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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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OHIO
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34-0577130
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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4500 Mount Pleasant Street 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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Large accelerated filer
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ý
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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 June 30, 2016
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Common Shares, without par value
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78,284,317 shares
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
(Dollars in millions, except per share data)
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|
|
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|
|
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||||||||
Net sales
|
$
|
673.6
|
|
|
$
|
728.0
|
|
|
$
|
1,357.6
|
|
|
$
|
1,450.5
|
|
Cost of products sold
|
491.3
|
|
|
522.9
|
|
|
994.4
|
|
|
1,042.9
|
|
||||
Gross Profit
|
182.3
|
|
|
205.1
|
|
|
363.2
|
|
|
407.6
|
|
||||
Selling, general and administrative expenses
|
110.2
|
|
|
126.1
|
|
|
228.5
|
|
|
254.6
|
|
||||
Impairment and restructuring charges
|
2.9
|
|
|
1.4
|
|
|
13.4
|
|
|
7.6
|
|
||||
Loss on divestitures
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
||||
Pension settlement charges
|
0.4
|
|
|
4.4
|
|
|
1.6
|
|
|
219.6
|
|
||||
Operating Income (Loss)
|
68.8
|
|
|
72.9
|
|
|
119.7
|
|
|
(74.5
|
)
|
||||
Interest expense
|
(8.7
|
)
|
|
(8.4
|
)
|
|
(17.1
|
)
|
|
(16.4
|
)
|
||||
Interest income
|
0.4
|
|
|
0.7
|
|
|
0.7
|
|
|
1.4
|
|
||||
Continued Dumping & Subsidy Offset Act income, net of related expenses
|
6.1
|
|
|
—
|
|
|
53.8
|
|
|
—
|
|
||||
Other (expense) income, net
|
(1.7
|
)
|
|
1.4
|
|
|
(1.7
|
)
|
|
—
|
|
||||
Income (Loss) Before Income Taxes
|
64.9
|
|
|
66.6
|
|
|
155.4
|
|
|
(89.5
|
)
|
||||
Provision for income taxes
|
20.0
|
|
|
28.9
|
|
|
47.6
|
|
|
7.6
|
|
||||
Net Income (Loss)
|
44.9
|
|
|
37.7
|
|
|
107.8
|
|
|
(97.1
|
)
|
||||
Less: Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
1.0
|
|
|
(0.1
|
)
|
|
1.4
|
|
||||
Net Income (Loss) attributable to The Timken Company
|
$
|
44.9
|
|
|
$
|
36.7
|
|
|
$
|
107.9
|
|
|
$
|
(98.5
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net Income (Loss) per Common Share attributable to The
Timken Company's Common Shareholders
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share
|
$
|
0.57
|
|
|
$
|
0.43
|
|
|
$
|
1.36
|
|
|
$
|
(1.14
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share
|
$
|
0.57
|
|
|
$
|
0.43
|
|
|
$
|
1.35
|
|
|
$
|
(1.14
|
)
|
|
|
|
|
|
|
|
|
||||||||
Dividends per share
|
$
|
0.26
|
|
|
$
|
0.26
|
|
|
$
|
0.52
|
|
|
$
|
0.51
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net Income (Loss)
|
$
|
44.9
|
|
|
$
|
37.7
|
|
|
$
|
107.8
|
|
|
$
|
(97.1
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(18.4
|
)
|
|
6.6
|
|
|
(3.6
|
)
|
|
(21.2
|
)
|
||||
Pension and postretirement liability adjustment
|
8.3
|
|
|
2.4
|
|
|
12.0
|
|
|
107.5
|
|
||||
Change in fair value of derivative financial instruments
|
0.7
|
|
|
(0.3
|
)
|
|
(1.6
|
)
|
|
(0.3
|
)
|
||||
Other comprehensive (loss) income, net of tax
|
(9.4
|
)
|
|
8.7
|
|
|
6.8
|
|
|
86.0
|
|
||||
Comprehensive Income (Loss), net of tax
|
35.5
|
|
|
46.4
|
|
|
114.6
|
|
|
(11.1
|
)
|
||||
Less: comprehensive income attributable to noncontrolling interest
|
0.2
|
|
|
0.5
|
|
|
1.2
|
|
|
0.9
|
|
||||
Comprehensive Income (Loss) attributable to The Timken Company
|
$
|
35.3
|
|
|
$
|
45.9
|
|
|
$
|
113.4
|
|
|
$
|
(12.0
|
)
|
|
(Unaudited)
|
|
|
||||
|
June 30,
2016 |
|
December 31,
2015 |
||||
(Dollars in millions)
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
156.0
|
|
|
$
|
129.6
|
|
Restricted cash
|
0.2
|
|
|
0.2
|
|
||
Accounts receivable, less allowances (2016 – $18.7 million; 2015 – $16.9 million)
|
452.3
|
|
|
454.6
|
|
||
Inventories, net
|
555.4
|
|
|
543.2
|
|
||
Deferred charges and prepaid expenses
|
20.7
|
|
|
22.7
|
|
||
Other current assets
|
52.5
|
|
|
56.1
|
|
||
Total Current Assets
|
1,237.1
|
|
|
1,206.4
|
|
||
|
|
|
|
||||
Property, Plant and Equipment, net
|
772.5
|
|
|
777.8
|
|
||
|
|
|
|
||||
Other Assets
|
|
|
|
||||
Goodwill
|
328.7
|
|
|
327.3
|
|
||
Non-current pension assets
|
85.6
|
|
|
86.3
|
|
||
Other intangible assets
|
258.0
|
|
|
271.3
|
|
||
Deferred income taxes
|
62.0
|
|
|
65.9
|
|
||
Other non-current assets
|
50.5
|
|
|
49.1
|
|
||
Total Other Assets
|
784.8
|
|
|
799.9
|
|
||
Total Assets
|
$
|
2,794.4
|
|
|
$
|
2,784.1
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Short-term debt
|
$
|
13.4
|
|
|
$
|
62.0
|
|
Current portion of long-term debt
|
15.0
|
|
|
15.1
|
|
||
Accounts payable, trade
|
172.9
|
|
|
159.7
|
|
||
Salaries, wages and benefits
|
92.3
|
|
|
102.3
|
|
||
Income taxes payable
|
34.4
|
|
|
13.1
|
|
||
Other current liabilities
|
147.0
|
|
|
153.1
|
|
||
Total Current Liabilities
|
475.0
|
|
|
505.3
|
|
||
|
|
|
|
||||
Non-Current Liabilities
|
|
|
|
||||
Long-term debt
|
604.2
|
|
|
579.4
|
|
||
Accrued pension cost
|
147.6
|
|
|
146.9
|
|
||
Accrued postretirement benefits cost
|
132.6
|
|
|
136.1
|
|
||
Deferred income taxes
|
3.5
|
|
|
3.6
|
|
||
Other non-current liabilities
|
72.3
|
|
|
68.2
|
|
||
Total Non-Current Liabilities
|
960.2
|
|
|
934.2
|
|
||
|
|
|
|
||||
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) (2016 – 98,375,135 shares; 2015 – 98,375,135 shares)
|
|
|
|
||||
Stated capital
|
53.1
|
|
|
53.1
|
|
||
Other paid-in capital
|
901.8
|
|
|
905.1
|
|
||
Earnings invested in the business
|
1,524.4
|
|
|
1,457.6
|
|
||
Accumulated other comprehensive loss
|
(281.5
|
)
|
|
(287.0
|
)
|
||
Treasury shares at cost (2016 – 20,090,818 shares; 2015 – 18,112,047 shares)
|
(864.4
|
)
|
|
(804.3
|
)
|
||
Total Shareholders’ Equity
|
1,333.4
|
|
|
1,324.5
|
|
||
Noncontrolling Interest
|
25.8
|
|
|
20.1
|
|
||
Total Equity
|
1,359.2
|
|
|
1,344.6
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
2,794.4
|
|
|
$
|
2,784.1
|
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
(Dollars in millions)
|
|
|
|
||||
CASH PROVIDED (USED)
|
|
|
|
||||
Operating Activities
|
|
|
|
||||
Net income (loss) attributable to The Timken Company
|
$
|
107.9
|
|
|
$
|
(98.5
|
)
|
Net (loss) income attributable to noncontrolling interest
|
(0.1
|
)
|
|
1.4
|
|
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
