Item 1. Description of Business ________________________________ General _______
As used herein the term "Timken" or the "company" refers to The Timken Company and its subsidiaries unless the context otherwise requires. Timken, an outgrowth of a business originally founded in 1899, was incorporated under the laws of Ohio in 1904.
Products ________
Timken's products are divided into two industry segments. The first includes anti-friction bearings; the second industry segment is steel. Anti-friction bearings constitute Timken's principal industry product. Basically, the tapered roller bearing made by Timken is its principal product in the anti-friction industry segment. It consists of four components (1) the cone or inner race, (2) the cup or outer race, (3) the tapered rollers which roll between the cup and cone, and (4) the cage which serves as a retainer and maintains proper spacing between the rollers. These four components are manufactured and sold in a wide variety of configurations and sizes. Matching bearings to service requirements of customers' applications requires engineering, and oftentimes sophisticated analytical techniques. The design of every tapered roller bearing made by Timken permits distribution of unit pressures over the full length of the roller. This fact, coupled with its tapered design, high precision tolerances and proprietary internal geometry and premium quality material, provides a bearing with high load carrying capacity, excellent friction-reducing qualities and long life.
With the acquisition of MPB Corporation in May 1990, Timken expanded into the super precision ball and roller bearing business thus gaining access to those portions of the Aerospace, Defense, Computer Disk Drive, and other markets requiring high precision applications. MPB's products utilizing balls and straight rolling elements are the super precision end of the general ball and straight roller bearing product range in the bearing industry. A majority of MPB's products are special custom-designed bearings and spindle assemblies. They often involve highly specialized materials and coatings for use in applications that subject the bearings to extreme operating conditions of speed and temperature.
During the second quarter of 1993, MPB Corporation, completed its acquisition of equipment and inventory of the U.S. jet engine bearing operations of The Torrington Company, a subsidiary of Ingersoll-Rand Company. This purchase should enable MPB to offer an expanded line of bearings for jet engine manufacturers and strengthen its position in the aerospace markets it serves.
Steel products include steels of alloy, vacuum processed alloys, intermediate alloy, low alloy and carbon grades, tool steels, and other custom-made specialty steel products. These are available in a wide range of solid and tubular sections with a variety of finishes.
4. Products (Cont.) ________________
Timken has been increasing the marketing of high volume semifinished components to major customers produced from its own steel. This value added activity is a small but growing portion of the business. In September 1993, the company's Steel Business began operation of its St. Clair Precision Tubing Components Plant in Eaton, Ohio. The facility produces sub-components for automotive and industrial customers. The development of the precision parts division provides the company with the opportunity to further expand its market for tubing and capture more higher-value steel sales. This will also enable the company's traditional tubing customers in the automotive and bearing industries to take advantage of higher-performing components that cost less than those they now use.
Sales and Distribution ______________________
Timken's products in the bearing industry segment are sold principally by its own sales organization. A major portion of the shipments are made directly from Timken's plants and the balance from warehouses located in a number of cities in the United States, Great Britain, France, Germany, Canada, Mexico, and Argentina. These warehouse inventories are augmented by authorized distributor and jobber inventories throughout the world which provide local availability when service is required. The company operates an Export Service Center in Atlanta, Georgia, which specializes in the export of tapered roller bearings for the replacement markets in the Caribbean, Central and South America and other regions. Timken's tapered roller bearings are used in general industry and in a wide variety of products including passenger cars, trucks, railroad cars and locomotives, machine tools, rolling mills and farm and construction equipment. MPB's products, which are at the super precision end of the general ball and straight roller bearing segment, are used in aircraft, missle guidance systems, computer peripherals, and medical instruments.
A significant portion of Timken's steel production is consumed in its bearing operations. In addition, sales are made to other anti-friction bearing companies and to the aircraft, automotive, forging, tooling and oil and gas drilling industries. In addition, sales are made to steel service centers. Timken's steel products are sold principally by its own sales organization. Most orders are custom made to satisfy specific customer applications and are shipped directly to customers from Timken's steel manufacturing plants.
