The Timken Company Comments on Moody's Rating Change
CANTON, Ohio, Oct. 3, 2003 -- The Timken Company responded to Moody's Investors Services announcement today that it has lowered its rating of the company's debt to Ba1. The rating is on the company's senior unsecured debt and senior implied and senior unsecured issuer ratings. "We are obviously disappointed in the decision made by Moody's to lower our debt rating," said James W. Griffith, president and CEO. "While on September 18 we lowered our earnings outlook for 2003, we believe Moody's gave insufficient weight to our commitment to maintain a strong balance sheet. The impact of reduced earnings on cash flow has been offset by other actions, including improving working capital management, reducing capital expenditures and continuing asset dispositions."
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The impact of the lower rating on the company's earnings will be minimal with only a slight increase in the cost of the company's revolving credit facility. The company has no significant long-term debt payments coming due in the next three years and believes it has ample liquidity.
Earnings have been challenged by declines in North American automotive production, inefficiencies in automotive plant manufacturing, increased energy and raw material costs and continuing weak industrial markets.
"We believe that the acquisition of The Torrington Company, earlier this year, is a strong strategic move that positions Timken for long-term competitiveness," said Mr. Griffith. "The issues we are facing with regard to our 2003 earnings are short-term, and corrective actions are being taken. We continue to be committed to a strong balance sheet and will aggressively apply discretionary cash to debt reduction.
"Given the strength of our leadership team, the recognition of our brand name in the market and the additional capabilities we now have with Torrington products, we are on the path of a winning strategy," said Mr. Griffith.
The company is scheduled to release third quarter earnings and discuss the results in a teleconference on October 23, 2003.
The Timken Company ( www.timken.com ) is a leading international manufacturer of highly engineered bearings, alloy and specialty steels and components, and a provider of related products and services. Following its February 2003 acquisition of The Torrington Company, Timken employs 28,000 people worldwide in operations in 29 countries. In 2002, the combined companies had sales of approximately $3.8 billion.
Certain statements in this news release (including statements regarding the Company's forecasts, beliefs and expectations) that are not historical in nature are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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: uncertainties in both timing and amount, if any, of actual benefits realized through the integration of Torrington with Timken's operations and the timing and amount of the resources required to achieve those results; risks associated with the greater level of debt associated with the acquisition; and the impact on operations of general economic conditions, higher raw material and energy costs, the cyclicality of the Company's business, customer demand and the Company's ability to achieve the benefits of its ongoing programs, including the implementation of its manufacturing transformation and rationalization activities. These and additional factors are described in greater detail in the Company's Prospectus Supplement dated February 11, 2003 relating to the offering of the Company's common stock, in the Company's Annual Report on Form 10-K for the year ended December 31, 2002, in the Company's 2002 Annual Report, page 47, and in the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2003. The Company undertakes no obligation to update or revise any forward-looking statement.
Media Contact: Denise L. Bowler Manager - Communications Planning and Integration (330) 471-3485 www.timken.com/media Investor Contact: Kevin R. Beck Manager - Investor Relations (330) 471-7181Photo: http://www.newscom.com/cgi-bin/prnh/19991012/TKRLOGO
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