UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
timkenlogoa50.jpg
FORM 10-Q
 
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20172023
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to                          
Commission file number: 1-1169
THE TIMKEN COMPANY
(Exact name of registrant as specified in its charter)
OHIO
34-0577130
Ohio
34-0577130
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
4500 Mount Pleasant Street NW
 North Canton, Ohio
44720-5450
North CantonOhio44720-5450
(Address of principal executive offices)(Zip Code)
234.262.3000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Shares, without par valueTKRThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ý☒    No  o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý☒    No  o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Large accelerated filerýAccelerated filero
Non-accelerated filero☐Smaller reporting companyo☐
Emerging growth companyo☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
 Yes  o☐    No   ý☒
Indicate the number of shares outstanding of each of the issuer's classes of common stock,shares, as of the latest practicable date.
ClassOutstanding at September 30, 2017July 31, 2023
Common Shares, without par value77,617,12271,041,023 shares


Table of Contents
THE TIMKEN COMPANY
INDEX TO FORM 10-Q REPORT

PAGE
I.PAGE
I.Item 1.
Item 1.
Financial Statements
1
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
2829
Item 3.
4849
Item 4.
4850
II.
Item 1.
4951
Item1A.
4951
Item 2.
4951
Item 6.5.
5051
Item 6.
52



Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
THE TIMKEN COMPANY AND SUBSIDIARIES

Consolidated Statements of Income
(Unaudited)
Three Months Ended
September 30,		 Nine Months Ended
September 30,		 Three Months Ended
June 30,		Six Months Ended
June 30,
2017 2016 2017 2016 2023202220232022
(Dollars in millions, except per share data)  (Revised)   (Revised)(Dollars in millions, except per share data)
Net sales$771.4
 $657.4
 $2,225.8
 $2,015.0
Net sales$1,272.3 $1,153.7 $2,535.1 $2,278.3 
Cost of products sold554.4
 487.7
 1,626.5
 1,477.7
Cost of products sold866.9 801.3 1,712.9 1,587.6 
Gross Profit217.0
 169.7
 599.3
 537.3
Selling, general and administrative expenses134.0
 107.2
 377.4
 331.3
Selling, general and administrative expenses184.9 155.9 371.7 310.0 
Pension settlement expenses—
 0.1
 —
 1.3
Amortization of intangible assetsAmortization of intangible assets17.3 10.6 30.8 21.5 
Impairment and restructuring charges1.3
 5.3
 3.8
 18.7
Impairment and restructuring charges2.5 10.0 31.4 11.0 
Operating Income81.7
 57.1
 218.1
 186.0
Operating Income200.7 175.9 388.3 348.2 
Interest expense(10.1) (8.0) (26.5) (25.1)Interest expense(28.3)(18.3)(52.4)(32.6)
Interest income0.7
 0.4
 2.0
 1.1
Interest income1.9 1.0 3.4 1.6 
Continued Dumping & Subsidy Offset Act income (expense), net—
 (0.2) —
 53.6
Non-service pension and other postretirement (expense) incomeNon-service pension and other postretirement (expense) income— (7.9)0.1 (6.6)
Other income (expense), net2.9
 (0.1) 9.1
 (1.8)Other income (expense), net2.3 (1.1)5.4 (0.9)
Income Before Income Taxes75.2
 49.2
 202.7
 213.8
Income Before Income Taxes176.6 149.6 344.8 309.7 
Provision for income taxes21.1
 15.2
 28.5
 65.8
Provision for income taxes47.1 44.0 89.6 82.2 
Net Income54.1
 34.0
 174.2
 148.0
Net Income129.5 105.6 255.2 227.5 
Less: Net income attributable to noncontrolling interest0.6
 0.4
 —
 0.3
Less: Net income attributable to noncontrolling interest4.3 0.6 7.7 4.3 
Net Income attributable to The Timken Company$53.5
 $33.6
 $174.2
 $147.7
Net Income Attributable to The Timken CompanyNet Income Attributable to The Timken Company$125.2 $105.0 $247.5 $223.2 
       
Net Income per Common Share attributable to The Timken
Company's Common Shareholders
       
Net Income per Common Share Attributable to The Timken
Company Common Shareholders		Net Income per Common Share Attributable to The Timken
Company Common Shareholders
Basic earnings per share$0.69
 $0.43
 $2.24

$1.87
Basic earnings per share$1.74 $1.43 $3.43 $3.01 
       
Diluted earnings per share$0.68
 $0.43
 $2.21
 $1.86
Diluted earnings per share$1.73 $1.42 $3.39 $2.98 
       
Dividends per share$0.27
 $0.26
 $0.80
 $0.78
See accompanying Notes to the Consolidated Financial Statements.


Consolidated Statements of Comprehensive Income
(Unaudited) 
Three Months Ended
September 30,		 Nine Months Ended
September 30,		 Three Months Ended
June 30,		Six Months Ended
June 30,
2017 2016 2017 2016 2023202220232022
(Dollars in millions)  (Revised)   (Revised)(Dollars in millions)
Net IncomeNet Income$129.5 $105.6 $255.2 $227.5 
Other comprehensive loss, net of tax:Other comprehensive loss, net of tax:
Foreign currency translation adjustmentsForeign currency translation adjustments(27.9)(113.1)(0.2)(135.7)
Pension and postretirement liability adjustmentsPension and postretirement liability adjustments(1.6)(1.4)(3.1)(2.9)
       
Net Income$54.1
 $34.0
 $174.2
 $148.0
Other comprehensive income (loss), net of tax:       
Foreign currency translation adjustments10.9
 3.7
 42.8
 5.2
Pension and postretirement liability adjustment0.1
 0.4
 0.2
 1.2
Change in fair value of derivative financial instruments(2.0) —
 (4.2) (1.6)Change in fair value of derivative financial instruments(0.3)2.2 (1.1)4.2 
Other comprehensive income, net of tax9.0
 4.1
 38.8
 4.8
Comprehensive Income, net of tax63.1
 38.1
 213.0
 152.8
Other comprehensive loss, net of taxOther comprehensive loss, net of tax(29.8)(112.3)(4.4)(134.4)
Comprehensive income (loss), net of taxComprehensive income (loss), net of tax99.7 (6.7)250.8 93.1 
Less: comprehensive income attributable to noncontrolling interest0.5
 1.0
 1.9
 2.2
Less: comprehensive income attributable to noncontrolling interest4.0 1.7 7.7 2.8 
Comprehensive Income attributable to The Timken Company$62.6
 $37.1
 $211.1
 $150.6
Comprehensive income (loss) attributable to The Timken CompanyComprehensive income (loss) attributable to The Timken Company$95.7 $(8.4)$243.1 $90.3 
See accompanying Notes to the Consolidated Financial Statements.

1
Table of Contents
Consolidated Balance Sheets
(Unaudited) (Revised)
September 30,
2017		 December 31,
2016		(Unaudited)
(Dollars in millions)   (Dollars in millions)June 30,
2023		December 31,
2022
ASSETS   ASSETS
Current Assets   Current Assets
Cash and cash equivalents$137.2
 $148.8
Cash and cash equivalents$344.3 $331.6 
Restricted cash3.3
 2.7
Restricted cash8.0 9.1 
Accounts receivable, less allowances (2017 – $20.5 million; 2016 – $20.2 million)542.2
 438.0
Accounts receivable, less allowances (2023 – $17.9 million; 2022 – $17.9 million)Accounts receivable, less allowances (2023 – $17.9 million; 2022 – $17.9 million)811.9 699.6 
Unbilled receivablesUnbilled receivables121.8 103.9 
Inventories, net687.5
 553.7
Inventories, net1,251.7 1,191.3 
Deferred charges and prepaid expenses39.9
 20.3
Deferred charges and prepaid expenses45.4 44.4 
Other current assets64.2
 48.4
Other current assets127.7 124.1 
Total Current Assets1,474.3
 1,211.9
Total Current Assets2,710.8 2,504.0 
   
Property, Plant and Equipment, net842.2
 804.4
Property, Plant and Equipment, net1,255.5 1,207.4 
   
Other Assets   Other Assets
Goodwill510.3
 357.5
Goodwill1,198.4 1,098.3 
Non-current pension assets31.6
 32.1
Other intangible assets428.9
 271.0
Other intangible assets876.1 765.3 
Operating lease assetsOperating lease assets111.9 101.4 
Deferred income taxes47.9
 51.4
Deferred income taxes70.3 71.0 
Other non-current assets28.4
 34.9
Other non-current assets28.3 25.0 
Total Other Assets1,047.1
 746.9
Total Other Assets2,285.0 2,061.0 
Total Assets$3,363.6
 $2,763.2
Total Assets$6,251.3 $5,772.4 
LIABILITIES AND EQUITYLIABILITIES AND EQUITY
Current LiabilitiesCurrent Liabilities
   
LIABILITIES AND SHAREHOLDERS' EQUITY   
Current Liabilities   
Short-term debt$41.1
 $19.2
Current portion of long-term debt5.0
 5.0
Accounts payable, trade248.1
 176.2
Accounts payable, trade392.2 403.9 
Short-term debt, including current portion of long-term debtShort-term debt, including current portion of long-term debt53.2 49.0 
Salaries, wages and benefits112.2
 85.9
Salaries, wages and benefits135.2 155.3 
Income taxes payable7.4
 16.9
Income taxes payable77.8 51.3 
Other current liabilities154.9
 149.5
Other current liabilities364.0 352.9 
Total Current Liabilities568.7
 452.7
Total Current Liabilities1,022.4 1,012.4 
   
