1.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
[X]Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended March 31, 1999.
Commission File No. 1-1169
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
(330) 438-3000
Registrant's telephone number, including area code
Not Applicable
Former name, former address and former fiscal year if changed
since last report.
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
___ ___
Common shares outstanding at March 31, 1999, 61,876,631.
<PAGE>
PART I. FINANCIAL INFORMATION 2.
THE TIMKEN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
Mar. 31 Dec. 31
1999 1998
ASSETS ---------- ----------
Current Assets (Thousands of dollars)
Cash and cash equivalents........................... $11,012 $320
Accounts receivable, less allowances,
(1999-$8,741; 1998-$7,949).......................... 373,814 350,483
Deferred income taxes............................... 41,444 42,288
Inventories (Note 2) ............................... 456,220 457,246
---------- ----------
Total Current Assets...................... 882,490 850,337
Property, Plant and Equipment....................... 2,827,739 2,789,131
Less allowances for depreciation................... 1,459,725 1,439,592
---------- ----------
1,368,014 1,349,539
Costs in excess of net assets of acquired business,
less amortization, (1999-$30,338; 1998-$28,936)..... 160,178 150,140
Deferred income taxes............................... 25,079 20,409
Other assets........................................ 88,222 79,606
---------- ----------
Total Assets.................................. $2,523,983 $2,450,031
========== ==========
LIABILITIES
Current Liabilities
Accounts payable and other liabilities.............. $226,176 $221,823
Short-term debt and commercial paper................ 183,865 144,312
Accrued expenses.................................... 149,845 124,288
---------- ----------
Total Current Liabilities................. 559,886 490,423
Noncurrent Liabilities
Long-term debt (Note 3) ............................ 327,076 325,086
Accrued pension cost................................ 155,524 149,366
Accrued postretirement benefits cost................ 391,897 390,804
Other noncurrent liabilities........................ 38,994 38,271
---------- ----------
Total Noncurrent Liabilities.............. 913,491 903,527
Shareholders' Equity (Note 4)
Common stock........................................ 289,636 287,003
Earnings invested in the business................... 824,235 818,794
Accumulated other comprehensive income.............. (63,265) (49,716)
---------- ----------
Total Shareholders' Equity................ 1,050,606 1,056,081
Total Liabilities and Shareholders' Equity.... $2,523,983 $2,450,031
========== ==========
<PAGE>
PART I. FINANCIAL INFORMATION Continued 3.
THE TIMKEN COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
Mar. 31 Mar. 31
1999 1998
-------- --------
(Thousands of dollars,
except per share data)
Net sales......................................... $625,370 $707,381
Cost of product sold.............................. 498,811 533,015
-------- --------
Gross Profit................................... 126,559 174,366
Selling, administrative and general expenses...... 89,330 88,141
-------- --------
Operating Income............................... 37,229 86,225
Interest expense.................................. (6,656) (5,863)
Interest income................................... 427 451
Other income (expense)............................ (3,415) (1,305)
-------- --------
Income Before Income Taxes..................... 27,585 79,508
Provision for income taxes (Note 5)............... 11,006 30,372
-------- --------
Net Income..................................... $16,579 $49,136
======== ========
Earnings Per Share * .......................... $0.27 $0.79
Earnings Per Share - assuming dilution **..... $0.27 $0.78
Dividends Per Share............................ $0.18 $0.18
======== ========
* Per average shares outstanding..................... 61,859,612 62,481,627
** Per average shares outstanding - assuming dilution. 62,018,468 63,331,559
<PAGE>
PART I. FINANCIAL INFORMATION Continued 4.
THE TIMKEN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
Cash Provided (Used) Mar. 31 Mar. 31
1999 1998
------- -------
OPERATING ACTIVITIES (Thousands of dollars)
Net Income............................................. $16,579 $49,136
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization......................... 36,597 33,756
(Credit) provision for deferred income taxes.......... (5,724) 1,094
Stock issued in lieu of cash to employee benefit plans 2,972 10,091
Changes in operating assets and liabilities:
Accounts receivable.................................. (21,820) (38,721)
Inventories.......................................... (2,807) (35,391)
Other assets......................................... (10,196) (1,879)
Accounts payable and accrued expenses................ 37,210 13,506
Foreign currency translation......................... 2,623 595
------- -------
Net Cash Provided by Operating Activities........... 55,434 32,187
INVESTING ACTIVITIES
Purchases of property, plant and equipment - net...... (46,599) (65,014)
Purchase of subsidiaries.............................. (27,923) 0
------- -------
Net Cash Used by Investing Activities............... (74,522) (65,014)
FINANCING ACTIVITIES
Cash dividends paid to shareholders................... (11,138) (11,258)
Purchase of Treasury Shares........................... (339) (36,803)
Payments on long-term debt............................ (78) (23,108)
Proceeds from issuance of long-term debt.............. 1,819 38,228
Short-term debt activity - net........................ 39,763 71,714
------- -------
Net Cash Provided by Financing Activities........... 30,027 38,773
Effect of exchange rate changes on cash................ (247) 215
Increase in Cash and Cash Equivalents.................. 10,692 6,161
Cash and Cash Equivalents at Beginning of Period....... 320 9,824
------- -------
Cash and Cash Equivalents at End of Period............. $11,012 $15,985
======= =======
<PAGE>
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 5.
Note 1 -- Basis of Presentation
The accompanying consolidated condensed financial statements (unaudited) for
the Timken Company (the "company") have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) and disclosures considered necessary
for a fair presentation have been included. For further information, refer to
the consolidated financial statements and footnotes included in the company's
annual report on Form 10-K for the year ended December 31, 1998.