65.0
|
|
|
65.6
|
|
||
Impairment charges
|
2.6
|
|
|
3.3
|
|
||
Loss on sale of assets
|
0.8
|
|
|
1.7
|
|
||
Continued Dumping and Subsidy Offset Act receivable
|
(6.2
|
)
|
|
—
|
|
||
Deferred income tax provision
|
(0.2
|
)
|
|
(88.4
|
)
|
||
Stock-based compensation expense
|
6.7
|
|
|
9.1
|
|
||
Excess tax benefits related to stock-based compensation
|
—
|
|
|
(1.5
|
)
|
||
Pension and other postretirement expense
|
18.9
|
|
|
238.0
|
|
||
Pension contributions and other postretirement benefit payments
|
(14.3
|
)
|
|
(16.9
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
4.7
|
|
|
(22.7
|
)
|
||
Inventories
|
(8.2
|
)
|
|
(2.8
|
)
|
||
Accounts payable, trade
|
12.5
|
|
|
28.9
|
|
||
Other accrued expenses
|
(7.5
|
)
|
|
(54.7
|
)
|
||
Income taxes
|
26.4
|
|
|
43.9
|
|
||
Other, net
|
(6.4
|
)
|
|
(0.9
|
)
|
||
Net Cash Provided by Operating Activities
|
202.6
|
|
|
105.5
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(50.4
|
)
|
|
(43.5
|
)
|
||
Acquisitions, net of cash received
|
(0.7
|
)
|
|
—
|
|
||
Proceeds from disposal of property, plant and equipment
|
0.1
|
|
|
5.6
|
|
||
Divestitures
|
—
|
|
|
2.8
|
|
||
Investments in short-term marketable securities, net
|
(0.1
|
)
|
|
2.6
|
|
||
Other
|
0.1
|
|
|
(0.8
|
)
|
||
Net Cash Used in Investing Activities
|
(51.0
|
)
|
|
(33.3
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
||||
Cash dividends paid to shareholders
|
(41.1
|
)
|
|
(44.0
|
)
|
||
Purchase of treasury shares
|
(68.2
|
)
|
|
(177.2
|
)
|
||
Proceeds from exercise of stock options
|
0.4
|
|
|
4.0
|
|
||
Excess tax benefits related to stock-based compensation
|
—
|
|
|
1.5
|
|
||
Proceeds from long-term debt
|
133.1
|
|
|
35.7
|
|
||
Deferred financing costs
|
—
|
|
|
(1.7
|
)
|
||
Accounts receivable facility borrowings
|
30.0
|
|
|
82.0
|
|
||
Accounts receivable facility payments
|
(18.0
|
)
|
|
—
|
|
||
Payments on long-term debt
|
(170.0
|
)
|
|
(1.1
|
)
|
||
Short-term debt activity, net
|
0.5
|
|
|
(7.2
|
)
|
||
Increase in restricted cash
|
—
|
|
|
(4.0
|
)
|
||
Other
|
4.8
|
|
|
3.7
|
|
||
Net Cash Used in Financing Activities
|
(128.5
|
)
|
|
(108.3
|
)
|
||
Effect of exchange rate changes on cash
|
3.3
|
|
|
(5.9
|
)
|
||
Increase (Decrease) in Cash and Cash Equivalents
|
26.4
|
|
|
(42.0
|
)
|
||
Cash and cash equivalents at beginning of year
|
129.6
|
|
|
278.8
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
156.0
|
|
|
$
|
236.8
|
|
|
As Originally Reported
|
New Presentation
|
Effect of Change
|
||||||
Assets:
|
|
|
|
||||||
Other non-current assets
|
$
|
50.3
|
|
$
|
49.1
|
|
$
|
1.2
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
||||||
Long-term debt
|
$
|
580.6
|
|
$
|
579.4
|
|
$
|
1.2
|
|
|
Initial Purchase Price Allocation
|
Adjustment
|
Final
Purchase Price Allocation
|
||||||
Assets:
|
|
|
|
||||||
Accounts receivable, net
|
$
|
13.3
|
|
|
$
|
13.3
|
|
||
Inventories, net
|
48.5
|
|
|
48.5
|
|
||||
Other current assets
|
1.1
|
|
|
1.1
|
|
||||
Property, plant and equipment, net
|
37.9
|
|
|
37.9
|
|
||||
Goodwill
|
70.8
|
|
0.7
|
|
71.5
|
|
|||
Other intangible assets
|
63.9
|
|
|
63.9
|
|
||||
Total assets acquired
|
$
|
235.5
|
|
$
|
0.7
|
|
$
|
236.2
|
|
Liabilities:
|
|
|
|
||||||
Accounts payable, trade
|
$
|
10.2
|
|
|
$
|
10.2
|
|
||
Salaries, wages and benefits
|
1.1
|
|
|
1.1
|
|
||||
Other current liabilities
|
1.3
|
|
|
1.3
|
|
||||
Accrued pension cost
|
2.3
|
|
|
2.3
|
|
||||
Accrued postretirement benefits cost
|
1.1
|
|
|
1.1
|
|
||||
Other non-current liabilities
|
5.9
|
|
|
5.9
|
|
||||
Total liabilities assumed
|
$
|
21.9
|
|
$
|
—
|
|
$
|
21.9
|
|
Net assets acquired
|
$
|
213.6
|
|
$
|
0.7
|
|
$
|
214.3
|
|
|
Final Purchase
Price Allocation |
|||
|
|
Weighted -
Average Life |
||
Trade name
|
$
|
1.7
|
|
11 years
|
Technology
|
17.1
|
|
20 years
|
|
All customer relationships
|
43.9
|
|
20 years
|
|
Capitalized software
|
1.2
|
|
3 years
|
|
Total intangible assets
|
$
|
63.9
|
|
|
|
June 30,
2016 |
December 31,
2015 |
||||
Manufacturing supplies
|
$
|
29.6
|
|
$
|
24.7
|
|
Raw materials
|
55.6
|
|
58.8
|
|
||
Work in process
|
186.3
|
|
181.9
|
|
||
Finished products
|
306.9
|
|
296.2
|
|
||
Subtotal
|
578.4
|
|
561.6
|
|
||
Allowance for obsolete and surplus inventory
|
(23.0
|
)
|
(18.4
|
)
|
||
Total Inventories, net
|
$
|
555.4
|
|
$
|
543.2
|
|
|
June 30,
2016 |
December 31,
2015 |
||||
Land and buildings
|
$
|
426.1
|
|
$
|
430.3
|
|
Machinery and equipment
|
1,766.1
|
|
1,741.4
|
|
||
Subtotal
|
2,192.2
|
|
2,171.7
|
|
||
Accumulated depreciation
|
(1,419.7
|
)
|
(1,393.9
|
)
|
||
Property, plant and equipment, net
|
$
|
772.5
|
|
$
|
777.8
|
|
|
Mobile
Industries
|
Process
Industries
|
Total
|
||||||
Beginning balance
|
$
|
97.0
|
|
$
|
230.3
|
|
$
|
327.3
|
|
Acquisitions
|
0.1
|
|
0.6
|
|
0.7
|
|
|||
Foreign currency translation adjustments
|
(0.2
|
)
|
0.9
|
|
0.7
|
|
|||
Ending balance
|
$
|
96.9
|
|
$
|
231.8
|
|
$
|
328.7
|
|
|
As of June 30, 2016
|
As of December 31, 2015
|
||||||||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||||||
Intangible assets
subject to amortization:
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
198.4
|
|
$
|
76.9
|
|
$
|
121.5
|
|
$
|
198.9
|
|
$
|
70.0
|
|
$
|
128.9
|
|
Know-how
|
31.8
|
|
7.5
|
|
24.3
|
|
31.9
|
|
6.7
|
|
25.2
|
|
||||||
Industrial license
agreements
|
0.1
|
|
0.1
|
|
—
|
|
0.1
|
|
0.1
|
|
—
|
|
||||||
Land-use rights
|
8.1
|
|
4.7
|
|
3.4
|
|
8.3
|
|
4.7
|
|
3.6
|
|
||||||
Patents
|
2.1
|
|
2.1
|
|
—
|
|
2.1
|
|
2.1
|
|
—
|
|
||||||
Technology use
|
53.7
|
|
15.5
|
|
38.2
|
|
53.6
|
|
14.0
|
|
39.6
|
|
||||||
Trademarks
|
6.3
|
|
3.5
|
|
2.8
|
|
6.5
|
|
3.3
|
|
3.2
|
|
||||||
Non-compete
agreements
|
0.7
|
|
0.6
|
|
0.1
|
|
2.7
|
|
2.5
|
|
0.2
|
|
||||||
Software
|
248.9
|
|
205.7
|
|
43.2
|
|
243.8
|
|
197.6
|
|
46.2
|
|
||||||
|
$
|
550.1
|
|
$
|
316.6
|
|
$
|
233.5
|
|
$
|
547.9
|
|
$
|
301.0
|
|
$
|
246.9
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
||||||||||||
Tradenames
|
$
|
15.8
|
|
|
|
$
|
15.8
|
|
$
|
15.7
|
|
|
|
$
|
15.7
|
|
||
FAA air agency
certificates
|
8.7
|
|
|
|
8.7
|
|
8.7
|
|
|
|
8.7
|
|
||||||
|
$
|
24.5
|
|
|
|
$
|
24.5
|
|
$
|
24.4
|
|
|
|
$
|
24.4
|
|
||
Total intangible assets
|
$
|
574.6
|
|
$
|
316.6
|
|
$
|
258.0
|
|
$
|
572.3
|
|
$
|
301.0
|
|
$
|
271.3
|
|
|
June 30,
2016 |
December 31,
2015 |
||||
Variable-rate Accounts Receivable Facility with interest rate of 1.05% at
December 31, 2015 |
$
|
—
|
|
$
|
49.0
|
|
Borrowings under variable-rate lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 0.29% to 0.50% at June 30, 2016 and 0.31% to 0.44% at December 31, 2015, respectively.
