<PAGE> 1
Rule 424(b)(5)
File No. 33-35773
PRICING SUPPLEMENT
(To Prospectus Supplement dated July 13, 1990)
To Prospectus dated July 13, 1990
$5,000,000
The Timken Company
7.68% Fixed Rate Medium-Term Notes, Series A
---------------------------
Interest payable August 15 and February 15
Commencing August 15, 1996
---------------------------
The Notes are being issued in certificated form.
<TABLE>
<CAPTION>
Principal Date of Maturity Fixed Interest Rate
Amount Issue Date Per Annum
- --------- ------- -------- -------------------
<S> <C> <C> <C>
$5,000,000 7/5/96 7/5/16 7.68%
</TABLE>
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
----------------------------------
July 5, 1996
<PAGE> 2
Rule 424(b)(5)
File No. 33-35773
PRICING SUPPLEMENT
(To Prospectus Supplement dated July 13, 1990)
To Prospectus dated July 13, 1990
$5,000,000
The Timken Company
7.76% Fixed Rate Medium-Term Notes, Series A
---------------------------
Interest payable August 15 and February 15
Commencing August 15, 1996
---------------------------
The Notes are being issued in certificated form.
<TABLE>
<CAPTION>
Principal Date of Maturity Fixed Interest Rate
Amount Issue Date Per Annum
- --------- ------- -------- -------------------
<S> <C> <C> <C>
$5,000,000 7/5/96 7/6/26 7.76%
</TABLE>
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
----------------------------------
July 5, 1996
<PAGE> 3
THE COMPANY
The foregoing hereby supersedes and replaces the description
of The Timken Company contained on pages 3 and 4 of the Prospectus dated July
13, 1990:
The Timken Company (the "Company") is a leading international
manufacturer of highly engineered bearings and alloy steels. The Company employs
over 17,000 people worldwide and had reported 1995 sales of more than $2.2
billion.
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data has been
derived from the unaudited consolidated interim financial statements of the
Company and should be read in conjunction with the consolidated financial
statements and related notes contained in the documents incorporated by
reference into this Prospectus. In the opinion of the Company, the data for
these periods reflect all adjustments, considered necessary for a fair
presentation of the results for such periods.
<TABLE>
<CAPTION>
Three Month Period
Ended March 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Income Data:
Net Sales ............. $ 595,954 $ 568,899
Income before income
taxes ........ 53,843 55,916
Net Income ............ 33,598 34,276
Balance Sheet Data:
Current assets ........ 770,849 715,676
Total assets .......... 1,987,711 1,939,926
Current Liabilities ... 487,926 523,719
Long-Term Debt ........ 151,108 150,857
Shareholders'
Equity ............. 848,453 765,194
</TABLE>
2
<PAGE> 4
RECENT DEVELOPMENTS
On June 17, 1996, the Company issued the following press
release:
CANTON, OH -- June 17, 1996 -- The Timken Company announced
today its board of directors has authorized the company to purchase up to two
million of its own shares. The company had 31.4 million shares outstanding
during the first quarter of 1996.
The company may buy back shares during the next 30 months,
although there is no precise timetable for making purchases. The timing of
purchases and the number of shares to be purchased will depend upon prevailing
share market prices and trading volumes. Shares that are acquired will be held
as treasury shares and will be available for general corporate purposes.
The Timken Company is a leading international manufacturer of
highly engineered bearings and alloy steels. The company employs about 17,000
people worldwide and recorded 1995 sales of more than $2.2 billion. On Industry
Week magazine's list of the 1,000 largest companies worldwide, The Timken
Company ranks 639th.
On June 27, 1996, the Company issued the following press
release:
CANTON, OH -- June 27, 1996 -- The Timken Company today
announced plans to expand the scope of its products and services to tool steel
customers by entering into a definitive agreement by which Houghton & Richards,
Inc. (H & R) will sell the assets of its tool steel service center headquartered
in Marlborough, Mass.
