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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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Emerging growth company
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o
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Class
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Outstanding at June 30, 2018
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Common Shares, without par value
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77,107,246 shares
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PAGE
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I.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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II.
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Item 1.
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||
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Item1A.
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Item 2.
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Item 6.
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2018
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2017
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2018
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2017
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||||||||
(Dollars in millions, except per share data)
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|
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||||||||
Net sales
|
$
|
906.3
|
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|
$
|
750.6
|
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$
|
1,789.4
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$
|
1,454.4
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Cost of products sold
|
638.9
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|
|
549.5
|
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1,257.1
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|
1,071.1
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||||
Gross Profit
|
267.4
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|
201.1
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|
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532.3
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383.3
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||||
Selling, general and administrative expenses
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141.8
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123.9
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290.4
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|
241.5
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||||
Impairment and restructuring charges
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0.3
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|
0.8
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|
0.5
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|
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2.5
|
|
||||
Operating Income
|
125.3
|
|
|
76.4
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|
|
241.4
|
|
|
139.3
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|
||||
Interest expense
|
(10.7
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)
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|
(8.5
|
)
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(20.7
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)
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(16.4
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)
|
||||
Interest income
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0.5
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|
0.7
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0.9
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1.3
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|
||||
Other income, net
|
7.0
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|
5.3
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9.3
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|
3.3
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|
||||
Income Before Income Taxes
|
122.1
|
|
|
73.9
|
|
|
230.9
|
|
|
127.5
|
|
||||
Provision (benefit) for income taxes
|
30.2
|
|
|
(8.1
|
)
|
|
58.5
|
|
|
7.4
|
|
||||
Net Income
|
91.9
|
|
|
82.0
|
|
|
172.4
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120.1
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|
||||
Less: Net income (loss) attributable to noncontrolling interest
|
0.9
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|
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(0.5
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)
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1.2
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(0.6
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)
|
||||
Net Income Attributable to The Timken Company
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$
|
91.0
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$
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82.5
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$
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171.2
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$
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120.7
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Net Income per Common Share Attributable to The Timken
Company Common Shareholders
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||||||||
Basic earnings per share
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$
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1.18
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$
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1.06
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$
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2.21
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$
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1.55
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||||||||
Diluted earnings per share
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$
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1.16
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$
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1.04
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$
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2.17
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$
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1.53
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||||||||
Dividends per share
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$
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0.28
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$
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0.27
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$
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0.55
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$
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0.53
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Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
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2018
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2017
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2018
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2017
|
||||||||
(Dollars in millions)
|
|
|
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||||||||
Net Income
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$
|
91.9
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$