Non-Current Liabilities   Non-Current Liabilities
Long-term debt959.8
 635.0
Long-term debt2,046.5 1,914.2 
Accrued pension cost160.3
 154.7
Accrued postretirement benefits cost126.7
 131.5
Accrued pension benefitsAccrued pension benefits161.3 160.3 
Accrued postretirement benefitsAccrued postretirement benefits31.5 31.4 
Long-term operating lease liabilitiesLong-term operating lease liabilities70.3 65.2 
Deferred income taxes44.9
 3.9
Deferred income taxes167.3 139.8 
Other non-current liabilities47.3
 74.5
Other non-current liabilities102.0 96.2 
Total Non-Current Liabilities1,339.0
 999.6
Total Non-Current Liabilities2,578.9 2,407.1 
   
Shareholders’ Equity   Shareholders’ Equity
Class I and II Serial Preferred Stock, without par value:   Class I and II Serial Preferred Stock, without par value:
Authorized – 10,000,000 shares each class, none issued—
 —
Authorized – 10,000,000 shares each class, none issued— — 
Common stock, without par value:   
Common shares, without par value:Common shares, without par value:
Authorized – 200,000,000 shares   Authorized – 200,000,000 shares
Issued (including shares in treasury) (2017 – 98,375,135 shares; 2016 – 98,375,135 shares)   
Issued (including shares in treasury) (2023 – 78,546,583 shares;
2022 – 77,767,640 shares)
Issued (including shares in treasury) (2023 – 78,546,583 shares;
2022 – 77,767,640 shares)
Stated capital53.1
 53.1
Stated capital40.7 40.7 
Other paid-in capital898.2
 906.9
Other paid-in capital1,058.4 829.6 
Earnings invested in the business1,400.2
 1,289.3
Retained earningsRetained earnings2,132.2 1,932.1 
Accumulated other comprehensive loss(41.0) (77.9)Accumulated other comprehensive loss(178.2)(181.9)
Treasury shares at cost (2017 – 20,758,013 shares; 2016 – 20,925,492 shares)(887.5) (891.7)
Treasury shares at cost (2023 – 7,304,483 shares; 2022 – 5,188,257 shares)Treasury shares at cost (2023 – 7,304,483 shares; 2022 – 5,188,257 shares)(521.8)(352.2)
Total Shareholders’ Equity1,423.0
 1,279.7
Total Shareholders’ Equity2,531.3 2,268.3 
Noncontrolling Interest32.9
 31.2
Noncontrolling Interest118.7 84.6 
Total Equity1,455.9
 1,310.9
Total Equity2,650.0 2,352.9 
Total Liabilities and Shareholders’ Equity$3,363.6
 $2,763.2
Total Liabilities and EquityTotal Liabilities and Equity$6,251.3 $5,772.4 
See accompanying Notes to the Consolidated Financial Statements.

2
Table of Contents
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,		 Six Months Ended
June 30,
2017 2016 20232022
(Dollars in millions)  (Revised)(Dollars in millions)
CASH PROVIDED (USED)   CASH PROVIDED (USED)
Operating Activities   Operating Activities
Net income attributable to The Timken Company$174.2
 $147.7
Net income attributable to noncontrolling interest—
 0.3
Net incomeNet income$255.2 $227.5 
Adjustments to reconcile net income to net cash provided by operating activities:   Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization102.5
 98.3
Depreciation and amortization96.8 82.1 
Impairment charges—
 3.8
Impairment charges28.3 8.8 
(Gain) loss on sale of assets(2.6) 0.8
Loss on sale of assetsLoss on sale of assets1.2 0.8 
Gain on divestituresGain on divestitures(3.6)— 
Deferred income tax provision7.5
 4.6
Deferred income tax provision2.8 1.7 
Stock-based compensation expense18.2
 10.9
Stock-based compensation expense17.1 15.6 
Pension and other postretirement expense12.6
 14.5
Pension and other postretirement expense1.1 11.2 
Pension contributions and other postretirement benefit payments(16.3) (22.3)
Pension and other postretirement benefit contributions and paymentsPension and other postretirement benefit contributions and payments(7.2)(8.1)
Changes in operating assets and liabilities:   Changes in operating assets and liabilities:
Accounts receivable(61.6) 12.2
Accounts receivable(87.4)(149.3)
Unbilled receivablesUnbilled receivables(17.7)(2.9)
Inventories(85.4) (13.6)Inventories15.3 (126.1)
Accounts payable, trade55.7
 15.0
Accounts payable, trade(14.9)(6.1)
Other accrued expenses15.9
 (17.5)Other accrued expenses(29.1)16.6 
Income taxes(59.6) 22.9
Income taxes(32.3)12.1 
Other, net(18.2) 1.1
Other, net(3.0)(6.8)
Net Cash Provided by Operating Activities142.9
 278.7
Net Cash Provided by Operating Activities222.6 77.1 
   
Investing Activities   Investing Activities
Capital expenditures(62.5) (84.4)Capital expenditures(91.3)(75.2)
Acquisitions, net of cash received(347.2) (62.8)
Acquisitions, net of cash acquiredAcquisitions, net of cash acquired(324.6)(152.3)
Proceeds from disposal of property, plant and equipment6.8
 1.5
Proceeds from disposal of property, plant and equipment0.3 — 
Proceeds from divestitures, net of cash divestedProceeds from divestitures, net of cash divested4.5 3.1 
Investments in short-term marketable securities, net(4.2) 2.1
Investments in short-term marketable securities, net(0.8)23.4 
Other(0.3) 0.3
Other, netOther, net(0.1)2.3 
Net Cash Used in Investing Activities(407.4) (143.3)Net Cash Used in Investing Activities(412.0)(198.7)
   
Financing Activities   Financing Activities
Cash dividends paid to shareholders(62.4) (61.4)Cash dividends paid to shareholders(47.4)(46.4)
Purchase of treasury shares(41.0) (83.3)Purchase of treasury shares(154.5)(144.3)
Proceeds from exercise of stock options27.7
 0.7
Proceeds from exercise of stock options17.2 1.6 
Shares surrendered for taxes(10.8) (1.6)
Accounts receivable facility borrowings51.2
 50.0
Accounts receivable facility payments(25.3) (30.1)
Payments related to tax withholding for stock-based compensationPayments related to tax withholding for stock-based compensation(15.1)(8.1)
Borrowings on accounts receivable facilityBorrowings on accounts receivable facility29.0 122.0 
Payments on accounts receivable facilityPayments on accounts receivable facility(29.0)(122.0)
Proceeds from long-term debt862.7
 275.5
Proceeds from long-term debt768.9 684.5 
Payments on long-term debt(574.4) (290.1)Payments on long-term debt(643.5)(344.8)
Deferred financing costs(1.1) —
Deferred financing costs— (3.5)
Short-term debt activity, net12.8
 (1.4)Short-term debt activity, net(1.4)31.9 
Increase in restricted cash(0.5) (2.5)
Proceeds from the sale of shares in Timken India LimitedProceeds from the sale of shares in Timken India Limited284.8 — 
Other(2.6) 4.5
Other— 6.5 
Net Cash Provided by (Used in) Financing Activities236.3
 (139.7)
Net Cash Provided by Financing ActivitiesNet Cash Provided by Financing Activities209.0 177.4 
Effect of exchange rate changes on cash16.6
 3.7
Effect of exchange rate changes on cash(8.0)(7.7)
Decrease in Cash and Cash Equivalents(11.6) (0.6)
Cash and cash equivalents at beginning of year148.8
 129.6
Cash and Cash Equivalents at End of Period$137.2
 $129.0
Increase in Cash, Cash Equivalents and Restricted CashIncrease in Cash, Cash Equivalents and Restricted Cash11.6 48.1 
Cash, cash equivalents and restricted cash at beginning of yearCash, cash equivalents and restricted cash at beginning of year340.7 257.9 
Cash, Cash Equivalents and Restricted Cash at End of PeriodCash, Cash Equivalents and Restricted Cash at End of Period$352.3 $306.0 
See accompanying Notes to the Consolidated Financial Statements.

3
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in millions, except per share data)

Note 1 - Basis of Presentation
The accompanying Consolidated Financial Statements (unaudited) for The Timken Company (the "Company" or "Timken") have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by the accounting principles generally accepted in the United States ("U.S. GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to the Consolidated Financial Statements and accompanying Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Certain amounts recorded2022.
The Company previously classified intangible asset amortization expense within cost of products sold in 2016 consolidated financial statements and accompanying footnotes havethe Company's Consolidated Statements of Income. Intangible asset amortization expense is now classified separately. The 2022 presentation has been reclassifiedrevised to conform to the current presentation.2023 presentation resulting in a reduction in the cost of products sold for the three and six months ended June 30, 2022.

