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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________________
Commission File Number 1-1169
THE TIMKEN COMPANY
______________________________________________________
(Exact name of registrant as specified in its charter)
Ohio 34-0577130
________________________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1835 Dueber Avenue, S.W., Canton, Ohio 44706-2798
________________________________________ ___________________
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code (330)438-3000
___________________
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock without par value New York Stock Exchange
______________________________ _______________________
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X].
i
The aggregate market value of the voting stock held by all shareholders
other than shareholders identified under item 12 of this Form 10-K as of
February 15, 2002, was $789,532,334 (representing 48,887,451 shares).
Indicate the number of shares outstanding of each of the registrant's classes
of Common Stock, as of February 15, 2002.
Common Stock without par value--59,917,751 shares (representing a market
value of $967,671,679).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended
December 31, 2001, are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual meeting of shareholders to
be held on April 16, 2002, are incorporated by reference into parts III
and IV.
Exhibit Index may be found on Pages 18 through 23.
ii
THE TIMKEN COMPANY
INDEX TO FORM 10-K REPORT
PAGE
----
I. PART I.
Item 1. Description of Business.................................... 1
General.................................................. 2
Products................................................. 2
Sales and Distribution................................... 3
Industry Segments........................................ 4
Competition.............................................. 5
Backlog.................................................. 6
Raw Materials............................................ 6
Research................................................. 7
Environmental Matters.................................... 7
Patents, Trademarks and Licenses......................... 8
Employment............................................... 8
Executive Officers of the Registrant..................... 8
Item 2. Properties................................................. 12
Item 3. Legal Proceedings.......................................... 13
Item 4. Submission of Matters to a Vote of Security Holders........ 13
II. PART II.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters........................................ 14
Item 6. Selected Financial Data.................................... 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 14
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 16
Item 8. Financial Statements and Supplementary Data................ 16
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 17
III. Part III.
Item 10. Directors and Executive Officers of the Registrant......... 17
Item 11. Executive Compensation..................................... 17
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................. 17
Item 13. Certain Relationships and Related Transactions............. 17
IV. Part IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................... 18
PART 1 1
______
Item 1. Description of Business
________________________________
Certain statements set forth in this document (including the company's fore-
casts, 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 readers that actual
results may differ materially from those projected or implied in forward-
looking statements made by or on behalf of the company due to a variety of
important factors, such as:
a) changes in world economic conditions, including additional adverse
effects from terrorism or hostilities. This includes, but is not
limited to, the potential instability of governments and legal systems
in countries in which the company or its customers conduct business and
significant changes in currency valuations.
b) the effects of changes in customer demand on sales, product mix and
prices. This includes the effects of customer strikes, the impact of
changes in industrial business cycles and whether conditions of fair
trade continue in the U.S. market, in light of the U.S. International
Trade Commission (ITC) voting in second quarter 2000 to revoke the
antidumping orders on imports of tapered roller bearings from Japan,
Romania and Hungary.
c) 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.
d) 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; changes resulting from inventory
management and cost reduction initiatives and different levels of
customer demands; the effects of unplanned work stoppages; changes in
the cost of labor and benefits; and the cost and availability of raw
materials and energy.
e) the success of the company's operating plans, including its ability to
achieve the benefits from its global restructuring, manufacturing
transformation, and administrative cost reduction as well as its
ongoing continuous improvement and rationalization programs; its
ability to integrate acquisitions into company operations; the ability
of acquired companies to achieve satisfactory operating results; its
ability to maintain appropriate relations with unions that represent
company associates in certain locations in order to avoid disruptions
of business and its ability to successfully implement its new
organizational structure.
f) unanticipated litigation, claims or assessments. This includes, but
is not limited to, claims or problems related to intellectual property,
product warranty and environmental issues.
g) changes in worldwide financial markets to the extent they (1) affect
the company's ability or costs to raise capital, (2) have an impact on
the overall performance of the company's pension fund investments and
(3) cause changes in the economy which affect customer demand.
2
The company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise.
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
________
The Timken Company manufactures two basic product lines: anti-friction
bearings and steel. Differentiation in these two product lines comes in two
different ways: (1) Differentiation by bearing type or steel type and,
(2) Differentiation in the applications of bearings and steel.
In bearings, Timken is best known for the tapered roller bearing, which was
originally patented by the company founder, Henry Timken. 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 or purchased and are sold in a wide variety of configurations
and sizes. The applications for tapered roller bearings have diversified
from the original application on horse-drawn wagons to applications on
passenger cars, light and heavy trucks, trains, as well as a wide range of
industrial applications, ranging from very small gear drives to bearings
over two meters in diameter for wind energy machines. Further differenti-
ation has come in the form of adding sensors to these bearings, which
measure parameters such as speed, load, temperature or overall bearing
health. Matching bearings to service requirements of customers' appli-
cations requires engineering, and often sophisticated analytical techniques.
The design of every tapered roller bearing made by Timken permits distri-
bution of unit pressures over the full length of the roller. This fact,
coupled with its tapered design, high precision tolerance and proprietary
internal geometry and premium quality material, provides a bearing with high
load carrying capacity, excellent friction-reducing qualities and long life.
The bearing product line has expanded in recent years with the addition of
Timken Aerospace and Super Precision facilities, which produce high-perform-
ance ball and cylindrical bearings for ultra high-speed and/or high-accuracy
applications in aerospace, medical/dental, computer disk drives and other
industries. They utilize ball and straight rolling elements and are in the
super precision end of the general ball and straight roller bearing product
range in the bearing industry. A majority of Timken Aerospace & Super
Precision Bearings' products are special custom-designed bearings and spindle
assemblies. They often involve specialized materials and coatings for use
in applications that subject the bearings to extreme operating conditions
of speed and temperature.