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82.0
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$
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172.4
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$
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120.1
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Other comprehensive income (loss), net of tax:
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||||||||
Foreign currency translation adjustments
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(46.6
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)
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11.5
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(38.2
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)
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31.9
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|
||||
Pension and postretirement liability adjustment
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—
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—
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—
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0.1
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|
||||
Change in fair value of derivative financial instruments
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3.6
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|
(1.4
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)
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4.4
|
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(2.2
|
)
|
||||
Other comprehensive (loss) income, net of tax
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(43.0
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)
|
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10.1
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|
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(33.8
|
)
|
|
29.8
|
|
||||
Comprehensive Income, net of tax
|
48.9
|
|
|
92.1
|
|
|
138.6
|
|
|
149.9
|
|
||||
Less: comprehensive (loss) income attributable to noncontrolling interest
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(1.4
|
)
|
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(1.1
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)
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(1.7
|
)
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1.4
|
|
||||
Comprehensive Income Attributable to The Timken Company
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$
|
50.3
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$
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93.2
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$
|
140.3
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$
|
148.5
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(Unaudited)
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||||
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June 30,
2018 |
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December 31,
2017 |
||||
(Dollars in millions)
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|
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|
||||
ASSETS
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|
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|
||||
Current Assets
|
|
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|
||||
Cash and cash equivalents
|
$
|
145.2
|
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$
|
121.6
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Restricted cash
|
1.4
|
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|
3.8
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|
||
Accounts receivable, less allowances (2018 – $19.1 million; 2017 – $20.3 million)
|
530.2
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524.9
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|
||
Contract assets
|
127.5
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—
|
|
||
Inventories, net
|
777.4
|
|
|
738.9
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|
||
Deferred charges and prepaid expenses
|
25.3
|
|
|
29.7
|
|
||
Other current assets
|
92.8
|
|
|
81.2
|
|
||
Total Current Assets
|
1,699.8
|
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|
1,500.1
|
|
||
Property, Plant and Equipment, net
|
834.5
|
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|
864.2
|
|
||
Other Assets
|
|
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|
||||
Goodwill
|
493.7
|
|
|
511.8
|
|
||
Non-current pension assets
|
26.0
|
|
|
19.7
|
|
||
Other intangible assets
|
389.0
|
|
|
420.6
|
|
||
Deferred income taxes
|
55.1
|
|
|
61.0
|
|
||
Other non-current assets
|
29.9
|
|
|
25.0
|
|
||
Total Other Assets
|
993.7
|
|
|
1,038.1
|
|
||
Total Assets
|
$
|
3,528.0
|
|
|
$
|
3,402.4
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Short-term debt
|
$
|
162.3
|
|
|
$
|
105.4
|
|
Current portion of long-term debt
|
2.7
|
|
|
2.7
|
|
||
Accounts payable, trade
|
253.2
|
|
|
265.2
|
|
||
Salaries, wages and benefits
|
111.4
|
|
|
127.9
|
|
||
Income taxes payable
|
15.1
|
|
|
9.8
|
|
||
Other current liabilities
|
166.5
|
|
|
160.7
|
|
||
Total Current Liabilities
|
711.2
|
|
|
671.7
|
|
||
Non-Current Liabilities
|
|
|
|
||||
Long-term debt
|
881.4
|
|
|
854.2
|
|
||
Accrued pension cost
|
165.7
|
|
|
167.3
|
|
||
Accrued postretirement benefits cost
|
122.2
|
|
|
122.6
|
|
||
Deferred income taxes
|
40.4
|
|
|
44.0
|
|
||
Other non-current liabilities
|
54.8
|
|
|
67.7
|
|
||
Total Non-Current Liabilities
|
1,264.5
|
|
|
1,255.8
|
|
||
Shareholders’ Equity
|
|
|
|
||||
Class I and II Serial Preferred Stock, without par value:
|
|
|
|
||||
Authorized – 10,000,000 shares each class, none issued
|
—
|
|
|
—
|
|
||
Common shares, without par value:
|
|
|
|
||||
Authorized – 200,000,000 shares
|
|
|
|
||||
Issued (including shares in treasury) (2018 – 98,375,135 shares; 2017 – 98,375,135 shares)
|
|
|
|
||||
Stated capital
|
53.1
|
|
|
53.1
|
|
||
Other paid-in capital
|
907.2
|
|
|
903.8
|
|
||
Earnings invested in the business
|
1,545.3
|
|
|
1,408.4
|
|
||
Accumulated other comprehensive loss
|
(69.9
|
)
|
|
(38.3
|
)
|
||
Treasury shares at cost (2018 – 21,267,889 shares; 2017 – 20,672,133 shares)
|
(913.9
|
)
|
|
(884.3
|
)
|
||
Total Shareholders’ Equity
|
1,521.8
|
|
|
1,442.7
|
|
||
Noncontrolling Interest
|
30.5
|
|
|
32.2
|
|
||
Total Equity
|
1,552.3
|
|
|
1,474.9
|
|
||
Total Liabilities and Equity
|
$
|
3,528.0
|
|
|
$
|
3,402.4
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
(Dollars in millions)
|
|
|
|
||||
CASH PROVIDED (USED)
|
|
|
|
||||
Operating Activities
|
|
|
|
||||
Net income attributable to The Timken Company
|
$
|
171.2
|
|
|
$
|
120.7
|
|
Net income (loss) attributable to noncontrolling interest
|
1.2
|
|
|
(0.6
|
)
|
||
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
70.8
|
|
|
66.8
|
|
||
Loss (gain) on sale of assets
|
0.9
|
|
|
(1.1
|
)
|
||
Deferred income tax provision
|
0.1
|
|
|
7.7
|
|
||
Stock-based compensation expense
|
17.8
|
|
|
10.4
|
|
||
Pension and other postretirement expense
|
1.6
|
|
|
9.9
|
|
||
Pension contributions and other postretirement benefit contributions
|
(8.8
|
)
|
|
(12.2
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(86.4
|
)
|
|
(46.0
|
)
|
||
Contract assets
|
(27.8
|
)
|
|
—
|
|
||
Inventories
|
(79.9
|
)
|
|
(38.1
|
)
|
||
Accounts payable, trade
|
(8.4
|
)
|
|
50.5
|
|
||
Other accrued expenses
|
(2.4
|
)
|
|
2.0
|
|
||
Income taxes
|
(3.8
|
)
|
|
(56.7
|
)
|
||
Other, net
|
11.7
|
|
|
1.2
|
|
||
Net Cash Provided by Operating Activities
|
57.8
|
|
|
114.5
|
|
||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(39.6