The transaction, which complements Timken's tool steel
distribution network, is subject to government approval and should be completed
in the third quarter of 1996. H & R will then function as a subsidiary of
Latrobe Steel Company, a specialty steel manufacturer that has operated as a
Timken Company subsidiary since 1975. H & R serves customers from a wide base of
facilities in White House, Tenn.; Northborough, Mass.; Walton Hills, Ohio;
Forest Park, Ill.; and Greenville, S.C.
"As with our other recent acquisitions, this move once again
emphasizes The Timken Company's commitment to expand our range of services and
to do so by building on core competencies," said Joseph F. Toot, Jr., president
and chief executive officer. "The product range and geographic scope of H & R
complements our newly acquired Ohio Alloy Steels Corporation and allows us to
provide tool steel customers with a unique mix of products and services.
"The series of acquisitions we have made, as well as our joint
ventures in India and China, will improve substantially the company's ability to
continue adding value for both shareholders and customers."
Latrobe Steel gains additional worldwide purchasing expertise
along with H & R's excellent reputation as a distributor that provides a variety
of value-added services and carries rolled bar, bar cut from plate, sheet and
plate.
"H & R itself enjoys solid stature in the tool steel market,"
said Hans J. Sack, president of Latrobe Steel Company. "Its specialty of flat
products will allow us to offer our customers a more complete line. Also, the
strong presence of H & R has established in the south, in New England and on the
eastern seaboard will further enhance the range of Latrobe's tool steel
distribution network.
"We have put together a comprehensive network that
covers the entire country with a combination of products and
3
<PAGE> 5
services from three well-respected names in the tool steel business -- H & R,
Ohio Alloy Steels and Latrobe Steel Company."
H & R is a privately owned company established in 1881 that
employs about 80 people and has annual sales of less than $50 million.
"Our reputation as a service company, combined with Ohio Alloy
Steels' round tool steel products line and Latrobe Steel's technical services
and specialty grades, makes this a perfect fit for us," said Robert E. Flynn,
president of H & R. "There is little overlap as all the pieces combined to
create a supplier unique to the entire tool steel industry, one that can provide
every customer the right product on time, every time."
Mr. Flynn and his management team will continue to run the
day-to-day operations of the business as H & R becomes one of the operating
units within Latrobe Steel Company's recently established distribution business.
The distribution business is aimed specifically at servicing Latrobe Steel's
tool steel customers, while the manufacturing business will continue to market
specialized steel products to large end users.
"We will focus on offering an unprecedented level of service
to the market," said Scott R. Boyd, general manager -- distribution and special
products. "Combining the resources of our recent acquisitions with existing
Latrobe Steel units -- Special Products Division and Koncor Industries -- will
greatly enhance our ability to meet and exceed the expectations of our tool
steel customers."
The Timken Company is a leading international manufacturer of
highly engineered bearings and alloy steels. The company employs some 17,000
people worldwide and reported 1995 sales of more than $2.2 billion. On Industry
Week magazine's list of the 1,000 largest public manufacturing companies
worldwide, The Timken Company ranks 639th.
4
<PAGE> 6
UNITED STATES TAXATION
The foregoing hereby supersedes and replaces the description
of the principal United States federal income tax consequences related to fixed
rate Notes contained on pages S-10 through S-14 of the Prospectus Supplement (to
the Prospectus dated July 13, 1990):
In the opinion of Jones, Day, Reavis & Pogue, tax counsel to
the Company, the following summary accurately describes the principal United
States federal income tax consequences to the initial holders purchasing Notes
at the "issue price" (as defined below) of ownership and disposition of the
Notes. This summary is based on the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code"), administrative pronouncements issued by the
Internal Revenue Service (the "Service"), judicial decisions and Treasury
Regulations ("Regulations"), changes to any of which subsequent to the date of
this Prospectus Supplement may affect the tax consequences described herein.