Timken does have a number of customers in the automotive industry including both manufacturers and suppliers. However, Timken feels that because of the size of that industry, the diverse bearing applications, and the fact that its business is spread among a number of customers, both foreign and domestic, in original equipment manufacturing and aftermarket distribution, its relationship with the automotive industry is well diversified.
Timken has entered into individually negotiated contracts with some of its customers in both the bearing and steel segments. These contracts may extend for one to five years and, if a price is fixed for any period extending beyond current shipments, customarily include a commitment by
5. Sales and Distribution (Cont. _____________________________
the customer to purchase a designated percentage of its requirements from Timken. Contracts extending beyond one year that are not subject to price adjustment provisions do not represent a material portion of Timken's sales. Timken does not believe that there is any significant loss of earnings risk associated with any given contract.
Industry Segments _________________
Segment information in Note 12 of the Notes to Consolidated Financial Statements and Information by Industry and Geographic Area on pages 32 and 33 of the Annual Report to Shareholders for the year ended December 31, 1993 are incorporated herein by reference. Export sales from the U.S. and Canada are not separately stated since such sales amount to less than 10% of revenue. The company's Bearing Business has historically participated in the worldwide bearing markets while the Steel Business has concentrated on U.S. markets.
Timken's non-U.S. operations are subject to normal international business risks not generally applicable to domestic business. These risks include currency fluctuation, changes in tariff restrictions, and restrictive regulations by foreign governments including price and exchange controls. The South African manufacturing unit, a small portion of the company's non-U.S. operations, is subject to additional laws and regulations imposed by the U.S. and South African governments.
Competition ___________
Both the anti-friction bearing business and the steel business are extremely competitive. The principal competitive factors involved, both in the United States and in foreign markets, include price, product quality, service, delivery, order lead times and technological innovation.
Timken manufactures an anti-friction bearing known as the tapered roller bearing. The tapered principle of bearings made by Timken permits ready absorption of both radial and axial loads in combination. For this reason, they are particularly adapted to reducing friction where shafts, gears, or wheels are used. Since the invention of the tapered roller bearing by its founder, Timken has maintained primary focus in its product and process technology on the tapered roller bearing segment. This has been important to its ability to remain a leader in the world's bearing industry. This contrasts with the majority of its major competitors who offer a wider variety of bearing types such as ball, straight roller, spherical roller and needle for the general industrial and automotive markets and are, therefore, less specialized in the tapered roller bearing segment. Timken competes with domestic manufacturers and many foreign manufacturers of anti-friction bearings.
The anti-friction bearing business is intensely competitive in every country in which Timken competes. Excess production capacity, weak economies outside the U.S., and a strengthened U.S. dollar contribute to these difficult market conditions. Particularly, the influx of tapered roller bearings into the United States market from foreign producers was
6. Competition (Cont.) ___________________
reported by the United States Department of Commerce to be $195 million in 1993 or approximately 20 percent of the domestic tapered roller bearing market. In addition, Timken estimates the tapered roller bearings contained as components of foreign automobiles and heavy equipment produced outside the United States and imported into this country, to be approximately $105 million in 1993.