|
)
|
|
(39.9
|
)
|
||
Acquisitions, net of cash received
|
—
|
|
|
(64.1
|
)
|
||
Proceeds from disposal of property, plant and equipment
|
0.2
|
|
|
2.5
|
|
||
Investments in short-term marketable securities, net
|
3.1
|
|
|
(7.1
|
)
|
||
Other
|
0.3
|
|
|
(0.3
|
)
|
||
Net Cash Used in Investing Activities
|
(36.0
|
)
|
|
(108.9
|
)
|
||
Financing Activities
|
|
|
|
||||
Cash dividends paid to shareholders
|
(42.7
|
)
|
|
(41.4
|
)
|
||
Purchase of treasury shares
|
(49.6
|
)
|
|
(27.0
|
)
|
||
Proceeds from exercise of stock options
|
10.6
|
|
|
25.7
|
|
||
Shares surrendered for taxes
|
(5.0
|
)
|
|
(9.4
|
)
|
||
Accounts receivable facility borrowings
|
52.1
|
|
|
46.1
|
|
||
Accounts receivable facility payments
|
(18.6
|
)
|
|
(12.1
|
)
|
||
Proceeds from long-term debt
|
130.0
|
|
|
478.3
|
|
||
Payments on long-term debt
|
(94.2
|
)
|
|
(186.4
|
)
|
||
Short-term debt activity, net
|
26.3
|
|
|
6.2
|
|
||
Other
|
(1.0
|
)
|
|
—
|
|
||
Net Cash Provided by Financing Activities
|
7.9
|
|
|
280.0
|
|
||
Effect of exchange rate changes on cash
|
(8.5
|
)
|
|
10.7
|
|
||
Increase in Cash, Cash Equivalents and Restricted Cash
|
21.2
|
|
|
296.3
|
|
||
Cash, cash equivalents and restricted cash at beginning of year
|
125.4
|
|
|
151.6
|
|
||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
146.6
|
|
|
$
|
447.9
|
|
•
|
For certain service contracts, this continuous transfer of control to the customer occurs as the Company's service enhances assets that the customer owns and controls at all times and the Company is contractually entitled to payment for work performed to date plus a reasonable margin.
|
•
|
For United States ("U.S.") government contracts, the customer is allowed to unilaterally terminate the contract for convenience, and is required to pay the Company for costs incurred plus a reasonable margin and take control of any work in process.
|
•
|
For certain non-U.S. government contracts involving customer-specific products, the customer controls the work in process based on contractual termination clauses or restrictions of the Company's use of the product and the Company possesses a right to payment for work performed to date plus a reasonable margin.
|
|
Balance at December 31, 2017
|
Effect of Accounting Change
|
Balance at January 1, 2018
|
||||||
ASSETS
|
|
|
|
||||||
Accounts receivable, less allowances
|
$
|
524.9
|
|
$
|
(67.3
|
)
|
$
|
457.6
|
|
Contract assets
|
—
|
|
100.5
|
|
100.5
|
|
|||
Inventories, net
|
738.9
|
|
(22.9
|
)
|
716.0
|
|
|||
Other current assets
|
81.2
|
|
3.0
|
|
84.2
|
|
|||
Deferred income taxes
|
61.0
|
|
(2.6
|
)
|
58.4
|
|
|||
LIABILITIES
|
|
|
|
||||||
Other current liabilities
|
160.7
|
|
3.0
|
|
163.7
|
|
|||
EQUITY
|
|
|
|
||||||
Earnings invested in the business
|
1,408.4
|
|
7.7
|
|
1,416.1
|
|
|
Previous Accounting Method
|
Effect of Accounting Change
|
As Reported
|
||||||
Net sales
|
$
|
899.0
|
|
$
|
7.3
|
|
$
|
906.3
|
|
Cost of products sold
|
634.5
|
|
4.4
|
|
638.9
|
|
|||
Selling, general, and administrative expenses
|
141.3
|
|
0.5
|
|
141.8
|
|
|||
Income before income taxes
|
119.7
|
|
2.4
|
|
122.1
|
|
|||
Provision for income taxes
|
29.6
|
|
0.6
|
|
30.2
|
|
|||
Net income
|
90.1
|
|
1.8
|
|
91.9
|
|
|||
Net income attributable to The Timken Company
|
$
|
89.2
|
|
$
|
1.8
|
|
$
|
91.0
|
|
Basic earnings per share
|
$
|
1.16
|
|
$
|
0.02
|
|
$
|
1.18
|
|
Diluted earnings per share
|
$
|
1.14
|
|
$
|
0.02
|
|
$
|
1.16
|
|
|
Previous Accounting Method
|
Effect of Accounting Change
|
As Reported
|
||||||
Net sales
|
$
|
1,778.1
|
|
$
|
11.3
|
|
$
|
1,789.4
|
|
Cost of products sold
|
1,251.0
|
|
6.1
|
|
1,257.1
|
|
|||
Selling, general, and administrative expenses
|
289.3
|
|
1.1
|
|
290.4
|
|
|||
Income before income taxes
|
226.8
|
|
4.1
|
|
230.9
|
|
|||
Provision for income taxes
|
57.5
|
|
1.0
|
|
58.5
|
|
|||
Net income
|
169.3
|
|
3.1
|
|
172.4
|
|
|||
Net income attributable to The Timken Company
|
$
|
168.1
|
|
$
|
3.1
|
|
$
|
171.2
|
|
Basic earnings per share
|
$
|
2.17
|
|
$
|
0.04
|
|
$
|
2.21
|
|
Diluted earnings per share
|
$
|
2.13
|
|
$
|
0.04
|
|
$
|
2.17
|
|
|
Previous Accounting Method
|
Effect of Accounting Change
|
As Reported
|
||||||
ASSETS
|
|
|
|
||||||
Accounts receivable, less allowances
|
$
|
614.3
|
|
$
|
(84.1
|
)
|
$
|
530.2
|
|
Contract assets
|
—
|
|
127.5
|
|
127.5
|
|
|||
Inventories, net
|
806.4
|
|
(29.0
|
)
|
777.4
|
|
|||
Other current assets
|
89.4
|
|
3.4
|
|
92.8
|
|
|||
Deferred income taxes
|
58.7
|
|
(3.6
|
)
|
55.1
|
|
|||
LIABILITIES
|
|
|
|
||||||
Other current liabilities
|
163.1
|
|
3.4
|
|
166.5
|
|
|||
EQUITY
|
|
|
|
||||||
Earnings invested in the business
|
1,534.5
|
|
10.8
|
|
1,545.3
|
|
|
As Previously Reported
|
Effect of Accounting Change
|
As Adjusted
|
||||||
Cost of products sold
|
$
|
548.8
|
|
$
|
0.7
|
|
$
|
549.5
|
|
Selling, general, and administrative expenses
|
123.8
|
|
0.1
|
|
123.9
|
|
|||
Operating income
|
77.2
|
|
(0.8
|
)
|
76.4
|
|
|||
Other income, net
|
4.5
|
|
0.8
|
|
5.3
|
|
|
As Previously Reported
|
Effect of Accounting Change
|
As Adjusted
|
||||||
Cost of products sold
|
$
|
1,072.1
|
|
$
|
(1.0
|
)
|
$
|
1,071.1
|
|
Selling, general, and administrative expenses
|
243.4
|
|
(1.9
|
)
|
241.5
|
|
|||
Operating income
|
136.4
|
|
2.9
|
|
139.3
|
|
|||
Other income (expense), net
|
6.2
|
|
(2.9
|
)
|
3.3
|
|
|
As Previously Reported
|
Effect of Accounting Change
|
As Adjusted
|
||||||
Cost of products sold
|
$
|
2,193.4
|
|
$
|
(1.7
|
)
|
$
|
2,191.7
|
|
Selling, general, and administrative expenses
|
521.4
|
|
(13.1
|
)
|
508.3
|
|
|||
Operating income
|
284.7
|
|
14.8
|
|
299.5
|
|
|||
Other income (expense), net
|
9.4
|
|
(14.8
|
)
|
(5.4
|
)
|
|
As Previously Reported
|
Effect of Accounting Change
|
As Adjusted
|
||||||
Cost of products sold
|
$
|
2,001.3
|
|
$
|
(37.8
|
)
|
$
|
1,963.5
|
|
Selling, general, and administrative expenses
|
470.7
|
|
(30.5
|
)
|
440.2
|
|
|||
Pension settlement charges
|
1.6
|
|
(1.6
|
)
|
—
|
|
|||
Operating income
|
174.5
|
|
69.9
|
|
244.4
|
|
|||
Other expense, net
|
(0.9
|
)
|
(69.9
|
)
|
(70.8
|
)
|
|
As Previously Reported
|
Effect of Accounting Change
|
As Adjusted
|
||||||
Cost of products sold
|
$
|
2,052.8
|
|
$
|
15.7
|
|
$
|
2,068.5
|
|
Selling, general, and administrative expenses
|
457.7
|
|
26.9
|
|
484.6
|
|
|||
Pension settlement charges
|
119.9
|
|
(119.9
|
)
|
—
|
|
|||
Operating income
|
255.9
|
|
77.3
|
|
333.2
|
|
|||
Other expense, net
|
(7.5
|
)
|
(77.3
|
)
|
(84.8
|
)
|
|
Initial Purchase
Price Allocation |
Adjustment
|
Purchase
Price Allocation
|
||||||
Assets:
|
|
|
|
||||||
Accounts receivable, net
|
$
|
27.6
|
|
|
$
|
27.6
|
|
||
Inventories, net
|
29.4
|
|
|
29.4
|
|
||||
Other current assets
|
3.3
|
|
$
|
2.7
|
|
6.0
|
|
||
Property, plant and equipment, net
|
31.5
|
|
|
31.5
|
|
||||
Goodwill
|
149.7
|
|
(3.2
|
)
|
146.5
|
|
|||
Other intangible assets
|
173.6
|
|
|
173.6
|
|
||||
Other non-current assets
|
1.8
|
|
|
1.8
|
|
||||
Total assets acquired
|
$
|
416.9
|
|
$
|
(0.5
|
)
|
$
|
416.4
|
|
Liabilities:
|
|
|
|
||||||
Accounts payable, trade
|
$
|
9.5
|
|
|
$
|
9.5
|
|
||
Salaries, wages and benefits
|
5.8
|
|
|
5.8
|
|
||||
Other current liabilities
|
8.6
|
|
$
|
(0.1
|
)
|
8.5
|
|
||
Short-term debt
|
0.1
|
|
|
0.1
|
|
||||
Long-term debt
|
2.9
|
|
|
2.9
|
|
||||
Deferred income taxes
|
42.2
|
|
(0.7
|
)
|
41.5
|
|
|||
Other non-current liabilities
|
1.0
|
|
0.3
|
|
1.3
|
|
|||
Total liabilities assumed
|
$
|
70.1
|
|
$
|
(0.5
|
)
|
$
|
69.6
|
|
Net assets acquired
|
$
|
346.8
|
|
$
|
—
|
|
$
|
346.8
|
|
|
June 30,
2018 |
December 31,
2017 |
||||
Manufacturing supplies
|
$
|
30.4
|
|
$
|
29.0
|
|