This summary discusses only Notes held as capital assets within the meaning of
Section 1221 of the Code. It does not discuss all of the tax consequences that
may be relevant to a holder in light of his particular circumstances or to
holders subject to special rules, such as certain financial institutions,
insurance companies, dealers in securities or foreign currencies, persons
holding Notes as a hedge against, or which are hedged against, currency risks,
that are part of a straddle or conversion transaction, persons who are not
"Holders" (as defined below) or holders whose functional currency (as defined in
Section 985 of the Code) is not the U.S. dollar. This summary does not delineate
all of the United States federal income tax consequences of holding Original
Issue Discount Notes (as defined below). Finally, this summary does not discuss
floating or variable rate notes, foreign currency notes, currency indexed notes,
notes that mature one year or less from the date of issuance, notes that may be
redeemed or paid prior to maturity at the option of the issuer or holder, or
notes providing for payments of principal or interest linked to commodity
prices, equity indices or other factors, the holders of any of which are subject
to special rules. Persons considering the purchase of Notes should consult with
their tax advisors with regard to the application of the United States federal
income tax laws to their particular situations as well as any tax consequences
arising under the laws of any state, local or foreign taxing jurisdiction.
As used herein, the term "Holder" means a beneficial owner of
a Note that is (i) for United States federal income tax purposes, a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in, or under the laws of, the United States or of any
political subdivision thereof, or (iii) an estate or trust the income of which
is subject to United States federal income taxation regardless of its source.
5
<PAGE> 7
TAX CONSEQUENCES TO HOLDERS
Payments of Interest
The Notes will constitute debt for United States federal
income tax purposes. Interest paid on a Note will generally be taxable to a
Holder as ordinary interest income at the time it accrues or is received in
accordance with the Holder's method of accounting for federal income tax
purposes.
De Minimis Original Issue Discount
A Note issued at an "issue price" that is less than the Note's
stated redemption price at maturity will generally be considered to have been
issued at an original issue discount for federal income tax purposes if it bears
more than a de minimis amount of original issue discount (an "Original Issue
Discount Note"). The "issue price" of a Note will equal the first price to the
public (not including bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters, placement agents or wholesalers) at
which a substantial amount of the Notes is sold. The stated redemption price at
maturity of a Note will equal the sum of all payments required under the Note
other than payments of "qualified stated interest." "Qualified stated interest"
is stated interest unconditionally payable as a series of payments in cash or
property (other than debt instruments of the issuer) at least annually during
the entire term of the Note and equal to the outstanding principal balance of
the Note multiplied by a single fixed rate or certain variable rates of
interest, or certain combinations thereof.
Holders of Original Issue Discount Notes that mature more than
one year from their date of issuance are generally required to include original
issue discount in income for federal income tax purposes as it accrues, in
accordance with a "constant-yield method" based on a compounding of interest,
before the receipt of cash payments attributable to such income. In general, the
amount of original issue discount included in income by a Holder of an Original
Issue Discount Note is the sum of the daily portions of original issue discount
with respect to the Original Issue Discount Note for each day during the taxable
year or portion of the taxable year on which the Holder holds such Original
Issue Discount Note. The daily portion is determined by allocating to each day
in any "accrual period" (as defined below) a pro rata portion of the original
issue discount allocable to that accrual period.
The Notes are not Original Issue Discount Notes for United
States federal income tax purposes. However, the Notes may be issued with "de
minimis original issue discount." If the difference between a Note's stated
redemption price at maturity and its issue price is less than a de minimis
amount, i.e., 1/4 of 1 percent of the stated redemption price at maturity
6
<PAGE> 8
multiplied by the number of complete years to maturity, then the Note will not
be considered to have original issue discount but will be considered to have de
minimis original issue discount.
Holders of Notes with a de minimis amount of original issue
discount will generally include such original issue discount in income, as
capital gain, on a pro rata basis as principal payments are made on the Note.
Under the Regulations, however, a Holder may make an election (the
"constant-yield election") to include in gross income all interest that accrues
on a Note (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis market
discount, and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) in accordance with the "constant-yield method" based on the
compounding of interest.
