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As Of Filer Filing For·On·As Docs:Size 10/29/20 Timken Co. 10-Q 9/30/20 78:11M |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 1.11M 2: EX-31.1 Certification -- §302 - SOA'02 HTML 23K 3: EX-31.2 Certification -- §302 - SOA'02 HTML 24K 4: EX-32 Certification -- §906 - SOA'02 HTML 22K 11: R1 Cover Document HTML 71K 12: R2 Consolidated Statements of Income (Unaudited) HTML 81K 13: R3 Consolidated Statements of Comprehensive Income HTML 56K (Unaudited) 14: R4 Consolidated Balance Sheets HTML 181K 15: R5 Consolidated Balance Sheets (Parenthetical) HTML 35K 16: R6 Consolidated Statements of Cash Flows (Unaudited) HTML 113K 17: R7 Basis of Presentation HTML 22K 18: R8 Accumulated Other Comprehensive Income HTML 103K 19: R9 Accumulated Other Comprehensive Income (Tables) HTML 59K 20: R10 Accumulated Other Comprehensive Income (Details) HTML 77K 21: R11 Significant Accounting Policies HTML 36K 22: R12 Acquisitions (Notes) HTML 66K 23: R13 Revenue (Notes) HTML 74K 24: R14 Segment Information HTML 59K 25: R15 Earnings Per Share HTML 48K 26: R16 Inventories HTML 33K 27: R17 Financing Arrangements HTML 51K 28: R18 Goodwill and Other Intangible Assets HTML 64K 29: R19 Contingencies (Notes) HTML 27K 30: R20 Equity HTML 142K 31: R21 Impairment and Restructuring (Notes) HTML 27K 32: R22 Postretirement Benefit Plans HTML 46K 33: R23 Fair Value HTML 70K 34: R24 Derivatives and Hedging Activities (Notes) HTML 38K 35: R25 Acquisitions (Tables) HTML 62K 36: R26 Revenue (Tables) HTML 66K 37: R27 Segment Information (Tables) HTML 56K 38: R28 Income Taxes (Tables) HTML 46K 39: R29 Earnings Per Share (Tables) HTML 47K 40: R30 Inventories (Tables) HTML 32K 41: R31 Financing Arrangements (Tables) HTML 49K 42: R32 Goodwill and Other Intangible Assets (Tables) HTML 65K 43: R33 Equity (Tables) HTML 141K 44: R34 Impairment and Restructuring (Tables) HTML 51K 45: R35 Retirement Benefit Plans (Tables) HTML 49K 46: R36 Postretirement Benefit Plans (Tables) HTML 44K 47: R37 Fair Value (Tables) HTML 64K 48: R38 Derivatives and Hedging Activities (Table) HTML 30K 49: R39 Recent Accounting Pronouncements Table (Details) HTML 161K 50: R40 Acquisitions (Details) HTML 156K 51: R41 Revenue Disaggregation of Revenue (Details) HTML 74K 52: R42 Segment Information (Details) HTML 56K 53: R43 Income Taxes (Details Textual) HTML 34K 54: R44 Earnings Per Share (Details) HTML 52K 55: R45 Earnings Per Share (Details Textual) HTML 22K 56: R46 Inventories (Details) HTML 34K 57: R47 Inventories (Details Textual) HTML 23K 58: R48 Financing Arrangements (Details) HTML 69K 59: R49 Financing Arrangements (Details 1) HTML 85K 60: R50 Financing Arrangements (Details Textual) HTML 145K 61: R51 Goodwill and Other Intangible Assets (Details) HTML 34K 62: R52 Goodwill and Other Intangible Assets (Details 1) HTML 53K 63: R53 Goodwill and Other Intangible Assets (Details HTML 49K Textual) 64: R54 Contingencies (Details) HTML 24K 65: R55 Equity (Details) HTML 137K 66: R56 Equity (Details Textual) HTML 35K 67: R57 Impairment and Restructuring (Details) HTML 88K 68: R58 Retirement Benefit Plans (Details) HTML 63K 69: R59 Postretirement Benefit Plans (Details) HTML 49K 70: R60 Fair Value (Details) HTML 57K 71: R61 Fair Value (Details Textual) HTML 31K 72: R62 Derivatives and Hedging Activities (Details) HTML 47K 73: R63 Derivatives and Hedging Activities Derivatives HTML 26K (Details) 74: R9999 Uncategorized Items - tkr-20200930.htm HTML 21K 76: XML IDEA XML File -- Filing Summary XML 139K 10: XML XBRL Instance -- tkr-20200930_htm XML 2.85M 75: EXCEL IDEA Workbook of Financial Reports XLSX 100K 6: EX-101.CAL XBRL Calculations -- tkr-20200930_cal XML 218K 7: EX-101.DEF XBRL Definitions -- tkr-20200930_def XML 1.17M 8: EX-101.LAB XBRL Labels -- tkr-20200930_lab XML 1.74M 9: EX-101.PRE XBRL Presentations -- tkr-20200930_pre XML 1.35M 5: EX-101.SCH XBRL Schema -- tkr-20200930 XSD 142K 77: JSON XBRL Instance as JSON Data -- MetaLinks 447± 616K 78: ZIP XBRL Zipped Folder -- 0000098362-20-000145-xbrl Zip 673K
tkr-20200930 |
i ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
i ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
i Ohio | i 34-0577130 | ||||||||||
(State
or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
i 4500 Mount Pleasant Street NW | |||||||||||
i North Canton | i Ohio | i 44720-5450 | |||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||||||||
i Common Shares, without par value | i TKR | i The New York Stock Exchange |
i Large accelerated filer | ☒ | Accelerated filer | ☐ | ||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | i ☐ | ||||||||||||||
Emerging growth company | i ☐ |
Class | Outstanding at September 30, 2020 | |||||||||||||
Common Shares, without par value | i 75,356,188 shares |
PAGE | |||||||||||
I. | |||||||||||
Item 1. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
II. | |||||||||||
Item 1. | |||||||||||
Item1A. | |||||||||||
Item 2. | |||||||||||
Item 6. |
Three
Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(Dollars in millions, except per share data) | |||||||||||||||||||||||
Net sales | $ | i 894.6 | $ | i 914.0 | $ | i 2,621.5 | $ | i 2,893.7 | |||||||||||||||
Cost of products sold | i 630.9 | i 636.5 | i 1,848.6 | i 2,007.9 | |||||||||||||||||||
Gross Profit | i 263.7 | i 277.5 | i 772.9 | i 885.8 | |||||||||||||||||||
Selling, general and administrative expenses | i 132.7 | i 148.0 | i 398.1 | i 459.4 | |||||||||||||||||||
Impairment and restructuring charges | i 12.0 | i 1.6 | i 18.7 | i 3.5 | |||||||||||||||||||
Operating Income | i 119.0 | i 127.9 | i 356.1 | i 422.9 | |||||||||||||||||||
Interest expense | ( i 16.3) | ( i 18.2) | ( i 52.3) | ( i 55.5) | |||||||||||||||||||
Interest income | i 0.9 | i 1.1 | i 3.0 | i 3.5 | |||||||||||||||||||
Non-service pension and other postretirement income (expense) | i 15.3 | ( i 14.4) | i 13.4 | ( i 14.1) | |||||||||||||||||||
Other income (expense), net | ( i 1.0) | i 5.8 | i 1.1 | i 10.5 | |||||||||||||||||||
Income Before Income Taxes | i 117.9 | i 102.2 | i 321.3 | i 367.3 | |||||||||||||||||||
Provision for income taxes | i 26.6 | i 35.5 | i 84.2 | i 110.4 | |||||||||||||||||||
Net Income | i 91.3 | i 66.7 | i 237.1 | i 256.9 | |||||||||||||||||||
Less: Net income attributable to noncontrolling interest | i 2.5 | i 2.5 | i 5.7 | i 8.3 | |||||||||||||||||||
Net Income Attributable to The Timken Company | $ | i 88.8 | $ | i 64.2 | $ | i 231.4 | $ | i 248.6 | |||||||||||||||
Net
Income per Common Share Attributable to The Timken Company Common Shareholders | |||||||||||||||||||||||
Basic earnings per share | $ | i 1.18 | $ | i 0.85 | $ | i 3.07 | $ | i 3.28 | |||||||||||||||
Diluted earnings per share | $ | i 1.16 | $ | i 0.84 | $ | i 3.04 | $ | i 3.23 | |||||||||||||||
