x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2015
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from______to_______
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Ohio
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34-0577130
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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4500 Mt. Pleasant St. NW, North Canton, Ohio
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44720-5450
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Shares, without par value
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Class
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Outstanding at January 29, 2016
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Common Shares, without par value
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80,030,053 shares
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Document
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Parts Into Which Incorporated
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Proxy Statement for the Annual Meeting of Shareholders to be held on or about May 10, 2016 (Proxy Statement)
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Part III
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PAGE
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I.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 4A.
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II.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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III.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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IV.
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Item 15.
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December 31,
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|||||
(Dollars in millions)
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2015
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2014
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||||
Segment:
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||||
Mobile Industries
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$
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587.1
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$
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838.5
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Process Industries
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356.1
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450.6
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Total Company
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$
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943.2
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$
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1,289.1
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•
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changes in tariff regulations, which may make our products more costly to export or import;
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•
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difficulties establishing and maintaining relationships with local original equipment manufacturers (OEMs), distributors and dealers;
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•
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import and export licensing requirements;
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•
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compliance with a variety of foreign laws and regulations, including unexpected changes in taxation and environmental or other regulatory requirements, which could increase our operating and other expenses and limit our operations;
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•
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disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act (FCPA);
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•
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difficulty in staffing and managing geographically diverse operations; and
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•
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tax exposures related to cross-border intercompany transfer pricing and other tax risks unique to international operations.
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Name
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Age
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Current Position and Previous Positions During Last Five Years
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William R. Burkhart
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50
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2014 Executive Vice President, General Counsel and Secretary
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2000 Senior Vice President and General Counsel
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Christopher A. Coughlin
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55
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2014 Executive Vice President, Group President
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2012 Group President
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2011 President - Process Industries
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Philip D. Fracassa
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47
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2014 Executive Vice President and Chief Financial Officer
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2012 Senior Vice President - Planning and Development
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2010 Senior Vice President and Controller - B&PT
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Richard G. Kyle
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50
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2014 President and Chief Executive Officer; Director
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2013 Chief Operating Officer - B&PT; Director
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2012 Group President
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2011 President - Mobile Industries & Aerospace
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J. Ted Mihaila
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61
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2006 Senior Vice President and Controller
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2015
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2014
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||||||||||||||||
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Stock prices
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Dividends
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Stock prices
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Dividends
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||||||||||||||
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High
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Low
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per share
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High
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Low
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per share
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||||||||||||
First quarter
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$
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43.56
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$
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37.65
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$
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0.25
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$
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61.37
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$
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52.51
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$
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0.25
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Second quarter
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$
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43.06
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$
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36.24
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$
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0.26
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$
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69.51
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$
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57.69
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$
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0.25
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Third quarter
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$
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36.95
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$
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26.31
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$
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0.26
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$
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49.96
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$
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42.34
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$
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0.25
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Fourth quarter
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$
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32.89
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$
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26.84
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$
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0.26
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$
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44.30
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$
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37.62
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$
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0.25
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Period
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Total number
of shares purchased
(1)
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Average
price paid per share
(2)
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Total number of
shares purchased as
part of publicly
announced
plans or programs
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Maximum number
of shares that may
yet be purchased
under the
plans or programs
(3)(4)
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|||||
10/1/2015 - 10/31/2015
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424,530
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$
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29.08
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424,292
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2,603,623
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11/1/2015 - 11/30/2015
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866,944
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31.34
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866,495
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1,737,128
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12/1/2015 - 12/31/2015
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1,445,352
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29.23
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1,445,000
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292,128
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Total
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2,736,826
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$
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29.88
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2,735,787
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—
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(1)
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Of the shares purchased in October, November and December, 238, 449 and 352, respectively, represent common shares of the Company that were 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.
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(2)
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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 shares 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 share price at the time the options are exercised.
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(3)
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On February 10, 2012, the Board of Directors of the Company approved a share purchase plan pursuant to which the Company may purchase up to ten million of its common shares in the aggregate. On June 13, 2014, the Board of Directors of the Company authorized an additional ten million common shares for repurchase under this plan. This share purchase plan expired on December 31, 2015.
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(4)
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On January 29, 2016, the Board of Directors of the Company approved a new share purchase plan pursuant to which the Company may purchase up to five million of its common shares, in the aggregate. This share purchase plan expires on January 31, 2017. 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 10b5-1 plans.
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2011
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2012
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2013
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2014
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2015
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||||||||||
Timken
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$
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88
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$
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104
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$
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122
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$
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134
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$
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93
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S&P 500
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102
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118
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157
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178
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181
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S&P 400 Industrials
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99
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120
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173
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176
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170
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(Dollars in millions, except per share and per employee data)
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2015
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2014
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2013
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2012
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2011
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||||||||||
Statements of Income
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Net sales
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$
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2,872.3
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$
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3,076.2
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$
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3,035.4
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$
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3,359.5
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$
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3,333.6
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Gross profit
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793.9
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898.0
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868.4
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1,028.0
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1,018.0
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Selling, general and administrative expenses
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494.3
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542.5
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546.6
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554.5
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540.6
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Impairment and restructuring charges
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14.7
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113.4
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8.7
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29.5
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14.4
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|||||
Operating (loss) income
(1)
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(151.4
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)
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208.4
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305.9
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444.0
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463.0
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|||||
Other (expense) income, net
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(7.5
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)
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19.9
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6.7
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102.0
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(0.4
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)
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|||||
Interest expense, net
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30.7
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24.3
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22.5
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28.2
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31.2
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(Loss) income from continuing operations
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(68.0
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)
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149.3
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175.5
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331.5
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280.8
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Income from discontinued operations, net of income taxes
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—
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24.0
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87.5
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164.4
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175.8
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Net (loss) income attributable to The Timken Company
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$
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(70.8
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)
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$
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170.8
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$
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262.7
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$
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495.5
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$
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454.3
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Balance Sheets
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Inventories, net
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$
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543.2
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$
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585.5
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$
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582.6
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$
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611.5
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$
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669.6
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Property, plant and equipment, net
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777.8
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780.5
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855.8
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834.1
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868.6
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|||||
Total assets
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2,785.3
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3,001.4
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4,477.9
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4,244.2
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4,327.4
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|||||
Total debt:
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||||||||||
Short-term debt
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62.0
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7.4
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18.6
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14.3
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22.0
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|||||
Current portion of long-term debt
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15.1
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|
0.6
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250.7
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9.6
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5.8
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|||||
Long-term debt
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580.6
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522.1
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176.4
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424.9
|
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448.6
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|||||
Total debt
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$
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657.7
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$
|
530.1
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|
$
|
445.7
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|
$
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448.8
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|
$
|
476.4
|
|
Net debt (cash)
|
|
|
|
|
|
||||||||||
Total debt
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657.7
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|
530.1
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|
445.7
|
|
448.8
|
|
476.4
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|||||
Less: cash and cash equivalents and restricted cash
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(129.8
|
)
|
(294.1
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)
|
(399.7
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)
|
(601.5
|
)
|
(468.4
|
)
|
|||||
Net debt (cash):
(2)
|
$
|
527.9
|
|
$
|
236.0
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|
$
|
46.0
|
|
$
|
(152.7
|
)
|
$
|
8.0
|
|
Total liabilities
|
1,440.7
|
|
1,412.3
|
|
1,829.3
|
|
1,997.6
|
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2,284.9
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|||||
Shareholders’ equity
|
$
|
1,344.6
|
|
$
|
1,589.1
|
|
$
|
2,648.6
|
|
$
|
2,246.6
|
|
$
|
2,042.5
|
|
Capital:
|
|
|
|
|
|
||||||||||
Net debt (cash)
|
527.9
|
|
236.0
|
|
46.0
|
|
(152.7
|
)
|
8.0
|
|
|||||
Shareholders’ equity
|
1,344.6
|
|
1,589.1
|
|
2,648.6
|
|
2,246.6
|
|
2,042.5
|
|
|||||
Net debt (cash) + shareholders’ equity (capital)
|
$
|
1,872.5
|
|
$
|
1,825.1
|
|
$
|
2,694.6
|
|
$
|
2,093.9
|
|
$
|
2,050.5
|
|
Other Comparative Data
|
|
|
|
|
|
||||||||||
(Loss) income from continuing operations / Net sales
|
(2.4
|
%)
|
4.9
|
%
|
5.8
|
%
|
9.9
|
%
|
8.4
|
%
|
|||||
Net (loss) income attributable to The Timken Company / Net sales
|
(2.5
|
%)
|
5.6
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%
|
8.7
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%
|
14.7
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%
|
13.6
|
%
|
|||||
Return on equity
(3)
|
(5.1
|
%)
|
9.4
|
%
|
6.6
|
%
|
14.8
|
%
|
13.7
|
%
|
|||||
Net sales per employee
(4)
|
$
|
197.5
|
|
$
|
210.9
|
|
$
|
203.1
|
|
$
|
218.0
|
|
$
|
218.8
|
|
Capital expenditures
|
105.6
|
|
126.8
|
|
133.6
|
|
118.3
|
|
105.5
|
|
|||||
Depreciation and amortization
|
130.8
|
|
137.0
|
|
142.4
|
|
149.6
|
|
146.7
|
|
|||||
Capital expenditures / Net sales
|
3.7
|
%
|
4.1
|
%
|
4.4
|
%
|
3.5
|
%
|
3.2
|
%
|
|||||
Dividends per share
|
$
|
1.03
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|
$
|
1.00
|
|
$
|
0.92
|
|
$
|
0.92
|
|
$
|
0.78
|
|
Basic (loss) earnings per share - continuing operations
(5)
|
$
|
(0.84
|
)
|
$
|
1.62
|
|
$
|
1.84
|
|
$
|
3.41
|
|
$
|
2.84
|
|
Diluted (loss) earnings per share - continuing operations
(5)
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$
|
(0.84
|
)
|
$
|
1.61
|
|
$
|
1.82
|
|
$
|
3.38
|
|
$
|
2.81
|
|
Basic (loss) earnings per share
(6)
|
$
|
(0.84
|
)
|
$
|
1.89
|
|
$
|
2.76
|
|
$
|
5.11
|
|
$
|
4.65
|
|
Diluted (loss) earnings per share
(6)
|
$
|
(0.84
|
)
|
$
|
1.87
|
|
$
|
2.74
|
|
$
|
5.07
|
|
$
|
4.59
|
|
Net debt (cash) to capital
(2)
|
28.2
|
%
|
12.9
|
%
|
1.7
|
%
|
(7.3
|
%)
|
0.4
|
%
|
|||||
Number of employees at year-end
(7)
|
14,709
|
|
14,378
|
|
14,794
|
|
15,093
|
|
15,722
|
|
|||||
Number of shareholders
(8)
|
40,257
|
|
44,271
|
|
52,218
|
|
50,783
|
|
44,238
|
|
(1)
|
Operating (loss) income included pension settlement charges of $465.0 million during 2015.
|
(2)
|
The Company presents net debt (cash) because it believes net debt (cash) is more representative of the Company’s financial position than total debt due to the amount of cash and cash equivalents.
|
(3)
|
Return on equity is defined as (loss) income from continuing operations divided by ending shareholders’ equity.
|
(4)
|
Based on average number of employees employed during the year.
|
(5)
|
Based on average number of shares outstanding during the year.
|
(6)
|
Based on average number of shares outstanding during the year and includes discontinued operations for all periods presented.
|
(7)
|
Adjusted to exclude temporary employees for all periods.
|
(8)
|
Includes an estimated count of shareholders having common shares held for their accounts by banks, brokers and trustees for benefit plans.
|
•
|
Mobile Industries
serves OEM customers that manufacture off-highway equipment for the agricultural, mining and construction markets; on-highway vehicles including passenger cars, light trucks, and medium- and heavy-duty trucks; rail cars and locomotives; and rotorcraft and fixed-wing aircraft. Beyond service parts sold to OEMs, aftermarket sales to individual end users, equipment owners, operators and maintenance shops are handled through the Company's extensive network of authorized automotive and heavy-truck distributors.
|
•
|
Process Industries
serves OEM and end-user customers in industries that place heavy demands on the fixed operating equipment they make or use in heavy and other general industrial sectors. This includes metals, cement and aggregate production; coal and wind power generation; oil and gas extraction and refining; pulp and paper and food processing; and health and critical motion control equipment. Other applications include marine equipment, gear drives, cranes, hoists and conveyors. This segment also supports aftermarket sales and service needs through its global network of authorized industrial distributors.
|
•
|
On December 4, 2015, the Company launched the 6000 series line of metric deep groove ball bearings and introduced a new line of Drives® Leaf Chain in North America, completing the global rollout of the series as an element of the Company's DeltaX growth initiative. DeltaX is a multi-year initiative designed to accelerate product development and line expansion.
|
•
|
On November 19, 2015, the Company announced plans to build a 161,000-square-foot manufacturing plant in Romania. The new plant will produce ISO and inch-sized Timken® tapered roller bearings up to 12 inches outside diameter for global power transmission, off-highway and distribution customers. The Company broke ground on the new plant in early February 2016, with projected start-up in 2017.
|
•
|
On April 28, 2015, the Company expanded its product offering of high performance spherical roller bearings. The new product line includes medium bore high performance spherical roller bearings featuring either steel or brass cages in a variety of sizes. The new offering of spherical roller bearings includes several new features that are expected to contribute to longer bearing life and to run cooler than other comparable products.
|
•
|
On April 10, 2015, the Company launched the Timken® UC-series ball bearing housed unit product line, an extension of the Company’s housed unit bearing portfolio.
|
•
|
On March 19, 2015, the Company unveiled its new 27,000-square-foot, state-of-the-art gear drive manufacturing facility in Houston, Texas. This facility serves customers in the power generation, oil and gas exploration, refining and pipeline/pumping industries that require reliable, high-speed enclosed gearboxes to keep pumps, compressors and generators operating in harsh conditions.
|
•
|
On November 30, 2015, the Company amended its $100 million Asset Securitization Agreement (Accounts Receivable Facility) to, among other things, extend the maturity to November 30, 2018.
|
•
|
On November 30, 2015, the Company entered into an agreement pursuant to which one of its U.S. defined benefit pension plans purchased a group annuity contract from Prudential Insurance Company of America
(Prudential) that requires Prudential to pay and administer future pension benefits for approximately 3,400 U.S. Timken retirees. The purchase was funded by existing pension plan assets and required no cash contribution from the Company to Prudential in this transaction. As a result of the purchase of the group annuity contract, the Company incurred non-cash pension settlement charges of $241.8 million in the fourth quarter of 2015. Coupled with the group annuity contract purchased in January discussed below, the Company transferred a total of approximately $1.1 billion of pension obligations to Prudential in 2015, which reduced the Company's total projected benefit obligation by approximately 50%.
|
•
|
On June 19, 2015, the Company amended and restated its five-year $500 million Senior Credit Facility to, among other things, extend the maturity to June 19, 2020.
|
•
|
On January 23, 2015, the Company entered into an agreement pursuant to which another of its U.S. defined benefit pension plans purchased a group annuity contract from Prudential that requires Prudential to pay and administer future pension benefits for approximately 5,000 U.S. Timken salaried retirees. The purchase was funded by existing pension plan assets and required no cash contribution from the Company to Prudential in this transaction. As a result of the purchase of the group annuity contract as well as lump-sum distributions to new retirees, the Company incurred pension settlement charges of $215.2 million in the first quarter of 2015.
|
•
|
On October 21, 2015, the Company completed the sale of all of the outstanding stock of Timken Alcor Aerospace Technologies, Inc. (Alcor), located in Mesa, Arizona. Alcor was engaged in the design, engineering, sourcing, manufacture and sale of parts and components used in gas turbine engines and helicopter drivetrain applications and filing applications for and obtaining certificates reflecting a Parts Manufacturer Approval (PMA) issued by the United States Federal Aviation Administration (FAA) for such parts and components. For the twelve months ending September 30, 2015, Alcor had sales of $20.6 million. The results of the operations of Alcor prior to the sale were reported in the Mobile Industries segment. The Company recognized a gain on the sale of Alcor of approximately $29 million.
|
•
|
On September 1, 2015, the Company acquired all the membership interests of Carlstar Belt LLC (the Belts business). The Belts business is a leading North American manufacturer of belts used in industrial, commercial and consumer applications. Based in Springfield, Missouri, the Belts business had sales of approximately $140 million for the twelve months ending June 30, 2015. The results of the operations of the Belts business are reported in the Mobile Industries and Process Industries segments based on the customers served.
|
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
2,872.3
|
|
$
|
3,076.2
|
|
$
|
(203.9
|
)
|
(6.6
|
%)
|
(Loss) income from continuing operations
|
(68.0
|
)
|
149.3
|
|
(217.3
|
)
|
(145.5
|
%)
|
|||
Income from discontinued operations
|
—
|
|
24.0
|
|
(24.0
|
)
|
(100.0
|
%)
|
|||
Income attributable to noncontrolling interest
|
2.8
|
|
2.5
|
|
0.3
|
|
12.0
|
%
|
|||
Net (loss) income attributable to The Timken Company
|
$
|
(70.8
|
)
|
$
|
170.8
|
|
$
|
(241.6
|
)
|
(141.5
|
%)
|
Diluted (loss) earnings per share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(0.84
|
)
|
$
|
1.61
|
|
$
|
(2.45
|
)
|
(152.2
|
%)
|
Discontinued operations
|
—
|
|
0.26
|
|
(0.26
|
)
|
(100.0
|
%)
|
|||
Diluted (loss) earnings per share
|
$
|
(0.84
|
)
|
$
|
1.87
|
|
$
|
(2.71
|
)
|
(144.9
|
%)
|
Average number of shares—diluted
|
84,631,778
|
|
91,224,328
|
|
—
|
|
(7.2
|
%)
|
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
2,872.3
|
|
$
|
3,076.2
|
|
$
|
(203.9
|
)
|
(6.6
|
%)
|
|
2015
|
2014
|
$ Change
|
Change
|
|||||||
Gross profit
|
$
|
793.9
|
|
$
|
898.0
|
|
$
|
(104.1
|
)
|
(11.6
|
%)
|
Gross profit % to net sales
|
27.6
|
%
|
29.2
|
%
|
—
|
|
(160) bps
|
|
|||
Rationalization expenses included in cost of products sold
|
$
|
6.4
|
|
$
|
3.6
|
|
$
|
2.8
|
|
77.8
|
%
|
|
2015
|
2014
|
$ Change
|
Change
|
|||||||
Selling, general and administrative expenses
|
$
|
494.3
|
|
$
|
542.5
|
|
$
|
(48.2
|
)
|
(8.9%
|
)
|
Selling, general and administrative expenses % to net sales
|
17.2
|
%
|
17.6
|
%
|
—
|
|
(40) bps
|
|
|
2015
|
2014
|
$ Change
|
||||||
Impairment charges
|
$
|
3.3
|
|
$
|
98.9
|
|
$
|
(95.6
|
)
|
Severance and related benefit costs
|
7.7
|
|
10.7
|
|
(3.0
|
)
|
|||
Exit costs
|
3.7
|
|
3.8
|
|
(0.1
|
)
|
|||
Total
|
$
|
14.7
|
|
$
|
113.4
|
|
$
|
(98.7
|
)
|
|
2015
|
2014
|
$ Change
|
||||||
Pension settlement charges
|
$
|
465.0
|
|
$
|
33.7
|
|
$
|
431.3
|
|
|
2015
|
2014
|
$ Change
|
||||||
Gain on divestiture
|
$
|
28.7
|
|
$
|
—
|
|
$
|
28.7
|
|
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Interest (expense)
|
$
|
(33.4
|
)
|
$
|
(28.7
|
)
|
$
|
(4.7
|
)
|
16.4
|
%
|
Interest income
|
2.7
|
|
4.4
|
|
(1.7
|
)
|
(38.6
|
%)
|
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Gain on sale of real estate
|
$
|
—
|
|
$
|
22.6
|
|
$
|
(22.6
|
)
|
(100.0
|
%)
|
Fixed asset write-off
|
(9.7
|
)
|
—
|
|
(9.7
|
)
|
NM
|
|
|||
Other income (expense), net
|
2.2
|
|
(2.7
|
)
|
4.9
|
|
(181.5
|
%)
|
|||
Total
|
$
|
(7.5
|
)
|
$
|
19.9
|
|
$
|
(27.4
|
)
|
(137.7
|
%)
|
|
2015
|
2014
|
$ Change
|
Change
|
|||||||
Income tax (benefit) expense
|
$
|
(121.6
|
)
|
$
|
54.7
|
|
$
|
(176.3
|
)
|
(322.3%
|
)
|
Effective tax rate
|
64.1
|
%
|
26.8
|
%
|
—
|
|
3,730
|
bps
|
|
2015
|
2014
|
||||
Income tax at the U.S. federal statutory rate
|
$
|
(66.4
|
)
|
$
|
71.4
|
|
Adjustments:
|
|
|
||||
Reversal of valuation allowance
|
(34.7
|
)
|
—
|
|
||
U.S. foreign tax credit
|
(22.4
|
)
|
(15.1
|
)
|
||
Foreign earnings taxed at different rates including tax holidays
|
(11.0
|
)
|
(15.7
|
)
|
||
Tax expense related to undistributed earnings of subsidiaries
|
—
|
|
(8.7
|
)
|
||
Accruals and settlements related to tax audits
|
(5.9
|
)
|
12.8
|
|
||
State and local income taxes, net of federal tax benefit
|
(4.9
|
)
|
(0.3
|
)
|
||
U.S. domestic manufacturing deduction
|
(4.5
|
)
|
(6.6
|
)
|
||
U.S. research tax credit
|
(1.1
|
)
|
(1.0
|
)
|
||
Other items (net)
|
(1.5
|
)
|
(6.0
|
)
|
||
Tax on foreign remittances and U.S. tax on foreign income
|
13.8
|
|
19.6
|
|
||
Deferred taxes related to branch operations
|
11.6
|
|
—
|
|
||
Foreign losses without current tax benefits
|
5.4
|
|
4.3
|
|
||
(Benefit) provision for income taxes
|
$
|
(121.6
|
)
|
$
|
54.7
|
|
Effective tax rate
|
64.1
|
%
|
26.8
|
%
|
|
2015
|
2014
|
$ Change
|
||||||
Net sales
|
$
|
—
|
|
$
|
786.2
|
|
$
|
(786.2
|
)
|
Income before income taxes
|
—
|
|
40.0
|
|
(40.0
|
)
|
|||
Income taxes
|
—
|
|
16.0
|
|
(16.0
|
)
|
|||
Operating results, net of tax
|
$
|
—
|
|
$
|
24.0
|
|
$
|
(24.0
|
)
|
•
|
During the fourth quarter of 2015, the Company sold all of the outstanding stock of Alcor. Results for Alcor were reported in the Mobile Industries segment.
|
•
|
During the third quarter of 2015, the Company acquired the Belts business. Results for the Belts business are reported in the Mobile Industries and Process Industries segments based on the customers served.
|
•
|
During the fourth quarter of 2014, the Company acquired substantially all of the assets of Revolvo Ltd. (Revolvo). Results for Revolvo are reported in the Process Industries segment.
|
•
|
During the fourth quarter of 2014, the Company sold its aerospace engine overhaul business. Results for the aerospace engine overhaul business were reported in the Mobile Industries segment.
|
•
|
During the second quarter of 2014, the Company acquired substantially all of the assets of Schulz Group (Schulz). Results for Schulz are reported in the Process Industries segment.