In August 1986, the company filed a petition on behalf of the U.S. tapered roller bearing industry with both the International Trade Commission and the Department of Commerce. The petition sought the imposition of anti-dumping duties on imports of tapered roller bearings from Japan, Italy, Yugoslavia, Romania, Hungary, and the People's Republic of China. The Department of Commerce found that product from each of the countries was being sold in the United States at less than fair value or "dumped", and The International Trade Commission found such imports were causing injury to the domestic industry. The Department also identified the amount by which selling prices in the United States are less than fair value. This amount is expressed as a weighted average percentage known as the final margin. The final margins for Japan as originally calculated in 1986 were approximately 36 percent. If requested, these margins are reviewed by the Department of Commerce on an annual basis. The final margins for Japan announced in 1993 for imports during 1992 ranged from approximately 3 to 46 percent. The margins for the other countries range from 0 to 37 percent. The Department of Commerce has not announced yet final margins for imports during 1993. Importers are currently required to post a cash deposit with the U.S. Customs Department equal to the margin percentage times the export price of any imported product covered by the dumping petition. To the extent such dumping continues, the deposits would become the property of the U.S. government. Although Timken will not receive any monetary award from such deposits, its benefit has been and will continue to be, the reduction of unfair competition.
Timken manufactures carbon and alloy seamless tubing, carbon and alloy steel solid bars and various solid shapes, tool steels and other custom-made specialty steel products. Specialty steels are characterized by special chemistry, tightly controlled melting and precise processing. Maintaining high standards of product quality and reliability while keeping production costs competitive is essential to Timken's ability to compete in the specialty steel industry with domestic and foreign steel manufacturers.
The steel industry in which the company participates is extremely competitive. Excess domestic production capacity, as well as the importation of foreign produced products, results in severe pressure on selling prices.
In May 1993, the U.S. Department of Commerce determined that Brazilian steel was being dumped in the U.S. market at prices up to 27% below fair value. This government action was in response to an anti-dumping petition filed in 1992 by the company and Republic Engineered Steel, Inc. In July 1993, the International Trade Commission (ITC) ruled that domestic producers of special quality finished hot-rolled steel bars are not being injured by imports from Brazil. The company and Republic appealed this ruling during the third quarter to the U.S. Court of International Trade
7.
Competition (Cont.) ___________________
in New York. The company believes that the ITC ruled incorrectly and that its determination is not supported by fact.
Backlog _______
The backlog of orders of Timken's domestic and overseas operations is estimated to have been $520 million at December 31, 1993 and $495 million at December 31, 1992. Actual shipments are dependent upon ever-changing production schedules of the customer. Accordingly, Timken does not believe that its backlog data and comparisons thereof as of different dates are reliable indicators of future sales or shipments.
Raw Materials _____________
The principal raw materials used by Timken in its North American plants to manufacture bearings are its own steel tubing and bars and purchased strip steel. Outside North America the company purchases raw materials from local sources with whom it has worked closely to assure steel quality according to its demanding specifications.
The principal raw materials used by Timken in steel manufacturing are scrap metal, nickel, and other alloys. Timken believes that the availability of raw materials and alloys are adequate for its needs, and, in general, it is not dependent on any single source of supply.
Research ________
Timken's major research center, located in Stark County, Ohio near its largest manufacturing plant, is engaged in research on bearings, steels, manufacturing methods and related matters. Research facilities are also located at the MPB New Hampshire Plants, the Duston, England plant and at the Latrobe, Pennsylvania plant. Expenditures for research, development and testing amounted to approximately $37,145,000 in 1993, $41,749,000 in 1992, and $40,905,000 in 1991. The company's research program is committed to the development of new and improved bearing and steel products, as well as more efficient manufacturing processes and techniques and the expansion of application of existing products.
Environmental Matters _____________________
The company continues to focus on protecting the environment and compliance with environmental protection laws. In doing so, the company has invested in pollution control equipment and updated plant operational practices. To the extent that the company's non-U.S. competitors are not subject to similar laws and regulations in their home countries, the company is placed at a competitive disadvantage.
It is very difficult to access the possible effect of compliance with future requirements that may differ from existing ones. The company
8. Environmental Matters (Cont.) _____________________________
believes that the effect of amendments to the Clean Air Act of 1990 on its utility suppliers will increase its costs for electricity by $4 million to $5 million annually by 1995. Furthermore, regulations related to these amendments have been proposed that, if adopted, would mandate significant changes in the way the company monitors air emissions. This would require capital expenditures in excess of $1 million and the addition of personnel. A large cross section of industries have expressed opposition to the proposed regulations for a variety of reasons. It is possible that the U.S. Environmental Protection Agency (EPA) may amend the regulations before they are adopted, lessening substantially their impact on the company.