Raw materials
|
98.7
|
|
90.4
|
|
||
Work in process
|
264.9
|
|
245.2
|
|
||
Finished products
|
418.4
|
|
404.3
|
|
||
Subtotal
|
812.4
|
|
768.9
|
|
||
Allowance for obsolete and surplus inventory
|
(35.0
|
)
|
(30.0
|
)
|
||
Total Inventories, net
|
$
|
777.4
|
|
$
|
738.9
|
|
|
Mobile
Industries
|
Process
Industries
|
Total
|
||||||
Beginning balance
|
$
|
254.3
|
|
$
|
257.5
|
|
$
|
511.8
|
|
Acquisitions
|
(3.2
|
)
|
—
|
|
(3.2
|
)
|
|||
Foreign currency translation adjustments and other changes
|
(14.0
|
)
|
(0.9
|
)
|
(14.9
|
)
|
|||
Ending balance
|
$
|
237.1
|
|
$
|
256.6
|
|
$
|
493.7
|
|
|
Balance at June 30, 2018
|
Balance at December 31, 2017
|
||||||||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||||||
Intangible assets
subject to amortization:
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
315.0
|
|
$
|
113.2
|
|
$
|
201.8
|
|
$
|
324.6
|
|
$
|
103.0
|
|
$
|
221.6
|
|
Technology and know-how
|
127.4
|
|
37.0
|
|
90.4
|
|
128.7
|
|
33.8
|
|
94.9
|
|
||||||
Trade names
|
7.7
|
|
4.5
|
|
3.2
|
|
8.6
|
|
4.3
|
|
4.3
|
|
||||||
Capitalized software
|
261.8
|
|
231.8
|
|
30.0
|
|
261.5
|
|
226.5
|
|
35.0
|
|
||||||
Other
|
10.1
|
|
6.2
|
|
3.9
|
|
10.3
|
|
6.2
|
|
4.1
|
|
||||||
|
$
|
722.0
|
|
$
|
392.7
|
|
$
|
329.3
|
|
$
|
733.7
|
|
$
|
373.8
|
|
$
|
359.9
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
||||||||||||
Trade names
|
$
|
51.0
|
|
|
$
|
51.0
|
|
$
|
52.0
|
|
|
$
|
52.0
|
|
||||
FAA air agency certificates
|
8.7
|
|
|
8.7
|
|
8.7
|
|
|
8.7
|
|
||||||||
|
$
|
59.7
|
|
|
|
$
|
59.7
|
|
$
|
60.7
|
|
|
|
$
|
60.7
|
|
||
Total intangible assets
|
$
|
781.7
|
|
$
|
392.7
|
|
$
|
389.0
|
|
$
|
794.4
|
|
$
|
373.8
|
|
$
|
420.6
|
|
|
June 30,
2018 |
December 31,
2017 |
||||
Variable-rate Accounts Receivable Facility with an interest rate of 2.93% at June 30, 2018 and 2.15% at December 31, 2017
|
$
|
96.4
|
|
$
|
62.9
|
|
Borrowings under variable-rate lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 0.32% to 1.10% at June 30, 2018 and 0.32% to 2.22% at December 31, 2017
|
65.9
|
|
42.5
|
|
||
Short-term debt
|
$
|
162.3
|
|
$
|
105.4
|
|
|
June 30,
2018 |
December 31,
2017 |
||||
Fixed-rate Medium-Term Notes, Series A, maturing at various dates through May 2028, with interest rates ranging from 6.74% to 7.76%
|
$
|
154.6
|
|
$
|
154.5
|
|
Fixed-rate Senior Unsecured Notes, maturing on September 1, 2024, with an interest rate of 3.875%
|
347.3
|
|
346.9
|
|
||
Variable-rate Senior Credit Facility with a weighted-average interest rate of 2.26% at June 30, 2018 and 1.83% at December 31, 2017
|
94.6
|
|
52.0
|
|
||
Fixed-rate Euro Senior Unsecured Notes, maturing on September 7, 2027, with an interest rate of 2.02%
|
174.6
|
|
179.3
|
|
||
Variable-rate Euro Term Loan with an interest rate of 1.13% at June 30, 2018 and December 31, 2017
|
109.1
|
|
119.7
|
|
||
Other
|
3.9
|
|
4.5
|
|
||
|
884.1
|
|
856.9
|
|
||
Less: Current maturities
|
2.7
|
|
2.7
|
|
||
Long-term debt
|
$
|
881.4
|
|
$
|
854.2
|
|
|
June 30,
2018 |
December 31,
2017 |
||||
Beginning balance, January 1
|
$
|
5.8
|
|
$
|
6.9
|
|
Additions
|
1.3
|
|
2.7
|
|
||
Payments
|
(1.0
|
)
|
(3.8
|
)
|
||
Ending balance
|
$
|
6.1
|
|
$
|
5.8
|
|
|
|
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, 2017
|
$
|
1,474.9
|
|
$
|
53.1
|
|
$
|
903.8
|
|
$
|
1,408.4
|
|
$
|
(38.3
|
)
|
$
|
(884.3
|
)
|
$
|
32.2
|
|
Cumulative effect of the new revenue standard
(net of income tax benefit of $2.6 million) |
7.7
|
|
|
|
7.7
|
|
|
|
|
||||||||||||
Cumulative effect of ASU 2018-02
|
—
|
|
|
|
0.7
|
|
(0.7
|
)
|
|
|
|||||||||||
Net income
|
172.4
|
|
|
|
171.2
|
|
|
|
1.2
|
|
|||||||||||
Foreign currency translation adjustment
|
(38.2
|
)
|
|
|
|
(35.3
|
)
|
|
(2.9
|
)
|
|||||||||||
Change in fair value of derivative financial
instruments, net of reclassifications |
4.4
|
|
|
|
|
4.4
|
|
|
|
||||||||||||
Dividends – $0.55 per share
|
(42.7
|
)
|
|
|
(42.7
|
)
|
|
|
|
||||||||||||
Stock-based compensation
|
17.8
|
|
|
17.8
|
|
|
|
|
|
||||||||||||
Stock purchased at fair market value
|
(49.6
|
)
|
|
|
|
|
(49.6
|
)
|
|
||||||||||||
Stock option exercise activity
|
10.6
|
|
|
(3.1
|
)
|
|
|
13.7
|
|
|
|||||||||||
Restricted share activity
|
—
|
|
|
(11.3
|
)
|
|
|
11.3
|
|
|
|||||||||||
Shares surrendered for taxes
|
(5.0
|
)
|
|
|
|
|
(5.0
|
)
|
|
||||||||||||
Balance at June 30, 2018
|
$
|
1,552.3
|
|
$
|
53.1
|
|
$
|
907.2
|
|
$
|
1,545.3
|
|
$
|
(69.9
|
)
|
$
|
(913.9
|
)
|
$
|
30.5
|
|
|
Foreign currency translation adjustments
|
Pension and postretirement liability adjustments
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||
Balance at March 31, 2018
|
$
|
(26.1
|
)
|
$
|
(0.4
|
)
|
$
|
(2.7
|
)
|
$
|
(29.2
|
)
|
Other comprehensive (loss) income before
reclassifications and income taxes |
(46.6
|
)
|
—
|
|
4.4
|
|
(42.2
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive income (loss), before income tax |
—
|
|
—
|
|
0.4
|
|
0.4
|
|
||||
Income tax benefit
|
—
|
|
—
|
|
(1.2
|
)
|
(1.2
|
)
|
||||
Net current period other comprehensive (loss)
income, net of income taxes |
(46.6
|
)
|
—
|
|
3.6
|
|
(43.0
|
)
|
||||
Noncontrolling interest
|
2.3
|
|
—
|
|
—
|
|
2.3
|
|
||||
Net current period comprehensive (loss) income, net
of income taxes and noncontrolling interest |
(44.3
|
)
|
—
|
|
3.6
|
|
(40.7
|
)
|
||||
Balance at June 30, 2018
|
$
|
(70.4
|
)
|
$
|
(0.4
|
)
|
$
|
0.9
|
|
$
|
(69.9
|
)
|
|
Foreign currency translation adjustments
|
Pension and postretirement liability adjustments
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
(35.1
|
)
|
$
|
(0.3
|
)
|
$
|
(2.9
|
)
|
$
|
(38.3
|
)
|
Cumulative effect of ASU 2018-02
|
—
|
|
(0.1
|
)
|
(0.6
|
)
|
(0.7
|
)
|
||||
Balance at January 1, 2018
|
(35.1
|
)
|
(0.4
|
)
|
(3.5
|
)
|
(39.0
|
)
|
||||
Other comprehensive (loss) income before
reclassifications and income tax |
(38.2
|
)
|
—
|
|
4.0
|
|
(34.2
|
)
|
||||
Amounts reclassified from accumulated other
comprehensive income (loss), before income tax |
—
|
|
—
|
|
1.8
|
|
1.8
|
|
||||
Income tax benefit
|
—
|
|
—
|
|
(1.4
|
)
|
(1.4
|
)
|
||||
Net current period other comprehensive (loss)
income, net of income taxes |
(38.2
|
)
|
—
|
|
4.4
|
|
(33.8
|
)
|
||||
Noncontrolling interest
|
2.9
|
|
—
|
|
—
|
|
2.9
|
|
||||
Net current period comprehensive (loss) income,
net of income taxes, noncontrolling interest and
cumulative effect of accounting change
|
(35.3
|
)
|
(0.1
|
)
|
3.8
|
|
(31.6
|
)
|
||||
Balance at June 30, 2018
|
$
|
(70.4
|
)
|
$
|
(0.4
|
)
|
$
|
0.9
|
|
$
|
(69.9
|
)
|
|
Foreign currency translation adjustments
|
Pension and postretirement liability adjustments
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||
Balance at March 31, 2017
|
$
|
(62.0
|
)
|
$
|
1.6
|
|
$
|
(0.4
|
)
|
$
|
(60.8
|
)
|
Other comprehensive income (loss) before
reclassifications and income taxes |
11.5
|
|
—
|
|
(2.0
|
)
|
9.5
|
|
||||
Amounts reclassified from accumulated other
comprehensive income (loss), before income tax |
—
|
|
0.1
|
|
(0.3
|
)
|
(0.2
|
)
|
||||
Income tax expense (benefit)
|
—
|
|
(0.1
|
)
|
0.9
|
|
0.8
|
|
||||
Net current period other comprehensive
income (loss), net of income taxes |
11.5
|
|
—
|
|
(1.4
|
)
|
10.1
|
|
||||
Noncontrolling interest
|
0.6
|
|
—
|
|
—
|
|
0.6
|
|
||||
Net current period comprehensive income (loss), net
of income taxes and noncontrolling interest |
12.1
|
|
—
|
|
(1.4
|
)
|
10.7
|
|
||||
Balance at June 30, 2017
|
$
|
(49.9
|
)
|
$
|
1.6
|
|
$
|
(1.8
|
)
|
$
|
(50.1
|
)
|
|
Foreign currency translation adjustments
|
Pension and postretirement liability adjustments
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||
Balance at December 31, 2016
|
$
|
(79.8