|
|
2015
|
2014
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
1,558.3
|
|
$
|
1,685.4
|
|
$
|
(127.1
|
)
|
(7.5%
|
)
|
EBIT
|
$
|
173.3
|
|
$
|
65.6
|
|
$
|
107.7
|
|
164.2%
|
|
EBIT margin
|
11.1
|
%
|
3.9
|
%
|
—
|
|
720 bps
|
|
|||
|
|
|
|
|
|||||||
|
|
|
|
|
|||||||
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
1,558.3
|
|
$
|
1,685.4
|
|
$
|
(127.1
|
)
|
(7.5%
|
)
|
Less: Acquisitions
|
21.8
|
|
—
|
|
21.8
|
|
NM
|
|
|||
Divestitures
|
(13.2
|
)
|
—
|
|
(13.2
|
)
|
NM
|
|
|||
Currency
|
(88.1
|
)
|
—
|
|
(88.1
|
)
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions, divestitures and currency
|
$
|
1,637.8
|
|
$
|
1,685.4
|
|
$
|
(47.6
|
)
|
(2.8%
|
)
|
|
2015
|
2014
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
1,314.0
|
|
$
|
1,390.8
|
|
$
|
(76.8
|
)
|
(5.5%
|
)
|
EBIT
|
$
|
190.2
|
|
$
|
267.1
|
|
$
|
(76.9
|
)
|
(28.8%
|
)
|
EBIT margin
|
14.5
|
%
|
19.2
|
%
|
—
|
|
(470) bps
|
|
|||
|
|
|
|
|
|||||||
|
|
|
|
|
|||||||
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
1,314.0
|
|
$
|
1,390.8
|
|
$
|
(76.8
|
)
|
(5.5%
|
)
|
Less: Acquisitions
|
30.2
|
|
—
|
|
30.2
|
|
NM
|
|
|||
Currency
|
(63.5
|
)
|
—
|
|
(63.5
|
)
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
1,347.3
|
|
$
|
1,390.8
|
|
$
|
(43.5
|
)
|
(3.1%
|
)
|
|
2015
|
2014
|
$ Change
|
Change
|
|||||||
Corporate expenses
|
$
|
57.4
|
|
$
|
71.4
|
|
$
|
(14.0
|
)
|
(19.6 %
|
)
|
Corporate expenses % to net sales
|
2.0
|
%
|
2.3
|
%
|
—
|
|
(30) bps
|
|
|
2014
|
2013
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
3,076.2
|
|
$
|
3,035.4
|
|
$
|
40.8
|
|
1.3
|
%
|
Income from continuing operations
|
149.3
|
|
175.5
|
|
(26.2
|
)
|
(14.9
|
%)
|
|||
Income from discontinued operations
|
24.0
|
|
87.5
|
|
(63.5
|
)
|
(72.6
|
%)
|
|||
Income attributable to noncontrolling interest
|
2.5
|
|
0.3
|
|
2.2
|
|
NM
|
|
|||
Net income attributable to The Timken Company
|
$
|
170.8
|
|
$
|
262.7
|
|
$
|
(91.9
|
)
|
(35.0
|
%)
|
Diluted earnings per share:
|
|
|
|
|
|||||||
Continuing operations
|
$
|
1.61
|
|
$
|
1.82
|
|
$
|
(0.21
|
)
|
(11.5
|
%)
|
Discontinued operations
|
0.26
|
|
0.92
|
|
(0.66
|
)
|
(71.7
|
%)
|
|||
Diluted earnings per share
|
$
|
1.87
|
|
$
|
2.74
|
|
$
|
(0.87
|
)
|
(31.8
|
%)
|
Average number of shares - diluted
|
91,224,328
|
|
95,823,728
|
|
—
|
|
(4.8
|
%)
|
|
2014
|
2013
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
3,076.2
|
|
$
|
3,035.4
|
|
$
|
40.8
|
|
1.3
|
%
|
|
2014
|
2013
|
$ Change
|
Change
|
|||||||
Gross profit
|
$
|
898.0
|
|
$
|
868.4
|
|
$
|
29.6
|
|
3.4
|
%
|
Gross profit % to net sales
|
29.2
|
%
|
28.6
|
%
|
—
|
|
60
|
bps
|
|||
Rationalization expenses included in cost of products sold
|
$
|
3.6
|
|
$
|
5.9
|
|
$
|
(2.3
|
)
|
(39.0
|
%)
|
|
2014
|
2013
|
$ Change
|
Change
|
|||||||
Selling, general and administrative expenses
|
$
|
542.5
|
|
$
|
546.6
|
|
$
|
(4.1
|
)
|
(0.8 %
|
)
|
Selling, general and administrative expenses % to net sales
|
17.6
|
%
|
18.0
|
%
|
—
|
|
(40) bps
|
|
|
2014
|
2013
|
$ Change
|
||||||
Impairment charges
|
$
|
98.9
|
|
$
|
0.1
|
|
$
|
98.8
|
|
Severance and related benefit costs
|
10.7
|
|
9.2
|
|
1.5
|
|
|||
Exit costs
|
3.8
|
|
(0.6
|
)
|
4.4
|
|
|||
Total
|
$
|
113.4
|
|
$
|
8.7
|
|
$
|
104.7
|
|
|
2014
|
2013
|
$ Change
|
||||||
Pension settlement charges
|
$
|
33.7
|
|
$
|
7.2
|
|
$
|
26.5
|
|
|
2014
|
2013
|
$ Change
|
% Change
|
|||||||
Interest (expense)
|
$
|
(28.7
|
)
|
$
|
(24.4
|
)
|
$
|
(4.3
|
)
|
17.6
|
%
|
Interest income
|
$
|
4.4
|
|
$
|
1.9
|
|
$
|
2.5
|
|
131.6
|
%
|
|
2014
|
2013
|
$ Change
|
% Change
|
|||||||
Gain on sale of real estate
|
$
|
22.6
|
|
$
|
5.4
|
|
$
|
17.2
|
|
318.5
|
%
|
Other income (expense), net
|
(2.7
|
)
|
1.3
|
|
(4.0
|
)
|
(307.7
|
%)
|
|||
Total
|
$
|
19.9
|
|
$
|
6.7
|
|
$
|
13.2
|
|
197.0
|
%
|
|
2014
|
2013
|
$ Change
|
Change
|
|||||||
Income tax expense
|
$
|
54.7
|
|
$
|
114.6
|
|
$
|
(59.9
|
)
|
(52.3 %
|
)
|
Effective tax rate
|
26.8
|
%
|
39.5
|
%
|
—
|
|
(1,270) bps
|
|
|
2014
|
2013
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
786.2
|
|
$
|
1,305.8
|
|
$
|
(519.6
|
)
|
(39.8%
|
)
|
Income before income taxes
|
40.0
|
|
127.1
|
|
(87.1
|
)
|
(68.5%
|
)
|
|||
Income taxes
|
16.0
|
|
39.6
|
|
(23.6
|
)
|
(59.6%
|
)
|
|||
Operating results, net of tax
|
$
|
24.0
|
|
$
|
87.5
|
|
$
|
(63.5
|
)
|
(72.6%
|
)
|
•
|
During the fourth quarter of 2014, the Company acquired substantially all of the assets of Revolvo. Results for Revolvo are reported in the Process Industries segment.
|
•
|
During the second quarter of 2014, the Company acquired substantially all of the assets of Schulz. Results for Schulz are reported in the Process Industries segment.
|
•
|
During the second quarter of 2013, the Company completed the acquisition of Hamilton Gear Ltd., d/b/a Standard Machine (Standard Machine), as well as substantially all of the assets of Smith Services, Inc. (Smith Services). Results for Standard Machine and Smith Services are reported in the Process Industries segment.
|
•
|
During the first quarter of 2013, the Company completed the acquisition of Interlube Systems Ltd. (Interlube). Results for Interlube are reported in the Mobile Industries segment.
|
|
2014
|
2013
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
1,685.4
|
|
$
|
1,775.8
|
|
$
|
(90.4
|
)
|
(5.1
|
%)
|
EBIT
|
$
|
65.6
|
|
$
|
193.7
|
|
$
|
(128.1
|
)
|
(66.1
|
%)
|
EBIT margin
|
3.9
|
%
|
10.9
|
%
|
—
|
|
(700) bps
|
|
|
2014
|
2013
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
1,685.4
|
|
$
|
1,775.8
|
|
$
|
(90.4
|
)
|
(5.1
|
%)
|
Less: Acquisitions
|
3.6
|
|
—
|
|
3.6
|
|
NM
|
|
|||
Currency
|
(17.1
|
)
|
—
|
|
(17.1
|
)
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
1,698.9
|
|
$
|
1,775.8
|
|
$
|
(76.9
|
)
|
(4.3
|
%)
|
|
2014
|
2013
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
1,390.8
|
|
$
|
1,259.6
|
|
$
|
131.2
|
|
10.4 %
|
|
EBIT
|
$
|
267.1
|
|
$
|
189.3
|
|
$
|
77.8
|
|
41.1 %
|
|
EBIT margin
|
19.2
|
%
|
15.0
|
%
|
—
|
|
420
|
bps
|
|||
|
|
|
|
|
|||||||
|
2014
|
2013
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
1,390.8
|
|
$
|
1,259.6
|
|
$
|
131.2
|
|
10.4 %
|
|
Less: Acquisitions
|
16.0
|
|
—
|
|
16.0
|
|
NM
|
|
|||
Currency
|
(13.3
|
)
|
—
|
|
(13.3
|
)
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
1,388.1
|
|
$
|
1,259.6
|
|
$
|
128.5
|
|
10.2 %
|
|
|
2014
|
2013
|
$ Change
|
Change
|
|||||||
Corporate expenses
|
$
|
71.4
|
|
$
|
70.4
|
|
$
|
1.0
|
|
1.4%
|
|
Corporate expenses % to net sales
|
2.3
|
%
|
2.3
|
%
|
—
|
|
—
|
|
|
December 31,
|
|
|
||||||||
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Cash and cash equivalents
|
$
|
129.6
|
|
$
|
278.8
|
|
$
|
(149.2
|
)
|
(53.5
|
%)
|
Restricted cash
|
0.2
|
|
15.3
|
|
(15.1
|
)
|
(98.7
|
%)
|
|||
Accounts receivable, net
|
454.6
|
|
475.7
|
|
(21.1
|
)
|
(4.4
|
%)
|
|||
Inventories, net
|
543.2
|
|
585.5
|
|
(42.3
|
)
|
(7.2
|
%)
|
|||
Deferred income taxes
|
—
|
|
49.9
|
|
(49.9
|
)
|
(100.0
|
%)
|
|||
Deferred charges and prepaid expenses
|
22.7
|
|
25.2
|
|
(2.5
|
)
|
(9.9
|
%)
|
|||
Other current assets
|
56.1
|
|
51.5
|
|
4.6
|
|
8.9
|
%
|
|||
Total current assets
|
$
|
1,206.4
|
|
$
|
1,481.9
|
|
$
|
(275.5
|
)
|
(18.6
|
%)
|
|
December 31,
|
|
|
||||||||
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Property, plant and equipment
|
$
|
2,171.7
|
|
$
|
2,164.1
|
|
$
|
7.6
|
|
0.4
|
%
|
Less: allowances for depreciation
|
(1,393.9
|
)
|
(1,383.6
|
)
|
(10.3
|
)
|
(0.7
|
%)
|
|||
Property, plant and equipment, net
|
$
|
777.8
|
|
$
|
780.5
|
|
$
|
(2.7
|
)
|
(0.3
|
%)
|
|
December 31,
|
|
|
||||||||
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Goodwill
|
$
|
327.3
|
|
$
|
259.5
|
|
$
|
67.8
|
|
26.1
|
%
|
Non-current pension assets
|
86.3
|
|
176.2
|
|
(89.9
|
)
|
(51.0
|
%)
|
|||
Other intangible assets
|
271.3
|
|
239.8
|
|
31.5
|
|
13.1
|
%
|
|||
Deferred income taxes
|
65.9
|
|
11.2
|
|
54.7
|
|
NM
|
|
|||
Other non-current assets
|
50.3
|
|
52.3
|
|
(2.0
|
)
|
(3.8
|
%)
|
|||
Total other assets
|
$
|
801.1
|
|
$
|
739.0
|
|
$
|
62.1
|
|
8.4
|
%
|
|
December 31,
|
|
|
||||||||
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Short-term debt
|
$
|
62.0
|
|
$
|
7.4
|
|
$
|
54.6
|
|
NM
|
|
Current portion of long-term debt
|
15.1
|
|
0.6
|
|
14.5
|
|
NM
|
|
|||
Accounts payable
|
159.7
|
|
143.9
|
|
15.8
|
|
11.0
|
%
|
|||
Salaries, wages and benefits
|
102.3
|
|
146.7
|
|
(44.4
|
)
|
(30.3
|
%)
|
|||
Income taxes payable
|
13.1
|
|
80.2
|
|
(67.1
|
)
|
(83.7
|
%)
|
|||
Other current liabilities
|
153.1
|
|
155.0
|
|
(1.9
|
)
|
(1.2
|
%)
|
|||
Total current liabilities
|
$
|
505.3
|
|
$
|
533.8
|
|
$
|
(28.5
|
)
|
(5.3
|
%)
|
|
December 31,
|
|
|
||||||||
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Long-term debt
|
$
|
580.6
|
|
$
|
522.1
|
|
$
|
58.5
|
|
11.2
|
%
|
Accrued pension cost
|
146.9
|
|
165.9
|
|
(19.0
|
)
|
(11.5
|
%)
|
|||
Accrued postretirement benefits cost
|
136.1
|
|
141.8
|
|
(5.7
|
)
|
(4.0
|
%)
|
|||
Deferred income taxes
|
3.6
|
|
4.1
|
|
(0.5
|
)
|
(12.2
|
%)
|
|||
Other non-current liabilities
|
68.2
|
|
44.6
|
|
23.6
|
|
52.9
|
%
|
|||
Total non-current liabilities
|
$
|
935.4
|
|
$
|
878.5
|
|
$
|
56.9
|
|
6.5
|
%
|
|
December 31,
|
|
|
||||||||
|
2015
|
2014
|
$ Change
|
% Change
|
|||||||
Common stock
|
$
|
958.2
|
|
$
|
952.5
|
|
$
|
5.7
|
|
0.6
|
%
|
Earnings invested in the business
|
1,457.6
|
|
1,615.4
|
|
(157.8
|
)
|
(9.8
|
%)
|
|||
Accumulated other comprehensive loss
|
(287.0
|
)
|
(482.5
|
)
|
195.5
|
|
(40.5
|
%)
|
|||
Treasury shares
|
(804.3
|
)
|
(509.2
|
)
|
(295.1
|
)
|
(58.0
|
%)
|
|||
Noncontrolling interest
|
20.1
|
|
12.9
|
|
7.2
|
|
55.8
|
%
|
|||
Total equity
|
$
|
1,344.6
|
|
$
|
1,589.1
|
|
$
|
(244.5
|
)
|
(15.4
|
%)
|
|
2015
|
2014
|
$ Change
|
||||||
Net cash provided by operating activities - continuing operations
|
$
|
374.8
|
|
$
|
281.5
|
|
$
|
93.3
|
|
Net cash provided by operating activities - discontinued operations
|
—
|
|
25.5
|
|
(25.5
|
)
|
|||
Net cash provided by operating activities
|
374.8
|
|
307.0
|
|
67.8
|
|
|||
Net cash used by investing activities - continuing operations
|
(265.2
|
)
|
(117.7
|
)
|
(147.5
|
)
|
|||
Net cash used by investing activities - discontinued operations
|
—
|
|
(77.0
|
)
|
77.0
|
|
|||
Net cash used by investing activities
|
(265.2
|
)
|
(194.7
|
)
|
(70.5
|
)
|
|||
Net cash used by financing activities - continuing operations
|
(241.6
|
)
|
(302.2
|
)
|
60.6
|
|
|||
Net cash provided by financing activities - discontinued operations
|
—
|
|
100.0
|
|
(100.0
|
)
|
|||
Net cash used by financing activities
|
(241.6
|
)
|
(202.2
|
)
|
(39.4
|
)
|
|||
Effect of exchange rate changes on cash
|
(17.2
|
)
|
(15.9
|
)
|
(1.3
|
)
|
|||
Decrease in cash and cash equivalents
|
$
|
(149.2
|
)
|
$
|
(105.8
|
)
|
$
|
(43.4
|
)
|
|
2015
|
2014
|
$ Change
|
||||||
Cash provided (used):
|
|
|
|
||||||
Accounts receivable
|
$
|
11.9
|
|
$
|
(48.3
|
)
|
$
|
60.2
|
|
Inventories
|
52.8
|
|
(26.8
|
)
|
79.6
|
|
|||
Trade accounts payable
|
11.6
|
|
8.0
|
|
3.6
|
|
|||
Other accrued expenses
|
(51.5
|
)
|
2.2
|
|
(53.7
|
)
|
|||
Increase (decrease) in cash provided (used) for working capital items
|
$
|
24.8
|
|
$
|
(64.9
|
)
|
$
|
89.7
|
|
|
2015
|
2014
|
$ Change
|
||||||
Net borrowings
|
$
|
130.1
|
|
$
|
85.7
|
|
$
|
44.4
|
|
Cash transferred to TimkenSteel Corporation
|
—
|
|
(46.5
|
)
|
46.5
|
|
|||
Purchase of treasury shares
|
(309.7
|
)
|
(270.9
|
)
|
(38.8
|
)
|
|||
Proceeds from exercise of stock options
|
4.1
|
|
16.8
|
|
(12.7
|
)
|
|||
Decrease in restricted cash
|
14.8
|
|
—
|
|
14.8
|
|
|||
Cash dividends paid to shareholders
|
(87.0
|
)
|
(90.3
|
)
|
3.3
|
|
|||
Other
|
6.1
|
|
3.0
|
|
3.1
|
|
|||
Decrease in cash used for financing activities
|
$
|
(241.6
|
)
|
$
|
(302.2
|
)
|
$
|
60.6
|
|
|
December 31,
|
|||||
|
2015
|
2014
|
||||
Short-term debt
|
$
|
62.0
|
|
$
|
7.4
|
|
Current portion of long-term debt
|
15.1
|
|
0.6
|
|
||
Long-term debt
|
580.6
|
|
522.1
|
|
||
Total debt
|
$
|
657.7
|
|
$
|
530.1
|
|
Less: Cash and cash equivalents
|
129.6
|
|
278.8
|
|
||
Restricted cash
|
0.2
|
|
15.3
|
|
||
Net debt
|
$
|
527.9
|
|
$
|
236.0
|
|
|
December 31,
|
|||||
|
2015
|
2014
|
||||
Net debt
|
$
|
527.9
|
|
$
|
236.0
|
|
Total equity
|
1,344.6
|
|
1,589.1
|
|
||
Capital (net debt + total equity)
|
$
|
1,872.5
|
|
$
|
1,825.1
|
|
Ratio of net debt to capital
|
28.2
|
%
|
12.9
|
%
|
Contractual Obligations
|
Total
|
Less than
1 Year
|
1-3 Years
|
3-5 Years
|
More than
5 Years
|
||||||||||
Interest payments
|
$
|
248.0
|
|
$
|
26.4
|
|
$
|
49.0
|
|
$
|
48.3
|
|
$
|
124.3
|
|
Long-term debt, including current portion
|
595.7
|
|
15.1
|
|
80.2
|
|
—
|
|
500.4
|
|
|||||
Short-term debt
|
62.0
|
|
62.0
|
|
—
|
|
—
|
|
—
|
|
|||||
Operating leases
|
142.2
|
|
35.1
|
|
53.9
|
|
39.2
|
|
14.0
|
|
|||||
Purchase commitments
|
19.2
|
|
12.8
|
|
6.4
|
|
—
|
|
—
|
|
|||||
Retirement benefits
|
297.3
|
|
29.2
|
|
47.9
|
|
77.6
|
|
142.6
|
|
|||||
Total
|
$
|
1,364.4
|
|
$
|
180.6
|
|
$
|
237.4
|
|
$
|
165.1
|
|
$
|
781.3
|
|
Net actuarial losses at December 31, 2012
|
|
|
$
|
1,489.4
|
|
||
|
|
|
|
||||
Plus/minus actuarial (gains) and losses recognized:
|
|
|
|
||||
Net actuarial gains recognized in 2013
|
|
$
|
(376.3
|
)
|
|
||
Net actuarial losses recognized in 2014
|
|
161.2
|
|
|
|||
Net actuarial losses recognized in 2015
|
|
89.5
|
|
|
|||
|
|
|
(125.6
|
)
|
|||
Minus amortization of net actuarial losses:
|
|
|
|
||||
Amortization of net actuarial losses in 2013
|
|
$
|
(116.8
|
)
|
|
||
Amortization of net actuarial losses in 2014
|
|
(60.9
|
)
|
|
|||
Amortization of net actuarial losses in 2015
|
|
(36.3
|
)
|
|
|||
|
|
|
(214.0
|
)
|
|||
Settlement charges recognized in 2013
|
|
|
(7.2
|
)
|
|||
Settlement charges recognized in 2014
|
|
|
(33.5
|
)
|
|||
Settlement charges recognized in 2015
|
|
|
(461.2
|
)
|
|||
Curtailment loss recognized in 2015
|
|
|
(0.6
|
)
|
|||
Spinoff of TimkenSteel
|
|
|
(347.4
|
)
|
|||
Foreign currency impact
|
|
|
(19.2
|
)
|
|||
Net actuarial losses at December 31, 2015
|
|
|
$
|
280.7
|
|
|
|
|
|
+ / - Change at December 31, 2015
|
||||||||||
|
|
Change
|
|
PBO
|
|
Equity
|
|
2016 Expense
|
||||||
Assumption:
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
|
+/- 0.25%
|
|
$
|
21.1
|
|
|
$
|
21.1
|
|
|
$
|
1.9
|
|
Actual return on plan assets
|
|
+/- 0.25%
|
|
N/A
|
|
|
1.3
|
|
|
—
|
|
|||
Expected return on assets
|
|
+/- 0.25%
|
|
N/A
|
|
|
N/A
|
|
|
1.2
|
|
|
|
|
|
+ / - Change at December 31, 2015
|
||||||||||
|
|
Change
|
|
ABO
|
|
Equity
|
|
2016 Expense
|
||||||
Assumption:
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
|
+/- 0.25%
|
|
$
|
4.6
|
|
|
$
|
4.6
|
|
|
$
|
0.4
|
|
Actual return on plan assets
|
|
+/- 0.25%
|
|
N/A
|
|
|
0.3
|
|
|
—
|
|
|||
Expected return on assets
|
|
+/- 0.25%
|
|
N/A
|
|
|
N/A
|
|
|
0.3
|
|
(a)
|
deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which the Company or its customers or suppliers conducts business, including additional adverse effects from the global economic slowdown, terrorism or hostilities. This includes: political risks associated with the potential instability of governments and legal systems in countries in which the Company, its customers or suppliers 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 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 produced, 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; availability and cost of raw materials; changes in the expected costs associated with product warranty claims; changes resulting from inventory management and cost reduction initiatives; the effects of unplanned plant shutdowns; and changes in the cost of labor and benefits;
|
(e)
|
the success of the Company’s operating plans, announced programs, initiatives and capital investments; the ability to integrate acquired companies; the ability of acquired companies to achieve satisfactory operating results, including results being accretive to earnings; 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: claims or problems related to intellectual property, product liability or warranty, environmental issues, and taxes;
|
(g)
|
changes in worldwide capital markets, including availability of financing and interest rates on satisfactory terms, which affect: the Company’s cost of funds and/or ability to raise capital; and the ability of customers to obtain financing to purchase the Company’s products or equipment that contain the Company’s products;
|
(h)
|
the impact on the Company's pension obligations due to changes in interest rates, investment performance, changes in law or regulation, and other tactics designed to reduce risk;
|
(i)
|
retention of CDSOA distributions;
|
(j)
|
the Company's ability to avoid any indemnification liabilities entered into with TimkenSteel in connection with the Spinoff, and the ability of TimkenSteel to satisfy any indemnification liabilities it entered into in connection with the Spinoff;
|
(k)
|
the taxable nature of the Spinoff; and
|
(l)
|
those items identified under Item 1A. Risk Factors on pages
6
through
12
.