Note 2 - ChangeSignificant Accounting Policies
The Company's significant accounting policies are detailed in "Note 1 - Significant Accounting PrinciplesPolicies"
Effective January 1, 2017, of the Company voluntarily changed its accounting principlesAnnual Report on Form 10-K for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans, with retrospective application to prior periods. Prior to 2017, the Company amortized, as a component of pension and other postretirement expense, unrecognized actuarial gains and losses (included within accumulated other comprehensive income (loss)) over the average remaining service period of active plan participants expected to receive benefits under the plan, or average remaining life expectancy of inactive plan participants when all or almost all of individual plan participants were inactive. The Company also historically calculated the market-related value of plan assets based on a five-year market adjustment. Under the new principles, actuarial gains and losses will be immediately recognized through net periodic benefit cost in the Statement of Income, upon the annual remeasurement in the fourth quarter, or on an interim basis if specific events trigger a remeasurement. In addition, the Company has changed its accounting policy for measuring the market-related value of plan assets from a calculated amount (based on a five-year smoothing of asset returns) to fair value. The Company believes these changes are preferable as they result in an accelerated recognition of actuarial gains and losses and changes in fair value of plan assets in its Consolidated Statement of Income, which provides greater transparency and better aligns with fair value principles by fully reflecting the impact of interest rate and economic changes on the Company's pension and other postretirement benefit liabilities and assets in the Company's operating results in the year in which the gains and losses are incurred. As of January 1, 2017, the cumulative effect of the change in accounting principles resulted in a decrease of $239 million in earnings invested in the business and a corresponding increase of $244 million in accumulated other comprehensive loss that was partially offset by the net impact of the direct effects of these changes on inventory and deferred taxes of $5 million.ended December 31, 2022.
The following tables reflect the changes to financial statement line items as a result of the change in accounting principles for the periods presented in the accompanying unaudited consolidated financial statements:
Consolidated Statements of Income:
 Three Months Ended
 September 30, 2017 September 30, 2016
 Previous Accounting MethodAs ReportedEffect of Accounting Change As Previously ReportedRevisedEffect of Accounting Change
Cost of products sold$556.7
$554.4
$(2.3) $489.9
$487.7
$(2.2)
Gross profit214.7
217.0
2.3
 167.5
169.7
2.2
Selling, general and administrative expense136.8
134.0
(2.8) 109.5
107.2
(2.3)
Pension settlement expenses3.9
—
(3.9) 10.3
0.1
(10.2)
Operating income72.7
81.7
9.0
 42.4
57.1
14.7
Income before income taxes66.2
75.2
9.0
 34.5
49.2
14.7
Provision for income taxes18.0
21.1
3.1
 13.5
15.2
1.7
Net income48.2
54.1
5.9
 21.0
34.0
13.0
Net income attributable to The Timken Company$47.6
$53.5
$5.9
 $20.6
$33.6
$13.0
Basic earnings per share$0.61
$0.69
$0.08
 $0.26
$0.43
$0.17
Diluted earnings per share$0.60
$0.68
$0.08
 $0.26
$0.43
$0.17

Consolidated Statements of Income:
 Nine Months Ended
 September 30, 2017 September 30, 2016
 Previous Accounting MethodAs ReportedEffect of Accounting Change As Previously ReportedRevisedEffect of Accounting Change
Cost of products sold$1,630.9
$1,626.5
$(4.4) $1,484.3
$1,477.7
$(6.6)
Gross profit594.9
599.3
4.4
 530.7
537.3
6.6
Selling, general and administrative expense383.8
377.4
(6.4) 338.0
331.3
(6.7)
Pension settlement expenses15.7
—
(15.7) 11.9
1.3
(10.6)
Operating income191.6
218.1
26.5
 162.1
186.0
23.9
Income before income taxes176.2
202.7
26.5
 189.9
213.8
23.9
Provision for income taxes19.3
28.5
9.2
 61.1
65.8
4.7
Net income156.9
174.2
17.3
 128.8
148.0
19.2
Net income attributable to The Timken Company$156.9
$174.2
$17.3
 $128.5
$147.7
$19.2
Basic earnings per share$2.02
$2.24
$0.22
 $1.63
$1.87
$0.24
Diluted earnings per share$1.99
$2.21
$0.22
 $1.62
$1.86
$0.24

Consolidated Statements of Comprehensive Income:
 Three Months Ended
 September 30, 2017 September 30, 2016
 Previous Accounting MethodAs ReportedEffect of Accounting Change As Previously ReportedRevisedEffect of Accounting Change
Net Income$48.2
$54.1
$5.9
 $21.0
$34.0
$13.0
Foreign currency translation adjustments10.9
10.9
—
 2.2
3.7
1.5
Pension and postretirement liability adjustment6.0
0.1
(5.9) 15.0
0.4
(14.6)
Other comprehensive income, net of tax14.9
9.0
(5.9) 17.2
4.1
(13.1)
Comprehensive Income, net of tax63.1
63.1
—
 38.2
38.1
(0.1)
Less: comprehensive income attributable to noncontrolling interest0.5
0.5
—
 0.9
1.0
0.1
Comprehensive income attributable to
The Timken Company
$62.6
$62.6
$—
 $37.3
$37.1
$(0.2)

 Nine Months Ended
 September 30, 2017 September 30, 2016
 Previous Accounting MethodAs ReportedEffect of Accounting Change As Previously ReportedRevisedEffect of Accounting Change
Net Income$156.9
$174.2
$17.3
 $128.8
$148.0
$19.2
Foreign currency translation adjustments42.8
42.8
—
 (1.4)5.2
6.6
Pension and postretirement liability adjustment17.5
0.2
(17.3) 27.0
1.2
(25.8)
Other comprehensive income, net of tax56.1
38.8
(17.3) 24.0
4.8
(19.2)
Comprehensive Income, net of tax213.0
213.0
—
 152.8
152.8
—
Less: comprehensive income attributable to noncontrolling interest1.9
1.9
—
 2.1
2.2
0.1
Comprehensive income attributable to
The Timken Company
$211.1
$211.1
$—
 $150.7
$150.6
$(0.1)




Consolidated Balance Sheets:
 September 30, 2017December 31, 2016
 Previous Accounting MethodAs ReportedEffect of Accounting ChangeAs Previously ReportedRevisedEffect of Accounting Change
Inventories, net$679.6
$687.5
$7.9
$545.8
$553.7
$7.9
Total current assets1,466.4
1,474.3
7.9
1,204.0
1,211.9
7.9
Deferred income taxes50.9
47.9
(3.0)54.4
51.4
(3.0)
Total other assets1,050.1
1,047.1
(3.0)749.9
746.9
(3.0)
Total assets3,358.7
3,363.6
4.9
2,758.3
2,763.2
4.9
Earnings invested in the business1,622.2
1,400.2
(222.0)1,528.6
1,289.3
(239.3)
Accumulated other comprehensive loss(267.8)(41.0)226.8
(322.0)(77.9)244.1
Total shareholders' equity1,418.2
1,423.0
4.8
1,274.9
1,279.7
4.8
Noncontrolling interest32.8
32.9
0.1
31.1
31.2
0.1
Total equity1,451.0
1,455.9
4.9
1,306.0
1,310.9
4.9
Total liabilities and shareholders' equity$3,358.7
$3,363.6
$4.9
$2,758.3
$2,763.2
$4.9

Consolidated Statements of Cash Flows:
 Nine Months Ended
 September 30, 2017 September 30, 2016
 Previous Accounting MethodAs ReportedEffect of Accounting Change As Previously ReportedRevisedEffect of Accounting Change
Net income attributable to The Timken Company$156.9
$174.2
$17.3
 $128.5
$147.7
$19.2
Deferred income tax (benefit) provision(1.7)7.5
9.2
 (0.1)4.6
4.7
Pension and other postretirement expense39.1
12.6
(26.5) 38.4
14.5
(23.9)



Note 3 - Recent Accounting PronouncementsPronouncements:

New Accounting Guidance Adopted:
In March 2016,September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, "Compensation2022-04, "Liabilities - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.Supplier Finance Programs (Subtopic 405-50)." ASU 2016-09 simplifies various aspects2022-04 is intended to establish disclosures that enhance the transparency of a supplier finance program used by an entity in connection with the accountingpurchase of goods and services. Supplier finance programs, which also may be referred to as reverse factoring, payables finance or structured payables arrangements, allow a buyer to offer its suppliers the option for stock-based payments. The simplifications include:
a.recording all tax effects associated with stock-based compensation through the income statement, as opposed to recording certain amounts in other paid-in capital, which eliminates the requirements to calculate a “windfall pool”;
b.allowing entities to withhold shares to satisfy the employer’s statutory tax withholding requirement up to the highest marginal tax rate applicable to employees rather than the employer’s minimum statutory rate, without requiring liability classification for the award;
c.modifying the requirement to estimate the number of awards that will ultimately vest by providing an accounting policy election to either estimate the number of forfeitures or recognize forfeitures as they occur;
d.changing certain presentation requirements in the statement of cash flows, including removing the requirement to present excess tax benefits as an inflow from financing activities and an outflow from operating activities and requiring the cash paid to taxing authorities arising from withheld shares to be classified as a financing activity; and
e.amending the assumed proceeds from applying the treasury stock method when computing earnings per share to exclude the amount of excess tax benefits that would be recognized in additional paid-in capital.

On January 1, 2017,access to payment in advance of an invoice due date, which is paid by a third-party finance provider or intermediary. Under the Company adopted the provisions of ASU 2016-09. The presentation of the Consolidated Statement of Cash Flows for shares surrendered by employees to meet the minimum statutory withholding requirement was applied retrospectively. Asguidance, a result of the adoption of ASU 2016-09, $1.6 million was reclassified from the other accrued expenses line in the operating activities section of the Consolidated Statement of Cash Flows to the shares surrendered for taxes line in the financing activities section for the first nine months of 2016.

In addition, the adoption of ASU 2016-09 resulted in the Company making an accounting policy election to change how it will recognize the number of stock awards that will ultimately vest. In the past, the Company applied a forfeiture rate to shares granted. With the adoption of ASU 2016-09, the Company will recognize forfeitures as they occur. This change resulted in the Company making a cumulative effect change to retained earnings of $0.9 million. For additional information, refer to Note 10 - Equity for the disclosure of the cumulative effect change. In addition, the Company began recording the tax effects associated with stock-based compensation through the income statement on a prospective basis, which resultedbuyer in a tax benefit of $1.9 million for the first nine months of 2017. Finally, the Company adjusted dilutive shares to remove the excess tax benefits from the calculation of earnings per share on a prospective basis.supplier finance program would disclose qualitative and quantitative information about its supplier finance programs. The revised calculation is more dilutive, but it did not change earnings per share for prior years.
In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory." ASU 2015-11 requires inventory to be measured at the lower of cost and net realizable value, which is defined as the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. Under existing guidance, net realizable value is one of several acceptable measures of market value that could be used to measure inventory at the lower of cost or market and, as such, the new guidance reduces the complexity in the measurement. On January 1, 2017, the Company adopted the provisions of ASU 2015-11 on a prospective basis. The adoption of ASU 2015-11 did not have a material impact on the Company's results of operations or financial condition. For our disclosures related to inventories, refer to Note 5 - Inventories.


