8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 1, 2006

THE TIMKEN COMPANY

(Exact Name of Registrant as Specified in its Charter)

Ohio

(State or Other Jurisdiction of Incorporation)

1-1169	34-0577130
(Commission File Number)	(I.R.S. Employer 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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

     The Timken Company issued a press release on, February 1, 2006, announcing results for the fourth quarter and full year of 2005. A copy of the press release is attached as Exhibit 99.1 to this report and incorporated by this reference.

     This information shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

     Exhibits.

99.1 The Timken Company Press Release dated February 1, 2006, announcing results for the fourth quarter and full year of 2005

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 hereunto duly authorized.

THE TIMKEN COMPANY
By:	/s/ William R. Burkhart
	William R. Burkhart
	Senior Vice President and General Counsel

Date: February 1, 2006

EXHIBIT INDEX

Exhibit
Number	Description of Document
99.1	The Timken Company Press Release dated February 1, 2006, announcing results for the fourth quarter and full year of 2005

EX-99.1

EXHIBIT 99.1

The Timken Company

Media Contact: Denise Bowler
Manager — Global Corporate & Financial
Communications
Mail Code: GNW-37
1835 Dueber Avenue, S.W.
Canton, OH 44706 U.S.A.
Telephone: (330) 471-3485
Facsimile: (330) 471-4118
denise.bowler@timken.com

Investor Contact: Steve Tschiegg
Manager — Investor Relations
Mail Code: GNE-26
1835 Dueber Avenue, S.W.
Canton, OH 44706 U.S.A.
Telephone: (330) 471-7446
Facsimile: (330) 471-2797
steve.tschiegg@timken.com

For Additional Information:
www.timken.com/media
www.timken.com/investors

NEWS RELEASE

The Timken Company Reports Strong 2005 Results; Positive Outlook for 2006

     CANTON, Ohio — Feb. 1, 2006 — The Timken Company (NYSE: TKR) today announced record sales of $5.2 billion, up 15 percent from a year ago. Net income in 2005 increased sharply to a record $260.3 million, or $2.81 per diluted share, from $135.7 million, or $1.49 per diluted share, last year. Excluding the impact of special items, the company reported adjusted 2005 net income of $234.2 million or $2.53 per diluted share, compared to $122.3 million or $1.35 per diluted share in 2004. These special items include the benefits received under the Continued Dumping and Subsidy Offset Act [CDSOA], partially offset by charges related to restructuring and rationalization of operations.

     “In 2005, demand across a broad range of industrial markets drove record sales. The combination of strong markets and our execution translated into significantly improved results,” said James W. Griffith, president and CEO. “We have made considerable strides in our efforts to structurally improve Timken’s profitability. We continued that process in 2005 by launching several key initiatives to position the company for continued success.”

     During 2005, the company:

• Leveraged demand and implemented surcharges and price increases to recover high raw material costs;

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• Improved the business mix and increased production capacity in targeted areas, including significant investments in the U.S., China and Romania;

• Launched a major growth initiative in Asia with the objective of increasing market share, influencing major design centers and expanding our network of sources of globally competitive friction management products;

• Initiated Project ONE, a five-year program designed to improve business processes and systems to deliver enhanced customer service and financial performance. With an expected cost of $90 million, Project ONE is targeted to achieve annual savings of approximately $75 million upon project completion, as well as improved working capital management;

• Began restructuring automotive operations to address challenging market issues, with expected costs of $80 to $90 million and targeted annual savings of approximately $40 million by the end of 2007;

• Reached a new four-year agreement with the United Steelworkers union, covering employees in the Canton, Ohio bearing and steel plants. As a result of the contract settlement, the company has refined its plans to rationalize the Canton bearing operations, with expected costs of approximately $35 to $40 million over the next four years and targeted annual savings of approximately $25 million;

• Improved the business portfolio. The company expanded its presence in the aerospace aftermarket through acquisitions and alliances, providing a broader range of engine bearing repair and

The Timken Company

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	reconditioning, while also completing the divestiture of several non-strategic product lines; and
•	Strengthened the balance sheet, reducing debt while contributing $226 million to the company’s U.S. pension plans.

Fourth quarter results

     For the quarter ended December 31, 2005, sales were $1.3 billion, an increase of 8 percent from a year ago. Sales across all three business groups improved from the fourth quarter of 2004. Earnings per diluted share for the fourth quarter were $1.01, compared to $0.71 in the same period a year ago.

