Timken Reports Improved Earnings

The Timken Company reported increased first quarter earnings despite lower sales compared to a year ago.

Excluding the impact of restructuring and reorganization charges, the company reported first quarter net income of $14.0 million. After restructuring and reorganization charges, the company had net income of $9.2 million. This compares with first quarter 2001 net income of $11.4 million before restructuring and reorganization charges and goodwill amortization and $2.2 million.

Sales in the first quarter of 2002 were $615.8 million versus $661.5 million a year earlier.

``The U.S. automotive market, especially the light truck and SUV segment where we have a strong position, continued at a robust level,'' said W.R. Timken, Jr., chairman & CEO. ``Our steel business also achieved a strong performance that resulted from a combination of healthy auto sales, effective cost controls and increased market penetration. A key to our stronger earnings was improved operating efficiencies, resulting from cost-cutting initiatives that began last year. These benefited all our business units.''

The company's first quarter performance reflected cost reductions achieved through its ongoing restructuring of manufacturing operations and lower administrative spending levels. As a result of those initiatives, the company so far has achieved an annualized savings rate of $35 million. These initiatives are on target to produce an annualized savings rate of $80 million by the end of 2002.

``The stronger-than-expected first quarter has been achieved with little improvement in domestic demand for industrial products. Improvement in those markets is expected in the latter half of 2002. Combined with the continuing strength in the automotive sector, those improvements should enable the company to achieve annual earnings at the upper end of the range provided in mid-March,'' added Timken, Jr.