|
13.4
|
|
13.0
|
|
||
Short-term debt
|
$
|
13.4
|
|
$
|
62.0
|
|
|
June 30,
2016 |
December 31,
2015 |
||||
Fixed-rate Medium-Term Notes, Series A, mature at various dates through
May 2028, with interest rates ranging from 6.74% to 7.76% |
$
|
174.5
|
|
$
|
174.4
|
|
Fixed-rate Senior Unsecured Notes, maturing on September 1, 2024, with an
interest rate of 3.875% |
345.3
|
|
344.8
|
|
||
Variable-rate Senior Credit Facility with an interest rate of 1.57% at June 30, 2016 and 1.45% at December 31, 2015, respectively.
|
38.4
|
|
75.2
|
|
||
Variable-rate Accounts Receivable Facility with interest rate of 1.29% at June 30, 2016
|
61.0
|
|
—
|
|
||
Other
|
—
|
|
0.1
|
|
||
|
$
|
619.2
|
|
$
|
594.5
|
|
Less current maturities
|
15.0
|
|
15.1
|
|
||
Long-term debt
|
$
|
604.2
|
|
$
|
579.4
|
|
|
|
The Timken Company Shareholders
|
|
||||||||||||||||||
|
Total
|
Stated
Capital
|
Other
Paid-In
Capital
|
Earnings
Invested
in the
Business
|
Accumulated
Other
Comprehensive
(Loss)
|
Treasury
Stock
|
Non-
controlling
Interest
|
||||||||||||||
Balance at December 31, 2015
|
$
|
1,344.6
|
|
$
|
53.1
|
|
$
|
905.1
|
|
$
|
1,457.6
|
|
$
|
(287.0
|
)
|
$
|
(804.3
|
)
|
$
|
20.1
|
|
Net income (loss)
|
107.8
|
|
|
|
107.9
|
|
|
|
(0.1
|
)
|
|||||||||||
Foreign currency translation adjustment
|
(3.6
|
)
|
|
|
|
(4.9
|
)
|
|
1.3
|
|
|||||||||||
Pension and postretirement liability
adjustment (net of the income tax benefit of $3.4 million) |
12.0
|
|
|
|
|
12.0
|
|
|
|
||||||||||||
Change in fair value of derivative
financial instruments, net of reclassifications |
(1.6
|
)
|
|
|
|
(1.6
|
)
|
|
|
||||||||||||
Investment in joint venture by
noncontrolling interest party
|
4.8
|
|
|
|
|
|
|
4.8
|
|
||||||||||||
Dividends declared to noncontrolling
interest |
(0.3
|
)
|
|
|
|
|
|
(0.3
|
)
|
||||||||||||
Dividends – $0.52 per share
|
(41.1
|
)
|
|
|
(41.1
|
)
|
|
|
|
||||||||||||
Excess tax shortfall from stock
compensation |
(0.8
|
)
|
|
(0.8
|
)
|
|
|
|
|
||||||||||||
Stock-based compensation expense
|
6.7
|
|
|
6.7
|
|
|
|
|
|
||||||||||||
Stock purchased at fair market value
|
(68.2
|
)
|
|
|
|
|
(68.2
|
)
|
|
||||||||||||
Stock option exercise activity
|
0.4
|
|
|
(0.6
|
)
|
|
|
1.0
|
|
|
|||||||||||
Restricted shares (issued) surrendered
|
—
|
|
|
(8.6
|
)
|
|
|
8.6
|
|
|
|||||||||||
Shares surrendered for taxes
|
(1.5
|
)
|
|
|
|
|
(1.5
|
)
|
|
||||||||||||
Balance at June 30, 2016
|
$
|
1,359.2
|
|
$
|
53.1
|
|
$
|
901.8
|
|
$
|
1,524.4
|
|
$
|
(281.5
|
)
|
$
|
(864.4
|
)
|
$
|
25.8
|
|
|
Foreign currency translation adjustments
|
Pension and postretirement liability adjustments
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||
Balance at March 31, 2016
|
$
|
(58.5
|
)
|
$
|
(211.4
|
)
|
$
|
(2.0
|
)
|
$
|
(271.9
|
)
|
Other comprehensive (loss) income before
reclassifications and income tax
|
(18.4
|
)
|
4.7
|
|
0.9
|
|
(12.8
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive income, before income tax
|
—
|
|
5.5
|
|
0.2
|
|
5.7
|
|
||||
Income tax (benefit) expense
|
—
|
|
(1.9
|
)
|
(0.4
|
)
|
(2.3
|
)
|
||||
Net current period other comprehensive
(loss) income, net of income taxes
|
(18.4
|
)
|
8.3
|
|
0.7
|
|
(9.4
|
)
|
||||
Noncontrolling interest
|
(0.2
|
)
|
—
|
|
—
|
|
(0.2
|
)
|
||||
Net current period comprehensive (loss) income, net
of income taxes and noncontrolling interest
|
(18.6
|
)
|
8.3
|
|
0.7
|
|
(9.6
|
)
|
||||
Balance at June 30, 2016
|
$
|
(77.1
|
)
|
$
|
(203.1
|
)
|
$
|
(1.3
|
)
|
$
|
(281.5
|
)
|
|
Foreign currency translation adjustments
|
Pension and postretirement liability adjustments
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||
Balance at December 31, 2015
|
$
|
(72.2
|
)
|
$
|
(215.1
|
)
|
$
|
0.3
|
|
$
|
(287.0
|
)
|
Other comprehensive (loss) income before
reclassifications and income tax
|
(3.6
|
)
|
4.8
|
|
(2.0
|
)
|
(0.8
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive income, before income tax
|
—
|
|
10.6
|
|
(0.6
|
)
|
10.0
|
|
||||
Income tax (benefit) expense
|
—
|
|
(3.4
|
)
|
1.0
|
|
(2.4
|
)
|
||||
Net current period other comprehensive
income (loss), net of income taxes
|
(3.6
|
)
|
12.0
|
|
(1.6
|
)
|
6.8
|
|
||||
Noncontrolling interest
|
(1.3
|
)
|
—
|
|
—
|
|
(1.3
|
)
|
||||
Net current period comprehensive income (loss), net
of income taxes and noncontrolling interest
|
(4.9
|
)
|
12.0
|
|
(1.6
|
)
|
5.5
|
|
||||
Balance at June 30, 2016
|
$
|
(77.1
|
)
|
$
|
(203.1
|
)
|
$
|
(1.3
|
)
|
$
|
(281.5
|
)
|
|
Foreign currency translation adjustments
|
Pension and postretirement liability adjustments
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||
Balance at March 31, 2015
|
$
|
(28.5
|
)
|
$
|
(375.9
|
)
|
$
|
(0.8
|
)
|
$
|
(405.2
|
)
|
Other comprehensive (loss) income before
reclassifications and income tax
|
6.6
|
|
(6.4
|
)
|
(0.6
|
)
|
(0.4
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive income, before income tax
|
—
|
|
12.4
|
|
0.1
|
|
12.5
|
|
||||
Income tax (benefit) expense
|
—
|
|
(3.6
|
)
|
0.2
|
|
(3.4
|
)
|
||||
Net current period other comprehensive
income (loss), net of income taxes
|
6.6
|
|
2.4
|
|
(0.3
|
)
|
8.7
|
|
||||
Non-controlling interest
|
0.5
|
|
—
|
|
—
|
|
0.5
|
|
||||
Net current period comprehensive income (loss), net
of income taxes and noncontrolling interest
|
7.1
|
|
2.4
|
|
(0.3
|
)
|
9.2
|
|
||||
Balance at June 30, 2015
|
$
|
(21.4
|
)
|
$
|
(373.5
|
)
|
$
|
(1.1
|
)
|
$
|
(396.0
|
)
|
|
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 and income tax
|
(21.2
|
)
|
(66.5