Three
Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||
Net Income | $ | i 91.3 | $ | i 66.7 | $ | i 237.1 | $ | i 256.9 | |||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
Foreign currency translation adjustments | i 63.5 | ( i 63.0) | i 9.2 | ( i 62.1) | |||||||||||||||||||
Pension and postretirement liability adjustments | ( i 1.2) | i 76.7 | ( i 4.0) | i 76.6 | |||||||||||||||||||
Change in fair value of marketable securities | ( i 0.1) | i — | i — | i — | |||||||||||||||||||
Change in fair value of derivative financial instruments | ( i 1.8) | i 1.9 | ( i 0.2) | i 0.5 | |||||||||||||||||||
Other comprehensive income, net of tax | i 60.4 | i 15.6 | i 5.0 | i 15.0 | |||||||||||||||||||
Comprehensive Income, net of tax | i 151.7 | i 82.3 | i 242.1 | i 271.9 | |||||||||||||||||||
Less: comprehensive income (loss) attributable to noncontrolling interest | i 3.0 | i 0.7 | ( i 0.1) | i 8.1 | |||||||||||||||||||
Comprehensive Income Attributable to The Timken Company | $ | i 148.7 | $ | i 81.6 | $ | i 242.2 | $ | i 263.8 |
(Unaudited) | |||||||||||
(Dollars in millions) | September 30, 2020 | December 31, 2019 | |||||||||
ASSETS | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | i 313.1 | $ | i 209.5 | |||||||
Restricted cash | i 0.9 | i 6.7 | |||||||||
Accounts
receivable, less allowances (2020 – $ i 17.1 million; 2019 – $ i 18.1 million) | i 571.5 | i 545.1 | |||||||||
Unbilled receivables | i 141.1 | i 129.2 | |||||||||
Inventories, net | i 789.9 | i 842.0 | |||||||||
Deferred charges and prepaid expenses | i 32.7 | i 36.7 | |||||||||
Other current assets | i 115.3 | i 105.4 | |||||||||
Total Current Assets | i 1,964.5 | i 1,874.6 | |||||||||
Property, Plant and Equipment, net | i 980.2 | i 989.2 | |||||||||
Other Assets | |||||||||||
Goodwill | i 1,021.1 | i 993.7 | |||||||||
Other intangible assets | i 737.2 | i 758.5 | |||||||||
Operating lease assets | i 105.4 | i 114.1 | |||||||||
Non-current pension assets | i 9.0 | i 3.4 | |||||||||
Non-current other postretirement benefit assets | i — | i 36.6 | |||||||||
Deferred income taxes | i 72.9 | i 71.8 | |||||||||
Other non-current assets | i 18.8 | i 18.0 | |||||||||
Total Other Assets | i 1,964.4 | i 1,996.1 | |||||||||
Total Assets | $ | i 4,909.1 | $ | i 4,859.9 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current Liabilities | |||||||||||
Short-term debt | $ | i 64.8 | $ | i 17.3 | |||||||
Current portion of long-term debt | i 10.8 | i 64.7 | |||||||||
Short-term operating lease liabilities | i 26.6 | i 28.3 | |||||||||
Accounts payable, trade | i 306.7 | i 301.7 | |||||||||
Salaries, wages and benefits | i 116.7 | i 134.5 | |||||||||
Income taxes payable | i 23.3 | i 17.8 | |||||||||
Other current liabilities | i 191.5 | i 172.3 | |||||||||
Total Current Liabilities | i 740.4 | i 736.6 | |||||||||
Non-Current Liabilities | |||||||||||
Long-term debt | i 1,533.0 | i 1,648.1 | |||||||||
Accrued pension benefits | i 161.5 | i 165.1 | |||||||||
Accrued postretirement benefits | i 44.8 | i 31.8 | |||||||||
Long-term operating lease liabilities | i 66.0 | i 71.3 | |||||||||
Deferred income taxes | i 162.3 | i 168.2 | |||||||||
Other non-current liabilities | i 102.1 | i 84.0 | |||||||||
Total Non-Current Liabilities | i 2,069.7 | i 2,168.5 | |||||||||
Shareholders’ Equity | |||||||||||
Class I and II Serial Preferred Stock, without par value: | |||||||||||
Authorized – i i i i 10,000,000 / / /
shares each class, none issued | i — | i — | |||||||||
Common shares, without par value: | |||||||||||
Authorized – i i 200,000,000 /
shares | |||||||||||
Issued (including shares in treasury) (2020 – i 98,375,135 shares; 2019 – i 98,375,135
shares) | |||||||||||
Stated capital | i 53.1 | i 53.1 | |||||||||
Other paid-in capital | i 930.6 | i 937.6 | |||||||||
Earnings invested in the business | i 2,073.4 | i 1,907.4 | |||||||||
Accumulated other comprehensive loss | ( i 39.3) | ( i 50.1) | |||||||||
Treasury
shares at cost (2020 – i 23,018,947 shares; 2019 – i 22,836,180 shares) | ( i 989.7) | ( i 979.8) | |||||||||
Total Shareholders’ Equity | i 2,028.1 | i 1,868.2 | |||||||||
Noncontrolling Interest | i 70.9 | i 86.6 | |||||||||
Total Equity | i 2,099.0 | i 1,954.8 | |||||||||
Total Liabilities and Equity | $ | i 4,909.1 | $ | i 4,859.9 |
Nine Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
(Dollars in millions) | |||||||||||
CASH PROVIDED (USED) | |||||||||||
Operating Activities | |||||||||||
Net income | $ | i 237.1 | $ | i 256.9 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | i 125.2 | i 120.4 | |||||||||
Impairment charges | i 0.1 | i 0.8 | |||||||||
Loss (gain) on sale of assets | i 1.7 | ( i 1.0) | |||||||||
Deferred income tax (benefit) provision | ( i 6.7) | i 1.7 | |||||||||
Stock-based compensation expense | i 19.2 | i 20.7 | |||||||||
Pension and other postretirement (income) expense | ( i 3.9) | i 23.2 | |||||||||
Pension and other postretirement benefit contributions and payments | ( i 12.9) | ( i 37.1) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( i 27.6) | ( i 6.4) | |||||||||
Unbilled receivables | ( i 11.9) | ( i 35.0) | |||||||||
Inventories | i 47.9 | i 37.8 | |||||||||
Accounts payable, trade | i 2.8 | ( i 7.4) | |||||||||
Other accrued expenses | i 49.4 | ( i 28.7) | |||||||||
Income taxes | i 12.4 | i 9.0 | |||||||||
Other, net | i 24.4 | ( i 0.1) | |||||||||
Net Cash Provided by Operating Activities | i 457.2 | i 354.8 | |||||||||
Investing Activities | |||||||||||
Capital expenditures | ( i 85.7) | ( i 82.9) | |||||||||
Acquisitions, net of cash received | ( i 6.7) | ( i 82.7) | |||||||||
Investments in short-term marketable securities, net | ( i 10.4) | i 0.1 | |||||||||
Other | i 1.4 | i 3.3 | |||||||||
Net Cash Used in Investing Activities | ( i 101.4) | ( i 162.2) | |||||||||
Financing Activities | |||||||||||
Cash dividends paid to shareholders | ( i 65.0) | ( i 63.8) | |||||||||
Purchase of treasury shares | ( i 42.3) | ( i 56.1) | |||||||||
Proceeds from exercise of stock options | i 18.2 | i 9.9 | |||||||||
Payments related to tax withholding for stock-based compensation | ( i 12.0) | ( i 9.3) | |||||||||
Accounts receivable facility borrowings | i 10.0 | i 25.0 | |||||||||
Accounts receivable facility payments | ( i 110.0) | i — | |||||||||
Proceeds from long-term debt | i 550.0 | i 451.0 | |||||||||
Payments on long-term debt | ( i 635.2) | ( i 481.7) | |||||||||
Deferred financing costs | ( i 1.6) | ( i 1.9) | |||||||||
Short-term debt activity, net | i 46.0 | ( i 10.2) | |||||||||
Noncontrolling interest dividends paid | ( i 15.8) | ( i 0.3) | |||||||||
Net Cash Used in Financing Activities | ( i 257.7) | ( i 137.4) | |||||||||
Effect of exchange rate changes on cash | ( i 0.3) | ( i 6.4) | |||||||||