     Excluding special items, the company’s adjusted fourth quarter earnings per diluted share were $0.54, versus $0.44 a year ago. Special items in the fourth quarter included income from CDSOA, a gain on the sale of assets and restructuring and rationalization charges.

     “While adjusted fourth quarter earnings per diluted share were up 23 percent over the same period last year, they were lower than anticipated due to higher manufacturing costs, a write-off of obsolete and slow-moving inventory and increased reserves for automotive industry credit exposure,” said Mr. Griffith.

Industrial Group Results

     Industrial Group 2005 sales increased 13 percent from the prior year to a record $1.9 billion. The increase was driven by higher volume and improved product mix. Many end markets were strong, especially mining, metals, rail, aerospace and oil and gas, which also drove strong distribution sales. The Industrial Group also benefited from growth in emerging markets, especially China.

The Timken Company

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     Industrial Group 2005 earnings before interest and taxes (EBIT) increased to $199.9 million from $177.9 million in 2004, reflecting volume growth and price increases, partially offset by investments in Project ONE and Asia growth initiatives.

     Industrial Group sales in the 2005 fourth quarter increased to $491.9 million, up 10 percent from the prior year with continued market strength. EBIT was $41.9 million, down from $47.6 million a year ago. The positive impact of improvements in volume and mix were more than offset by higher manufacturing costs associated with the ramping up of capacity to meet customer demand, investments in Project ONE and Asia growth initiatives, and a write-off of obsolete and slow-moving inventory.

Automotive Group Results

     Automotive Group 2005 sales increased 5 percent to a record $1.7 billion. Sales grew due to favorable pricing actions and growth in medium and heavy truck markets. The Automotive Group had a loss in 2005 of $19.9 million, compared to EBIT of $15.9 million in 2004. Increased volume and pricing were more than offset by higher manufacturing costs associated with ramping up plants serving industrial customers and from reduced unit volume from light vehicle customers. Automotive results were also impacted by investments in Project ONE and an increase in accounts receivable reserves. In the third quarter, the company announced a restructuring plan as part of its effort to improve Automotive Group performance and address challenges in the automotive markets.

     In the fourth quarter, the Automotive Group had sales of $406.9 million, a 4 percent increase from a year ago. The Automotive Group had a loss of $7.5 million in the fourth quarter of 2005, compared to a loss of $1.9 million

The Timken Company

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for the same period a year ago. Despite higher pricing, fourth quarter results were negatively impacted by higher manufacturing costs, investments in Project ONE and an increase in accounts receivable reserves.

Steel Group Results

     Steel Group 2005 sales, including inter-segment sales, were a record $1.8 billion, up 27 percent from 2004. The sales growth reflected record shipments, driven by strong industrial markets, as well as surcharges and price increases to offset higher raw material and energy costs. For 2005, EBIT increased to $219.8 million from $54.8 million in 2004, driven by higher volume, raw material surcharges and price increases. High capacity utilization and record productivity also improved the results.

     Steel Group sales in the fourth quarter, including inter-segment sales, were $419.7 million, an 8 percent increase from the prior year. Fourth-quarter EBIT was $49.6 million, compared to $32.2 million a year ago. Both sales and EBIT reflected the strong business performance experienced throughout the year.

Outlook

     The company expects continued financial improvement in 2006. Global industrial markets are expected to remain strong, while improvements in Timken’s operating performance will be partially constrained by investments in Project ONE and Asia growth initiatives as well as the expensing of stock options. Earnings per diluted share for 2006, excluding special items, are estimated at $2.65 to $2.80 for the full year and $0.55 to $0.60 for the first quarter.

     The company will host a conference call for investors and analysts today to discuss financial results.

The Timken Company

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Conference Call:	Wednesday, Feb. 1, 2006
	11:00 a.m. Eastern Standard Time
All Callers:	Live Dial-In: 706-634-0975
	(Call in 10 minutes prior to be included)
	Replay Dial-In through Feb. 8, 2006: 706-645-9291
	Conference ID: 3960158
Live Webcast:	www.timken.com

     The Timken Company (NYSE: TKR; www.timken.com) keeps the world turning, with innovative ways to make customers’ products run smoother, faster and more efficiently. Timken’s highly engineered bearings, alloy steels and related products and services turn up everywhere. With operations in 27 countries, sales of $5.2 billion in 2005 and 27,000 employees, Timken is Where You Turn™ for better performance.

