The Timken Company Reports Sales and Earnings Up in 2000; Fourth Quarter Reflects Weaker Global Markets

                Three Growth Initiatives Announced in January

    CANTON, Ohio, Jan. 18 Despite a slowing global economy and
weakening of North American automotive markets, The Timken Company
reported solid increases in sales and earnings in 2000, excluding
restructuring, impairment and reorganization charges.
    (Photo:  http://www.newscom.com/cgi-bin/prnh/19991012/TKRLOGO )
    "While our businesses made impressive gains in the first half of 2000,
slowing demand checked our momentum in the second half," said W.R. Timken,
Jr., chairman and chief executive officer.  "Still, we were able to make good
progress as we continued the company's transformation to a more globally
focused, high-performance organization.  The combination of the restructuring
launched in the first quarter, the introduction of new products and services
and numerous continuous improvement initiatives strengthened the company.  In
2001, we will continue that process by vigorously driving further
improvements."  Through the end of 2000, the company recorded $38.9 million in
pretax restructuring, impairment and reorganization charges, and it is on
schedule to meet the $55 million in pretax charges estimated for
restructuring, impairment and reorganization through the first quarter of
2001.
    For the year, net sales were the second highest in the company's history
at $2.6 billion, up 6 percent from $2.5 billion in 1999.  Net income,
excluding pretax restructuring, impairment and reorganization charges,
increased 19 percent to $74.6 million from $62.6 million a year ago.  Earnings
per diluted share before these charges were $1.22 for 2000, compared to $1.01
per diluted share in 1999.  Including the charges, net income for 2000 was
$45.9 million or $0.76 per diluted share.
    "For the year, our Bearing segment had increased operating profit,
reflecting significant improvements in operating efficiency, despite slowing
sales in the second half.  Meanwhile, the Steel business improved its
penetration in targeted markets, and its performance was quite strong relative
to the overall North American steel industry.  Steel's sales were up, but its
operating profit was negatively affected by pricing pressures, product mix and
inventory reductions," Mr. Timken said.
    The company's fourth quarter results were affected both by substantial
slowing of North American automotive demand and weakening of several other
global segments.  While North American automotive demand had remained steady
through October, it began declining during the fourth quarter and fell sharply
in December with automotive build rates decreasing some 20 percent as
manufacturers lowered production and worked down inventories.  Also, while the
Euro strengthened somewhat late in the quarter, its earlier depressed value
against U.S. and British currencies continued to hurt margins of the company's
export products to Continental Europe and exacerbated pricing pressures in
North American steel markets.  "Automotive production is expected to remain
weak in the first half, and this will affect our automotive, alloy steel and
precision steel components businesses to differing degrees in the first part
of the year.  We anticipate some strengthening in global automotive markets
later in the year," Mr. Timken said.  "It's important to bear in mind the
difference between one-time demand reductions reflecting inventory
corrections, versus a slowdown in consumer demand."
    Sales in the fourth quarter of 2000 were even compared to a year ago.
Fourth quarter net income was $11.4 million, or $0.19 per diluted share,
excluding $11.3 million in pretax restructuring, impairment and reorganization
charges.  This compares with net income of $21.3 million, or $0.35 per diluted
share, in the fourth quarter of 1999 -- that year's strongest quarter due to a
positive $7.5 million after-tax LIFO inventory adjustment.  LIFO inventory
adjustments in the fourth quarter of 2000 were not significant.  Including the
pretax restructuring, impairment and reorganization charges, net income in the
fourth quarter of 2000 was $0.9 million, or $0.02 per diluted share.
    Year-end debt was $515 million, down slightly from the third quarter.  For
the year, borrowing was up $65 million, as the company funded growth
initiatives, repurchased some of its stock and increased working capital.
"The company remains committed to a strong capital structure," said Mr.
Timken.
    In January 2001, the company announced several initiatives aimed at
accelerating its global transformation.  Timken entered into a joint venture
with SKF to produce bearing components in Brazil, which should reduce costs
and create a local high-quality source for these components.  The company also
reached an agreement to buy out its joint-venture partner in China.  The
company plans to operate Yantai Timken as a wholly owned subsidiary,
facilitating more rapid technology transfer and building its export potential.
In addition, Timken announced with Rockwell Automation, SKF and INA an
e-business joint venture to provide web-based market resources and integrated
logistics for North American distributors and also joined with these companies
as well as Sandvik Group to provide e-business services for European
distributors.  These initiatives will build upon the acquisitions the company
has made in recent years, which are now contributing positively to corporate
performance.