Increase in Cash, Cash Equivalents and Restricted Cash | i 97.8 | i 48.8 | |||||||||
Cash, cash equivalents and restricted cash at beginning of year | i 216.2 | i 133.1 | |||||||||
Cash, Cash Equivalents and Restricted Cash at End of Period | $ | i 314.0 | $ | i 181.9 |
Initial Purchase Price Allocation | Adjustments | Purchase Price Allocation | |||||||||
Assets: | |||||||||||
Accounts receivable, net | $ | i 26.3 | $ | ( i 0.1) | $ | i 26.2 | |||||
Inventories, net | i 62.9 | ( i 0.4) | i 62.5 | ||||||||
Other current assets | i 4.9 | i 0.2 | i 5.1 | ||||||||
Property, plant and equipment, net | i 57.4 | ( i 0.1) | i 57.3 | ||||||||
Operating lease assets | i 4.7 | ( i 0.1) | i 4.6 | ||||||||
Goodwill | i 44.2 | i 6.6 | i 50.8 | ||||||||
Other intangible assets | i 84.4 | i — | i 84.4 | ||||||||
Other non-current assets | i 0.7 | i — | i 0.7 | ||||||||
Total assets acquired | $ | i 285.5 | $ | i 6.1 | $ | i 291.6 | |||||
Liabilities: | |||||||||||
Accounts payable, trade | $ | i 10.8 | $ | ( i 0.2) | $ | i 10.6 | |||||
Salaries, wages and benefits | i 6.8 | i — | i 6.8 | ||||||||
Income taxes payable | i 2.1 | i — | i 2.1 | ||||||||
Other current liabilities | i 6.7 | i 0.4 | i 7.1 | ||||||||
Short-term debt | i 0.8 | i — | i 0.8 | ||||||||
Long-term debt | i 17.2 | i — | i 17.2 | ||||||||
Accrued pension benefits | i 0.5 | i — | i 0.5 | ||||||||
Accrued postretirement benefits | i 0.1 | i — | i 0.1 | ||||||||
Long-term operating lease liabilities | i 4.1 | ( i 0.1) | i 4.0 | ||||||||
Deferred income taxes | i 5.1 | ( i 0.7) | i 4.4 | ||||||||
Other non-current liabilities | i 1.1 | i — | i 1.1 | ||||||||
Total liabilities assumed | $ | i 55.3 | $ | ( i 0.6) | $ | i 54.7 | |||||
Noncontrolling interest acquired | i 1.8 | i — | i 1.8 | ||||||||
Net assets acquired | $ | i 228.4 | $ | i 6.7 | $ | i 235.1 | |||||
Three Months Ended | Three Months Ended | |||||||||||||||||||
September 30, 2020 | September 30, 2019 | |||||||||||||||||||
Mobile | Process | Total | Mobile | Process | Total | |||||||||||||||
United States | $ | i 220.7 | $ | i 163.2 | $ | i 383.9 | $ | i 245.8 | $ | i 196.0 | $ | i 441.8 | ||||||||
Americas excluding United States | i 45.1 | i 36.0 | i 81.1 | i 54.7 | i 41.1 | i 95.8 | ||||||||||||||
Europe / Middle East / Africa | i 92.7 | i 114.3 | i 207.0 | i 85.3 | i 120.2 | i 205.5 | ||||||||||||||
Asia-Pacific | i 70.1 | i 152.5 | i 222.6 | i 69.3 | i 101.6 | i 170.9 | ||||||||||||||
Net sales | $ | i 428.6 | $ | i 466.0 | $ | i 894.6 | $ | i 455.1 | $ | i 458.9 | $ | i 914.0 |
Nine Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, 2020 | September 30, 2019 | |||||||||||||||||||
Mobile | Process | Total | Mobile | Process | Total | |||||||||||||||
United States | $ | i 645.5 | $ | i 529.5 | $ | i 1,175.0 | $ | i 778.1 | $ | i 632.6 | $ | i 1,410.7 | ||||||||
Americas excluding United States | i 120.7 | i 100.3 | i 221.0 | i 160.4 | i 125.5 | i 285.9 | ||||||||||||||
Europe / Middle East / Africa | i 280.2 | i 342.8 | i 623.0 | i 288.2 | i 374.3 | i 662.5 | ||||||||||||||
Asia-Pacific | i 191.5 | i 411.0 | i 602.5 | i 222.1 | i 312.5 | i 534.6 | ||||||||||||||
Net sales | $ | i 1,237.9 | $ | i 1,383.6 | $ | i 2,621.5 | $ | i 1,448.8 | $ | i 1,444.9 | $ | i 2,893.7 |
Nine Months Ended | Nine Months Ended | |||||||
Revenue by sales channel | September 30, 2020 | September 30, 2019 | ||||||
Original equipment manufacturers | i 60% | i 56% | ||||||
Distribution/end users | i 40% | i 44% |
September 30, 2020 | |||||
Beginning balance, January 1 | $ | i 129.2 | |||
Additional unbilled revenue recognized | i 310.0 | ||||
Less: amounts billed to customers | ( i 298.1) | ||||
Ending balance | $ | i 141.1 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net sales: | |||||||||||||||||||||||
Mobile Industries | $ | i 428.6 | $ | i 455.1 | $ | i 1,237.9 | $ | i 1,448.8 | |||||||||||||||
Process Industries | i 466.0 | i 458.9 | i 1,383.6 | i 1,444.9 | |||||||||||||||||||
Net sales | $ | i 894.6 | $ | i 914.0 | $ | i 2,621.5 | $ | i 2,893.7 | |||||||||||||||
Segment EBITDA: | |||||||||||||||||||||||
Mobile Industries | $ | i 64.0 | $ | i 70.1 | $ | i 177.9 | $ | i 227.4 | |||||||||||||||
Process Industries | i 109.2 | i 116.5 | i 343.0 | i 369.8 | |||||||||||||||||||
Total EBITDA, for reportable segments | $ | i 173.2 | $ | i 186.6 | $ | i 520.9 | $ | i 597.2 | |||||||||||||||
Corporate EBITDA | ( i 10.6) | ( i 11.2) | ( i 28.2) | ( i 40.6) | |||||||||||||||||||
Corporate
pension and other postretirement benefit related income (expense) (1) | i 11.9 | ( i 16.9) | i 3.1 | ( i 16.9) | |||||||||||||||||||
Depreciation and amortization | ( i 41.2) | ( i 39.2) | ( i 125.2) | ( i 120.4) | |||||||||||||||||||
Interest expense | ( i 16.3) | ( i 18.2) | ( i 52.3) | ( i 55.5) | |||||||||||||||||||
Interest income | i 0.9 | i 1.1 | i 3.0 | i 3.5 | |||||||||||||||||||
Income before income taxes | $ | i 117.9 | $ | i 102.2 | $ | i 321.3 | $ | i 367.3 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Provision for income taxes | $ | i 26.6 | $ | i 35.5 | $ | i 84.2 | $ | i 110.4 | ||||||||||||
Effective tax rate | i 22.6 | % | i 34.7 | % | i 26.2 | % | i 30.1 | % |
Three Months Ended September 30, | Nine
Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income attributable to The Timken Company | $ | i 88.8 | $ | i 64.2 | $ | i 231.4 | $ | i 248.6 | |||||||||||||||
Less:
undistributed earnings allocated to nonvested stock | i — | i — | i — | i — | |||||||||||||||||||
Net
income available to common shareholders for basic and diluted earnings per share | $ | i 88.8 | $ | i 64.2 | $ | i 231.4 | $ | i 248.6 | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average number of shares outstanding - basic | i 75,223,462 | i 75,628,410 | i 75,288,567 | i 75,864,544 | |||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||
Stock options and awards - based on the treasury stock method | i 1,062,674 | i 964,284 | i 843,353 | i 1,037,882 | |||||||||||||||||||
Weighted
average number of shares outstanding assuming dilution of stock options and awards | i 76,286,136 | i 76,592,694 | i 76,131,920 | i 76,902,426 | |||||||||||||||||||
Basic earnings per share | $ | i 1.18 | $ | i 0.85 | $ | i 3.07 | $ | i 3.28 | |||||||||||||||
Diluted earnings per share | $ | i 1.16 | $ | i 0.84 | $ | i 3.04 | $ | i 3.23 |
September 30, 2020 | December 31, 2019 | ||||||||||
Manufacturing supplies | $ | i 34.7 | $ | i 34.2 | |||||||
Raw materials | i 98.3 | i 100.0 | |||||||||
Work in process | i 304.2 | i 308.9 | |||||||||
Finished products | i 401.6 | i 439.0 | |||||||||
Subtotal | i 838.8 | i 882.1 | |||||||||
Allowance for obsolete and surplus inventory | ( i 48.9) | ( i 40.1) | |||||||||
Total Inventories, net | $ | i 789.9 | $ | i 842.0 |
Mobile Industries | Process Industries | Total | ||||||||||||