3/31/99 12/31/98
Note 2 -- Inventories -------- ---------
(Thousands of dollars)
Finished products $183,206 $183,950
Work-in-process and raw materials 231,667 229,397
Manufacturing supplies 41,347 43,899
-------- --------
$456,220 $457,246
======== ========
Note 3 -- Long-term Debt 3/31/99 12/31/98
-------- ---------
(Thousands of dollars)
State of Ohio Pollution Control Revenue Refunding Bonds,
maturing on July 1, 2003. The variable interest
rate is tied to the bank's tax exempt weekly interest
rate. The rate at March 31, 1999 is 2.95%. $17,000 $17,000
State of Ohio Water Development Revenue Refunding
Bond, maturing on May 1, 2007. The variable interest
rate is tied to the bank's tax exempt weekly interest
rate. The rate at March 31, 1999 is 3.05%. 8,000 8,000
State of Ohio Air Quality and Water Development Revenue
Refunding Bonds, maturing on June 1, 2001. The
variable interest rate is tied to the bank's tax
exempt weekly interest rate. The rate at
March 31, 1999 is 3.05%. 21,700 21,700
State of Ohio Water Development Authority Solid Waste
Revenue Bonds, maturing on July 2, 2032. The
variable interest rate is tied to the bank's tax
exempt weekly interest rate. The rate at
March 31, 1999 is 3.10%. 24,000 24,000
Fixed Rate Medium-Term Notes, Series A, due at various
dates through May, 2028 with interest rates ranging
from 6.20% to 7.76%. 267,000 267,000
Other 12,071 5,105
-------- --------
349,771 342,805
Less: Current Maturities 22,695 17,719
-------- --------
$327,076 $325,086
======== ========
<PAGE>
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited)
Continued 6.
Note 4 -- Shareholders' Equity 3/31/99 12/31/98
-------- --------
Class I and Class II serial preferred stock (Thousands of dollars)
without par value:
Authorized -- 10,000,000 shares each class
Issued - none $0 $0
Common Stock without par value:
Authorized -- 200,000,000 shares
Issued (including shares in treasury)
1999 - 63,082,626 shares
1998 - 63,082,626 shares
Stated Capital 53,064 53,064
Other paid-in capital 263,056 261,156
Less cost of Common Stock in treasury
1999 - 1,205,994 shares
1998 - 1,234,462 shares 26,484 27,217
-------- --------
$289,636 $287,003
======== ========
<TABLE>
An analysis of the change in capital and earnings invested in the business is as follows:
Common Stock Earnings Accumulated
Other Invested Other
Stated Paid-In in the Comprehensive Treasury
Capital Capital Business Income Stock Total
------- -------- -------- ---------- -------- ----------
(Thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1998 $53,064 $261,156 $818,794 ($49,716) ($27,217) $1,056,081
Net Income 16,579 16,579
Foreign currency translation adjustment (13,549) (13,549)
----------
Total comprehensive income 3,030
Dividends - $.18 per share (11,138) (11,138)
Stock Options, employee benefit and dividend
reinvestment plans: 1,900 733 2,633
Treasury - (issued)/acquired (28,468) shares
------- -------- -------- ---------- -------- ----------
Balance March 31, 1999 $53,064 $263,056 $824,235 ($63,265) ($26,484) $1,050,606
======= ======== ======== ========== ======== ==========
</TABLE>
<PAGE>
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 7.
Continued
Note 5 -- Income Tax Provision Three Months Ended
Mar. 31 Mar. 31
1999 1998
------- -------
U.S. (Thousands of dollars)
Federal $9,106 $24,126
State & Local 1,035 2,984
Foreign 865 3,262
------- -------
$11,006 $30,372
======= =======
Taxes provided exceed the U.S. statutory rate primarily due to state and
local taxes and losses without current tax benefits.
Note 6 -- Segment Information
(Thousands of Dollars) Three Months Ended
Mar. 31 Mar. 31
Bearings 1999 1998
------- -------
Net sales to external customers 438,717 462,779
Depreciation and amortization 20,486 19,287
Earnings before interest and taxes 23,249 48,748
Interest expense (5,080) (4,938)
Interest income 448 458
Steel
Net sales to external customers 186,653 244,602
Intersegment sales 55,378 56,677
Depreciation and amortization 16,111 14,483
Earnings before interest and taxes 11,029 37,606
Interest expense (2,316) (1,630)
Interest income 719 698
Profit Before Taxes
Total EBIT for reportable segments 34,278 86,354
Interest expense (6,656) (5,863)
Interest income 427 451
Intersegment adjustments (464) (1,434)
Income before income taxes 27,585 79,508
<PAGE>
8.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
- - ---------------------
The Timken Company reported net sales of $625.4 million for the first
quarter of 1999, down 11.6% from $707.4 million in 1998's first
quarter. Net income declined by 66.2% to $16.6 million compared to
$49.1 million in the first quarter of 1998. During the quarter,
the company recorded month-to-month improvements in both sales
and earnings. First quarter earnings were higher than those
recorded during the third and fourth quarters of 1998 when markets
were deteriorating rapidly. At this point, sales for the second
quarter are expected to improve somewhat over first quarter levels
while earnings are expected to be near first quarter results.
Sales were lower in the current year's quarter as a result of
lower demand for bearing and steel products in most markets
throughout the world. Global weakness in industrial markets and
continued deterioration of steel oil country and service center
markets fueled by inventory adjustments by key industry producers
contributed to the sales decline. Markets in Europe and Latin
America also continued to weaken. In North America, aftermarket
sales remained depressed; however, automotive and rail markets
maintained their strength and Asia Pacific markets are showing
some signs of strengthening.
Gross profit was $126.6 million (20.2% of net sales) in the first
quarter of 1999, compared to $174.4 million (24.6% of net sales)
in 1998's first quarter. Lower sales and production volumes
combined with weakness in more profitable aftermarket and
industrial market segments contributed to the decline.
Selling, administrative, and general expenses were $89.3 million
(14.3% of net sales) in the first quarter of 1999 compared to
$88.1 million (12.5% of net sales) in 1998. First quarter 1999
expenses would have been lower except for the addition of
Desford Steel Tubes Ltd., now Timken Desford Steel, acquired in
the fourth quarter of 1998. The company has been successful in
containing administrative costs through the installation of new
software systems and focused continuous improvement efforts.
The company is continuing to implement cost cutting initiatives
in administrative and manufacturing areas and has taken
aggressive actions in Bearings and Steel to improve
competitiveness and to produce on-going returns for its
shareholders. In the fourth quarter 1998, the company recorded
expense of $21.4 million related to these actions. A portion of
this expense related to the elimination of 515 positions by
December 31, 1999. To-date, 312 positions have been eliminated,
with separation cash payments of $4.4 million being made to
terminated associates. At this point, the expenses recorded in
the fourth quarter 1998 are deemed sufficient to cover the
remaining costs associated with the improvement initiatives.
