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1.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File Number 1-1169
December 31, 1995
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
Rights to Purchase 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].
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
16,1996 was $1,212,484,049 (representing 26,430,170 shares).
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of February 16, 1996.
Common Stock without par value --31,396,956 shares (representing a market
___________________________________________________ value of $1,440,335,357)
2.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31,
1995, 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, 1996, are incorporated by reference into parts III and IV.
Exhibit Index may be found on Pages 16 thru 19.
3.
PART I
______
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.
Timken also produces super precision ball and roller bearings for use in
aerospace, defense, computer disk drive and other markets having high
precision applications. These bearings are mostly produced at the
company's MPB Corporation subsidiary. 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 MPB's 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 January 1995, Timken acquired Rail Bearing Service (RBS). The Virginia-
based company remanufactures and reconditions bearings for the railroad
industry. This purchase has allowed the company to increase sales and
expand its presence in existing railroad markets.
On March 6, 1995, Timken launched its newest line of bearing products,
cylindrical bearings for the rolling mill market. This is the first time
the company will produce and sell bearings featuring the Timken brand with
straight versus tapered rollers. The broadening of the company's product
line is consistent with its corporate mission of leadership in high-
quality anti-friction bearings.
During the third quarter, the company's Bearing Business introduced a new
family of 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.
4.
Products (cont.)
_________________
Steel products include steels of intermediate alloy, low alloy and carbon
grades, vacuum processed alloys, tool steel and other custom-made steel
products including parts made from specialty steel. These are available
in a wide range of solid and tubular sections with a variety of finishes.
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 this precision parts business has provided the company with
the opportunity to further expand its market for tubing and capture more
high-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 generally cost less than
those they now use. During 1995, The Timken Company expanded its steel
parts manufacturing capabilities with the opening of a new plant in
Columbus, North Carolina. The plant uses seamless tubing produced in the
company's Ohio plants to manufacture steel rings primarily for the
bearing industry.
In June 1994, the company's Steel Business announced a new product line
called DynametalTM Performance Steels. The company's associates developed
this new, environmentally-friendly replacement for medium carbon leaded
steels and cast iron components. No capital investment was required. The
Steel Business' aggressive move into this market represents part of its
continuing strategy to improve financial performance by focusing its
energies and production on higher-value engineered steel bars and tubes.
Sales and Distribution
______________________
Timken's products in the bearing industry segment are sold principally by
its own sales organization. Shipments are made directly from Timken's
plants and 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 that 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, missile 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 and truck, construction,
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.
5.
Sales and Distribution (Cont.)
______________________________
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 both the bearing 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
_________________
Segment information in Note 11 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,
1995 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.
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 primarily manufactures an anti-friction bearing known as the
tapered roller bearing. However, in recent years the company expanded
its bearing product line to include super precision ball and straight
roller bearings. 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. 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 produce 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.
6.
Competition (Cont.)
___________________
The anti-friction bearing business is intensely competitive in every
country in which Timken competes. Demand for capacity worldwide became
even more intense in 1995 as economies around the world continued to
strengthen. The U. S. Dollar remained weak against the Japanese Yen and
German Mark causing demand for U. S. imports to increase. The influx of
tapered roller bearings into the United States market from foreign
producers reported by the United States Department of Commerce
was $230 million in 1995 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 $180 million in 1995.
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, 1994 or 1995. The Department of Commerce revoked
the order covering Yugoslavia in September, 1995. 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, 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.
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 were not being
injured by imports from Brazil. The company and Republic appealed this
ruling during the third quarter of 1993 to the U.S. Court of International
Trade in New York. In early 1996, the Court issued a decision affirming
the determination of the ITC. No further appeals were taken.
7.
Backlog
_______
The backlog of orders of Timken's domestic and overseas operations is
estimated to have been $1 billion at December 31, 1995, and $880 million
at December 31, 1994. 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 $35,000,000 in 1995, $36,000,000 in
1994 and $37,000,000 in 1993. 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
complying with environmental protection laws. In doing so, the company
has invested in pollution control equipment and updated plant operational
practices. The company has established adequate reserves to cover its
environmental expenses.