Beginning balance | $ | i 361.3 | $ | i 632.4 | $ | i 993.7 | ||||||||
Acquisitions | i 4.4 | i 2.2 | i 6.6 | |||||||||||
Foreign currency translation adjustments and other changes | i 7.8 | i 13.0 | i 20.8 | |||||||||||
Ending balance | $ | i 373.5 | $ | i 647.6 | $ | i 1,021.1 |
Balance at September 30, 2020 | Balance at December 31, 2019 | |||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||
Intangible
assets subject to amortization: | ||||||||||||||||||||
Customer relationships | $ | i 519.8 | $ | ( i 152.3) | $ | i 367.5 | $ | i 510.9 | $ | ( i 128.8) | $ | i 382.1 | ||||||||
Technology and know-how | i 270.2 | ( i 66.7) | i 203.5 | i 265.1 | ( i 54.7) | i 210.4 | ||||||||||||||
Trade names | i 12.7 | ( i 6.7) | i 6.0 | i 12.7 | ( i 6.1) | i 6.6 | ||||||||||||||
Capitalized software | i 274.0 | ( i 252.0) | i 22.0 | i 270.3 | ( i 245.8) | i 24.5 | ||||||||||||||
Other | i 14.0 | ( i 9.8) | i 4.2 | i 13.8 | ( i 9.1) | i 4.7 | ||||||||||||||
$ | i 1,090.7 | $ | ( i 487.5) | $ | i 603.2 | $ | i 1,072.8 | $ | ( i 444.5) | $ | i 628.3 | |||||||||
Intangible assets not subject to amortization: | ||||||||||||||||||||
Trade names | $ | i 125.3 | $ | i 125.3 | $ | i 121.5 | $ | i 121.5 | ||||||||||||
FAA air agency certificates | i 8.7 | i 8.7 | i 8.7 | i 8.7 | ||||||||||||||||
$ | i 134.0 | $ | i 134.0 | $ | i 130.2 | $ | i 130.2 | |||||||||||||
Total intangible assets | $ | i 1,224.7 | $ | ( i 487.5) | $ | i 737.2 | $ | i 1,203.0 | $ | ( i 444.5) | $ | i 758.5 |
September 30, 2020 | December 31, 2019 | |||||||
Variable-rate Accounts Receivable Facility with an interest rate of i 2.77%
at December 31, 2019 | $ | i — | $ | i 1.8 | ||||
Borrowings
under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from i 0.15% to i 1.75%
at September 30, 2020 and i 0.27%to i 1.75% at December 31,
2019 | i 64.8 | i 15.5 | ||||||
Short-term debt | $ | i 64.8 | $ | i 17.3 |
September 30, 2020 | December 31, 2019 | |||||||
Variable-rate Senior Credit Facility with an average interest rate on U.S. Dollar of i 2.29%
and Euro of i 1.10% at September 30, 2020 and i 2.85% and Euro of i 1.00%
at December 31, 2019 | $ | i 114.3 | $ | i 132.7 | ||||
Variable-rate
Euro Term Loan(1), matured on September 18, 2020, with an interest of i 1.13% at December 31, 2019 | i — | i 54.4 | ||||||
Variable-rate
Accounts Receivable Facility with an interest rate of i 2.77% at December 31, 2019 | i — | i 98.2 | ||||||
Variable-rate
Term Loan(1), maturing on i September 11, 2023, with an interest rate of i 2.11% at September 30,
2020 and i 2.92% at December 31, 2019 | i 331.7 | i 338.5 | ||||||
Fixed-rate
Senior Unsecured Notes(1), maturing on i September 01, 2024, with an interest rate of i i 3.875 / % | i 348.9 | i 348.5 | ||||||
Fixed-rate
Euro Senior Unsecured Notes(1), maturing on i September 07, 2027, with an interest rate of i i 2.02 / % | i 175.4 | i 167.7 | ||||||
Fixed-rate
Senior Unsecured Notes(1), maturing on i December 15, 2028, with an interest rate of i i 4.50 / % | i 396.4 | i 396.1 | ||||||
Fixed-rate
Medium-Term Notes, Series A(1), maturing at various dates through May 2028, with interest rates ranging from i i 6.74 / %
to i i 7.76 / % | i 154.6 | i 154.6 | ||||||
Fixed-rate
Bank Loan, maturing on i June 30, 2033, with an interest rate of i i 2.15 / % | i 18.4 | i 18.0 | ||||||
Other | i 4.1 | i 4.1 | ||||||
i 1,543.8 | i 1,712.8 | |||||||
Less: Current maturities | i 10.8 | i 64.7 | ||||||
Long-term debt | $ | i 1,533.0 | $ | i 1,648.1 |
The Timken Company Shareholders | |||||||||||||||||||||||
Total | Stated Capital | Other Paid-In Capital | Earnings Invested in the Business | Accumulated Other Comprehensive (Loss) | Treasury Stock | Non controlling Interest | |||||||||||||||||
Balance at June 30, 2020 | $ | i 1,967.6 | $ | i 53.1 | $ | i 924.4 | $ | i 2,005.7 | $ | ( i 99.2) | $ | ( i 1,000.4) | $ | i 84.0 | |||||||||
Net income | i 91.3 | i 88.8 | i 2.5 | ||||||||||||||||||||
Foreign currency translation adjustment | i 63.5 | i 63.0 | i 0.5 | ||||||||||||||||||||
Pension
and other postretirement liability adjustments (net of income tax benefit of $ i 0.4 million) | ( i 1.2) | ( i 1.2) | |||||||||||||||||||||
Unrealized gain on marketable securities | ( i 0.1) | ( i 0.1) | |||||||||||||||||||||
Change
in fair value of derivative financial instruments, net of reclassifications | ( i 1.8) | ( i 1.8) | |||||||||||||||||||||
Dividends declared to noncontrolling interest | ( i 16.1) | ( i 16.1) | |||||||||||||||||||||
Dividends
– $ i 0.28 per share | ( i 21.1) | ( i 21.1) | |||||||||||||||||||||
Stock-based compensation expense | i 7.8 | i 7.8 | |||||||||||||||||||||
Stock option exercise activity | i 10.7 | ( i 1.5) | i 12.2 | ||||||||||||||||||||
Restricted share activity | i — | ( i 0.1) | i 0.1 | ||||||||||||||||||||
Payments
related to tax withholding for stock-based compensation | ( i 1.6) | ( i 1.6) | |||||||||||||||||||||
Balance at September 30, 2020 | $ | i 2,099.0 | $ | i 53.1 | $ | i 930.6 | $ | i 2,073.4 | $ | ( i 39.3) | $ | ( i 989.7) | $ | i 70.9 |
The Timken Company Shareholders | |||||||||||||||||||||||
Total | Stated Capital | Other Paid-In Capital | Earnings Invested in the Business | Accumulated Other Comprehensive (Loss) | Treasury Stock | Non controlling Interest | |||||||||||||||||
Balance at December 31, 2019 | $ | i 1,954.8 | $ | i 53.1 | $ | i 937.6 | $ | i 1,907.4 | $ | ( i 50.1) | $ | ( i 979.8) | $ | i 86.6 | |||||||||
Cumulative
effect of ASU 2016-13 (net of income tax benefit of $ i 0.2 million) | ( i 0.4) | ( i 0.4) | |||||||||||||||||||||
Net income | i 237.1 | i 231.4 | i 5.7 | ||||||||||||||||||||
Foreign currency translation adjustment | i 9.2 | i 15.0 | ( i 5.8) | ||||||||||||||||||||
Pension
and other postretirement liability adjustments (net of income tax benefit of $ i 1.4 million) | ( i 4.0) | ( i 4.0) | |||||||||||||||||||||
Change
in fair value of derivative financial instruments, net of reclassifications | ( i 0.2) | ( i 0.2) | |||||||||||||||||||||
Change
in ownership of noncontrolling interest | i 0.5 | i 0.5 | |||||||||||||||||||||
Dividends declared to noncontrolling interest | ( i 16.1) | ( i 16.1) | |||||||||||||||||||||
Dividends
– $ i 0.84 per share | ( i 65.0) | ( i 65.0) | |||||||||||||||||||||
Stock-based compensation expense | i 19.2 | i 19.2 | |||||||||||||||||||||
Stock purchased at fair market value | ( i 42.3) | ( i 42.3) | |||||||||||||||||||||
Stock option exercise activity | i 18.2 | ( i 2.4) | i 20.6 | ||||||||||||||||||||
Restricted share activity | i — | ( i 23.8) | i 23.8 | ||||||||||||||||||||
Payments
related to tax withholding for stock-based compensation | ( i 12.0) | ( i 12.0) | |||||||||||||||||||||
Balance at September 30, 2020 | $ | i 2,099.0 | $ | i 53.1 | $ | i 930.6 | $ | i 2,073.4 | $ | ( i 39.3) | $ | ( i 989.7) | $ | i 70.9 |