New Accounting Guidance Issued and Not Yet Adopted:
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities", which impacts both designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. ASU 2017-12 amends and clarifies the requirements to qualify for hedge accounting, removes the requirement to recognize changes in fair value from certain hedges in current earnings, and specifies the presentation of changes in fair value in the income statement for all hedging instruments. ASU 2017-02 is effective for public companies for fiscal years andbeginning after December 15, 2022, including interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including in any interim periodexcept for which financial statements have not yet been issued, but the effect of adoption is required to be reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the effect that the adoption of ASU 2017-12 will haveamendment on the Company's results of operations and financial condition.

In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting." ASU 2017-09 provides clarity onrollforward information, which changes to the terms or conditions of share-based payment awards require entities to apply the modification accounting provisions required in Topic 718. ASU 2017-09 is effective for public companies for annual reporting periods beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. The Company does not expect that the adoption of ASU 2017-09 will have a material impact on the Company's results of operations and financial condition, as the Company does not anticipate future modifications of share-based payment awards.

In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU 2017-07 impacts where the components of net benefit cost are presented within an entity’s income statement. Service cost will be included in other employee compensation costs within operating income and is the only component that may be capitalized when applicable. The other components of net periodic benefit cost will be presented separately outside of operating income. ASU 2017-07 is effective for public companies for annual reporting periods beginning after December 15, 2017 and interim periods within that reporting period. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued or made available for issuance. Our initial assessment has indicated that the adoption of ASU 2017-07 will result in the reclassification of certain amounts out of "Cost of products sold" and "Selling, general and administrative ("SG&A") expenses" into "Other expense, net" in the Consolidated Statement of Income. Also, the adoption of this standard will result in the reclassification of certain amounts from "Cost of products sold" and "SG&A expenses" for the Mobile Industries and Process Industries segments into Corporate "Other expense, net". The amounts impacted may be material. The Company is currently performing further analysis on the effect that the adoption of ASU 2017-07 will have on the Company's results of operations.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Prior to the issuance of the new accounting guidance, entities first assessed qualitative factors to determine whether a two-step goodwill impairment test was necessary. When entities bypassed or failed the qualitative analysis, they were required to apply a two-step goodwill impairment test. Step 1 compared a reporting unit’s fair value to its carrying amount to determine if there is a potential impairment. If the carrying amount of a reporting unit exceeds its fair value, Step 2 was required to be completed. Step 2 involved determining the implied fair value of goodwill and comparing it to the carrying amount of that goodwill to measure the impairment loss, if any. ASU 2017-04 eliminates Step 2 of the current goodwill impairment test. ASU 2017-04 will require that a goodwill impairment loss be measured at the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for public companies for years beginning after December 15, 2019, with early adoption permitted, and must be applied prospectively. The Company is currently evaluating the effect that the adoption of ASU 2017-04 will have on the Company's results of operations and financial condition.


In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The new guidance will replace the current incurred loss approach with an expected loss model. The new expected credit loss impairment model will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt instruments, net investments in leases, loan commitments and standby letters of credit. Upon initial recognition of the exposure, the expected credit loss model requires entities to estimate the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses should consider historical information, current information and reasonable and supportable forecasts, including estimates of prepayments. Financial instruments with similar risk characteristics should be grouped together when estimating expected credit losses. ASU 2016-13 does not prescribe a specific method to make the estimate, so its application will require significant judgment. ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the effect that the adoption of ASU 2016-13 will have on the Company's results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 was issued to increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. ASU 2016-02 is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the effect that the adoption of ASU 2016-02 will have on the Company's results of operations and financial condition.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires disclosures sufficient to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments and assets recognized from the costs to obtain or fulfill a contract. On July 9, 2015, the FASB decided to delay the effective date of this new accounting guidance by one year, which will result in it being effective for public companies for annual periods beginning after December 15, 2017. Although early2023. Early adoption is permitted, permitted. Refer to Note 12 - Supply Chain Financing inthe Company intends to adopt the new accounting standard effective January 1, 2018.

The two permitted transition methods under the new standard are: (1) the full retrospective method, in which case the standard would be applied to each prior reporting period presented, subject to allowable practical expedients and the cumulative effect of applying the standard would be recognized at the earliest period shown and (2) the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application accompanied by additional disclosures comparing the current period results presented under the new standardNotes to the prior periods presented under the current revenue recognition standards. The Company plans to use the modified retrospective method.

The Company has substantially completed the assessment phase of the project, which has identified potential differences from the application of the new standard.  Upon adoption, the Company expects that certain revenue streams currently accountedConsolidated Financial Statements for using a point-in-time model will utilize an over-time model due to the continuous transfer of control to customers.  The Company is currently designing and implementing procedures and related internal controls to address the potential differences identified, including the expanded disclosure requirements resulting from the new standard, and performing a deeper analysis of those potential differences to quantify the impacts of applying the new standard. The Company expects to finalize its evaluation of these potential differences that may result from applying the new standard to the Company's contracts with customers in 2017 and will provide updates on its progress in future filings.



Note 4 - Acquisitionsadditional information.


4
Table of Contents
Note 3 - Acquisitions and Divestitures
Acquisitions:
During the first ninesix months of 2017,2023, the Company completed threetwo acquisitions. On July 3, 2017,April 4, 2023, the Company completed the acquisition of Groeneveld Groupacquired Leonardo Top S.a.r.l. ("Groeneveld"Nadella"), a leading providerEuropean manufacturer of automatic lubricationlinear guides, telescopic rails, actuators and systems and other specialized industrial motion solutions, usedfrom ICG plc. Based in on-Italy, Nadella employs approximately 450 people and off-highway applications.operates manufacturing facilities in Europe and China. Nadella reported revenue of approximately €100 million in 2022. Results for Nadella are reported in the Industrial Motion segment. On May 5, 2017,January 31, 2023, the Company completed the acquisition ofacquired the assets of PT Tech, Inc.American Roller Bearing Company ("PT Tech"ARB"), a North Carolina-based manufacturer of engineered clutches, brakes, hydraulic power take-off unitsindustrial bearings. ARB, which boasts a large U.S. installed base and other torque management devices usedstrong aftermarket business, operates manufacturing facilities in mining, aggregate, wood recyclingHiddenite and metals industries. On April 3, 2017, the Company completed the acquisitionMorganton, North Carolina. ARB reported revenue of Torsion Control Products, Inc. ("Torsion Control Products"), a manufacturer of engineered torsional couplings usedapproximately $35 million in 2022. Results for ARB are reported in the construction, agriculture and mining industries. Aggregate sales for these companies for the most recent twelve months prior to their respective acquisitions totaled approximately $146.2 million.Engineered Bearings segment. The total purchase price for these acquisitions was $346.6$326.9 million, net of $35.0 million cash received.acquired of $21.0 million. The Company incurred acquisition-related costs of $3.6$2.7 million to complete these acquisitions. The 2017 acquisitions are subject to post-closing purchase price allocation adjustments. Based on markets and customers served, substantially all of the results for Groeneveld, PT Tech and Torsion Control Products are reported in the Mobile Industries segment.

The following table presents the initialpreliminary purchase price allocation at fair value for the 2023 acquisitions as of June 30, 2023.
Initial Purchase
Price Allocation
Assets:
Accounts receivable$25.0
Inventories72.6
Other current assets5.3
Property, plant and equipment34.1
Goodwill121.3
Other intangible assets136.7
Other non-current assets4.9
   Total assets acquired$399.9
Liabilities:
Accounts payable, trade$15.3
Salaries, wages and benefits4.7
Income taxes payable4.1
Other current liabilities6.4
Short-term debt5.0
Long-term debt6.0
Deferred income taxes27.7
Other non-current liabilities3.8
   Total liabilities assumed$73.0
   Net assets acquired$326.9
In determining the fair value of the amounts above, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being valued. The estimation of fair value required judgement related to future net cash flows, discount rates, competitive trends, market comparisons and other factors. Inputs were generally determined by taking into account independent appraisals and historical data, supplemented by current and anticipated market conditions.

5
Table of Contents
Note 3 - Acquisitions and Divestitures (continued)
The amounts in the table above represent the preliminary purchase price allocation for acquisitionsthe 2023 acquisitions. This purchase price allocation, including the residual amount allocated to goodwill, is based on preliminary information and is subject to change as additional information concerning final asset and liability valuations are obtained and management completes its reassessment of the measurement period procedures based on the results of the preliminary valuation. As of June 30, 2023, no elements of the purchase price allocation have been finalized. During the applicable measurement period, the Company will adjust assets and liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in 2017: 
 Initial Purchase Price Allocation
Assets: 
Accounts receivable, net$27.6
Inventories, net29.1
Other current assets4.7
Property, plant and equipment, net31.6
Goodwill147.6
Other intangible assets175.3
Other non-current assets1.9
Total assets acquired$417.8
Liabilities: 
Accounts payable, trade$9.5
Salaries, wages and benefits5.8
Other current liabilities8.2
Short-term debt1.0
Long-term debt2.0
Deferred income taxes42.4
Other non-current liabilities2.3
Total liabilities assumed$71.2
Net assets acquired$346.6


revised estimated values of those assets or liabilities as of that date. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments has been completed on the acquisition date.
The following table summarizes the initialpreliminary purchase price allocation at fair value for identifiable intangible assets acquired in 2017:2023.
 Initial Purchase
Price Allocation
  Weighted -
Average Life
Trade names (indefinite life)$33.4
Indefinite
Trade names (finite life)2.2
13 years
Technology and know-how29.9
16 years
Customer relationships108.2
17 years
Other0.2
5 years
Capitalized software1.4
3 years
Total intangible assets$175.3
 

2023
Weighted-
Average Life
Trade names$18.815 years
Technology and know-how29.415 years
Customer relationships88.49 years
Capitalized software0.12 years
Total intangible assets$136.7

On July 5, 2017, the Company announced that the Company's majority-owned subsidiary, Timken India Ltd. ("Timken India"), entered into a definitive agreement to acquire ABC Bearings Limited ("ABC Bearings"). Timken India is a public limited company listed on the National Stock Exchange of India Limited and BSE Limited. ABC Bearings is a manufacturer of tapered, cylindrical and spherical roller bearings and slewing rings in India. The transaction is structured as a merger of ABC Bearings into Timken India, whereby shareholders of ABC Bearings will receive shares of Timken India as consideration. The transaction is subject to receipt of various approvals in India, which are expected to be completed in the first half of 2018. ABC Bearings, located in Mumbai, India, operates primarily out of manufacturing facilities in Bharuch, Gujarat and Dehradun, Uttarakhand and had annual sales of approximately $29 million for the twelve months ended March 31, 2017.