<PAGE>
9.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
"Other income (expense)" reflects higher expense due primarily to
foreign currency exchange losses recorded in the first quarter of
1999.
Bearings
Bearings' net sales were $438.7 million in the first quarter of
1999, down 5.2% from the $462.8 million recorded in the year-
earlier period. Sales to North American automotive markets
increased by 11% compared to the year-ago quarter as the strong
levels of activity in light and heavy truck production
experienced in 1998 continued into 1999. North American
locomotive and freight car markets also remained strong.
Industrial markets, however, continued to weaken from already low
levels at year-end 1998 showing a decrease of 18% compared to the
first quarter 1998. Global weakness in agricultural and
commodity prices as well as inventory adjustments on the part of
key industry producers hurt industrial bearing sales,
particularly in the aftermarket.
First quarter 1999 sales in Europe were down by 14% as weakness
in the economy in both Western and Eastern Europe continued.
Many of the factors influencing North American markets are also
impacting Europe. Sales in Latin American markets are down by
29% as a result of the financial crisis in that part of the
world. Asia Pacific markets are showing some signs of
strengthening from 1998's extremely depressed levels.
Bearings' earnings before interest and income taxes (EBIT) for
the first quarter was $23.2 million compared to $48.7 million in
the year-earlier period. Lower manufacturing volumes combined
with lower sales in industrial original equipment and aftermarket
distribution segments in North America and Europe contributed to
the decline in profits. Lower levels of production aimed at
controlling inventory also hurt EBIT in the first quarter of
1999. Selling and administrative expenses were up slightly from
the first quarter of last year as Bearings continued to invest in
growth initiatives while closely controlling day-to-day spending.
In February 1999, the company agreed to increase its ownership in
Tata Timken Limited (Tata), a joint venture with The Tata Iron
and Steel Company (TISCO) of India, to 80 percent by acquiring
the 40 percent stake held by TISCO. The transaction was approved
by the Indian government and completed in March. The Indian
public continues to hold the remaining 20 percent.
Steel
Steel's net sales, including intersegment sales, were
$242 million in the first quarter of 1999, down 19.7% from the
$301.3 million recorded a year earlier. The reduction in demand
that began late in the second quarter of 1998 continued into the
<PAGE>
10.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
first quarter 1999. Sales were lower in all markets. Weakness
in oil country markets continued as first quarter sales were down
by more than 80% compared to the year-ago quarter. Service
center markets were also weak with first quarter 1999 sales 65%
below last year's first quarter as distributors continue to
reduce excess inventories. However, it appears as though the
bottom of this inventory correction may have been reached as
bookings have begun to stabilize. Industrial sales were off by
about 24% while sales to external bearing customers dropped by
29%. Tool steel and aerospace sales also declined by 15% and 44%
respectively. Precision steel component sales to automotive
customers were up by about 8% in the first quarter. Overall,
alloy steel automotive demand is off slightly from the first
quarter 1998 record levels; however, it has continued to provide
the main source of consistent demand for the Steel business in
1999. The company does not expect significant improvement in
steel markets before late in the second quarter. Sales in the
first quarter of 1999 include sales from Timken Desford Steel
acquired in the fourth quarter of 1998.
Steel's EBIT was $11 million in the first quarter of 1999
compared to $37.6 million in last year's corresponding period.
In addition to lower sales volumes, lower production volumes and
the shift in mix to lower margin automotive sales contributed to
lower first quarter profits. Lower purchased scrap prices helped
in part to offset higher costs associated with manufacturing
inefficiencies that resulted from lower volume. Steel has
implemented a series of cost improvement actions aimed at
improving efficiency and profitability such as the alignment of
its work force to match lower volumes and the acceleration of
plans to streamline rolling processes. In addition, staffing
reductions in administrative areas have helped to reduce selling
and administrative expenses despite the addition of Timken
Desford Steel.
Financial Condition
- - -------------------
Total assets as shown on the Consolidated Condensed Balance
Sheets increased by $74 million from December 31, 1998.
Approximately $50 million of the increase resulted from the
consolidation of Tata Timken Limited (Tata) assets into the
company's balance sheet. Prior to the March 1999 increase in
ownership to 80%, the company's investment in Tata was accounted
for using the equity method. Inventory balances at the end of
the first quarter were basically unchanged from year-end 1998
levels. The number of days' supply in inventory increased
slightly to 111 days at March 31, 1999, compared to 109 days at
December 31, 1998, due primarily to the addition of Tata
inventory and an increase in steel inventory. Bearings'
inventory (including Tata) decreased by about 3 days. Steel's
inventory increased by about 8 days to accommodate upcoming
planned facility schedule reductions.
<PAGE>
11.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
As shown on the Consolidated Condensed Statement of Cash Flows,
the change in inventories used $2.8 million of cash during the
first quarter of 1999. Accounts receivable increased
$21.8 million since year-end. The number of days' sales in
receivables at March 31, 1999, was only slightly higher than
December 31, 1998, levels due to a proportionately higher level
of sales in the last month of the quarter. Cash was provided by
a $37.2 million increase in accounts payable and accrued expenses
related in part to higher retirement and postretirement benefit
liabilities and accruals for performance-based pay. Purchases of
property, plant and equipment used $46.6 million of cash in the
first three months of 1999 compared to $65 million during the
same period in 1998. The company limited capital expenditures in
the first quarter as a means to conserve cash in response to the
business environment. Growth initiatives were continued as the
company invested $27.9 million to acquire an additional 40%
ownership in Tata Timken Limited. Company investments continue
to support activities consistent with the strategies it is
pursuing to achieve industry leadership positions. Further
capital investments in technologies within the company's plants
throughout the world and new acquisitions provide Timken with the
opportunity to improve the company's competitiveness and meet the
needs of its growing base of customers.
The 32.7% debt to total capital ratio at March 31, 1999, was
higher than the 30.8% at year-end 1998. Debt increased by
$41.5 million, from $469.4 million at year-end 1998 to
$510.9 million at the end of the first quarter. Almost $9.8
million of the increase resulted from consolidating Tata Timken
debt. Cash was also needed to fund additional investments in
property, plant and equipment and to finance acquisitions. Any
future cash needs that exceed cash generated from operations will
be met by short-term borrowing and issuance of medium-term notes.