|
)
|
$
|
1.5
|
|
$
|
0.4
|
|
$
|
(77.9
|
)
|
Other comprehensive income (loss) before
reclassifications and income taxes |
31.9
|
|
—
|
|
(3.1
|
)
|
28.8
|
|
||||
Amounts reclassified from accumulated other
comprehensive income (loss), before income tax |
—
|
|
0.2
|
|
(0.5
|
)
|
(0.3
|
)
|
||||
Income tax expense (benefit)
|
—
|
|
(0.1
|
)
|
1.4
|
|
1.3
|
|
||||
Net current period other comprehensive
income (loss), net of income taxes |
31.9
|
|
0.1
|
|
(2.2
|
)
|
29.8
|
|
||||
Noncontrolling interest
|
(2.0
|
)
|
—
|
|
—
|
|
(2.0
|
)
|
||||
Net current period comprehensive income (loss),
net of income taxes and noncontrolling interest
|
29.9
|
|
0.1
|
|
(2.2
|
)
|
27.8
|
|
||||
Balance at June 30, 2017
|
$
|
(49.9
|
)
|
$
|
1.6
|
|
$
|
(1.8
|
)
|
$
|
(50.1
|
)
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Numerator:
|
|
|
|
|
||||||||
Net income attributable to The Timken Company
|
$
|
91.0
|
|
$
|
82.5
|
|
$
|
171.2
|
|
$
|
120.7
|
|
Less: undistributed earnings allocated to nonvested stock
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Net income available to common shareholders for
basic and diluted earnings per share
|
$
|
91.0
|
|
$
|
82.5
|
|
$
|
171.2
|
|
$
|
120.7
|
|
Denominator:
|
|
|
|
|
||||||||
Weighted average number of shares outstanding - basic
|
77,360,159
|
|
77,931,576
|
|
77,544,365
|
|
77,814,438
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
||||||||
Stock options and awards - based on the treasury stock method
|
1,136,139
|
|
1,097,821
|
|
1,207,586
|
|
1,129,991
|
|
||||
Weighted average number of shares outstanding, assuming
dilution of stock options and awards
|
78,496,298
|
|
79,029,397
|
|
78,751,951
|
|
78,944,429
|
|
||||
Basic earnings per share
|
$
|
1.18
|
|
$
|
1.06
|
|
$
|
2.21
|
|
$
|
1.55
|
|
Diluted earnings per share
|
$
|
1.16
|
|
$
|
1.04
|
|
$
|
2.17
|
|
$
|
1.53
|
|
|
Three Months Ended
|
Three Months Ended
|
||||||||||||||||
|
June 30, 2018
|
June 30, 2017
|
||||||||||||||||
|
Mobile
|
Process
|
Total
|
Mobile(1)
|
Process(1)
|
Total(1)
|
||||||||||||
United States
|
$
|
261.7
|
|
$
|
190.0
|
|
$
|
451.7
|
|
$
|
246.9
|
|
$
|
165.0
|
|
$
|
411.9
|
|
Americas excluding United States
|
53.5
|
|
42.4
|
|
95.9
|
|
41.9
|
|
37.6
|
|
79.5
|
|
||||||
Europe / Middle East / Africa
|
100.3
|
|
92.4
|
|
192.7
|
|
66.5
|
|
64.9
|
|
131.4
|
|
||||||
Asia-Pacific
|
73.6
|
|
92.4
|
|
166.0
|
|
53.1
|
|
74.7
|
|
127.8
|
|
||||||
Net sales
|
$
|
489.1
|
|
$
|
417.2
|
|
$
|
906.3
|
|
$
|
408.4
|
|
$
|
342.2
|
|
$
|
750.6
|
|
|
Six Months Ended
|
Six Months Ended
|
||||||||||||||||
|
June 30, 2018
|
June 30, 2017
|
||||||||||||||||
|
Mobile
|
Process
|
Total
|
Mobile(1)
|
Process(1)
|
Total(1)
|
||||||||||||
United States
|
$
|
519.1
|
|
$
|
368.6
|
|
$
|
887.7
|
|
$
|
475.6
|
|
$
|
327.0
|
|
$
|
802.6
|
|
Americas excluding United States
|
108.7
|
|
89.1
|
|
197.8
|
|
85.2
|
|
72.5
|
|
157.7
|
|
||||||
Europe / Middle East / Africa
|
203.2
|
|
180.4
|
|
383.6
|
|
129.6
|
|
126.0
|
|
255.6
|
|
||||||
Asia-Pacific
|
146.6
|
|
173.7
|
|
320.3
|
|
101.0
|
|
137.5
|
|
238.5
|
|
||||||
Net sales
|
$
|
977.6
|
|
$
|
811.8
|
|
$
|
1,789.4
|
|
$
|
791.4
|
|
$
|
663.0
|
|
$
|
1,454.4
|
|
|
Six Months Ended
|
Revenue by sales channel
|
June 30, 2018
|
Original equipment manufacturers
|
57%
|
Distribution/end users
|
43%
|
|
June 30,
2018 |
||
Beginning balance, January 1
|
$
|
100.5
|
|
Additional unbilled revenue recognized
|
159.0
|
|
|
Less: amounts billed to customers
|
(132.0
|
)
|
|
Ending balance
|
$
|
127.5
|
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Net sales:
|
|
|
|
|
||||||||
Mobile Industries
|
$
|
489.1
|
|
$
|
408.4
|
|
$
|
977.6
|
|
$
|
791.4
|
|
Process Industries
|
417.2
|
|
342.2
|
|
811.8
|
|
663.0
|
|
||||
Net sales
|
$
|
906.3
|
|
$
|
750.6
|
|
$
|
1,789.4
|
|
$
|
1,454.4
|
|
Segment EBIT:
|
|
|
|
|
||||||||
Mobile Industries
|
$
|
54.5
|
|
$
|
34.4
|
|
$
|
105.6
|
|
$
|
67.0
|
|
Process Industries
|
90.6
|
|
60.2
|
|
172.2
|
|
104.3
|
|
||||
Total EBIT, for reportable segments
|
$
|
145.1
|
|
$
|
94.6
|
|
$
|
277.8
|
|
$
|
171.3
|
|
Corporate expenses
|
(15.2
|
)
|
(12.9
|
)
|
(29.5
|
)
|
(24.3
|
)
|
||||
Pension actuarial gains (losses), net
|
2.4
|
|
—
|
|
2.4
|
|
(4.4
|
)
|
||||
Interest expense
|
(10.7
|
)
|
(8.5
|
)
|
(20.7
|
)
|
(16.4
|
)
|
||||
Interest income
|
0.5
|
|
0.7
|
|
0.9
|
|
1.3
|
|
||||
Income before income taxes
|
$
|
122.1
|
|
$
|
73.9
|
|
$
|
230.9
|
|
$
|
127.5
|
|
|
U.S. Plans
|
International Plans
|
Total
|
|||||||||||||||
|
Three Months Ended
June 30, |
Three Months Ended
June 30, |
Three Months Ended
June 30, |
|||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
3.2
|
|
$
|
3.0
|
|
$
|
0.4
|
|
$
|
0.4
|
|
$
|
3.6
|
|
$
|
3.4
|
|
Interest cost
|
5.8
|
|
6.1
|
|
1.8
|
|
1.9
|
|
7.6
|
|
8.0
|
|
||||||
Expected return on plan assets
|
(7.3
|
)
|
(7.0
|
)
|
(2.9
|
)
|
(2.7
|
)
|
(10.2
|
)
|
(9.7
|
)
|
||||||
Amortization of prior service cost
|
0.4
|
|
0.4
|
|
—
|
|
—
|
|
0.4
|
|
0.4
|
|
||||||
Recognition of actuarial gains
|
(2.4
|
)
|
—
|
|
—
|
|
—
|
|
(2.4
|
)
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
(0.3
|
)
|
$
|
2.5
|
|
$
|
(0.7
|
)
|
$
|
(0.4
|
)
|
$
|
(1.0
|
)
|
$
|
2.1
|
|
|
U.S. Plans
|
International Plans
|
Total
|
|||||||||||||||
|
Six Months Ended
June 30, |
Six Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
6.4
|
|
$
|
6.1
|
|
$
|
0.8
|
|
$
|
0.8
|
|
$
|
7.2
|
|
$
|
6.9
|
|
Interest cost
|
11.7
|
|
12.3
|
|
3.7
|
|
3.7
|
|
15.4
|
|
16.0
|
|
||||||
Expected return on plan assets
|
(14.6
|
)
|
(14.0
|
)
|
(5.9
|
)
|
(5.4
|
)
|
(20.5
|
)
|
(19.4
|
)
|
||||||
Amortization of prior service cost
|
0.8
|
|
0.7
|
|
—
|
|
—
|
|
0.8
|
|
0.7
|
|
||||||
Recognition of actuarial (gains) losses
|
(2.4
|
)
|
4.4
|
|
—
|
|
—
|
|
(2.4
|
)
|
4.4
|
|
||||||
Net periodic benefit cost
|
$
|
1.9
|
|
$
|
9.5
|
|
$
|
(1.4
|
)
|
$
|
(0.9
|
)
|
$
|
0.5
|
|
$
|
8.6
|
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Components of net periodic benefit cost:
|
|
|
|
|
||||||||
Service cost
|
$
|
0.1
|
|
$
|
0.1
|
|
$
|
0.1
|
|
$
|
0.1
|
|
Interest cost
|
1.9
|
|
2.2
|
|
3.7
|
|
4.5
|
|
||||
Expected return on plan assets
|
(1.0
|
)
|
(1.4
|
)
|
(1.9
|
)
|
(2.8
|
)
|
||||
Amortization of prior service credit
|
(0.4
|
)
|
(0.3
|
)
|
(0.8
|
)
|
(0.5
|
)
|
||||
Net periodic benefit cost
|
$
|
0.6
|
|
$
|
0.6
|
|
$
|
1.1
|
|
$
|
1.3
|
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Provision (benefit) for income taxes
|
$
|
30.2
|
|
$
|
(8.1
|
)
|
$
|
58.5
|
|
$
|
7.4
|
|
Effective tax rate
|
24.7
|
%
|
(11.0
|
)%
|
25.3
|
%
|
5.8
|
%
|
|
June 30, 2018
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
129.7
|
|
$
|
126.0
|
|
$
|
3.7
|
|
$
|
—
|
|
Cash and cash equivalents measured at net asset value
|
15.5
|
|
|
|
|
|
|
|
||||
Restricted cash
|
1.4
|
|
1.4
|
|
—
|
|
—
|
|
||||
Short-term investments
|
12.9
|
|
—
|
|
12.9
|
|
—
|
|
||||
Short-term investments measured at net asset value
|
0.2
|
|
|
|
|
|
|
|||||
Foreign currency hedges
|
7.9
|
|
—
|
|
7.9
|
|
—
|
|
||||
Total Assets
|
$
|
167.6
|
|
$
|
127.4
|
|
$
|
24.5
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Foreign currency hedges
|
$
|
1.6
|
|
$
|
—
|
|
$
|
1.6
|
|
$
|
—
|
|
Total Liabilities
|
$
|
1.6
|
|
$
|
—
|
|
$
|
1.6
|
|
$
|
—
|
|
|
December 31, 2017
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
108.5
|
|
$
|
107.3
|
|
$
|
1.2
|
|
$
|
—
|
|
Cash and cash equivalents measured at net asset value
|
13.1
|
|
|
|
|
|
|
|
||||
Restricted cash
|
3.8
|
|
3.8
|
|
—
|
|
—
|
|
||||
Short-term investments
|
16.2
|
|
—
|
|
16.2
|
|
—
|
|
||||
Short-term investments measured at net asset value
|
0.2
|
|
|
|
|
|
|
|||||
Foreign currency hedges
