<PAGE> 1
Rule 424(b)(5)
File No. 33-35773
CUSIP: 88739LAX4
PRICING SUPPLEMENT
(To Prospectus Supplement dated July 24, 1996)
To Prospectus dated July 24, 1996
$5,000,000
The Timken Company
6.40% 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
----------- --------- --------- -------------------
$5,000,000 11/12/1997 11/12/2004 6.40%
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.
----------------------------
J.P. Morgan Securities, Inc.
----------------------------
November 10, 1997
<PAGE> 2
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.
<PAGE> 3
"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.
<PAGE> 4
"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,
<PAGE> 5
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
<PAGE> 6
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)
<PAGE> 7
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>
<PAGE> 8
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>
<PAGE> 1
On November 7, 1997 the Company issued the following press release:
CANTON, OH--November 7, 1997--The board of directors of The Timken
Company today declared a quarterly cash dividend of sixteen and one half (16.5)
cents per share. The dividend is payable on December 8, 1997, to shareholders
of record at the close of business on November 21, 1997. It will be the 302nd
consecutive dividend paid on the common stock of the company.
The Timken Company (NYSE:TKR) is a leading international manufacturer
of highly engineered bearings and alloy steels. The company employs some 19,000
associates worldwide and reported 1996 sales of about U.S. $2.4 billion.
<PAGE> 2
On November 7, 1997, the Company issued the following press release:
BUCYRUS, OH--November 6, 1997--The Timken Company's Board of Directors
today hosted a Bucyrus community dinner that focused on the importance of
reinvestment in manufacturing and technology. At the dinner, the company
announced plans for millions of dollars of investments at the Bucyrus Bearing
Plant.
Many pillars of the community, including local business, community and
government leaders, as well as Timken associates, gathered to celebrate The
Timken Company's dedication to the Bucyrus community through nearly half a
century of operation in the city.
From a rough design sketched on a tablecloth by Albert Bergstrom, then
Timken Company vice president--engineering, the "Bucyrus Concept" was
conceived in 1947. An automated plant where material is fed into one end of a
plant with trucks loading packaged bearings for shipment at the other, the
"Bucyrus Concept" was extolled by many Timken customers. As a result, the
Bucyrus Bearing Plant was opened in 1950. On the cutting-edge of technology
from its earliest days, the continuous-line plant remains one of the most
technologically advanced bearing operations in the world.
<PAGE> 3
"We will be investing approximately $15 million in new machining technology
for the Bucyrus plant over the next two to three years," said W.R. Timken, Jr.,
chairman -- board of directors. "This investment will ensure that the Bucyrus
Operations maintains its position in the intensely competitive worldwide
automotive tapered roller bearing market. In addition to improving the quality
of the product, the state-of-the-art equipment will reduce product variation and
waste."
Currently, the Bucyrus plant's machinery transforms large pieces of tubing
into cups and cones for bearings. The new machining technology will increase
the yield of material to parts because there will be less scrap and rework.
This will result in increased productivity.
"One of the major contributors to increased productivity is capital
investment based on new technology," said Mr. Timken. "It is U.S.
manufacturing that has made the great capital investments of the last 15
years. Manufacturing has been investing billions and billions of dollars on
new and improved manufacturing facilities, and The Timken Company is a prime
example. This investment in new technology at the Bucyrus Operations will
benefit both The Timken Company, its associates and the Bucyrus community. We
are making this investment to provide our associates with the best
manufacturing processes so they can compete successfully."
"Bucyrus is in a significant growth period, during which our plant, our
retirees and The Timken Company all have played important roles," said Ron
Menning, general manager--Bucyrus Operations. "The Timken Company and our
associates have joined in an effort to revitalize the plant through our
continuous improvement efforts."
<PAGE> 4
During the last few years, the Bucyrus Operations has continued to
upgrade the level of technology, including greater use of lasers and automation,
in order to remain competitive. The investment in machining technology is
another step forward in improving the Bucyrus Operations.
"We had to prove to our management that we have what it takes to make
this investment payoff," said Mr. Menning. "The decision to place as many as 50
new computer-controlled machines here and train our associates to operate them
is a tremendous vote of confidence in our plant and our associates. Automotive
customers are among the most demanding in the world. And the automotive tapered
roller bearings produced in our plant are--and will remain--among the most
competitively priced in the world."
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.
<PAGE> 5
On November 7, 1997, the Company issued the following press release:
CANTON, OH, Nov. 7, 1997--The Timken Company today announced that Joseph F.