|
)
|
—
|
|
(87.7
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive income, before income tax
|
—
|
|
237.9
|
|
(0.5
|
)
|
237.4
|
|
||||
Income tax (benefit) expense
|
—
|
|
(63.9
|
)
|
0.2
|
|
(63.7
|
)
|
||||
Net current period other comprehensive
income (loss), net of income taxes
|
(21.2
|
)
|
107.5
|
|
(0.3
|
)
|
86.0
|
|
||||
Non-controlling interest
|
0.5
|
|
—
|
|
—
|
|
0.5
|
|
||||
Net current period comprehensive income (loss), net
of income taxes and noncontrolling interest
|
(20.7
|
)
|
107.5
|
|
(0.3
|
)
|
86.5
|
|
||||
Balance at June 30, 2015
|
$
|
(21.4
|
)
|
$
|
(373.5
|
)
|
$
|
(1.1
|
)
|
$
|
(396.0
|
)
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||
Numerator:
|
|
|
|
|
||||||||
Net income (loss) attributable to The Timken Company
|
$
|
44.9
|
|
$
|
36.7
|
|
$
|
107.9
|
|
$
|
(98.5
|
)
|
Less: undistributed earnings allocated to nonvested stock
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Net income (loss) available to common shareholders for basic earnings per share and diluted earnings per share
|
$
|
44.9
|
|
$
|
36.7
|
|
$
|
107.9
|
|
$
|
(98.5
|
)
|
Denominator:
|
|
|
|
|
||||||||
Weighted average number of shares outstanding, basic
|
78,671,509
|
|
85,326,526
|
|
79,225,703
|
|
86,514,517
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
||||||||
Stock options and awards based on the treasury stock method
|
641,265
|
|
830,249
|
|
654,519
|
|
—
|
|
||||
Weighted average number of shares outstanding, assuming dilution
of stock options and awards
|
79,312,774
|
|
86,156,775
|
|
79,880,222
|
|
86,514,517
|
|
||||
Basic earnings (loss) per share
|
$
|
0.57
|
|
$
|
0.43
|
|
$
|
1.36
|
|
$
|
(1.14
|
)
|
Diluted earnings (loss) per share
|
$
|
0.57
|
|
$
|
0.43
|
|
$
|
1.35
|
|
$
|
(1.14
|
)
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||
Net sales:
|
|
|
|
|
||||||||
Mobile Industries
|
$
|
367.8
|
|
$
|
388.6
|
|
$
|
751.0
|
|
$
|
781.6
|
|
Process Industries
|
305.8
|
|
339.4
|
|
606.6
|
|
668.9
|
|
||||
|
$
|
673.6
|
|
$
|
728.0
|
|
$
|
1,357.6
|
|
$
|
1,450.5
|
|
|
|
|
|
|
||||||||
Segment EBIT:
|
|
|
|
|
||||||||
Mobile Industries
|
$
|
35.3
|
|
$
|
36.0
|
|
$
|
65.5
|
|
$
|
71.4
|
|
Process Industries
|
46.7
|
|
56.7
|
|
79.3
|
|
101.9
|
|
||||
Total EBIT, for reportable segments
|
$
|
82.0
|
|
$
|
92.7
|
|
$
|
144.8
|
|
$
|
173.3
|
|
Unallocated corporate expenses
|
(14.5
|
)
|
(14.0
|
)
|
(25.2
|
)
|
(28.2
|
)
|
||||
Unallocated pension settlement charges
|
(0.4
|
)
|
(4.4
|
)
|
(1.6
|
)
|
(219.6
|
)
|
||||
Continued Dumping & Subsidy Offset Act income, net of
expenses |
6.1
|
|
—
|
|
53.8
|
|
—
|
|
||||
Interest expense
|
(8.7
|
)
|
(8.4
|
)
|
(17.1
|
)
|
(16.4
|
)
|
||||
Interest income
|
0.4
|
|
0.7
|
|
0.7
|
|
1.4
|
|
||||
Income (loss) before income taxes
|
$
|
64.9
|
|
$
|
66.6
|
|
$
|
155.4
|
|
$
|
(89.5
|
)
|
|
Mobile Industries
|
Process Industries
|
Total
|
||||||
Severance and related benefit costs
|
$
|
0.7
|
|
$
|
0.9
|
|
$
|
1.6
|
|
Exit costs
|
1.1
|
|
0.2
|
|
1.3
|
|
|||
Total
|
$
|
1.8
|
|
$
|
1.1
|
|
$
|
2.9
|
|
|
Mobile Industries
|
Process Industries
|
Total
|
||||||
Impairment charges
|
$
|
—
|
|
$
|
0.6
|
|
$
|
0.6
|
|
Severance and related benefit costs
|
0.6
|
|
—
|
|
0.6
|
|
|||
Exit costs
|
0.2
|
|
—
|
|
0.2
|
|
|||
Total
|
$
|
0.8
|
|
$
|
0.6
|
|
$
|
1.4
|
|
|
Mobile Industries
|
Process Industries
|
Total
|
||||||
Impairment charges
|
$
|
2.6
|
|
$
|
—
|
|
$
|
2.6
|
|
Severance and related benefit costs
|
4.8
|
|
4.5
|
|
9.3
|
|
|||
Exit costs
|
1.3
|
|
0.2
|
|
1.5
|
|
|||
Total
|
$
|
8.7
|
|
$
|
4.7
|
|
$
|
13.4
|
|
|
Mobile Industries
|
Process Industries
|
Total
|
||||||
Impairment charges
|
$
|
0.1
|
|
$
|
3.2
|
|
$
|
3.3
|
|
Severance and related benefit costs
|
0.7
|
|
—
|
|
0.7
|
|
|||
Exit costs
|
0.6
|
|
3.0
|
|
3.6
|
|
|||
Total
|
$
|
1.4
|
|
$
|
6.2
|
|
$
|
7.6
|
|
|
June 30,
2016 |
December 31,
2015 |
||||
Beginning balance, January 1
|
$
|
11.3
|
|
$
|
9.5
|
|
Expense
|
10.8
|
|
11.4
|
|
||
Payments
|
(13.6
|
)
|
(9.6
|
)
|
||
Ending balance
|
$
|
8.5
|
|
$
|
11.3
|
|
|
U.S. Plans
|
International Plans
|
Total
|
|||||||||||||||
|
Three Months Ended
June 30, |
Three Months Ended
June 30, |
Three Months Ended
June 30, |
|||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
3.3
|
|
$
|
3.8
|
|
$
|
0.3
|
|
$
|
0.7
|
|
$
|
3.6
|
|
$
|
4.5
|
|
Interest cost
|
6.6
|
|
11.3
|
|
2.8
|
|
3.1
|
|
9.4
|
|
14.4
|
|
||||||
Expected return on plan assets
|
(7.4
|
)
|
(15.6
|
)
|
(2.7
|
)
|
(4.1
|
)
|
(10.1
|
)
|
(19.7
|
)
|
||||||
Amortization of prior service cost
|
0.4
|
|
0.5
|
|
—
|
|
—
|
|
0.4
|
|
0.5
|
|
||||||
Amortization of net actuarial loss
|
3.6
|
|
6.7
|
|
0.8
|
|
1.3
|
|
4.4
|
|
8.0
|
|
||||||
Pension settlements and curtailments
|
—
|
|
2.8
|
|
0.4
|
|
1.1
|
|
0.4
|
|
3.9
|
|
||||||
Net periodic benefit cost
|
$
|
6.5
|
|
$
|
9.5
|
|
$
|
1.6
|
|
$
|
2.1
|
|
$
|
8.1
|
|
$
|
11.6
|
|
|
U.S. Plans
|
International Plans
|
Total
|
|||||||||||||||
|
Six Months Ended
June 30, |
Six Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
6.6
|
|
$
|
7.6
|
|
$
|
0.7
|
|
$
|
1.4
|
|
$
|
7.3
|
|
$
|
9.0
|
|
Interest cost
|
13.3
|
|
24.2
|
|
5.6
|
|
6.2
|
|
18.9
|
|
30.4
|
|
||||||
Expected return on plan assets
|
(14.9
|
)
|
(33.4
|
)
|
(5.4
|
)
|
(8.4
|
)
|
(20.3
|
)
|
(41.8
|
)
|
||||||
Amortization of prior service cost
|
0.8
|
|
1.4
|
|
—
|
|
—
|
|
0.8
|
|
1.4
|
|
||||||
Amortization of net actuarial loss
|
7.3
|
|
16.3
|
|
1.6
|
|
2.7
|
|
8.9
|
|
19.0
|
|
||||||
Pension settlements and curtailments