|
Consolidated Statements of Income
|
|||||||||
|
Year Ended December 31,
|
||||||||
|
2015
|
2014
|
2013
|
||||||
(Dollars in millions, except per share data)
|
|
|
|
||||||
Net sales
|
$
|
2,872.3
|
|
$
|
3,076.2
|
|
$
|
3,035.4
|
|
Cost of products sold
|
2,078.4
|
|
2,178.2
|
|
2,167.0
|
|
|||
Gross Profit
|
793.9
|
|
898.0
|
|
868.4
|
|
|||
Selling, general and administrative expenses
|
494.3
|
|
542.5
|
|
546.6
|
|
|||
Impairment and restructuring charges
|
14.7
|
|
113.4
|
|
8.7
|
|
|||
Gain on divestiture
|
(28.7
|
)
|
—
|
|
—
|
|
|||
Pension settlement charges
|
465.0
|
|
33.7
|
|
7.2
|
|
|||
Operating (Loss) Income
|
(151.4
|
)
|
208.4
|
|
305.9
|
|
|||
Interest expense
|
(33.4
|
)
|
(28.7
|
)
|
(24.4
|
)
|
|||
Interest income
|
2.7
|
|
4.4
|
|
1.9
|
|
|||
Gain on sale of real estate
|
—
|
|
22.6
|
|
5.4
|
|
|||
Other (expense) income, net
|
(7.5
|
)
|
(2.7
|
)
|
1.3
|
|
|||
(Loss) Income From Continuing Operations Before Income Taxes
|
(189.6
|
)
|
204.0
|
|
290.1
|
|
|||
(Benefit) provision for income taxes
|
(121.6
|
)
|
54.7
|
|
114.6
|
|
|||
(Loss) Income From Continuing Operations
|
(68.0
|
)
|
149.3
|
|
175.5
|
|
|||
Income from discontinued operations, net of income taxes
|
—
|
|
24.0
|
|
87.5
|
|
|||
Net (Loss) Income
|
(68.0
|
)
|
173.3
|
|
263.0
|
|
|||
Less: Net income attributable to noncontrolling interest
|
2.8
|
|
2.5
|
|
0.3
|
|
|||
Net (Loss) Income Attributable to The Timken Company
|
$
|
(70.8
|
)
|
$
|
170.8
|
|
$
|
262.7
|
|
|
|
|
|
||||||
Amounts Attributable to The Timken Company's Common Shareholders:
|
|
|
|
||||||
(Loss) income from continuing operations, net of income taxes
|
$
|
(70.8
|
)
|
$
|
146.8
|
|
$
|
175.2
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
24.0
|
|
87.5
|
|
|||
Net (Loss) Income Attributable to The Timken Company
|
$
|
(70.8
|
)
|
$
|
170.8
|
|
$
|
262.7
|
|
|
|
|
|
||||||
Net (Loss) Income per Common Share Attributable to The Timken Company
Common Shareholders
|
|
|
|
||||||
(Loss) earnings per share - continuing operations
|
$
|
(0.84
|
)
|
$
|
1.62
|
|
$
|
1.84
|
|
Earnings per share - discontinued operations
|
—
|
|
0.27
|
|
0.92
|
|
|||
Basic (loss) earnings per share
|
$
|
(0.84
|
)
|
$
|
1.89
|
|
$
|
2.76
|
|
|
|
|
|
||||||
Diluted (loss) earnings per share - continuing operations
|
$
|
(0.84
|
)
|
$
|
1.61
|
|
$
|
1.82
|
|
Diluted earnings per share - discontinued operations
|
—
|
|
0.26
|
|
0.92
|
|
|||
Diluted (loss) earnings per share
|
$
|
(0.84
|
)
|
$
|
1.87
|
|
$
|
2.74
|
|
|
|
|
|
||||||
Dividends per share
|
$
|
1.03
|
|
$
|
1.00
|
|
$
|
0.92
|
|
Consolidated Statements of Comprehensive Income
|
|||||||||
|
Year Ended December 31,
|
||||||||
|
2015
|
2014
|
2013
|
||||||
(Dollars in millions)
|
|
|
|
||||||
Net (Loss) Income
|
$
|
(68.0
|
)
|
$
|
173.3
|
|
$
|
263.0
|
|
Other comprehensive income, net of tax:
|
|
|
|
||||||
Foreign currency translation adjustments
|
(73.5
|
)
|
(41.8
|
)
|
(19.0
|
)
|
|||
Pension and post retirement liability adjustment
|
265.9
|
|
(43.1
|
)
|
398.3
|
|
|||
Change in fair value of derivative financial instruments
|
1.1
|
|
(0.4
|
)
|
0.3
|
|
|||
Other comprehensive income (loss), net of tax
|
193.5
|
|
(85.3
|
)
|
379.6
|
|
|||
Comprehensive Income, net of tax
|
125.5
|
|
88.0
|
|
642.6
|
|
|||
Less: comprehensive income (loss) attributable to noncontrolling interest
|
0.8
|
|
2.0
|
|
(7.2
|
)
|
|||
Comprehensive Income Attributable to The Timken Company
|
$
|
124.7
|
|
$
|
86.0
|
|
$
|
649.8
|
|
Consolidated Balance Sheets
|
||||||
|
December 31,
|
|||||
|
2015
|
2014
|
||||
(Dollars in millions)
|
|
|
||||
ASSETS
|
|
|
||||
Current Assets
|
|
|
||||
Cash and cash equivalents
|
$
|
129.6
|
|
$
|
278.8
|
|
Restricted cash
|
0.2
|
|
15.3
|
|
||
Accounts receivable, less allowances (2015 - $16.9 million; 2014 - $13.7 million)
|
454.6
|
|
475.7
|
|
||
Inventories, net
|
543.2
|
|
585.5
|
|
||
Deferred income taxes
|
—
|
|
49.9
|
|
||
Deferred charges and prepaid expenses
|
22.7
|
|
25.2
|
|
||
Other current assets
|
56.1
|
|
51.5
|
|
||
Total Current Assets
|
1,206.4
|
|
1,481.9
|
|
||
Property, Plant and Equipment, Net
|
777.8
|
|
780.5
|
|
||
Other Assets
|
|
|
||||
Goodwill
|
327.3
|
|
259.5
|
|
||
Non-current pension assets
|
86.3
|
|
176.2
|
|
||
Other intangible assets
|
271.3
|
|
239.8
|
|
||
Deferred income taxes
|
65.9
|
|
11.2
|
|
||
Other non-current assets
|
50.3
|
|
52.3
|
|
||
Total Other Assets
|
801.1
|
|
739.0
|
|
||
Total Assets
|
$
|
2,785.3
|
|
$
|
3,001.4
|
|
LIABILITIES AND EQUITY
|
|
|
||||
Current Liabilities
|
|
|
||||
Short-term debt
|
$
|
62.0
|
|
$
|
7.4
|
|
Current portion of long-term debt
|
15.1
|
|
0.6
|
|
||
Accounts payable, trade
|
159.7
|
|
143.9
|
|
||
Salaries, wages and benefits
|
102.3
|
|
146.7
|
|
||
Income taxes payable
|
13.1
|
|
80.2
|
|
||
Other current liabilities
|
153.1
|
|
155.0
|
|
||
Total Current Liabilities
|
505.3
|
|
533.8
|
|
||
Non-Current Liabilities
|
|
|
||||
Long-term debt
|
580.6
|
|
522.1
|
|
||
Accrued pension cost
|
146.9
|
|
165.9
|
|
||
Accrued post-retirement benefits cost
|
136.1
|
|
141.8
|
|
||
Deferred income taxes
|
3.6
|
|
4.1
|
|
||
Other non-current liabilities
|
68.2
|
|
44.6
|
|
||
Total Non-Current Liabilities
|
935.4
|
|
878.5
|
|
||
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) (2015 - 98,375,135; 2014 - 98,375,135 shares)
|
|
|
||||
Stated capital
|
53.1
|
|
53.1
|
|
||
Other paid-in capital
|
905.1
|
|
899.4
|
|
||
Earnings invested in the business
|
1,457.6
|
|
1,615.4
|
|
||
Accumulated other comprehensive loss
|
(287.0
|
)
|
(482.5
|
)
|
||
Treasury shares at cost (2015 - 18,112,047; 2014 - 9,783,375 shares)
|
(804.3
|
)
|
(509.2
|
)
|
||
Total Shareholders’ Equity
|
1,324.5
|
|
1,576.2
|
|
||
Noncontrolling interest
|
20.1
|
|
12.9
|
|
||
Total Equity
|
1,344.6
|
|
1,589.1
|
|
||
Total Liabilities and Equity
|
$
|
2,785.3
|
|
$
|
3,001.4
|
|
Consolidated Statements of Cash Flows
|
|||||||||
|
Year Ended December 31,
|
||||||||
|
2015
|
2014
|
2013
|
||||||
(Dollars in millions)
|
|
|
|
||||||
CASH PROVIDED (USED)
|
|
|
|
||||||
Operating Activities
|
|
|
|
||||||
Net (loss) income attributable to The Timken Company
|
$
|
(70.8
|
)
|
$
|
170.8
|
|
$
|
262.7
|
|
Net income from discontinued operations
|
—
|
|
(24.0
|
)
|
(87.5
|
)
|
|||
Net income attributable to noncontrolling interest
|
2.8
|
|
2.5
|
|
0.3
|
|
|||
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
130.8
|
|
137.0
|
|
142.4
|
|
|||
Impairment charges
|
3.3
|
|
98.9
|
|
0.1
|
|
|||
Loss (gain) on sale of assets
|
11.8
|
|
(20.2
|
)
|
(1.1
|
)
|
|||
Gain on divestitures
|
(28.7
|
)
|
—
|
|
—
|
|
|||
Deferred income tax benefit
|
(170.1
|
)
|
(53.3
|
)
|
(33.0
|
)
|
|||
Stock-based compensation expense
|
18.4
|
|
21.8
|
|
16.3
|
|
|||
Excess tax benefits related to stock-based compensation
|
(1.5
|
)
|
(7.1
|
)
|
(10.9
|
)
|
|||
Pension and other postretirement expense
|
502.9
|
|
62.0
|
|
55.1
|
|
|||
Pension and other postretirement benefit contributions
|
(29.8
|
)
|
(49.9
|
)
|
(93.4
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
||||||
Accounts receivable
|
11.9
|
|
(48.3
|
)
|
(4.6
|
)
|
|||
Inventories
|
52.8
|
|
(26.8
|
)
|
34.6
|
|
|||
Accounts payable, trade
|
11.6
|
|
8.0
|
|
0.9
|
|
|||
Other accrued expenses
|
(51.5
|
)
|
2.2
|
|
(39.6
|
)
|
|||
Income taxes
|
(40.4
|
)
|
(15.3
|
)
|
67.5
|
|
|||
Other, net
|
21.3
|
|
23.2
|
|
(17.0
|
)
|
|||
Net Cash Provided by Operating Activities - continuing operations
|
374.8
|
|
281.5
|
|
292.8
|
|
|||
Net Cash Provided by Operating Activities - discontinued operations
|
—
|
|
25.5
|
|
137.2
|
|
|||
Net Cash Provided by Operating Activities
|
374.8
|
|
307.0
|
|
430.0
|
|
|||
Investing Activities
|
|
|
|
||||||
Capital expenditures
|
(105.6
|
)
|
(126.8
|
)
|
(133.6
|
)
|
|||
Acquisitions, net of cash acquired of $0.1 million in 2015 and $0.4 million in 2013
|
(213.3
|
)
|
(21.7
|
)
|
(64.2
|
)
|
|||
Proceeds from disposals of property, plant and equipment
|
9.8
|
|
18.5
|
|
7.1
|
|
|||
Divestitures
|
46.2
|
|
7.4
|
|
—
|
|
|||
Investments in short-term marketable securities, net
|
(1.8
|
)
|
4.9
|
|
5.5
|
|
|||
Other
|
(0.5
|
)
|
—
|
|
1.1
|
|
|||
Net Cash Used by Investing Activities - continuing operations
|
(265.2
|
)
|
(117.7
|
)
|
(184.1
|
)
|
|||
Net Cash Used by Investing Activities - discontinued operations
|
—
|
|
(77.0
|
)
|
(191.9
|
)
|
|||
Net Cash Used by Investing Activities
|
(265.2
|
)
|
(194.7
|
)
|
(376.0
|
)
|
|||
Financing Activities
|
|
|
|
||||||
Cash dividends paid to shareholders
|
(87.0
|
)
|
(90.3
|
)
|
(87.5
|
)
|
|||
Purchase of treasury shares
|
(309.7
|
)
|
(270.9
|
)
|
(189.2
|
)
|
|||
Proceeds from exercise of stock options
|
4.1
|
|
16.8
|
|
13.1
|
|
|||
Excess tax benefits related to stock-based compensation
|
1.5
|
|
7.1
|
|
10.9
|
|
|||
Proceeds from issuance of long-term debt
|
265.7
|
|
346.2
|
|
1.9
|
|
|||
Deferred financing costs
|
(2.0
|
)
|
(3.2
|
)
|
—
|
|
|||
Accounts receivable securitization financing borrowings
|
116.0
|
|
90.0
|
|
—
|
|
|||
Accounts receivable securitization financing payments
|
(67.0
|
)
|
(90.0
|
)
|
—
|
|
|||
Payments on long-term debt
|
(190.6
|
)
|
(250.7
|
)
|
(9.9
|
)
|
|||
Short-term debt activity, net
|
6.0
|
|
(9.8
|
)
|
4.8
|
|
|||
Decrease in restricted cash
|
14.8
|
|
—
|
|
—
|
|
|||
Cash transferred to TimkenSteel Corporation
|
—
|
|
(46.5
|
)
|
—
|
|
|||
Other
|
6.6
|
|
(0.9
|
)
|
6.6
|
|
|||
Net Cash Used by Financing Activities - continuing operations
|
(241.6
|
)
|
(302.2
|
)
|
(249.3
|
)
|
|||
Net Cash Provided by Financing Activities - discontinued operations
|
—
|
|
100.0
|
|
—
|
|
|||
Net Cash Used by Financing Activities
|
(241.6
|
)
|
(202.2
|
)
|
(249.3
|
)
|
|||
Effect of exchange rate changes on cash
|
(17.2
|
)
|
(15.9
|
)
|
(6.5
|
)
|
|||
Decrease In Cash and Cash Equivalents
|
(149.2
|
)
|
(105.8
|
)
|
(201.8
|
)
|
|||
Cash and cash equivalents at beginning of year
|
278.8
|
|
384.6
|
|
586.4
|
|
|||
Cash and Cash Equivalents at End of Year
|
$
|
129.6
|
|
$
|
278.8
|
|
$
|
384.6
|
|
Consolidated Statements of Shareholders’ Equity
|
|||||||||||||||||||||
|
|
The Timken Company Shareholders
|
|
||||||||||||||||||
|
Total
|
Stated
Capital
|
Other
Paid-In
Capital
|
Earnings
Invested
in the
Business
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Treasury
Shares
|
Non-
controlling
Interest
|
||||||||||||||
(Dollars in millions, except per share data)
|
|
|
|
|
|
|
|
||||||||||||||
Year Ended December 31, 2013
|
|
|
|
|
|
|
|
||||||||||||||
Balance at January 1, 2013
|
$
|
2,246.6
|
|
$
|
53.1
|
|
$
|
891.4
|
|
$
|
2,411.2
|
|
$
|
(1,013.2
|
)
|
$
|
(110.3
|
)
|
$
|
14.4
|
|
Net income
|
263.0
|
|
|
|
262.7
|
|
|
|
0.3
|
|
|||||||||||
Foreign currency translation adjustments
|
(19.0
|
)
|
|
|
|
(11.5
|
)
|
|
(7.5
|
)
|
|||||||||||
Pension and post-retirement liability adjustment (net of income tax of $226.5 million)
|
398.3
|
|
|
|
|
398.3
|
|
|
|
||||||||||||
Change in fair value of derivative financial
instruments, net of reclassifications
|
0.3
|
|
|
|
|
0.3
|
|
|
|
||||||||||||
Change in ownership of noncontrolling interest
|
8.9
|
|
|
1.3
|
|
|
|
|
7.6
|
|
|||||||||||
Dividends declared to noncontrolling interest
|
(2.8
|
)
|
|
|
|
|
|
(2.8
|
)
|
||||||||||||
Dividends – $.92 per share
|
(87.5
|
)
|
|
|
(87.5
|
)
|
|
|
|
||||||||||||
Excess tax benefit from stock compensation
|
10.9
|
|
|
10.9
|
|
|
|
|
|
||||||||||||
Stock-based compensation expense
|
18.6
|
|
|
18.6
|
|
|
|
|
|
||||||||||||
Purchase of treasury shares
|
(189.2
|
)
|
|
|
|
|
(189.2
|
)
|
|
||||||||||||
Stock option exercise activity
|
7.8
|
|
|
(22.0
|
)
|
|
|
29.8
|
|
|
|||||||||||
Restricted shares (issued) surrendered
|
1.0
|
|
|
(3.8
|
)
|
|
|
4.8
|
|
|
|||||||||||
Shares surrendered for taxes
|
(8.3
|
)
|
|
|
|
|
(8.3
|
)
|
|
||||||||||||
Balance at December 31, 2013
|
$
|
2,648.6
|
|
$
|
53.1
|
|
$
|
896.4
|
|
$
|
2,586.4
|
|
$
|
(626.1
|
)
|
$
|
(273.2
|
)
|
$
|
12.0
|
|
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
173.3
|
|
|
|
170.8
|
|
|
|
2.5
|
|
|||||||||||
Foreign currency translation adjustments
|
(41.8
|
)
|
|
|
|
(41.3
|
)
|
|
(0.5
|
)
|
|||||||||||
Pension and post-retirement liability adjustment (net of income tax of $23.9 million)
|
(43.1
|
)
|
|
|
|
(43.1
|
)
|
|
|
||||||||||||
Change in fair value of derivative financial
instruments, net of reclassifications
|
(0.4
|
)
|
|
|
|
(0.4
|
)
|
|
|
||||||||||||
Dividends declared to noncontrolling interest
|
(1.1
|
)
|
|
|
|
|
|
(1.1
|
)
|
||||||||||||
Dividends – $1.00 per share
|
(90.3
|
)
|
|
|
(90.3
|
)
|
|
|
|
||||||||||||
Distribution of TimkenSteel
|
(823.1
|
)
|
|
|
(1,051.5
|
)
|
228.4
|
|
|
|
|||||||||||
Excess tax benefit from stock compensation
|
7.1
|
|
|
7.1
|
|
|
|
|
|
||||||||||||
Stock-based compensation expense
|
23.9
|
|
|
23.9
|
|
|
|
|
|
||||||||||||
Purchase of treasury shares
|
(270.9
|
)
|
|
|
|
|
(270.9
|
)
|
|
||||||||||||
Stock option exercise activity
|
16.7
|
|
|
(23.8
|
)
|
|
|
40.5
|
|
|
|||||||||||
Restricted shares (issued) surrendered
|
0.9
|
|
|
(4.2
|
)
|
|
|
5.1
|
|
|
|||||||||||
Shares surrendered for taxes
|
(10.7
|
)
|
|
|
|
|
(10.7
|
)
|
|
||||||||||||
Balance at December 31, 2014
|
$
|
1,589.1
|
|
$
|
53.1
|
|
$
|
899.4
|
|
$
|
1,615.4
|
|
$
|
(482.5
|
)
|
$
|
(509.2
|
)
|
$
|
12.9
|
|
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
||||||||||||||
Net (loss) income
|
(68.0
|
)
|
|
|
(70.8
|
)
|
|
|
2.8
|
|
|||||||||||
Foreign currency translation adjustments
|
(73.5
|
)
|
|
|
|
(71.5
|
)
|
|
(2.0
|
)
|
|||||||||||
Pension and post-retirement liability adjustment (net of income tax benefit of $155.4 million)
|
265.9
|
|
|
|
|
265.9
|
|
|
|
||||||||||||
Change in fair value of derivative financial
instruments, net of reclassifications
|
1.1
|
|
|
|
|
1.1
|
|
|
|
||||||||||||
Dissolution of joint venture
|
(0.2
|
)
|
|
|
|
|
|
(0.2
|
)
|
||||||||||||
Investment in joint venture by noncontrolling interest party
|
6.6
|
|
|
|
|
|
|
6.6
|
|
||||||||||||
Dividends – $1.03 per share
|
(87.0
|
)
|
|
|
(87.0
|
)
|
|
|
|
||||||||||||
Excess tax benefit from stock compensation
|
1.5
|
|
|
1.5
|
|
|
|
|
|
||||||||||||
Stock-based compensation expense
|
18.4
|
|
|
18.4
|
|
|
|
|
|
||||||||||||
Purchase of treasury shares
|
(309.7
|
)
|
|
|
|
|
(309.7
|
)
|
|
||||||||||||
Stock option exercise activity
|
4.2
|
|
|
(7.5
|
)
|
|
|
11.7
|
|
|
|||||||||||
Restricted shares (issued) surrendered
|
0.2
|
|
|
(6.7
|
)
|
|
|
6.9
|
|
|
|||||||||||
Shares surrendered for taxes
|
(4.0
|
)
|
|
|
|
|
(4.0
|
)
|
|
||||||||||||
Balance at December 31, 2015
|
$
|
1,344.6
|
|
$
|
53.1
|
|
$
|
905.1
|
|
$
|
1,457.6
|
|
$
|
(287.0
|
)
|
$
|
(804.3
|
)
|
$
|
20.1
|
|
|
Year Ended December 31,
|
|||||
|
2014
|
2013
|
||||
Net sales
|
$
|
786.2
|
|
$
|
1,305.8
|
|
Cost of goods sold
|
642.0
|
|
1,082.2
|
|
||
Gross profit
|
144.2
|
|
223.6
|
|
||
Selling, administrative and general expenses
|
46.4
|
|
80.5
|
|
||
Separation costs
|
57.1
|
|
13.0
|
|
||
Interest expense, net
|
0.8
|
|
—
|
|
||
Other (income) expense, net
|
(0.1
|
)
|
3.0
|
|
||
Income before income taxes
|
40.0
|
|
127.1
|
|
||
Income tax expense
|
16.0
|
|
39.6
|
|
||
Income from discontinued operations
|
$
|
24.0
|
|
$
|
87.5
|
|
|
2015
|
2014
|
2013
|
||||||
Assets:
|
|
|
|
||||||
Accounts receivable
|
$
|
13.3
|
|
$
|
4.5
|
|
$
|
10.6
|
|
Inventories
|
48.5
|
|
5.4
|
|
12.7
|
|
|||
Other current assets
|
1.1
|
|
0.3
|
|
0.4
|
|
|||
Property, plant and equipment
|
37.9
|
|
2.8
|
|
19.5
|
|
|||
Goodwill
|
70.8
|
|
4.7
|
|
18.1
|
|
|||
Other intangible assets
|
63.9
|
|
7.5
|
|
13.0
|
|
|||
Total assets acquired
|
$
|
235.5
|
|
$
|
25.2
|
|
$
|
74.3
|
|
Liabilities:
|
|
|
|
||||||
Accounts payable, trade
|
$
|
10.2
|
|
$
|
2.3
|
|
$
|
3.3
|
