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Rule 424(b)(5)
File No. 33-35773
PRICING SUPPLEMENT
(To Prospectus Supplement dated July 24, 1996)
To Prospectus dated July 24, 1996
$10,000,000
The Timken Company
6.99% Fixed Rate Medium-Term Notes, Series A
---------------------------
Interest payable August 15 and February 15
Commencing February 15, 1997
---------------------------
Principal Date of Maturity Fixed Interest Rate
Amount Issue Date Per Annum
--------- ------- -------- -------------------
$10,000,000 11/1/96 11/1/06 6.99%
Price to Public: 100% of principal amount of each Note.
Redemption/Repayment: The Notes are not redeemable prior to their stated
maturity date and are not repayable prior to such
date.
---------------------------------
Morgan Stanley & Co. Incorporated
----------------------------------
November 1, 1996
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RECENT DEVELOPMENTS
On September 10, 1996, the Company issued the following press
release:
CANTON, OH -- September 10, 1996 -- Continuing to pursue its
worldwide growth strategy, The Timken Company today announced that it has
entered into negotiations to acquire the tool steel finishing and distribution
businesses of Sanderson Kayser Ltd., a United Kingdom integrated steelmaker,
from its British parent GEI International PLC.
The businesses to be acquired are based in Sheffield, England,
and include steel distribution sites in Birmingham, London and Wigan, England;
and Glasgow, Scotland.
"This acquisition is important in two major respects," said
Joseph F. Toot, Jr., president and chief executive officer. "We have been moving
at a demonstrably faster pace to achieve stronger worldwide growth. This
acquisition, along with other recent acquisitions, including one in Poland, as
well as joint ventures in India and China, accelerates that progress. In
particular, it strengthens our position in the value-creation stream of the tool
steel business.
"With this latest move, we will expand the breadth and depth
of our core competencies," said Mr. Toot. "We will be combining Sanderson
Kayser's market position and distribution capabilities with The Timken Company's
leadership in technology, manufacturing and tool steel distribution. Along with
the recent acquisitions of Ohio Alloy Steels and Houghton & Richards, the
addition of Sanderson Kayser translates into strengthened tool steel
leadership."
The Sanderson Kayser businesses will become part of Latrobe
Steel Company, a Timken Company subsidiary known for its leadership in specialty
steel manufacturing and, increasingly, in tool steel distribution. Sales of the
businesses to be acquired were about $17 million in 1995.
The Timken Company is a worldwide leader in the manufacture of
highly engineered bearings and alloy steels. The company employs some 17,000
people worldwide and reported 1995 sales of $2.2 billion.
On October 18, 1996, the company issued the following press
release:
CANTON, OH - October 18, 1996 - Continuing to pursue its
strategy of accelerating growth worldwide, The Timken Company announced today
that it is nearing completion of negotiations to acquire the tapered roller
bearing business of Gnutti Carlo S.p.A. Located near Brescia in northern Italy,
Gnutti is a leading European manufacturer of tapered roller bearings.
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"This acquisition fits perfectly with our basic business,
gives us a stronger position in Europe, and enables us to offer a broader range
of product to our customers," said Joseph F. Toot, Jr., president and chief
executive officer.
Established in 1922, Gnutti Carlo S.p.A. is a privately
owned firm. Its bearing business serves primarily the truck,
railroad and construction equipment markets. 1995 sales for the
bearing business approached $25 million.
"This acquisition will be an excellent match," said Jon
Elsasser, vice president - bearings - Europe, Africa and West Asia. "Gnutti is a
respected tapered roller bearing specialist with a reputation for producing
quality bearings. We see its presence and service capabilities, combined with
Timken's worldwide leadership in customer engineering and manufacturing
technology, to be a more formidable competitive force in this region."
The Timken Company has operated a design and sales office in
Milan, Italy, since 1988.
"We have been selling tapered roller bearings in the Italian
market for many years," added Mr. Elsasser. "By operating a manufacturing plant
there, we will enhance significantly our service to customers. Gnutti's
production capabilities will complement our existing European manufacturing
facilities in France, England and Poland, allowing us to leverage each plant's
areas of expertise for optimum performance for our customers and shareholders."
The Timken Company is a leading international manufacturer of
highly engineered bearings and alloy steels. The company employs about 18,000
people worldwide and reported 1995 sales of more than $2.2 billion.