The company and its U.S. subsidiaries are involved as potentially responsible parties (PRP), as named by the EPA, for the clean-up of hazardous waste at five non-company sites. It is believed the company's share of liability for these sites would not be material to its financial condition or results of operations because of the company's uncertain or limited involvement at these sites and the number of other identified PRPs. In 1993, the company and its Latrobe Steel subsidiary each participated in one minor settlement agreement, which terminated their respective clean-up obligations at two other sites.
The company's MPB Corporation subsidiary is engaged in environmental clean-up projects at its manufacturing locations in New Hampshire. The costs for these projects, estimated at slightly over $3 million, were recorded previously. A portion of these costs will be recovered from a former owner of the property. MPB has filed suit against its insurance companies for reimbursement of clean-up costs. The full extent of reimbursement cannot be estimated. In late 1993, MPB was notified by the city of Keene, New Hampshire, that city officials were looking to MPB to contribute to the costs of cleaning up alleged soil and groundwater contamination of a city dump, which allegedly had been used by MPB along with many others for industrial waste disposal. This is not a superfund site. No specific monetary request has been made at this time.
Patents, Trademarks and Licenses ________________________________
Timken owns a number of United States and foreign patents, trademarks and licenses relating to certain of its products. While Timken regards these as items of importance, it does not deem its business as a whole, or either industry segment, to be materially dependent upon any one item or group of items.
Employment __________
At December 31, 1993, Timken had 15,985 associates.
9. Executive Officers of the Registrant ____________________________________
The officers are elected by the Board of Directors normally for a term of one year and until the election of their successors. All officers, except L. R. Brown and S. A. Perry, have been employed by Timken or by a subsidiary of the company during the past five-year period. The Executive Officers of the company as of February 21, 1994, are as follows:
Current Position and Previous Name Age Positions During Last Five Years ____ ___ ______________________________________________
W. R. Timken, Jr. 55 1988 Chairman - Board of Directors; Officer since 1968. J. F. Toot, Jr. 58 1988 President; 1992 President and Chief Executive Officer; Director; Officer since 1967. P. J. Ashton 58 1988 Executive Vice President - Bearings; 1992 Executive Vice President and President - Bearings; Director; Officer since 1980. C. H. West 59 1988 Executive Vice President - Steel; 1992 Executive Vice President and President - Steel; Director; Officer since 1982. M. J. Amiel 62 1988 Managing Director - Bearings - Europe, Africa and West Asia; 1989 Vice President - Bearings - Europe, Africa and West Asia; Officer since 1989. S. A. Perry 48 1988 Director - Accounting and Controller; 1989 Director - Purchasing and Logistics; 1993 Vice President - Human Resources and Logistics; Officer since 1993. L. R. Brown 58 1990 Vice President and General Counsel; prior thereto Managing Partner, Day, Ketterer, Raley, Wright & Rybolt - Law Firm; Officer since 1990. D. L. Hart 62 1988 Vice President - Bearings - North and South America; Officer since 1978. R. L. Leibensperger 55 1988 Vice President - Technology; Officer since 1986. G. E. Little 50 1988 Director Finance and Assistant Treasurer; 1990 Treasurer; 1992 Vice President - Finance & Treasurer; Officer since 1990. J. J. Schubach 57 1988 Vice President - Strategic Management; Officer since 1984. W. J. Timken 51 1988 Director - Human Resource Development; 1992 Vice President; Director; Officer since 1992.
