file:///C:/ELINK/02filing/April1602Lisa8K/e8k04162002.txt
1.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 16, 2002
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THE TIMKEN COMPANY
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(Exact name of registrant as specified in charter)
Ohio 1-1169 34-0577130
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1835 Dueber Avenue, S.W., Canton, Ohio 44706-2798
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (330) 438-3000
ITEM 5. OTHER EVENTS
Press Releases
On April 16, 2002, The Timken Company issued the following press release:
Earnings Up, Despite Sales Decline
The Timken Company Announces First Quarter Results
CANTON, OH - April 16, 2002 - The Timken Company (NYSE: TKR) today reported
increased first quarter earnings despite lower sales compared to a year ago.
Excluding the impact of restructuring and reorganization charges, the company
reported first quarter net income of $14.0 million or $0.23 per diluted share
compared to consensus analyst estimates of $0.17 per share. After
restructuring and reorganization charges, the company had net income of
$9.2 million or $0.15 per diluted share. This compares with first quarter 2001
net income of $11.4 million or $0.19 per diluted share before restructuring and
reorganization charges and goodwill amortization and $2.2 million or $0.04 per
diluted share after these special items.
Sales in the first quarter of 2002 were $615.8 million versus $661.5 million
a year earlier.
"The U.S. automotive market, especially the light truck and SUV segment where
we have a strong position, continued at a robust level," said W.R. Timken, Jr.,
chairman & CEO. "Our steel business also achieved a strong performance that
resulted from a combination of healthy auto sales, effective cost controls and
increased market penetration. A key to our stronger earnings was improved
operating efficiencies, resulting from cost-cutting initiatives that began last
year. These benefited all our business units."
The company's first quarter performance reflected cost reductions achieved
through its ongoing restructuring of manufacturing operations and lower
administrative spending levels. As a result of those initiatives, the company
so far has achieved an annualized savings rate of $35 million. These
initiatives are on target to produce an annualized savings rate of $80 million
by the end of 2002.
Later today, the board of directors is expected to vote on a quarterly
dividend - which would be the 320th consecutive dividend paid since the
company listed on the NYSE 80 years ago.
Automotive Bearings' Results
Sales of automotive bearings increased 5 percent to $203.7 million,
reflecting continued strength in vehicle production in North America and new
automotive platforms launched using Timken products. In the first quarter,
these new programs contributed about $10 million to sales.
The Automotive Bearings segment reported earnings before interest and taxes
(EBIT) of $15.3 million versus a loss of $1.6 million a year earlier, excluding
restructuring and reorganization charges and goodwill amortization. The
improvement resulted from three factors - higher volume, effects of the
manufacturing restructuring and salaried cost reduction initiatives and
aggressive management of business costs. After restructuring and
reorganization charges, Automotive Bearings' EBIT was $11.2 million compared to
a loss of $2.0 million in the first quarter of 2001.
In April, the company announced a joint venture with NSK Ltd. to produce
certain tapered roller bearings in China. The equally owned venture is
expected to begin production of small-size single-row tapered roller bearings
for automotive applications by 2004. This initiative continues the company's
transformation. It is intended to help Timken work more effectively with its
global customers, foster profitable growth in Asia and around the world and
continue the company's efforts to reduce manufacturing costs by adding a low-
cost source for certain automotive products.
Industrial Bearings' Results
First quarter sales of industrial bearings fell 12 percent to $212.9 million
compared to a year ago. Industrial markets around the world, while
stabilizing, have shown few signs of recovery. North American and European
industrial markets are weaker than a year ago, and orders for industrial
bearings have not risen appreciably from very low levels in the fourth quarter.
First quarter EBIT, totaled $3.2 million, down from $16.6 million a year ago,
before restructuring and reorganization charges and goodwill amortization.
The decline in EBIT reflected lower sales to North American industrial, rail
and super precision customers. After restructuring and reorganization charges,
the Industrial Bearings segment had a loss of $0.6 million compared to EBIT of
$4.8 million a year earlier.
The company is continuing to broaden its range of services for industrial
customers. In mid-March, it acquired an industrial equipment repair facility
in Niles, Ohio, that repairs components for the rolling mill industry.
Steel's Results
Steel sales, including intersegment sales, decreased 11 percent to
$238.4 million compared to the first quarter of 2001. Despite lower sales,
Steel EBIT was $12.2 million, up from $11.0 million in the first quarter of
2001, excluding restructuring and reorganization charges and goodwill
amortization.
The improvement reflected strong shipments to the automotive and bearing
industries, higher capacity utilization, increased penetration in industrial
markets and continuing cost-control actions. Pricing has improved and capacity
utilization has increased from very low fourth-quarter levels. Steel EBIT,
after restructuring and reorganization charges, was $12.0 million compared to
$9.3 million a year ago.