Total shareholders' equity decreased by $5.5 million. The
$16.6 million increase in equity from the first quarter's net
income was more than offset by a $13.5 million foreign currency
translation adjustment and the payment of $11.1 million in
dividends.
Other Information
- - -----------------
The Timken Company has approached year 2000 compliance using a
defined methodology that includes inventory and assessment,
remediation, test, integration, implementation and contingency
plan components. Begun in 1996, this program encompasses Timken
worldwide business systems and operations, manufacturing and
distribution systems, technical architecture, end-user computing
and the company's supplier and customer base. Additionally, the
company's corporate information systems department has instituted
a corporate level reporting and tracking process that monitors
<PAGE>
12.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
all Timken year 2000 project efforts worldwide. Critical
business computer information technology (IT) systems were year
2000 ready as of January 1999. Current project plans call for
Timken to have all of its critical non-IT manufacturing and
personal end-user systems year 2000 ready and substantially
implemented in the second quarter of 1999. Testing on all
systems will continue throughout 1999. Although the company
plans to meet these projected completion dates, it can provide no
assurances that all of its year 2000 efforts will be successful.
The company expects that the total costs associated with its year
2000 conversion efforts will not have a material effect on its
financial position, results of operations or cash flows. Between
1996 and 1999, overall costs of the year 2000 project, including
internal and external resources as well as hardware and software,
are expected to approximate $15 million. As of March 1999, the
company spent $10.3 million in support of these efforts. Its
year 2000 efforts have had minimal impact on its other
information technology programs. The company's financial results
are also dependent on the ability of customers, suppliers and
governments to become year 2000 compliant. The company is making
concerted efforts to understand the year 2000 status of its
customers and third parties including, without limitation,
electric utilities, water utilities, communications carriers,
transportation providers, governmental entities, vendors and
other general service suppliers. The company has implemented a
structured plan to communicate and evaluate year 2000 compliance
of its customers and suppliers. This plan includes surveys,
audits, meetings and other applicable methods. These efforts are
to minimize any potential year 2000 compliance impact; however,
it is not possible to guarantee compliance.
The company is currently in the process of developing financial
and operating contingency plans and will be finalizing such plans
during the first half of 1999. The company is also in the
process of identifying fourth quarter 1999 and first quarter 2000
operating support strategies, which include staffing
requirements, communication procedures and installation
schedules, to minimize the impact of potential disruptions.
Failure of the company or any third party with whom the company
has a material relationship to achieve year 2000 compliance could
have a material adverse effect on the company's business,
financial condition or results of operations or involve safety
risk.
Assets and liabilities of subsidiaries, other than Timken Romania
which is considered to operate in a highly inflationary economy,
are translated at the rate of exchange in effect on the balance
sheet date; income and expenses are translated at the average
rates of exchange prevailing during the quarter. Related
translation adjustments are reflected as a separate component of
accumulated other comprehensive income. Foreign currency gains
and losses resulting from transactions and the translation of
financial statements of Timken Romania are included in the
results of operations.
<PAGE>
13.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
Foreign currency exchange losses included in first quarter 1999
operating results amounted to $6.5 million compared to $0.6
million in the year-ago period. In addition, the company
recorded a foreign currency translation adjustment of
$13.5 million which reduced other comprehensive income compared
to a reduction of $5.1 million in the first quarter of 1998.
Weakening currencies in most of the countries in which the
company operates caused the losses. The January 1999 devaluation
of the Brazilian Real contributed to 1999's foreign currency
losses; however, the company's operations in France and the
United Kingdom recorded the most significant translation losses.
On April 20, 1999, the Board of Directors declared a quarterly
cash dividend of 18 cents per share payable June 7, 1999, to
shareholders of record at the close of business on May 21, 1999.
This is the 308th consecutive dividend paid on the common stock
of the company.
The statements set forth in this document that are not historical
in nature are forward-looking statements. 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:
a) changes in world economic conditions. This includes, but is
not limited to, the potential instability of governments and
legal systems in countries in which the company conducts
business, significant changes in currency valuations and the
effects of year 2000 compliance.
b) changes in customer demand on sales and product mix. This
includes the effect of customer strikes and the impact of
changes in industrial business cycles.
c) competitive factors, including changes in market penetration
and the introduction of new products by existing and new
competitors.
d) changes in operating costs. This includes the effect of
changes in the company's manufacturing processes; changes in
costs associated with varying levels of operations; changes
resulting from inventory management and cost reduction
initiatives and different levels of customer demands; the
effects of unplanned work stoppages; changes in the cost of
labor and benefits; and the cost and availability of raw
materials and energy.
e) the success of the company's operating plans, including its
ability to achieve the benefits from its on-going continuous
improvement programs, its ability, along with that of its
customers and suppliers, to update computer systems to be
year 2000 compliant; its ability to integrate acquisitions
into company operations, the ability of recently acquired
<PAGE>
14.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
companies to achieve satisfactory operating results and the
company's ability to maintain appropriate relations with
unions that represent company associates in certain
locations in order to avoid disruptions of business.
f) unanticipated litigation, claims or assessments. This
includes, but is not limited to, claims or problems related
to product warranty and environmental issues.
g) changes in worldwide financial markets to the extent they
affect the company's ability or costs to raise capital,
have an impact on the overall performance of the company's
pension fund investments and cause changes in the economy
which affect customer demand.
<PAGE>
15.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
(1) The Board of Directors recommended the four individuals set
forth below be elected Directors in Class II at the 1999
Annual Meeting of Shareholders of The Timken Company held
on April 20, 1999, to serve a term of three years expiring
at the Annual Meeting in 2002 (or until their respective
successors are elected and qualified). All four individuals
had been previously elected as Directors by the shareholders
and were re-elected at the 1999 meeting.
Affirmative Withheld
J. Clayburn La Force, Jr. 55,242,938 773,385
Robert W. Mahoney 55,291,149 725,174
Jay A. Precourt 55,304,696 711,627
Joseph F. Toot, Jr. 54,809,791 1,206,532
(2) The Board of Directors recommended the one individual set
forth below be elected Director in Class I at the 1999
Annual Meeting of Shareholders of The Timken Company held
on April 20, 1999, to serve a term of two years expiring
at the Annual Meeting in 2001 (or until his respective
successor is elected and qualified). The individual was
elected at the 1999 meeting.