The Timken Company Shareholders | |||||||||||||||||||||||
Total | Stated Capital | Other Paid-In Capital | Earnings Invested in the Business | Accumulated Other Comprehensive (Loss) | Treasury Stock | Non controlling Interest | |||||||||||||||||
Balance at June 30, 2019 | $ | i 1,783.6 | $ | i 53.1 | $ | i 941.3 | $ | i 1,772.0 | $ | ( i 97.5) | $ | ( i 957.6) | $ | i 72.3 | |||||||||
Net income | i 66.7 | i 64.2 | i 2.5 | ||||||||||||||||||||
Foreign currency translation adjustment | ( i 63.0) | ( i 61.2) | ( i 1.8) | ||||||||||||||||||||
Pension
and other postretirement liability adjustments (net of income tax expense of $ i 25.4 million) | i 76.7 | i 76.7 | |||||||||||||||||||||
Change
in fair value of derivative financial instruments, net of reclassifications | i 1.9 | i 1.9 | |||||||||||||||||||||
Dividends paid to noncontrolling interest | ( i 0.3) | ( i 0.3) | |||||||||||||||||||||
Dividends
– $ i 0.28 per share | ( i 21.2) | ( i 21.2) | |||||||||||||||||||||
Stock-based compensation expense | i 5.8 | i 5.8 | |||||||||||||||||||||
Stock purchased at fair market value | ( i 32.5) | ( i 32.5) | |||||||||||||||||||||
Stock option exercise activity | i 1.0 | ( i 1.0) | i 2.0 | ||||||||||||||||||||
Restricted share activity | i — | ( i 0.6) | i 0.6 | ||||||||||||||||||||
Payments
related to tax withholding for stock-based compensation | ( i 1.2) | ( i 1.2) | |||||||||||||||||||||
Balance at September 30, 2019 | $ | i 1,817.5 | $ | i 53.1 | $ | i 945.5 | $ | i 1,815.0 | $ | ( i 80.1) | $ | ( i 988.7) | $ | i 72.7 |
The Timken Company Shareholders | |||||||||||||||||||||||
Total | Stated Capital | Other Paid-In Capital | Earnings Invested in the Business | Accumulated Other Comprehensive (Loss) | Treasury Stock | Non controlling Interest | |||||||||||||||||
Balance at December 31, 2018 | $ | i 1,642.7 | $ | i 53.1 | $ | i 951.9 | $ | i 1,630.2 | $ | ( i 95.3) | $ | ( i 960.3) | $ | i 63.1 | |||||||||
Net income | i 256.9 | i 248.6 | i 8.3 | ||||||||||||||||||||
Foreign currency translation adjustment | ( i 62.1) | ( i 61.9) | ( i 0.2) | ||||||||||||||||||||
Pension
and postretirement liability adjustments (net of income tax expense of $ i 25.3 million) | i 76.6 | i 76.6 | |||||||||||||||||||||
Change
in fair value of derivative financial instruments, net of reclassifications | i 0.5 | i 0.5 | |||||||||||||||||||||
Dividends paid to noncontrolling interest | ( i 0.3) | ( i 0.3) | |||||||||||||||||||||
Noncontrolling interest acquired | i 1.8 | i 1.8 | |||||||||||||||||||||
Dividends
– $ i 0.84 per share | ( i 63.8) | ( i 63.8) | |||||||||||||||||||||
Stock-based compensation | i 20.7 | i 20.7 | |||||||||||||||||||||
Stock purchased at fair market value | ( i 56.1) | ( i 56.1) | |||||||||||||||||||||
Stock option exercise activity | i 9.9 | ( i 4.4) | i 14.3 | ||||||||||||||||||||
Restricted share activity | i — | ( i 22.7) | i 22.7 | ||||||||||||||||||||
Payments
related to tax withholding for stock-based compensation | ( i 9.3) | ( i 9.3) | |||||||||||||||||||||
Balance at September 30, 2019 | $ | i 1,817.5 | $ | i 53.1 | $ | i 945.5 | $ | i 1,815.0 | $ | ( i 80.1) | $ | ( i 988.7) | $ | i 72.7 |
Mobile Industries | Process Industries | Corporate | Total | |||||||||||
Severance and related benefit costs | $ | i 5.9 | $ | i 5.6 | $ | i 0.4 | $ | i 11.9 | ||||||
Exit costs | i 0.1 | i — | i — | i 0.1 | ||||||||||
Total | $ | i 6.0 | $ | i 5.6 | $ | i 0.4 | $ | i 12.0 |
Mobile Industries | Process Industries | Corporate | Total | |||||||||||
Impairment charges | $ | i — | $ | i 0.1 | $ | i — | $ | i 0.1 | ||||||
Severance and related benefit costs | i 7.5 | i 9.8 | i 0.5 | i 17.8 | ||||||||||
Exit costs | i 0.4 | i 0.4 | i — | i 0.8 | ||||||||||
Total | $ | i 7.9 | $ | i 10.3 | $ | i 0.5 | $ | i 18.7 |
September 30, 2020 | ||||||||
Beginning balance, January 1 | $ | i 2.7 | ||||||
Expense | i 18.6 | |||||||
Payments | ( i 13.5) | |||||||
Ending balance | $ | i 7.8 |
U.S. Plans | International Plans | Total | ||||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Components of net periodic benefit cost: | ||||||||||||||||||||
Service cost | $ | i 2.7 | $ | i 2.6 | $ | i 0.5 | $ | i 0.4 | $ | i 3.2 | $ | i 3.0 | ||||||||
Interest cost | i 5.2 | i 5.7 | i 1.4 | i 1.8 | i 6.6 | i 7.5 | ||||||||||||||
Expected return on plan assets | ( i 6.3) | ( i 6.4) | ( i 2.2) | ( i 2.4) | ( i 8.5) | ( i 8.8) | ||||||||||||||
Amortization of prior service cost | i 0.4 | i 0.4 | i — | i — | i 0.4 | i 0.4 | ||||||||||||||
Recognition
of net actuarial (gains) losses | ( i 12.8) | i 7.0 | i — | i — | ( i 12.8) | i 7.0 | ||||||||||||||
Curtailment loss | i i 0.9 / | i — | i — | i — | i 0.9 | i — | ||||||||||||||
Net periodic benefit (credit) cost | $ | ( i 9.9) | $ | i 9.3 | $ | ( i 0.3) | $ | ( i 0.2) | $ | ( i 10.2) | $ | i 9.1 |
U.S. Plans | International Plans | Total | ||||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Components
of net periodic benefit cost: | ||||||||||||||||||||
Service cost | $ | i 8.1 | $ | i 7.8 | $ | i 1.3 | $ | i 1.2 | $ | i 9.4 | $ | i 9.0 | ||||||||
Interest cost | i 15.7 | i 17.7 | i 4.2 | i 5.5 | i 19.9 | i 23.2 | ||||||||||||||
Expected return on plan assets | ( i 19.0) | ( i 19.2) | ( i 6.5) | ( i 7.6) | ( i 25.5) | ( i 26.8) | ||||||||||||||
Amortization of prior service cost | i 1.2 | i 1.2 | i 0.1 | i 0.1 | i 1.3 | i 1.3 | ||||||||||||||
Recognition
of net actuarial (gains) losses | ( i 4.0) | i 7.0 | i — | i — | ( i 4.0) | i 7.0 | ||||||||||||||
Curtailment loss | i 0.9 | i — | i — | i — | i 0.9 | i — | ||||||||||||||
Net periodic benefit cost (credit) | $ | i 2.9 | $ | i 14.5 | $ | ( i 0.9) | $ | ( i 0.8) | $ | i 2.0 | $ | i 13.7 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Components of net periodic benefit (credit) cost: | |||||||||||||||||||||||
Service cost | $ | i — | $ | i — | $ | i 0.1 | $ | i 0.1 | |||||||||||||||
Interest cost | i 0.6 | i 1.2 | i 1.6 | i 5.0 | |||||||||||||||||||
Expected return on plan assets | ( i 0.1) | ( i 0.8) | ( i 0.3) | ( i 2.4) | |||||||||||||||||||
Amortization of prior service credit | ( i 2.4) | ( i 2.0) | ( i 7.3) | ( i 3.1) | |||||||||||||||||||
Recognition of net actuarial losses | i — | i 9.9 | i — | i 9.9 | |||||||||||||||||||
Net periodic benefit (credit) cost | $ | ( i 1.9) | $ | i 8.3 | $ | ( i 5.9) | $ | i 9.5 |
Foreign currency translation adjustments | Pension and other postretirement liability adjustments | Unrealized gain (loss) on marketable securities | Change in fair value of derivative financial instruments | Total | |||||||||||||
Balance at June 30, 2020 | $ | ( i 163.3) | $ | i 64.1 | $ | i 0.1 | $ | ( i 0.1) | $ | ( i 99.2) | |||||||
Other