During 2016, the Company completed two acquisitions. On October 31, 2016,November 4, 2022, the Company completed the acquisition of EDT Corp.GGB Bearing Technology ("EDT"GGB"), a manufacturerglobal technology and market leader of polymer housed unitspremium engineered metal-polymer plain bearings, for $300.2 million, net of cash acquired of $19.7 million. GGB's revenue was approximately $200 million for the full year 2022. GGB's products are used mainly in industrial applications, including pumps and stainless steel ball bearings used primarilycompressors, HVAC, off-highway, energy, material handling and aerospace. With manufacturing facilities across the United States, Europe and China, GGB employs approximately 900 people and has a global engineering, distribution and sales footprint. Results for GGB are reported in the food and beverage industry. Engineered Bearings segment.
On July 8, 2016,May 31, 2022, the Company completed the acquisition of Lovejoy Inc.Spinea, s.r.o. ("Lovejoy"Spinea"), a European technology leader and manufacturer of premium industrial couplingshighly engineered cycloidal reduction gears and universal joints.
In January 2017,actuators, with full year 2022 sales of approximately $40 million. Spinea’s solutions primarily serve high-precision automation and robotics applications in the Company paid a netfactory automation platform. Spinea is located in Presov, Slovakia. The purchase price adjustmentfor this acquisition was $151.2 million, net of $0.6 million in connection with the EDT acquisition, resulting in an adjustment to goodwill. During the second quartercash acquired of 2017, the Company re-evaluated the fair value of certain contingent liabilities assumed$0.2 million. Results for Spinea are reported in the Lovejoy acquisition, resulting in adjustments to other current assets, goodwill, other current liabilitiesIndustrial Motion segment.


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Table of Contents
Note 3 - Acquisitions and other non-current liabilities. Divestitures (continued)
The following table presents the updated purchase price allocation at fair value, net of cash acquired, for the 2022 acquisitions, as of June 30, 2023:
Initial Purchase Price AllocationAdjustmentsUpdated Purchase Price Allocation
Assets:
Accounts receivable$30.6 $0.1 $30.7 
Inventories52.3 (0.3)52.0 
Other current assets7.6 — 7.6 
Property, plant and equipment153.6 (4.7)148.9 
Goodwill106.9 (1.4)105.5 
Other intangible assets182.6 (0.8)181.8 
Other assets12.1 3.9 16.0 
Total assets acquired$545.7 $(3.2)$542.5 
Liabilities:
Accounts payable, trade$16.8 $(0.5)$16.3 
Salaries, wages and benefits11.8 — 11.8 
Income taxes payable3.2 — 3.2 
Other current liabilities7.0 (1.0)6.0 
Accrued pension benefits3.2 0.3 3.5 
Deferred income taxes30.0 — 30.0 
Other non-current liabilities20.0 0.3 20.3 
Total liabilities assumed$92.0 $(0.9)$91.1 
Net assets acquired$453.7 $(2.3)$451.4 
The above purchase price allocation, including the residual amount allocated to goodwill, is based on preliminary information and is subject to change as additional information concerning final asset and liability valuations is obtained. The purchase price allocation for bothSpinea was finalized during the Lovejoysecond quarter of 2023. The purchase price allocation for GGB is preliminary pending the continued evaluation of real estate and other property, plant and equipment assets, as well as the EDT acquisitions: related impacts on deferred income taxes. During the measurement period, the Company will adjust assets and liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date.
Divestitures:
 Initial Purchase Price AllocationAdjustmentFinal Purchase Price Allocation
Assets:   
Accounts receivable, net$8.4
 $8.4
Inventories, net17.8
 17.8
Other current assets5.3
(0.2)5.1
Property, plant and equipment, net16.5
 16.5
Goodwill29.9
(1.1)28.8
Other intangible assets27.9
 27.9
Other non-current assets0.1
 0.1
Total assets acquired$105.9
$(1.3)$104.6
Liabilities:   
Accounts payable, trade$8.1
 $8.1
Salaries, wages and benefits1.3
 1.3
Other current liabilities4.4
(0.6)3.8
Long-term debt2.2
 2.2
Deferred taxes10.4
 10.4
Other non-current liabilities7.6
(1.3)6.3
Total liabilities assumed$34.0
$(1.9)$32.1
Net assets acquired$71.9
$0.6
$72.5
On February 28, 2023, the Company completed the sale of all of its membership interests in S.E. Setco Services Company, LLC ("SE Setco"), a 50% owned joint venture. The Company had accounted for SE Setco as an equity method investment prior to the sale. The Company received $5.7 million in cash proceeds for SE Setco and recognized a pretax gain of $4.8 million on the sale. The gain was reflected in other income, net in the Consolidated Statement of Income.
On November 1, 2022, the Company completed the divestiture of Timken Aerospace Drive Systems, LLC ("ADS"). The Company recorded proceeds of $33.0 million on the sale of the business. For the first six months of 2023, the Company recorded a loss $1.2 million due to the payment of a working capital adjustment.



7

Table of Contents
Note 4 - Segment Information
The primary measurement used by management to measure the financial performance of each segment is earnings before interest, taxes, depreciation and amortization ("EBITDA").
Effective January 1, 2023, the Company began operating under new reportable segments. The Company’s two reportable segments are Engineered Bearings and Industrial Motion. Segment results for 2022 have been revised to conform to the 2023 presentation of segments.
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2023202220232022
Net sales:
Engineered Bearings$857.2 $798.3 $1,757.9 $1,570.7 
Industrial Motion415.1 355.4 777.2 707.6 
Net sales$1,272.3 $1,153.7 $2,535.1 $2,278.3 
Segment EBITDA:
Engineered Bearings$185.5 $167.5 $390.5 $335.8 
Industrial Motion80.9 65.1 129.1 127.5 
Total EBITDA, for reportable segments$266.4 $232.6 $519.6 $463.3 
Unallocated corporate expense(13.2)(13.4)(30.9)(26.3)
Corporate pension and other postretirement
     benefit related income (expense) (1)
1.0 (11.6)1.9 (14.2)
Depreciation and amortization(51.2)(40.7)(96.8)(82.1)
Interest expense(28.3)(18.3)(52.4)(32.6)
Interest income1.9 1.0 3.4 1.6 
Income before income taxes$176.6 $149.6 $344.8 $309.7 
(1) Corporate pension and other postretirement benefit related income (expense) represents actuarial gains and (losses) that resulted from the remeasurement of pension and other postretirement plan assets and obligations as a result of changes in assumptions or experience.

June 30,
2023		December 31, 2022
Assets by Segment:
Engineered Bearings$3,387.3 $3,270.3 
Industrial Motion2,435.7 2,070.1 
Corporate (2)
428.3 432.0 
 $6,251.3 $5,772.4 
(2) Corporate assets include corporate buildings and cash and cash equivalents.
8
Table of Contents
Note 5 - InventoriesRevenue
The componentsfollowing table presents details deemed most relevant to the users of inventories at Septemberthe financial statements about total revenue for the three and six months ended June 30, 20172023 and 2022:
Three Months EndedThree Months Ended
June 30, 2023June 30, 2022
Engineered BearingsIndustrial MotionTotalEngineered BearingsIndustrial MotionTotal
United States$317.6 $218.8 $536.4 $302.0 $197.7 $499.7 
Americas excluding the United States96.0 27.9 123.9 104.6 24.3 128.9 
Europe / Middle East / Africa175.6 136.6 312.2 155.7 104.0 259.7 
China156.5 22.9 179.4 133.3 21.7 155.0 
Asia-Pacific excluding China111.5 8.9 120.4 102.7 7.7 110.4 
Net sales$857.2 $415.1 $1,272.3 $798.3 $355.4 $1,153.7 
Six Months EndedSix Months Ended
June 30, 2023June 30, 2022
Engineered BearingsIndustrial MotionTotalEngineered BearingsIndustrial MotionTotal
United States$658.5 $413.1 $1,071.6 $591.8 $396.5 $988.3 
Americas excluding the United States188.2 55.8 244.0 197.0 45.1 242.1 
Europe / Middle East / Africa359.5 250.4 609.9 318.3 206.5 524.8 
China314.9 39.2 354.1 262.6 43.8 306.4 
Asia-Pacific excluding China236.8 18.7 255.5 201.0 15.7 216.7 
Net sales$1,757.9 $777.2 $2,535.1 $1,570.7 $707.6 $2,278.3 

When reviewing revenue by sales channel, the Company separates net sales to original equipment manufacturers ("OEMs") from sales to distributors and end users. The following table presents the approximate percent of revenue by sales channel for the six months ended June 30, 2023 and 2022:
Six Months EndedSix Months Ended
Revenue by sales channelJune 30, 2023June 30, 2022
Original equipment manufacturers60%60%
Distribution/end users40%40%
In addition to disaggregating revenue by segment, geography and by sales channel as shown above, the Company believes information about the timing of transfer of goods or services, type of customer and distinguishing service revenue from product sales is also relevant. During the six months ended June 30, 2023 and June 30, 2022, approximately 8% and 9%, respectively, of total net sales were recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized as of a point in time. Approximately 4% of total net sales represented service revenue during the six months ended June 30, 2023 and June 30, 2022. Finally, business with the United States ("U.S.") government or its contractors represented approximately 6% of total net sales during each of the six months ended June 30, 2023 and June 30, 2022.

