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Rule 424(b)(5)
File No. 33-35773
CUSIP: 88739LAV8
PRICING SUPPLEMENT
(To Prospectus Supplement dated July 24, 1996)
To Prospectus dated July 24, 1996
$10,000,000
The Timken Company
7.16% Fixed Rate Medium-Term Notes, Series A
---------------------------
Interest payable February 15 and August 15
Commencing February 15, 1998
---------------------------
Principal Date of Maturity Fixed Interest Rate
Amount Issue Date Per Annum
----------- --------- --------- -------------------
$10,000,000 11/3/1997 11/3/2027 7.16%
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
---------------------------------
October 31, 1997
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RECENT DEVELOPMENTS
On September 9, 1997, the Company issued the following press release:
GAFFNEY, SC - September 9, 1997 - The Timken Company is investing $51
million over the next five years to expand and modernize its Gaffney
Bearing Plant in Gaffney, South Carolina and to help it retain its
industry leadership position.
The improvement program will increase plant capacity by more than 25
percent in some areas. Over half the investment will be made in the coming
12 months.
Bob Leibensperger, executive vice-president and president - Bearings
Business, was in Gaffney to announce the investment. "Our Gaffney Bearing
Plant associates continue to exceed their customers' expectations for
quality and service at the lowest possible cost," said Mr. Leibensperger.
"The Gaffney Bearing Plant is in business to help its customers succeed.
This new state-of-the-art equipment will allow our associates to build on
their past successes. Because we operate in a highly competitive
environment, we must continuously improve existing operations and, from
time to time, make major investments such as this one to keep our plants
at the forefront of technology. Our company's shareholders, including
thousands of Timken associates, also will benefit."
John Travers, general manager - Gaffney Bearing Plant, said "Our
success has been due in large measure to the strengths of our associates.
We are confident of continued success because the markets we serve are
strong, our customers continue to recognize our excellence, we are
continuously improving our performance and we continue to win investment
support from our company.
"Many of the positive changes we have made and the resulting
prosperity are the result of an excellent work ethic and team spirit in
our plant," said Mr. Travers. "We can meet the needs of our customers
because we enjoy the freedom to be flexible and, therefore, responsive.
Gaffney Bearing Plant associates have many reasons to be proud. Among
these are achieving both QS-9000 and ISO 9001 registrations, earning
customer awards such as the Chrysler Pentastar, and achieving new highs in
output as the result of our continuous improvement process."
Capital investment in the Gaffney Bearing Plant over the coming five
years will equal $75,000 per associate. The $51 million five-year
investment announced today compares to a total of about $25 million over
the past five years.
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"Our associates have put in many overtime hours, reduced our unit
cost and maintained the quality and delivery expected by our customers,"
said Mr. Travers. "Their efforts are being rewarded, as they should be. At
the same time, the challenge to further improve our performance is even
greater in light of this vote of confidence on the part of our company's
leadership."
The Timken Company is a leading international manufacturer of highly
engineered bearings and alloy steels. The company employs some 19,000
people worldwide and reported 1996 sales of $2.4 billion.
On September 19, 1997, the Company issued the following press
release:
CANTON, OH - September 19, 1997 - As noted in the attached news
release, Standard & Poor's rating agency has increased The Timken
Company's corporate credit and senior unsecured rating to "A" and its
commercial paper program rating to "A-1."
"This is an important recognition by one of the agencies that rates
the credit worthiness of our debt," said Gene E. Little, vice president -
finance for The Timken Company, "and reflects the improved performance
both the Bearing and Steel businesses have accomplished over recent
years."
According to Mr. Little, this translates into two benefits for The
Timken Company. "First, it formally recognizes important strengths of The
Timken Company: good financial performance, a strong balance sheet and
prudent fiscal management. This returns us to a level attained prior to
1986," said Mr. Little. "Secondly, it will reduce modestly the interest
rate which the company pays to borrow money it needs to operate, which
thus lowers the cost of capital for The Timken Company."
The Timken Company (NYSE:TKR, www.timken.com) is a leading
international manufacturer of highly engineered bearings and alloy steels.
The company employs some 19,000 people worldwide and reported 1996 sales
of about U.S. $2.4 billion.