It is difficult to assess the possible effect of compliance with future
requirements that may differ from existing ones. The company previously
reported it expected the effect of amendments to the Clean Air Act of
1990 on its utility suppliers would increase its costs of electricity by
$4 million to $5 million annually. Through negotiations with the
utilities, the company has limited this annual cost increase to
$1.5 million. Further, proposed regulations related to those amendments
concerning air emissions monitoring, which would have required capital
expenditures in excess of $1 million, now have been changed. If the
currently proposed regulations become final, no significant costs to
comply would be incurred by the company.
8.
Environmental Matters (Cont.)
_____________________________
The company and certain of its U.S. subsidiaries have been designated as
potentially responsible parties (PRP's) by the United States
Environmental Protection Agency for site investigation and remediation at
certain sites under the Comprehensive Environmental Response,
Compensation and Liability Act (Superfund). Such designations are made
regardless of the company's limited involvement at each site. 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. Additionally, the company and its
Latrobe Steel Company subsidiary have been notified by the EPA regarding
possible participation at two additional superfund sites. Currently,
neither the company nor Latrobe has been named a PRP at the sites.
Management believes any ultimate liability with respect to these actions
will not materially affect the company's operations or consolidated
financial position.
The company's MPB Corporation subsidiary is engaged in environmental
projects at its manufacturing locations in New Hampshire. The company
has provided for the costs of these projects, which are estimated to be
$3 million, recognizing a portion of these costs are being recovered from
a former owner of the property. MPB also filed suit against its
insurance companies for reimbursement of clean-up costs. Settlements
have been reached with two insurers and suits remain outstanding against
two companies. The full extent of reimbursement cannot be estimated. In
late 1993, MPB was notified that Keene, New Hampshire, city officials
were looking to MPB to contribute to the costs of cleaning up alleged
soil and groundwater contamination of a city dump. This is not a
superfund site and allegedly had been used by MPB along with many others
for industrial waste disposal. No specific monetary request has been
made. City officials recently estimated the total cost to clean up the
site to be approximately $500,000.
The company initiated work in 1995 on an environmental project at its
Canton, Ohio, location. In 1996, an environmental project will be
started at the company's Columbus, Ohio, location. Costs for these
projects are estimated to be about $1.25 million each.
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, 1995, Timken had 17,034 associates of which approximately
50% are covered by collective bargaining agreements. Less than 3% of the
company's labor force is covered by a collective bargaining agreement that
will expire within one year.
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 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
16, 1996, are as follows:
Current Position and Previous
Name Age Positions During Last Five Years
____ ___ ______________________________________________
W. R. Timken, Jr. 57 1990 Chairman - Board of Directors; Director;
Officer since 1968.
J. F. Toot, Jr. 60 1990 President;
1992 President and Chief Executive Officer;
Director; Officer since 1967.
R. L. Leibensperger 57 1990 Vice President - Technology;
1995 Executive Vice President and President -
Bearings; Officer since 1986.
C. H. West 61 1990 Executive Vice President - Steel;
1992 Executive Vice President and President -
Steel; Director; Officer since 1982.
(Retires March 31, 1996, but remains
as a Director).
B. J. Bowling 54 1990 Vice President - Human Resources and
Logistics;
1993 Executive Vice President-Latrobe Steel
Company;
1995 President-Latrobe Steel Company;
1996 Executive Vice President and President -
Steel; Officer since 1996 (Effective
April 1, 1996).
M. J. Amiel 64 1990 Vice President - Bearings - Europe,
Africa, and West Asia;
1995 Vice President and Chairman - Bearings -
Europe, Africa and West Asia;
Officer since 1989.
L. R. Brown 60 1990 Vice President and General Counsel;
Secretary; Officer since
1990.
J. T. Elsasser 43 1990 Director-President-Timken do Brasil;
1990 Director-21st Century Business Project;
1993 Deputy Managing Director-Bearings-
Europe, Africa and West Asia;
1995 Managing Director-Bearings-Europe,
Africa and West Asia;
1996 Vice President-Bearings-Europe, Africa
and West Asia; Officer since 1996.