|
—
|
|
216.4
|
|
0.4
|
|
1.1
|
|
0.4
|
|
217.5
|
|
||||||
Net periodic benefit cost
|
$
|
13.1
|
|
$
|
232.5
|
|
$
|
2.9
|
|
$
|
3.0
|
|
$
|
16.0
|
|
$
|
235.5
|
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||
Components of net periodic benefit cost:
|
|
|
|
|
||||||||
Service cost
|
$
|
0.1
|
|
$
|
0.1
|
|
$
|
0.2
|
|
$
|
0.2
|
|
Interest cost
|
2.8
|
|
2.7
|
|
5.5
|
|
5.4
|
|
||||
Expected return on plan assets
|
(1.7
|
)
|
(1.7
|
)
|
(3.3
|
)
|
(3.5
|
)
|
||||
Amortization of prior service cost
|
0.3
|
|
0.2
|
|
0.5
|
|
0.4
|
|
||||
Net periodic benefit cost
|
$
|
1.5
|
|
$
|
1.3
|
|
$
|
2.9
|
|
$
|
2.5
|
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||
Provision for income taxes
|
$
|
20.0
|
|
$
|
28.9
|
|
$
|
47.6
|
|
$
|
7.6
|
|
Effective tax rate
|
30.8
|
%
|
43.4
|
%
|
30.6
|
%
|
(8.5
|
)%
|
|
June 30, 2016
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
120.8
|
|
$
|
120.8
|
|
$
|
—
|
|
$
|
—
|
|
Cash and cash equivalents measured at net asset value
|
35.1
|
|
|
|
|
|
|
|
||||
Restricted cash
|
0.2
|
|
0.2
|
|
—
|
|
—
|
|
||||
Short-term investments
|
8.7
|
|
—
|
|
8.7
|
|
—
|
|
||||
Short-term investments measured at net asset value
|
0.5
|
|
|
|
|
|
|
|
||||
Foreign currency hedges
|
4.3
|
|
—
|
|
4.3
|
|
—
|
|
||||
Total Assets
|
$
|
169.6
|
|
$
|
121.0
|
|
$
|
13.0
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Foreign currency hedges
|
$
|
3.4
|
|
$
|
—
|
|
$
|
3.4
|
|
$
|
—
|
|
Total Liabilities
|
$
|
3.4
|
|
$
|
—
|
|
$
|
3.4
|
|
$
|
—
|
|
|
December 31, 2015
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
110.2
|
|
$
|
110.2
|
|
$
|
—
|
|
$
|
—
|
|
Cash and cash equivalents measured net asset value
|
19.4
|
|
|
|
|
|
|
|
||||
Restricted cash
|
0.2
|
|
0.2
|
|
—
|
|
—
|
|
||||
Short-term investments
|
8.9
|
|
—
|
|
8.9
|
|
—
|
|
||||
Short-term investments measured at net asset value
|
0.8
|
|
|
|
|
|
|
|
||||
Foreign currency hedges
|
8.2
|
|
—
|
|
8.2
|
|
—
|
|
||||
Total Assets
|
$
|
147.7
|
|
$
|
110.4
|
|
$
|
17.1
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Foreign currency hedges
|
$
|
0.4
|
|
$
|
—
|
|
$
|
0.4
|
|
$
|
—
|
|
Total Liabilities
|
$
|
0.4
|
|
$
|
—
|
|
$
|
0.4
|
|
$
|
—
|
|
|
Carrying Value
|
Fair Value Adjustment
|
Fair Value
|
||||||
Long-lived assets held for sale:
|
|
|
|
||||||
Land
|
$
|
0.2
|
|
$
|
(0.2
|
)
|
$
|
—
|
|
Total long-lived assets held for sale
|
$
|
0.2
|
|
$
|
(0.2
|
)
|
$
|
—
|
|
|
|
|
|
||||||
Long-lived assets held and used:
|
|
|
|
||||||
Altavista bearing plant
|
$
|
5.7
|
|
$
|
(2.4
|
)
|
$
|
3.3
|
|
Total long-lived assets held and used
|
$
|
5.7
|
|
$
|
(2.4
|
)
|
$
|
3.3
|
|
|
Carrying Value
|
Fair Value Adjustment
|
Fair Value
|
||||||
Long-lived assets held for sale:
|
|
|
|
||||||
Repair business
|
$
|
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
|
|
|
|
Asset Derivatives
|
Liability Derivatives
|
||||||||||
Derivatives designated as hedging instruments
|
Balance Sheet Location
|
Fair Value at 6/30/16
|
Fair Value at 12/31/15
|
Fair Value at 6/30/16
|
Fair Value at 12/31/15
|
||||||||
Foreign currency forward contracts
|
Other non-current assets/liabilities
|
$
|
0.5
|
|
$
|
2.2
|
|
$
|
1.2
|
|
$
|
0.2
|
|
Total derivatives designated as hedging instruments
|
0.5
|
|
2.2
|
|
1.2
|
|
0.2
|
|
|||||
|
|
|
|
|
|
||||||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|||||||||
Foreign currency forward contracts
|
Other non-current assets/liabilities
|
3.8
|
|
6.0
|
|
2.2
|
|
0.2
|
|
||||
|
|
|
|
|
|
||||||||
Total Derivatives
|
|
$
|
4.3
|
|
$
|
8.2
|
|
$
|
3.4
|
|
$
|
0.4
|
|
|
Amount of gain or (loss) recognized in
Other Comprehensive Income ("OCI") on derivative instruments
|
|||||||||||
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
Derivatives in cash flow hedging relationships
|
2016
|
2015
|
2016
|
2015
|
||||||||
Foreign currency forward contracts
|
$
|
0.9
|
|
$
|
(0.6
|
)
|
$
|
(2.0
|
)
|
$
|
—
|
|
Total
|
$
|
0.9
|
|
$
|
(0.6
|
)
|
$
|
(2.0
|
)
|
$
|
—
|
|
|
Amount of gain or (loss) reclassified from Accumulated Other Comprehensive Income ("AOCI") into income (effective portion)
|
|||||||||||
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
Derivatives in cash flow hedging relationships
|
2016
|
2015
|
2016
|
2015
|
||||||||
Foreign currency forward contracts
|
$
|
(0.1
|
)
|
$
|
—
|
|
$
|
0.8
|
|
$
|
0.6
|
|
Interest rate swaps
|
(0.1
|
)
|
(0.1
|
)
|
(0.2
|
)
|
(0.1
|
)
|
||||
Total
|
$
|
(0.2
|
)
|
$
|
(0.1
|
)
|
$
|
0.6
|
|
$
|
0.5
|
|
|
|
Amount of gain or (loss) recognized in
income on derivative instruments
|
|||||||||||
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
Derivatives not designated as hedging instruments
|
Location of gain or (loss) recognized in income on derivative
|
2016
|
2015
|
2016
|
2015
|
||||||||
Foreign currency forward contracts
|
Other (expense) income, net
|
$
|
0.3
|
|
$
|
(6.7
|
)
|
$
|
(4.3
|
)
|
$
|
6.6
|
|
Total
|
|
$
|
0.3
|
|
$
|
(6.7
|
)
|
$
|
(4.3
|
)
|
$
|
6.6
|
|
•
|
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 July 8, 2016, the Company acquired Lovejoy, a manufacturer of premium industrial couplings and universal joints, for $63.5 million in cash and assumed debt of $2.5 million. Based in Downers Grove, Illinois, with additional locations in the U.S., Canada and Germany, Lovejoy had sales of approximately $56 million for the twelve months ended March 31, 2016.
|
•
|
Continued to advance the Company's manufacturing footprint initiatives with the closure of a bearing facility in the United Kingdom.