comprehensive income (loss) before reclassifications and income taxes | i 63.5 | ( i 0.2) | i — | ( i 1.9) | i 61.4 | ||||||||||||
Amounts
reclassified from accumulated other comprehensive (loss) income before income taxes | i | ( i 1.4) | ( i 0.2) | ( i 0.7) | ( i 2.3) | ||||||||||||
Income tax benefit | i | i 0.4 | i 0.1 | i 0.8 | i 1.3 | ||||||||||||
Net
current period other comprehensive income (loss), net of income taxes | i 63.5 | ( i 1.2) | ( i 0.1) | ( i 1.8) | i 60.4 | ||||||||||||
Noncontrolling interest | ( i 0.5) | i | i | i | ( i 0.5) | ||||||||||||
Net
current period comprehensive income (loss), net of income taxes and noncontrolling interest | i 63.0 | ( i 1.2) | ( i 0.1) | ( i 1.8) | i 59.9 | ||||||||||||
Balance at September 30, 2020 | $ | ( i 100.3) | $ | i 62.9 | $ | i — | $ | ( i 1.9) | $ | ( i 39.3) |
Foreign currency translation adjustments | Pension and other postretirement liability adjustments | Unrealized gain (loss) on marketable securities | Change in fair value of derivative financial instruments | Total | |||||||||||||
Balance at December 31, 2019 | $ | ( i 115.3) | $ | i 66.9 | $ | i — | $ | ( i 1.7) | $ | ( i 50.1) | |||||||
Other
comprehensive (loss) income before reclassifications and income taxes | i 9.2 | i — | i 0.5 | i 2.3 | i 12.0 | ||||||||||||
Amounts
reclassified from accumulated other comprehensive (loss) income before income taxes | i | ( i 5.4) | ( i 0.5) | ( i 2.6) | ( i 8.5) | ||||||||||||
Income tax benefit | i | i 1.4 | i — | i 0.1 | i 1.5 | ||||||||||||
Net
current period other comprehensive (loss) income, net of income taxes | i 9.2 | ( i 4.0) | i — | ( i 0.2) | i 5.0 | ||||||||||||
Noncontrolling interest | i 5.8 | i | i | i | i 5.8 | ||||||||||||
Net
current period comprehensive (loss) income, net of income taxes and noncontrolling interest | i 15.0 | ( i 4.0) | i — | ( i 0.2) | i 10.8 | ||||||||||||
Balance at September 30, 2020 | $ | ( i 100.3) | $ | i 62.9 | $ | i — | $ | ( i 1.9) | $ | ( i 39.3) |
Foreign currency translation adjustments | Pension and other postretirement liability adjustments | Unrealized gain (loss) on marketable securities | Change in fair value of derivative financial instruments | Total | |||||||||||||
Balance at June 30, 2019 | $ | ( i 96.3) | $ | ( i 0.1) | $ | i — | $ | ( i 1.1) | $ | ( i 97.5) | |||||||
Other
comprehensive income (loss) before reclassifications and income taxes | ( i 63.0) | i 103.7 | i — | i 3.2 | i 43.9 | ||||||||||||
Amounts
reclassified from accumulated other comprehensive (loss) income before income taxes | i — | ( i 1.6) | i — | ( i 1.0) | ( i 2.6) | ||||||||||||
Income tax expense | i — | ( i 25.4) | i — | ( i 0.3) | ( i 25.7) | ||||||||||||
Net
current period other comprehensive income (loss), net of income taxes | ( i 63.0) | i 76.7 | i — | i 1.9 | i 15.6 | ||||||||||||
Noncontrolling interest | i 1.8 | i — | i — | i — | i 1.8 | ||||||||||||
Net
current period comprehensive income (loss), net of income taxes and noncontrolling interest | ( i 61.2) | i 76.7 | i — | i 1.9 | i 17.4 | ||||||||||||
Balance at September 30, 2019 | $ | ( i 157.5) | $ | i 76.6 | $ | i — | $ | i 0.8 | $ | ( i 80.1) |
Foreign currency translation adjustments | Pension and other postretirement liability adjustments | Unrealized gain (loss) on marketable securities | Change in fair value of derivative financial instruments | Total | |||||||||||||
Balance at December 31, 2018 | $ | ( i 95.6) | $ | i — | $ | i — | $ | i 0.3 | $ | ( i 95.3) | |||||||
Other
comprehensive income before reclassifications and income taxes | ( i 62.1) | i 103.7 | i — | i 3.4 | i 45.0 | ||||||||||||
Amounts
reclassified from accumulated other comprehensive (loss) income before income taxes | i — | ( i 1.8) | i — | ( i 2.9) | ( i 4.7) | ||||||||||||
Income tax expense | i — | ( i 25.3) | i — | i — | ( i 25.3) | ||||||||||||
Net
current period other comprehensive (loss) income, net of income taxes | ( i 62.1) | i 76.6 | i — | i 0.5 | i 15.0 | ||||||||||||
Noncontrolling interest | i 0.2 | i — | i — | i — | i 0.2 | ||||||||||||
Net
current period comprehensive loss, net of income taxes and noncontrolling interest | ( i 61.9) | i 76.6 | i — | i 0.5 | i 15.2 | ||||||||||||
Balance at September 30, 2019 | $ | ( i 157.5) | $ | i 76.6 | $ | i — | $ | i 0.8 | $ | ( i 80.1) |
September 30, 2020 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets: | ||||||||||||||
Cash and cash equivalents | $ | i 313.0 | $ | i 310.2 | $ | i 2.8 | $ | i — | ||||||
Cash and cash equivalents measured at net asset value | i 0.1 | |||||||||||||
Restricted cash | i 0.9 | i 0.9 | i — | i — | ||||||||||
Short-term investments | i 48.6 | i 11.6 | i 37.0 | i — | ||||||||||
Foreign currency forward contracts | i 1.1 | i — | i 1.1 | i — | ||||||||||
Total Assets | $ | i 363.7 | $ | i 322.7 | $ | i 40.9 | $ | i — | ||||||
Liabilities: | ||||||||||||||
Foreign currency forward contracts | $ | i 4.9 | $ | i — | $ | i 4.9 | $ | i — | ||||||
Total Liabilities | $ | i 4.9 | $ | i — | $ | i 4.9 | $ | i — |
December 31, 2019 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets: | ||||||||||||||
Cash and cash equivalents | $ | i 160.7 | $ | i 158.2 | $ | i 2.5 | $ | i — | ||||||
Cash and cash equivalents measured at net asset value | i 48.8 | |||||||||||||
Restricted cash | i 6.7 | i 6.7 | i — | i — | ||||||||||
Short-term investments | i 25.7 | i — | i 25.7 | i — | ||||||||||
Short-term investments measured at net asset value | i 0.1 | |||||||||||||
Foreign currency forward contracts | i 7.6 | i — | i 7.6 | i — | ||||||||||
Total Assets | $ | i 249.6 | $ | i 164.9 | $ | i 35.8 | $ | i — | ||||||
Liabilities: | ||||||||||||||
Foreign currency forward contracts | $ | i 1.4 | $ | i — | $ | i 1.4 | $ | i — | ||||||
Total Liabilities | $ | i 1.4 | $ | i — | $ | i 1.4 | $ | i — |
Amount of gain or (loss) recognized in income | ||||||||||||||||||||||||||
Three
Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | Location of gain or (loss) recognized in income | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||
Foreign currency forward contracts | Other income (expense), net | $ | ( i 2.9) | $ | i 6.3 | $ | ( i 1.1) | $ | i 9.0 | |||||||||||||||||
Three
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Net sales | $ | 894.6 | $ | 914.0 | $ | (19.4) | (2.1) | % | ||||||
Net income | 91.3 | 66.7 | 24.6 | 36.9 | % | |||||||||
Net income attributable to noncontrolling interest | 2.5 | 2.5 | — | — | % | |||||||||
Net income attributable to The Timken Company | $ | 88.8 | $ | 64.2 | $ | 24.6 | 38.3 | % | ||||||
Diluted earnings per share | $ | 1.16 | $ | 0.84 | $ | 0.32 | 38.1 | % | ||||||
Average number of shares – diluted | 76,286,136 | 76,592,694 | — | (0.4) | % |
Nine
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Net sales | $ | 2,621.5 | $ | 2,893.7 | $ | (272.2) | (9.4) | % | ||||||