J. W. Griffith 42 1990 Managing Director-Australian Timken
Proprietary Limited;
1991 Director-Purchasing and Logistics;
1993 Director-Manufacturing-Bearings-North
and South America;
1993 Vice President-Manufacturing-Bearings-
North America;
1996 Vice President-Bearings-North American
Automotive, Rail, Asia Pacific and
Latin America; Officer since 1996.
10.
Current Position and Previous
Name Age Positions During Last Five Years
____ ___ ______________________________________________
G. E. Little 52 1990 Director Finance and Assistant
Treasurer;
1990 Treasurer;
1992 Vice President - Finance; Treasurer;
Officer since 1990.
S. J. Miraglia 45 1990 Director-Manufacturing-Steel;
1993 Vice President-Manufacturing-Steel;
1994 Director-Manufacturing-Europe, Africa
and West Asia;
1996 Vice President-Bearings-North American
Industrial and Super Precision;
Officer since 1996.
S. A. Perry 50 1990 Director - Purchasing and Logistics;
1993 Vice President - Human Resources and
Logistics; Officer since 1993.
J. J. Schubach 59 1990 Vice President - Strategic Management;
Officer since 1984.
T. W. Strouble 57 1990 Director - Manufacturing - Bearings
North and South America;
1992 Director - Marketing - Bearings -
North and South America;
1993 Vice President - Sales and Marketing -
Bearings - North and South America;
1995 Vice President - Technology;
Officer since 1995.
W. J. Timken 53 1990 Director - Human Resource Development;
1992 Vice President; Director; Officer since
1992.
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 10,800,000 square feet, all of
which, except for approximately 337,000 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; Asheboro and Lincolnton,
North Carolina; Altavista, Virginia; Keene and Lebanon, New Hampshire;
Carlyle, Illinois; North Little Rock, Arkansas; Knoxville, Tennessee;
Lenexa, Kansas; Ogden, Utah; and Richmond, Virginia. These facilities,
including the research facility in Canton, Ohio, and warehouses at plant
locations, have an aggregate floor area of approximately 4,471,000 square
feet. Timken's steel manufacturing and distribution facilities in the
United States are located in Canton, Eaton, Wauseon and Wooster, Ohio;
Franklin and Latrobe, Pennsylvania; and Columbus, North Carolina. These
facilities have an aggregate floor area of approximately 4,814,000 square
feet. Timken's bearing manufacturing plants outside the United States are
located in Duston, England; Colmar, France; St. Thomas, Canada; Benoni,
South Africa; Sao Paulo, Brazil; Ballarat, Australia; Medemblik, The
Netherlands; and Singapore. The facilities have an aggregate floor area
of approximately 1,415,000 square feet. In addition to the manufacturing
facilities discussed above, Timken owns warehouses in the United States,
England, Germany, Mexico and Argentina, and leases several relatively
small warehouse facilities in cities throughout the world.
11.
Properties (cont.)
__________________
During 1995, the company's Bearing and Steel Businesses experienced
increased plant utilization compared to 1994 as a result of increased
sales in all industries and most geographic areas.
In January, 1995, the company completed its acquisition of Rail Bearing
Service (RBS). The Virginia-based company provides bearing reconditioning
services for the railroad industry. The RBS Manufacturing facilities
consist of 156,280 square feet of manufacturing space and RBS employs some
300 people in the United States.
During 1995's first quarter, The Timken Company announced the expansion of
its steel parts manufacturing capabilities with the opening of its new
Tyron Peak Steel Parts plant in Columbus, North Carolina. The plant uses
seamless tubing produced in the company's Ohio plants to manufacture steel
rings primarily for the bearing industry. The plant consists of 30,000
square feet of manufacturing and warehouse space and employs about a dozen
associates.
Also in the first quarter of 1995, the company's Bearing Business broke
ground for an expansion of its Altavista, Virginia plant, where SENSOR-
PACTM bearings for anti-lock braking systems are produced. The expansion
will double the size of the facility.