|
1.3
|
|
—
|
|
1.3
|
|
—
|
|
||||
Total Assets
|
$
|
143.1
|
|
$
|
111.1
|
|
$
|
18.7
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Foreign currency hedges
|
$
|
7.1
|
|
$
|
—
|
|
$
|
7.1
|
|
$
|
—
|
|
Total Liabilities
|
$
|
7.1
|
|
$
|
—
|
|
$
|
7.1
|
|
$
|
—
|
|
|
Asset Derivatives
|
Liability Derivatives
|
||||||||||
Derivatives designated as hedging instruments:
|
June 30, 2018
|
December 31, 2017
|
June 30, 2018
|
December 31, 2017
|
||||||||
Foreign currency forward contracts
|
$
|
4.0
|
|
$
|
0.5
|
|
$
|
0.6
|
|
$
|
2.1
|
|
|
|
|
|
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
3.9
|
|
0.8
|
|
1.0
|
|
5.0
|
|
||||
Total Derivatives
|
$
|
7.9
|
|
$
|
1.3
|
|
$
|
1.6
|
|
$
|
7.1
|
|
|
Amount of gain or (loss) recognized in
Other Comprehensive Loss
|
|||||||||||
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
Derivatives in cash flow hedging relationships:
|
2018
|
2017
|
2018
|
2017
|
||||||||
Foreign currency forward contracts
|
$
|
4.4
|
|
$
|
(2.0
|
)
|
$
|
4.0
|
|
$
|
(3.1
|
)
|
|
|
Amount of gain or (loss) reclassified from Accumulated Other Comprehensive Loss into income (effective portion)
|
|||||||||||
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
Derivatives in cash flow hedging relationships:
|
Location of gain or (loss) recognized in income
|
2018
|
2017
|
2018
|
2017
|
||||||||
Foreign currency forward contracts
|
Cost of products sold
|
$
|
(0.2
|
)
|
$
|
0.4
|
|
$
|
(1.4
|
)
|
$
|
0.7
|
|
Interest rate swaps
|
Interest expense
|
(0.2
|
)
|
(0.1
|
)
|
(0.4
|
)
|
(0.2
|
)
|
||||
Total
|
|
$
|
(0.4
|
)
|
$
|
0.3
|
|
$
|
(1.8
|
)
|
$
|
0.5
|
|
|
|
Amount of gain or (loss) recognized in income
|
|||||||||||
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||
Derivatives not designated as hedging instruments:
|
Location of gain or (loss) recognized in income
|
2018
|
2017
|
2018
|
2017
|
||||||||
Foreign currency forward contracts
|
Other income (expense), net
|
$
|
11.0
|
|
$
|
(7.2
|
)
|
$
|
6.7
|
|
$
|
(8.3
|
)
|
•
|
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; outdoor power equipment; rotorcraft and fixed-wing aircraft; and other mobile equipment. Beyond service parts sold to OEMs, aftermarket sales and services to individual end users, equipment owners, operators and maintenance shops are handled directly or 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 and through the provision of services directly to end users.
|
•
|
On July 24, 2018, the Company announced that it has reached an agreement to acquire Cone Drive, a leader in precision drives used in diverse markets including solar, automation, aerial platforms, and food and beverage. Cone Drive, located in Traverse City, Michigan, operates in the United States and China. Cone Drive is expected to generate full year sales just over $100 million for 2018.
|
•
|
On July 26, 2018, the Company reached an agreement to acquire Rollon Group ("Rollon"), a leader in engineered linear motion products, specializing in the design and manufacture of linear guides, telescopic rails and linear actuators used in a wide range of industries such as passenger rail, aerospace, packaging and logistics, medical and automation. Rollon, located near Milan, Italy, has manufacturing operations in Italy, Germany and the U.S. Rollon is expected to generate full year sales of about $140 million for 2018.
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
906.3
|
|
$
|
750.6
|
|
$
|
155.7
|
|
20.7
|
%
|
Net income
|
91.9
|
|
82.0
|
|
9.9
|
|
12.1
|
%
|
|||
Net income (loss) attributable to noncontrolling interest
|
0.9
|
|
(0.5
|
)
|
1.4
|
|
(280.0
|
)%
|
|||
Net income attributable to The Timken Company
|
91.0
|
|
82.5
|
|
8.5
|
|
10.3
|
%
|
|||
Diluted earnings per share
|
$
|
1.16
|
|
$
|
1.04
|
|
$
|
0.12
|
|
11.5
|
%
|
Average number of shares – diluted
|
78,496,298
|
|
79,029,397
|
|
—
|
|
(0.7
|
)%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
1,789.4
|
|
$
|
1,454.4
|
|
$
|
335.0
|
|
23.0
|
%
|
Net income
|
172.4
|
|
120.1
|
|
52.3
|
|
43.5
|
%
|
|||
Net income (loss) attributable to noncontrolling interest
|
1.2
|
|
(0.6
|
)
|
1.8
|
|
(300.0
|
)%
|
|||
Net income attributable to The Timken Company
|
171.2
|
|
120.7
|
|
$
|
50.5
|
|
41.8
|
%
|
||
Diluted earnings per share
|
$
|
2.17
|
|
$
|
1.53
|
|
$
|
0.64
|
|
41.8
|
%
|
Average number of shares – diluted
|
78,751,951
|
|
78,944,429
|
|
—
|
|
(0.2
|
)%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Net Sales
|
$
|
906.3
|
|
$
|
750.6
|
|
$
|
155.7
|
|
20.7
|
%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Net Sales
|
$
|
1,789.4
|
|
$
|
1,454.4
|
|
$
|
335.0
|
|
23.0
|
%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
Change
|
|||||||
Gross profit
|
$
|
267.4
|
|
$
|
201.1
|
|
$
|
66.3
|
|
33.0
|
%
|
Gross profit % to net sales
|
29.5
|
%
|
26.8
|
%
|
|
|
270
|
bps
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
Change
|
|||||||
Gross profit
|
$
|
532.3
|
|
$
|
383.3
|
|
$
|
149.0
|
|
38.9
|
%
|
Gross profit % to net sales
|
29.7
|
%
|
26.4
|
%
|
|
330
|
bps
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
2018
|
2017
|
$ Change
|
Change
|
||||||
Selling, general and administrative expenses
|
$
|
141.8
|
|
$
|
123.9
|
|
$
|
17.9
|
|
14.4%
|
Selling, general and administrative expenses % to net sales
|
15.6
|
%
|
16.5
|
%
|
|
(90) bps
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2018
|
2017
|
$ Change
|
Change
|
||||||
Selling, general and administrative expenses
|
$
|
290.4
|
|
$
|
241.5
|
|
$
|
48.9
|
|
20.2%
|
Selling, general and administrative expenses % to net sales
|
16.2
|
%
|
16.6
|
%
|
|
(40) bps
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Severance and related benefit costs
|
$
|
0.2
|
|
$
|
0.7
|
|
$
|
(0.5
|
)
|
(71.4
|
)%
|
Exit costs
|
0.1
|
|
0.1
|
|
—
|
|
—
|
%
|
|||
Total
|
$
|
0.3
|
|
$
|
0.8
|
|
$
|
(0.5
|
)
|
(62.5
|
)%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Severance and related benefit costs
|
$
|
0.4
|
|
$
|
1.9
|
|
$
|
(1.5
|
)
|
(78.9
|
)%
|
Exit costs
|
0.1
|
|
0.6
|
|
(0.5
|
)
|
(83.3
|
)%
|
|||
Total
|
$
|
0.5
|
|
$
|
2.5
|
|
$
|
(2.0
|
)
|
(80.0
|
)%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Interest expense
|
$
|
(10.7
|
)
|
$
|
(8.5
|
)
|
$
|
(2.2
|
)
|
25.9
|
%
|
Interest income
|
$
|
0.5
|
|
$
|
0.7
|
|
$
|
(0.2
|
)
|
(28.6
|
)%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Interest expense
|
$
|
(20.7
|
)
|
$
|
(16.4
|
)
|
$
|
(4.3
|
)
|
26.2
|
%
|
Interest income
|
$
|
0.9
|
|
$
|
1.3
|
|
$
|
(0.4
|
)
|
(30.8
|
)%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Other income, net
|
$
|
7.0
|
|
$
|
5.3
|
|
$
|
1.7
|
|
32.1
|
%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Other income, net
|
$
|
9.3
|
|
$
|
3.3
|
|
$
|
6.0
|
|
181.8
|
%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Provision (benefit) for income taxes
|
$
|
30.2
|
|
$
|
(8.1
|
)
|
$
|
38.3
|
|
(472.8
|
)%
|
Effective tax rate
|
24.7
|
%
|
(11.0
|
)%
|
|
NM
|
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2018
|
2017
|
$ Change
|
Change
|
||||||
Provision for income taxes
|
$
|
58.5
|
|
$
|
7.4
|
|
$
|
51.1
|
|
NM
|
Effective tax rate
|
25.3
|
%
|
5.8
|
%
|
|
NM
|
•
|
The Company acquired Groeneveld during the third quarter of 2017. Results for Groeneveld are reported in the Mobile Industries and Process Industries segments based on customers served.
|
•
|
The Company acquired Torsion Control Products and PT Tech during the second quarter of 2017. Substantially all of the results for Torsion Control Products are reported in the Mobile Industries segment. Results for PT Tech are reported in the Mobile Industries and Process Industries segments based on customers served.