    Bearings' Results
    Bearings' gains in the first half of 2000, which resulted from strong
automotive demand and recovery of industrial markets in North America, were
countered in the second half by weaker demand for cars and trucks.  For the
year, Bearings had net sales of $1.8 billion, equal to 1999 sales.  For the
fourth quarter of 2000, sales decreased to $412.4 million from $446.0 million
in the year-ago period.  In addition to a decline in automotive markets, the
fourth quarter also reflected weakening in Asia Pacific and Europe.  Aerospace
markets strengthened slightly.  While sales in North American industrial
markets were higher than a year ago, these markets weakened during the
quarter.
    Excluding restructuring, impairment and reorganization charges of
$21.1 million, earnings before interest and taxes (EBIT) for 2000 were
$100.0 million, compared to $80.5 million a year earlier.  The increase
resulted from improved performance in the industrial business and increased
profitability in India and Central and Eastern Europe.  Including the
restructuring, impairment and reorganization charges, EBIT was $78.9 million
in 2000.
    For the fourth quarter of 2000, Bearings' EBIT was $20.4 million,
excluding restructuring, impairment and reorganization charges of
$7.6 million.  This compares with EBIT of $12.4 million in the fourth quarter
of 1999.  Including the charges, Bearings' fourth quarter EBIT in 2000 was
$12.8 million.  Excluding restructuring, impairment and reorganization
charges, Bearing EBIT margin was 4.9 percent, which was higher than both the
third quarter of 2000 and the fourth quarter of 1999.

    Steel's Results
    Reflecting strong demand in the first half of the year in nearly all steel
markets, net sales for 2000, including intersegment sales, reached
$1.1 billion, up from $947.0 million a year ago.  The weaker Euro in 2000,
however, increased pricing pressures from low-priced imports and eroded
Steel's margins in both North America and Great Britain.  Earnings before
interest and taxes (EBIT) for 2000, excluding restructuring, impairment and
reorganization charges, were $37.1 million, compared to $44.0 million in 1999.
Continued improvements in manufacturing costs, including strong labor
productivity levels, contributed to profitability, despite weaker volumes in
the second half.  Including $17.8 million in restructuring, impairment and
reorganization charges, Steel EBIT for 2000 was $19.3 million.
    During the fourth quarter, demand in North American automotive markets
declined and service center markets weakened, reflecting excess inventories.
This was offset by increased aerospace demand and continued strength in oil
country markets.  European markets also remained stable.  In the fourth
quarter sales were $258.3 million, up from $239.9 million a year earlier.
    Higher energy costs, low capacity utilization, inventory reduction and
continued pressure from the weak Euro, resulted in a loss in the Steel
business in the fourth quarter of 2000.  Excluding restructuring, impairment
and reorganization charges of $3.7 million, Steel had a loss in the quarter of
$4.4 million before interest and taxes.  Inventory reduction of $18.1 million
in the fourth quarter led to positive cash flow, but it reduced profitability
due to lower manufacturing volumes.  Including restructuring, impairment and
reorganization charges, Steel had a loss of $8.2 million.  This compares with
EBIT of $23.0 million in the very strong 1999 fourth quarter, which included a
$10 million pretax LIFO inventory adjustment.
    The Timken Company is a leading international manufacturer of highly
engineered bearings and alloy steels with operations in 24 countries.
    The company will conduct a teleconference at 312-470-0033 (access code:
timken) and webcast at http://www.timken.com today at 10 a.m. Eastern Time.  Replay
is available at 402-220-0190, from January 18 at 12 noon through January 25 at
11:59 p.m.

    Note: The statements in this news release that are not historical in
nature may be construed as forward-looking.  The company cautions that actual
results may differ materially from those projected or implied in
forward-looking statements due to a variety of important factors, including
international economic conditions, continuing currency issues, customer demand
and the company's ability to achieve the benefits of its restructuring program
and its continuous improvement initiatives.  These and additional factors are
described in greater detail in the company's 1999 annual report, page 17, and
in the 10-Qs filed in 2000.  The company undertakes no obligation to update
any forward-looking statement.