10. Item 2.
Item 2. Properties ___________________
Timken has bearing and steel manufacturing facilities at several locations in the United States. Timken also has bearing manufacturing facilities in several countries outside the United States. The aggregate floor area of these facilities worldwide is approximately 10,916,000 square feet, all of which, except for approximately 208,000 square feet, is owned in fee. The buildings occupied by Timken are principally of brick, steel, reinforced concrete and concrete block construction, all of which are suitably equipped and in satisfactory operating condition.
Timken's bearing manufacturing and distribution facilities in the United States are located in Ashland, Bucyrus, Canton, Columbus and New Philadelphia, Ohio; Gaffney, South Carolina; Lincolnton, North Carolina; Altavista, Virginia; and Keene and Lebanon, New Hampshire. These facilities, including the research facility in Canton, Ohio, and warehouses at plant locations, have an aggregate floor area of approximately 4,193,000 square feet. Timken's steel manufacturing and distribution facilities in the United States are located in Canton, Eaton, Wauseon and Wooster, Ohio; and Latrobe, Pennsylvania. These facilities have an aggregate floor area of approximately 4,694,000 square feet. Timken's bearing manufacturing plants outside the United States are located in Daventry and Duston, England; Colmar, France; St. Thomas, Canada; Benoni, South Africa; Sao Paulo and Santa Barbara, Brazil; Ballarat, Australia; and Medemblik, The Netherlands. The facilities have an aggregate floor area of approximately 2,029,000 square feet. In addition to the manufacturing facilities discussed above, Timken owns warehouses in the United States, Germany, Mexico and Argentina, and leases several relatively small warehouse facilities in cities throughout the world.
During 1993, the company's Steel Business experienced increased plant utilization compared to 1992 as a result of increased sales in almost all product lines. The company's Bearing Business experienced slightly lower plant utilization during 1993. Continued reduction of inventories and weak demand in certain market segments combined with recessionary economies in Europe and Japan lowered plant utilization.
During the first quarter of 1993, the company announced that British Timken's Daventry bearing manufacturing operations would be consolidated into other plants by mid-1994. This action, which will result in improved utilization of plant assets, was part of a streamlining process that the company announced in December 1991. Anticipated consolidation costs were accounted for in December 1991.
In June 1993, the company's Bearing Business announced that it was resuming work on its 21st century bearing plant in Asheboro, North Carolina. Start-up of the 145,000 square-foot plant is expected in the third quarter of 1994.
In July 1993, the company's Steel Business announced the establishment of a tubing components manufacturing facility in Eaton, Ohio. Production in the 42,000 square-foot leased facility began in September.
11. Item 2. Properties (Cont.) ___________________________
In July 1993, the company's Latrobe Steel subsidiary announced plans to establish a 90,000 square-foot facility near Franklin, Pennsylvania for cold finishing of the company's specialty steel round bar products. Start-up is planned for April 1994. The building will also provide for warehousing and shipping functions.
The company is a forty percent shareholder in Tata Timken Limited, a joint venture with The Tata Iron and Steel Company Limited. The joint venture consists of a manufacturing facility in Jamshedpur, India, completed in March of 1992, and four sales offices, also located in India.
The $1 billion capital expenditure program announced in March 1989 was intended to cover the years through 1994. While more than $588 million has been invested through 1993 encompassing the initiation of six new bearing and steel facilities, the $1 billion in capital expenditures will not be spent by the end of 1994.
At the time the program was announced, the company indicated that the investment amounts and timing would be continually reviewed with the intention of meeting economic conditions, both internal and external to the company, as they developed. Finding less capital intensive alternatives has been a major factor enabling the company to spend less. Additionally, in 1990, the company entered the super precision bearing business with the $195 million acquisition of MPB Corporation. Cost reducing initiatives with less capital intensity have also received priority over investments in some markets.
In December 1993, MPB announced the formation of MPB Singapore PTE. LTD., which will open a manufacturing facility in Singapore. This facility is to be operational by early summer 1994. This will improve service to MPB's existing Pacific Rim area customers and provide direct participation in new growth markets and products.
Item 3.