|
Salaries, wages and benefits
|
1.1
|
|
—
|
|
1.4
|
|
|||
Other current liabilities
|
1.3
|
|
1.0
|
|
0.9
|
|
|||
Accrued pension cost
|
2.3
|
|
—
|
|
—
|
|
|||
Accrued postretirement liability
|
1.1
|
|
—
|
|
—
|
|
|||
Other non-current liabilities
|
5.9
|
|
0.5
|
|
4.5
|
|
|||
Total liabilities assumed
|
$
|
21.9
|
|
$
|
3.8
|
|
$
|
10.1
|
|
Net assets acquired
|
$
|
213.6
|
|
$
|
21.4
|
|
$
|
64.2
|
|
|
Purchase
Price Allocation
|
|||
|
|
Weighted-
Average Life
|
||
Trade name
|
$
|
1.7
|
|
11 years
|
Technology / Know-how
|
17.1
|
|
20 years
|
|
All customer relationships
|
43.9
|
|
20 years
|
|
Capitalized software
|
1.2
|
|
3 years
|
|
Total intangible assets
|
$
|
63.9
|
|
|
|
Purchase
Price Allocation
|
|||
|
|
Weighted-
Average Life
|
||
Trade name
|
$
|
0.6
|
|
7 years
|
Technology / Know-how
|
2.6
|
|
17 years
|
|
All customer relationships
|
4.2
|
|
15 years
|
|
Non-compete agreements
|
0.1
|
|
5 years
|
|
Total intangible assets
|
$
|
7.5
|
|
|
|
2015
|
2014
|
2013
|
||||||
Numerator:
|
|
|
|
||||||
Net (loss) income from continuing operations attributable to The Timken Company
|
$
|
(70.8
|
)
|
$
|
146.8
|
|
$
|
175.2
|
|
Less: undistributed earnings allocated to nonvested stock
|
—
|
|
—
|
|
(0.2
|
)
|
|||
Net (loss) income from continuing operations available to common shareholders for basic earnings per share and diluted earnings per
share
|
$
|
(70.8
|
)
|
$
|
146.8
|
|
$
|
175.0
|
|
Denominator:
|
|
|
|
||||||
Weighted-average number of shares outstanding – basic
|
84,631,778
|
|
90,367,345
|
|
94,989,561
|
|
|||
Effect of dilutive securities:
|
|
|
|
||||||
Stock options and awards - based on the treasury
stock method
|
—
|
|
856,983
|
|
834,167
|
|
|||
Weighted-average number of shares outstanding, assuming
dilution of stock options and awards |
84,631,778
|
|
91,224,328
|
|
95,823,728
|
|
|||
Basic (loss) earnings per share from continuing operations
|
$
|
(0.84
|
)
|
$
|
1.62
|
|
$
|
1.84
|
|
Diluted (loss) earnings per share from continuing operations
|
$
|
(0.84
|
)
|
$
|
1.61
|
|
$
|
1.82
|
|
|
Foreign currency
translation adjustments
|
Pension and postretirement
liability adjustments
|
Change in fair value of
derivative financial instruments
|
Total
|
||||||||
Balance at December 31, 2014
|
$
|
(0.7
|
)
|
$
|
(481.0
|
)
|
$
|
(0.8
|
)
|
$
|
(482.5
|
)
|
Other comprehensive (loss) income before
reclassifications, before income tax
|
(73.5
|
)
|
(80.6
|
)
|
3.0
|
|
(151.1
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive income (loss), before income tax
|
—
|
|
501.9
|
|
(1.2
|
)
|
500.7
|
|
||||
Income tax (benefit)
|
—
|
|
(155.4
|
)
|
(0.7
|
)
|
(156.1
|
)
|
||||
Net current period other comprehensive (loss) income, net of income taxes
|
(73.5
|
)
|
265.9
|
|
1.1
|
|
193.5
|
|
||||
Non-controlling interest
|
2.0
|
|
—
|
|
—
|
|
2.0
|
|
||||
Net current period comprehensive (loss) income, net of income taxes and non-controlling interest
|
(71.5
|
)
|
265.9
|
|
1.1
|
|
195.5
|
|
||||
Balance at December 31, 2015
|
$
|
(72.2
|
)
|
$
|
(215.1
|
)
|
$
|
0.3
|
|
$
|
(287.0
|
)
|
|
Foreign currency
translation adjustments
|
Pension and postretirement
liability adjustments
|
Change in fair value of
derivative financial instruments
|
Total
|
||||||||
Balance at December 31, 2013
|
$
|
37.5
|
|
$
|
(663.2
|
)
|
$
|
(0.4
|
)
|
$
|
(626.1
|
)
|
Other comprehensive (loss) income before
reclassifications, before income tax
|
(41.8
|
)
|
(166.0
|
)
|
0.7
|
|
(207.1
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive income (loss), before income tax
|
—
|
|
99.0
|
|
(0.8
|
)
|
98.2
|
|
||||
Income tax (benefit) expense
|
—
|
|
23.9
|
|
(0.3
|
)
|
23.6
|
|
||||
Net current period other comprehensive (loss) income, net of income taxes
|
(41.8
|
)
|
(43.1
|
)
|
(0.4
|
)
|
(85.3
|
)
|
||||
Non-controlling interest
|
0.5
|
|
—
|
|
—
|
|
0.5
|
|
||||
Distribution of TimkenSteel
|
3.1
|
|
225.3
|
|
—
|
|
228.4
|
|
||||
Net current period comprehensive (loss) income, net of income taxes and non-controlling interest
|
(38.2
|
)
|
182.2
|
|
(0.4
|
)
|
143.6
|
|
||||
Balance at December 31, 2014
|
$
|
(0.7
|
)
|
$
|
(481.0
|
)
|
$
|
(0.8
|
)
|
$
|
(482.5
|
)
|
|
2015
|
2014
|
||||
Manufacturing supplies
|
$
|
24.7
|
|
$
|
25.0
|
|
Raw materials
|
58.8
|
|
51.3
|
|
||
Work in process
|
181.9
|
|
219.3
|
|
||
Finished products
|
296.2
|
|
302.7
|
|
||
Subtotal
|
$
|
561.6
|
|
$
|
598.3
|
|
Allowance for surplus and obsolete inventory
|
(18.4
|
)
|
(12.8
|
)
|
||
Total Inventories, net
|
$
|
543.2
|
|
$
|
585.5
|
|
|
2015
|
2014
|
||||
Land and buildings
|
$
|
430.3
|
|
$
|
428.8
|
|
Machinery and equipment
|
1,741.4
|
|
1,735.3
|
|
||
Subtotal
|
$
|
2,171.7
|
|
$
|
2,164.1
|
|
Less allowances for depreciation
|
(1,393.9
|
)
|
(1,383.6
|
)
|
||
Property, Plant and Equipment, net
|
$
|
777.8
|
|
$
|
780.5
|
|
|
Mobile Industries
|
Process
Industries
|
Total
|
||||||
Beginning Balance
|
$
|
89.6
|
|
$
|
169.9
|
|
$
|
259.5
|
|
Acquisitions
|
8.2
|
|
62.6
|
|
70.8
|
|
|||
Other
|
(0.8
|
)
|
(2.2
|
)
|
(3.0
|
)
|
|||
Ending Balance
|
$
|
97.0
|
|
$
|
230.3
|
|
$
|
327.3
|
|
|
Mobile Industries
|
Process
Industries
|
Total
|
||||||
Beginning Balance
|
$
|
176.7
|
|
$
|
169.4
|
|
$
|
346.1
|
|
Acquisitions
|
—
|
|
3.3
|
|
3.3
|
|
|||
Impairment
|
(86.3
|
)
|
—
|
|
(86.3
|
)
|
|||
Other
|
(0.8
|
)
|
(2.8
|
)
|
(3.6
|
)
|
|||
Ending Balance
|
$
|
89.6
|
|
$
|
169.9
|
|
$
|
259.5
|
|
|
2015
|
2014
|
||||||||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||||||
Intangible assets subject
to amortization: |
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
198.9
|
|
$
|
70.0
|
|
$
|
128.9
|
|
$
|
160.1
|
|
$
|
59.0
|
|
$
|
101.1
|
|
Know-how
|
31.9
|
|
6.7
|
|
25.2
|
|
33.4
|
|
5.1
|
|
28.3
|
|
||||||
Industrial license agreements
|
0.1
|
|
0.1
|
|
—
|
|
0.1
|
|
0.1
|
|
—
|
|
||||||
Land-use rights
|
8.3
|
|
4.7
|
|
3.6
|
|
8.7
|
|
4.7
|
|
4.0
|
|
||||||
Patents
|
2.1
|
|
2.1
|
|
—
|
|
2.3
|
|
2.0
|
|
0.3
|
|
||||||
Technology use
|
53.6
|
|
14.0
|
|
39.6
|
|
37.0
|
|
11.9
|
|
25.1
|
|
||||||
Trademarks
|
6.5
|
|
3.3
|
|
3.2
|
|
5.4
|
|
3.0
|
|
2.4
|
|
||||||
PMA licenses
|
—
|
|
—
|
|
—
|
|
5.3
|
|
4.5
|
|
0.8
|
|
||||||
Non-compete agreements
|
2.7
|
|
2.5
|
|
0.2
|
|
3.5
|
|
3.2
|
|
0.3
|
|
||||||
Software
|
243.8
|
|
197.6
|
|
46.2
|
|
235.0
|
|
182.0
|
|
53.0
|
|
||||||
|
$
|
547.9
|
|
$
|
301.0
|
|
$
|
246.9
|
|
$
|
490.8
|
|
$
|
275.5
|
|
$
|
215.3
|
|
Intangible assets not
subject to amortization: |
|
|
|
|
|
|
||||||||||||
Tradename
|
$
|
15.7
|
|
$
|
—
|
|
$
|
15.7
|
|
$
|
15.8
|
|
$
|
—
|
|
$
|
15.8
|
|
FAA air agency
certificates |
8.7
|
|
—
|
|
8.7
|
|
8.7
|
|
—
|
|
8.7
|
|
||||||
|
$
|
24.4
|
|
$
|
—
|
|
$
|
24.4
|
|
$
|
24.5
|
|
$
|
—
|
|
$
|
24.5
|
|
Total intangible assets
|
$
|
572.3
|
|
$
|
301.0
|
|
$
|
271.3
|
|
$
|
515.3
|
|
$
|
275.5
|
|
$
|
239.8
|
|
|
2015
|
2014
|
||||
Variable-rate Accounts Receivable Facility with interest rate of 1.05% at December 31, 2015
|
$
|
49.0
|
|
$
|
—
|
|
Variable-rate lines of credit for certain of the Company’s foreign subsidiaries with
various banks with interest rates ranging from 0.31% to 0.44% and 0.51% to 5.13% at December 31, 2015 and 2014, respectively |
13.0
|
|
7.4
|
|
||
Short-term debt
|
$
|
62.0
|
|
$
|
7.4
|
|
|
2015
|
2014
|
||||
Beginning balance, January 1
|
$
|
1.7
|
|
$
|
4.2
|
|
Expense (Income)
|
0.6
|
|
(1.4
|
)
|
||
Payments
|
(1.3
|
)
|
(1.1
|
)
|
||
Ending balance, December 31
|
$
|
1.0
|
|
$
|
1.7
|
|
|
Mobile
Industries
|
Process
Industries
|
Corporate
|
Total
|
||||||||
Impairment charges
|
$
|
0.1
|
|
$
|
3.2
|
|
$
|
—
|
|
$
|
3.3
|
|
Severance expense and related benefit costs
|
4.5
|
|
2.6
|
|
0.6
|
|
7.7
|
|
||||
Exit costs
|
0.8
|
|
2.9
|
|
—
|
|
3.7
|
|
||||
Total
|
$
|
5.4
|
|
$
|
8.7
|
|
$
|
0.6
|
|
$
|
14.7
|
|
|
Mobile
Industries
|
Process
Industries
|
Corporate
|
Total
|
||||||||
Impairment charges
|
$
|
98.2
|
|
$
|
0.3
|
|
$
|
0.4
|
|
$
|
98.9
|
|
Severance expense and related benefit costs
|
9.3
|
|
1.4
|
|
—
|
|
10.7
|
|
||||
Exit costs
|
2.0
|
|
1.8
|
|
—
|
|
3.8
|
|
||||
Total
|
$
|
109.5
|
|
$
|
3.5
|
|
$
|
0.4
|
|
$
|
113.4
|
|
|
Mobile
Industries
|
Process
Industries
|
Corporate
|
Total
|
||||||||
Impairment charges
|
$
|
—
|
|
$
|
0.1
|
|
$
|
—
|
|
$
|
0.1
|
|
Severance expense and related benefit costs
|
6.6
|
|
2.6
|
|
—
|
|
9.2
|
|
||||
Exit costs
|
(1.5
|
)
|
0.9
|
|
—
|
|
(0.6
|
)
|
||||
Total
|
$
|
5.1
|
|
$
|
3.6
|
|
$
|
—
|
|
$
|
8.7
|
|
|
2015
|
2014
|
||||
Beginning balance, January 1
|
$
|
9.5
|
|
$
|
10.8
|
|
Expense
|
11.4
|
|
14.5
|
|
||
Payments
|
(9.6
|
)
|
(15.8
|
)
|
||
Ending balance, December 31
|
$
|
11.3
|
|
$
|
9.5
|
|
|
2015
|
2014
|
2013
|
||||||
Weighted-average fair value per option (Pre-Spinoff for 2014 and 2013)
|
$
|
11.67
|
|
$
|
23.09
|
|
$
|
21.17
|
|
Risk-free interest rate
|
1.58
|
%
|
1.64
|
%
|
1.09
|
%
|
|||
Dividend yield
|
2.29
|
%
|
1.75
|
%
|
2.29
|
%
|
|||
Expected stock volatility
|
36.53
|
%
|
50.96
|
%
|
50.66
|
%
|
|||
Expected life - years
|
5
|
|
5
|
|
6
|
|
|
Number of
Shares
|
Weighted-average
Exercise Price |
Weighted-average
Remaining Contractual Term |
Aggregate Intrinsic Value
(millions)
|
|||||
Outstanding - beginning of year
|
3,168,363
|
|
$
|
33.57
|
|
|
|
||
Granted - new awards
|
491,615
|
|
41.56
|
|
|
|
|||
Exercised
|
(297,765
|
)
|
22.35
|
|
|
|
|||
Canceled or expired
|
(82,345
|
)
|
40.95
|
|
|
|
|||
Outstanding - end of year
|
3,279,868
|
|
$
|
35.60
|
|
6 years
|
$
|
5.9
|
|
Options expected to vest
|
3,257,113
|
|
$
|
35.55
|
|
6 years
|
$
|
5.9
|
|
Options exercisable
|
2,034,395
|
|
$
|
32.41
|
|
5 years
|
$
|
5.9
|
|
|
Number of Shares
|
Weighted-average
Grant Date Fair Value |
|||
Outstanding - beginning of year
|
687,030
|
|
$
|
39.61
|
|
Granted - new awards
|
485,975
|
|
41.39
|
|
|
Vested
|
(103,953
|
)
|
36.37
|
|
|
Canceled or expired
|
(54,282
|
)
|
41.44
|
|
|
Outstanding - end of year
|
1,014,770
|
|
$
|
40.69
|
|
|
U.S. Plans
|
International Plans
|
||||||||||||||||
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
||||||||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
15.4
|
|
$
|
21.5
|
|
$
|
35.7
|
|
$
|
2.2
|
|
$
|
2.4
|
|
$
|
2.8
|
|
Interest cost
|
45.6
|
|
98.3
|
|
116.2
|
|
12.3
|
|
17.7
|
|
18.5
|
|
||||||
Expected return on plan assets
|
(62.6
|
)
|
(152.0
|
)
|
(207.6
|
)
|
(16.7
|
)
|
(23.7
|
)
|
(24.4
|
)
|
||||||
Amortization of prior service cost
|
2.8
|
|
3.5
|
|
4.5
|
|
0.1
|
|
0.1
|
|
—
|
|
||||||
Amortization of net actuarial loss
|
31.1
|
|
55.6
|
|
109.2
|
|
5.2
|
|
5.3
|
|
7.6
|
|
||||||
Curtailment
|
—
|
|
—
|
|
—
|
|
0.6
|
|
—
|
|
—
|
|
||||||
Settlement
|
456.4
|
|
32.7
|
|
—
|
|
4.8
|
|
0.8
|
|
7.2
|
|
||||||
Special termination benefits
|
—
|
|
—
|
|
—
|
|
0.6
|
|
—
|
|
—
|
|
||||||
Less: Discontinued operations
|
—
|
|
(8.0
|
)
|
(24.2
|
)
|
—
|
|
0.4
|
|
0.4
|
|
||||||
Net periodic benefit cost
|
$
|
488.7
|
|
$
|
51.6
|
|
$
|
33.8
|
|
$
|
9.1
|
|
$
|
3.0
|
|
$
|
12.1
|
|
Assumptions
|
2015
|
2014
|
2013
|
|||
U.S. Plans:
|
|
|
|
|||
Discount rate
|
3.98% to 4.64%
|
|
4.68% / 5.02%
|
|
4.00
|
%
|
Future compensation assumption
|
2.00% to 3.00%
|
|
2.00% to 3.00%
|
|
2.00% to 3.00%
|
|
Expected long-term return on plan assets
|
6.00
|
%
|
7.25
|
%
|
8.00
|
%
|
International Plans:
|
|
|
|
|||
Discount rate
|
1.50% to 8.75%
|
|
3.25% to 9.75%
|
|
2.75% to 9.00%
|
|
Future compensation assumption
|
2.20% to 8.00%
|
|
2.30% to 8.00%
|
|
2.30% to 8.00%
|
|
Expected long-term return on plan assets
|
2.25% to 9.25%
|
|
3.00% to 8.50%
|
|
3.25% to 8.50%
|
|
|
U.S. Plans
|
International Plans
|
||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||
Change in benefit obligation:
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
1,703.9
|
|
$
|
2,642.4
|
|
$
|
415.7
|
|
$
|
491.1
|
|
Service cost
|
15.4
|
|
21.5
|
|
2.2
|
|
2.4
|
|
||||
Interest cost
|
45.6
|
|
98.3
|
|
12.3
|
|
17.7
|
|
||||
Amendments
|
—
|
|
—
|
|
—
|
|
0.3
|
|
||||
Actuarial losses (gains)
|
68.8
|
|
239.6
|
|
(31.6
|
)
|
38.7
|
|
||||
Employee contributions
|
—
|
|
—
|
|
—
|
|
0.3
|
|
||||
International plan exchange rate change
|
—
|
|
—
|
|
(29.5
|
)
|
(29.5
|
)
|
||||
Curtailment
|
—
|
|
—
|
|
0.5
|
|
—
|
|
||||
Benefits paid
|
(100.9
|
)
|
(234.6
|
)
|
(17.6
|
)
|
(23.5
|
)
|
||||
Special termination benefits
|
—
|
|
—
|
|
0.6
|
|
—
|
|
||||
Settlements
|
(1,162.8
|
)
|
—
|
|
(14.5
|
)
|
—
|
|
||||
Acquisitions
|
19.9
|
|
—
|
|
—
|
|
—
|
|
||||
Spinoff of TimkenSteel
|
—
|
|
(1,063.3
|
)
|
—
|
|
(81.8
|
)
|
||||
Benefit obligation at end of year
|
$
|
589.9
|
|
$
|
1,703.9
|
|
$
|
338.1
|
|
$
|
415.7
|
|
|
U.S. Plans
|
International Plans
|
||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||
Change in plan assets:
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
1,772.4
|
|
$
|
2,870.0
|
|
$
|
349.4
|
|
$
|
420.6
|
|
Actual return on plan assets
|
23.0
|
|
250.5
|
|
4.5
|
|
42.2
|
|
||||
Employee contributions
|
—
|
|
—
|
|
—
|
|
0.3
|
|
||||
Company contributions / payments
|
4.4
|
|
4.5
|
|
6.4
|
|
16.6
|
|
||||
International plan exchange rate change
|
—
|
|
—
|
|
(23.6
|
)
|
(21.2
|
)
|
||||
Acquisitions
|
17.6
|
|
—
|
|
—
|
|
—
|
|
||||
Settlements
|
(1,162.8
|
)
|
—
|
|
(14.5
|
)
|
—
|
|
||||
Benefits paid
|
(100.9
|
)
|
(234.6
|
)
|
(17.6
|
)
|
(23.5
|
)
|
||||
Spinoff of TimkenSteel
|
—
|
|
(1,118.0
|
)
|
—
|
|
(85.6
|
)
|
||||
Fair value of plan assets at end of year
|
553.7
|
|
1,772.4
|
|
304.6
|
|
349.4
|
|
||||
Funded status at end of year
|
$
|
(36.2
|
)
|
$
|
68.5
|
|
$
|
(33.5
|
)
|
$
|
(66.3
|
)
|
Amounts recognized on the Consolidated Balance Sheets:
|
|
|
|
|
||||||||
Non-current assets
|
$
|
69.0
|
|
$
|
176.2
|
|
$
|
17.3
|
|
$
|
—
|
|
Current liabilities
|
(4.2
|
)
|
(4.1
|
)
|
(4.9
|
)
|
(4.0
|
)
|
||||
Non-current liabilities
|
(101.0
|
)
|
(103.6
|
)
|
(45.9
|
)
|
(62.3
|
)
|
||||
|
$
|
(36.2
|
)
|
$
|
68.5
|
|
$
|
(33.5
|
)
|
$
|
(66.3
|
)
|
Amounts recognized in accumulated other comprehensive loss:
|
|
|
|
|
||||||||
Net actuarial loss
|
$
|
187.4
|
|
$
|
566.5
|
|
$
|
93.3
|
|
$
|
132.3
|
|
Net prior service cost
|
9.1
|
|
11.9
|
|
0.5
|
|
0.7
|
|
||||
Accumulated other comprehensive loss
|
$
|
196.5
|
|
$
|
578.4
|
|
$
|
93.8
|
|
$
|
133.0
|
|
Changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss (AOCL):
|
|
|
|
|
||||||||
AOCL at beginning of year
|
$
|
578.4
|
|
$
|
865.4
|
|
$
|
133.0
|
|
$
|
142.7
|
|
Net actuarial loss (gain)
|
108.4
|
|
141.0
|
|
(18.9
|
)
|
20.2
|
|
||||
Prior service cost
|
—
|
|
—
|
|
—
|
|
0.3
|
|
||||
Recognized net actuarial loss
|
(31.1
|
)
|
(55.6
|
)
|
(5.2
|
)
|
(5.3
|
)
|
||||
Recognized prior service cost
|
(2.8
|
)
|
(3.5
|
)
|
(0.1
|
)
|
(0.1
|
)
|
||||
Loss recognized due to curtailment
|
—
|
|
—
|
|
(0.6
|
)
|
—
|
|
||||
Loss recognized due to settlement
|
(456.4
|
)
|
(32.7
|
)
|
(4.8
|
)
|
(0.8
|
)
|
||||
Foreign currency impact
|
—
|
|
—
|
|
(9.6
|
)
|
(9.8
|
)
|
||||
TimkenSteel Spinoff
|
—
|
|
(336.2
|
)
|
—
|
|
(14.2
|
)
|
||||
Total recognized in accumulated other comprehensive loss at December 31
|
$
|
196.5
|
|
$
|
578.4
|
|
$
|
93.8
|
|
$
|
133.0
|
|
Assumptions
|
2015
|
2014
|
||
U.S. Plans:
|
|
|
||
Discount rate
|
4.69
|
%
|
4.20
|
%
|
Future compensation assumption
|
2.00% to 3.00%
|
|
2.00% to 3.00%
|
|
International Plans:
|
|
|
||
Discount rate
|
2.00% to 8.50%
|
|
1.50% to 8.75%
|
|
Future compensation assumption
|
2.20% to 8.00%
|
|
2.20% to 8.00%
|
|
|
Current Target
Allocation
|
Percentage of Pension Plan
Assets at December 31,
|
|||
Asset Category
|
|
|
|
2015
|
2014
|
Equity securities
|
6%
|
to
|
12%
|
15%
|
10%
|
Debt securities
|
70%
|
to
|
90%
|
63%
|
77%
|
Other
|
7%
|
to
|
15%
|
22%
|
13%
|
Total
|
|
|
|
100%
|
100%
|
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.