    CONSOLIDATED STATEMENT OF INCOME
    (Thousands of U.S. dollars, except
     share data)                              4Q 00       4Q 99       3Q 00

    Net sales                                $631,711    $631,862    $632,243
    Cost of products sold                     527,824     501,695     522,698
        Gross Profit                         $103,887    $130,167    $109,545
    Selling, administrative & general
     expenses                                  93,319      93,639      88,920
    Impairment and restructuring                6,220           0       3,453
        Operating Income                       $4,348     $36,528     $17,172
    Other income (expense)                      1,048      (1,169)     (1,388)
        Earnings Before Interest and Taxes
         (EBIT)                                $5,396     $35,359     $15,784
    Interest expense                           (9,148)     (6,847)     (8,081)
    Interest income                               635       1,344       1,735
        Income Before Income Taxes            ($3,117)    $29,856      $9,438
    Provision for income taxes                 (4,040)      8,517       1,753
        Net Income                               $923     $21,339      $7,685

       Earnings Per Share                       $0.02       $0.35       $0.13
       Earnings Per Share-assuming
        dilution                                $0.02       $0.35       $0.13

    Average Shares Outstanding             59,980,285  61,572,124  60,283,189
    Average Shares Outstanding-assuming
     dilution                              60,103,733  61,823,990  60,422,761


    CONSOLIDATED STATEMENT OF INCOME
    (Thousands of U.S. dollars, except
     share data)                                    2Q 00             1Q 00

    Net sales                                     $693,263          $685,791
    Cost of products sold                          550,787           540,826
        Gross Profit                              $142,476          $144,965
    Selling, administrative & general
     expenses                                       91,115            94,145
    Impairment and restructuring                     3,322            14,759
        Operating Income                           $48,039           $36,061
    Other income (expense)                          (3,585)           (2,655)
        Earnings Before Interest and
         Taxes (EBIT)                              $44,454           $33,406
    Interest expense                                (7,471)           (7,222)
    Interest income                                    560               549
        Income Before Income Taxes                 $37,543           $26,733
    Provision for income taxes                      16,303            10,693
        Net Income                                 $21,240           $16,040

       Earnings Per Share                            $0.35             $0.26
       Earnings Per Share-assuming
        dilution                                     $0.35             $0.26

    Average Shares Outstanding                  60,837,740        61,099,962
    Average Shares Outstanding-assuming
     dilution                                   61,103,848        61,237,143


    CONSOLIDATED STATEMENT OF INCOME
    (Thousands of U.S. dollars, except
     share data)                                 Year 2000         Year 1999

    Net sales                                   $2,643,008        $2,495,034
    Cost of products sold                        2,142,135         2,002,366
        Gross Profit                              $500,873          $492,668
    Selling, administrative & general
     expenses                                      367,499           359,910
    Impairment and restructuring                    27,754                 0
        Operating Income                          $105,620          $132,758
    Other income (expense)                          (6,580)           (9,638)
        Earnings Before Interest and
         Taxes (EBIT)                              $99,040          $123,120
    Interest expense                               (31,922)          (27,225)
    Interest income                                  3,479             3,096
        Income Before Income Taxes                 $70,597           $98,991
    Provision for income taxes                      24,709            36,367
        Net Income                                 $45,888           $62,624

       Earnings Per Share                            $0.76             $1.01
       Earnings Per Share-assuming
        dilution                                     $0.76             $1.01

    Average Shares Outstanding                  60,556,595        61,795,162
    Average Shares Outstanding-assuming
     dilution                                   60,723,172        62,025,813


    BUSINESS SEGMENTS
    (Thousands of U.S. dollars)                4Q 00       4Q 99      3Q 00

     Bearings
    Net sales to external customers         $412,412    $446,036    $414,495
    Impairment and restructuring               4,358           0       3,150
    Earnings before interest and taxes
     (EBIT) *                                $12,826     $12,447      $7,304
    EBIT Margin                                 3.1%        2.8%        1.8%

    Steel
    Net sales to external customers         $219,299    $185,826    $217,748
    Intersegment sales                        38,969      54,086      50,617
    Total net sales                         $258,268    $239,912    $268,365
    Impairment and restructuring               1,862           0         303
    Earnings before interest and taxes
     (EBIT) *                                -$8,179     $22,994      $8,002
    EBIT Margin                                -3.2%        9.6%        3.0%

    * Bearings and Steel EBIT do not equal Consolidated EBIT due to
      intersegment adjustments which are eliminated upon consolidation.