     Certain statements in this news release (including statements regarding the Company’s forecasts, estimates and expectations) that are not historical in nature are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, the statements related to expected savings and costs of the Company’s programs and initiatives and expectations concerning the Company’s financial performance, as well as statements contained in the paragraph under the heading “Outlook,” are 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: fluctuations in raw material and energy costs and the operation of the Company’s surcharge mechanisms; the Company’s ability to respond to the changes in its end markets; changes in the financial health of the Company’s customers; and the impact on operations of general economic conditions, higher raw material and energy costs, fluctuations in customer demand and the Company’s ability to achieve the benefits of its future and ongoing programs and initiatives, including the implementation of its Automotive Group restructuring, the rationalization of the Company’s Canton bearing operations, manufacturing transformation and rationalization activities. These and additional factors are described in greater detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, in the Company’s 2004 Annual Report, page 64 and in the Company’s Form 10-Q for the quarter ended September 30, 2005. The Company undertakes no obligation to update or revise any forward-looking statement.

#

The Timken Company

CONSOLIDATED STATEMENT OF INCOME	AS REPORTED												ADJUSTED (1)
(Thousands of U.S. dollars, except share data)	4Q 05			4Q 04			Year 05			Year 04			4Q 05			4Q 04			Year 05			Year 04
Net sales	$	1,281,083		$	1,187,875		$	5,168,434		$	4,513,671		$	1,281,083		$	1,187,875		$	5,168,434		$	4,513,671
Cost of products sold		1,019,120			940,317			4,095,209			3,670,584			1,019,120			940,317			4,095,209			3,670,584
Manufacturing rationalization/Integration/Reorganization expenses — cost of products sold		4,315			1,128			14,504			4,502			—			—			—			—
Gross Profit	$	257,648		$	246,430		$	1,058,721		$	838,585		$	261,963		$	247,558		$	1,073,225		$	843,087
Selling, administrative & general expenses (SG&A)		171,501			157,045			658,826			565,400			171,501			157,045			658,826			565,400
Manufacturing rationalization/Integration/Reorganization expenses — SG&A		1,289			5,778			2,766			22,523			—			—			—			—
Impairment and restructuring		1,686			9,436			26,093			13,434			—			—			—			—
Operating Income	$	83,172		$	74,171		$	371,036		$	237,228		$	90,462		$	90,513		$	414,399		$	277,687
Other expense		(5,331	)		(11,964	)		(17,764	)		(30,964	)		(5,331	)		(11,964	)		(17,764	)		(30,964	)
Special items — other income		82,435			36,876			85,422			42,952			—			—			—			—
Earnings Before Interest and Taxes (EBIT) (2)	$	160,276		$	99,083		$	438,694		$	249,216		$	85,131		$	78,549		$	396,635		$	246,723
Interest expense, net		(10,991	)		(14,262	)		(48,148	)		(49,437	)		(10,991	)		(14,262	)		(48,148	)		(49,437	)
Income Before Income Taxes	$	149,285		$	84,821		$	390,546		$	199,779		$	74,140		$	64,287		$	348,487		$	197,286
Provision for income taxes		54,404			20,439			130,265			64,123			23,495			24,429			114,304			74,969
Net Income	$	94,881		$	64,382		$	260,281		$	135,656		$	50,645		$	39,858		$	234,183		$	122,317
Earnings Per Share	$	1.03		$	0.71		$	2.84		$	1.51		$	0.55		$	0.44		$	2.56		$	1.36
Earnings Per Share—assuming dilution	$	1.01		$	0.71		$	2.81		$	1.49		$	0.54		$	0.44		$	2.53		$	1.35
Average Shares Outstanding		92,426,648			90,397,233			91,533,242			89,875,650			92,426,648			90,397,233			91,533,242			89,875,650
Average Shares Outstanding—assuming dilution		93,616,089			91,314,698			92,537,529			90,759,571			93,616,089			91,314,698			92,537,529			90,759,571

(1) “Adjusted” statements exclude the impact of impairment and restructuring, manufacturing rationalization/integration/reorganization and special charges and credits for all periods shown.