In addition, the Timken Romania facility produces high-quality spherical and
cylindrical bearings to expand application opportunities in large gear
drives, rolling mills and other process industry and infrastructure-develop-
3
Products (cont.)
________________
ment projects. Timken also produces custom-designed products called SpexxTM
performance Bearings. The product line includes both tapered and
cylindrical roller bearings and provides cost-effective solutions for
selective applications. The company produces the Timken IsoClassTM brand of
tapered roller bearings, which gives Timken access to 95% of the demand for
ISO tapered roller bearings, which are about one half of today's total
tapered roller bearing sales.
In addition to bearing products, Timken provides bearing reconditioning
services for industrial and railroad customers, both globally and
domestically. These services account for less than 3% of the company's net
sales for the year ended December 31, 2001.
Steel products include steels of low and intermediate alloy, vacuum-
processed alloys, tool steel and some carbon grades. These are available
in a wide range of solid and tubular sections with a variety of finishes.
These steel products are used in a wide array of applications, from bearings
to automotive transmissions; from engine crankshafts to special corrosion-
resistant, down-hole seamless tubing for oil drilling, as well as aerospace
and other similarly demanding applications.
The company also produces custom-made steel products including precision
steel components for automotive and industrial customers. The precision
steel components business has provided the company with the opportunity
to further expand its market for tubing and capture more higher-value steel
sales. This also enables 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. This activity is a
growing portion of the Steel business.
Sales and Distribution
______________________
Timken's products in the Automotive Bearings and Industrial Bearings
segments are sold principally by its own sales organization. A major
portion of the shipments are made directly from Timken's warehouses located
in a number of cities in the United States, Canada, England, France, Mexico,
Singapore, Argentina and Australia. A growing number of shipments are made
directly from plant locations. The warehouse inventories are augmented by
authorized distributor and jobber inventories throughout the world that
provide local availability when service is required.
In January 2001, the company formed a joint venture in North America focused
on joint logistics and e-business services. This alliance is called Colinx,
and was founded by Timken, SKF, INA and Rockwell Automation. The e-business
service was launched in April 2001, and is focused on information and
business services for authorized distributors in the Industrial Bearings
segment. The joint logistics services, and how Timken might participate,
were studied during 2001, with action plans to be implemented in 2002 and
beyond.
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.
4
Sales and Distribution (cont.)
______________________________
Timken's tapered roller bearings and other bearing types 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. Timken Aerospace & Super Precision Bearings' pro-
ducts, which are at the super precision end of the general ball and straight
roller bearing segment, are used in aircraft, missile guidance systems,
computer peripherals, and medical/dental instruments.
During 2001, progress was made in transitioning the European logistics
center located in Strasbourg, France. The facility is managed and operated
by Timken associates. Further investments and consolidation of European
logistics into Strasbourg were studied in 2001, with additional consol-
idation expected to occur in 2002 and beyond. Also, the company formed
another e-business joint venture in Europe in January 2001. This alliance
is called Endorsia and was founded by Timken, SKF, INA, Sandvik and Rockwell
Automation. The e-business service was launched in October 2001, and is
focused on information and business services for authorized distributors in
the Industrial Bearings segment.
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 and truck, construction,
forging, oil and gas drilling and tooling industries. Sales are also 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 has 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 its Automotive Bearings, Industrial Bearings and Steel
segments. These contracts may extend for one or more years and, if a price
is fixed for any period extending beyond current shipments, customarily
include a commitment by 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
_________________
The company has three reportable segments: Automotive Bearings, Industrial
Bearings and Steel. Segment information in Note 12 of the Notes to
Consolidated Financial Statements on pages 36 and 37 of the Annual Report
to Shareholders for the year ended December 31, 2001, are incorporated
5
Industry Segments (cont.)
_________________________
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 Automotive and Industrial Bearings' businesses have historically
participated in the worldwide bearing markets while Steel has concentrated
on U.S. customers. However, over the past few years, Steel has acquired
foreign companies, such as Timken Desford Steel, in Leicester, England, a
manufacturer of seamless mechanical tubing and Lecheres Industries SAS
(Lecheres), the parent company of Bamarec S.A., a precision component
manufacturer based in France. Lecheres was aquired in November 2001.
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.
Both the anti-friction Automotive and Industrial Bearings' businesses 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 techno-
logical innovation.
Competition
___________
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 well-adapted to reducing friction where
shafts, gears or wheels are used. Timken also produces super precision
ball and straight roller bearings at its Timken Aerospace & Super
Precision Bearings subsidiary. With recent acquisitions, the company has
selectively expanded its product line to include other bearing types.
However, 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 segments. This has been important to its
ability to remain one of the leaders in the world's bearing industry.
This contrasts with the majority of Timken's major competitors who focus
more heavily on other 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 sells products. Substantial downward pricing
pressures exist in the United States and other countries even during periods
of significant demand.
In the second quarter of 2000, the ITC voted to revoke the industry's anti-
dumping orders on imports of tapered roller bearings from Japan, Romania and
Hungary. The ITC determined that revocation of the antidumping duty orders
on tapered roller bearings from those countries was not likely to lead to
continuation or recurrence of material injury to the domestic industry
within a reasonably foreseeable time. The ITC upheld the antidumping duty
6
Competition (cont.)
___________________
order against China. The company has filed an appeal of the ITC's decision
regarding Japan, which is still pending. In June 2001, President Bush
directed the ITC to initiate an investigation on steel imports under Section
201 of U.S. trade law, urging multilateral negotiations to reduce global
excess steel capacity and calling for multilateral negotiations to address
market-distorting factors in the world steel trade. In late October, the
ITC voted and affirmed 6-0 that injury had been caused by surges of low
priced imports of hot-rolled and cold-finished bars. The vote for tool
steels was 3-3. On March 5, 2002, President Bush announced that the U.S.
would impose tariffs on hot and cold-finished bar imports. The remedy for
these product categories is three years of tariffs at 30%, 24% and 18%.