In applying the constant-yield method to a Note with respect
to which the constant-yield election has been made, the issue price of the Note
will equal the electing Holder's adjusted basis in the Note immediately after
its acquisition, the issue date of the Note will be the date of its acquisition
by the electing Holder, and no payments on the Note will be treated as payments
of qualified stated interest. This election will generally apply only to the
Note with respect to which it is made and may not be revoked without the consent
of the Service.
Under the constant-yield method generally, the "accrual
period" with respect to a Note may be of any length selected by the Holder and
may vary in length over the term of the Note as long as (i) no accrual period is
longer than one year and (ii) each scheduled payment of interest or principal on
the Note occurs on either the final or first day of an accrual period. The
amount of original issue discount allocable to an accrual period equals the
excess of (a) the product of the Note's adjusted issue price at the beginning of
the accrual period and such Note's yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for the
length of the accrual period) over (b) the sum of the payments of qualified
stated interest on the Note allocable to the accrual period. The "adjusted issue
price" of the Note at the beginning of any accrual period is the issue price of
the Note increased by (x) the amount of accrued original issue discount for each
prior accrual period and decreased by (y) the amount of any payments previously
made on the Note that were not qualified stated interest payments. The amount of
original issue discount allocable to an initial short accrual period may be
computed using any reasonable method if all other accrual periods other than a
final short accrual period are of equal length. The amount of original issue
discount allocable to the final accrual period is the difference between (x) the
amount payable at the maturity of the Note (other than any payment of qualified
stated interest) and (y) the Note's adjusted issue price as of the beginning of
the final accrual period.
7
<PAGE> 9
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a Note, a Holder will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such Holder's adjusted tax
basis in the Note. For these purposes, the amount realized does not include any
amount attributable to accrued interest on the Note. Amounts attributable to
accrued interest are treated as interest in accordance with the Holder's method
of accounting for federal income tax purposes as described above. A Holder's
adjusted tax basis in a Note will equal the cost of the Note to such Holder,
increased by the amount of any de minimis original issue discount previously
included in income by the Holder with respect to such Note pursuant to the
Holder's constant-yield election and reduced by any amortized premium and any
principal payments received by the Holder.
Gain or loss realized on the sale, exchange or retirement of a
Note will generally be capital gain or loss and will be long-term capital gain
or loss if at the time of sale, exchange or retirement the Note has been held
for more than one year. The excess of net long-term capital gains over net
short-term capital losses is currently taxed at a lower rate than ordinary
income for certain non-corporate taxpayers. The distinction between capital gain
or loss and ordinary income or loss is also relevant for purposes of, among
other things, limitations on the deductibility of capital losses.
Amortizable Bond Premium
If a Holder purchases a Note for an amount that is greater
than the amount payable at maturity, such Holder will be considered to have
purchased such Note with "amortizable bond premium" equal in amount to such
excess, and may elect (in accordance with applicable Code provisions) to
amortize such premium, using a constant-yield method, over the remaining term of
the Note.
A Holder who elects to amortize bond premium must reduce his
tax basis in the Note by the amount of the premium amortized in any year. An
election to amortize bond premium applies to all taxable debt obligations then
owned and thereafter acquired by the taxpayer and may be revoked only with the
consent of the Service.
If a Holder makes a constant-yield election with respect to a
Note with amortizable bond premium, then the electing Holder will be deemed to
have elected to apply amortizable bond premium against interest with respect to
all debt instruments with amortizable bond premium (other than debt instruments
the interest on which is excluded from gross income) held by the electing Holder
as of the beginning of the taxable year in which the Note with respect to which
the election is made
8
<PAGE> 10
is acquired or thereafter acquired. The deemed election with respect to
amortizable bond premium may not be revoked without the consent of the Service.
Acquisition Premium
A Holder that purchases a Note for an amount less than or
equal to the sum of all amounts payable on the Note after the purchase date
other than payments of qualified stated interest but in excess of its adjusted
issue price (any such excess being "acquisition premium") and that does not make
the constant-yield election is permitted to reduce the daily portions of
original issue discount by a fraction, the numerator of which is the excess of
the Holder's adjusted basis in the Note immediately after its purchase over the
adjusted issue price of the Note, and the denominator of which is the excess of
the sum of all amounts payable on the Note after the purchase date, other than
payments of qualified stated interest, over the Note's adjusted issue price.