On October 21, 1996, the company issued the following press
release:
Canton, OH -- October 21, 1996 -- During a nine-month period
highlighted by affiliations and investments made to spur growth and strengthen
leadership worldwide, The Timken Company reported higher sales and earnings,
including record results for the quarter and nine months ended September 30.
"Producing these results meant successfully overcoming
weaknesses in certain markets: heavy trucks, freight cars and locomotives in the
U.S. and truck, construction and agricultural equipment in Europe," said Joseph
F. Toot,Jr., president and chief executive officer. "Achieving this level of
performance in a mixed world economy reflects well on both the soundness of our
strategies and the achievements of our associates. We were pleased to see our
efforts, both the ones aimed at accelerating
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growth and those intended to reduce costs, produce results that put our earnings
well ahead of last year's.
"We continued a string of 17 straight year-to-year quarterly
sales increases," said Mr. Toot, "Excluding write-offs and accounting changes,
we have achieved year-to-year improvements in net earnings in 18 of the last 19
quarters, including the two most recent."
For the first nine months of 1996, the company achieved record
net sales of $1.78 billion, up 7 percent from $1.67 billion of 1995's first nine
months. For the third quarter, net sales were $581.4 million, an increase of 12
percent over the $519.5 million in the year-earlier period.
Net Income for 1996's first nine months totaled $99.9 million,
up 18 percent from $84.5 million in last year's first nine months. For the third
quarter, net income was $31.8 million, well above the year-earlier total of $19
million, and an all-time high for the quarter.
Earnings per share for the first nine months totaled $3.18
versus $2.71 in 1995's corresponding period. For the third quarter, earnings per
share were $1.01 compared with $0.61 in the year-ago period.
During the quarter, the company contributed additional funds
to its pension plans and financed various growth initiatives. As a result, debt
at the end of the third quarter was higher than a year ago.
BEARING BUSINESS RESULTS
- ------------------------
In the Bearing Business, higher-value "smart" bearings
equipped with sensors and used in anti-lock braking systems buoyed sales. So did
strengthened business in Mexico, Argentina and Australia.
During the third quarter, the company announced an expansion
of its New Philadelphia, Ohio, bearing plant that will increase by 50 percent
its capacity for precision bearings used in high technology applications such as
aircraft and high-speed printing presses.
In the first nine months, Bearing Business net sales were
$1.19 billion compared with $1.15 billion in 1995's corresponding period. For
the third quarter, net sales were $382.6 million versus $351.5 million a year
earlier.
Operating income in the first nine months totaled $114.3
million compared with $109.4 million in last year's first nine months. For the
third quarter, operating income increased to $37.9 million from $33.4 million in
1995's third period. Cost reductions in manufacturing contributed to growth in
operating
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income. The third quarter was also affected by an inventory write-up that was
considerably less than one recorded in the year-ago period.
STEEL BUSINESS RESULTS
- ----------------------
Continuing strong demand for both alloy steel products and
steel components as well as continuous improvement efforts propelled the Steel
Business to higher financial performance.
The company last week announced plans to invest $30 million in
new technology to expand its manufacturing capabilities and increase its product
lines in the fast-growing Steel Parts Business. Earlier it announced a $55
millon investment in its Harrison Steel Plant that will result in a new rolling
mill and bar processing equipment.
In the first nine months, Steel Business net sales totaled
$585.3 million, up from $527.9 million in last year's corresponding period. For
the third quarter, net sales increased to $198.8 million from $168 million in
the year-ago period.
Operating income in the first nine months rose to $70.5
million from $52.1 million in 1995's first nine months. For the third quarter,
operating income was $22.4 million versus $4.6 million in the year-earlier
period. Natural gas costs were higher than a year ago, but steel scrap prices
were lower. Operating income in 1995's third quarter was adversely affected by a
physical inventory adjustment.
The Timken Company (NYSE:TKR) is a leading international
manufacturer of highly engineered bearings and allow steels. the company employs
about 18,000 people worldwide and reported 1995 sales of more than $2.2 billion.