BUSINESS SEGMENTS

(Thousands of U.S. dollars)	4Q 05			4Q 04			Year 05			Year 04
Industrial Group
Net sales to external customers	$	491,465		$	448,496		$	1,925,211		$	1,709,770
Intersegment sales		386			454			1,847			1,437
Total net sales	$	491,851		$	448,950		$	1,927,058		$	1,711,207
Adjusted earnings before interest and taxes (EBIT)*(2)	$	41,864		$	47,636		$	199,936		$	177,913
Adjusted EBIT Margin (2)		8.5	%		10.6	%		10.4	%		10.4	%
Automotive Group
Net sales to external customers	$	406,875		$	391,585		$	1,661,048		$	1,582,226
Adjusted (loss) earnings before interest and taxes (EBIT)*(2)	$	(7,529	)	$	(1,863	)	$	(19,886	)	$	15,919
Adjusted EBIT (Loss) Margin (2)		-1.9	%		-0.5	%		-1.2	%		1.0	%
Steel Group
Net sales to external customers	$	382,743		$	347,794		$	1,582,175		$	1,221,675
Intersegment sales		36,909			40,794			178,157			161,941
Total net sales	$	419,652		$	388,588		$	1,760,332		$	1,383,616
Adjusted earnings before interest and taxes (EBIT) * (2)	$	49,609		$	32,246		$	219,780		$	54,756
Adjusted EBIT Margin (2)		11.8	%		8.3	%		12.5	%		4.0	%

*

Industrial Group, Automotive Group and Steel Group EBIT do not equal Consolidated EBIT due to intersegment adjustments which are eliminated upon consolidation.

(2)

EBIT is defined as operating income plus other income (expense). EBIT Margin is EBIT as a percentage of net sales. EBIT and EBIT margin on a segment basis exclude certain special items set forth above. EBIT and EBIT Margin are important financial measures used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. Management believes that reporting EBIT and EBIT Margin best reflect the performance of our business segments and EBIT disclosures are responsive to investors.

Reconciliation of Total Debt to Net Debt and the Ratio of Net Debt to Capital:
(Thousands of U.S. Dollars)	Dec 31, 2005			Dec 31, 2004
Short-term debt	$	159,279		$	158,690
Long-term debt		561,747			620,634
Total Debt		721,026			779,324
Less: cash and cash equivalents		(65,417	)		(50,967	)
Net Debt	$	655,609		$	728,357
Shareholders’ equity		1,497,067			1,269,848
Ratio of Total Debt to Capital		32.5	%		38.0	%
Ratio of Net Debt to Capital (Leverage)		30.5	%		36.5	%

This reconciliation is provided as additional relevant information about Timken’s financial position. Capital is defined as debt plus shareholder’s equity. Management believes Net Debt is more representative of Timken’s indicative financial position, due to a temporary increase in cash and cash equivalents.

Reconciliation of GAAP net income and EPS — Basic and Diluted as previously disclosed.

This reconciliation is provided as additional relevant information about the company’s performance. Management believes adjusted net income and adjusted earnings per share are more representative of the company’s performance and therefore useful to investors. Management also believes that it is appropriate to compare GAAP net income to adjusted net income in light of special items related to impairment and restructuring and manufacturing rationalization/integration/reorganization costs, Continued Dumping and Subsidy Offset Act (CDSOA) receipts, and gain on the sale of non-strategic assets.

	Fourth Quarter												Year
	05						04						05						04
(Thousands of U.S. dollars, except share data)	$			EPS			$			EPS			$			EPS			$			EPS
Net income	$	94,881		$	1.01		$	64,382		$	0.71		$	260,281		$	2.81		$	135,656		$	1.49
Pre-tax special items:
Manufacturing rationalization/integration/reorganization expenses — cost of products sold		4,315			0.05			1,128			0.01			14,504			0.16			4,502			0.05
Manufacturing rationalization/integration/reorganization expenses — SG&A		1,289			0.01			5,778			0.06			2,766			0.03			22,523			0.25
Impairment and restructuring		1,686			0.02			9,436			0.10			26,093			0.28			13,434			0.15
Special items — other (income) expense:
Gain on sale of non-strategic assets/dissolution of British Timken		(6,012	)		(0.06	)		(190	)		—			(8,547	)		(0.09	)		(190	)		—
CDSOA receipts, net of expenses		(77,069	)		(0.82	)		(36,686	)		(0.40	)		(77,069	)		(0.83	)		(44,429	)		(0.49	)
Adoption of FIN 46 for investment in PEL		—			—			—			—			—			—			948	(3)		0.01
Other		646			0.01			—			—			194			—			719			0.01
Tax effect of special items		30,909		$	0.32			(3,990	)		(0.04	)		15,961		$	0.17			(10,846	)		(0.12	)
Adjusted net income	$	50,645		$	0.54		$	39,858		$	0.44		$	234,183		$	2.53		$	122,317		$	1.35

(3) In the first quarter of 2004, Timken adopted Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51” (FIN 46). Timken concluded that its investment in a joint venture, PEL, was subject to the provisions of FIN 46 and that Timken was the primary beneficiary of PEL. Accordingly, Timken consolidated PEL, effective March 31, 2004, which resulted in a charge to earnings related to the cumulative effect of change in accounting principle.