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
673.6
|
|
$
|
728.0
|
|
$
|
(54.4
|
)
|
(7.5
|
)%
|
Net income
|
44.9
|
|
37.7
|
|
7.2
|
|
19.1
|
%
|
|||
Net income attributable to noncontrolling interest
|
—
|
|
1.0
|
|
(1.0
|
)
|
(100.0
|
)%
|
|||
Net income attributable to The Timken Company
|
$
|
44.9
|
|
$
|
36.7
|
|
$
|
8.2
|
|
22.3
|
%
|
Diluted earnings per share
|
$
|
0.57
|
|
$
|
0.43
|
|
$
|
0.14
|
|
32.6
|
%
|
Average number of shares – diluted
|
79,312,774
|
|
86,156,775
|
|
—
|
|
(7.9
|
)%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
1,357.6
|
|
$
|
1,450.5
|
|
$
|
(92.9
|
)
|
(6.4
|
)%
|
Net income (loss)
|
107.8
|
|
$
|
(97.1
|
)
|
204.9
|
|
(211.0
|
)%
|
||
Net (loss) income attributable to noncontrolling interest
|
(0.1
|
)
|
1.4
|
|
(1.5
|
)
|
(107.1
|
)%
|
|||
Net income (loss) attributable to The Timken Company
|
$
|
107.9
|
|
$
|
(98.5
|
)
|
$
|
206.4
|
|
(209.5
|
)%
|
Diluted earnings (loss) per share
|
$
|
1.35
|
|
$
|
(1.14
|
)
|
$
|
2.49
|
|
(218.4
|
)%
|
Average number of shares – diluted
|
79,880,222
|
|
86,514,517
|
|
—
|
|
(7.7
|
)%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Net Sales
|
$
|
673.6
|
|
$
|
728.0
|
|
$
|
(54.4
|
)
|
(7.5
|
)%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Net Sales
|
$
|
1,357.6
|
|
$
|
1,450.5
|
|
$
|
(92.9
|
)
|
(6.4
|
)%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
Change
|
|||||||
Gross profit
|
$
|
182.3
|
|
$
|
205.1
|
|
$
|
(22.8
|
)
|
(11.1)%
|
|
Gross profit % to net sales
|
27.1
|
%
|
28.2
|
%
|
|
(110) bps
|
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
Change
|
|||||||
Gross profit
|
$
|
363.2
|
|
$
|
407.6
|
|
$
|
(44.4
|
)
|
(10.9)%
|
|
Gross profit % to net sales
|
26.8
|
%
|
28.1
|
%
|
|
(130) bps
|
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
Change
|
|||||||
Selling, general and administrative expenses
|
$
|
110.2
|
|
$
|
126.1
|
|
$
|
(15.9
|
)
|
(12.6)%
|
|
Selling, general and administrative expenses % to net sales
|
16.4
|
%
|
17.3
|
%
|
—
|
|
(90) bps
|
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
Change
|
|||||||
Selling, general and administrative expenses
|
$
|
228.5
|
|
$
|
254.6
|
|
$
|
(26.1
|
)
|
(10.3)%
|
|
Selling, general and administrative expenses % to net sales
|
16.8
|
%
|
17.6
|
%
|
—
|
|
(80) bps
|
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Impairment charges
|
$
|
—
|
|
$
|
0.6
|
|
$
|
(0.6
|
)
|
(100.0
|
)%
|
Severance and related benefit costs
|
1.6
|
|
0.6
|
|
1.0
|
|
166.7
|
%
|
|||
Exit costs
|
1.3
|
|
0.2
|
|
1.1
|
|
NM
|
|
|||
Total
|
$
|
2.9
|
|
$
|
1.4
|
|
$
|
1.5
|
|
107.1
|
%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Impairment charges
|
$
|
2.6
|
|
$
|
3.3
|
|
$
|
(0.7
|
)
|
(21.2
|
)%
|
Severance and related benefit costs
|
9.3
|
|
0.7
|
|
8.6
|
|
NM
|
|
|||
Exit costs
|
1.5
|
|
3.6
|
|
(2.1
|
)
|
(58.3
|
)%
|
|||
Total
|
$
|
13.4
|
|
$
|
7.6
|
|
$
|
5.8
|
|
76.3
|
%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Pension settlement charges
|
$
|
0.4
|
|
$
|
4.4
|
|
$
|
(4.0
|
)
|
(90.9
|
)%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Pension settlement charges
|
$
|
1.6
|
|
$
|
219.6
|
|
$
|
(218.0
|
)
|
(99.3
|
)%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Interest (expense)
|
$
|
(8.7
|
)
|
$
|
(8.4
|
)
|
$
|
(0.3
|
)
|
3.6
|
%
|
Interest income
|
$
|
0.4
|
|
$
|
0.7
|
|
$
|
(0.3
|
)
|
(42.9
|
)%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
Interest (expense)
|
$
|
(17.1
|
)
|
$
|
(16.4
|
)
|
$
|
(0.7
|
)
|
4.3
|
%
|
Interest income
|
$
|
0.7
|
|
$
|
1.4
|
|
$
|
(0.7
|
)
|
(50.0
|
)%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
% Change
|
|||||||
CDSOA income, net of related expenses
|
$
|
6.1
|
|
$
|
—
|
|
$
|
6.1
|
|
NM
|
|
Other (expense) income, net
|
(1.7
|
)
|
1.4
|
|
(3.1
|
)
|
(221.4
|
)%
|
|||
Total other income (expense)
|
$
|
4.4
|
|
$
|
1.4
|
|
$
|
3.0
|
|
214.3
|
%
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
CDSOA income, net of related expenses
|
$
|
53.8
|
|
$
|
—
|
|
$
|
53.8
|
|
NM
|
Other (expense) income, net
|
(1.7
|
)
|
—
|
|
(1.7
|
)
|
NM
|
|||
Total other income (expense)
|
$
|
52.1
|
|
$
|
—
|
|
$
|
52.1
|
|
NM
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2016
|
2015
|
$ Change
|
Change
|
|||||||
Income tax expense
|
$
|
20.0
|
|
$
|
28.9
|
|
$
|
(8.9
|
)
|
(30.8
|
)%
|
Effective tax rate
|
30.8
|
%
|
43.4
|
%
|
—
|
|
(1,260
|
) bps
|
|
Three Months Ended
June 30, 2016 |
Six Months Ended
June 30, 2016 |
||||
|
$ Change
|
$ Change
|
||||
Impact of global earnings at the U.S. statutory rate of 35%
|
$
|
(0.6
|
)
|
$
|
85.7
|
|
Foreign taxation impact
|
(8.8
|
)
|
(30.8
|
)
|
||
U.S. taxation
(1)
|
0.8
|
|
(12.4
|
)
|
||
Discrete items
|
(0.3
|
)
|
(2.5
|
)
|
||
Total
|
$
|
(8.9
|
)
|
$
|
40.0
|
|
•
|
During the fourth quarter of 2015, the Company sold all of the outstanding stock of Timken Alcor Aerospace Technologies, Inc. (Alcor). Results for Alcor prior to the sale were reported in the Mobile Industries segment.
|
•
|
During the third quarter of 2015, the Company acquired the membership interests of Timken Belts. Results for Timken Belts are reported in the Mobile Industries and Process Industries segments based on the customers and underlying markets served.
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
Net sales
|
$
|
367.8
|
|
$
|
388.6
|
|
$
|
(20.8
|
)
|
(5.4)%
|
EBIT
|
$
|
35.3
|
|
$
|
36.0
|
|
$
|
(0.7
|
)
|
(1.9)%
|
EBIT margin
|
9.6
|
%
|
9.3
|
%
|
—
|
|
30 bps
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
Net sales
|
$
|
367.8
|
|
$
|
388.6
|
|
$
|
(20.8
|
)
|
(5.4)%
|
Less: Acquisitions
|
16.9
|
|
—
|
|
16.9
|
|
NM
|
|||
Divestitures
|
(5.3
|
)
|
—
|
|
(5.3
|
)
|
NM
|
|||
Currency
|
(5.7
|
)
|
—
|
|
(5.7
|
)
|
NM
|
|||
Net sales, excluding the impact of acquisitions,
divestitures and currency
|
$
|
361.9
|
|
$
|
388.6
|
|
$
|
(26.7
|
)
|
(6.9)%
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
Net sales
|
$
|
751.0
|
|
$
|
781.6
|
|
$
|
(30.6
|
)
|
(3.9)%
|
EBIT
|
65.5
|
|
71.4
|
|
(5.9
|
)
|
(8.3)%
|
|||
EBIT margin
|
8.7
|
%
|
9.1
|
%
|
—
|
|
(40) bps
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
Net sales
|
$
|
751.0
|
|
$
|
781.6
|
|
$
|
(30.6
|
)
|
(3.9)%
|
Less: Acquisitions
|
35.2
|
|
—
|
|
35.2
|
|
NM
|
|||
Divestitures
|
(9.9
|
)
|
—
|
|
(9.9
|
)
|
NM
|
|||
Currency
|
(16.6
|
)
|
—
|
|
(16.6
|
)
|
NM
|
|||
Net sales, excluding the impact of acquisitions,
divestitures and currency
|
$
|
742.3
|
|
$
|
781.6
|
|
$
|
(39.3
|
)
|
(5.0)%
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
Change
|
||||||
Net sales
|
$
|
305.8
|
|
$
|
339.4
|
|
$
|
(33.6
|
)
|
(9.9)%
|
EBIT
|
$
|
46.7
|
|
$
|
56.7
|
|
$
|
(10.0
|
)
|
(17.6)%
|
EBIT margin
|
15.3
|
%
|
16.7
|
%
|
—
|
|
(140) bps