Affirmative Withheld
John A. Luke, Jr. 54,889,447 1,126,876
(3) Shareholders approved The Timken Company Senior Executive
Management Performance Plan, effective January 1, 1999.
Affirmative Negative Abstain
52,622,428 2,460,240 933,655
Item 5. Other Information
Not applicable.
<PAGE>
16.
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
10 The Timken Company 1996 Deferred Compensation Plan
amended and restated effective as of April 20, 1999.
10.1 The Timken Company Senior Executive Management Performance
Plan effective January 1, 1999, and approved by share-
holders April 20, 1999, was filed as Appendix A to Proxy
Statement dated February 24, 1999, and is incorporated
herein by reference.
11 Computation of Per Share Earnings
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
The company did not file any reports on Form 8-K during the three
months ended March 31, 1999.
<PAGE>
17.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
The Timken Company
_______________________________
Date May 13, 1999 BY /s/ W. R. Timken, Jr.
________________________ _______________________________
W. R. Timken, Jr.,
Director and Chairman;
President and Chief Executive
Officer
Date May 13, 1999 BY /s/ G. E. Little
________________________ _______________________________
G. E. Little
Senior Vice President - Finance
EXHIBIT 10
THE TIMKEN COMPANY
1996 DEFERRED COMPENSATION PLAN
The Timken Company hereby amends and restates effective as of April 20, 1999,
the 1996 Deferred Compensation Plan for the Company, which was established on
November 3, 1995. Such Plan provides key executives with the opportunity to
defer base salary or incentive compensation payments in cash and in Common
shares, in accordance with the provisions of this Plan.
ARTICLE I
DEFINITIONS
For the purposes hereof, the following words and phrases shall have the
meanings indicated.
1. "Account" shall mean a bookkeeping account in which Base
Salary or Incentive Compensation which is deferred by a Participant shall be
recorded and to which dividends, distributions and interest may be credited in
accordance with the Plan.
2. "Base Salary" shall mean the annual fixed or base compensation,
payable monthly or otherwise to a Participant.
3. "Beneficiary" or "Beneficiaries" shall mean the person or
persons designated by a Participant in accordance with the Plan to receive
payment of the remaining balance of the Participant's Account in the event of
the death of the Participant prior to receipt of the entire amount credited to
the Participant's Account.
1.
<PAGE>
4. "Board" shall mean the Board of Directors of the Company.
5. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
6. "Change in Control" shall mean that:
(i) All or substantially all of the assets of the Company are sold
or transferred to another corporation or entity, or the
Company is merged, consolidated or reorganized into or with
another corporation or entity, with the result that upon con-
clusion of the transaction less than 51 percent of the out-
standing securities entitled to vote generally in the election
of directors or other capital interests of the acquiring
corporation or entity is owned, directly or indirectly, by the
shareholders of the Company generally prior to the trans-
action; or
(ii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report thereto), as
promulgated pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"), disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation thereto under the Exchange Act)
of securities representing 30 percent or more of the combined
voting power of the then-outstanding voting securities of the
Company; or
(iii) The Company shall file a report or proxy statement with the
Securities and Exchange Commission (the "SEC") pursuant to the
Exchange Act disclosing in response to Item 1 of Form 8-K
thereunder or Item 5(f) of Schedule 14A thereunder (or any
2.
<PAGE>
successor schedule, form, report or item thereto) that a
change in control of the Company has or may have occurred, or
will or may occur in the future, pursuant to any then-existing
contract or transaction; or
(iv) The individuals who constituted the Board at the beginning of
any period of two consecutive calendar years cease for any
reason to constitute at least a majority thereof unless the
nomination for election by the Company's shareholders of each
new member of the Board was approved by a vote of at least
two-thirds of the members of the Board still in office who
were members of the Board at the beginning of any such period.
7. "Committee" shall mean the Compensation Committee of the Board
or such other Committee as may be authorized by the Board to administer the
Plan.
8. "Common Shares" shall mean shares of common stock without par
value of the Company or any security into which such Common Shares may be
changed by reason of any transaction or event of the type referred to in
Section 9 of Article II of the Plan.
9. "Company" shall mean The Timken Company and its successors,
including, without limitation, the surviving corporation resulting from any
merger or consolidation of The Timken Company with any other corporation or
corporations.
10. "Election Agreement" shall mean an agreement in substantially
the form attached hereto as Exhibit A, as modified from time to time by the
Company.
11. "Eligible Associate" shall mean an associate of the Company
(or a Subsidiary that has adopted the Plan) who is a participant in the
Management Performance Plan of the Company. In the case of associates who are
3.
<PAGE>
residents of the United States, an Eligible Associate shall include only those
associates whose position with the Company has a mid-point compensation of at
least $100,000 and who is a participant in the Management Performance Plan of
the Company. Unless otherwise determined by the Committee, an Eligible
Associate shall continue as such until termination of employment.
12. "Incentive Compensation" shall mean (i) cash incentive
compensation earned as an associate pursuant to an incentive compensation plan
now in effect or hereafter established by the Company, including, without
limitation, the Management Performance Plan, the Long-Term Incentive Plans,
and the Post-Tax Savings and Investment Pension Plan Employee Contributions
and Match and (ii) incentive compensation payable in the form of Common Shares
pursuant to the Long-Term Incentive Plans or any similar plan approved by the
Committee for purposes of this Plan.
13. "Insolvent" shall mean that the Company has become subject to
a pending voluntary or involuntary proceeding under the United States
Bankruptcy Code or has become unable to pay its debts as they mature.
14. "Long-Term Incentive Plans" shall mean The Timken Company
Long-Term Incentive Plan, The Timken Company 1985 Incentive Plan or other
similar long-term incentive plans, all plans as amended from time to time.
15. "Participant" shall mean any Eligible Associate who has at
any time elected to defer the receipt of Base Salary or Incentive Compensation
in accordance with the Plan.
4.
<PAGE>
16. "Plan" shall mean this deferred compensation plan, which shall
be known as the 1996 Deferred Compensation Plan for The Timken Company.
17. "Subsidiary" shall mean any corporation, joint venture,
partnership, unincorporated association or other entity in which the Company
has a direct or indirect ownership or other equity interest and directly or
indirectly owns or controls more than 50 percent of the total combined voting
or other decision-making power.