Hot-rolled bars are a major product line for the company's Steel business,
which also manufactures some cold-finished bar products. Steel made in
Mexico, Canada and developing nations are generally exempt from the tariffs
announced. No relief was granted with respect to tool steels, which is a
major product line for the Timken Latrobe Steel subsidiary in Latrobe,
Pennsylvania.
In December 2001, the company received a $31.0 million payment from the U.S.
Treasury Department under the Continued Dumping and Subsidy Offset Act
(Act). This payment resulted from the requirement in the Act that dumping
duties collected by the U.S. Customs Service be distributed to domestic pro-
ducers, and is related to the company's Automotive and Industrial Bearings'
segments.
Timken manufactures carbon and alloy seamless tubing, carbon and alloy steel
solid bars, 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
with domestic and foreign manufacturers in both the anti-friction bearing
and steel businesses.
Backlog
_______
The backlog of orders of Timken's domestic and overseas operations is
estimated to have been $1.01 billion at December 31, 2001, and $1.13 billion
at December 31, 2000. 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
7
Raw Materials (cont.)
_____________________
to its demanding specifications. In addition, Timken Desford Steel, in
Leicester, England is a major source of raw materials for the Timken plants
in Western Europe.
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
worldwide headquarters, is engaged in research on bearings, steels, manu-
facturing methods and related matters. Research facilities are also located
at the Timken Aerospace & Super Precision Bearings New Hampshire plants; the
Colmar, France plant; the Latrobe, Pennsylvania plant; the Ploiesti, Romania
plant; and the facility in Bangelore, India. Expenditures for research,
development and testing amounted to approximately $54,000,000 in 2001,
$52,000,000 in 2000, and $50,000,000 in 1999. 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 tech-
niques and the expansion of application of existing products.
Environmental Matters
_____________________
The company continues to protect the environment and comply with
environmental protection laws. Additionally, it has invested in pollution
control equipment and updated plant operational practices. The company is
committed to implementing a documented environmental management system
worldwide and to becoming certified under the ISO 14001 standard to meet or
exceed customer requirements. By the end of 2001, the company's plants in
Leicester, England; Sosnowiec, Poland; Jamshedpur, India; and Iron Station,
North Carolina had obtained ISO 14001 certification.
It is difficult to assess the possible effect of compliance with future
requirements that differ from existing ones. As previously reported,
the company is unsure of the future financial impact to the company that
could result from the United States Environmental Protection Agency's
(EPA's) final rules to tighten the National Ambient Air Quality Standards
for fine particulate and ozone.
The company and certain of its U.S. subsidiaries have been designated as
potentially responsible parties (PRPs) by the United States EPA for site
investigation and remediation at certain sites under the Comprehensive
Environmental Response, Compensation and Liability Act (Superfund). The
claims for remediation have been asserted against numerous other entities,
which are believed to be financially solvent and are expected to fulfill
their proportionate share of the obligation. Management believes any
ultimate liability with respect to all pending actions will not materially
affect the company's operations, cash flows or consolidated financial
position. Furthermore, the company believes it has established adequate
reserves to cover its environmental expenses and has a well-established
environmental compliance audit program, which includes a proactive approach
8
Environmental Matters (cont.)
_____________________________
to bringing its domestic and international units to higher standards of
environmental performance. This program measures performance against local
laws as well as standards that have been established for all units
worldwide.
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 any industry segment, to be materially dependent upon any one item
or group of items.
Employment
__________
At December 31, 2001, Timken had 18,735 associates. Thirty-one percent
of Timken's U.S. associates are covered under collective bargaining
agreements. Three percent of Timken's U.S. associates are covered under
collective bargaining agreements that expire within one year.
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 for two, 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 15, 2002, are as follows:
Current Position and Previous
Name Age Positions During Last Five Years
___________________ ___ ____________________________________________
W. R. Timken, Jr. 63 1996 Chairman - Board of Directors;
1997 Chairman, President and Chief
Executive Officer; Director;
1999 Chairman and Chief Executive Officer;
Director; Officer since 1968.
J. W. Griffith 48 1996 Vice President - Bearings - North
American Automotive, Rail, Asia
Pacific and Latin America;
1998 Group Vice President - Bearings -
North American Automotive, Asia
Pacific and Latin America;
1999 President and Chief Operating Officer;
Director; Officer since 1996.
B. J. Bowling 60 1996 Executive Vice President and President
- Steel;
1997 Executive Vice President, Chief
Operating Officer and President -
Steel; Officer since 1996.
9
Executive Officers of the Registrant (cont.)
____________________________________________
Current Position and Previous
Name Age Positions During Last Five Years
___________________ ___ ____________________________________________
C. J. Andersson 40 1996 Manager of Global Sourcing and Asset
Management, Power Generation Manu-
facturing (General Electric Company);
1997 General Manager - Mexico Sourcing and
Business Development, GE International
Mexico (General Electric Company);
1999 General Manager - Aviation Information
Services, GE Aircraft Engines (General
Electric Company);
2000 Senior Vice President - e-Business, The
Timken Company;
2001 Senior Vice President - e-Business and
Lean Six Sigma, The Timken Company;
Officer since 2000.
M. C. Arnold 45 1996 Director - Manufacturing and Technology -
Europe, Africa and West Asia;
1997 Director - Bearing Business Process
Advancement;
1998 Vice President - Bearings - Business
Process Advancement;
2000 President - Industrial; Officer since
2000.
S. B. Bailey 42 1996 Director - Finance;
1999 Director - Finance and Treasurer;
2000 Treasurer;
2001 Corporate Controller; Officer since 1999.
W. R. Burkhart 36 1996 Corporate Attorney
1997 Legal Counsel - Europe, Africa and West
Asia;
1998 Director of Affiliations and Acquisitions
2000 Senior Vice President and General Counsel;
Officer since 2000.