|
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
$
|
65.9
|
|
$
|
23.9
|
|
$
|
42.0
|
|
$
|
—
|
|
$
|
31.0
|
|
$
|
12.8
|
|
$
|
18.2
|
|
$
|
—
|
|
Government and agency securities
|
35.1
|
|
32.9
|
|
2.2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Corporate bonds - investment grade
|
56.0
|
|
—
|
|
56.0
|
|
—
|
|
3.0
|
|
—
|
|
3.0
|
|
—
|
|
||||||||
Equity securities - U.S. companies
|
9.8
|
|
9.7
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Equity securities - international companies
|
6.1
|
|
6.1
|
|
—
|
|
—
|
|
0.9
|
|
—
|
|
0.9
|
|
—
|
|
||||||||
Common collective funds - domestic equities
|
13.0
|
|
—
|
|
13.0
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Common collective funds - international equities
|
14.2
|
|
—
|
|
14.2
|
|
—
|
|
81.4
|
|
—
|
|
81.4
|
|
—
|
|
||||||||
Common collective funds - fixed income
|
173.5
|
|
—
|
|
173.5
|
|
—
|
|
85.0
|
|
—
|
|
85.0
|
|
—
|
|
||||||||
Common collective funds - other
|
—
|
|
—
|
|
—
|
|
—
|
|
103.3
|
|
—
|
|
103.3
|
|
—
|
|
||||||||
Limited partnerships
|
52.8
|
|
—
|
|
—
|
|
52.8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Real estate partnerships
|
99.7
|
|
—
|
|
71.9
|
|
27.8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Risk parity
|
27.6
|
|
—
|
|
27.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Total Assets
|
$
|
553.7
|
|
$
|
72.6
|
|
$
|
400.5
|
|
$
|
80.6
|
|
$
|
304.6
|
|
$
|
12.8
|
|
$
|
291.8
|
|
$
|
—
|
|
|
Limited Partnerships
|
Real Estate
|
Total
|
||||||
Beginning balance, January 1
|
$
|
66.1
|
|
$
|
27.8
|
|
$
|
93.9
|
|
Purchases
|
0.6
|
|
7.0
|
|
7.6
|
|
|||
Sales
|
(9.8
|
)
|
(8.3
|
)
|
(18.1
|
)
|
|||
Realized losses
|
(7.5
|
)
|
(4.7
|
)
|
(12.2
|
)
|
|||
Unrealized gains
|
3.4
|
|
6.0
|
|
9.4
|
|
|||
Ending balance, December 31
|
$
|
52.8
|
|
$
|
27.8
|
|
$
|
80.6
|
|
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
$
|
55.3
|
|
$
|
0.8
|
|
$
|
54.5
|
|
$
|
—
|
|
$
|
25.5
|
|
$
|
—
|
|
$
|
25.5
|
|
$
|
—
|
|
Government and agency securities
|
505.9
|
|
496.4
|
|
9.5
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Corporate bonds - investment grade
|
473.7
|
|
—
|
|
473.7
|
|
—
|
|
2.7
|
|
—
|
|
2.7
|
|
—
|
|
||||||||
Equity securities - U.S. companies
|
22.7
|
|
22.7
|
|
—
|
|
—
|
|
30.2
|
|
30.2
|
|
—
|
|
—
|
|
||||||||
Equity securities - international companies
|
16.3
|
|
16.3
|
|
—
|
|
—
|
|
26.6
|
|
25.7
|
|
0.9
|
|
—
|
|
||||||||
Asset backed securities
|
—
|
|
—
|
|
—
|
|
—
|
|
3.4
|
|
—
|
|
3.4
|
|
—
|
|
||||||||
Common collective funds - domestic equities
|
22.6
|
|
—
|
|
22.6
|
|
—
|
|
2.1
|
|
—
|
|
2.1
|
|
—
|
|
||||||||
Common collective funds - international equities
|
27.4
|
|
—
|
|
27.4
|
|
—
|
|
60.6
|
|
—
|
|
60.6
|
|
—
|
|
||||||||
Common collective funds - fixed income
|
379.5
|
|
—
|
|
379.5
|
|
—
|
|
108.9
|
|
—
|
|
108.9
|
|
—
|
|
||||||||
Common collective funds - other
|
—
|
|
—
|
|
—
|
|
—
|
|
89.4
|
|
—
|
|
89.4
|
|
—
|
|
||||||||
Limited partnerships
|
66.1
|
|
—
|
|
—
|
|
66.1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Real estate partnerships
|
112.6
|
|
—
|
|
84.8
|
|
27.8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Risk Parity
|
90.3
|
|
—
|
|
90.3
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Total Assets
|
$
|
1,772.4
|
|
$
|
536.2
|
|
$
|
1,142.3
|
|
$
|
93.9
|
|
$
|
349.4
|
|
$
|
55.9
|
|
$
|
293.5
|
|
$
|
—
|
|
|
Limited Partnerships
|
Real Estate
|
Total
|
||||||
Beginning balance, January 1
|
$
|
78.8
|
|
$
|
21.1
|
|
$
|
99.9
|
|
Purchases
|
2.1
|
|
10.5
|
|
12.6
|
|
|||
Sales
|
(16.8
|
)
|
(5.6
|
)
|
(22.4
|
)
|
|||
Realized losses
|
(11.0
|
)
|
(4.1
|
)
|
(15.1
|
)
|
|||
Unrealized gains
|
13.0
|
|
5.9
|
|
18.9
|
|
|||
Ending balance, December 31
|
$
|
66.1
|
|
$
|
27.8
|
|
$
|
93.9
|
|
|
2015
|
2014
|
2013
|
||||||
Components of net periodic benefit cost:
|
|
|
|
||||||
Service cost
|
$
|
0.4
|
|
$
|
1.3
|
|
$
|
2.9
|
|
Interest cost
|
10.9
|
|
16.7
|
|
21.7
|
|
|||
Expected return on plan assets
|
(7.1
|
)
|
(8.5
|
)
|
(11.1
|
)
|
|||
Amortization of prior service credit
|
0.8
|
|
1.0
|
|
(0.2
|
)
|
|||
Amortization of net actuarial loss
|
0.1
|
|
—
|
|
2.3
|
|
|||
Less: discontinued operations
|
—
|
|
(3.1
|
)
|
(6.4
|
)
|
|||
Net periodic benefit cost
|
$
|
5.1
|
|
$
|
7.4
|
|
$
|
9.2
|
|
Assumptions:
|
2015
|
2014
|
2013
|
|||
Discount rate
|
3.95
|
%
|
4.33% / 4.59%
|
|
3.80
|
%
|
Rate of return
|
6.25
|
%
|
5.00
|
%
|
5.00
|
%
|
|
2015
|
2014
|
||||
Change in benefit obligation:
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
284.6
|
|
$
|
515.6
|
|
Service cost
|
0.4
|
|
1.3
|
|
||
Interest cost
|
10.9
|
|
16.7
|
|
||
Actuarial (gains) losses
|
(7.7
|
)
|
18.0
|
|
||
International plan exchange rate change
|
(0.3
|
)
|
(0.1
|
)
|
||
Benefits paid
|
(26.3
|
)
|
(37.1
|
)
|
||
Spinoff of TimkenSteel
|
—
|
|
(229.8
|
)
|
||
Acquisition
|
1.1
|
|
—
|
|
||
Benefit obligation at end of year
|
$
|
262.7
|
|
$
|
284.6
|
|
|
2015
|
2014
|
||||
Change in plan assets:
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
120.7
|
|
$
|
240.1
|
|
Company contributions / payments
|
19.0
|
|
49.4
|
|
||
Return on plan assets
|
(1.3
|
)
|
12.2
|
|
||
Benefits paid
|
(26.3
|
)
|
(37.1
|
)
|
||
Spinoff of TimkenSteel
|
—
|
|
(143.9
|
)
|
||
Fair value of plan assets at end of year
|
112.1
|
|
120.7
|
|
||
Funded status at end of year
|
$
|
(150.5
|
)
|
$
|
(163.9
|
)
|
Changes in plan assets and benefit obligations recognized in AOCL:
|
|
|
||||
AOCL at beginning of year
|
$
|
21.5
|
|
$
|
13.3
|
|
Net actuarial loss
|
0.7
|
|
14.3
|
|
||
Recognized net actuarial loss
|
(0.1
|
)
|
—
|
|
||
Recognized prior service credit
|
(0.8
|
)
|
(1.0
|
)
|
||
Spinoff of TimkenSteel
|
—
|
|
(5.1
|
)
|
||
Total recognized in accumulated other comprehensive loss at December 31
|
$
|
21.3
|
|
$
|
21.5
|
|
Assumptions:
|
2015
|
2014
|
||
Discount rate
|
4.39
|
%
|
3.95
|
%
|
|
Current Target
Allocation
|
Percentage of VEBA Assets
at December 31,
|
|||
Asset Category
|
|
|
|
2015
|
2014
|
Equity securities
|
34%
|
to
|
46%
|
42%
|
51%
|
Debt securities
|
54%
|
to
|
66%
|
58%
|
49%
|
Total
|
|
|
|
100%
|
100%
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
3.0
|
|
$
|
—
|
|
$
|
3.0
|
|
$
|
—
|
|
Common collective fund - U.S. equities
|
28.2
|
|
—
|
|
28.2
|
|
—
|
|
||||
Common collective fund - international equities
|
18.3
|
|
—
|
|
18.3
|
|
—
|
|
||||
Common collective fund - fixed income
|
62.6
|
|
—
|
|
62.6
|
|
—
|
|
||||
Total Assets
|
$
|
112.1
|
|
$
|
—
|
|
$
|
112.1
|
|
$
|
—
|
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
7.9
|
|
$
|
—
|
|
$
|
7.9
|
|
$
|
—
|
|
Common collective fund - U.S. equities
|
39.9
|
|
—
|
|
39.9
|
|
—
|
|
||||
Common collective fund - international equities
|
22.1
|
|
—
|
|
22.1
|
|
—
|
|
||||
Common collective fund - fixed income
|
50.8
|
|
—
|
|
50.8
|
|
—
|
|
||||
Total Assets
|
$
|
120.7
|
|
$
|
—
|
|
$
|
120.7
|
|
$
|
—
|
|
2014
|
$
|
20.0
|
|
2015
|
—
|
|
|
2016 (planned)
|
—
|
|
|
Gross
|
Expected
Medicare
Subsidies
|
Net Including
Medicare
Subsidies
|
||||||
2016
|
$
|
29.0
|
|
$
|
1.7
|
|
$
|
27.3
|
|
2017
|
27.7
|
|
1.7
|
|
26.0
|
|
|||
2018
|
26.5
|
|
1.7
|
|
24.8
|
|
|||
2019
|
25.1
|
|
1.7
|
|
23.4
|
|
|||
2020
|
23.7
|
|
1.7
|
|
22.0
|
|
|||
2021-2025
|
101.4
|
|
7.8
|
|
93.6
|
|
|
2015
|
2014
|
2013
|
||||||
Net sales:
|
|
|
|
||||||
United States
|
$
|
1,566.1
|
|
$
|
1,623.6
|
|
$
|
1,663.0
|
|
Americas excluding United States
|
339.7
|
|
378.1
|
|
349.4
|
|
|||
Europe / Middle East / Africa
|
496.7
|
|
559.8
|
|
564.4
|
|
|||
Asia-Pacific
|
469.8
|
|
514.7
|
|
458.6
|
|
|||
|
$
|
2,872.3
|
|
$
|
3,076.2
|
|
$
|
3,035.4
|
|
Property, Plant and Equipment, net:
|
|
|
|
||||||
United States
|
$
|
446.7
|
|
$
|
443.5
|
|
$
|
497.1
|
|
Americas excluding United States
|
10.6
|
|
13.9
|
|
14.7
|
|
|||
Europe / Middle East / Africa
|
92.5
|
|
96.2
|
|
105.5
|
|
|||
Asia-Pacific
|
228.0
|
|
226.9
|
|
238.5
|
|
|||
|
$
|
777.8
|
|
$
|
780.5
|
|
$
|
855.8
|
|
|
2015
|
2014
|
2013
|
||||||
Net sales to external customers:
|
|
|
|
||||||
Mobile Industries
|
$
|
1,558.3
|
|
$
|
1,685.4
|
|
$
|
1,775.8
|
|
Process Industries
|
1,314.0
|
|
1,390.8
|
|
1,259.6
|
|
|||
|
$
|
2,872.3
|
|
$
|
3,076.2
|
|
$
|
3,035.4
|
|
Segment EBIT:
|
|
|
|
||||||
Mobile Industries
|
$
|
173.3
|
|
$
|
65.6
|
|
$
|
193.7
|
|
Process Industries
|
190.2
|
|
267.1
|
|
189.3
|
|
|||
Total EBIT, for reportable segments
|
$
|
363.5
|
|
$
|
332.7
|
|
$
|
383.0
|
|
Unallocated corporate expenses
|
(57.4
|
)
|
(71.4
|
)
|
(70.4
|
)
|
|||
Unallocated pension settlement charges
|
(465.0
|
)
|
(33.0
|
)
|
—
|
|
|||
Interest expense
|
(33.4
|
)
|
(28.7
|
)
|
(24.4
|
)
|
|||
Interest income
|
2.7
|
|
4.4
|
|
1.9
|
|
|||
(Loss) income from continuing operations before income taxes
|
$
|
(189.6
|
)
|
$
|
204.0
|
|
$
|
290.1
|
|
|
2015
|
2014
|
2013
|
||||||
Capital expenditures:
|
|
|
|
||||||
Mobile Industries
|
$
|
47.5
|
|
$
|
55.7
|
|
$
|
48.2
|
|
Process Industries
|
57.5
|
|
70.1
|
|
80.3
|
|
|||
Corporate
|
0.6
|
|
1.0
|
|
5.1
|
|
|||
|
$
|
105.6
|
|
$
|
126.8
|
|
$
|
133.6
|
|
Depreciation and amortization:
|
|
|
|
||||||
Mobile Industries
|
$
|
61.4
|
|
$
|
65.7
|
|
$
|
71.4
|
|
Process Industries
|
68.1
|
|
68.8
|
|
67.9
|
|
|||
Corporate
|
1.3
|
|
2.5
|
|
3.1
|
|
|||
|
$
|
130.8
|
|
$
|
137.0
|
|
$
|
142.4
|
|
|
2015
|
2014
|
2013
|
||||||
United States
|
$
|
(307.7
|
)
|
$
|
39.5
|
|
$
|
189.4
|
|
Non-United States
|
118.1
|
|
164.5
|
|
100.7
|
|
|||
(Loss) income from continuing operations before income taxes
|
$
|
(189.6
|
)
|
$
|
204.0
|
|
$
|
290.1
|
|
|
2015
|
2014
|
2013
|
||||||
Current:
|
|
|
|
||||||
Federal
|
$
|
26.8
|
|
$
|
61.1
|
|
$
|
96.8
|
|
State and local
|
5.4
|
|
2.8
|
|
11.5
|
|
|||
Foreign
|
16.3
|
|
44.1
|
|
39.3
|
|
|||
|
$
|
48.5
|
|
$
|
108.0
|
|
$
|
147.6
|
|
Deferred:
|
|
|
|
||||||
Federal
|
$
|
(146.1
|
)
|
$
|
(46.9
|
)
|
$
|
(35.7
|
)
|
State and local
|
(13.1
|
)
|
(4.4
|
)
|
1.8
|
|
|||
Foreign
|
(10.9
|
)
|
(2.0
|
)
|
0.9
|
|
|||
|
$
|
(170.1
|
)
|
$
|
(53.3
|
)
|
$
|
(33.0
|
)
|
United States and foreign tax (benefit) expense on (loss) income
|
$
|
(121.6
|
)
|
$
|
54.7
|
|
$
|
114.6
|
|
|
2015
|
2014
|
2013
|
||||||
Income tax at the U.S. federal statutory rate
|
$
|
(66.4
|
)
|
$
|
71.4
|
|
$
|
101.5
|
|
Adjustments:
|
|
|
|
||||||
State and local income taxes, net of federal tax benefit
|
(4.9
|
)
|
(0.3
|
)
|
8.4
|
|
|||
Tax on foreign remittances and U.S. tax on foreign income
|
13.8
|
|
19.6
|
|
41.0
|
|
|||
Tax expense related to undistributed earnings of foreign subsidiaries
|
—
|
|
(8.7
|
)
|
8.7
|
|
|||
Foreign losses without current tax benefits
|
5.3
|
|
4.3
|
|
9.5
|
|
|||
Foreign earnings taxed at different rates including tax holidays
|
(11.0
|
)
|
(15.7
|
)
|
(3.9
|
)
|
|||
U.S. domestic manufacturing deduction
|
(4.5
|
)
|
(6.6
|
)
|
(8.8
|
)
|
|||
U.S. foreign tax credit
|
(22.4
|
)
|
(15.1
|
)
|
(25.9
|
)
|
|||
U.S. research tax credit
|
(1.1
|
)
|
(1.0
|
)
|
(3.2
|
)
|
|||
Accruals and settlements related to tax audits
|
(5.9
|
)
|
12.8
|
|
(10.8
|
)
|
|||
Reversal of valuation allowance
|
(34.7
|
)
|
—
|
|
—
|
|
|||
Deferred taxes related to branch operations
|
11.6
|
|
—
|
|
—
|
|
|||
Other items, net
|
(1.4
|
)
|
(6.0
|
)
|
(1.9
|
)
|
|||
(Benefit) provision for income taxes
|
$
|
(121.6
|
)
|
$
|
54.7
|
|
$
|
114.6
|
|
Effective income tax rate
|
64.1
|
%
|
26.8
|
%
|
39.5
|
%
|
|
2015
|
2014
|
||||
Deferred tax assets:
|
|
|
||||
Accrued postretirement benefits cost
|
$
|
72.3
|
|
$
|
91.4
|
|
Accrued pension cost
|
36.3
|
|
16.3
|
|
||
Other employee benefit accruals
|
10.9
|
|
16.9
|
|
||
Tax loss and credit carryforwards
|
100.3
|
|
117.9
|
|
||
Other, net
|
40.0
|
|
60.0
|
|
||
Valuation allowances
|
(83.7
|
)
|
(145.4
|
)
|
||
|
$
|
176.1
|
|
$
|
157.1
|
|
Deferred tax liabilities - principally depreciation and amortization
|
(113.8
|
)
|
(100.3
|
)
|
||
Net deferred tax assets
|
$
|
62.3
|
|
$
|
56.8
|
|
|
2015
|
2014
|
2013
|
||||||
Beginning balance, January 1
|
$
|
57.5
|
|
$
|
49.5
|
|
$
|
112.6
|
|
Tax positions related to the current year:
|
|
|
|
||||||
Additions
|
6.5
|
|
0.7
|
|
9.3
|
|
|||
Tax positions related to prior years:
|
|
|
|
||||||
Additions
|
5.0
|
|
14.7
|
|
6.9
|
|
|||
Reductions
|
(4.0
|
)
|
(3.5
|
)
|
(1.4
|
)
|
|||
Settlements with tax authorities
|
(14.6
|
)
|
(3.0
|
)
|
(77.9
|
)
|
|||
Lapses in statutes of limitation
|
—
|
|
(0.9
|
)
|
—
|
|
|||
Ending balance, December 31
|
$
|
50.4
|
|
$
|
57.5
|
|
$
|
49.5
|
|
|
December 31, 2015
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
129.6
|
|
$
|
110.2
|
|
$
|
19.4
|
|
$
|
—
|
|
Restricted cash
|
0.2
|
|
—
|
|
0.2
|
|
—
|
|
||||
Short-term investments
|
9.7
|
|
—
|
|
9.7
|
|
—
|
|
||||
Foreign currency hedges
|
8.2
|
|
—
|
|
8.2
|
|
—
|
|
||||
Total Assets
|
$
|
147.7
|
|
$
|
110.2
|
|
$
|
37.5
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Foreign currency hedges
|
$
|
0.4
|
|
$
|
—
|
|
$
|
0.4
|
|
$
|
—
|
|
Total Liabilities
|
$
|
0.4
|
|
$
|
—
|
|
$
|
0.4
|
|
$
|
—
|
|
|
December 31, 2014
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
278.8
|
|
$
|
155.6
|
|
$
|
123.2
|
|
$
|
—
|
|
Restricted cash
|
15.3
|
|
—
|
|
15.3
|
|
—
|
|
||||
Short-term investments
|
8.4
|
|
—
|
|
8.4
|
|
—
|
|
||||
Foreign currency hedges
|
12.4
|
|
—
|
|
12.4
|
|
—
|
|
||||
Total Assets
|
$
|
314.9
|
|
$
|
155.6
|
|
$
|
159.3
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Foreign currency hedges
|
$
|
0.3
|
|
$
|
—
|
|
$
|
0.3
|
|
$
|
—
|
|
Total Liabilities
|
$
|
0.3
|
|
$
|
—
|
|
$
|
0.3
|
|
$
|
—
|
|
|
Carrying Value
|
Fair Value Adjustment
|
Fair Value
|
||||||
Long-lived assets held for sale:
|
|
|
|
||||||
Repair business in Niles, Ohio
|
$
|
5.8
|
|
$
|
(3.0
|
)
|
$
|
2.8
|
|
Total long-lived assets held for sale
|
$
|
5.8
|
|
$
|
(3.0
|
)
|
$
|
2.8
|
|
|
|
|
|
||||||
Long-lived assets held and used:
|
|
|
|
||||||
Fixed assets
|
$
|
0.8
|
|
$
|
(0.3
|
)
|
$
|
0.5
|
|
Total long-lived assets held and used
|
$
|
0.8
|
|
$
|
(0.3
|
)
|
$
|
0.5
|
|
|
Carrying Value
|
Fair Value Adjustment
|
Fair Value
|
||||||
Long-lived assets held for sale:
|
|
|
|
||||||
Aerospace overhaul business
|
$
|
8.0
|
|
$
|
(1.2
|
)
|
$
|
6.8
|
|
Total long-lived assets held for sale
|
$
|
8.0
|
|
$
|
(1.2
|
)
|
$
|
6.8
|
|
|
|
|
|
||||||
Long-lived assets held and used:
|
|
|
|
||||||
Goodwill
|
$
|
92.5
|
|
$
|
(86.3
|
)
|
$
|
6.2
|
|
Indefinite-lived intangible assets
|
14.2
|
|
(5.5
|
)
|
8.7
|
|
|||
Amortizable intangible assets
|
4.4
|
|
(4.4
|
)
|
—
|
|
|||
Fixed assets
|
1.5
|
|
(1.5
|
)
|
—
|
|
|||
Total long-lived assets held and used
|
$
|
112.6
|
|
$
|
(97.7
|
)
|
$
|
14.9
|
|
|
|
Asset Derivatives
|
Liability Derivatives
|
||||||||||
Derivatives designated as hedging instruments
|
Balance Sheet Location
|
Fair Value
at 12/31/15
|
Fair Value
at 12/31/14
|
Fair Value
at 12/31/15
|
Fair Value
at 12/31/14
|
||||||||
Foreign currency forward contracts
|
Other non-current assets/liabilities
|
$
|
2.2
|
|
$
|
0.6
|
|
$
|
0.2
|
|
$
|
—
|
|
Total derivatives designated as hedging instruments
|
2.2
|
|
0.6
|
|
0.2
|
|
—
|
|
|||||
|
|
|
|
|
|
||||||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|||||||||
Foreign currency forward contracts
|
Other non-current assets/liabilities
|
6.0
|
|
11.8
|
|
0.2
|
|
0.3
|
|
||||
|
|
|
|
|
|
||||||||
Total Derivatives
|
|
$
|
8.2
|
|
$
|
12.4
|
|
$
|
0.4
|
|
$
|
0.3
|
|
|
Amount of gain or (loss) recognized in
Other Comprehensive Income (loss)(OCI) on derivative instruments
|
||||||||
|
Twelve Months Ended December 31,
|
||||||||
Derivatives in cash flow hedging relationships
|
2015
|
2014
|
2013
|
||||||
Foreign currency forward contracts
|
$
|
3.0
|
|
$
|
1.3
|
|
$
|
0.7
|
|
Interest rate swaps
|
—
|
|
(2.1
|
)
|
—
|
|
|||
Total
|
$
|
3.0
|
|
$
|
(0.8
|
)
|
$
|
0.7
|
|
|
Amount of gain or (loss) reclassified from Accumulated Other Comprehensive (loss) Income (AOCI) into income (effective portion)
|
||||||||
|
Twelve Months Ended December 31,
|
||||||||
Derivatives in cash flow hedging relationships
|
2015
|
2014
|
2013
|
||||||
Foreign currency forward contracts
|
$
|
1.5
|
|
$
|
0.2
|
|
$
|
0.4
|
|
Interest rate swaps
|
(0.3
|
)
|
(0.1
|
)
|
—
|
|
|||
Total
|
$
|
1.2
|
|
$
|
0.1
|
|
$
|
0.4
|
|
|
|
Amount of gain or (loss) recognized in
income on derivative instruments
|
||||||||
|
|
Twelve Months Ended December 31,
|
||||||||
Derivatives not designated as hedging instruments
|
Location of gain or (loss) recognized in income on derivative
|
2015
|
2014
|
2013
|
||||||
Foreign currency forward contracts
|
Other (expense) income, net
|
$
|
(5.7
|
)
|
$
|
19.1
|
|
$
|
(7.6
|
)
|
Total
|
|
$
|
(5.7
|
)
|
$
|
19.1
|
|
$
|
(7.6
|
)
|
|
2015
|
||||||||||||||
|
1st
|
2nd
|
3rd
|
4th
|
Total
|
||||||||||
Net sales
|
$
|
722.5
|
|
$
|
728.0
|
|
$
|
707.4
|
|
$
|
714.4
|
|
$
|
2,872.3
|
|
Gross profit
|
202.5
|
|
205.1
|
|
195.4
|
|
190.9
|
|
793.9
|
|
|||||
Impairment and restructuring charges
(1)
|
6.2
|
|
1.4
|
|
4.4
|
|
2.7
|
|
14.7
|
|
|||||
Gain (loss) on divestiture
(2)
|
—
|
|
0.3
|
|
—
|
|
(29.0
|
)
|
(28.7
|
)
|
|||||
Pension settlement charges
(3)
|
215.2
|
|
4.4
|
|
3.6
|
|
241.8
|
|
465.0
|
|
|||||
Net (loss) income
(4)
|
(134.8
|
)
|
37.7
|
|
64.5
|
|
(35.4
|
)
|
(68.0
|
)
|
|||||
Net income attributable to noncontrolling interests
|
0.4
|
|
1.0
|
|
1.1
|
|
0.3
|
|
2.8
|
|
|||||
Net (loss) income attributable to The Timken Company
|
(135.2
|
)
|
36.7
|
|
63.4
|
|
(35.7
|
)
|
(70.8
|
)
|
|||||
Net (loss) income per share - Basic:
|
$
|
(1.54
|
)
|
$
|
0.43
|
|
$
|
0.76
|
|
$
|
(0.44
|
)
|
$
|
(0.84
|
)
|
Net (loss) income per share - Diluted:
|
$
|
(1.54
|
)
|
$
|
0.43
|
|
$
|
0.75
|
|
$
|
(0.44
|
)
|
$
|
(0.84
|
)
|
Dividends per share
|
$
|
0.25
|
|
$
|
0.26
|
|
$
|
0.26
|
|
$
|
0.26
|
|
$
|
1.03
|
|
|
|
|
|
|
|
||||||||||
|
2014
|
||||||||||||||
|
1st
|
2nd
|
3rd
|
4th
|
Total
|
||||||||||
Net sales
|
$
|
736.8
|
|
$
|
789.2
|
|
$
|
788.0
|
|
$
|
762.2
|
|
$
|
3,076.2
|
|
Gross profit
(5)
|
218.1
|
|
233.6
|
|
225.5
|
|
220.8
|
|
898.0
|
|
|||||
