Timken Revises Fourth-Quarter Earnings Estimate

Timken Revises Fourth-Quarter Earnings Estimate The Timken Company today announced it is reducing its earnings estimate for the fourth quarter of 2006. The reduction is primarily due to lower North American automotive demand, an increase in the company's Automotive warranty reserves, the effect of higher Industrial manufacturing costs and the impact of the sale of Latrobe Steel. The company now anticipates 2006 fourth-quarter earnings per diluted share of approximately $0.37 and $2.36 for the full year. Excluding the impact of special items, the company estimates fourth-quarter earnings per diluted share of approximately $0.30 and $2.48 for the full year. Special items include income from Continued Dumping and Subsidy Offset Act payments, net losses on divestitures and charges related to restructuring, rationalization and goodwill impairment. The company had previously provided estimated earnings per share of $0.47 to $0.57 for the fourth quarter and $2.65 to $2.75 for the full year, excluding the impact of special items. The revised 2006 earnings estimates include Latrobe Steel through November 30 in the amount of $0.20 for the quarter and $0.49 for the full year or, excluding special items, $0.07 for the quarter and $0.35 for the full year. The difference reflects the gain on the sale of Latrobe Steel. "We are confident the actions we are taking are positioning the company for stronger performance," said James W. Griffith, Timken's president and chief executive officer. "Specifically, our efforts to ramp up Industrial capacity, restructure our Automotive business, divest non-strategic assets and focus our Steel business on more differentiated products have better positioned the company to create higher levels of value and customer service going forward. As a result of these initiatives, along with improvements in working capital management and increased pension funding, we expect to see substantial improvement in our 2007 financial performance, as reflected in our earnings outlook." Outlook The company expects improved results in 2007 as global industrial markets are anticipated to remain strong. Targeted investments in Industrial bearing capacity are expected to become operational throughout the year, and the Steel Group is anticipated to continue performing at a historically high level of profitability. In addition, the company expects its Automotive restructuring initiatives to enable improved performance compared to the second half of 2006, as North American automotive demand stabilizes. On a continuing operations basis, earnings per diluted share for 2007, excluding special items, are estimated to be $2.50 to $2.70, compared to an estimated $2.13 in 2006, which is adjusted to reflect the divestiture of Latrobe Steel.