Item 3. Legal Proceedings __________________________
There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the company or any of its subsidiaries is a party or of which any of their property is the subject. Reference is made to the Environmental Matters section on page 6.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders ____________________________________________________________
No matters were submitted to a vote of security holders during the fourth quarter ended December 31, 1993.
12. PART II _______ Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stock ____________________________________________________________________ Holder Matters ______________
The company's common stock is traded on the New York Stock Exchange (TKR). The estimated number of record holders of the company's common stock at December 31, 1993, was 20,684.
High and low stock prices and dividends for the last two years are presented in the Quarterly Financial Data schedule on Page 1 of the Annual Report to Shareholders for the year ended December 31, 1993, and is incorporated herein by reference.
Item 6.
Item 6. Selected Financial Data ________________________________
The Summary of Operations and Other Comparative Data on Pages 34 and 35 of the Annual Report to Shareholders for the year ended December 31, 1993, is incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and ________________________________________________________________________ Results of Operation ____________________
Management's Discussion and Analysis of Financial Condition and Results of Operations on Pages 17-23 of the Annual Report to Shareholders for the year ended December 31, 1993, is incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data ____________________________________________________
The Quarterly Financial Data schedule included on Page 1, the consolidated financial statements of the registrant and its subsidiaries on Pages 18-24, the notes to consolidated financial statements on Pages 25-33, and the Report of Independent Auditors on Page 33 of the Annual Report to Shareholders for the year ended December 31, 1993, are incorporated herein by reference.
Item 9.
Item 9. Changes in and Disagreements with Accountants ______________________________________________________ on Accounting and Financial Disclosure ______________________________________
Not applicable.
13. PART III ________
Item 10.
Item 10. Directors and Executive Officers of the Registrant ____________________________________________________________
Required information is set forth under the caption "Election of Directors" on Pages 4-9 of the proxy statement issued in connection with the annual meeting of shareholders to be held April 19, 1994, and is incorporated herein by reference. Information regarding the executive officers of the registrant is included in Part I hereof.
Item 11.
Item 11. Executive Compensation ________________________________
Required information is set forth under the caption "Executive Compensation" on Pages 12-17 of the proxy statement issued in connection with the annual meeting of shareholders to be held April 19, 1994, and is incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management ________________________________________________________________________
Required information regarding Security Ownership of Certain Beneficial Owners and Management, excluding institutional investors owning more than 5% of the company's Common Stock, is set forth under the caption "Beneficial Ownership of Common Stock" on Pages 9-11 of the proxy statement issued in connection with the annual meeting of shareholders to be held April 19, 1994, and is incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions ________________________________________________________
Required information is set forth under the caption "Election of Directors" on Pages 4-9 of the proxy statement issued in connection with the annual meeting of shareholders to be held April 19, 1994, and is incorporated herein by reference.
14. PART IV _______ Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Report on Form 8-K _________________________________________________________________________
(a)(1) and (2) - The response to this portion of Item 14 is submitted as a separate section of this report.
(3) Listing of Exhibits
Exhibit _______
(3)(i) Amended Articles of Incorporation of The Timken Company (Effective August 22, 1988) were filed with Form S-8 dated October 13, 1993, and are incorporated herein by reference.
(3)(ii) Amended Regulations of The Timken Company effective April 21, 1987 were filed with Form 10-K for the period ended December 31, 1992 and are incorporated herein by reference.
(4) First Amendment Agreement dated February 26, 1993, to the restated credit agreement as amended December 31, 1991, between Timken and certain banks was filed with Form 10-K for the period ended December 31, 1992 and is incorporated herein by reference.
(4.1) Credit Agreement amended as of December 31, 1991 between Timken and certain banks was filed with Form 10-K for the period ended December 31, 1991 and is incorporated herein by reference.