Impairment and restructuring charges
(6)
|
3.2
|
|
5.4
|
|
99.4
|
|
5.4
|
|
113.4
|
|
|||||
Pension settlement charges
(7)
|
0.7
|
|
—
|
|
—
|
|
33.0
|
|
33.7
|
|
|||||
Income (loss) from continuing operations
|
60.3
|
|
57.6
|
|
(10.2
|
)
|
41.6
|
|
149.3
|
|
|||||
Income (loss) from discontinued operations
|
23.5
|
|
6.2
|
|
(11.0
|
)
|
5.3
|
|
24.0
|
|
|||||
Net income (loss)
(8)
|
83.8
|
|
63.8
|
|
(21.2
|
)
|
46.9
|
|
173.3
|
|
|||||
Net income attributable to noncontrolling interests
|
0.3
|
|
1.1
|
|
0.7
|
|
0.4
|
|
2.5
|
|
|||||
Net income (loss) attributable to The Timken Company
|
83.5
|
|
62.7
|
|
(21.9
|
)
|
46.5
|
|
170.8
|
|
|||||
Net income (loss) per share - Basic:
|
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) from continuing operations
|
$
|
0.64
|
|
$
|
0.62
|
|
$
|
(0.12
|
)
|
$
|
0.46
|
|
$
|
1.62
|
|
Income (loss) from discontinuing operations
|
0.26
|
|
0.07
|
|
(0.12
|
)
|
0.06
|
|
0.27
|
|
|||||
Total net income (loss) per share
|
$
|
0.90
|
|
$
|
0.69
|
|
$
|
(0.24
|
)
|
$
|
0.52
|
|
$
|
1.89
|
|
Net income (loss) per share - Diluted:
|
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) from continuing operations
|
$
|
0.64
|
|
$
|
0.61
|
|
$
|
(0.12
|
)
|
$
|
0.46
|
|
$
|
1.61
|
|
Income (loss) from discontinued operations
|
0.26
|
|
0.07
|
|
(0.12
|
)
|
0.06
|
|
0.26
|
|
|||||
Total net income (loss) per share
|
$
|
0.90
|
|
$
|
0.68
|
|
$
|
(0.24
|
)
|
$
|
0.52
|
|
$
|
1.87
|
|
Dividends per share
|
$
|
0.25
|
|
$
|
0.25
|
|
$
|
0.25
|
|
$
|
0.25
|
|
$
|
1.00
|
|
(1)
|
Impairment and restructuring charges for the first quarter of 2015 included exit costs of
$3.1 million
, impairment charges of
$2.7 million
and severance and related benefit costs of
$0.4 million
. Impairment and restructuring charges for the third quarter of 2015 included severance and related benefits of
$4.3 million
and exit costs of
$0.1 million
.
|
(2)
|
Gain on divestitures in the fourth quarter of 2015 included a gain of
$29.0 million
on the sale of Alcor located in Mesa, Arizona.
|
(3)
|
Pension settlement charges in the first and fourth quarters of 2015 related to two agreements pursuant to which two of the Company's U.S. defined benefit pension plans purchased group annuity contracts from Prudential, which require Prudential to pay and administer future benefits for a total of approximately
8,400
U.S. Timken retirees in the aggregate, as well as lump sum distributions to new retirees during 2015. Pension settlement charges of
$215.2 million
were recorded during the first quarter of 2015 and pension settlement charges of
$241.8 million
were recorded during the fourth quarter of 2015.
|
(4)
|
The net loss attributable to the Company for the fourth quarter of 2015 included a charge of
$9.7 million
(
$6.1 million
, or
$0.07
per share, after-tax) due to the correction of an error. Refer to
Note 8 - Property, Plant and Equipment
for additional information.
|
(5)
|
Gross profit for the third quarter of 2014 included an inventory valuation adjustment of
$18.7 million
related to the Company's Mobile Industries segment.
|
(6)
|
Impairment and restructuring charges for the second quarter of 2014 included severance and related benefits of
$2.8 million
, exit costs of
$1.8 million
and impairment charges of
$0.8 million
. Impairment and restructuring charges for the third quarter of 2014 included impairment charges of
$98.0 million
, severance and related benefits of
$1.3 million
and exit costs of
$0.1 million
. The impairment charges primarily related to the impairment of goodwill and intangible assets for two of the Company's Aerospace reporting units. Impairment and restructuring charges for the fourth quarter of 2014 included severance and related benefits of
$4.4 million
and exits costs of
$1.0 million
.
|
(7)
|
Pension settlement charges for the fourth quarter of 2014 primarily related to the settlement of approximately
$110 million
of pension obligation for one of the Company's U.S. defined benefit pension plans.
|
(8)
|
Net income for the first quarter of 2014 included a gain of
$22.6 million
on the sale of real estate in Sao Paulo.
|
Exhibit
|
|
|
|
|
|
|
|
(2.1
|
)
|
|
Separation and Distribution Agreement between The Timken Company and TimkenSteel Corporation, dated as of June 30, 2014 was filed on July 3, 2014 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(3.1
|
)
|
|
Amended Articles of Incorporation of The Timken Company, (effective May 31, 2013) were filed on July 31, 2013 with Form 10-Q (Commission File No. 1-1169) and are incorporated herein by reference.
|
|
|
|
|
(3.2
|
)
|
|
Amended Regulations of The Timken Company adopted on February 14, 2014, were filed on February 14, 2014 with Form 8-K (Commission File No. 1-1169) and are incorporated herein by reference.
|
|
|
|
|
(4.1
|
)
|
|
Third Amended and Restated Credit Agreement, dated as of June 19, 2015, by and among: The Timken Company; Bank of America, N.A. and KeyBank National Association as Co-Administrative Agents; KeyBank National Association as Paying Agent, L/C Issuer and Swing Line Lender; and the other Lenders party thereto, was filed on June 23, 2015 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(4.2
|
)
|
|
Indenture dated as of July 1, 1990, between The Timken Company and Ameritrust Company of New York, was filed with Form S-3 dated July 12, 1990 (Registration No. 333-35773) and is incorporated herein by reference.
|
|
|
|
|
(4.3
|
)
|
|
First Supplemental Indenture, dated as of July 24, 1996, by and between The Timken Company and Mellon Bank, N.A. was filed on November 13, 1996 with Form 10-Q (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(4.4
|
)
|
|
Indenture, dated as of February 18, 2003, between The Timken Company and The Bank of New York, as Trustee, providing for Issuance of Notes in Series was filed on March 27, 2003 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(4.5
|
)
|
|
Indenture, dated as of August 20, 2014, by and between The Timken Company and The Bank of New York Mellon Trust Company, N.A., was filed on August 20, 2014 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(4.6
|
)
|
|
The Company is also a party to agreements with respect to other long-term debt in total amount less than 10% of the Registrant's consolidated total assets. The Registrant agrees to furnish a copy of such agreements upon request.
|
Management Contracts and Compensation Plans
|
|||
(10.1
|
)
|
|
The Timken Company 1996 Deferred Compensation Plan for officers and other key employees, amended and restated effective December 31, 2010, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.2
|
)
|
|
The Timken Company Director Deferred Compensation Plan, amended and restated effective December 31, 2008, was filed on February 25, 2010 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.3
|
)
|
|
Form of The Timken Company 1996 Deferred Compensation Plan Election Agreement, amended and restated as of January 1, 2008, was filed on February 25, 2010 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.4
|
)
|
|
Form of The Timken Company Director Deferred Compensation Plan Election Agreement, amended and restated as of January 1, 2008, was filed on February 25, 2010 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.5
|
)
|
|
The Timken Company Long-Term Incentive Plan for directors, officers and other key employees as amended and restated as of February 5, 2008 and approved by the shareholders on May 1, 2008 was filed on March 18, 2008 as Appendix A to the Registrant's Definitive Proxy Statement on Schedule 14A (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.6
|
)
|
|
The Timken Company 2011 Long-Term Incentive Plan, as amended and restated as of February 13, 2015 for directors, officers and other key employees as approved by the shareholders on May 7, 2015 was filed on March 27, 2015 with Definitive Proxy Statement on Schedule 14A (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
Management Contracts and Compensation Plans
|
|||
(10.7
|
)
|
|
Amended and Restated Supplemental Pension Plan of The Timken Company, amended and restated effective as of January 1, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.8
|
)
|
|
The Timken Company Senior Executive Management Performance Plan, as amended and restated as of February 13, 2015 and approved by shareholders on May 7, 2015, was filed on March 27, 2015 with Definitive Proxy Statement on Schedule 14A (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.9
|
)
|
|
Form of Severance Agreement (for Executive Officers appointed on or after November 12, 2015), as adopted on November 12, 2015, is attached hereto as Exhibit 10.1.
|
|
|
|
|
(10.10
|
)
|
|
Form of Severance Agreement as adopted on December 9, 2010 was filed on February 22, 2011 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.11
|
)
|
|
Form of Indemnification Agreement entered into with all Directors who are not Executive Officers of the Company was filed on July 31, 2013 with Form 10-Q (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.12
|
)
|
|
Form of Indemnification Agreement entered into with all Directors who are not Executive Officers of the Company was filed on July 31, 2013 with Form 10-Q (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.13
|
)
|
|
Form of Indemnification Agreement entered into with all Executive Officers of the Company who are not Directors of the Company was filed on July 31, 2013 with Form 10-Q (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.14
|
)
|
|
Form of Amended and Restated Employee Excess Benefits Agreement entered into with certain Executive Officers and certain key employees of the Company, was filed on February 26, 2009 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference
|
|
|
|
|
(10.15
|
)
|
|
Form of Amended and Restated Employee Excess Benefits Agreement entered into with certain Executive Officers and certain key employees of the Company, was filed on February 26, 2009 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.16
|
)
|
|
Form of Employee Excess Benefits Agreement, entered into with all Executive Officers after January 1, 2011, was filed on August 4, 2011 with Form 10-Q (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.17
|
)
|
|
Form of Amendment No. 1 to The Amended and Restated Employee Excess Benefit Agreement, entered into with certain Executive Officers and certain key employees of the Company, was filed on September 2, 2009 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.18
|
)
|
|
Form of Amendment No. 1 to The Amended and Restated Employee Excess Benefits Agreement with all Executive Officers after January 1, 2011 and Form of Amendment No. 2 to the Amended and Restated Excess Benefits Agreement with certain Executive Officers and certain key employees of the Company, as adopted December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.19
|
)
|
|
Form of Amendment No. 1 to The Amended and Restated Employee Excess Benefits Agreement entered into with the Chief Executive Officer, as adopted December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.20
|
)
|
|
Form of Amendment No. 2 to The Amended and Restated Employee Excess Benefits Agreement entered into with the Chief Executive Officer, as adopted December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.21
|
)
|
|
Form of Nonqualified Stock Option Agreement for nontransferable options without dividend credit, as adopted on April 17, 2001, was filed on May 14, 2001 with Form 10-Q (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.22
|
)
|
|
Form of Nonqualified Stock Option Agreement for transferable options for Officers, as adopted on August 12, 2015, is attached hereto as Exhibit 10.2.
|
|
|
|
|
(10.23
|
)
|
|
Form of Nonqualified Stock Option Agreement for Officers, as adopted on February 6, 2006, was filed on February 10, 2006 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.24
|
)
|
|
Form of Nonqualified Stock Option Agreement for Officers, as adopted on November 6, 2008, was filed on February 26, 2009 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.25
|
)
|
|
Form of Nonqualified Stock Option Agreement for Officers, as adopted on December 10, 2009, was filed on February 25, 2010 with Form 10-K (Commission File No. 1-1169), and is incorporated herein by reference.
|
|
|
|
|
(10.26
|
)
|
|
Form of Nonqualified Stock Option Agreement for Non-Employee Directors, as adopted on December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
Management Contracts and Compensation Plans
|
|||
(10.27
|
)
|
|
Form of Nonqualified Stock Option Agreement for transferable options for Officers, as adopted on December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.28
|
)
|
|
Form of Nonqualified Stock Option Agreement for non-transferable options for Non-Officer Employees, as adopted on December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.29
|
)
|
|
Form of Restricted Share Agreement for Non-Employee Directors, as adopted on January 31, 2005, was filed on March 15, 2005 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.30
|
)
|
|
Form of Restricted Shares Agreement, as adopted on November 6, 2008, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.31
|
)
|
|
Form of Restricted Share Agreement for Non-Employee Directors, as adopted on December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.32
|
)
|
|
Form of Restricted Share Agreement for Non-Employee Directors (ratable vesting over five years), as adopted on August 12, 2015, is attached hereto as Exhibit 10.3.
|
|
|
|
|
(10.33
|
)
|
|
Form of Restricted Share Agreement for Non-Employee Directors (one year vesting), as adopted on February 12, 2015, is attached hereto as Exhibit 10.4.
|
|
|
|
|
(10.34
|
)
|
|
Form of Performance Unit Agreement, as adopted on February 4, 2008, was filed on February 7, 2008 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.35
|
)
|
|
Form of Performance Shares Agreement was filed on February 11, 2010 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.36
|
)
|
|
Form of Deferred Shares Agreement, as adopted on February 2, 2009, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.37
|
)
|
|
Form of Deferred Shares Agreement entered into with employees after January 1, 2012, as adopted on December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.38
|
)
|
|
Form of Deferred Shares Agreement (five year cliff vesting) entered into with employees after August 12, 2015, as adopted on August 12, 2015, is attached hereto as Exhibit 10.5.
|
|
|
|
|
(10.39
|
)
|
|
Form of Deferred Shares Agreement (three year cliff vesting) entered into with employees after November 12, 2015, as adopted on November 12, 2015, is attached hereto as Exhibit 10.6.
|
|
|
|
|
(10.40
|
)
|
|
Form of Performance-Based Restricted Stock Unit Agreement entered into with key employees was filed on May 2, 2012 with Form 10-Q (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.41
|
)
|
|
Form of Time-Based Restricted Stock Unit Agreement entered into with key employees was filed on May 2, 2012 with Form 10-Q (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.42
|
)
|
|
Form of Time-Based Restricted Stock Unit Agreement (Cliff Vesting) entered into with key employees was filed on February 28, 2014 with Form 10-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.43
|
)
|
|
Form of Associate Non-Compete Agreement entered into with key employees was filed on December 3, 2012 with Form 10-Q/A (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.44
|
)
|
|
Employee Matters Agreement between The Timken Company and TimkenSteel Corporation, dated June 30, 2014 was filed on July 3, 2014 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.45
|
)
|
|
Tax Sharing Agreement by and between The Timken Company and TimkenSteel Corporation, dated June 30, 2014 was filed on July 3, 2014 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.46
|
)
|
|
Transition Services Agreement between The Timken Company and TimkenSteel Corporation, dated June 30, 2014 was filed on July 3, 2014 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.47
|
)
|
|
Trademark License Agreement between The Timken Company and TimkenSteel Corporation, dated June 30, 2014 was filed on July 3, 2014 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.48
|
)
|
|
Noncompetition Agreement between The Timken Company and TimkenSteel Corporation, dated June 30, 2014 was filed on July 3, 2014 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
|
|
|
|
(10.49
|
)
|
|
Registration Rights Agreement between The Timken Company and TimkenSteel Corporation, dated August 20, 2014 was filed on August 20, 2014 with Form 8-K (Commission File No. 1-1169) and is incorporated herein by reference.
|
Listing of Exhibits (continued)
|
|||
|
|
|
|
10.1
|
|
|
Severance Agreement
|
|
|
|
|
10.2
|
|
|
Non-Qualified Stock Option Agreement
|
|
|
|
|
10.3
|
|
|
Restricted Shares Agreement for Nonemployee Directors (5 year vesting)
|
|
|
|
|
10.4
|
|
|
Restricted Shares Agreement for Nonemployee Directors (1 year vesting)
|
|
|
|
|
10.5
|
|
|
Deferred Shares Agreement (5 year cliff vesting)
|
|
|
|
|
10.6
|
|
|
Deferred Shares Agreement (3 year cliff vesting)
|
|
|
|
|
(12
|
)
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
|
|
|
(21
|
)
|
|
A list of subsidiaries of the Registrant.
|
|
|
|
|
(23
|
)
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
(24
|
)
|
|
Power of Attorney.
|
|
|
|
|
(31.1
|
)
|
|
Principal Executive Officer's Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
(31.2
|
)
|
|
Principal Financial Officer's Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
(32
|
)
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
(101
|
)
|
|
Financial statements from the Annual Report on Form 10-K of The Timken Company for the year ended December 31, 2015, formatted in XBRL: (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders' Equity and (vi) the Notes to the Consolidated Financial Statements.