V. K. Dasari 35 1996 Director - Manufacturing and Technology -
Tata Timken Limited;
1998 Deputy Managing Director - Tata Timken
Limited;
1999 Managing Director - Tata Timken Limited;
2000 President - Rail;
2001 Corporate Vice President - Manufacturing
Transformation; Officer since 2000.
D. J. Demerling 51 1996 Stanford Sloan Fellow;
1997 President - MPB Corporation;
2000 President - Aerospace and Super Precision;
Officer since 2000.
10
Executive Officers of the Registrant (cont.)
____________________________________________
Current Position and Previous
Name Age Positions During Last Five Years
___________________ ___ ____________________________________________
G. A. Eisenberg 40 1996 Executive Vice President and Chief
Financial Officer, United Dominion
Industries;
1998 President - Test Instrumentation Segment;
Executive Vice President and Chief
Financial Officer, United Dominion
Industries;
1999 President and Chief Operating Officer,
United Dominion Industries;
2002 Executive Vice President - Finance and
Administration, The Timken Company;
Officer since 2002.
J. T. Elsasser 49 1996 Vice President - Bearings - Europe,
Africa and West Asia;
1998 Group Vice President - Bearings -
Rail, Europe, Africa and West Asia;
1999 Senior Vice President - Corporate
Development; Officer since 1996.
K. P. Kimmerling 44 1996 Vice President - Manufacturing -
Steel;
1998 Group Vice President - Alloy Steel;
1999 President - Automotive; Officer since
1998.
G. E. Little 58 1996 Vice President - Finance; Treasurer;
1998 Senior Vice President - Finance;
Treasurer;
1999 Senior Vice President - Finance; Officer
since 1990.
S. J. Miraglia, Jr. 51 1996 Vice President - Bearings - North
American Industrial and Super
Precision;
1998 Group Vice President - Bearings -
North American Industrial and Super
Precision;
1999 Senior Vice President - Technology;
Officer since 1996.
H. J. Sack 48 1996 President - Latrobe Steel Company;
1998 Group Vice President - Specialty Steel
and President - Latrobe Steel
Company;
1999 Group Vice President - Specialty Steel
and President - Timken Latrobe Steel;
2000 President - Specialty Steel; Officer
since 1998.
11
Executive Officers of the Registrant (cont.)
____________________________________________
Current Position and Previous
Name Age Positions During Last Five Years
___________________ ___ ____________________________________________
M. J. Samolczyk 46 1996 Vice President - Sales and Marketing -
Industrial - Original Equipment;
1998 Vice President and General Manager -
Precision Steel Components;
2000 President - Precision Steel Components;
Officer since 2000.
S. A. Scherff 48 1996 Director - Legal Services and Assistant
Secretary;
1999 Corporate Secretary;
2000 Corporate Secretary and Assistant General
Counsel; Officer since 1999.
W. J. Timken 59 1996 Vice President; Director; Officer
since 1992.
W. J. Timken, Jr. 34 1996 Market Manager - Original Equipment
Distribution - Europe, Africa and West
Asia
1998 Vice President - Latin America
2000 Corporate Vice President - Office of the
Chairman; Officer since 2000.
12
Item 2. Properties
___________________
Timken has Automotive and Industrial Bearing and Steel manufacturing
facilities at multiple locations in the United States. Timken also has
Automotive and Industrial Bearing and Steel manufacturing facilities in a
number of countries outside the United States. The aggregate floor area of
these facilities worldwide is approximately 13,790,000 square feet, all of
which, except for approximately 1,688,000 square feet, is owned in fee. The
facilities not owned in fee are leased. The buildings occupied by Timken
are principally of brick, steel, reinforced concrete and concrete block
construction. All buildings are in satisfactory operating condition in
which to conduct business.
Timken's Automotive and Industrial Bearing manufacturing facilities in the
United States are located in Ashland, Bucyrus, Canton and New Philadelphia,
Ohio; Altavista, Virginia; Randleman and Iron Station, North Carolina;
Carlyle, Illinois; South Bend, Indiana; Gaffney, South Carolina; Keene and
Lebanon, New Hampshire; Winchester, Kentucky; Knoxville, Tennessee; Lenexa,
Kansas; Ogden, Utah; Orange and Sanford, California. These facilities,
including the research facility in Canton, Ohio, and warehouses at plant
locations, have an aggregate floor area of approximately 4,404,000 square
feet. As part of the management strategy initiative announced in April
2001, the company announced that it was closing the Industrial Bearing
plant in Columbus, Ohio and selling a tooling plant in Ashland, Ohio.
The Columbus plant ceased operations on November 9, which decreased floor
area by approximately 388,000 square feet.
Timken's Automotive and Industrial Bearing manufacturing plants outside the
United States are located in Benoni, South Africa; Brescia, Italy; Colmar,
France; Duston, Northampton and Wolverhampton, England; Medemblik, The
Netherlands; Ploiesti, Romania; Mexico City, Mexico; Sao Paulo, Brazil;
Singapore; Jamshedpur, India; Sosnowiec, Poland; St. Thomas, Canada and
Yantai, China. The facilities, including warehouses at plant locations,
have an aggregate floor area of approximately 3,690,000 square feet. The
company announced in March, 2001 the opening of a bearing reconditioning
facility in Mexico City as part of its Timken de Mexico operations. The
Industrial Bearing service facility will remanufacture railroad bearings
used in locomotives and freight cars. In April 2001, the company announced
that it was also closing the Automotive Bearing plant in Duston, England.
This plant is scheduled to close in mid-2002.
Timken's Steel manufacturing facilities in the United States are located
in Canton, Eaton, Wauseon and Wooster, Ohio; Columbus, North Carolina;
Franklin and Latrobe, Pennsylvania. These facilities have an aggregate
floor area of approximately 4,942,000 square feet.
