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Drives business brings significant expertise in precision- engineered chain and related products, especially among global equipment manufacturers in agricultural and food processing. 

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In high-speed and high-torque environments, Philadelphia Gear ® components and services consistently offer resilience. The world’s energy, infrastructure and marine industries rely on Timken to design, manufacture and maintain complex gear drive systems that power the world. 

## $292M 

iNvESTED iN ACqUiSiTiONS 

Process Industries  achieved record financial performance with sales of $1.2 billion and an operating margin of 22.6 percent. Throughout the year, we seized opportunities to enhance this business through investments in new products and acquisitions and expanded sales in Asia by 24 percent over the prior year. 

in Aerospace and Defense , late-cycle recovery finally gained traction toward the end of the year although overall sales remained weak. Despite this year’s lackluster performance, we remain confident about the business’ underlying strength and future prospects. Leveraging the downturn, we have rationalized resources and set a solid foundation for future growth. 

Our Steel  segment delivered strong performance with sales of $2 billion and a 13.8 percent operating return on sales. To serve record demand — particularly in the energy and machinery sectors — we took steps to strategically allocate resources across our manufacturing base to satisfy these customer requests. 

## iNvESTiNG iN GrOWTh 

The acquisitions Timken made in the past year broaden our portfolio with capabilities that complement our core product lines. Specifically, we added two companies that present Timken with ripe opportunities for diversification and global expansion: 

• In July, we acquired Philadelphia Gear Corp., a leading gear-drive services company, offering a diverse range of industrial and marine gear services. 

• In October, we added Drives LLC, a manufacturer of engineered chain, roller chain and conveyor augers, complementing Timken’s established capabilities. 

Across the company, efficient business processes and more cost-effective operations directly attributable to our new enterprise system allowed us to successfully serve customers in diverse industries around the world. For example, although we continued to leverage working capital, we ended the year with aftermarket product availability greater than 95 percent, a key performance metric for the distribution channel. 

in 2011, we also redeployed cash to shareholders with $76 million in dividends, an increase of 48 percent over 2010, and $44 million in share repurchases. in addition, we invested $292 million in acquisitions and another $205 million in capital improvements. We also continued to fund the company’s pension and post-retiree medical plans, contributing $401 million. 

## $76M 

DEPLOYED iN DiviDENDS TO ShArEhOLDErS 