Outlook
"The stronger-than-expected first quarter has been achieved with little
improvement in domestic demand for industrial products. Improvement in those
markets is expected in the latter half of 2002. Combined with the continuing
strength in the automotive sector, those improvements should enable the company
to achieve annual earnings at the upper end of the range provided in mid-
March," said W.R. Timken, Jr.
The Timken Company (NYSE: TKR) (http://www.timken.com) is a leading
international manufacturer of highly engineered bearings, alloy and specialty
steels and components, as well as a provider of related product and services.
With operations in 24 countries, the company employs about 18,700 people
worldwide and reported 2001 sales of U.S. $2.4 billion.
The company will conduct a teleconference on Wednesday, April 17 at 10 a.m.
Eastern Time on its first quarter earnings. Dial 706-634-0975 (reference
Timken) or link to www.timken.com for the Web cast. Replay will be available
at (706) 645-9291, beginning at 1 p.m. Eastern Time, April 17, through
11:59 p.m. Eastern Time, April 26, 2002. Access Code 3539933.
NOTE: Certain statements in this news release (including statements
regarding the company's forecasts, beliefs and expectations) that are not
historical in nature are "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The company cautions that
actual results may differ materially from those projected or implied in
forward-looking statements due to a variety of important factors, including
general economic conditions, customer demand and the company's ability to
achieve the benefits of its ongoing restructuring programs. These and
additional factors are described in greater detail in the company's 2001 Annual
Report, page 39, and the Annual Report on Form 10-K for 2001. The company
undertakes no obligation to update or revise any forward-looking statement.
CONSOLIDATED STATEMENT OF INCOME AS REPORTED ADJUSTED (1)
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(Thousands of U.S. dollars, except per share date) 1Q02 1Q01 4Q01 1Q02 1Q01 4Q01
Net sales $615,757 $661,516 $573,575 $615,757 $661,516 $573,575
Cost of products sold 494,816 538,356 488,646 494,816 538,356 488,646
Goodwill amortization 0 1,544 1,447 0 0 0
Reorganization expenses - cost of products sold 2,299 3,602 2,810 0 0 0
____________________________________________________________________________________ ________________________________
Gross Profit $118,642 $118,014 $ 80,672 $120,941 $123,160 $ 84,802
Selling, administrative & general expenses (SG&A) 83,248 95,565 84,802 83,248 95,565 84,802
Reorganization expenses - SG&A 2,744 973 2,226 0 0 0
Impairment and restructuring 3,057 7,907 5,284 0 0 0
____________________________________________________________________________________ ________________________________
Operating Income $ 29,593 $ 13,569 $(11,640) $ 37,693 $ 27,595 $ 127
Other income (expense) (7,468) (1,210) (3,568) (7,468) (1,210) (3,568)
Receipt of U.S. Continuous Dumping and Subsidy
Offset Act payment 0 0 31,000 0 0 0
____________________________________________________________________________________ ________________________________
Earnings Before Interest and Taxes (EBIT) $ 22,125 $ 12,359 $ 15,792 $ 30,225 $ 26,385 $ (3,441)
Interest expense (8,035) (8,894) (7,588) (8,035) (8,894) (7,588)
Interest income 380 489 439 380 489 439
____________________________________________________________________________________ _________________________________
Income Before Income Taxes $ 14,470 $ 3,954 $ 8,643 $ 22,570 $ 17,980 $(10,590)
Provision for income taxes 5,282 1,732 7,425 8,582 6,558 1,920
____________________________________________________________________________________ _________________________________
Net Income $ 9,188 $ 2,222 $ 1,218 $ 13,988 $ 11,422 $(12,510)
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Earnings Per Share $0.15 $0.04 $0.02 $0.23 $0.19 ($0.21)
Earnings Per Share - assuming dilution $0.15 $0.04 $0.02 $0.23 $0.19 ($0.21)
Average Shares Outstanding 59,914,680 59,981,237 59,941,185 59,914,680 59,981,237 59,941,185
Average Shares Outstanding - assuming dilution 60,395,183 60,122,806 59,954,790 60,395,183 60,122,806 59,954,790
BUSINESS SEGMENTS
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(Thousands of U.S. dollars, except per share date) 1Q02 1Q01 4Q01 1Q02 1Q01 4Q01
____________________________________________________________________________________ _________________________________
Automotive Bearings
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Net sales to external customers $203,696 $194,257 $185,268 $203,696 $194,257 $185,268
Impairment and restructuring 1,932 82 3,412 0 0 0
Reorganization expenses 2,144 294 2,467 0 0 0
Receipt of U.S. Continuous Dumping and Subsidy Offset
Act payment 0 0 3,000 0 0 0
Goodwill amortization 0 23 (32) 0 0 0
Earnings before interest and taxes (EBIT) * $ 11,213 $ (1,986) $ (5,382) $ 15,289 $ (1,587) $ (2,535)