Timken's Steel manufacturing facilities outside the United States are
located in Leicester and Sheffield, England; Fougeres and Marnaz, France.
These facilities have an aggregate floor of approximately 754,000 square
feet.
In addition to the manufacturing and distribution facilities discussed
above, Timken owns warehouses and steel distribution facilities in the
United States, Canada, England, France, Singapore, Mexico, Argentina and
Australia, and leases several relatively small warehouse facilities in
cities throughout the world.
13
Properties (cont.)
__________________
During 2001, the global demand for automotive and industrial bearings
decreased from 2000. Automotive and Industrial plant utilization declined
as a result of the overall manufacturing recession. Steel plant utilization
also decreased during 2001 in response to weakened customer demand. Utili-
zation was curtailed even further as the Steel business took actions to
control inventory and curtail spending.
Item 3. Legal Proceedings
__________________________
On May 22, 2001, eight current or former employees of the company filed a
lawsuit in the Court of Common Pleas, Stark County, Ohio against the company
and fifteen current or former employees of the company. The lawsuit was
removed to the United States District Court, Northern District of Ohio,
Eastern Division on June 20, 2001. The lawsuit alleged, among other things,
sexual harassment and employment discrimination. The plaintiffs sought
compensatory and punitive damages of approximately $95 million.
During the third quarter of 2001, this case was dismissed, without pre-
judice, pursuant to a sua sponte order of the presiding judge. In February
2002, the lawsuit was refiled in the Court of Common Pleas, Stark County,
Ohio, by two of the original plaintiffs naming only the company as a
defendant. The allegations contained in the complaint are similar to those
made in the May 22, 2001 filing. The new lawsuit does not specify the
amount of damages the plaintiffs are seeking.
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 of the fiscal year ended December 31, 2001.
14
PART II
_______
Item 5. Market for Registrant's Common Equity and Related Stockholder
______________________________________________________________________
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, 2001, was 8,109. The estimated number of shareholders at
December 31, 2001, was 39,919.
High and low stock prices and dividends for the last two fiscal years are
presented in the Quarterly Financial Data schedule on Page 1 of the Annual
Report to Shareholders for the year ended December 31, 2001, and are
incorporated herein by reference.
Item 6. Selected Financial Data
________________________________
The Summary of Operations and Other Comparative Data on Pages 40-41 of the
Annual Report to Shareholders for the year ended December 31, 2001, is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
________________________________________________________________________
Results of Operations
_____________________
Management's Discussion and Analysis of Financial Condition and Results of
Operations on Pages 20-27 of the Annual Report to Shareholders for the year
ended December 31, 2001, is incorporated herein by reference.
On February 13, 2002, Standard & Poor's ("S&P") publicly announced that it
had lowered the company's long-term senior debt rating to "BBB" from "A-."
At the same time, S&P announced that the company's ratings were removed
from "CreditWatch," and that the outlook is now "stable." The company's
"A-2" short-term corporate credit and commercial paper ratings, which were
not on CreditWatch, were affirmed.
On March 5, 2002, President Bush announced that the U.S. would impose
tariffs on hot and cold-finished bar imports. The remedy for these product
categories is three years of tariffs at 30%, 24% and 18%. Hot-rolled bars
are a major product line for the company's Steel business, which also manu-
factures some cold-finished bar products. Steel made in Mexico, Canada and
developing nations are generally exempt from the tariffs announced. No
relief was granted with respect to tool steels, which is a major product
line for the Timken Latrobe Steel subsidiary in Latrobe, Pennsylvania.
On March 15, 2002, the company acquired an industrial equipment repair
facility located in Niles, Ohio. The 60,000 square foot plant specializes
in the repair and rebuild of chocks, chock overlays, rolls and roll
overlays, and other processing components commonly found in heavy
industrial mill applications.
15
Item 7. Management's Discussion and Analysis of Financial Condition and
________________________________________________________________________
Results of Operations (cont.)
_____________________________
On March 19, 2002, the company announced that it expects to report improved
financial performance above consensus estimates for the first quarter and
full year. The improvement is expected to result from increased revenues,
increased efficiency resulting from the company's restructuring efforts and
aggressive cost management. During the first quarter, the company has noted
stronger-than-expected U.S. automotive sector demand. The company has not,
however, observed a perceptible increase in broad-based manufacturing
activity. In 2002, the company is continuing with the global restructuring
of its manufacturing operations. The ongoing manufacturing initiative,
combined with the salaried workforce reduction that occurred in the second
half of 2001, is expected to produce an annualized savings rate of
$80 million by the end of 2002.
Critical Accounting Policies
____________________________
The company's financial statements are prepared in accordance with account-
ing principles generally accepted in the United States. The preparation of
these financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
date of the financial statements and the reported amounts of revenues and
expenses during the periods presented. The following paragraphs include a
discussion of some critical areas that require a higher degree of judgement,
estimates and complexity:
The company's revenue recognition policy is to recognize revenue when title
passes to the customer. This is generally FOB shipping point except for
certain exported goods, which is FOB destination. Selling prices are fixed
based on purchase orders or contractual arrangements. Write-offs of
accounts receivable have historically been low.
It is the company's policy to recognize restructuring costs in accordance
with Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs incurred in a Restructuring)" and the SEC Staff
Accounting Bulletin No. 100, "Restructuring and Impairment Charges."
Detailed contemporaneous documentation is maintained and updated on a
monthly basis to ensure that accruals are properly supported. If management
determines that there is a change in the estimate, the accruals are adjusted
to reflect this change.
The company sponsors a number of defined benefit pension plans which cover
most associates, except for those at certain locations who are covered by
government plans. The company also sponsors several unfunded postretirement
plans that provide health care and life insurance benefits for eligible
retirees and dependents. The measurement of liabilities related to these
plans is based on management's assumptions related to future events
including return on pension plan assets, rate of compensation increases and
health care cost trend rates. The discount rate is determined using a model
that matches corporate bond securities against projected pension and post-
retirement disbursements. Actual pension plan asset performance will either
reduce or increase unamortized pension losses at the end of 2002, which
ultimately affects net income.