THE TIMKEN COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Third Quarter Second Quarter Nine Months
Consolidated Statements of Income Ended September 30 Ended June 30 Ended Sept. 30
(Thousands of dollars, 1996 1995 1996 1996 1995
except share data) ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales................................ $ 581,417 $ 519,463 $ 601,553 $ 1,778,924 $ 1,674.159
Cost of products sold.................... 443,767 403,912 459,164 1,359,670 1,286,640
---------- ---------- ---------- ----------- -----------
Gross profit........................ 137,650 115,551 142,389 419,254 387,519
Selling, administration &
general expenses....................... 77,326 77,552 78,217 234,460 225,974
------ ------ ------ ------- -------
Operating income.................... 60,324 37,999 64,172 184,794 161,545
Other income (expense):
Interest expense....................... (4,672) (4,781) (4,059) (12,406) (15,162)
Other income (expense) - net........... (3,545) (2,427) (2,281) (8,606) (9,575)
---------- ---------- ---------- ----------- -----------
Income before income taxes.......... 52,107 30,791 57,832 163,782 136,808
Provision for income taxes............... 20,322 11,763 23,308 63,875 52,261
---------- ---------- ---------- ----------- -----------
Net income.......................... 31,785 19,028 34,524 99,907 84,547
========== ========== ========== =========== ===========
Net income per share................ $ 1.01 $ 0.61 $ 1.10 $ 3.18 $ 2.71
========== ========== ========== =========== ===========
Average shares outstanding............... 31,424,410 31,244,711 31,480,612 31,420,653 31,159,689
=================================================================================================================
</TABLE>
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<TABLE>
<CAPTION>
Consolidated Balance Sheets.............. Sept. 30 Dec. 31 June 30
(Thousands of dollars)................. 1996 1995 1996
---------- ---------- ----------
ASSETS
<S> <C> <C> <C>
Cash & cash equivalents.................. $ 15,309 $ 7,262 $ 6,869
Accounts receivable...................... 323,342 284,924 326,536
Deferred income taxes.................... 54,179 50,183 52,686
Inventories.............................. 427,482 367,889 413,866
---------- ---------- ----------
Total current assets................ 820,312 710,258 799,956
Property, plant & equipment.............. 1,068,217 1,039,382 1,058,753
Deferred income taxes.................... 14,203 31,176 30,710
Other assets............................. 178,482 145,109 165,887
---------- ---------- ----------
Total assets........................ $2,081,214 $1,925,925 $2,055,306
========== ========== ==========
LIABILITIES
Accounts payable & other
liabilities............................ $ 221,659 $ 229,096 $ 235,751
Short-term debt & comm. paper............ 232,955 60,078 101,656
Accrued expenses......................... 177,140 173,189 192,913
---------- ---------- ----------
Total current liabilities........... 631,754 452,363 530,320
Long-term debt........................... 140,930 151,154 151,012
Accrued pension cost..................... 27,265 97,524 102,823
Accrued postretirement benefits.......... 394,825 393,706 396,551
---------- ---------- ----------
Total liabilities................... $1,194,774 $1,104,747 $1,180,706
SHAREHOLDERS' EQUITY..................... 886,440 821,178 874,600
---------- ---------- ----------
Total liabilities & equity.......... $2,081,214 $1,925,925 $2,055,306
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
BEARING BUSINESS SEGMENT FINANCIAL RESULTS
(Dollars in millions)
Third Quarter Second Quarter Nine Months
Ended September 30 Ended June 30 Ended Sept. 30
1996 1995 1996 1996 1995
-------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales ................ $ 382.6 $ 351.5 $ 403.5 $ 1,193.6 $ 1,146.3
Operating Income ......... $ 37.9 $ 33.4 $ 36.0 $ 114.3 $ 109.4
Operating Margin ......... 9.9% 9.5% 8.9% 9.6% 9.5%
</TABLE>
<TABLE>
<CAPTION>
STEEL BUSINESS SEGMENT FINANCIAL RESULTS
(Dollars in millions)
Third Quarter Second Quarter Nine Months
Ended September 30 Ended June 30 Ended Sept. 30
1996 1995 1996 1996 1995
-------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales ............... $ 198.8 $ 168.0 $ 198.0 $ 585.3 $ 527.9
Operating Income ........ $ 22.4 $ 4.6 $ 28.2 $ 70.5 $ 52.1
Operating Margin ........ 11.3% 2.7% 14.2% 12.0% 9.9%
</TABLE>
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