(4.2) Rights Agreement dated as of December 18, 1986, as amended and restated as of February 1, 1991 between Timken and First Chicago Trust Company (formerly Morgan Shareholder Services Trust Company) was filed with Form 8-K dated February 1, 1991, and is incorporated herein by reference.
(4.3) Indenture dated as of July 1, 1990 between Timken and Ameritrust Company of New York, which was filed with Timken's Form S-3 registration statement dated July 12, 1990 and is incorporated herein by reference.
(4.4) The company is also a party to agreements with respect to other long-term debt in total amount less than 10% of the registrant's consolidated total assets. The registrant agrees to furnish a copy of such agreements upon request.
Management Contracts and Compensation Plans ___________________________________________
(10) The Management Performance Plan of The Timken Company for Officers and Certain Management Personnel.
15.
Exhibit (Cont.) ------------------------------------ (10.1) The Long Term Incentive Plan of The Timken Company for officers and other key employees as approved by shareholders April 21, 1992 was filed with Form 10-K for the period ended December 31, 1992 and is incorporated herein by reference.
(10.2) The 1985 Incentive Plan of The Timken Company for Officers and other key employees as amended through April 16, 1991 was filed with Form 10-K for the period ended December 31, 1991 and is incorporated herein by reference.
(10.3a) The form of Severance Agreement entered into with W. R. Timken, Jr. was filed with Form 10-K for the period ended December 31, 1992 and is incorporated herein by reference.
(10.3b) The form of Severance Agreement entered into with Joseph F. Toot, Jr. was filed with Form 10-K for the period ended December 31, 1992 and is incorporated herein by reference.
(10.3c) The form of Severance Agreement entered into with Peter J. Ashton was filed with Form 10-K for the period ended December 31, 1992 and is incorporated herein by reference.
(10.3d) The form of Severance Agreement entered into with Charles H. West was filed with Form 10-K for the period ended December 31, 1992 and is incorporated herein by reference.
(10.3e) The form of Severance Agreement entered into with Donald L. Hart.
(10.3f) The form of Severence Agreement entered into with all Executive Officers of the company and certain other key employees of the company and its subsidiaries. Each differs only as to name and date executed.
(10.4) The form of Death Benefit Agreement entered into with all Executive Officers of the company. Each differs only as to name and date executed, except Mr. Amiel, who is a non-resident.
(10.5) The form of Indemnification Agreements entered into with all Directors who are not Executive Officers of the company was filed with Form 10-K for the period ended December 31, 1990 and is incorporated herein by reference. Each differs only as to name and date executed.
16. Exhibit (Cont.) _______________
(10.6) The form of Indemnification Agreements entered into with all Executive Officers of the company who are not Directors of the company was filed with Form 10-K for the period ended December 31, 1990 and is incorporated herein by reference. Each differs only as to name and date executed.
(10.7) The form of Indemnification Agreements entered into with all Executive Officers of the company who are also Directors of the company was filed with Form 10-K for the period ended December 31, 1990 and is incorporated herein by reference. Each differs only as to name and date executed.
(10.8) The form of Employee Excess Benefits Agreement entered into with all active Executive Officers, certain retired Executive Officers, and certain other key employees of the company was filed with Form 10-K for the period ended December 31, 1991 and is incorporated herein by reference. Each differs only as to name and date executed, except Mr. Brown who will be given additional service and Mr. Amiel who is a non-resident.
(11) Computation of Per Share Earnings.
(13) Annual Report to Shareholders for the year ended December 31, 1993, (only to the extent expressly incorporated herein by reference).
(21) A list of subsidiaries of the registrant.
(23) Consent of Independent Auditors.
(24) Power of Attorney
(b) Reports on Form 8-K:
None.