16
Item 7. Management's Discussion and Analysis of Financial Condition and
________________________________________________________________________
Results of Operations (cont.)
_____________________________
In previous years, the company had two reportable segments consisting of
Bearings and Steel. Based on the company's reorganization into global
business units, management has determined that the Automotive Bearings and
Industrial Bearings segments meet the quantitative and qualitative
thresholds of a reporting segment as defined by SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information."
New Accounting Standards
________________________
The specifics related to SFAS No. 141 and 142 are discussed on page 29 of
the Annual Report to Shareholders for the year ended December 31, 2001, and
are incorporated herein by reference. In accordance with SFAS No. 141, the
goodwill resulting from the November 2001 purchase of Lecheres Industries
SAS has not been amortized. Beginning in the first quarter of 2002, the
application of the nonamortization provisions of SFAS No. 142 is expected
to result in an increase in annual net income of $6.1 million. Changes in
the estimated useful lives of intangible assets will not result in a
material increase to net income.
The company will test goodwill for impairment using the two-step process
described in SFAS No. 142. The company has identified five reporting units
and plans to complete the analysis for potential impairment in the second
quarter of 2002. It is expected that the measurement of the transitional
goodwill impairment will also be completed in the second quarter and
reflected as a cumulative effect of a change in accounting principle.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
____________________________________________________________________
Information appearing under the caption "Management's Discussion and
Analysis of Other Information" appearing on page 27 of the Annual
Report to Shareholders for the year ended December 31, 2001, is
incorporated herein by reference.
The company has no update to the information provided in the Annual Report.
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 20-28, the Notes to Consolidated Financial Statements on Pages
29-38, and the Report of Independent Auditors on Page 39 of the Annual
Report to Shareholders for the year ended December 31, 2001, are
incorporated herein by reference.
17
Item 9. Changes in and Disagreements with Accountants on Accounting
____________________________________________________________________
and Financial Disclosure
________________________
Not applicable.
PART III
________
Item 10. Directors and Executive Officers of the Registrant
____________________________________________________________
Required information is set forth under the caption "Election of
Directors" on Pages 4-7 of the proxy statement filed in connection with
the annual meeting of shareholders to be held April 16, 2002, and is
incorporated herein by reference. Information regarding the executive
officers of the registrant is included in Part I hereof.
Item 11. Executive Compensation
________________________________
Required information is set forth under the caption "Executive
Compensation" on Pages 10-20 of the proxy statement filed in connection
with the annual meeting of shareholders to be held April 16, 2002, and
is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
________________________________________________________________________
Required information regarding Security Ownership of Certain Beneficial
Owners and Management, including 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 8-9 of the proxy
statement filed in connection with the annual meeting of shareholders
to be held April 16, 2002, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
________________________________________________________
Required information is set forth under the caption "Election of
Directors" on Pages 4-7 of the proxy statement issued in connection with
the annual meeting of shareholders to be held April 16, 2002, and is
incorporated herein by reference.
18
PART IV
_______
Item 14. Exhibits, Financial Statement Schedules, and Reports 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.
Schedules I, III, IV and V are not applicable to the company and, therefore,
have been omitted.
(3) Listing of Exhibits
Exhibit
_______
(3)(i) Amended Articles of Incorporation of The Timken Company
(Effective April 16, 1996) were filed with Form S-8 dated
April 16, 1996 (Registration Number 333-02553) and are
incorporated herein by reference.
(3)(ii) Amended Regulations of The Timken Company effective April
21, 1987, were filed on March 29, 1993 with Form 10-K
(Commission File Number 1-1169), and are incorporated
herein by reference.
(4) Credit Agreement dated as of July 10, 1998 among The Timken
Company, as Borrower, Various Financial Institutions, as
Banks, and Keybank National Association, as Agent was filed
on August 13, 1998 with Form 10-Q (Commission File Number
1-1169), and is incorporated herein by reference.
(4.1) Indenture dated as of April 24, 1998, between The Timken
Company and The Bank of New York, which was filed with
Timken's Form S-3 registration statement which became
effective April 24, 1998 (Registration Number 333-45791),
and is incorporated herein by reference.
(4.2) 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 (Registration Number 333-35773), and is incorporated
herein by reference.
(4.3) First Supplemental Indenture, dated as of July 24, 1996,
by and between The Timken Company and Mellon Bank, N.A.
was filed on November 13, 1996 with Form 10-Q (Commission
File Number 1-1169), and is incorporated herein by
reference.
(4.4) First Amendment Agreement dated as of January 1, 2002 among
The Timken Company, as Borrower, Various Financial
Institutions, as Banks, and Keybank National Association,
as Agent.
19
Listing of Exhibits (cont.)
___________________________
(4.5) 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.
(10.1) The form of Deferred Compensation Agreement entered
into with James W. Griffith, W. R. Timken, Jr., R. L.
Leibensperger and B. J. Bowling was filed on November 13,
1995 with Form 10-Q (Commission File Number 1-1169), and
is incorporated herein by reference.
(10.2) The Timken Company 1996 Deferred Compensation Plan for
officers and other key employees, amended and restated as
of April 20, 1999 was filed on May 13, 1999 with Form 10-Q
(Commission File Number 1-1169), and is incorporated herein
by reference.
(10.3) The Timken Company Long-Term Incentive Plan As Amended And
Restated As Of December 16, 1999, and approved by share-
holders April 18, 2000 was filed as Appendix A to Proxy
Statement filed on February 25, 2000 (Commission File
Number 1-1169), and is incorporated herein by reference.