On October 21, 1997, the Company issued the following press release:
CANTON, OH--October 21, 1997--The Timken Company reported record
sales and earnings for both the quarter and nine months ended September
30.
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"This performance results from our success in entering new markets,
increasing penetration in existing ones and focusing on new areas of
business activity that bring long-term value to both our customers and
shareholders," said Joseph F. Toot, Jr., president and chief executive
officer. "This includes continuing to broaden our scope beyond
manufacturing to initiatives that focus on related value-added services in
the rebuilding, repair and distribution arenas. These markets are proving
to be receptive to both our skills and performance orientation.
"Demand for our products remains strong, particularly in the
aerospace, automotive and industrial markets," said Mr. Toot. "Plant
utilization throughout our organization looks very good, with the majority
of our facilities running at full levels. This should enable us to finish
1997 strongly.
"Our associates have achieved 21 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 for
22 of the last 23 quarters. This is precisely the stability of earnings
for which we have been striving."
For the first nine months of 1997, the company achieved net sales of
$1.95 billion, up 9.4 percent from $1.78 billion in 1996's first nine
months. For the third quarter, net sales were $629.9 million, an increase
of 8.3 percent over the $581.4 million in the year-earlier period.
Net income for 1997's first nine months totaled $123.8 million, up
23.9 percent from $99.9 million in last year's first nine months. For the
third quarter, net income was $37.8 million, 18.9 percent above the
year-earlier total of $31.8 million, and a new high for the quarter. This
includes an income tax credit relating to claims for prior years' research
and development credits totaling $4 million, or $.06 per share.
Earnings per share for the first nine months totaled $1.97 versus
$1.59 in 1996's corresponding period. For the third quarter, earnings per
share were $.60 compared with $.51 in the year-ago period.
BEARING BUSINESS RESULTS
In the Bearing Business, net sales were up, due chiefly to increased
volume in light truck, heavy truck, and industrial equipment markets.
Strong sales in Mexico, the launch of Timken(R) Automotive Service
Parts(TM) to better serve the needs of the automotive do-it-yourself
retail market,
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and improved volumes in the company's European operations also contributed
to the sales performance.
Because of strong market successes with a range of products, the
company will be investing $51 million over the next five years to expand
and modernize its Gaffney (South Carolina) Bearing Plant. This follows
last quarter's announcement that the company would be investing $20
million in its Ashboro (North Carolina) Plant to meet demand for
industrial bearings.
In the first nine months, Bearing Business net sales were $1.28
billion compared with $1.19 billion in 1996's corresponding period. For
the third quarter, net sales were $408.8 million versus $382.6 million a
year earlier.
Operating income in the first nine months totaled $121.3 million
compared with $114.3 million in last year's first nine months. For the
third quarter, operating income, which decreased to $27.2 million from
$37.9 million in 1996's third period, was affected by an inventory
write-down, compared to a year-earlier write-up. Costs associated with
meeting additional hiring and training needs, integrating newly acquired
operations, and addressing stronger customer demand also dampened
earnings.
STEEL BUSINESS RESULTS
The Timken Steel Business is performing at record levels, resulting
from continued strong demand in all markets for both alloy steel products
and steel components and from continuous improvement efforts aimed at
maximizing sales and margins.
While the industry historically has exhibited a seasonal pattern in
the third quarter, strategic long-term initiatives in the Timken Steel
Business have reduced this to a much less dramatic level. These
initiatives include expanding distribution services, implementing new
operating practices, and building the range of products and services
available through the Steel Parts Business. A new plant in Winchester,
Kentucky, serving the needs of both the Timken Bearing Business and
external bearing customers, ramped up production during the quarter.
In the first nine months, Steel Business net sales totaled $669.9
million, up from $585.3 million in last year's corresponding period. For
the third quarter, net sales increased to $221.1 million from $198.8
million in the year-ago period.
Operating income in the first nine months rose to $99 million from
$70.5 million in 1996's first nine months. For
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the third quarter, operating income was $34.3 million versus $22.4 million
in the year-earlier period.
The Timken Company (NYSE:TKR, www.timken.com) is a leading
international manufacturer of highly engineered bearing and alloy steels.
The company employs about 19,000 people worldwide and reported 1996 sales
of about $2.4 billion.