In January, 1996, the company announced it entered into a definitive
agreement with FLT Prema Milmet S.A. to acquire the assets of a tapered
roller bearing business in Sosnowiec, Poland. The company expects to
complete the transaction in early 1996.
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.
On March 27, 1996 the company announced that it entered into a joint
venture to produce bearings in China. Timken and Shandong Yantai Bearing
Factory, which manufactures tapered roller bearings, will form a new
company, Yantai Timken Company Limited, located in Yantai, Shandong
Province, on the northeast coast of China. Company officials expect
Yantai Timken to begin operations by the third quarter of 1996, pending
completion of the business transaction.
Item 3. Legal Proceedings
__________________________
The company is currently involved in negotiations with the Ohio Attorney
General's office regarding alleged violations of the company's NPDES water
discharge permits at its Canton, Ohio, location. The company believes it
has substantial defenses to the violations alleged by the Attorney
General, and that the matter will ultimately be settled for an amount that
will not be material to its financial condition or results of operations.
12.
Legal Proceedings (Cont.)
_________________________
In August 1994, the company's Latrobe Steel Company subsidiary was served
with a complaint filed by seven former employees. Each of the employees
had been terminated from employment in late 1993 as part of the company's
administrative streamlining efforts. The plaintiffs' claims include
discrimination on account of age and/or disability status, wrongful
termination in violation of public policy, breach of contract and
promissory estoppel. The relief requested includes reinstatement, back
pay, front pay, liquidated damages, attorneys' fees and compensatory and
punitive damages under the Americans With Disabilities Act and
Pennsylvania law.
The company has denied all of the plaintiffs' allegations and believes
that it has valid defenses to the plaintiffs' claims. Discovery in this
matter has been completed. In April 1995, the company filed a motion to
sever the trials of each of the individual plaintiffs. The motion was
granted, and the cases will be tried seriatim. The trials are scheduled
to commence in March 1996. At this time, the company believes that the
ultimate resolution of this matter will not be material to its financial
condition or results of operations.
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, 1995.
13.
PART II
_______
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, 1995, was 26,792.
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, 1995, and is
incorporated herein by reference.
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, 1995, is
incorporated herein by reference.
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, 1995, is incorporated herein by reference.
Some of the statements set forth in this document that are not historical
in nature are forward-looking statements. The Timken Company (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:
- changes in world economic conditions, including the potential
instability of governments and legal systems in countries in
which the company conducts business, significant changes in
currency valuations, and the impact of industrial business cycles.
- changes in customer demand on sales and product mix, including
the impact of customer strikes.
- competitive factors, including changes in market penetration and
the introduction of new products by existing and new competitors.
- changes in operating costs as they relate to changes in the
company's manufacturing processes; higher cost associated with
increasing output to meet higher customer demands; the effects of
weather; unplanned work stoppages; and changes in the cost of
labor, health care and retirements benefits, raw material, and
energy.
- the success of the company's operating plans, including its
ability to achieve the total benefits of its accelerated
continuous improvement program.
- unanticipated product warranty and environmental claims or problems.
14.
Management's Discussion and Analysis of Financial Condition and Results
of Operation (Cont.)
_______________________________________________________________________
On March 27, 1996 the company announced that it entered into a joint
venture to produce bearings in China. Timken and Shandong Yantai
Bearing Factory, which manufactures tapered roller bearings, will form
a new company, Yantai Timken Company Limited, located in Yantai,
Shandong Province, on the northeast coast of China. Company officials
expect Yantai Timken to begin operations by the third quarter of 1996,
pending completion of the business transaction.
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, 1995, are incorporated herein
by reference.
Item 9. Changes in and Disagreements with Accountants
______________________________________________________
on Accounting and Financial Disclosure
______________________________________
Not applicable.
15.
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 issued in connection with
the annual meeting of shareholders to be held April 16, 1996, 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 10-19 of the proxy statement issued in connection
with the annual meeting of shareholders to be held April 16, 1996, 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
issued in connection with the annual meeting of shareholders to be held
April 16, 1996, 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, 1996, and is
incorporated herein by reference.