Toot, Jr., president and chief executive officer, will retire at the end of
December.
"It is virtually impossible to overstate Joe Toot's contribution to our
company, our customers, our associates and our shareholders," said W.R. Timken,
Jr., chairman--board of directors. "He has epitomized strong, effective
leadership. Joe strengthened significantly our emphasis on performance for our
shareholders and our customers. He led the growth of the company. He has served
with great distinction and he has become a nationally recognized business
leader."
Mr. Toot, 62, will continue to serve as a member of the board of directors
and is chairman of the board's executive committee. In that capacity, he will
carry out certain projects on behalf of the company.
Mr. Toot has served as president of the company since 1979 and as president
and CEO since 1992. "During the 1990s," Mr. Timken noted, "the company's return
on capital has doubled, the market value of the company has tripled to $2.3
billion, and dividends have increased by more than 40%."
<PAGE> 6
A strong believer in the skill and dedication of Timken associates, Mr.
Toot observed that "productivity, always a measure of success, has grown by more
than 40% in the 1990s which far exceeds the national average. Timken associates
have won hundreds of quality awards from customers."
Following Mr. Toot's retirement, Mr. Timken, 58, will continue as chairman
and also serve as president and CEO. Joining him in leading the company will be
Bill J. Bowling, 56, and Robert L. Leibensperger, 59. Each will take on
additional responsibility as chief operating officer. Thus, Mr. Bowling will be
executive vice president, COO and president--steel, and Mr. Leibensperger will
be executive vice president, COO and president--bearings.
"Bill and Bob have demonstrated convincingly their ability to continue
Joe's record of superior leadership," said Mr. Timken. "These are two tested
leaders. Under their direction, both our bearing and steel businesses have set
new performance standards for success the world over. They will work closely
with me in guiding the entire company as chief operating officers and members of
the office of the chairman."
Mr. Toot joined the company in 1962 in its manufacturing operations and
then concentrated on the company's business outside the United States. He was
elected a company officer in 1967 and director in 1968.
"When Joe became president in 1979, we were barely a billion dollar
company," said Mr. Timken. "Today we are a two and a half billion dollar
enterprise and are pushing for more growth. With Joe as CEO in the 1990s, we
have expanded our reach, serving thousands of new customers in different
businesses in many more countries around the world. Joe Toot leaves a tremendous
record of success. Based on results through nine months, we expect 1997 to be
another record year of financial performance."
<PAGE> 7
Away from the company, Mr. Toot serves as a director of Rockwell
International Corporation. He is the former chairman of the American Iron and
Steel Institute which honored him with its prestigious Gary Medal for
distinguished service to the steel industry. He is also a director of the
U.S.-China Business Council.
Mr. Bowling joined the company in 1966. Among his many accomplishments have
been directing the design, construction, and startup of the world renowned
Faircrest Steel Plant. He also has headed the company's Latrobe Steel subsidiary
and, since April of 1996, has been leading the company's Steel Business.
"Bill has led our Steel Business to a one billion dollar enterprise," said
Mr. Timken. "He also has led the business's expansion into distribution and
international markets. In addition, he has had past experience in the bearing
business and corporate functions."
Mr. Leibensperger joined the company in 1961. Before taking his current
position in 1995, he has been vice president--technology since 1986. In that
position he was responsible for Timken Research, one of the world's leading
industrial research organizations. He started his career with the company in
sales.
"Bob brings a unique perspective to our office of the chairman," said Mr.
Timken. "He combines indepth understanding of customer needs along with
tremendous knowledge of technology. Under his leadership, Timken Research became
much more of a customer-driven organization. And since Bob began leading the
worldwide bearing business, he has been a driver in expanding our ability to
serve customers internationally and responsible for our growth in sales and
profitability."
Mr. Timken began his career with the company in 1962 and early on had both
manufacturing and international experience. He has served as chairman since 1975
and functioned as CEO from 1979-1992.
<PAGE> 8
Mr. Timken also serves on the board of Aeroquip-Vickers Inc. and
Diebold Inc. He also is a member of the executive committee of the National
Association of Manufacturers' board of directors as well as the board of
trustees of The Manufacturing Institute, and is chairman of the Ohio Business
Roundtable. He is a member of the U.S.-Japan Business Council and the Council on
Competitiveness.
"Given the blend of experience possessed by the members of our office
of the chairman, we are putting in place a senior leadership organization which
will provide continuity and a strong foundation for continued performance," said
Mr. Timken. "This organization will serve both our shareholders and customers
very well."
The Timken Company (NYSE:TKR) 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.