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
Net sales
|
$
|
305.8
|
|
$
|
339.4
|
|
$
|
(33.6
|
)
|
(9.9)%
|
Less: Acquisitions
|
11.5
|
|
—
|
|
11.5
|
|
NM
|
|||
Currency
|
(6.4
|
)
|
—
|
|
(6.4
|
)
|
NM
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
300.7
|
|
$
|
339.4
|
|
$
|
(38.7
|
)
|
(11.4)%
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
Change
|
||||||
Net sales
|
$
|
606.6
|
|
$
|
668.9
|
|
$
|
(62.3
|
)
|
(9.3)%
|
EBIT
|
$
|
79.3
|
|
$
|
101.9
|
|
$
|
(22.6
|
)
|
(22.2)%
|
EBIT margin
|
13.1
|
%
|
15.2
|
%
|
—
|
|
(210) bps
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
Net sales
|
$
|
606.6
|
|
$
|
668.9
|
|
$
|
(62.3
|
)
|
(9.3)%
|
Less: Acquisitions
|
23.2
|
|
—
|
|
23.2
|
|
NM
|
|||
Currency
|
(15.6
|
)
|
—
|
|
(15.6
|
)
|
NM
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
599.0
|
|
$
|
668.9
|
|
$
|
(69.9
|
)
|
(10.4)%
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
Corporate expenses
|
$
|
14.5
|
|
$
|
14.0
|
|
$
|
0.5
|
|
3.6%
|
Corporate expenses % to net sales
|
2.2
|
%
|
1.9
|
%
|
—
|
|
30 bps
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2016
|
2015
|
$ Change
|
% Change
|
||||||
Corporate expenses
|
$
|
25.2
|
|
$
|
28.2
|
|
$
|
(3.0
|
)
|
(10.6)%
|
Corporate expenses % to net sales
|
1.9
|
%
|
1.9
|
%
|
—
|
|
—
|
|
June 30,
2016 |
December 31,
2015 |
$ Change
|
% Change
|
|||||||
Cash and cash equivalents
|
$
|
156.0
|
|
$
|
129.6
|
|
$
|
26.4
|
|
20.4
|
%
|
Restricted cash
|
0.2
|
|
0.2
|
|
—
|
|
—
|
%
|
|||
Accounts receivable, net
|
452.3
|
|
454.6
|
|
(2.3
|
)
|
(0.5
|
)%
|
|||
Inventories, net
|
555.4
|
|
543.2
|
|
12.2
|
|
2.2
|
%
|
|||
Deferred charges and prepaid expenses
|
20.7
|
|
22.7
|
|
(2.0
|
)
|
(8.8
|
)%
|
|||
Other current assets
|
52.5
|
|
56.1
|
|
(3.6
|
)
|
(6.4
|
)%
|
|||
Total current assets
|
$
|
1,237.1
|
|
$
|
1,206.4
|
|
$
|
30.7
|
|
2.5
|
%
|
|
June 30,
2016 |
December 31,
2015 |
$ Change
|
% Change
|
|||||||
Goodwill
|
$
|
328.7
|
|
$
|
327.3
|
|
$
|
1.4
|
|
0.4
|
%
|
Non-current pension assets
|
85.6
|
|
86.3
|
|
(0.7
|
)
|
(0.8
|
)%
|
|||
Other intangible assets
|
258.0
|
|
271.3
|
|
(13.3
|
)
|
(4.9
|
)%
|
|||
Deferred income taxes
|
62.0
|
|
65.9
|
|
(3.9
|
)
|
(5.9
|
)%
|
|||
Other non-current assets
|
50.5
|
|
49.1
|
|
1.4
|
|
2.9
|
%
|
|||
Total other assets
|
$
|
784.8
|
|
$
|
799.9
|
|
$
|
(15.1
|
)
|
(1.9
|
)%
|
|
June 30,
2016 |
December 31,
2015 |
$ Change
|
% Change
|
|||||||
Short-term debt
|
$
|
13.4
|
|
$
|
62.0
|
|
$
|
(48.6
|
)
|
(78.4
|
)%
|
Current portion of long-term debt
|
15.0
|
|
15.1
|
|
(0.1
|
)
|
(0.7
|
)%
|
|||
Accounts payable
|
172.9
|
|
159.7
|
|
13.2
|
|
8.3
|
%
|
|||
Salaries, wages and benefits
|
92.3
|
|
102.3
|
|
(10.0
|
)
|
(9.8
|
)%
|
|||
Income taxes payable
|
34.4
|
|
13.1
|
|
21.3
|
|
162.6
|
%
|
|||
Other current liabilities
|
147.0
|
|
153.1
|
|
(6.1
|
)
|
(4.0
|
)%
|
|||
Total current liabilities
|
$
|
475.0
|
|
$
|
505.3
|
|
$
|
(30.3
|
)
|
(6.0
|
)%
|
|
June 30,
2016 |
December 31,
2015 |
$ Change
|
% Change
|
|||||||
Long-term debt
|
$
|
604.2
|
|
$
|
579.4
|
|
$
|
24.8
|
|
4.3
|
%
|
Accrued pension cost
|
147.6
|
|
146.9
|
|
0.7
|
|
0.5
|
%
|
|||
Accrued postretirement benefits cost
|
132.6
|
|
136.1
|
|
(3.5
|
)
|
(2.6
|
)%
|
|||
Deferred income taxes
|
3.5
|
|
3.6
|
|
(0.1
|
)
|
(2.8
|
)%
|
|||
Other non-current liabilities
|
72.3
|
|
68.2
|
|
4.1
|
|
6.0
|
%
|
|||
Total non-current liabilities
|
$
|
960.2
|
|
$
|
934.2
|
|
$
|
26.0
|
|
2.8
|
%
|
|
June 30,
2016 |
December 31,
2015 |
$ Change
|
% Change
|
|||||||
Common stock
|
$
|
954.9
|
|
$
|
958.2
|
|
$
|
(3.3
|
)
|
(0.3
|
)%
|
Earnings invested in the business
|
1,524.4
|
|
1,457.6
|
|
66.8
|
|
4.6
|
%
|
|||
Accumulated other comprehensive loss
|
(281.5
|
)
|
(287.0
|
)
|
5.5
|
|
(1.9
|
)%
|
|||
Treasury shares
|
(864.4
|
)
|
(804.3
|
)
|
(60.1
|
)
|
7.5
|
%
|
|||
Noncontrolling interest
|
25.8
|
|
20.1
|
|
5.7
|
|
28.4
|
%
|
|||
Total shareholders’ equity
|
$
|
1,359.2
|
|
$
|
1,344.6
|
|
$
|
14.6
|
|
1.1
|
%
|
|
Six Months Ended
June 30, |
|
|||||||
|
2016
|
2015
|
$ Change
|
||||||
Net cash provided by operating activities
|
$
|
202.6
|
|
$
|
105.5
|
|
$
|
97.1
|
|
Net cash used in investing activities
|
(51.0
|
)
|
(33.3
|
)
|
(17.7
|
)
|
|||
Net cash used in financing activities
|
(128.5
|
)
|
(108.3
|
)
|
(20.2
|
)
|
|||
Effect of exchange rate changes on cash
|
3.3
|
|
(5.9
|
)
|
9.2
|
|
|||
Increase in cash and cash equivalents
|
$
|
26.4
|
|
$
|
(42.0
|
)
|
$
|
68.4
|
|
|
Six Months Ended
June 30, |
|
|||||||
|
2016
|
2015
|
$ Change
|
||||||
Cash Provided (Used):
|
|
|
|
||||||
Accounts receivable
|
$
|
4.7
|
|
$
|
(22.7
|
)
|
$
|
27.4
|
|
Inventories
|
(8.2
|
)
|
(2.8
|
)
|
(5.4
|
)
|
|||
Trade accounts payable
|
12.5
|
|
28.9
|
|
(16.4
|
)
|
|||
Other accrued expenses
|
(7.5
|
)
|
(54.7
|
)
|
47.2
|
|
|||
Cash provided (used) in working capital items
|
$
|
1.5
|
|
$
|
(51.3
|
)
|
$
|
52.8
|
|
|
Six Months Ended
June 30, |
|
|||||||
|
2016
|
2015
|
$ Change
|
||||||
Accrued income tax expense
|
$
|
47.6
|
|
$
|
7.6
|
|
$
|
40.0
|
|
Income tax payments
|
(16.8
|
)
|
(51.7
|
)
|
34.9
|
|
|||
Other miscellaneous
|
(4.6
|
)
|
(0.4
|
)
|
(4.2
|
)
|
|||
Change in income taxes
|
$
|
26.2
|
|
$
|
(44.5
|
)
|
$
|
70.7
|
|
|
Six Months Ended
June 30, |
|
|||||||
|
2016
|
2015
|
$ Change
|
||||||
Net income attributable to The Timken Company
|
$
|
107.9
|
|
$
|
(98.5
|
)
|
$
|
206.4
|
|
Non-cash pension settlement charges included in net income
|
0.4
|
|
217.5
|
|
(217.1
|
)
|
|||
CDSOA receivable
|
(6.2
|
)
|
—
|
|
(6.2
|
)
|
|||
Net income (excluding pension settlement and CDSOA)
|
$
|
102.1
|
|
$
|
119.0
|
|
$
|
(16.9
|
)
|
|
Six Months Ended
June 30, |
|
|||||||
|
2016
|
2015
|
$ Change
|
||||||
Net borrowings
|
$
|
(24.4
|
)
|
$
|
109.4
|
|
$
|
(133.8
|
)
|
Purchase of treasury shares
|
(68.2
|
)
|
(177.2
|
)
|
109.0
|
|
|||
Proceeds from exercise of stock options
|
0.4
|
|
4.0
|
|
(3.6
|
)
|
|||
Cash dividends paid to shareholders
|
(41.1
|
)
|
(44.0
|
)
|
2.9
|
|
|||
Decrease in restricted cash
|
—
|
|
(4.0
|
)
|
4.0
|
|
|||
Other
|
4.8
|
|
3.5
|
|
1.3
|
|
|||
Decrease in cash used in financing activities
|
$
|
(128.5
|
)
|
$
|
(108.3
|
)
|
$
|
(20.2
|
)
|
|
June 30,
2016 |
December 31,
2015 |
||||
Short-term debt
|
$
|
13.4
|
|
$
|
62.0
|
|
Current portion of long-term debt
|
15.0
|
|
15.1
|
|
||
Long-term debt
|
604.2
|
|
579.4
|
|
||
Total debt
|
$
|
632.6
|
|
$
|
656.5
|
|
Less: Cash and cash equivalents
|
156.0
|
|
129.6
|
|
||
Restricted cash
|
0.2
|
|
0.2
|
|
||
Net debt
|
$
|
476.4
|
|
$
|
526.7
|
|
|
June 30,
2016 |
December 31,
2015 |
||||
Net debt
|
$
|
476.4
|
|
$
|
526.7
|
|
Shareholders’ equity
|
1,359.2
|
|
1,344.6
|
|
||
Net debt plus shareholders’ equity (capital)
|
$
|
1,835.6
|
|
$
|
1,871.3
|
|