16.
PART IV
_______
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) Revolving Credit Agreement (364-Day Facility) dated as of
November 15, 1994, among Timken and certain banks, was
filed with Form 10-K for the period ended December 31,
1994, and is incorporated herein by reference.
(4.1) Fourth Amended Agreement dated August 15, 1995, to the
amended and restated credit agreement as amended February
23, 1993, May 31,1994, and November 15, 1994, between
Timken and certain banks, was filed with Form 10-Q for
the period ended September 30, 1995, and is
incorporated herein by reference.
(4.2) Third Amendment Agreement dated November 15, 1994, to the
amended restated credit agreement as amended February 23,
1993, and May 31, 1994, between Timken and certain banks,
was filed with Form 10-K for the period ended December
31, 1994, and is incorporated herein by reference.
(4.3) Second Amendment Agreement dated May 31, 1994, to the
amended restated credit agreement as amended February 23,
1993, between Timken and certain banks, was filed with
Form 10-Q for the period ended June 30, 1994, and is
incorporated herein by reference.
(4.4) 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.
(4.5) 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.
17.
Exhibit (Cont.)
_______________
(4.6) 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.
(4.7) 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.
(4.8) 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 Joseph F. Toot, Jr. and W. R. Timken, Jr., was filed
with Form 10-Q for the period ended September 30, 1995,
and is incorporated herein by reference.
(10.2) The Timken Company 1996 Deferred Compensation Plan for
officers and other key employees, was filed with Form
10-Q for the period ended September 30, 1995, and is
incorporated herein by reference.
(10.3) 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.
(10.4) 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.
(10.4a) 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.
(10.4b) 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.
(10.4c) 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.
18.
Exhibit (Cont.)
_______________
(10.4d) The form of Severance Agreement entered into with all
Executive Officers of the company and certain other key
employees of the company and its subsidiaries was filed
with Form 10-K for the period ended December 31, 1993,
and is incorporated herein by reference. Each differs
only as to name and date executed.
(10.5) The form of Death Benefit Agreement entered into with all
Executive Officers of the company was filed with Form
10-K for the period ended December 31, 1993, and is
incorporated herein by reference. Each differs only as
to name and date executed, except Mr. Amiel, who is a non-
resident.
(10.6) 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.
(10.7) 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.
(10.8) 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.
(10.9) 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.
(10.10) The Amended and Restated Supplemental Pension Plan of The
Timken Company.
(10.11) Amendment No. 1 to the Amended and Restated Supplemental
Pension Plan of The Timken Company.
19.
Exhibit (Cont.)
_______________
(11) Computation of Per Share Earnings.
(13) Annual Report to Shareholders for the year ended
December 31, 1995, (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
(27) Article 5
(b) Reports on Form 8-K:
None.
(c) The exhibits are contained in a separate section of this report.
20.
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 28, 1996
________________________________ Date March 28,1996
_____________________________
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 28, 1996 Date March 28, 1996
__________________________________ _______________________________
By /s/ Martin D. Walker* By /s/ W. J. Timken*
__________________________________ _______________________________
Martin D. Walker Director W. J. Timken Director
Date March 28, 1996 Date March 28, 1996
__________________________________ _______________________________
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 28, 1996 Date March 28, 1996
__________________________________ _______________________________
By /s/ J. Clayburn La Force, Jr.* By /s/ Charles H. West*
__________________________________ _______________________________
J. Clayburn La Force, Jr. Director Charles H. West Director
Date March 28, 1996 Date March 28, 1996
__________________________________ _______________________________
By /s/ Robert W. Mahoney* By /s/ Alton W. Whitehouse*
__________________________________ _______________________________
Robert W. Mahoney Director Alton W. Whitehouse Director
Date March 28, 1996 Date March 28, 1996
__________________________________ _______________________________
By /s/ James W. Pilz*
__________________________________ By: /s/ G. E. Little
James W. Pilz Director _______________________________
Date March 28, 1996 G. E. Little, attorney-in-fact
__________________________________ by authority of Power of
Attorney filed as Exhibit 24
hereto