18. "Year" shall mean a calendar year.
ARTICLE II
ELECTION TO DEFER
1. Eligibility. An Eligible Associate may elect to defer receipt
of all or a specified part of his or her Base Salary or Incentive Compensation
for any Year in accordance with Section 2 of this Article. An Eligible
Associate's entitlement to defer shall cease with respect to the Year following
the Year in which he or she ceases to be an Eligible Associate.
2. Election to Defer. An Eligible Associate who desires to defer
all or part of his or her Base Salary or Incentive Compensation pursuant to
this Plan must complete and deliver an Election Agreement to the Director of
Compensation and Benefits of the Company prior to the beginning of the first
year of service for which such compensation is payable. Notwithstanding the
preceding sentence, in the first year in which an individual becomes an
Eligible Associate, the individual may deliver an Election Agreement to the
Director of Compensation and Benefits of the Company, with respect to
compensation for services to be earned subsequent to filing of such Election
5.
<PAGE>
Agreement, within 30 days after the individual becomes an Eligible Associate.
An Eligible Associate who timely delivers an Election Agreement to the Director
of Compensation and Benefits of the Company shall be a Participant. An
Election Agreement that is timely delivered shall be effective for the
succeeding Year, or in the case of an Election Agreement filed during the first
year of participation, for the remainder of that year. Except as otherwise
specified by an Eligible Associate in his or her Election Agreement, the
Election Agreement shall continue to be effective from Year to Year until
revoked or modified by written notice to the Director of Compensation and
Benefits of the Company or until terminated automatically upon either the
termination of the Plan or the Company becoming Insolvent. In order to be
effective to revoke or modify an election to defer compensation payable in any
particular Year, a revocation or modification must be delivered prior to the
beginning of the Year of service for which such compensation is payable.
3. Amount Deferred; Period of Deferral. A Participant shall
designate on the Election Agreement the percentage or the dollar amount of his
or her Base Salary or Incentive Compensation that is to be deferred. A
Participant may specify in the Election Agreement that different percentages
or dollar amounts shall apply to different compensation plans or different
forms of payment, i.e., cash or Common Shares. The applicable percentage(s)
or dollar amount(s) of Base Salary or Incentive Compensation shall be deferred
until (i) the date the Participant ceases to be an associate by death,
retirement or otherwise or (ii) the date otherwise specified by the Participant
in the Election Agreement, including a date determined by reference to the date
the Participant ceases to be an associate by death, retirement or otherwise.
6.
<PAGE>
4. Accounts.
(i) Cash compensation that a Participant elects to defer shall be
treated as if it were set aside in an Account on the date the Base Salary or
Incentive Compensation would otherwise have been paid to the Participant. Such
Account will be credited with interest computed quarterly (based on calendar
quarters) on the lowest balance in the Account during each quarter at such rate
and in such manner as determined from time to time by the Committee. Unless
otherwise determined by the Committee, interest to be credited hereunder shall
be credited at the prime rate in effect according to the Wall Street Journal on
the last day of each calendar quarter plus one percent. Interest for a
calendar quarter shall be credited to the Account as of the first day of the
following quarter.
(ii) Incentive Compensation payable in the form of Common shares
that a Participant elects to defer shall be reflected in a separate Account,
which shall be credited with the number of Common Shares that would otherwise
have been issued or transferred and delivered to the Participant. Such
Account, following any applicable vesting period, shall be credited from time
to time with amounts equal to dividends or other distributions paid on the
number of Common Shares reflected in such Account, and such Account shall be
credited with interest on cash amounts credited to such Account from time to
time in the manner provided in Subsection (i) above.
5. Payment of Accounts. The amounts in Participants' Accounts
shall be paid as provided in this Section 5.
7.
<PAGE>
(i) The amount of a Participant's Account attributable to deferral
of cash Incentive Compensation shall be paid to the Participant in a lump sum
or in a number of approximately equal quarterly installments, not to exceed 40,
as designated by the Participant in the Election Agreement. The amount of such
Account remaining unpaid shall continue to bear interest, as provided in
Section 4 of this Article. The lump sum payment or the first quarterly
installment, as the case may be, shall be made as soon as practicable following
the end of the period of deferral as specified in Section 3 of this Article.
(ii) The number of Common Shares in a Participant's Account
attributable to deferral of Incentive Compensation payable in the form of
Common Shares shall be issued or transferred to the Participant in one
installment or in a number of approximately equal quarterly installments, not
to exceed 40, as designated by the Participant in the Election Agreement. The
one installment or first quarterly installment, as the case may be, shall be
made as soon as practicable following the end of the period of deferral as
specified in Section 3 of this Article. All amounts credited to such Account
in respect of dividends, distributions and interest thereon as provided in
Subsection (ii) of Section 5 of this Article shall likewise be paid to the
Participant at the same time the shares causing the dividend, distribution or
interest are transferred to the Participant.
6. Death of a Participant. In the event of the death of a
Participant, the amount of the Participant's Account or Accounts shall be paid
to the Beneficiary or Beneficiaries designated in a writing substantially in
the form attached hereto as Exhibit B (the "Beneficiary Designation"), in
8.
<PAGE>
accordance with the Participant's Election Agreement and Section 5 of this
Article. A Participant's Beneficiary Designation may be changed at any time
prior to his or her death by the execution and delivery of a new Beneficiary
Designation. The Beneficiary Designation on file with the Company that bears
the latest date at the time of the Participant's death shall govern. In the
absence of a Beneficiary Designation or the failure of any Beneficiary to
survive the Participant, the amount of the Participant's Account or Accounts
shall be paid to the Participant's estate in a lump sum 90 days after the
appointment of an executor or administrator. In the event of the death of the
Beneficiary or Beneficiaries after the death of a Participant, the remaining
amount of the Account or Accounts shall be paid in a lump sum to the estate of
the last Beneficiary to receive payments 90 days after the appointment of an
executor or administrator.
7. Small Payments. Notwithstanding the foregoing, if installment
payments elected by a Participant would result in a payment with a value of
less than $500, or if the total account is less than $5,000, the entire amount
of the Participant's Account or Accounts may at the discretion of the Company
be paid in a lump sum in accordance with Section 6 of this Article.