(10.4) The 1985 Incentive Plan of The Timken Company for Officers
and other key employees as amended through December 17,
1997 was filed on March 20, 1998 with Form 10-K (Commission
File Number 1-1169), and is incorporated herein by
reference.
(10.5) The form of Severance Agreement entered into with all
Executive Officers of the company was filed on March 27,
1997 with Form 10-K (Commission File Number 1-1169), and
is incorporated herein by reference. Each differs only as
to name and date executed.
(10.6) The form of Death Benefit Agreement entered into with all
Executive Officers of the company was filed on March 30,
1994 with Form 10-K (Commission File Number 1-1169), 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 Directors who are not Executive Officers of the company
was filed on April 1, 1991 with Form 10-K (Commission File
Number 1-1169), and is incorporated herein by reference.
Each differs only as to name and date executed.
Listing of Exhibits (cont.) 20
___________________________
Management Contracts and Compensation Plans (cont.)
___________________________________________________
(10.8) The form of Indemnification Agreements entered into with
all Executive Officers of the company who are not Directors
of the company was filed on April 1, 1991 with Form 10-K
(Commission File Number 1-1169), and is incorporated herein
by reference. Each differs only as to name and date
executed.
(10.9) The form of Indemnification Agreements entered into with
all Executive Officers of the company who are also
Directors of the company was filed on April 1, 1991 with
Form 10-K (Commission File Number 1-1169), and is
incorporated herein by reference. Each differs only as to
name and date executed.
(10.10) 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 on March 27, 1992 with Form 10-K
(Commission File Number 1-1169), and is incorporated herein
by reference. Each differs only as to name and date
executed.
(10.11) The Amended and Restated Supplemental Pension Plan of
The Timken Company as adopted March 16, 1998 was filed
on March 20, 1998 with Form 10-K (Commission File Number
1-1169), and is incorporated herein by reference.
(10.12) Amendment to the Amended and Restated Supplemental Pension
Plan of the Timken Company executed on December 29, 1998
was filed on March 30, 1999 with Form 10-K (Commission File
Number 1-1169), and is incorporated herein by reference.
(10.13) The form of The Timken Company Nonqualified Stock Option
Agreement for nontransferable options as adopted on April
18, 2000 was filed on May 12, 2000 with Form 10-Q
(Commission File Number 1-1169), and is incorporated herein
by reference.
(10.14) The form of The Timken Company Nonqualified Stock Option
Agreement for transferable options as adopted on April 18,
2000 was filed on May 12, 2000 with Form 10-Q (Commission
File Number 1-1169), and is incorporated herein by
reference.
(10.15) The form of The Timken Company Nonqualified Stock Option
Agreement for special award options as adopted on April 18,
2000 was filed on May 12, 2000 with Form 10-Q (Commission
File Number 1-1169), and is incorporated herein by
reference.
(10.16) The Timken Company Deferral of Stock Option Gains Plan
effective as of April 21, 1998 was filed on May 14, 1998
with Form 10-Q (Commission File Number 1-1169), and is
incorporated herein by reference.
21
Listing of Exhibits (cont.)
___________________________
Management Contracts and Compensation Plans (cont.)
___________________________________________________
(10.17) The Consulting Agreement entered into with Joseph F.
Toot, Jr., effective January 1, 2001 was filed on March 30,
2001 with Form 10-K (Commission File Number 1-1169), and is
incorporated herein by reference.
(10.18) The form of The Timken Company Performance Share Agreement
entered into with W. R. Timken, Jr., R. L. Leibensperger
and B. J. Bowling was filed on March 20, 1998 with Form
10-K (Commission File Number 1-1169), and is incorporated
herein by reference.
(10.19) The Timken Company Senior Executive Management Performance
Plan effective January 1, 1999, and approved by
shareholders April 20, 1999 was filed as Appendix A to
Proxy Statement filed on February 29, 1999 (Commission File
Number 1-1169), and is incorporated herein by reference.
(10.20) The Timken Company Nonqualified Stock Option Agreement
entered into with James W. Griffith and adopted on
December 16, 1999 was filed on March 29, 2000 with Form
10-K (Commission File Number 1-1169), and is incorporated
herein by reference.
(10.21) The Timken Company Promissory Note entered into with James
W. Griffith and dated December 17, 1999 was filed on March
29, 2000 with Form 10-K (Commission File Number 1-1169),
and is incorporated herein by reference.
(10.22) The Timken Company Director Deferred Compensation Plan
effective as of February 4, 2000 was filed on May 12, 2000
with Form 10-Q (Commission File Number 1-1169), and is
incorporated herein by reference.
(10.23) The form of The Timken Company Deferred Shares Agreement as
adopted on April 18, 2000 was filed on May 12, 2000 with
Form 10-Q (Commission File Number 1-1169), and is
incorporated herein by reference.
(10.24) Amendment to Employee Excess Benefits Agreement was filed
on May 12, 2000 with Form 10-Q (Commission File Number
1-1169), and is incorporated herein by reference.
(10.25) Consulting agreement entered into with Robert L.
Leibensperger was filed on August 11, 2000 with Form 10-Q
(Commission File Number 1-1169), and is incorporated herein
by reference.
(10.26) Consulting agreement entered into with John Schubach was
filed on August 11, 2000 with Form 10-Q (Commission File
Number 1-1169), and is incorporated herein by reference.
22
Listing of Exhibits (cont.)
___________________________
Management Contracts and Compensation Plans (cont.)
___________________________________________________
(10.27) Consulting Agreement entered into with e-Solutions.biz, LLC
(Thomas W. Strouble, Owner and principal) was filed on
November 13, 2001 with Form 10-Q (Commission File Number
1-1169), and is incorporated herein by reference.
(10.28) The form of The Timken Company Nonqualified Stock Option
Agreement for nontransferable options without dividend
credit as adopted on April 17, 2001 was filed on May 14,
2001 with Form 10-Q (Commission File Number 1-1169), and is
incorporated herein by reference.