|
By: /s/ Richard G. Kyle
|
|
By: /s/ Philip D. Fracassa
|
Richard G. Kyle
|
|
Philip D. Fracassa
|
President, Chief Executive Officer and Director
|
|
Executive Vice President and Chief Financial Officer
|
(Principal Executive Officer)
|
|
(Principal Financial Officer)
|
Date: February 24, 2016
|
|
Date: February 24, 2016
|
|
|
|
|
|
By: /s/ J. Ted Mihaila
|
|
|
J. Ted Mihaila
|
|
|
Senior Vice President and Controller
|
|
|
(Principal Accounting Officer)
|
|
|
Date: February 24, 2016
|
By: /s/ Maria A. Crowe *
|
|
By: /s/ Joseph W. Ralston *
|
Maria A. Crowe, Director
|
|
Joseph W. Ralston, Director
|
Date: February 24, 2016
|
|
Date: February 24, 2016
|
|
|
|
By: /s/ Richard G. Kyle *
|
|
By: /s/ John P. Reilly *
|
Richard G. Kyle, Director
|
|
John P. Reilly, Director
|
Date: February 24, 2016
|
|
Date: February 24, 2016
|
|
|
|
By: /s/ John A. Luke, Jr.*
|
|
By: /s/ Frank C. Sullivan *
|
John A. Luke, Jr., Director
|
|
Frank C. Sullivan, Director
|
Date: February 24, 2016
|
|
Date: February 24, 2016
|
|
|
|
By: /s/ Christopher L. Mapes*
|
|
By: /s/ John M. Timken, Jr.*
|
Christopher L. Mapes, Director
|
|
John M. Timken, Jr., Director
|
Date: February 24, 2016
|
|
Date: February 24, 2016
|
|
|
|
By: /s/ James F. Palmer*
|
|
By: /s/ Ward J. Timken, Jr.*
|
James F. Palmer, Director
|
|
Ward J. Timken, Jr., Director
|
Date: February 24, 2016
|
|
Date: February 24, 2016
|
|
|
|
By: /s/ Ajita G. Rajendra*
|
|
By: /s/ Jacqueline F. Woods *
|
Ajita G. Rajendra, Director
|
|
Jacqueline F. Woods, Director
|
Date: February 24, 2016
|
|
Date: February 24, 2016
|
|
|
|
|
|
* By: /s/ Philip D. Fracassa
|
|
|
Philip D. Fracassa, attorney-in-fact
|
|
|
By authority of Power of Attorney
|
|
|
filed as Exhibit 24 hereto
|
|
|
Date: February 24, 2016
|
Allowance for uncollectible accounts:
|
2015
|
2014
|
2013
|
||||||
Balance at beginning of period
|
$
|
13.7
|
|
$
|
10.1
|
|
$
|
11.0
|
|
Additions:
|
|
|
|
||||||
Charged to costs and expenses
(1)
|
6.8
|
|
2.7
|
|
2.4
|
|
|||
Charged to other accounts
(2)
|
0.6
|
|
(0.5
|
)
|
—
|
|
|||
Deductions
(3)
|
4.2
|
|
(1.4
|
)
|
3.3
|
|
|||
Balance at end of period
|
$
|
16.9
|
|
$
|
13.7
|
|
$
|
10.1
|
|
|
|
|
|
||||||
Allowance for surplus and obsolete inventory:
|
2015
|
2014
|
2013
|
||||||
Balance at beginning of period
|
$
|
12.8
|
|
$
|
18.4
|
|
$
|
19.0
|
|
Additions:
|
|
|
|
||||||
Charged to costs and expenses
(4)
|
9.6
|
|
28.0
|
|
10.5
|
|
|||
Charged to other accounts
(2)
|
2.7
|
|
(5.7
|
)
|
0.2
|
|
|||
Deductions
(5)
|
6.7
|
|
27.9
|
|
11.3
|
|
|||
Balance at end of period
|
$
|
18.4
|
|
$
|
12.8
|
|
$
|
18.4
|
|
|
|
|
|
||||||
Valuation allowance on deferred tax assets:
|
2015
|
2014
|
2013
|
||||||
Balance at beginning of period
|
$
|
145.4
|
|
$
|
177.0
|
|
$
|
164.0
|
|
Additions
|
|
|
|
||||||
Charged to costs and expenses
(6)
|
4.1
|
|
14.4
|
|
32.1
|
|
|||
Charged to other accounts
(7)
|
(14.1
|
)
|
(10.0
|
)
|
(4.5
|
)
|
|||
Deductions
(8)
|
51.7
|
|
36.0
|
|
14.6
|
|
|||
Balance at end of period
|
$
|
83.7
|
|
$
|
145.4
|
|
$
|
177.0
|
|
(1)
|
Provision for uncollectible accounts included in expenses.
|
(2)
|
Currency translation and change in reserves due to acquisitions, net of divestitures.
|
(3)
|
Actual accounts written off against the allowance, net of recoveries.
|
(4)
|
Provisions for surplus and obsolete inventory included in expenses. Higher Obsolete and Surplus Inventory expenses in 2014 were a result of an inventory adjustment of $18.7 million in the third quarter that was recorded as a result of the announcement to exit the engine overhaul business, as well as other product lines, and lower than expected future sales. The Company sold or disposed of this excess inventory during the fourth quarter of 2014.
|
(5)
|
Inventory items written off against the allowance.
|
(6)
|
Increase in valuation allowance is recorded as a component of the provision for income taxes.
|
(7)
|
Includes valuation allowances recorded against other comprehensive income/loss or goodwill.
|
(8)
|
Amount primarily relates to the reversal of valuation allowances due to the realization of net operating loss carryforwards.
|
If to the Company:
|
The Timken Company 4500 Mt. Pleasant St., N.W. North Canton, Ohio 44720
|
If to the Employee:
|
The Employee’s current address on file with the Company
|
By: __________________________
|
William R. Burkhart
|
(i)
|
Upon a Change in Control occurring during the four-year period described in Section 1(a) above while the Optionee is an employee of the Company or a Subsidiary, to the extent the Option has not been forfeited, the Option shall become immediately exercisable in full, except to the extent that a Replacement Award is provided to the Optionee for such Option.
|
(ii)
|
For purposes of this Agreement, a “Replacement Award” means an award (A) of stock options, (B) that have a value at least equal to the value of the Option, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control (or another entity that is affiliated with the Company or its successor following the Change in Control), (D) the tax consequences of which, under the Code, if the Optionee is subject to U.S. federal income tax under the Code, are not less favorable to the Optionee than the tax consequences of the Option, (E) that vests in full upon a termination of the Optionee’s employment with Company or its successor in the Change in Control
|
(iii)
|
For purposes of Section 2(b)(ii), “Cause” will be defined not less favorably with respect to Optionee than: any intentional act of fraud, embezzlement or theft in connection with the Optionee’s duties with the Successor, any intentional wrongful disclosure of secret processes or confidential information of the Successor, or any intentional wrongful engagement in any competitive activity that would constitute a material breach of Optionee’s duty of loyalty to the Successor, and no act, or failure to act, on the part of Optionee shall be deemed “intentional” unless done or omitted to be done by Optionee not in good faith and without reasonable belief that Optionee’s action or omission was in or not opposed to the best interest of the Successor;
provided
, that for any Optionee who is party to an individual severance or employment agreement defining Cause, “Cause” will have the meaning set forth in such agreement. For purposes of Section 2(b)(ii), “Good Reason” will be defined to mean: a material reduction in the nature or scope of the responsibilities, authorities or duties of Optionee attached to Optionee’s position held immediately prior to the Change in Control, a change of more than 60 miles in the location of Optionee’s principal office immediately prior to the Change in Control, or a material reduction in Optionee’s remuneration upon or after the Change in Control;
provided
, that no later than 90 days following an event constituting Good Reason Grantee gives notice to the Successor of the occurrence of such event and the Successor fails to cure the event within 30 days following the receipt of such notice.
|
1.
|
Five-Year Vesting of Awards
.
|
(a)
|
Normal Vesting
: Subject to the terms and conditions of Sections 2 and 3 hereof, Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto shall become nonforfeitable on the fifth anniversary of the Date of Grant if Grantee has been in the continuous employ of the Company or a Subsidiary from the Date of Grant until the date of said fifth anniversary.
|
(b)
|
Vesting Upon Retirement with Consent
: In the event Grantee should retire with the Company’s consent prior to the fifth anniversary of the Date of Grant, then, subject to the payment provisions of Section 5 hereof, Grantee’s right to receive the Common Shares covered by this Agreement, along with any Deferred Cash Dividends accumulated with respect thereto, shall become nonforfeitable in accordance with the terms and conditions of Section 1(a) as if Grantee had remained in the continuous employ of the Company or a Subsidiary from the Date of Grant until the date of the fifth anniversary of the Date of Grant or the occurrence of an event referenced in Section 2, whichever occurs first.
|
2.
|
Alternative Vesting of Awards
.
|
(a)
|
Death or Disability
: Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto shall immediately become nonforfeitable if Grantee should die or become permanently disabled while in the employ of the Company or any Subsidiary. If Grantee should die or become permanently disabled during the period that Grantee is deemed to be in the continuous employ of the Company or a Subsidiary pursuant to Section 1(b), 2(c) or 2(d), then the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto will immediately become nonforfeitable, except that to the extent that Section 2(d) applies, the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto will immediately become nonforfeitable only to the extent that the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto would have become nonforfeitable during the severance period pursuant to Section 2(d).
|
(b)
|
Change in Control
:
|
(i)
|
Upon a Change in Control occurring during the five-year period described in Section 1(a) above while Grantee is an employee of the Company or a Subsidiary, to the extent the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto have not been forfeited, the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto shall immediately become nonforfeitable (except to the extent that a Replacement Award is provided to Grantee for such Common Shares and Deferred Cash Dividends). If Grantee is deemed to be in the continuous employ of the Company or a Subsidiary pursuant to Section 1(b), 2(c) or 2(d), then, upon a Change in Control prior to the fifth anniversary of the Date of Grant, the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto will immediately become nonforfeitable, except that to the extent that Section 2(d) applies, the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto will immediately become nonforfeitable only to the extent that the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto would have become nonforfeitable during the severance period pursuant to Section 2(d).
|
(ii)
|
For purposes of this Agreement, a “Replacement Award” means an award (A) of deferred shares, (B) that has a value at least equal to the value of the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control (or another entity that is affiliated with the Company or its successor following the Change in Control), (D) the tax consequences of which, under the Code, if Grantee is subject to U.S. federal income tax under the Code, are not less favorable to Grantee than the tax consequences of the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto, (E) that vests in full upon a termination of Grantee’s employment with Company or its successor in the Change in Control (or another entity that is affiliated with the Company or its successor following the Change in Control) (the “Successor”) for Good Reason by Grantee or without Cause by the Successor within a period of two years after the Change in Control, and (F) the other terms and conditions of which are not less favorable to Grantee than the terms and conditions of the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it conforms to the requirements of Treasury Regulation 1.409A-3(i)(5)(iv)(B) or otherwise does not result in the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto, or the Replacement Award, failing to comply with Section 409A of the Code. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Section 2(b)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
|
(iii)
|
For purposes of Section 2(b)(ii), “Cause” will be defined not less favorably with respect to Grantee than: any intentional act of fraud, embezzlement or theft in connection with the Grantee’s duties with the Successor, any intentional wrongful disclosure of secret processes or confidential information of the Successor, or any intentional wrongful engagement in any competitive activity that would constitute a material breach of Grantee’s duty of loyalty to the Successor, and no act, or failure to act, on the part of Grantee shall be deemed “intentional” unless done or omitted to be done by Grantee not in good faith and without reasonable belief that Grantee’s action or omission was in or not opposed to the best interest of the Successor;
provided
, that for any Grantee who is party to an individual severance or employment agreement defining Cause, “Cause” will have the meaning set forth in such agreement. For purposes of Section 2(b)(ii), “Good Reason” will be defined to mean a material reduction in the nature or scope of the responsibilities, authorities or duties of Grantee attached to Grantee’s position held immediately prior to the Change in Control, a change of more than 60 miles in the location of Grantee’s principal office immediately prior to the Change in Control, or a material reduction in Grantee’s remuneration upon or after the Change in Control;
provided
, that no later than 90 days following an event constituting Good Reason Grantee gives notice to the Successor of the occurrence of such event and the Successor fails to cure the event within 30 days following the receipt of such notice.
|
(iv)
|
If a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any outstanding Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto which at the time of the Change in Control are not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code) will be deemed to be nonforfeitable at the time of such Change in Control.
|
(c)
|
Divestiture
: If Grantee’s employment with the Company or a Subsidiary terminates as the result of a divestiture, then the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto shall become nonforfeitable in accordance with the terms and conditions of
|
(d)
|
Layoff
: If (i) Grantee’s employment with the Company or a Subsidiary terminates as the result of a layoff and (ii) Grantee is entitled to receive severance pay pursuant to the terms of any severance pay plan of the Company in effect at the time of Grantee’s termination of employment that provides for severance pay calculated by multiplying Grantee’s base compensation by a specified severance period, then Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto shall become nonforfeitable in accordance with the terms and conditions of Section 1(a) as if Grantee had remained in the continuous employ of the Company or a Subsidiary from the Date of Grant until the end of the severance period or the occurrence of a circumstance referenced in Section 2(a) or 2(b), whichever occurs first. Notwithstanding the foregoing, in the event Grantee’s employment is terminated as a result of layoff after Grantee becomes eligible for retirement at or after age 62 under a retirement plan of the Company or a Subsidiary, then Section 1(b) shall govern.
|
3.
|
Forfeiture of Awards
. Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto shall be forfeited automatically and without further notice on the date that Grantee ceases to be an employee of the Company or a Subsidiary prior to the fifth anniversary of the Date of Grant for any reason other than as described in Sections 1 or 2 hereof. In the event that Grantee shall intentionally commit an act that the Committee determines to be materially adverse to the interests of the Company or a Subsidiary, Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto shall be forfeited at the time of that determination notwithstanding any other provision of this Agreement to the contrary.
|
4.
|
Crediting of Deferred Cash Dividends
. With respect to each of the Common Shares covered by this Agreement, Grantee shall be credited on the records of the Company with Deferred Cash Dividends in an amount equal to the amount per share of any cash dividends declared by the Board on the outstanding Common Shares during the period beginning on the Date of Grant and ending on the date on which Grantee receives payment of the Common Shares covered by this Agreement pursuant to Section 5 hereof or at the time when the Common Shares covered by this Agreement are forfeited in accordance with Section 3 of this Agreement. The Deferred Cash Dividends shall accumulate without interest.
|
5.
|
Payment of Awards
.
|
(a)
|
General
: Subject to Section 3 and Section 5(b), payment for the Common Shares covered by this Agreement that are nonforfeitable and any Deferred Cash Dividends accumulated with respect thereto will be made within 10 days following the fifth anniversary of the Date of Grant.
|
(b)
|
Other Payment Events
: Notwithstanding Section 5(a), to the extent that the Common Shares covered by this Agreement are nonforfeitable on the dates set forth below, payment with respect to the Common Shares covered by this Agreement that have become nonforfeitable and any Deferred Cash Dividends accumulated with respect thereto will be made as follows:
|
(i)
|
Change in Control
. Within 10 days of a Change in Control, Grantee is entitled to receive payment for the Common Shares covered by this Agreement that are nonforfeitable and any Deferred Cash Dividends accumulated with respect thereto on the date of the Change in Control;
provided
,
however
, that if such Change in Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code, and the regulations thereunder, and where Section 409A of the Code applies to such distribution, Grantee is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to Sections 5(a) or 5(b)(ii) as though such Change in Control had not occurred.
|
(ii)
|
Death or Disability
. Within 10 days of the date of Grantee’s death or the date Grantee becomes permanently disabled, Grantee is entitled to receive payment for the Common Shares covered by this Agreement that are nonforfeitable and any Deferred Cash Dividends accumulated with respect thereto on such date.
|
6.
|
Compliance with Law
. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws;
provided
,
however
, notwithstanding any other provision of this Agreement, the Company shall not be obligated to issue any of the Common Shares covered by this Agreement or pay any Deferred Cash Dividends accumulated with respect thereto if the issuance or payment thereof would result in violation of any such law. To the extent that the Ohio Securities Act shall be applicable to this Agreement, the Company shall not be obligated to issue any of the Common Shares or other securities covered by this Agreement or pay any Deferred Cash Dividends
|
7.
|
Transferability
. Neither Grantee’s right to receive the Common Shares covered by this Agreement nor his right to receive any Deferred Cash Dividends shall be transferable by Grantee except by will or the laws of descent and distribution. Any purported transfer in violation of this Section 7 shall be null and void, and the purported transferee shall obtain no rights with respect to such Shares.
|
8.
|
Compliance with Section 409A of the Code
. To the extent applicable, it is intended that this Agreement and the Plan comply with the provisions of Section 409A of the Code. This Agreement and the Plan shall be administered in a manner consistent with this intent.
|
9.
|
Adjustments
. Subject to Section 12 of the Plan, the Committee shall make any adjustments in the number or kind of shares of stock or other securities covered by this Agreement, and other terms and provisions, that the Committee shall determine to be equitably required to prevent any dilution or expansion of Grantee’s rights under this Agreement that otherwise would result from any (a) stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) merger, consolidation, separation, reorganization, partial or complete liquidation or other distribution of assets involving the Company or (c) other transaction or event having an effect similar to any of those referred to in subsection (a) or (b) herein. Furthermore, in the event that any transaction or event described or referred to in the immediately preceding sentence, or a Change in Control, shall occur, the Committee shall provide in substitution of any or all of Grantee’s rights under this Agreement such alternative consideration (including cash) as the Committee shall determine in good faith to be equitable under the circumstances.
|
10.
|
Withholding Taxes
. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any delivery of Common Shares to Grantee, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the receipt of such delivery that Grantee make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld. Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Company of a portion of the Common Shares delivered to Grantee. If such election is made, the shares so retained shall be credited against such withholding requirement at the market value of such shares on the date of such delivery.
|
11.
|
Detrimental Activity and Recapture
.
|
(a)
|
In the event that, as determined by the Committee, Grantee shall engage in Detrimental Activity during employment with the Company or a Subsidiary, the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto will be forfeited automatically and without further notice at the time of that determination notwithstanding any other provision of this Agreement.
|
(b)
|
If a Restatement occurs and the Committee determines that Grantee is personally responsible for causing the Restatement as a result of Grantee’s personal misconduct or any fraudulent activity on the part of Grantee, then the Committee has discretion to, based on applicable facts and circumstances and subject to applicable law, cause the Company to recover all or any portion (but no more than 100%) of the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto earned or payable to Grantee for some or all of the years covered by the Restatement. The amount of any earned or payable Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto recovered by the Company shall be limited to the amount by which such earned or payable Common Shares and Deferred Cash Dividends exceeded the amount that would have been earned by or paid to Grantee had the Company’s financial statements for the applicable restated fiscal year or years been initially filed as restated, as reasonably determined by the Committee. The Committee shall also determine whether the Company shall effect any recovery under this Section 11(b) by: (i) seeking repayment from Grantee; (ii) reducing, except with respect to any non-qualified deferred compensation under Section 409A of the Code, the amount that would otherwise be payable to Grantee under any compensatory plan, program or arrangement maintained by the Company (subject to applicable law and the terms and conditions of such plan, program or arrangement); (iii) by withholding, except with respect to any non-qualified deferred compensation under Section 409A of the Code, payment of future increases in compensation (including the payment of any discretionary bonus amount) that would otherwise have been made to Grantee in accordance with the Company’s compensation practices; or (iv) by any combination of these alternatives. For purposes of this Agreement, “Restatement” means a restatement of any part of the Company’s financial statements for any fiscal year or years after 2015 due to material noncompliance with any financial reporting requirement under the U.S. securities laws applicable to such fiscal year or years.
|
12.
|
No Right to Future Awards or Employment
. This award is a voluntary, discretionary bonus being made on a one-time basis and it does not constitute a commitment to make any future awards. This award and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. No provision of this Agreement shall limit in any way whatsoever any right that the Company or a Subsidiary may otherwise have to terminate Grantee’s employment at any time.
|
13.
|
Relation to Other Benefits
. Any economic or other benefit to Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which Grantee may be entitled under any profit‑sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary.
|
14.
|
Processing of Information
. Information about Grantee and Grantee’s award of Common Shares and Deferred Cash Dividends may be collected, recorded and held, used and disclosed for any purpose related to the administration of the award. Grantee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within Grantee’s country or elsewhere, including the United States of America. Grantee consents to the processing of information relating to Grantee and Grantee’s receipt of the Common Shares and Deferred Cash Dividends in any one or more of the ways referred to above.
|
15.
|
Amendments
. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto;
provided
,
however
, that subject to the provisions of Section 8 hereof no amendment shall adversely affect the rights of Grantee with respect to either the Common Shares or other securities covered by this Agreement or the Deferred Cash Dividends without Grantee’s consent.
|
16.
|
Severability
. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid or unenforceable, the remainder of this Agreement and the application of such provision in any other person or circumstances shall not be affected, and the provisions so held to be invalid or unenforceable shall be reformed to the extent (and only to the extent) necessary to make it enforceable and valid.
|
17.
|
Governing Law
. This Agreement is made under, and shall be construed in accordance with, the internal substantive laws of the State of Ohio.
|
1.
|
Three-Year Vesting of Awards
.
|
(a)
|
Normal Vesting
: Subject to the terms and conditions of Sections 2 and 3 hereof, Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto shall become nonforfeitable on the third anniversary of the Date of Grant if Grantee has been in the continuous employ of the Company or a Subsidiary from the Date of Grant until the date of said third anniversary.
|
(b)
|
Vesting Upon Retirement with Consent
: In the event Grantee should retire with the Company’s consent prior to the third anniversary of the Date of Grant, then, subject to the payment provisions of Section 5 hereof, Grantee’s right to receive the Common Shares covered by this Agreement, along with any Deferred Cash Dividends accumulated with respect thereto, shall become nonforfeitable in accordance with the terms and conditions of Section 1(a) as if Grantee had remained in the continuous employ of the Company or a Subsidiary from the Date of Grant until the date of the third anniversary of the Date of Grant or the occurrence of an event referenced in Section 2, whichever occurs first.
|
2.
|
Alternative Vesting of Awards
.
|
(a)
|
Death or Disability
: Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto shall immediately become nonforfeitable if Grantee should die or become permanently disabled while in the employ of the Company or any Subsidiary. If Grantee should die or become permanently disabled during the period that Grantee is deemed to be in the continuous employ of the Company or a Subsidiary pursuant to Section 1(b), 2(c) or 2(d), then the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto will immediately become nonforfeitable, except that to the extent that Section 2(d) applies, the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto will immediately become nonforfeitable only to the extent that the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto would have become nonforfeitable during the severance period pursuant to Section 2(d).
|
(b)
|
Change in Control
:
|
(i)
|
Upon a Change in Control occurring during the three-year period described in Section 1(a) above while Grantee is an employee of the Company or a Subsidiary, to the extent the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto have not been forfeited, the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto shall immediately become nonforfeitable (except to the extent that a Replacement Award is provided to Grantee for such Common Shares and Deferred Cash Dividends). If Grantee is deemed to be in the continuous employ of the Company or a Subsidiary pursuant to Section 1(b), 2(c) or 2(d), then, upon a Change in Control prior to the third anniversary of the Date of Grant, the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto will immediately become nonforfeitable, except that to the extent that Section 2(d) applies, the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto will immediately become nonforfeitable only to the extent that the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto would have become nonforfeitable during the severance period pursuant to Section 2(d).