8. Acceleration. Notwithstanding the provisions of the fore-
going: (i) if a Change in Control occurs, the amount of each Participant's
Account or Accounts shall immediately be paid to the Participant in full;
(ii) in the event of an unforeseeable emergency, as defined in section
1.457-2(h) (4) and (5) of the Income Tax Regulations, that is caused by an
event beyond the control of the Participant or Beneficiary and that would
result in severe financial hardship to the individual if acceleration were
not permitted, the Committee may in its sole discretion accelerate the payment
9.
<PAGE>
to the Participant or Beneficiary of the amount of his or her Account or
Accounts, but only up to the amount necessary to meet the emergency.
9. Adjustments. The Committee may make or provide for such
adjustments in the numbers of Common Shares credited to Participants'
Accounts, and in the kind of shares so credited, as the Committee in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or
(ii) any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of
assets, issuance of rights or warrants to purchase securities, or (iii) any
other corporate transaction or event having an effect similar to any of the
foregoing. Moreover, in the event of any such transaction or event, the
Committee, in its discretion, may provide in substitution for any or all
Common Shares deliverable under this Plan such alternative consideration as
it, in good faith, may determine to be equitable in the circumstances.
10. Fractional Shares. The Company shall not be required to
issue any fractional Common Shares pursuant to this Plan. The Committee may
provide for the elimination of fractions or for the settlement of fractions
in cash.
10.
<PAGE>
ARTICLE III
ADMINISTRATION
The Company, through the Committee, shall be responsible for the
general administration of the Plan and for carrying out the provisions hereof.
The Committee shall have all such powers as may be necessary to carry out the
provisions of the Plan, including the power to (i) determine all questions
relating to eligibility for participation in the Plan and the amount in the
Account or Accounts of any Participant and all questions pertaining to claims
for benefits and procedures for claim review, (ii) resolve all other questions
arising under the Plan, including any questions or construction, and (iii) take
such further action as the Company shall deem advisable in the administration
of the Plan. The actions taken and the decisions made by the Committee
hereunder shall be final and binding upon all interested parties.
ARTICLE IV
AMENDMENT AND TERMINATION
The Company reserves the right to amend or terminate the Plan at any
time by action of the Board; provided, however, that no such action shall
adversely affect any Participant or Beneficiary who has an Account, or result
in the acceleration of payment of the amount of any Account (except as
otherwise permitted under the Plan), without the consent of the Participant
or Beneficiary.
11.
<PAGE>
ARTICLE V
MISCELLANEOUS
1. Non-alienation of Deferred Compensation. Except as permitted
by this Plan, no right or interest under this Plan of any Participant or
Beneficiary shall, without the written consent of the Company, be (i)
assignable or transferable in any manner, (ii) subject to alienation,
anticipation, sale, pledge, encumbrance, attachment, garnishment or other legal
process or (iii) in any manner liable for or subject to the debts or
liabilities of the Participant or Beneficiary.
2. Participant by Associates of Subsidiaries. An Eligible
Associate who is employed by a Subsidiary and elects to participate in the
Plan shall participate on the same basis as an associate of the Company. The
Account or Accounts of a Participant employed by a Subsidiary shall be paid in
accordance with the Plan solely by such Subsidiary to the extent attributable
to Base Salary or Incentive Compensation that would have been paid by such
Subsidiary in the absence of deferral pursuant to the Plan.
3. Interest of Associate. The obligation of the Company under
the Plan to make payment of amounts reflected in an Account merely constitutes
the unsecured promise of the Company to make payments from its general assets
or in the form of its Common Shares, as the case may be, as provided herein,
and no Participant or Beneficiary shall have any interest in, or a lien or
prior claim upon, any property of the Company. Further, no Participant or
Beneficiary shall have any claim whatsoever against any Subsidiary for amounts
reflected in an Account. Nothing in this Plan shall be construed as
guaranteeing future employment to Eligible Associates and nothing in this Plan
shall be considered in any manner a contract of employment. It is the
12.
<PAGE>
intention of the Company that the Plan be unfunded for tax purposes of Title I
of ERISA. The Company may create a trust to hold funds, Common Shares or
other securities to be used in payment of its obligations under the Plan, and
may fund such trust; provided, however, that any funds contained therein shall
remain liable for the claims of the Company's general creditors.
4. Claims of Other Persons. The provisions of the Plan shall in
no event be construed as giving any other person, firm or corporation any
legal or equitable right as against the Company or any Subsidiary or the
officers, employees or directors of the Company or any Subsidiary, except any
such rights as are specifically provided for in the Plan or are hereafter
created in accordance with the terms and provisions of the Plan.
5. Severability. The invalidity and unenforceability of any
particular provision of the Plan shall not affect any other provision hereof,
and the Plan shall be construed in all respects as if such invalid or
unenforceable provision were omitted herefrom.
6. Governing Law. Except to the extent preempted by federal
law, the provisions of the Plan shall be governed and construed in accordance
with the laws of the State of Ohio.
7. Relationship to Other Plans. This Plan is intended to serve
the purposes of and to be consistent with the Long-Term Incentive Plans and
any similar plan approved by the Committee for purposes of this Plan. The
issuance or transfer of Common Shares pursuant to this Plan shall be subject
in all respects to the terms and conditions of the Long-Term Incentive Plans
and any other such plan. Without limiting the generality of the foregoing,
13.
<PAGE>
Common Shares credited to the Accounts of Participants pursuant to this Plan
as Incentive Compensation shall be taken into account for purposes of Section
3 of the Long-Term Incentive Plans (Shares Available Under the Plans) and for
purposes of the corresponding provisions of any other such plan.
Deferred.doc
14.
<PAGE>
EXHIBIT A
Page 1 of 4
1996 DEFERRED COMPENSATION PLAN
THE TIMKEN COMPANY
ELECTION AGREEMENT
I, ____________________________, hereby elect [ ] to participate
in the 1996 Deferred Compensation Plan for The Timken Company (the "Plan")
with respect to the compensation that I may receive beginning January 1, 1996.
(Complete Sections I, II and III.)
[ ] Waive participation in the 1996 Deferred Compensation Plan for
The Timken Company (the "Plan") with respect to the compensation that I may
receive beginning January 1, 1996. (Complete Section III.)