Reconciliation of Outlook Information —
Expected earnings per diluted share for the first quarter and the full year exclude special items. Examples of such special items include impairment and restructuring, manufacturing rationalization/integration/reorganization expenses, gain on the sale of non-strategic assets, and payments under the CDSOA. It is not possible at this time to identify the potential amount or significance of these special items. We cannot predict whether we will receive any additional payments under the CDSOA in 2006 and if so, in what amount. If we do receive any additional CDSOA payments, they will most likely be received in the fourth quarter.

CONSOLIDATED BALANCE SHEET	Dec 31		Dec 31
(Thousands of U.S. dollars)	2005		2004
ASSETS
Cash & cash equivalents	$	65,417	$	50,967
Accounts receivable		711,783		717,425
Deferred income taxes		107,632		114,657
Inventories		998,368		874,833
Total Current Assets	$	1,883,200	$	1,757,882
Property, plant & equipment		1,547,044		1,583,425
Goodwill		204,129		189,299
Other assets		359,056		415,056
Total Assets	$	3,993,429	$	3,945,662
LIABILITIES
Accounts payable & other liabilities	$	500,939	$	504,585
Short-term debt		159,279		158,690
Accrued expenses		411,298		370,101
Total Current Liabilities	$	1,071,516	$	1,033,376
Long-term debt		561,747		620,634
Accrued pension cost		246,692		468,644
Accrued postretirement benefits cost		513,771		490,366
Other non-current liabilities		102,636		62,794
Total Liabilities	$	2,496,362	$	2,675,814
SHAREHOLDERS’ EQUITY		1,497,067		1,269,848
Total Liabilities and Shareholders’ Equity	$	3,993,429	$	3,945,662

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS	For the three months ended						For the year ended
	Dec 31			Dec 31			Dec 31			Dec 31
(Thousands of U.S. dollars)	2005			2004			2005			2004
Cash Provided (Used)
OPERATING ACTIVITIES
Net Income	$	94,881		$	64,382		$	260,281		$	135,656
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization		57,294			52,515			218,059			209,431
Other		97,507			74,944			93,304			81,097
Changes in operating assets and liabilities:
Accounts receivable		80,836			7,067			(29,426	)		(114,264	)
Inventories		1,819			(38,702	)		(160,287	)		(130,407	)
Other assets		7,571			8,693			(21,099	)		9,544
Accounts payable and accrued expenses		(126,477	)		(23,170	)		(47,288	)		(73,218	)
Foreign currency translation (gain) loss		(424	)		948			5,157			2,690
Net Cash Provided (Used) by Operating Activities	$	213,007		$	146,677		$	318,701		$	120,529
INVESTING ACTIVITIES
Capital expenditures		($97,002	)		($59,951	)		($225,607	)		($155,180	)
Other		3,116			5,565			9,963			5,268
Proceeds from disposals of non-strategic assets		10,109			50,690			21,838			50,690
Acquisitions		(42,367	)		874			(48,996	)		(9,359	)
Net Cash Used by Investing Activities		($126,144	)		($2,822	)		($242,802	)		($108,581	)
FINANCING ACTIVITIES
Cash dividends paid to shareholders		($13,911	)		($11,753	)		($55,149	)		($46,767	)
Proceeds from exercise of stock options		9,053			3,884			39,793			17,628
Net (payments) borrowings on credit facilities		(79,337	)		(146,038	)		(40,938	)		27,277
Net Cash (Used) Provided by Financing Activities		($84,195	)		($153,907	)		($56,294	)		($1,862	)
Effect of exchange rate changes on cash		($356	)	$	8,148			($5,155	)	$	12,255
Increase (Decrease) in Cash and Cash Equivalents		2,312			(1,904	)		14,450			22,341
Cash and Cash Equivalents at Beginning of Period	$	63,105		$	52,871		$	50,967		$	28,626
Cash and Cash Equivalents at End of Period	$	65,417		$	50,967		$	65,417		$	50,967