(10.29) Retirement Agreement entered into with Stephen A. Perry was
filed on May 14, 2001 with Form 10-Q (Commission File
Number 1-1169), and is incorporated herein by reference.
(10.30) Restricted Shares Agreement entered into with Glenn A.
Eisenberg.
(10.31) Restricted Shares Agreement entered into with Curt J.
Andersson.
(12) Ratio of Earnings to Fixed Charges
(13) Annual Report to Shareholders for the year ended
December 31, 2001, (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:
On March 20, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed.
On February 22, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed.
23
Listing of Exhibits (cont.)
___________________________
(b) Reports on Form 8-K (cont.):
On February 19, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
a recent development of rating agency activity related to the
company's debt ratings. No financial statements were filed.
On January 22, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed.
On December 21, 2001, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed.
On December 19, 2001, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained a
press release announcing Glenn A. Eisenberg's election by the
company's board of directors as Executive Vice President -
Finance and Administration.
On November 30, 2001, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed.
(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/ W. R. Timken, Jr. By /s/ Gene E. Little
________________________________ ________________________________
W. R. Timken, Jr., Gene E. Little
Director and Chairman and Chief Senior Vice President - Finance
Executive Officer (Principal Financial and
Accounting Officer)
Date March 28, 2002 Date March 28, 2002
________________________________ _______________________________
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/ Stanley C. Gault* By /s/ John M. Timken, Jr.*
______________________________ _______________________________
Stanley C. Gault Director John M. Timken, Jr. Director
Date March 28, 2002 Date March 28, 2002
By /s/ J. Clayburn La Force, Jr.* By /s/ W. J. Timken*
______________________________ _______________________________
J. Clayburn La Force, Jr., Director W. J. Timken Director
Date March 28, 2002 Date March 28, 2002
By /s/ James W. Griffith* By /s/ Joseph F. Toot, Jr.*
______________________________ _______________________________
James W. Griffith, Director Joseph F. Toot, Jr. Director
Date March 28, 2002 Date March 28, 2002
By /s/ By /s/ Martin D. Walker*
______________________________ _______________________________
John A. Luke, Jr. Director Martin D. Walker Director
Date March 28, 2002 Date March 28, 2002
By /s/ Robert W. Mahoney* By /s/ Jacqueline F. Woods*
______________________________ _______________________________
Robert W. Mahoney Director Jacqueline F. Woods, Director
Date March 28, 2002 Date March 28, 2002
By /s/ Jay A. Precourt*
______________________________
Jay A. Precourt Director
Date March 28, 2002
By /s/ Glenn A. Eisenberg* By /s/ Gene E. Little
______________________________ ___________________________________
Glenn A. Eisenberg Gene E. Little, attorney-in-fact
Executive Vice President - By authority of Power of Attorney
Finance and Administration filed as Exhibit 24 hereto
Date March 28, 2002 Date March 28, 2002
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) AND (2), (c) AND (d)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 2001
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 SCHEDULE
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, 2001, are incorporated by
reference in Item 8:
Consolidated statements of income-Years ended December 31, 2001, 2000 and 1999
Consolidated balance sheets-December 31, 2001 and 2000
Consolidated statements of cash flows-Years ended December 31, 2001, 2000
and 1999
Consolidated statements of shareholders' equity-Years ended December 31, 2001,
2000 and 1999
Notes to consolidated financial statements-December 31, 2001
The consolidated financial statement Schedule II-Valuation and qualifying
accounts of The Timken Company and subsidiaries is included in Item 14(d).
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
To the Board of Directors and Shareholders of
The Timken Company
We have audited the accompanying consolidated balance sheets of The Timken
Company and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of income, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 2001. Our audits
also included the financial statement schedule listed in the index at Item
14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 and schedule. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement and schedule 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, 2001 and
2000, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
ERNST & YOUNG LLP
Canton, Ohio
January 29, 2002
II--VALUATION AND QUALIFYING ACCOUNTS
THE TIMKEN COMPANY AND SUBSIDIARIES
COL. A COL. B COL. C COL. D COL. E
Additions
Balance at Charged to Charged to Other
Beginning of Costs and Accounts-- Deductions-- Balance at End
Description Period Expenses Describe Describe of Period
(Thousands of dollars)
Year ended December 31, 2001:
Reserves and allowances
deducted from asset accounts:
Allowance for
uncollectible accounts $ 11,259 $ 10,025 (1) $ 6,308 (3) $ 14,976
Valuation allowance
on deferred tax assets 18,084 20,219 (2) 3,547 (4) 34,756
______ ______ ______ ______
$ 29,343 $ 30,244 $ 9,855 $ 49,732
====== ====== ====== ======
Year ended December 31, 2000:
Reserves and allowances
deducted from asset accounts:
Allowance for
uncollectible accounts $ 9,497 $ 2,406 (1) $ 644 (3) $ 11,259
Valuation allowance
on deferred tax assets 15,041 11,543 (2) 8,500 (4) 18,084
______ ______ ______ ______
$ 24,538 $ 13,949 $ 9,144 $ 29,343
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Year ended December 31, 1999:
Reserves and allowances
deducted from asset accounts:
Allowance for
uncollectible accounts $ 7,949 $ 2,963 (1) $ 1,415 (3) $ 9,497
Valuation allowance
on deferred tax assets 14,367 1,407 (2) 733 (4) 15,041
______ ______ ______ ______
$ 22,316 $ 4,370 $ 2,148 $ 24,538
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(1) Provision for uncollectible accounts included in expenses.
(2) Increase in valuation allowance is recorded as a component of the provision for income taxes.
(3) Actual accounts written off against the allowance--net of recoveries.
(4) Reduction in valuation allowance due to utilization of foreign net operating losses previously
reserved or write-off of deferred tax assets that are not realizable in future years.