Remaining Performance Obligations:
Remaining performance obligations represent the transaction price of orders meeting the definition of a contract for which work has not been performed and excludes unexercised contract options. Performance obligations having a duration of more than one year are concentrated in contracts for certain products and services provided to the U.S. government or its contractors. The aggregate amount of the transaction price allocated to remaining performance obligations for such contracts with a duration of more than one year was approximately $216.0 million at June 30, 2023.

9
Table of Contents
Note 5 - Revenue(continued)
Unbilled Receivables:
The following table contains a rollforward of unbilled receivables for the six months ended June 30, 2023 and the twelve months ended December 31, 20162022:
June 30,
2023		December 31,
2022
Beginning balance, January 1$103.9 $104.5 
Additional unbilled revenue recognized207.6 396.2 
Less: amounts billed to customers(189.7)(370.5)
Less: unbilled receivables reclassified to assets held for sale— (26.3)
Ending balance$121.8 $103.9 
There were as follows:no impairment losses recorded on unbilled receivables for the six months ended June 30, 2023 and the twelve months ended December 31, 2022.
 September 30,
2017		December 31,
2016
Manufacturing supplies$29.5
$28.2
Raw materials85.7
54.9
Work in process238.4
182.9
Finished products367.4
308.8
Subtotal$721.0
$574.8
Allowance for obsolete and surplus inventory(33.5)(21.1)
Total Inventories, net$687.5
$553.7


Deferred Revenue:
Inventories are valued atThe following table contains a rollforward of deferred revenue for the lower of cost or market, with approximately 55% valued by the first-in, first-out ("FIFO") methodsix months ended June 30, 2023 and the remaining 45% valued by the last-in, first-out ("LIFO") method. The majority of the Company's domestic inventories are valued by the LIFO method and all of the Company's international (outside the United States) inventories are valued by the FIFO method.

An actual valuation of the inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation.

The LIFO reserves at September 30, 2017 and twelve months ended December 31, 2016 were $167.4 million and $179.5 million, respectively. The Company recognized a decrease in its LIFO reserve of $12.1 million during the first nine months of 2017, compared with a decrease in its LIFO reserve of $0.2 million during the first nine months of 2016.2022:

June 30,
2023		December 31,
2022
Beginning balance, January 1$54.3 $35.8 
Revenue (cash) received in advance105.7 54.8 
Less: revenue recognized(104.6)(36.3)
Ending balance$55.4 $54.3 
Note 6 - Property, Plant and EquipmentIncome Taxes
The components of property, plant and equipment at September 30, 2017 and December 31, 2016 were as follows:Company's provision for income taxes in interim periods is computed by applying the estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period(s) in which they occur.
 September 30,
2017		December 31,
2016
Land and buildings$478.2
$425.4
Machinery and equipment1,882.4
1,807.6
Subtotal$2,360.6
$2,233.0
Accumulated depreciation(1,518.4)(1,428.6)
Property, plant and equipment, net$842.2
$804.4

 Three Months Ended
June 30,		Six Months Ended
June 30,
 2023202220232022
Provision for income taxes$47.1 $44.0 $89.6 $82.2 
Effective tax rate26.7 %29.4 %26.0 %26.5 %

Total depreciationIncome tax expense for the ninethree and six months ended SeptemberJune 30, 2017 and 20162023 was $73.3 million and $71.1 million, respectively.calculated using forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the projected mix of earnings in non-U.S. jurisdictions with relatively higher tax rates.






Note 7 - Goodwill and Other Intangible Assets
The changeseffective tax rate of 26.7% for the three months ended June 30, 2023 was lower than the effective tax rate for the three months ended June 30, 2022 primarily due to the net favorable impact of discrete tax items in comparison to the year ago period, partially offset by an increase in the carrying amountmix of goodwillearnings in non-U.S. jurisdictions with relatively higher tax rates.
The effective tax rate of 26.0% for the ninesix months ended SeptemberJune 30, 2017 were as follows:
 
Mobile
Industries
Process
Industries
Total
Beginning balance$97.2
$260.3
$357.5
Acquisitions147.6
(1.1)146.5
Foreign currency translation adjustments4.0
2.3
6.3
Ending balance$248.8
$261.5
$510.3


The Groeneveld, PT Tech and Torsion Control Products acquisitions added a total of $147.6 million of goodwill2023 was lower than the effective tax rate for the six months ended June 30, 2022 primarily due to the Mobile Industries segment. The goodwill acquired from PT Tech and Torsion Control Products is expectednet favorable impact of discrete tax items in comparison to be tax-deductible over 15 years. The goodwill acquired from Groeneveld is not expected to be tax-deductible. The Company paid a net purchase price adjustment of $0.6 million in January 2017 in connection with the acquisition of EDT, which resulted inyear ago period, partially offset by an increase to goodwill. The Company also adjusted its purchase price allocation forin the Lovejoy acquisitionmix of earnings in 2017, which resulted in a $1.7 million reduction to goodwill. The goodwill resulting from the EDT and Lovejoy acquisitions was allocated to the Process Industries segment.non-U.S. jurisdictions with relatively higher tax rates.

10
The following table displays intangible assets asTable of September 30, 2017 and December 31, 2016:
 As of September 30, 2017As of December 31, 2016
 
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Intangible assets
subject to amortization:
      
Customer relationships$322.4
$97.6
$224.8
$211.4
$84.4
$127.0
Technology and know-how126.4
29.9
96.5
95.2
25.4
69.8
Trade names8.6
4.2
4.4
6.5
3.8
2.7
Capitalized software260.0
223.4
36.6
251.7
211.8
39.9
Other12.2
8.1
4.1
11.0
7.5
3.5
 $729.6
$363.2
$366.4
$575.8
$332.9
$242.9
Intangible assets not subject to amortization:      
Trade names$53.8
 $53.8
$19.4
 $19.4
FAA air agency certificates8.7
 8.7
8.7
 8.7
 $62.5


$62.5
$28.1


$28.1
Total intangible assets$792.1
$363.2
$428.9
$603.9
$332.9
$271.0

Contents

Amortization expense for intangible assets was $29.2 million and $27.2 million for the nine months ended September 30, 2017 and 2016, respectively. Amortization expense for intangible assets is estimated to be $40.5 million in 2017; $39.8 million in 2018; $36.0 million in 2019; $29.9 million in 2020; and $27.3 million in 2021.

Note 8 - Financing Arrangements
Short-term debt at September 30, 2017 and December 31, 2016 was as follows:
 September 30,
2017		December 31,
2016
Variable-rate Accounts Receivable Facility with an interest rate of 2.07% at September 30, 2017$5.6
$—
Borrowings under variable-rate lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 0.32% to 1.75% at September 30, 2017 and 0.50% at December 31, 2016, respectively35.5
19.2
Short-term debt$41.1
$19.2

The Company has a $100 million Amended and Restated Asset Securitization Agreement ("Accounts Receivable Facility") that matures on November 30, 2018. Under the terms of the Accounts Receivable Facility, the Company sells, on an ongoing basis, certain domestic trade receivables to Timken Receivables Corporation, a wholly owned consolidated subsidiary, which, in turn, uses the trade receivables to secure borrowings that are funded through a vehicle that issues commercial paper in the short-term market. Borrowings under the Accounts Receivable Facility are limited by certain borrowing base limitations. These limitations reduced the availability of the Accounts Receivable Facility to $80.3 million at September 30, 2017. As of September 30, 2017, there were outstanding borrowings of $74.8 million under the Accounts Receivable Facility, which reduced the availability under this facility to $5.5 million. The cost of this facility, which is the prevailing commercial paper rate plus program fees, is considered a financing cost and is included in interest expense in the Consolidated Statement of Income. The outstanding balance under the Accounts Receivable Facility was classified as short term or long term in accordance with the terms of the agreement and reflects the Company's expectations relative to the minimum borrowing base.

The lines of credit for certain of the Company’s foreign subsidiaries provide for short-term borrowings up to $250.0 million in the aggregate. Most of these lines of credit are uncommitted. At September 30, 2017, the Company’s foreign subsidiaries had borrowings outstanding of $35.5 million and bank guarantees of $2.0 million, which reduced the aggregate availability under these facilities to $212.5 million.

Long-term debt at September 30, 2017 and December 31, 2016 was as follows:
 September 30,
2017		December 31,
2016
Fixed-rate Medium-Term Notes, Series A, maturing at various dates through May 2028, with interest rates ranging from 6.74% to 7.76%$159.5
$159.5
Fixed-rate Senior Unsecured Notes, maturing on September 1, 2024, with an interest rate of 3.875%346.6
345.9
Variable-rate Senior Credit Facility with a weighted-average interest rate of 1.59% at September 30, 2017 and 1.50% at December 31, 201691.2
83.8
Variable-rate Accounts Receivable Facility with an interest rate of 2.07% at September 30, 2017 and 1.65% at December 31, 201669.2
48.9
Fixed-rate Euro Senior Unsecured Notes, maturing on September 7, 2027, with an interest rate of 2.02%176.5
—
Variable-rate Euro Term Loan with an interest rate of 1.13% at September 30, 2017117.8
—
Other4.0
1.9
 $964.8
$640.0
Less: Current maturities5.0
5.0
Long-term debt$959.8
$635.0

The Company has a $500 million Amended and Restated Credit Agreement ("Senior Credit Facility"), which matures on June 19, 2020. At September 30, 2017, the Company had $91.2 million of outstanding borrowings under the Senior Credit Facility, which reduced the availability under this facility to $408.8 million. The Senior Credit Facility has two financial covenants: a consolidated leverage ratio and a consolidated interest coverage ratio. At September 30, 2017, the Company was in full compliance with both of these covenants.