(c) The exhibits are contained in a separate section of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE TIMKEN COMPANY
By /s/ J. F. Toot, Jr. By /s/ G. E. Little ________________________________ _____________________________ J. F. Toot, Jr., Director; G. E. Little President and Chief Executive Vice President - Finance Officer (Principal Financial and Accounting Officer) Date March 29, 1994 ________________________________ Date March 29, 1994 _____________________________ Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/ Robert Anderson* By /s/ John M. Timken, Jr.* __________________________________ _______________________________ Robert Anderson Director John M. Timken, Jr. Director Date March 29, 1994 Date March 29, 1994 __________________________________ _______________________________
By /s/ Peter J. Ashton* By /s/ W. J. Timken* __________________________________ _______________________________ Peter J. Ashton Director W. J. Timken Director Date March 29, 1994 Date March 29, 1994 __________________________________ _______________________________
By /s/ Stanley C. Gault* By /s/ W. R. Timken, Jr.* __________________________________ _______________________________ Stanley C. Gault Director W. R. Timken, Jr. Director Chairman - Board of Directors Date March 29, 1994 Date March 29, 1994 __________________________________ _______________________________
By /s/ J. Clayburn La Force, Jr.* By /s/ Charles H. West* __________________________________ _______________________________ J. Clayburn La Force, Jr. Director Charles H. West Director Date March 29, 1994 Date March 29, 1994 __________________________________ _______________________________
By /s/ Robert W. Mahoney* By /s/ Alton W. Whitehouse* __________________________________ _______________________________ Robert W. Mahoney Director Alton W. Whitehouse Director Date March 29, 1994 Date March 29, 1994 __________________________________ _______________________________
By /s/ James W. Pilz* __________________________________ *By: /s/ G. E. Little James W. Pilz Director _______________________________ Date March 29, 1994 G. E. Little, attorney-in-fact __________________________________ by authority of Power of Attorney filed as Exhibit 24 hereto
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) AND (2), (c) AND (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1993
THE TIMKEN COMPANY
CANTON, OHIO
FORM 10-K--ITEM 14(a)(1) AND (2)
THE TIMKEN COMPANY AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of The Timken Company and subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 1993, are incorporated by reference in Item 8.
Consolidated statements of income--Years ended December 31, 1993, 1992 and 1991
Consolidated balance sheets--December 31, 1993 and 1992
Consolidated statements of cash flows--Years ended December 31, 1993, 1992 and 1991
Consolidated statements of shareholders' equity--Years ended December 31, 1993, 1992 and 1991
Notes to consolidated financial statements--December 31, 1993
The following consolidated financial statement schedules of The Timken Company and subsidiaries are included in Item 14(d):
Schedule V--Property, plant and equipment
Schedule VI--Accumulated depreciation, depletion and amortization of property, plant and equipment
Schedule VIII--Valuation and qualifying accounts
Schedule IX--Short-term borrowings
Schedule X--Supplementary income statement information
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
Report of Independent Auditors
Board of Directors The Timken Company
We have audited the consolidated balance sheets of The Timken Company and subsidiaries as of December 31, 1993 and 1992, and the related statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Timken Company and subsidiaries at December 31, 1993 and 1992, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
As described in Note 2 to the financial statements, in 1993 the Company changed its methods of accounting for postretirement benefits, postemployment benefits and income taxes.
ERNST & YOUNG
Canton, Ohio February 3, 1994
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
THE TIMKEN COMPANY AND SUBSIDIARIES
___________________________________________________________________________ COL. A COL. B ___________________________________________________________________________
Item Charged to Costs and Expenses ___________________________________________________________________________
(Thousands of dollars)
Year Ended December 31 1993 1992 1991 _________________________________
Maintenance and repairs (1) $167,838 $173,731 $168,985
Taxes, other than payroll and income taxes--real and personal property $ 15,306 $ 16,109 $ 16,613
(1) The amounts shown for maintenance and repairs include material, labor and overhead as well as a portion of the costs reported as depreciation, amortization and taxes. It is not practicable to separate such information.
Amounts for depreciation and amortization of intangibles, royalties, and advertising costs are not presented as such amounts are less than 1% of total sales and revenues.