Net income | 237.1 | 256.9 | (19.8) | (7.7) | % | |||||||||
Net income attributable to noncontrolling interest | 5.7 | 8.3 | (2.6) | (31.3) | % | |||||||||
Net income attributable to The Timken Company | $ | 231.4 | $ | 248.6 | $ | (17.2) | (6.9) | % | ||||||
Diluted earnings per share | $ | 3.04 | $ | 3.23 | $ | (0.19) | (5.9) | % | ||||||
Average number of shares – diluted | 76,131,920 | 76,902,426 | — | (1.0) | % |
Three
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Net Sales | $ | 894.6 | $ | 914.0 | $ | (19.4) | (2.1) | % |
Nine
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Net Sales | $ | 2,621.5 | $ | 2,893.7 | $ | (272.2) | (9.4) | % |
Three
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Gross profit | $ | 263.7 | $ | 277.5 | $ | (13.8) | (5.0 | %) | ||||||
Gross profit % to net sales | 29.5 | % | 30.4 | % | (90) | bps |
Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Gross profit | $ | 772.9 | $ | 885.8 | $ | (112.9) | (12.7 | %) | ||||||
Gross profit % to net sales | 29.5 | % | 30.6 | % | (110) | bps |
Three
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Selling, general and administrative expenses | $ | 132.7 | $ | 148.0 | $ | (15.3) | (10.3 | %) | ||||||
Selling, general and administrative expenses % to net sales | 14.8 | % | 16.2 | % | (140) | bps |
Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Selling, general and administrative expenses | $ | 398.1 | $ | 459.4 | $ | (61.3) | (13.3 | %) | ||||||
Selling, general and administrative expenses % to net sales | 15.2 | % | 15.9 | % | (70) | bps |
Three
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Impairment charges | $ | — | $ | 0.1 | $ | (0.1) | (100.0) | % | ||||||
Severance and related benefit costs | 11.9 | 0.8 | 11.1 | 1,387.5 | % | |||||||||
Exit costs | 0.1 | 0.7 | (0.6) | (85.7) | % | |||||||||
Total | $ | 12.0 | $ | 1.6 | $ | 10.4 | 650.0 | % |
Nine
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Impairment charges | $ | 0.1 | $ | 0.8 | $ | (0.7) | (87.5) | % | ||||||
Severance and related benefit costs | 17.8 | 1.6 | 16.2 | 1,012.5 | % | |||||||||
Exit costs | 0.8 | 1.1 | (0.3) | (27.3) | % | |||||||||
Total | $ | 18.7 | $ | 3.5 | $ | 15.2 | 434.3 |
Three
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Non-service pension and other postretirement income (expense) | $ | 15.3 | $ | (14.4) | $ | 29.7 | (206.3) | % | ||||||
Other (expense) income, net | (1.0) | 5.8 | (6.8) | (117.2) | % | |||||||||
Total other income (expense), net | $ | 14.3 | $ | (8.6) | $ | 22.9 | (266.3) | % |
Nine
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Non-service pension and other postretirement income (expense) | $ | 13.4 | $ | (14.1) | $ | 27.5 | (195.0) | % | ||||||
Other income, net | 1.1 | 10.5 | (9.4) | (89.5) | % | |||||||||
Total other income (expense), net | $ | 14.5 | $ | (3.6) | $ | 18.1 | (502.8) | % |
Three
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Provision for income taxes | $ | 26.6 | $ | 35.5 | $ | (8.9) | (25.1) | % | ||||||
Effective tax rate | 22.6 | % | 34.7 | % | (1,210) bps |
Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Provision for income taxes | $ | 84.2 | $ | 110.4 | $ | (26.2) | (23.7) | % | ||||||
Effective tax rate | 26.2 | % | 30.1 | % | (390) bps |
Three Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Net sales | $ | 428.6 | $ | 455.1 | $ | (26.5) | (5.8 | %) | ||||||
EBITDA | $ | 64.0 | $ | 70.1 | $ | (6.1) | (8.7 | %) | ||||||
EBITDA margin | 14.9 | % | 15.4 | % | (50) | bps |
Three Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Net sales | $ | 428.6 | $ | 455.1 | $ | (26.5) | (5.8 | %) | ||||||
Less: Acquisitions | 19.8 | — | 19.8 | NM | ||||||||||
Currency | (2.6) | — | (2.6) | NM | ||||||||||
Net sales, excluding the impact of acquisitions and currency | $ | 411.4 | $ | 455.1 | $ | (43.7) | (9.6 | %) |
Nine
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Net sales | $ | 1,237.9 | $ | 1,448.8 | $ | (210.9) | (14.6 | %) | ||||||
EBITDA | $ | 177.9 | $ | 227.4 | $ | (49.5) | (21.8 | %) | ||||||
EBITDA margin | 14.4 | % | 15.7 | % | (130) | bps |
Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Net sales | $ | 1,237.9 | $ | 1,448.8 | $ | (210.9) | (14.6 | %) | ||||||
Less: Acquisitions | 67.5 | — | 67.5 | NM | ||||||||||
Currency | (24.0) | — | (24.0) | NM | ||||||||||
Net sales, excluding the impact of acquisitions and currency | $ | 1,194.4 | $ | 1,448.8 | $ | (254.4) | (17.6 | %) |
Three Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Net sales | $ | 466.0 | $ | 458.9 | $ | 7.1 | 1.5 | % | ||||||
EBITDA | $ | 109.2 | $ | 116.5 | $ | (7.3) | (6.3 | %) | ||||||
EBITDA margin | 23.4 | % | 25.4 | % | (200) bps |
Three Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Net sales | $ | 466.0 | $ | 458.9 | $ | 7.1 | 1.5 | % | ||||||
Less: Acquisitions | 8.9 | — | 8.9 | NM | ||||||||||
Currency | 1.1 | — | 1.1 | NM | ||||||||||
Net sales, excluding the impact of acquisitions and currency | $ | 456.0 | $ | 458.9 | $ | (2.9) | (0.6) | % |
Nine
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Net sales | $ | 1,383.6 | $ | 1,444.9 | $ | (61.3) | (4.2 | %) | ||||||
EBITDA | $ | 343.0 | $ | 369.8 | $ | (26.8) | (7.2 | %) | ||||||
EBITDA margin | 24.8 | % | 25.6 | % | (80) bps |
Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Net sales | $ | 1,383.6 | $ | 1,444.9 | $ | (61.3) | (4.2 | %) | ||||||
Less: Acquisitions | 39.7 | — | 39.7 | NM | ||||||||||
Currency | (19.9) | — | (19.9) | NM | ||||||||||
Net sales, excluding the impact of acquisitions and currency | $ | 1,363.8 | $ | 1,444.9 | $ | (81.1) | (5.6) | % |
Three Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Corporate EBITDA | $ | (10.6) | $ | (11.2) | $ | 0.6 | (5.4%) | |||||||
Corporate EBTIDA % to net sales | (1.2) | % | (1.2) | % | — bps |
Nine
Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | Change | |||||||||||
Corporate EBITDA | $ | (28.2) | $ | (40.6) | $ | 12.4 | (30.5%) | |||||||
Corporate EBTIDA % to net sales | (1.1) | % | (1.4) | % | 30 bps |
September 30, 2020 | December 31, 2019 | $ Change | % Change | |||||||||||
Cash and cash equivalents | $ | 313.1 | $ | 209.5 | $ | 103.6 | 49.5 | % | ||||||
Restricted cash | 0.9 | 6.7 | (5.8) | (86.6) | % | |||||||||
Accounts receivable, net | 571.5 | 545.1 | 26.4 | 4.8 | % | |||||||||
Unbilled receivables | 141.1 | 129.2 | 11.9 | 9.2 | % | |||||||||
Inventories, net | 789.9 | 842.0 | (52.1) | (6.2) | % | |||||||||
Deferred charges and prepaid expenses | 32.7 | 36.7 | (4.0) | (10.9) | % | |||||||||
Other current assets | 115.3 | 105.4 | 9.9 | 9.4 | % | |||||||||
Total current assets | $ | 1,964.5 | $ | 1,874.6 | $ | 89.9 | 4.8 | % |
September
30, 2020 | December 31, 2019 | $ Change | % Change | |||||||||||
Property, plant and equipment, net | $ | 980.2 | $ | 989.2 | $ | (9.0) | (0.9) | % |