    BUSINESS SEGMENTS
    (Thousands of U.S. dollars)                      2Q 00             1Q 00

     Bearings
    Net sales to external customers               $466,034          $470,374
    Impairment and restructuring                     3,225             1,909
    Earnings before interest and taxes
     (EBIT) *                                      $26,636           $32,133
    EBIT Margin                                       5.7%              6.8%

    Steel
    Net sales to external customers               $227,229          $215,417
    Intersegment sales                              51,332            55,582
    Total net sales                               $278,561          $270,999
    Impairment and restructuring                        97            12,850
    Earnings before interest and taxes
     (EBIT) *                                      $16,735            $2,791
    EBIT Margin                                       6.0%              1.0%

    * Bearings and Steel EBIT do not equal Consolidated EBIT due to
      intersegment adjustments which are eliminated upon consolidation.

    BUSINESS SEGMENTS
    (Thousands of U.S. dollars)                   Year 2000       Year 1999

     Bearings
    Net sales to external customers             $1,763,315        $1,759,871
    Impairment and restructuring                    12,642                 0
    Earnings before interest and taxes
     (EBIT) *                                      $78,899           $80,548
    EBIT Margin                                       4.5%              4.6%

    Steel
    Net sales to external customers               $879,693          $735,163
    Intersegment sales                             196,500           211,870
    Total net sales                             $1,076,193          $947,033
    Impairment and restructuring                    15,112                 0
    Earnings before interest and taxes
     (EBIT) *                                      $19,349           $44,039
    EBIT Margin                                       1.8%              4.7%

    * Bearings and Steel EBIT do not equal Consolidated EBIT due to
      intersegment adjustments which are eliminated upon consolidation.


    CONSOLIDATED BALANCE SHEET                 Dec 31     Sept 30     June 30
    (Thousands of U.S. dollars)                 2000        2000        2000

     ASSETS
    Cash & cash equivalents                   $10,927     $18,921      $6,450
    Accounts receivable                       354,972     380,111     406,157
    Deferred income taxes                      43,094      35,421      38,929
    Inventories                               489,549     500,599     484,376
        Total Current Assets                 $898,542    $935,052    $935,912
    Property, plant & equipment             1,363,772   1,335,307   1,344,491
    Deferred income taxes                           0           0           0
    Other assets                              301,791     218,765     229,569
        Total Assets                       $2,564,105  $2,489,124  $2,509,972

    LIABILITIES
    Accounts payable & other liabilities     $239,182    $233,743    $248,285
    Short-term debt & commercial paper        209,423     212,693     181,620
    Accrued expenses                          138,847     164,325     176,514
        Total Current Liabilities            $587,452    $610,761    $606,419
    Long-term debt                            305,181     305,624     305,908
    Accrued pension cost                      237,952     128,892     115,087
    Accrued postretirement benefits           394,097     398,039     396,705
    Deferred income taxes                      11,742       3,780      19,279
    Other non-current liabilities              22,999      29,258      31,343
        Total Liabilities                  $1,559,423  $1,476,354  $1,474,741

    SHAREHOLDERS' EQUITY                    1,004,682   1,012,770   1,035,231
        Total Liabilities and
         Shareholders' Equity              $2,564,105  $2,489,124  $2,509,972


    CONSOLIDATED BALANCE SHEET                      Mar 31            Dec 31
    (Thousands of U.S. dollars)                      2000              1999

     ASSETS
    Cash & cash equivalents                         $9,620            $7,906
    Accounts receivable                            394,033           339,326
    Deferred income taxes                           39,901            39,706
    Inventories                                    478,387           446,588
        Total Current Assets                      $921,941          $833,526
    Property, plant & equipment                  1,349,779         1,381,474
    Deferred income taxes                                0                 0
    Other assets                                   220,562           226,318
        Total Assets                            $2,492,282        $2,441,318

    LIABILITIES
    Accounts payable & other liabilities          $241,101          $236,602
    Short-term debt & commercial paper             141,288           122,547
    Accrued expenses                               205,823           198,512
        Total Current Liabilities                 $588,212          $557,661
    Long-term debt                                 326,302           327,343
    Accrued pension cost                           101,456            76,005
    Accrued postretirement benefits                395,531           394,084
    Deferred income taxes                            5,453             6,147
    Other non-current liabilities                   32,643            34,097
        Total Liabilities                       $1,449,597        $1,395,337

    SHAREHOLDERS' EQUITY                         1,042,685         1,045,981
        Total Liabilities and
         Shareholders' Equity                   $2,492,282        $2,441,318