-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OyF5UjvfPZaNtmwsj70p/Vea+r0pftJj7EXBfa92GteXwsFwX/0xE+VEWc/xLnDc N/7HyHuWE2R7COoid7PYTg== 0000098362-99-000011.txt : 19990520 0000098362-99-000011.hdr.sgml : 19990520 ACCESSION NUMBER: 0000098362-99-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIMKEN CO CENTRAL INDEX KEY: 0000098362 STANDARD INDUSTRIAL CLASSIFICATION: 3562 IRS NUMBER: 340577130 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01169 FILM NUMBER: 99620046 BUSINESS ADDRESS: STREET 1: 1835 DUEBER AVE SW CITY: CANTON STATE: OH ZIP: 44706 BUSINESS PHONE: 3304383000 FORMER COMPANY: FORMER CONFORMED NAME: TIMKEN ROLLER BEARING CO DATE OF NAME CHANGE: 19710304 10-Q 1 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. 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 ========== ========== 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 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 ======= ======= 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 ======== ======== 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 ======== ======== 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) 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 ======= ======== ======== ========== ======== ==========
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 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. 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 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. 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 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. 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 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. 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. 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. 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 EX-10 2 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. 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. 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. 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. 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. 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. 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. (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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. EX-11 3 Exhibit 11 - COMPUTATION OF PER SHARE EARNINGS (Thousands of dollars, except per share data)
Three Months Ended March 31 1999 1998 ---------- ---------- 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
===== ===== EX-12 4 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 ======== ======== EX-27 5
5 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. 1,000 3-MOS DEC-31-1999 MAR-31-1999 11,012 0 382,555 8,741 456,220 882,490 2,827,739 1,459,725 2,523,983 559,886 327,076 0 0 289,636 760,970 2,523,983 625,370 625,370 498,811 498,811 0 0 6,656 27,585 11,006 16,579 0 0 0 16,579 .27 .27
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