On September 7 2017, the Company issued €150 million of fixed-rate 2.02% senior unsecured notes that mature on September 7, 2027 ("2027 Notes"). On September 18, 2017, the Company entered into a €100 million variable-rate term loan that matures on September 18, 2020 ("2020 Term Loan"). The increased borrowings were primarily to refinance the acquisition of Groeneveld that closed on July 3, 2017. Refer to Note 4 - Acquisitions for additional information. These debt instruments have two financial covenants: a consolidated leverage ratio and a consolidated interest coverage ratio. These covenants are the same as those in the Senior Credit Facility. At September 30, 2017, the Company was in full compliance with both of these covenants.

Note 9 - Contingencies
Product Warranties:
The Company provides limited warranties on certain of its products. The following is a rollforward of the warranty liability for the nine months ended September 30, 2017 and the twelve months ended December 31, 2016:
 September 30,
2017		December 31,
2016
Beginning balance, January 1$6.9
$5.4
Additions2.6
2.4
Payments(2.1)(0.9)
Ending balance$7.4
$6.9

The product warranty liability at September 30, 2017 and December 31, 2016 was included in other current liabilities on the Consolidated Balance Sheets.

Currently, the Company is evaluating claims raised by certain customers with respect to the performance of bearings sold into the wind energy sector. Accruals related to this matter are included in the table above. Management believes that the outcome of these claims will not have a material effect on the Company’s consolidated financial position; however, the effect of any such outcome may be material to the results of operations of any particular period in which costs in excess of amounts provided, if any, are recognized.

Note 10 - Equity

The changes in the equity components for the nine months ended September 30, 2017 were as follows:
  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, 2016$1,310.9
$53.1
$906.9
$1,289.3
$(77.9)$(891.7)$31.2
Cumulative effect of ASU 2016-090.5
 1.4
(0.9)   
Net income174.2
  174.2
  —
Foreign currency translation adjustment42.8
   40.9
 1.9
Pension and postretirement liability
adjustments (net of $0.1 income
tax benefit)		0.2
   0.2
  
Change in fair value of derivative financial
instruments, net of reclassifications		(4.2)   (4.2)  
Dividends paid to noncontrolling
interest		(0.2)     (0.2)
Dividends – $0.80 per share(62.4)  (62.4)   
Stock-based compensation expense18.2
 18.2
    
Stock purchased at fair market value(41.0)    (41.0) 
Stock option exercise activity27.7
 (9.7)  37.4
 
Restricted share activity—
 (18.6)  18.6
 
Shares surrendered for taxes(10.8)    (10.8) 
Balance at September 30, 2017$1,455.9
$53.1
$898.2
$1,400.2
$(41.0)$(887.5)$32.9

Note 11 - Accumulated Other Comprehensive Income (Loss)

The following tables present details about components of accumulated other comprehensive loss for the three and nine months ended September 30, 2017 and 2016, respectively:
 Foreign currency translation adjustmentsPension and postretirement liability adjustmentsChange in fair value of derivative financial instrumentsTotal
Balance at June 30, 2017$(49.9)$1.6
$(1.8)$(50.1)
Other comprehensive income (loss) before
reclassifications and income tax		10.9
—
(4.0)6.9
Amounts reclassified from accumulated other
comprehensive income, before income tax		—
0.1
0.9
1.0
Income tax expense—
—
1.1
1.1
Net current period other comprehensive
income (loss), net of income taxes		10.9
0.1
(2.0)9.0
Noncontrolling interest0.1
—
—
0.1
Net current period comprehensive income (loss),
   net of income taxes and noncontrolling interest
11.0
0.1
(2.0)9.1
Balance at September 30, 2017$(38.9)$1.7
$(3.8)$(41.0)
 Foreign currency translation adjustmentsPension and postretirement liability adjustmentsChange in fair value of derivative financial instrumentsTotal
Balance at December 31, 2016$(79.8)$1.5
$0.4
$(77.9)
Other comprehensive income (loss) before
reclassifications and income tax		42.8
—
(7.1)35.7
Amounts reclassified from accumulated other
comprehensive income, before income tax		—
0.3
0.4
0.7
Income tax expense (benefit)—
(0.1)2.5
2.4
Net current period other comprehensive
income (loss), net of income taxes		42.8
0.2
(4.2)38.8
Noncontrolling interest(1.9)—
—
(1.9)
Net current period comprehensive income (loss),
   net of income taxes and noncontrolling interest
40.9
0.2
(4.2)36.9
Balance at September 30, 2017$(38.9)$1.7
$(3.8)$(41.0)


 Foreign currency translation adjustmentsPension and postretirement liability adjustmentsChange in fair value of derivative financial instrumentsTotal
Balance at June 30, 2016$(55.1)$1.2
$(1.3)$(55.2)
Other comprehensive income (loss) before
reclassifications and income tax		3.7
—
(0.5)3.2
Amounts reclassified from accumulated other
comprehensive income, before income tax		—
0.7
0.5
1.2
Income tax benefit—
(0.3)—
(0.3)
Net current period other comprehensive
income, net of income taxes		3.7
0.4
—
4.1
Noncontrolling interest(0.6)—
—
(0.6)
Net current period comprehensive income,
   net of income taxes and noncontrolling interest
3.1
0.4
—
3.5
Balance at September 30, 2016$(52.0)$1.6
$(1.3)$(51.7)
 Foreign currency translation adjustmentsPension and postretirement liability adjustmentsChange in fair value of derivative financial instrumentsTotal
Balance at December 31, 2015$(55.3)$0.4
$0.3
$(54.6)
Other comprehensive income (loss) before
reclassifications and income tax		5.2
—
(2.5)2.7
Amounts reclassified from accumulated other
comprehensive income (loss), before income tax		—
2.0
(0.1)1.9
Income tax (benefit) expense—
(0.8)1.0
0.2
Net current period other comprehensive
income (loss), net of income taxes		5.2
1.2
(1.6)4.8
Noncontrolling interest(1.9)—
—
(1.9)
Net current period comprehensive income (loss),
   net of income taxes and noncontrolling interest
3.3
1.2
(1.6)2.9
Balance at September 30, 2016$(52.0)$1.6
$(1.3)$(51.7)

Other comprehensive income (loss) before reclassifications and income taxes includes the effect of foreign currency.

The before-tax reclassification of pension and postretirement liability adjustments was due to the amortization of prior service costs and was included in costs of products sold and SG&A expenses in the Consolidated Statement of Income. The reclassification of the remaining components of accumulated other comprehensive loss was included in "Other income (expense), net" in the Consolidated Statement of Income.


Note 12 - Earnings Per Share

The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, respectively:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2017201620172016
Numerator:    
Net income attributable to The Timken Company$53.5
$33.6
$174.2
$147.7
 Less: undistributed earnings allocated to nonvested stock—
—
—
—
Net income available to common shareholders for basic earnings per share and diluted earnings per share$53.5
$33.6
$174.2
$147.7
Denominator:    
Weighted average number of shares outstanding, basic77,694,974
77,935,783
77,766,828
78,808,179
Effect of dilutive securities:    
Stock options and awards based on the treasury stock method1,109,322
681,693
1,123,102
663,577
 Weighted average number of shares outstanding, assuming dilution
 of stock options and awards
78,804,296
78,617,476
78,889,930
79,471,756
Basic earnings per share$0.69
$0.43
$2.24
$1.87
Diluted earnings per share$0.68
$0.43
$2.21
$1.86

Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Numerator:
Net income attributable to The Timken Company$125.2 $105.0 $247.5 $223.2 
Denominator:
Weighted average number of shares outstanding - basic71,882,843 73,660,410 72,162,267 74,234,300 
Effect of dilutive securities:
Stock options and awards - based on the treasury
   stock method		630,148 522,383 745,537 642,948 
Weighted average number of shares outstanding assuming
   dilution of stock options and awards		72,512,991 74,182,793 72,907,804 74,877,248 
Basic earnings per share$1.74 $1.43 $3.43 $3.01 
Diluted earnings per share$1.73 $1.42 $3.39 $2.98 