#
(Financial Summaries Attached)
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The Timken Company and Subsidiaries
<TABLE>
<CAPTION>
Second
Third Quarter Quarter Nine Months
Consolidated Statements of Income Ended Sept 30 Ended Ended Sept 30
-------------------------------- June 30 ----------------------------------
(Thousands of dollars, 1997 1996 1997 1997 1996
except share data) --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales .......................... $629,900 $581,417 $676,003 $1,946,487 $1,778,924
Cost of products sold .............. 487,182 443,767 508,484 1,483,038 1,359,670
--------------------------------------------------------------------------------------
Gross profit .......... $142,718 $137,650 $167,519 $463,449 419,254
Selling, admin. & general expenses . 81,184 77,326 84,220 243,158 234,460
--------------------------------------------------------------------------------------
Operating income .......... $61,534 $60,324 $83,299 $220,291 $184,794
Other income (expense):
Interest expense ................. (5,242) (4,672) (5,588) (16,295) (12,406)
Other income (expense) - net ..... (2,342) (3,545) (3,710) (9,053) (8,606)
--------------------------------------------------------------------------------------
Income before income taxes $53,950 $52,107 $74,001 $194,943 $163,782
Provision for income taxes ......... 16,160 20,322 29,061 71,147 63,875
--------------------------------------------------------------------------------------
Net income ................ $37,790 $31,785 $44,940 $123,796 99,907
======================================================================================
Net income per share ...... $0.60 $0.51 $0.72 $1.97 $1.59
======================================================================================
Average shares outstanding ......... 62,977,635 62,848,820 62,751,517 62,727,242 62,841,106
==============================================================================================================================
Consolidated Balance Sheets Sept 30 Dec 31 June 30
(Thousands of dollars) 1997 1996 1997
------------------------------------------------
ASSETS
Cash & cash equivalents ............ $31,836 $5,342 $9,906
Accounts receivable ................ 349,252 313,932 363,684
Deferred income taxes .............. 51,307 54,852 55,307
Inventories ........................ 439,919 419,507 425,597
------------------------------------------------
Total current assets ...... $872,314 $793,633 $854,494
Property, plant & equipment ........ 1,146,466 1,094,329 1,120,079
Deferred income taxes .............. 21,600 3,803 13,578
Other assets ....................... 183,855 179,573 190,494
------------------------------------------------
Total assets .............. $2,224,235 $2,071,338 $2,178,645
================================================
LIABILITIES
Accounts payable & other liabilities $237,001 $237,020 $242,985
Short-term debt & commercial paper . 172,758 136,830 185,695
Accrued expenses ................... 155,043 154,098 138,565
------------------------------------------------
Total current liabilities . $564,802 $527,948 $567,245
Long-term debt ..................... 166,627 165,835 142,688
Accrued pension cost ............... 87,933 56,568 82,918
Accrued postretirement benefits .... 400,994 398,759 400,594
------------------------------------------------
Total liabilities ......... $1,220,356 $1,149,110 $1,193,445
SHAREHOLDERS' EQUITY ............... 1,003,879 922,228 985,200
------------------------------------------------
Total liabilities & equity $2,224,235 $2,071,338 $2,178,645
================================================
</TABLE>
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BEARING BUSINESS SEGMENT FINANCIAL RESULTS
(Dollars in millions)
<TABLE>
<CAPTION>
Second
Third Quarter Qtr Ended Nine Months
Ended Sept 30 June 30 Ended Sept 30
---------------------------------- ----------- ---------------------------------
1997 1996 1997 1997 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $408.8 $382.6 $444.9 $1,276.6 $1,193.6
Operating income $27.2 $37.9 $49.0 $121.3 $114.3
Operating Margin 6.7% 9.9% 11.0% 9.5% 9.6%
</TABLE>
STEEL BUSINESS SEGMENT FINANCIAL RESULTS
(Dollars in millions)
<TABLE>
<CAPTION>
Second
Third Quarter Qtr Ended Nine Months
Ended Sept 30 June 30 Ended Sept 30
---------------------------------- ------------ ---------------------------------
1997 1996 1997 1997 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $221.1 $198.8 $231.1 $669.9 $585.3
Operating income $34.3 $22.4 $34.3 $99.0 $70.5
Operating Margin 15.5% 11.3% 14.8% 14.8% 12.0%
</TABLE>