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
489.1
|
|
$
|
408.4
|
|
$
|
80.7
|
|
19.8
|
%
|
EBIT
|
$
|
54.5
|
|
$
|
34.4
|
|
$
|
20.1
|
|
58.4
|
%
|
EBIT margin
|
11.1
|
%
|
8.4
|
%
|
|
270
|
bps
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
489.1
|
|
$
|
408.4
|
|
$
|
80.7
|
|
19.8
|
%
|
Less: Acquisitions
|
30.7
|
|
—
|
|
30.7
|
|
NM
|
|
|||
Currency
|
3.5
|
|
—
|
|
3.5
|
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
454.9
|
|
$
|
408.4
|
|
$
|
46.5
|
|
11.4
|
%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
977.6
|
|
$
|
791.4
|
|
$
|
186.2
|
|
23.5
|
%
|
EBIT
|
$
|
105.6
|
|
$
|
67.0
|
|
$
|
38.6
|
|
57.6
|
%
|
EBIT margin
|
10.8
|
%
|
8.5
|
%
|
|
230
|
bps
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
977.6
|
|
$
|
791.4
|
|
$
|
186.2
|
|
23.5
|
%
|
Less: Acquisitions
|
73.7
|
|
—
|
|
73.7
|
|
NM
|
|
|||
Currency
|
14.7
|
|
—
|
|
14.7
|
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
889.2
|
|
$
|
791.4
|
|
$
|
97.8
|
|
12.4
|
%
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
417.2
|
|
$
|
342.2
|
|
$
|
75.0
|
|
21.9
|
%
|
EBIT
|
$
|
90.6
|
|
$
|
60.2
|
|
$
|
30.4
|
|
50.5
|
%
|
EBIT margin
|
21.7
|
%
|
17.6
|
%
|
|
410
|
bps
|
|
Three Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
417.2
|
|
$
|
342.2
|
|
$
|
75.0
|
|
21.9
|
%
|
Less: Acquisitions
|
3.1
|
|
—
|
|
3.1
|
|
NM
|
|
|||
Currency
|
6.6
|
|
—
|
|
6.6
|
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
407.5
|
|
$
|
342.2
|
|
$
|
65.3
|
|
19.1
|
%
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
811.8
|
|
$
|
663.0
|
|
$
|
148.8
|
|
22.4
|
%
|
EBIT
|
$
|
172.2
|
|
$
|
104.3
|
|
$
|
67.9
|
|
65.1
|
%
|
EBIT margin
|
21.2
|
%
|
15.7
|
%
|
|
550
|
bps
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
2017
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
811.8
|
|
$
|
663.0
|
|
$
|
148.8
|
|
22.4
|
%
|
Less: Acquisitions
|
7.1
|
|
—
|
|
7.1
|
|
NM
|
|
|||
Currency
|
19.9
|
|
—
|
|
19.9
|
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
784.8
|
|
$
|
663.0
|
|
$
|
121.8
|
|
18.4
|
%
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
2018
|
2017
|
$ Change
|
Change
|
||||||
Corporate expenses
|
$
|
15.2
|
|
$
|
12.9
|
|
$
|
2.3
|
|
17.8%
|
Corporate expenses % to net sales
|
1.7
|
%
|
1.7
|
%
|
|
—
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
2018
|
2017
|
$ Change
|
Change
|
||||||
Corporate expenses
|
$
|
29.5
|
|
$
|
24.3
|
|
$
|
5.2
|
|
21.4%
|
Corporate expenses % to net sales
|
1.6
|
%
|
1.7
|
%
|
|
(10) bps
|
|
June 30,
2018 |
December 31,
2017 |
$ Change
|
% Change
|
|||||||
Cash and cash equivalents
|
$
|
145.2
|
|
$
|
121.6
|
|
$
|
23.6
|
|
19.4
|
%
|
Restricted cash
|
1.4
|
|
3.8
|
|
(2.4
|
)
|
(63.2
|
)%
|
|||
Accounts receivable, net
|
530.2
|
|
524.9
|
|
5.3
|
|
1.0
|
%
|
|||
Contract assets
|
127.5
|
|
—
|
|
127.5
|
|
NM
|
|
|||
Inventories, net
|
777.4
|
|
738.9
|
|
38.5
|
|
5.2
|
%
|
|||
Deferred charges and prepaid expenses
|
25.3
|
|
29.7
|
|
(4.4
|
)
|
(14.8
|
)%
|
|||
Other current assets
|
92.8
|
|
81.2
|
|
11.6
|
|
14.3
|
%
|
|||
Total current assets
|
$
|
1,699.8
|
|
$
|
1,500.1
|
|
$
|
199.7
|
|
13.3
|
%
|
|
June 30,
2018 |
December 31,
2017 |
$ Change
|
% Change
|
|||||||
Property, plant and equipment
|
$
|
2,392.7
|
|
$
|
2,405.6
|
|
$
|
(12.9
|
)
|
(0.5
|
)%
|
Less: accumulated depreciation
|
(1,558.2
|
)
|
(1,541.4
|
)
|
(16.8
|
)
|
1.1
|
%
|
|||
Property, plant and equipment, net
|
$
|
834.5
|
|
$
|
864.2
|
|
$
|
(29.7
|
)
|
(3.4
|
)%
|
|
June 30,
2018 |
December 31,
2017 |
$ Change
|
% Change
|
|||||||
Goodwill
|
$
|
493.7
|
|
$
|
511.8
|
|
$
|
(18.1
|
)
|
(3.5
|
)%
|
Non-current pension assets
|
26.0
|
|
19.7
|
|
6.3
|
|
32.0
|
%
|
|||
Other intangible assets
|
389.0
|
|
420.6
|
|
(31.6
|
)
|
(7.5
|
)%
|
|||
Deferred income taxes
|
55.1
|
|
61.0
|
|
(5.9
|
)
|
(9.7
|
)%
|
|||
Other non-current assets
|
29.9
|
|
25.0
|
|
4.9
|
|
19.6
|
%
|
|||
Total other assets
|
$
|
993.7
|
|
$
|
1,038.1
|
|
$
|
(44.4
|
)
|
(4.3
|
)%
|
|
June 30,
2018 |
December 31,
2017 |
$ Change
|
% Change
|
|||||||
Short-term debt
|
$
|
162.3
|
|
$
|
105.4
|
|
$
|
56.9
|
|
54.0
|
%
|
Current portion of long-term debt
|
2.7
|
|
2.7
|
|
—
|
|
—
|
%
|
|||
Accounts payable
|
253.2
|
|
265.2
|
|
(12.0
|
)
|
(4.5
|
)%
|
|||
Salaries, wages and benefits
|
111.4
|
|
127.9
|
|
(16.5
|
)
|
(12.9
|
)%
|
|||
Income taxes payable
|
15.1
|
|
9.8
|
|
5.3
|
|
54.1
|
%
|
|||
Other current liabilities
|
166.5
|
|
160.7
|
|
5.8
|
|
3.6
|
%
|
|||
Total current liabilities
|
$
|
711.2
|
|
$
|
671.7
|
|
$
|
39.5
|
|
5.9
|
%
|
|
June 30,
2018 |
December 31,
2017 |
$ Change
|
% Change
|
|||||||
Long-term debt
|
$
|
881.4
|
|
$
|
854.2
|
|
$
|
27.2
|
|
3.2
|
%
|
Accrued pension cost
|
165.7
|
|
167.3
|
|
(1.6
|
)
|
(1.0
|
)%
|
|||
Accrued postretirement benefits cost
|
122.2
|
|
122.6
|
|
(0.4
|
)
|
(0.3
|
)%
|
|||
Deferred income taxes
|
40.4
|
|
44.0
|
|
(3.6
|
)
|
(8.2
|
)%
|
|||
Other non-current liabilities
|
54.8
|
|
67.7
|
|
(12.9
|
)
|
(19.1
|
)%
|
|||
Total non-current liabilities
|
$
|
1,264.5
|
|
$
|
1,255.8
|
|
$
|
8.7
|
|
0.7
|
%
|
|
June 30,
2018 |
December 31,
2017 |
$ Change
|
% Change
|
|||||||
Common shares
|
$
|
960.3
|
|
$
|
956.9
|
|
$
|
3.4
|
|
0.4
|
%
|
Earnings invested in the business
|
1,545.3
|
|
1,408.4
|
|
136.9
|
|
9.7
|
%
|
|||
Accumulated other comprehensive loss
|
(69.9
|
)
|
(38.3
|
)
|
(31.6
|
)
|
82.5
|
%
|
|||
Treasury shares
|
(913.9
|
)
|
(884.3
|
)
|
(29.6
|
)
|
3.3
|
%
|
|||
Noncontrolling interest
|
30.5
|
|
32.2
|
|
(1.7
|
)
|
(5.3
|
)%
|
|||
Total shareholders’ equity
|
$
|
1,552.3
|
|
$
|
1,474.9
