Timken Announces Restructuring and Reorganization of Aerospace Business

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Sep 08, 2014, 09:00 ET

NORTH CANTON, Ohio, Sept. 8, 2014 /PRNewswire/ -- The Timken Company today announced that it is taking multiple actions to improve the performance of its Aerospace business.

The company plans to:

Eliminate its aerospace segment leadership positions and integrate aerospace activities under the direction of Chris Coughlin, executive vice president and group president;
Close its aerospace engine overhaul business, located in Mesa, Arizona, by the end of the year;
Evaluate strategic alternatives for its aerospace MRO parts business, also located in Mesa; and
Close its aerospace bearing facility located in Wolverhampton, U.K., subject to the employee consultation process, rationalizing the capacity into existing facilities, with timing to be determined.

As a result of these changes, beginning with fourth quarter of 2014, Timken will no longer report Aerospace financial results separately but rather will incorporate aerospace business results primarily within the company's Mobile Industries segment.

In the third quarter of 2014, Timken expects to record a non-cash charge of $110 to $120 million (pre-tax) comprised primarily of goodwill and inventory impairments. In addition, cash charges related to the facility closures are expected to be less than $10 million (pre-tax), primarily consisting of severance, and will be recorded as incurred. The above actions are expected to have negligible impact on the company's 2015 revenues, with Mobile Industries EBIT margins for 2015 targeted in the previously communicated 10 to 13 percent range.

"Aerospace has been and will continue to be an important market for Timken," said Richard G. Kyle, Timken president and CEO. "It fits the Timken Business Model well and we will continue to pursue challenging applications that value our technology and our service.

"While the segment's overall performance has been weak, we expect that the actions we've outlined will improve returns and generate growth going forward," Kyle said. "We remain committed to creating value for customers in the aerospace industry and are confident that our efforts will improve the strength of our business for both customers and shareholders going forward."

About The Timken Company
The Timken Company (NYSE: TKR; www.timken.com) engineers, manufactures and markets Timken^® bearings, transmissions, gearboxes, chain, and related products, and offers a spectrum of power system rebuild and repair services around the world. The leading authority on tapered roller bearings, Timken today applies its deep knowledge of metallurgy, tribology and power transmission across the broad spectrum of bearings and related systems to improve the reliability and efficiency of machinery and equipment all around the world. Known for its quality products and collaborative technical sales model, Timken posted $3 billion in sales in 2013 (excluding Steel business sales.) With approximately 17,000 people operating from 28 countries, Timken makes the world more productive and keeps industry in motion.

Certain statements in this release (including statements regarding the company's 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 regarding the company's expectations for the performance and outlook of its aerospace business and its Mobile Industries segment and the amount and timing of cash and non-cash charges related to the restructuring 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: severance costs that differ from original estimates due to the nature and timing of employee terminations; and amounts for non-cash charges relating to inventory and other assets that differ from the original estimates based on the final fair value determinations. Additional factors are discussed in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended Dec. 31, 2013, quarterly reports on Form 10-Q and current reports on Form 8-K. Except as required by the federal securities laws, the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Media Contact:

Gloria Irwin

Communications Manager

4500 Mount Pleasant St. N.W.

North Canton, OH 44720 U.S.A.

Telephone: 234.262.3514

[email protected]

Investor Contact:

Steve Tschiegg

Director – Capital Markets & Investor Relations

4500 Mount Pleasant St. N.W.

North Canton, OH 44720 U.S.A.