Ratio of net debt to capital
|
26.0
|
%
|
28.1%
|
|
•
|
deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which the Company 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 or its customers conduct business, and changes in currency valuations;
|
•
|
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;
|
•
|
competitive factors, including changes in market penetration, increasing price competition by existing or new foreign and domestic competitors, the introduction of new products by existing and new competitors, and new technology that may impact the way the Company’s products are sold or distributed;
|
•
|
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 and energy; changes in the expected costs associated with product warranty claims; changes resulting from inventory management and cost reduction initiatives and different levels of customer demands; the effects of unplanned plant shutdowns; and changes in the cost of labor and benefits;
|
•
|
the success of the Company’s operating plans, announced programs, initiatives and capital investments; the ability to complete previously announced transactions; the ability to integrate acquired companies; and the ability of acquired companies to achieve satisfactory operating results, including results being accretive to earnings;
|
•
|
the Company’s ability to maintain appropriate relations with unions that represent Company associates in certain locations in order to avoid disruptions of business;
|
•
|
unanticipated litigation, claims or assessments. This includes: claims or problems related to intellectual property, product liability or warranty, environmental issues and taxes;
|
•
|
changes in worldwide financial markets, including availability of financing and interest rates, which affect the Company’s cost of funds and/or ability to raise capital, as well as customer demand and the ability of customers to obtain financing to purchase the Company’s products or equipment that contain the Company’s products;
|
•
|
the impact on the Company's pension obligations due to changes in interest rates, investment performance and other tactics designed to reduce risk;
|
•
|
retention of CDSOA distributions; and
|
•
|
those items identified under Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended
December 31, 2015
.
|
(a)
|
Disclosure Controls and Procedures
|
(b)
|
Changes in Internal Control Over Financial Reporting
|
Period
|
Total number
of shares
purchased
(1)
|
|
Average
price paid
per share
(2)
|
|
Total number
of shares
purchased as
part of publicly
announced
plans or
programs
|
|
Maximum
number of
shares that
may yet
be purchased
under the plans
or programs
(3)
|
|
|
4/1/16 - 4/30/16
|
420,738
|
|
$
|
34.37
|
|
420,000
|
|
3,655,809
|
|
5/1/16 - 5/31/16
|
310,553
|
|
34.08
|
|
310,000
|
|
3,345,809
|
|
|
6/1/16 - 6/30/16
|
250,000
|
|
32.59
|
|
250,000
|
|
3,095,809
|
|
|
Total
|
981,291
|
|
$
|
33.82
|
|
980,000
|
|
3,095,809
|
|
(1)
|
Of the shares purchased in April and May, 738 and 553, 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.
|
(2)
|
For shares tendered in connection with the vesting of restricted shares, the average price paid per share is an average calculated using the daily high and low of the Company's common 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 stock price at the time the options are exercised.
|
(3)
|
On January 29, 2016, the Board of Directors of the Company approved a share purchase plan pursuant to which the Company may purchase up to five million of its common shares in the aggregate. This share repurchase 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.
|
3.1
|
Amended Regulations of The Timken Company
|
|
|
12
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
|
31.1
|
Certification of Richard G. Kyle, President and Chief Executive Officer (principal executive officer) of The Timken Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification of Philip D. Fracassa, Executive Vice President and Chief Financial Officer (principal financial officer) of The Timken Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32
|
Certifications of Richard G. Kyle, President and Chief Executive Officer (principal executive officer) and Philip D. Fracassa, Executive Vice President and Chief Financial Officer (principal financial officer) of The Timken Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101
|
Financial statements from the quarterly report on Form 10-Q of The Timken Company for the quarter ended June 30, 2016, filed on July 28, 2016, 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 and (v) the Notes to the Consolidated Financial Statements.
|
|
|
THE TIMKEN COMPANY
|
Date: July 28, 2016
|
|
By: /s/ Richard G. Kyle
|
|
|
Richard G. Kyle
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Date: July 28, 2016
|
|
By: /s/ Philip D. Fracassa
|
|
|
Philip D. Fracassa
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
Six Months Ended
June 30, |
Twelve Months Ended December 31,
|
||||||||||||||||
|
|
2016
|
2015
|
2015
|
2014
|
2013
|
2012
|
||||||||||||
Income (loss) from continuing operations before tax
|
|
$
|
155.4
|
|
$
|
(89.5
|
)
|
$
|
(189.6
|
)
|
$
|
204.0
|
|
$
|
290.1
|
|
$
|
517.8
|
|
|
|
|
|
|
|
|
|
||||||||||||
Share of undistributed (losses) income from 50%-or-less-owned affiliates, excluding affiliates with guaranteed debt
|
|
$
|
(0.4
|
)
|
$
|
(0.4
|
)
|
$
|
(0.8
|
)
|
$
|
(0.6
|
)
|
$
|
(0.4
|
)
|
$
|
0.5
|
|
Amortization of capitalized interest
|
|
0.3
|
|
0.4
|
|
0.6
|
|
0.9
|
|
(1.3
|
)
|
(1.3
|
)
|
||||||
Interest expense
|
|
17.1
|
|
16.5
|
|
33.4
|
|
28.7
|
|
24.4
|
|
31.1
|
|
||||||
Interest portion of rental expense
|
|
2.4
|
|
2.4
|
|
4.8
|
|
5.2
|
|
8.0
|
|
8.0
|
|
||||||
Earnings (loss)
|
|
$
|
174.8
|
|
$
|
(70.6
|
)
|
$
|
(151.6
|
)
|
$
|
238.2
|
|
$
|
320.8
|
|
$
|
556.1
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest
|
|
$
|
17.5
|
|
$
|
16.5
|
|
$
|
33.4
|
|
$
|
30.4
|
|
$
|
37.1
|
|
$
|
36.0
|
|
Interest portion of rental expense
|
|
2.4
|
|
2.4
|
|
4.8
|
|
5.2
|
|
8.0
|
|
8.0
|
|
||||||
Fixed Charges
|
|
$
|
19.9
|
|
$
|
18.9
|
|
$
|
38.2
|
|
$
|
35.6
|
|
$
|
45.1
|
|
$
|
44.0
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of Earnings to Fixed Charges
|
|
8.78
|
|
(3.74
|
)
|
(3.97
|
)
|
6.69
|
|
7.11
|
|
12.64
|
|
By: /s/ Richard G. Kyle
|
|
Richard G. Kyle
President and Chief Executive Officer
(Principal Executive Officer)
|
|
By: /s/ Philip D. Fracassa
|
|
Philip D. Fracassa
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
By: /s/ Richard G. Kyle
|
|
Richard G. Kyle
President and Chief Executive Officer
(Principal Executive Officer)
|
|
By: /s/ Philip D. Fracassa
|
|
Philip D. Fracassa
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|