I hereby elect to defer payment of the compensation which I otherwise
would be entitled to receive as follows:
I. DEFERRAL OF BONUS
1. Percentage or dollar amount of bonus, if any, payable under
the Management Performance Plan (a) in 1996 only [ ] or (b)
in 1996 and in later years [ ] (check one):
25% [ ] 50% [ ] 100% [ ] ___% [ ] $ _______ [ ]
2. Please make payment of the above specified cash compensation
together with all accrued interest reflected in my Account
as follows:
a. Pay in lump sum [ ]
b. Pay in ___ approximately equal quarterly installments [ ]
3. Please defer payment or make payment of first installment as
follows:
a. Defer until the date I cease to be an associate [ ]
b. Defer until _______ [ ] (specify date or number of years
following termination of employment)
15.
<PAGE>
EXHIBIT A
Page 2 of 4
II. DEFERRAL OF BASE SALARY
1. Percentage or dollar amount of Base Salary (a) for 1996 only
[ ] or (b) for 1996 and for later years [ ] (check one):
25% [ ] 50% [ ] ___% [ ] $ _______ [ ]
2. Please make payment of the above specified cash compensation
together with all accrued interest reflected in my Account
as follows:
a. Pay in lump sum [ ]
b. Pay in ___ approximately equal quarterly installments [ ]
3. Please defer payment or make payment of first installment as
follows:
a. Defer until the date I cease to be an associate [ ]
b. Defer until _______ [ ] (specify date or number of years
following termination of employment)
III. DEFERRAL OF SAVINGS AND INVESTMENT PENSION PLAN (SIP)
1. Percentage or dollar amount, if any, payable under the Post-
Tax Savings and Investment Pension (SIP) Plan Employee
Contributions and Match (a) in 1996 only [ ] or (b) in 1996
and in later years [ ] (check one):
25% [ ] 50% [ ] 100% [ ] ___% [ ] $ _______ [ ]
2. Please make payment of the above specified cash compensation
together with all accrued interest reflected in my Account
as follows:
a. Pay in lump sum [ ]
b. Pay in ___ approximately equal quarterly installments [ ]
3. Please defer payment or make payment of first installment as
follows:
a. Defer until the date I cease to be an associate [ ]
b. Defer until _______ [ ] (specify date or number of years
following termination of employment)
16.
<PAGE>
EXHIBIT A
Page 3 of 4
IV. DEFERRAL OF COMMON SHARES
1. Percentage or dollar amount value of Common Shares, if any,
payable as a result of the vesting of Deferred Dividend Shares
(a) in 1996 only [ ] or (b) in 1996 and in later years [ ]
(check one):
25% [ ] 50% [ ] 100% [ ] ___% [ ] $ _______ [ ]
2. Please make payment of the above specified cash compensation
together with all accrued interest reflected in my Account
as follows:
a. Pay in lump sum [ ]
b. Pay in ___ approximately equal quarterly installments [ ]
3. Please defer payment or make payment of first installment as
follows:
a. Defer until the date I cease to be an associate [ ]
b. Defer until _______ [ ] (specify date or number of years
following termination of employment)
17.
<PAGE>
EXHIBIT A
Page 4 of 4
V. SIGNATURE/AUTHORIZATION
I acknowledge that I have reviewed the Plan and understand
that my participation will be subject to the terms and conditions
contained in the Plan. Capitalized terms used, but not otherwise
defined, in this Election Agreement shall have the respective
meanings assigned to them in the Plan.
I understand that (i) this Election Agreement shall continue
to be effective from Year to Year except as specified above and
except as otherwise provided in the Plan and (ii) in order to be
effective to revoke or modify this Election Agreement with respect
to compensation otherwise payable in a particular Year, a revocation
or modification must be delivered to the Director of Compensation
and Benefits of the Company ____ prior to the beginning of the first
Year of service for which such compensation is payable.
I acknowledge that I have been advised to consult with my own
financial, tax, estate planning and legal advisors before making this
election to defer in order to determine the tax effects and other
implications of my participation in the Plan.
Dated this ______ day of _____, 1995.
________________________________ ______________________________
(Signature) (Print or type name)
DEFERRED.DOC
18.
<TABLE>
Exhibit 11 - COMPUTATION OF PER SHARE EARNINGS
(Thousands of dollars, except per share data)
<CAPTION>
Three Months Ended March 31
1999 1998
---------- ----------
<S> <C> <C>
BASIC
Average shares outstanding 61,859,612 62,481,627
Net income $16,579 $49,136
Per share amount $0.27 $0.79
===== =====
DILUTED
Average shares outstanding 61,859,612 62,481,627
Effect of dilutive securities based on the
treasury stock method using the average
market price if higher than the exercise price 158,856 849,932
---------- ----------
62,018,468 63,331,559
Net income $16,579 $49,136
Per share amount $0.27 $0.78
</TABLE> ===== =====
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended
Mar. 31 Mar. 31
1999 1998
-------- --------
(Thousands of Dollars)
Income before income taxes,
extraordinary item and cumulative
effect of accounting changes $27,585 $79,508
Amortization of capitalized interest 608 610
Interest expense 6,656 5,863
Interest portion of rental expense 529 607
-------- --------
Earnings $35,378 $86,588
======== ========
Interest $ 7,530 $ 7,076
Interest portion of rental expense 529 607
-------- --------
Fixed Charges $ 8,059 $ 7,683
======== ========
Ratio of Earnings to Fixed Charges 4.39 11.27
======== ========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AND PROFIT & LOSS FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 11,012
<SECURITIES> 0
<RECEIVABLES> 382,555
<ALLOWANCES> 8,741
<INVENTORY> 456,220
<CURRENT-ASSETS> 882,490
<PP&E> 2,827,739
<DEPRECIATION> 1,459,725
<TOTAL-ASSETS> 2,523,983
<CURRENT-LIABILITIES> 559,886
<BONDS> 327,076
0
0
<COMMON> 289,636
<OTHER-SE> 760,970
<TOTAL-LIABILITY-AND-EQUITY> 2,523,983
<SALES> 625,370
<TOTAL-REVENUES> 625,370
<CGS> 498,811
<TOTAL-COSTS> 498,811
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,656
<INCOME-PRETAX> 27,585
<INCOME-TAX> 11,006
<INCOME-CONTINUING> 16,579
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,579
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
