Timken Company Reports Q3 Results
21 October 1997
Timken Company Performance Moves Ahead At Brisk Pace Earnings Up: 19 Percent for Third Quarter, 24 Percent for Year-To-Date
CANTON, Ohio, Oct. 21 -- The Timken Company
reported record sales and earnings for both the quarter and nine months ended
September 30.
"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, 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 Asheboro
(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 the third quarter, operating
income was $34.3 million versus $22.4 million in the year-earlier period.
The Timken Company (http://www.timken.com) is a leading international
manufacturer of highly engineered bearings and alloy steels. The company
employs about 19,000 people worldwide and reported 1996 sales of about
$2.4 billion.
The Timken Company and Subsidiaries
Third Quarter Second Quarter
Ended Sept 30 Ended Jun 30
Consolidated Statements
of Income 1997 1996 1997
(Thousands of dollars,
except share data)
Net sales $629,900 $581,417 $676,003
Cost of products sold 487,182 443,767 508,484
Gross profit $142,718 $137,650 $167,519
Selling, admin. & general
expenses 81,184 77,326 84,220
Operating income $61,534 $60,324 $83,299
Other income (expense):
Interest expense (5,242) (4,672) (5,588)
Other income (expense) - net (2,342) (3,545) (3,710)
Income before income
taxes $53,950 $52,107 $74,001
Provision for income
taxes 16,160 20,322 29,061
Net income $37,790 $31,785 $44,940
Net income per share $0.60 $0.51 $0.72
Average shares
outstanding 62,977,635 62,848,820 62,751,517
Nine Months
Ended Sept 30
Consolidated Statements of Income 1997 1996
(Thousands of dollars,
except share data)
Net sales $1,946,487 $1,778,924
Cost of products sold 1,483,038 1,359,670
Gross profit $463,449 $419,254
Selling, admin. & general expenses 243,158 234,460
Operating income $220,291 $184,794
Other income (expense):
Interest expense (16,295) (12,406)
Other income (expense) - net (9,053) (8,606)
Income before income taxes $194,943 $163,782
Provision for income taxes 71,147 63,875
Net income $123,796 $99,907
Net income per share $1.97 $1.59
Average shares outstanding 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
BEARING BUSINESS SEGMENT FINANCIAL RESULTS
(Dollars in millions)
Third Quarter Second Qtr Nine Months
Ended Sept 30 Ended June 30 Ended Sept 30
1997 1996 1997 1997 1996
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%
STEEL BUSINESS SEGMENT FINANCIAL RESULTS
(Dollars in millions)
Third Quarter Second Qtr Nine Months
Ended Sept 30 Ended June 30 Ended Sept 30
1997 1996 1997 1997 1996
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%
SOURCE The Timken Company