EBIT Margin 5.5% -1.0% -2.9% 7.5% -0.8% -1.4%
Industrial Bearings
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Net sales to external customers $212,940 $241,994 $204,238 $212,940 $241,994 $204,238
Impairment and restructuring 956 7,393 1,328 0 0 0
Reorganization expenses 2,900 3,259 2,569 0 0 0
Receipt of U.S. Continuous Dumping and Subsidy Offset
Act payment 0 0 28,000 0 0 0
Goodwill amortization 0 1,208 1,169 0 0 0
Earnings before interest and taxes (EBIT) * $ (606) $ 4,774 $ 27,722 $ 3,250 $ 16,634 $ 4,788
EBIT Margin -0.3% 2.0% 13.6% 1.5% 6.9% 2.3%
Steel
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Net sales to external customers $199,121 $225,265 $184,069 $199,121 $225,265 $184,069
Intersegment sales 39,273 42,477 32,008 39,273 42,477 32,008
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Total net sales $238,394 $267,742 $216,077 $238,394 $267,742 $216,077
Impairment and restructuring 169 432 543 0 0 0
Reorganization expenses 0 1,023 0 0 0 0
Goodwill amortization 0 313 310 0 0 0
Earnings before interest and taxes (EBIT) * $ 11,950 $ 9,282 $ (7,177) $ 12,119 $ 11,050 $ (6,324)
EBIT Margin 5.0% 3.5% -3.3% 5.1% 4.1% -2.9%
*Automotive Bearings, Industrial Bearings and Steel EBIT do not equal Consolidated EBIT due to intersegment adjustments
which are eliminated upon consolidation.
(1) "Adjusted" statements exclude the impact of restructuring and reorganization charges for all quarters shown, the
receipt of the U.S. Continued Dumping and Subsidy Offset Act payment received in December 2001 and the elimination
of goodwill amortization in 2001.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three months ended
Mar 31 Mar 31
(Thousands of U.S. dollars) 2002 2001
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Cash Provided (Used)
OPERATING ACTIVITIES
Net Income $ 9,188 $ 2,222
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 36,762 37,898
Provision (credit) for deferred income taxes 29,435 (2,725)
Stock issued in lieu of cash to employee benefit
plans 1,031 106
Non-cash impact of impairment and restructuring
charges (6,671) 4,225
Changes in operating assets and liabilities:
Accounts receivable (49,862) (54,854)
Inventories (17,128) (7,491)
Other assets (7,526) (11,221)
Accounts payable and accrued expenses (11,510) 9,659
Foreign currency translation (465) 2,876
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Net Cash Used by Operating Activities $(16,746) $(19,305)
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net (10,439) (14,848)
Acquisitions (6,751) (1,170)
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Net Cash Used by Investing Activities (17,982) (16,018)
FINANCING ACTIVITIES
Cash dividends paid to shareholders (7,789) (10,798)
Issuance of treasury shares - net 0 505
Payments on long-term debt (1,727) (884)
Proceeds from issuance of long-term debt 0 18
Short-term debt activity - net 27,498 55,701
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Net Cash Provided by Financing Activities $ 17,982 $ 44,542
Effect of exchange rate changes on cash (388) (1,274)
Decrease (increase) in Cash and Cash Equivalents (16,342) 7,945
Cash and Cash Equivalents at Beginning of Period $ 33,392 $ 10,927
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Cash and Cash Equivalents at End of Period $ 17,050 $ 18,872
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CONSOLIDATED BALANCE SHEET Mar 31 Dec 31
(Thousands of U.S. dollars) 2002 2001
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ASSETS
Cash and cash equivalents $ 17,050 $ 33,392
Accounts receivable 356,718 307,759
Refundable income taxes 15,092 15,103
Deferred income taxes 43,148 42,895
Inventories 446,366 429,231
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Total Current Assets $ 878,374 $ 828,380
Property, plant & equipment 1,281,039 1,305,345
Deferred income taxes 16,704 27,164
Other assets 379,155 372,195
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Total Assets $2,555,272 $2,533,084
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LIABILITIES
Accounts payable & other liabilities $ 265,156 $ 258,001
Short-term debt and commercial paper 153,824 128,864
Accrued expenses 253,387 254,291
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Total Current Liabilities $ 672,367 $ 641,156
Long-term debt 367,279 368,151
Accrued pension cost 304,423 317,297
Accrued postretirement benefits cost 410,269 406,568
Other noncurrent liabilities 17,631 18,177
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Total Liabilities $1,771,969 $1,751,349
Shareholders' Equity 783,303 781,735
_______________________________________________________________________________
Total Liabilities and Shareholders' Equity $2,555,272 $2,533,084
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the under-
signed hereunto duly authorized.
THE TIMKEN COMPANY
By: /s/ Gene E. Little
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Gene E. Little
Senior Vice President - Finance
Dated: April 16, 2002