|
|
$
|
77.4
|
|
5.2
|
%
|
|
Six Months Ended
June 30, |
|
|||||||
|
2018
|
2017
|
$ Change
|
||||||
Net cash provided by operating activities
|
$
|
57.8
|
|
$
|
114.5
|
|
$
|
(56.7
|
)
|
Net cash used in investing activities
|
(36.0
|
)
|
(108.9
|
)
|
72.9
|
|
|||
Net cash provided by financing activities
|
7.9
|
|
280.0
|
|
(272.1
|
)
|
|||
Effect of exchange rate changes on cash
|
(8.5
|
)
|
10.7
|
|
(19.2
|
)
|
|||
Increase in cash, cash equivalents and restricted cash
|
$
|
21.2
|
|
$
|
296.3
|
|
$
|
(275.1
|
)
|
|
Six Months Ended
June 30, |
|
|||||||
|
2018
|
2017
|
$ Change
|
||||||
Cash (Used) Provided:
|
|
|
|
||||||
Accounts receivable
|
$
|
(86.4
|
)
|
$
|
(46.0
|
)
|
$
|
(40.4
|
)
|
Contact assets
|
(27.8
|
)
|
—
|
|
(27.8
|
)
|
|||
Inventories
|
(79.9
|
)
|
(38.1
|
)
|
(41.8
|
)
|
|||
Trade accounts payable
|
(8.4
|
)
|
50.5
|
|
(58.9
|
)
|
|||
Other accrued expenses
|
(2.4
|
)
|
2.0
|
|
(4.4
|
)
|
|||
Cash used in working capital items
|
$
|
(204.9
|
)
|
$
|
(31.6
|
)
|
$
|
(173.3
|
)
|
|
Six Months Ended
June 30, |
|
|||||||
|
2018
|
2017
|
$ Change
|
||||||
Accrued income tax expense
|
$
|
58.6
|
|
$
|
7.4
|
|
$
|
51.2
|
|
Income tax payments
|
(59.5
|
)
|
(54.4
|
)
|
(5.1
|
)
|
|||
Other miscellaneous items
|
(2.8
|
)
|
(2.0
|
)
|
(0.8
|
)
|
|||
Change in income taxes
|
$
|
(3.7
|
)
|
$
|
(49.0
|
)
|
$
|
45.3
|
|
|
June 30,
2018 |
December 31,
2017 |
||||
Short-term debt
|
$
|
162.3
|
|
$
|
105.4
|
|
Current portion of long-term debt
|
2.7
|
|
2.7
|
|
||
Long-term debt
|
881.4
|
|
854.2
|
|
||
Total debt
|
$
|
1,046.4
|
|
$
|
962.3
|
|
Less: Cash and cash equivalents
|
145.2
|
|
121.6
|
|
||
Restricted cash
|
1.4
|
|
3.8
|
|
||
Net debt
|
$
|
899.8
|
|
$
|
836.9
|
|
|
June 30,
2018 |
December 31,
2017 |
||||
Net debt
|
$
|
899.8
|
|
$
|
836.9
|
|
Total equity
|
1,552.3
|
|
1,474.9
|
|
||
Net debt plus total equity (capital)
|
$
|
2,452.1
|
|
$
|
2,311.8
|
|
Ratio of net debt to capital
|
36.7
|
%
|
36.2
|
%
|
•
|
deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which the Company or its customers or suppliers conduct business, including adverse effects from a 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 or suppliers conduct business, changes in currency valuations and recent world events that have increased the risks posed by international trade disputes, tariffs and sanctions;
|
•
|
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 or supplier bankruptcies or liquidations, the impact of changes in industrial business cycles and whether conditions of fair trade continue in the Company'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; 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 and 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, 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 and assets due to changes in interest rates, investment performance and other tactics designed to reduce risk;
|
•
|
the actual impact of U.S. Tax Reform on the full-year 2018 global effective tax rate;
|
•
|
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, 2017.
|
(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)
|
|
|
4/1/18 - 4/30/18
|
37,153
|
|
$
|
44.40
|
|
36,928
|
|
8,533,369
|
|
5/1/18 - 5/31/18
|
381,492
|
|
48.02
|
|
375,979
|
|
8,157,390
|
|
|
6/1/18 - 6/30/18
|
156,148
|
|
46.20
|
|
155,000
|
|
8,002,390
|
|
|
Total
|
574,793
|
|
$
|
47.29
|
|
567,907
|
|
|
|
(1)
|
Of the shares purchased in April, May and June, 225, 5,513 and 1,148, 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 or 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 February 6, 2017, the Company announced that its Board of Directors approved a share purchase plan pursuant to which the Company may purchase up to ten million of its common shares in the aggregate. This share repurchase plan expires on February 28, 2021. 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.
|
|
|
THE TIMKEN COMPANY
|
Date: July 31, 2018
|
|
By: /s/ Richard G. Kyle
|
|
|
Richard G. Kyle
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Date: July 31, 2018
|
|
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,
|
|||||||||||||||||||
|
2018
|
2017
|
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
Income from continuing operations before
income taxes |
$
|
230.9
|
|
$
|
127.5
|
|
|
$
|
259.9
|
|
$
|
201.6
|
|
$
|
217.7
|
|
$
|
121.4
|
|
$
|
692.1
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Share of undistributed (income) loss from 50%-or-less-owned affiliates, excluding affiliates with guaranteed debt
|
(0.3
|
)
|
(0.4
|
)
|
|
(0.8
|
)
|
(0.9
|
)
|
(0.8
|
)
|
(0.6
|
)
|
(0.4
|
)
|
|||||||
Amortization of capitalized interest
|
0.1
|
|
0.3
|
|
|
0.4
|
|
0.6
|
|
0.6
|
|
0.9
|
|
(1.3
|
)
|
|||||||
Interest expense
|
20.7
|
|
16.4
|
|
|
37.1
|
|
33.5
|
|
33.4
|
|
28.7
|
|
24.4
|
|
|||||||
Interest portion of rental expense
|
2.2
|
|
2.2
|
|
|
4.4
|
|
4.8
|
|
4.8
|
|
5.2
|
|
8.0
|
|
|||||||
Earnings
|
$
|
253.6
|
|
$
|
146.0
|
|
|
$
|
301.0
|
|
$
|
239.6
|
|
$
|
255.7
|
|
$
|
155.6
|
|
$
|
722.8
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest
|
20.9
|
|
16.7
|
|
|
37.8
|
|
34.6
|
|
33.4
|
|
30.4
|
|
37.1
|
|
|||||||
Interest portion of rental expense
|
2.2
|
|
2.2
|
|
|
4.4
|
|
4.8
|
|
4.8
|
|
5.2
|
|
8.0
|
|
|||||||
Fixed Charges
|
$
|
23.1
|
|
$
|
18.9
|
|
|
$
|
42.2
|
|
$
|
39.4
|
|
$
|
38.2
|
|
$
|
35.6
|
|
$
|
45.1
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Ratio of Earnings to Fixed Charges
|
10.98
|
|
7.72
|
|
|
7.13
|
|
6.08
|
|
6.69
|
|
4.37
|
|
16.03
|
|
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)
|
|