Market Discount
A Note, other than a Note maturing one year or less from the
date of issuance, will be treated as purchased at a market discount (a "Market
Discount Note") if (i) the amount for which a Holder purchased the Note is less
than the Note's issue price and (ii) the Note's stated redemption price at
maturity exceeds the amount for which the Holder purchased the Note by at least
1/4 of 1 percent of such Note's stated redemption price at maturity multiplied
by the number of complete years to the Note's maturity. If such excess is not
sufficient to cause the Note to be a Market Discount Note, then such excess
constitutes "de minimis market discount." Any gain recognized on the maturity or
disposition of a Market Discount Note will be treated as ordinary income to the
extent that such gain does not exceed the accrued market discount on such Note.
Alternatively, a Holder of a Market Discount Note may elect to
include market discount in income currently over the life of the Note. Such an
election shall apply to all debt instruments with market discount acquired by
the electing Holder on or after the first day of the first taxable year to which
the election applies. This election may not be revoked without the consent of
the Service. Market discount on a Market Discount Note will accrue on a
straight-line basis unless the Holder elects to accrue such market discount on a
constant-yield method. The constant-yield method election shall apply only to
the Note with respect to which it is made and may not be revoked. A Holder of a
Market Discount Note that does not elect to include market discount in income
currently generally will be required to defer deductions for interest on
borrowings allocable to such Note in an amount not exceeding the accrued market
discount on such Note until the maturity or disposition of such Note.
9
<PAGE> 11
If the constant-yield election is made with respect to a
Market Discount Note, the electing Holder will be treated as having elected to
include market discount in income currently over the life of all debt
instruments held or thereafter acquired by such Holder.
Pre-Issuance Accrued Interest
If (i) a portion of the initial purchase price of a Note is
attributable to pre-issuance accrued interest, (ii) the first stated interest
payment on the Note is to be made within one year of the Note's issue date and
(iii) the payment will equal or exceed the amount of pre-issuance accrued
interest, then the Holder may elect to decrease the issue price of the Note by
the amount of pre-issuance accrued interest. In that event, a portion of the
first stated interest payment will be treated as a return of the excluded
pre-issuance accrued interest and not as an amount payable on the Note.
Extension of Maturity
Under present law, whether the extension of the maturity of a
Note not occurring by operation of the original terms of the instrument will
result in a taxable exchange depends on the changes in the yield, if any, in the
timing and amounts of payments, and on any changes in other relevant terms.
Under proposed Regulations, the extension of the maturity of a Note not
occurring by operation of the original terms of the instrument will be viewed as
a taxable exchange if the extension exceeds the lesser of five years of 50
percent of the original term of the instrument.
Backup Withholding and Information Reporting
Certain noncorporate Holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium, if any, and
interest (including the accrual of original issue discount, if any) on, and the
proceeds of disposition of, a Note. Backup withholding will apply only if the
Holder (i) fails to furnish its Taxpayer Identification Number ("TIN") which,
for an individual, would be his Social Security number, (ii) furnishes an
incorrect TIN, (iii) is notified by the Service that it has failed to properly
report payments of interest and dividends or (iv) under certain circumstances,
fails to certify, under penalty of perjury, that it has furnished a correct TIN
and has not been notified by the Service that it is subject to backup
withholding for failure to report interest and dividend payments.
10
<PAGE> 12
THE TRUSTEE
Effective July 3, 1996, Society National Bank of New York
("Society"), as successor to Ameritrust of New York, resigned as Trustee under
that certain Indenture, dated as of July 1, 1990, between the Company and
Society and was replaced by Mellon Bank, N.A., Two Mellon Bank Center, Room 335,
Pittsburgh, Pennsylvania 15259-0001.
11