September
30, 2020 | December 31, 2019 | $ Change | % Change | |||||||||||
Goodwill | $ | 1,021.1 | $ | 993.7 | $ | 27.4 | 2.8 | % | ||||||
Other intangible assets | 737.2 | 758.5 | (21.3) | (2.8) | % | |||||||||
Operating lease assets | 105.4 | 114.1 | (8.7) | (7.6) | % | |||||||||
Non-current pension assets | 9.0 | 3.4 | 5.6 | 164.7 | % | |||||||||
Non-current other postretirement benefit assets | — | 36.6 | (36.6) | (100.0) | % | |||||||||
Deferred income taxes | 72.9 | 71.8 | 1.1 | 1.5 | % | |||||||||
Other non-current assets | 18.8 | 18.0 | 0.8 | 4.4 | % | |||||||||
Total other assets | $ | 1,964.4 | $ | 1,996.1 | $ | (31.7) | (1.6) | % |
September 30, 2020 | December
31, 2019 | $ Change | % Change | |||||||||||
Short-term debt | $ | 64.8 | $ | 17.3 | $ | 47.5 | 274.6 | % | ||||||
Current portion of long-term debt | 10.8 | 64.7 | (53.9) | (83.3) | % | |||||||||
Short-term operating lease liabilities | 26.6 | 28.3 | (1.7) | (6.0) | % | |||||||||
Accounts payable | 306.7 | 301.7 | 5.0 | 1.7 | % | |||||||||
Salaries, wages and benefits | 116.7 | 134.5 | (17.8) | (13.2) | % | |||||||||
Income taxes payable | 23.3 | 17.8 | 5.5 | 30.9 | % | |||||||||
Other current liabilities | 191.5 | 172.3 | 19.2 | 11.1 | % | |||||||||
Total current liabilities | $ | 740.4 | $ | 736.6 | $ | 3.8 | 0.5 | % |
September
30, 2020 | December 31, 2019 | $ Change | % Change | |||||||||||
Long-term debt | $ | 1,533.0 | $ | 1,648.1 | $ | (115.1) | (7.0) | % | ||||||
Accrued pension benefits | 161.5 | 165.1 | (3.6) | (2.2) | % | |||||||||
Accrued postretirement benefits | 44.8 | 31.8 | 13.0 | 40.9 | % | |||||||||
Long-term operating lease liabilities | 66.0 | 71.3 | (5.3) | (7.4) | % | |||||||||
Deferred income taxes | 162.3 | 168.2 | (5.9) | (3.5) | % | |||||||||
Other non-current liabilities | 102.1 | 84.0 | 18.1 | 21.5 | % | |||||||||
Total non-current liabilities | $ | 2,069.7 | $ | 2,168.5 | $ | (98.8) | (4.6) | % |
September 30, 2020 | December 31, 2019 | $ Change | % Change | |||||||||||
Common shares | $ | 983.7 | $ | 990.7 | $ | (7.0) | (0.7) | % | ||||||
Earnings invested in the business | 2,073.4 | 1,907.4 | 166.0 | 8.7 | % | |||||||||
Accumulated other comprehensive loss | (39.3) | (50.1) | 10.8 | (21.6) | % | |||||||||
Treasury shares | (989.7) | (979.8) | (9.9) | 1.0 | % | |||||||||
Noncontrolling interest | 70.9 | 86.6 | (15.7) | (18.1) | % | |||||||||
Total shareholders’ equity | $ | 2,099.0 | $ | 1,954.8 | $ | 144.2 | 7.4 | % |
Nine
Months Ended September 30, | |||||||||||
2020 | 2019 | $ Change | |||||||||
Net cash provided by operating activities | $ | 457.2 | $ | 354.8 | $ | 102.4 | |||||
Net cash used in investing activities | (101.4) | (162.2) | 60.8 | ||||||||
Net cash used in financing activities | (257.7) | (137.4) | (120.3) | ||||||||
Effect of exchange rate changes on cash | (0.3) | (6.4) | 6.1 | ||||||||
Increase in cash, cash equivalents and restricted cash | $ | 97.8 | $ | 48.8 | $ | 49.0 |
Nine Months Ended September 30, | |||||||||||
2020 | 2019 | $ Change | |||||||||
Cash Provided (Used): | |||||||||||
Accounts receivable | $ | (27.6) | $ | (6.4) | $ | (21.2) | |||||
Unbilled receivables | (11.9) | (35.0) | 23.1 | ||||||||
Inventories | 47.9 | 37.8 | 10.1 | ||||||||
Trade accounts payable | 2.8 | (7.4) | 10.2 | ||||||||
Other accrued expenses | 49.4 | (28.7) | 78.1 | ||||||||
Cash provided by (used in) working capital items | $ | 60.6 | $ | (39.7) | $ | 100.3 |
Nine Months Ended September 30, | |||||||||||
2020 | 2019 | $ Change | |||||||||
Accrued income tax expense | $ | 84.2 | $ | 110.4 | $ | (26.2) | |||||
Income tax payments | (78.6) | (97.5) | 18.9 | ||||||||
Other miscellaneous items | 0.1 | (2.2) | 2.3 | ||||||||
Change in income taxes | $ | 5.7 | $ | 10.7 | $ | (5.0) |
September 30, 2020 | December 31, 2019 | |||||||
Short-term debt | $ | 64.8 | $ | 17.3 | ||||
Current portion of long-term debt | 10.8 | 64.7 | ||||||
Long-term debt | 1,533.0 | 1,648.1 | ||||||
Total debt | $ | 1,608.6 | $ | 1,730.1 | ||||
Less: Cash and cash equivalents | 313.1 | 209.5 | ||||||
Net debt | $ | 1,295.5 | $ | 1,520.6 |
September
30, 2020 | December 31, 2019 | |||||||
Net debt | $ | 1,295.5 | $ | 1,520.6 | ||||
Total equity | 2,099.0 | 1,954.8 | ||||||
Net debt plus total equity (capital) | $ | 3,394.5 | $ | 3,475.4 | ||||
Ratio of net debt to capital | 38.2 | % | 43.8 | % |
Period | Total number of
shares purchased (1) | Average price paid per share (2) | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs (3) | ||||||||||
7/1/2020 - 7/31/2020 | 63 | $ | 47.93 | — | 4,357,042 | |||||||||
8/1/2020 - 8/31/2020 | 26,472 | 54.84 | — | 4,357,042 | ||||||||||
9/1/2020 - 9/30/2020 | 2,104 | 55.53 | — | 4,357,042 | ||||||||||
Total | 28,639 | $ | 54.88 | — |
Certification of Richard G. Kyle, President and Chief Executive Officer (principal executive officer) of The Timken Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
Certification of Philip D. Fracassa, Executive Vice President and Chief Financial Officer (principal financial officer) of The Timken Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
Certifications of Richard G. Kyle, President and Chief Executive Officer (principal executive officer) and Philip D. Fracassa, Executive Vice President and Chief Financial Officer (principal financial officer) of The Timken Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||
Financial statements from the quarterly report on Form 10-Q of The Timken Company for the quarter ended September 30, 2020 filed on October 29, 2020, formatted in Inline XBRL: (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements. | |||||
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
THE TIMKEN COMPANY | ||||||||
Date: October 29, 2020 | By: /s/ Richard G. Kyle | |||||||
Richard G. Kyle President and Chief Executive Officer (Principal Executive Officer) | ||||||||
Date: October 29, 2020 | By: /s/ Philip D. Fracassa | |||||||
Philip
D. Fracassa Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
6/30/33 | ||||
12/15/28 | ||||
9/7/27 | ||||
9/1/24 | ||||
6/25/24 | ||||
9/11/23 | ||||
12/31/22 | ||||
11/30/21 | 8-K | |||
6/30/21 | 10-Q | |||
2/28/21 | ||||
12/31/20 | 10-K, 11-K, 5, SD | |||
12/15/20 | ||||
10/30/20 | ||||
Filed on: | 10/29/20 | 8-K | ||
For Period end: | 9/30/20 | |||
9/18/20 | ||||
9/15/20 | ||||
9/8/20 | 4 | |||
9/3/20 | ||||
6/30/20 | 10-Q | |||
5/27/20 | 8-K | |||
3/27/20 | ||||
2/4/20 | ||||
1/1/20 | ||||
12/31/19 | 10-K, SD | |||
12/15/19 | ||||
11/1/19 | ||||
10/16/19 | ||||
9/30/19 | 10-Q | |||
7/12/19 | 8-K | |||
6/30/19 | 10-Q | |||
6/25/19 | 11-K, 8-K | |||
4/1/19 | 8-K | |||
12/31/18 | 10-K, 5, SD | |||
9/18/18 | ||||
9/11/18 | ||||
9/1/18 | ||||
9/18/17 | ||||
2/6/17 | ||||
12/28/04 | ||||
List all Filings |