|
(ii)
|
For purposes of this Agreement, a “Replacement Award” means an award (A) of deferred shares, (B) that has a value at least equal to the value of the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control (or another entity that is affiliated with the Company or its successor following the Change in Control), (D) the tax consequences of which, under the Code, if Grantee is subject to U.S. federal income tax under the Code, are not less favorable to Grantee than the tax consequences of the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto, (E) that vests in full upon a termination of Grantee’s employment with Company or its successor in the Change in Control (or another entity that is affiliated with the Company or its successor following the Change in Control) (the “Successor”) for Good Reason by Grantee or without Cause by the Successor within a period of two years after the Change in Control, and (F) the other terms and conditions of which are not less favorable to Grantee than the terms and conditions of the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it conforms to the requirements of Treasury Regulation 1.409A-3(i)(5)(iv)(B) or otherwise does not result in the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto, or the Replacement Award, failing to comply with Section 409A of the Code. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Section 2(b)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
|
(iii)
|
For purposes of Section 2(b)(ii), “Cause” will be defined not less favorably with respect to Grantee than: any intentional act of fraud, embezzlement or theft in connection with the Grantee’s duties with the Successor, any intentional wrongful disclosure of secret processes or confidential information of the Successor, or any intentional wrongful engagement in any competitive activity that would constitute a material breach of Grantee’s duty of loyalty to the Successor, and no act, or failure to act, on the part of Grantee shall be deemed “intentional” unless done or omitted to be done by Grantee not in good faith and without reasonable belief that Grantee’s action or omission was in or not opposed to the best interest of the Successor;
provided
, that for any Grantee who is party to an individual severance or employment agreement defining Cause, “Cause” will have the meaning set forth in such agreement. For purposes of Section 2(b)(ii), “Good Reason” will be defined to mean a material reduction in the nature or scope of the responsibilities, authorities or duties of Grantee attached to Grantee’s position held immediately prior to the Change in Control, a change of more than 60 miles in the location of Grantee’s principal office immediately prior to the Change in Control, or a material reduction in Grantee’s remuneration upon or after the Change in Control;
provided
, that no later than 90 days following an event constituting Good Reason Grantee gives notice to the Successor of the occurrence of such event and the Successor fails to cure the event within 30 days following the receipt of such notice.
|
(iv)
|
If a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any outstanding Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto which at the time of the Change in Control are not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code) will be deemed to be nonforfeitable at the time of such Change in Control.
|
(c)
|
Divestiture
: If Grantee’s employment with the Company or a Subsidiary terminates as the result of a divestiture, then the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto shall become nonforfeitable in accordance with the terms and conditions of
|
(d)
|
Layoff
: If (i) Grantee’s employment with the Company or a Subsidiary terminates as the result of a layoff and (ii) Grantee is entitled to receive severance pay pursuant to the terms of any severance pay plan of the Company in effect at the time of Grantee’s termination of employment that provides for severance pay calculated by multiplying Grantee’s base compensation by a specified severance period, then Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends then accumulated with respect thereto shall become nonforfeitable in accordance with the terms and conditions of Section 1(a) as if Grantee had remained in the continuous employ of the Company or a Subsidiary from the Date of Grant until the end of the severance period or the occurrence of a circumstance referenced in Section 2(a) or 2(b), whichever occurs first. Notwithstanding the foregoing, in the event Grantee’s employment is terminated as a result of layoff after Grantee becomes eligible for retirement at or after age 62 under a retirement plan of the Company or a Subsidiary, then Section 1(b) shall govern.
|
3.
|
Forfeiture of Awards
. Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto shall be forfeited automatically and without further notice on the date that Grantee ceases to be an employee of the Company or a Subsidiary prior to the third anniversary of the Date of Grant for any reason other than as described in Sections 1 or 2 hereof. In the event that Grantee shall intentionally commit an act that the Committee determines to be materially adverse to the interests of the Company or a Subsidiary, Grantee’s right to receive the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto shall be forfeited at the time of that determination notwithstanding any other provision of this Agreement to the contrary.
|
4.
|
Crediting of Deferred Cash Dividends
. With respect to each of the Common Shares covered by this Agreement, Grantee shall be credited on the records of the Company with Deferred Cash Dividends in an amount equal to the amount per share of any cash dividends declared by the Board on the outstanding Common Shares during the period beginning on the Date of Grant and ending on the date on which Grantee receives payment of the Common Shares covered by this Agreement pursuant to Section 5 hereof or at the time when the Common Shares covered by this Agreement are forfeited in accordance with Section 3 of this Agreement. The Deferred Cash Dividends shall accumulate without interest.
|
5.
|
Payment of Awards
.
|
(a)
|
General
: Subject to Section 3 and Section 5(b), payment for the Common Shares covered by this Agreement that are nonforfeitable and any Deferred Cash Dividends accumulated with respect thereto will be made within 10 days following the third anniversary of the Date of Grant.
|
(b)
|
Other Payment Events
: Notwithstanding Section 5(a), to the extent that the Common Shares covered by this Agreement are nonforfeitable on the dates set forth below, payment with respect to the Common Shares covered by this Agreement that have become nonforfeitable and any Deferred Cash Dividends accumulated with respect thereto will be made as follows:
|
(i)
|
Change in Control
. Within 10 days of a Change in Control, Grantee is entitled to receive payment for the Common Shares covered by this Agreement that are nonforfeitable and any Deferred Cash Dividends accumulated with respect thereto on the date of the Change in Control;
provided
,
however
, that if such Change in Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code, and the regulations thereunder, and where Section 409A of the Code applies to such distribution, Grantee is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to Sections 5(a) or 5(b)(ii) as though such Change in Control had not occurred.
|
(ii)
|
Death or Disability
. Within 10 days of the date of Grantee’s death or the date Grantee becomes permanently disabled, Grantee is entitled to receive payment for the Common Shares covered by this Agreement that are nonforfeitable and any Deferred Cash Dividends accumulated with respect thereto on such date.
|
6.
|
Compliance with Law
. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws;
provided
,
however
, notwithstanding any other provision of this Agreement, the Company shall not be obligated to issue any of the Common Shares covered by this Agreement or pay any Deferred Cash Dividends accumulated with respect thereto if the issuance or payment thereof would result in violation of any such law. To the extent that the Ohio Securities Act shall be applicable to this Agreement, the Company shall not be obligated to issue any of the Common Shares or other securities covered by this Agreement or pay any Deferred Cash Dividends
|
7.
|
Transferability
. Neither Grantee’s right to receive the Common Shares covered by this Agreement nor his right to receive any Deferred Cash Dividends shall be transferable by Grantee except by will or the laws of descent and distribution. Any purported transfer in violation of this Section 7 shall be null and void, and the purported transferee shall obtain no rights with respect to such Shares.
|
8.
|
Compliance with Section 409A of the Code
. To the extent applicable, it is intended that this Agreement and the Plan comply with the provisions of Section 409A of the Code. This Agreement and the Plan shall be administered in a manner consistent with this intent.
|
9.
|
Adjustments
. Subject to Section 12 of the Plan, the Committee shall make any adjustments in the number or kind of shares of stock or other securities covered by this Agreement, and other terms and provisions, that the Committee shall determine to be equitably required to prevent any dilution or expansion of Grantee’s rights under this Agreement that otherwise would result from any (a) stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) merger, consolidation, separation, reorganization, partial or complete liquidation or other distribution of assets involving the Company or (c) other transaction or event having an effect similar to any of those referred to in subsection (a) or (b) herein. Furthermore, in the event that any transaction or event described or referred to in the immediately preceding sentence, or a Change in Control, shall occur, the Committee shall provide in substitution of any or all of Grantee’s rights under this Agreement such alternative consideration (including cash) as the Committee shall determine in good faith to be equitable under the circumstances.
|
10.
|
Withholding Taxes
. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any delivery of Common Shares to Grantee, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the receipt of such delivery that Grantee make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld. Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Company of a portion of the Common Shares delivered to Grantee. If such election is made, the shares so retained shall be credited against such withholding requirement at the market value of such shares on the date of such delivery.
|
11.
|
Detrimental Activity and Recapture
.
|
(a)
|
In the event that, as determined by the Committee, Grantee shall engage in Detrimental Activity during employment with the Company or a Subsidiary, the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto will be forfeited automatically and without further notice at the time of that determination notwithstanding any other provision of this Agreement.
|
(b)
|
If a Restatement occurs and the Committee determines that Grantee is personally responsible for causing the Restatement as a result of Grantee’s personal misconduct or any fraudulent activity on the part of Grantee, then the Committee has discretion to, based on applicable facts and circumstances and subject to applicable law, cause the Company to recover all or any portion (but no more than 100%) of the Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto earned or payable to Grantee for some or all of the years covered by the Restatement. The amount of any earned or payable Common Shares covered by this Agreement and any Deferred Cash Dividends accumulated with respect thereto recovered by the Company shall be limited to the amount by which such earned or payable Common Shares and Deferred Cash Dividends exceeded the amount that would have been earned by or paid to Grantee had the Company’s financial statements for the applicable restated fiscal year or years been initially filed as restated, as reasonably determined by the Committee. The Committee shall also determine whether the Company shall effect any recovery under this Section 11(b) by: (i) seeking repayment from Grantee; (ii) reducing, except with respect to any non-qualified deferred compensation under Section 409A of the Code, the amount that would otherwise be payable to Grantee under any compensatory plan, program or arrangement maintained by the Company (subject to applicable law and the terms and conditions of such plan, program or arrangement); (iii) by withholding, except with respect to any non-qualified deferred compensation under Section 409A of the Code, payment of future increases in compensation (including the payment of any discretionary bonus amount) that would otherwise have been made to Grantee in accordance with the Company’s compensation practices; or (iv) by any combination of these alternatives. For purposes of this Agreement, “Restatement” means a restatement of any part of the Company’s financial statements for any fiscal year or years after 2015 due to material noncompliance with any financial reporting requirement under the U.S. securities laws applicable to such fiscal year or years.
|
12.
|
No Right to Future Awards or Employment
. This award is a voluntary, discretionary bonus being made on a one-time basis and it does not constitute a commitment to make any future awards. This award and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. No provision of this Agreement shall limit in any way whatsoever any right that the Company or a Subsidiary may otherwise have to terminate Grantee’s employment at any time.
|
13.
|
Relation to Other Benefits
. Any economic or other benefit to Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which Grantee may be entitled under any profit‑sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary.
|
14.
|
Processing of Information
. Information about Grantee and Grantee’s award of Common Shares and Deferred Cash Dividends may be collected, recorded and held, used and disclosed for any purpose related to the administration of the award. Grantee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within Grantee’s country or elsewhere, including the United States of America. Grantee consents to the processing of information relating to Grantee and Grantee’s receipt of the Common Shares and Deferred Cash Dividends in any one or more of the ways referred to above.
|
15.
|
Amendments
. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto;
provided
,
however
, that subject to the provisions of Section 8 hereof no amendment shall adversely affect the rights of Grantee with respect to either the Common Shares or other securities covered by this Agreement or the Deferred Cash Dividends without Grantee’s consent.
|
16.
|
Severability
. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid or unenforceable, the remainder of this Agreement and the application of such provision in any other person or circumstances shall not be affected, and the provisions so held to be invalid or unenforceable shall be reformed to the extent (and only to the extent) necessary to make it enforceable and valid.
|
17.
|
Governing Law
. This Agreement is made under, and shall be construed in accordance with, the internal substantive laws of the State of Ohio.
|
|
|
Twelve Months Ended December 31,
|
||||||||||||||
|
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||
(Loss) income from continuing operations before income taxes
|
|
$
|
(189.6
|
)
|
$
|
204.0
|
|
$
|
290.1
|
|
$
|
517.8
|
|
$
|
431.4
|
|
|
|
|
|
|
|
|
||||||||||
Share of undistributed (losses) income from 50%-or-less-owned affiliates, excluding affiliates with guaranteed debt
|
|
$
|
(0.8
|
)
|
$
|
(0.6
|
)
|
$
|
(0.4
|
)
|
$
|
0.5
|
|
$
|
0.5
|
|
Amortization of capitalized interest
|
|
0.6
|
|
0.9
|
|
(1.3
|
)
|
(1.3
|
)
|
(1.4
|
)
|
|||||
Interest expense
|
|
33.4
|
|
28.7
|
|
24.4
|
|
31.1
|
|
36.8
|
|
|||||
Interest portion of rental expense
|
|
4.8
|
|
5.2
|
|
8.0
|
|
8.0
|
|
7.6
|
|
|||||
Earnings (loss)
|
|
$
|
(151.6
|
)
|
$
|
238.2
|
|
$
|
320.8
|
|
$
|
556.1
|
|
$
|
474.9
|
|
|
|
|
|
|
|
|
||||||||||
Interest
|
|
$
|
33.4
|
|
$
|
30.4
|
|
$
|
37.1
|
|
$
|
36.0
|
|
$
|
36.8
|
|
Interest portion of rental expense
|
|
4.8
|
|
5.2
|
|
8.0
|
|
8.0
|
|
7.6
|
|
|||||
Fixed Charges
|
|
$
|
38.2
|
|
$
|
35.6
|
|
$
|
45.1
|
|
$
|
44.0
|
|
$
|
44.4
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
|
(3.97
|
)
|
6.69
|
|
7.11
|
|
12.64
|
|
10.70
|
|
Exhibit 21. Subsidiaries of the Registrant
|
Name
|
|
State or sovereign power under laws of which organized
|
Percentage of voting securities owned directly or indirectly by Company
|
|
|
|
United States
|
|
|
AIPCF V Feeder CTP Belts, LLC
|
|
Delaware
|
100.0
|
%
|
Bearing Inspection, Inc.
|
|
California
|
100.0
|
%
|
Drives Brazil Holdings I, LLC
|
|
Delaware
|
100.0
|
%
|
Drives Brazil Holdings II, LLC
|
|
Delaware
|
100.0
|
%
|
MPB Corporation
|
|
Delaware
|
100.0
|
%
|
Rail Bearing Service LLC
|
|
Virginia
|
100.0
|
%
|
The Timken Corporation
|
|
Ohio
|
100.0
|
%
|
The Timken Service and Sales Company
|
|
Ohio
|
100.0
|
%
|
Timken Aerospace Transmissions, LLC
|
|
Delaware
|
100.0
|
%
|
Timken Communications Company
|
|
Ohio
|
100.0
|
%
|
Timken Drives LLC
|
|
Delaware
|
100.0
|
%
|
Timken Gears & Services Inc.
|
|
Ohio
|
100.0
|
%
|
Timken Holdings LLC
|
|
Delaware
|
100.0
|
%
|
TImken ILS Dayton, Inc.
|
|
Ohio
|
100.0
|
%
|
Timken Industrial Services, LLC
|
|
Delaware
|
100.0
|
%
|
Timken Motor & Crane Services LLC
|
|
Delaware
|
100.0
|
%
|
Timken NCT LLC
|
|
Delaware
|
100.0
|
%
|
Timken Newco Corp.
|
|
Delaware
|
100.0
|
%
|
Timken Receivables Corporation
|
|
Delaware
|
100.0
|
%
|
Timken SMO LLC
|
|
Delaware
|
100.0
|
%
|
Timken U.S. Holdings LLC
|
|
Delaware
|
100.0
|
%
|
Timken US LLC
|
|
Delaware
|
100.0
|
%
|
|
|
|
|
|
|
|
International
|
|
|
AIPCF V CTP Belt Blocker Cooperatie U.A.
|
|
Netherlands
|
100.0
|
%
|
Australian Timken Proprietary Limited
|
|
Australia
|
100.0
|
%
|
Drive Comerico, Importacoes e Exportacoes Ltda.
|
|
Brazil
|
100.0
|
%
|
Hamilton Gear ULC
|
|
Canada
|
100.0
|
%
|
Jiangsu TWB Bearings Co., Ltd.
|
|
China
|
100.0
|
%
|
Nihon Timken K.K.
|
|
Japan
|
100.0
|
%
|
PTBridge (Hong Kong) Investment Limited
|
|
Hong Kong
|
100.0
|
%
|
Timken (Bermuda) L.P.
|
|
Bermuda
|
100.0
|
%
|
Timken (Canada) Holdings II ULC
|
|
Canada
|
100.0
|
%
|
Timken (Chengdu) Aerospace and Precision Products Co., Ltd.
|
|
China
|
100.0
|
%
|
Timken (China) Investment Co., Ltd.
|
|
China
|
100.0
|
%
|
Timken (Gibraltar) 2 Limited
|
|
Gibraltar
|
100.0
|
%
|
Timken (Gibraltar) Limited
|
|
Gibraltar
|
100.0
|
%
|
Timken (Hong Kong) Holding Limited
|
|
Hong Kong
|
100.0
|
%
|
Timken Mex Holdings SARL
|
|
Luxembourg
|
100.0
|
%
|
Timken (Shanghai) Distribution and Sales Co., Ltd.
|
|
China
|
100.0
|
%
|
Timken (Wuxi) Bearings Co., Ltd.
|
|
China
|
100.0
|
%
|
Timken Argentina Sociedad De Responsabilidad Limitada
|
|
Argentina
|
100.0
|
%
|
Timken Australia Holdings ULC
|
|
Canada
|
100.0
|
%
|
Timken Bermuda Treasury Ltd
|
|
Bermuda
|
100.0
|
%
|
Timken Canada GP ULC
|
|
Canada
|
100.0
|
%
|
Timken Canada LP
|
|
Canada
|
100.0
|
%
|
Timken Colombia SAS
|
|
Columbia
|
100.0
|
%
|
Timken De Mexico, S.A. De C.V.
|
|
Mexico
|
100.0
|
%
|
Timken De Venezuela C.A.
|
|
Venezuela
|
100.0
|
%
|
Timken Do Brasil Comercial Importadora LTDA.
|
|
Brazil
|
100.0
|
%
|
Timken Engineering and Research - India Private Limited
|
|
India
|
100.0
|
%
|
Timken Espana, S.L.
|
|
Spain
|
100.0
|
%
|
Timken Europe B.V.
|
|
Netherlands
|
100.0
|
%
|
Timken Global Treasury SARL
|
|
Luxembourg
|
100.0
|
%
|
Timken GmbH
|
|
Germany
|
100.0
|
%
|
Timken ILS Cheltenham Limited
|
|
England
|
100.0
|
%
|
TImken ILS Limited
|
|
England
|
100.0
|
%
|
Timken India Limited
|
|
India
|
75.0
|
%
|
Timken Italia S.r.l.
|
|
Italy
|
100.0
|
%
|
Timken Korea Limited Liability Corporation
|
|
South Korea
|
100.0
|
%
|
Timken Lux Holdings II S.A R.L.
|
|
Luxembourg
|
100.0
|
%
|
Timken Luxembourg Holdings SARL
|
|
Luxembourg
|
100.0
|
%
|
Timken Middle East FZE
|
|
Dubai
|
100.0
|
%
|
Timken Polska SP z.o.o.
|
|
Poland
|
100.0
|
%
|
Timken PWP SRL
|
|
Romania
|
100.0
|
%
|
Timken Romania SA
|
|
Romania
|
98.9
|
%
|
Timken Rulman ve Guc Aktarma Sistemleri Ticaret Limited Sirketi
|
|
Turkey
|
100.0
|
%
|
Timken-Rus Service Company, ooo
|
|
Russia
|
100.0
|
%
|
Timken Singapore PTE Ltd.
|
|
Singapore
|
100.0
|
%
|
Timken South Africa Holdings
|
|
South Africa
|
100.0
|
%
|
Timken South Africa (PTY) Limited
|
|
South Africa
|
100.0
|
%
|
Timken UK Limited
|
|
England
|
100.0
|
%
|
Timken UWC LLC
|
|
Russia
|
51.0
|
%
|
Timken-XEMC (Hunan) Bearings Co., Ltd.
|
|
China
|
80.0
|
%
|
TUBC Limited
|
|
Cyprus
|
51.0
|
%
|
TTC Asia Limited
|
|
Cayman Islands
|
100.0
|
%
|
Yantai Timken Co., Ltd.
|
|
China
|
100.0
|
%
|
(1)
|
Registration Statement (Form S-8 No. 333-43847) pertaining to The Timken Company International Stock Ownership Plan
|
(2)
|
Registration Statement (Form S-8 No. 333-103753) pertaining to The Timken Company Savings and Stock Investment Plan for Torrington Non-Bargaining Associates
|
(3)
|
Registration Statement (Form S-8 No. 333-103754) pertaining to The Timken Company Savings Plan for Torrington Bargaining Associates
|
(4)
|
Registration Statement (Form S-8 No. 333-105333) pertaining to The Timken Share Incentive Plan
|
(5)
|
Registration Statements (Form S-8 No. 333-66921; Form S-8 No. 333-35152; Form S-8 No. 333-108840; Form S-8 No. 333-157720) pertaining to The Hourly Pension Investment Plan
|
(6)
|
Registration Statements (Form S-8 No. 333-66905; Form S-8 No. 333-52866; Form S-8 No. 333-113390; Form S-8 No 333-157721) pertaining to The Voluntary Investment Pension Plan for Hourly Employees of The Timken Company
|
(7)
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Registration Statements (Form S-8 No. 333-62483; Form S-8 No. 333-69129; Form S-8 No. 333-113391; Form S-8 No. 333-179564) pertaining to The Timken Company Savings and Investment Pension Plan
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(8)
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Registration Statements (Form S-8 No. 333-113394; Form S-8 No. 333-141067; Form S-8 No. 333-157718) pertaining to The Timken Company Employee Savings Plan
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(9)
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Registration Statements (Form S-8 No. 333-66907; Form S-8 No. 333-118664; Form S-8 No. 333-141068; Form S-8 No. 333-157717) pertaining to the MPB Corporation Employees’ Savings Plan
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(10)
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Registration Statements (Form S-8 No. 333-62481; Form S-8 No. 333-76062; Form S-8 No. 333-150846; Form S-8 No. 333-157719) pertaining to the Company Savings Plan for the Employees of Timken France
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(11)
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Registration Statements (Form S-8 No. 333-02553; Form S-8 No. 333-35154; Form S-8 No. 333-86452; Form S-8 No. 333-114647; Form S-8 No. 333-150847) pertaining to The Timken Company Long-Term Incentive Plan (as amended and restated as of February 5, 2008)
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(12)
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Registration Statement (Form S-8 No. 333-174093) pertaining to the Timken Company 2011 Long-Term Incentive Plan
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(13)
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Registration Statement (Form S-8 No. 333-204058) pertaining to the Timken Company 2011 Long-Term Incentive Plan
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/s/ Maria A. Crowe
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/s/ J. Ted Mihaila
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Maria A. Crowe
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J. Ted Mihaila
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(Principal Accounting Officer)
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/s/ Phillip D. Fracassa
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/s/ Joseph W. Ralston
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Phillip D. Fracassa
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Joseph W. Ralston
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(Principal Financial Officer)
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/s/ Richard G. Kyle
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/s/ John P. Reilly
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Richard G. Kyle
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John P. Reilly
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(Principal Executive Officer)
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/s/ John A. Luke, Jr.
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/s/ Frank C. Sullivan
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John A. Luke, Jr.
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Frank C. Sullivan
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/s/ Christopher L. Mapes
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/s/ John M. Timken, Jr.
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Christopher L. Mapes
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John M. Timken, Jr.
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/s/ James F. Palmer
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/s/ Ward J. Timken, Jr.
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James F. Palmer
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Ward J. Timken, Jr.
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/s/ Ajita G. Rajendra
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/s/ Jacqueline F. Woods
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Ajita G. Rajendra
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Jacqueline F. Woods
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By: /s/ Richard G. Kyle
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Richard G. Kyle
President and Chief Executive Officer
(Principal Executive Officer)
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By: /s/ Philip D. Fracassa
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Philip D. Fracassa
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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By: /s/ Richard G. Kyle
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Richard G. Kyle
President and Chief Executive Officer
(Principal Executive Officer)
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By: /s/ Philip D. Fracassa
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Philip D. Fracassa
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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