The exercise prices for certaindilutive effect of performance-based restricted stock units are included once they meet minimum performance thresholds. The dilutive effect of stock options includes all outstanding stock options except stock options that are considered antidilutive. Stock options are antidilutive when the Company has awarded exceedexercise price exceeds the average market price of the Company’s common shares. Such stock options are antidilutive andshares during the periods presented. There were not included in the computation of diluted earnings per share. Theno antidilutive stock options outstanding during the three and six months ended SeptemberJune 30, 20172023 and 20162022.
Note 8 - Inventories
The components of inventories at June 30, 2023 and December 31, 2022 were 473,694as follows:
June 30,
2023		December 31,
2022
Manufacturing supplies$42.8 $41.7 
Raw materials140.9 132.0 
Work in process502.4 491.2 
Finished products642.8 584.8 
     Subtotal1,328.9 1,249.7 
Allowance for obsolete and surplus inventory(77.2)(58.4)
     Total inventories, net$1,251.7 $1,191.3 
Inventories are valued at net realizable value, with approximately 61% valued on the first-in, first-out ("FIFO") method and 2,706,711,the remaining 39% valued on the last-in, first-out ("LIFO") method. The majority of the Company's U.S. inventories are valued on the LIFO method. The Company's non-U.S. inventories are valued on the FIFO method.
The LIFO reserve at June 30, 2023 and December 31, 2022 was $236.1 million and $235.4 million, respectively. An actual valuation of the inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation.
11
Table of Contents
Note 9 - Goodwill and Other Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment at least annually, performing its annual impairment test as of October 1st. Furthermore, goodwill and indefinite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
In connection with the adoption of new reportable segments, goodwill was reallocated to new reporting units based on relative fair value at the reporting unit level. The Engineered Bearings segment has one reporting unit and the Industrial Motion segment has six reporting units.
The changes in the carrying amount of goodwill for the six months ended June 30, 2023 were as follows:
Engineered BearingsIndustrial MotionTotal
Beginning balance$679.8 $418.5 $1,098.3 
Acquisitions— 121.3 121.3 
Impairment loss— (28.3)(28.3)
Foreign currency translation adjustments and other changes2.6 4.5 7.1 
Ending balance$682.4 $516.0 $1,198.4 
During the ninefirst quarter of 2023, the Company reviewed goodwill for impairment for its reporting units due to the change in reporting segments that went into effect January 1, 2023. The Company utilizes both an income approach and a market approach in testing goodwill for impairment. The Company utilized updated forecasts for the income approach as part of the goodwill impairment review. Based on the earnings and cash flow forecasts for the Belts and Chain reporting unit within the Industrial Motion segment, the Company determined that the reporting unit could not support the carrying value of its goodwill. As a result, the Company recorded a pretax impairment loss of $28.3 million during the first quarter of 2023, which was reported in impairment and restructuring charges on the Consolidated Statement of Income.
The following table displays intangible assets as of June 30, 2023 and December 31, 2022:
 Balance at June 30, 2023Balance at December 31, 2022
Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount
Intangible assets
subject to amortization:
Customer relationships$655.8 $(201.3)$454.5 $561.5 $(183.2)$378.3 
Technology and know-how301.2 (90.1)211.1 273.1 (80.4)192.7 
Trade names50.6 (9.8)40.8 18.4 (8.7)9.7 
Capitalized software290.0 (267.0)23.0 288.4 (266.3)22.1 
Other7.6 (5.4)2.2 3.3 (2.3)1.0 
$1,305.2 $(573.6)$731.6 $1,144.7 $(540.9)$603.8 
Intangible assets not subject to amortization:
Trade names$135.8 $135.8 $152.8 $152.8 
FAA air agency certificates8.7 8.7 8.7 8.7 
$144.5 $144.5 $161.5 $161.5 
Total intangible assets$1,449.7 $(573.6)$876.1 $1,306.2 $(540.9)$765.3 
Amortization expense for intangible assets was $33.9 million and $25.3 million for the six months ended SeptemberJune 30, 20172023 and 2016,2022, respectively. Amortization expense related to intangible assets acquired as part of a business combination is reported in amortization of intangible assets on the antidilutive stock options outstanding were 529,020Consolidated Statement of Income, and 3,080,133, respectively.amortization expense related to capitalized software is reported in cost of products sold or selling, general and administrative expenses on the Consolidated Statement of Income. Amortization expense for intangible assets is projected to be $67.3 million in 2023; $66.6 million in 2024; $66.0 million in 2025; $60.3 million in 2026; and $58.5 million in 2027.
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Note 10 - Other Current Liabilities
The following table displays other current liabilities as of June 30, 2023 and December 31, 2022:
(Dollars in millions)June 30,
2023		December 31,
2022
Sales rebates$72.0 $82.9 
Deferred revenue55.4 54.3 
Product warranty27.1 23.5 
Operating lease liabilities24.7 24.1 
Current derivative liability30.2 19.8 
Taxes other than income and payroll taxes24.2 18.7 
Freight and duties16.1 21.7 
Interest15.3 15.0 
Professional fees17.3 17.4 
Restructuring4.1 3.1 
Other77.6 72.4 
Total other current liabilities$364.0 $352.9 
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Note 11 - Financing Arrangements
Short-term debt at June 30, 2023 and December 31, 2022 was as follows:
June 30,
2023		December 31,
2022
Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 4.00% to 10.07% at June 30, 2023 and 2.38% to 5.50% at December 31, 2022$49.8 $46.3 
Short-term debt$49.8 $46.3 
Lines of credit for certain of the Company's foreign subsidiaries provide for short-term borrowings up to $246.1 million in the aggregate. Most of these lines of credit are uncommitted. At June 30, 2023, the Company’s foreign subsidiaries had borrowings outstanding of $49.8 million and bank guarantees of $2.7 million, which reduced the aggregate availability under these facilities to $193.6 million.
Long-term debt at June 30, 2023 and December 31, 2022 was as follows:
June 30,
2023		December 31,
2022
Variable-rate Senior Credit Facility with an average interest rate on U.S. Dollar of 6.27% and Euro of 4.07% at June 30, 2023 and U.S. Dollar of 5.10% and Euro of 2.21% at December 31, 2022$133.2 $8.5 
Variable-rate Accounts Receivable Facility with an interest rate of 5.98% at June 30, 2023 and 5.01% at December 31, 202285.0 85.0 
Variable-rate Term Loan(1), maturing on December 5, 2027, with an interest rate of 6.33% at June 30, 2023 and 5.55% at December 31, 2022
399.2 399.1 
Fixed-rate Senior Unsecured Notes(1), maturing on September 1, 2024, with an interest rate of 3.875%
349.9 349.8 
Fixed-rate Euro Senior Unsecured Notes(1), maturing on September 7, 2027, with an interest rate of 2.02%
163.5 160.4 
Fixed-rate Senior Unsecured Notes(1), maturing on December 15, 2028, with an interest rate of 4.50%
397.4 397.2 
Fixed-rate Medium-Term Notes, Series A(1), maturing at various dates through May 2028, with interest rates ranging from 6.74% to 7.76%
154.8 154.8 
Fixed-rate Senior Unsecured Notes(1), maturing on April 1, 2032, with an interest rate of 4.125%
342.9 342.1 
Fixed-rate Euro Bank Loan, maturing on June 30, 2033, with an interest rate of 2.15%13.2 13.6 
Other10.8 6.4 
Total debt$2,049.9 $1,916.9 
Less: current maturities3.4 2.7 
Long-term debt$2,046.5 $1,914.2 
(1) Net of discounts and fees

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Note 11 - Financing Arrangements (continued)
The Company has a $100 million Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility"), which matures on November 30, 2024. Under the terms of the Accounts Receivable Facility, the Company sells, on an ongoing basis, certain domestic trade receivables to Timken Receivables Corporation, a wholly-owned consolidated subsidiary that, in turn, uses the trade receivables to secure borrowings that are funded through a vehicle that issues commercial paper in the short-term market. Borrowings under the Accounts Receivable Facility may be limited to certain borrowing base limitations; however, availability under the Accounts Receivable Facility was not reduced by any such borrowing base limitations at June 30, 2023. As of June 30, 2023, there were $85.0 million in outstanding borrowings under the Accounts Receivable Facility, which reduced the availability under this facility to $15.0 million. The cost of this facility, which is the prevailing commercial paper rate plus facility fees, is considered a financing cost and is included in interest expense in the Consolidated Statements of Income.
On December 5, 2022, the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of the $750.0 million unsecured revolving credit facility ("Senior Credit Facility") and a $400.0 million unsecured term loan facility ("2027 Term Loan") that each mature on December 5, 2027. The Credit Agreement amended and restated the Company's previous revolving credit agreement that was set to mature on June 25, 2024, and replaced the $350.0 million term loan that was set to mature on September 11, 2023 ("2023 Term Loan"). The Credit Agreement also replaced interest rates based on LIBOR with interest rates based on Secured Overnight Financing Rate ("SOFR"). At June 30, 2023, the Company had $133.2 million of outstanding borrowings and $1.8 million of letters of credit under the Senior Credit Facility, which reduced the availability under this facility to $615.0 million. The Credit Agreement has two financial covenants: a consolidated leverage ratio and a consolidated interest coverage ratio.
On March 28, 2022, the Company issued fixed-rate unsecured senior notes ("2032 Notes") in the aggregate principal amount of $350 million with an interest rate of 4.125%, maturing on April 1, 2032. Proceeds from the 2032 Notes were used for general corporate purposes, which included the repayment of borrowings under the Company's previous senior credit facility and the Accounts Receivable Facility outstanding at the time of issuance.
At June 30, 2023, the Company was in full compliance with all applicable covenants on its outstanding debt.
In the ordinary course of business, the Company utilizes standby letters of credit issued by financial institutions to guarantee certain obligations, most of which relate to insurance contracts. At June 30, 2023, outstanding letters of credit totaled $59.1 million, most with expiration dates within 12 months.
The maturities of long-term debt (including $4.9 million of finance leases) subsequent to June 30, 2023 are as follows:
Year
2023$3.0 
2024444.0 
202528.9 
202652.7 
2027654.5 
2028522.0 
Thereafter356.9 
The table above excludes $12.0 million of unamortized premiums and fees that are netted against long-term debt at June 30, 2023.
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Note 12 - Supply Chain Financing
The Company offers a supplier finance program with two different financial institutions where suppliers may receive early payment from the financial institutions on invoices issued to the Company. The Company and each financial institution entered into arrangements providing for the Company to pay the financial institution per the terms of any supplier invoice paid early under the program and to pay an annual fee for the supplier finance platform subscription and related support. The Company and the financial institutions may terminate participation in the program with 90 days’ written notice. The supplier finance programs are unsecured and are not guaranteed by the Company. The financial institutions enter into separate arrangements with suppliers directly to participate in the program. The Company does not determine the terms or conditions of such arrangements or participate in the transactions between the suppliers and the financial institutions.The supplier invoice terms under the program typically require payment in full within 90 days of the invoice date.
The following table is a rollforward of the outstanding obligations for the Company’s supplier finance program for the six months ended June 30, 2023:
June 30,
2023
Confirmed obligations outstanding, January 1$14.4
Invoices confirmed45.4
Confirmed invoices paid(41.3)
Confirmed obligations outstanding, ending balance$18.5
The obligations outstanding at June 30, 2023 were included in accounts payable, trade on the Consolidated Balance Sheet.
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Note 13 - Segment InformationContingencies

The Company is responsible for environmental remediation at various manufacturing facilities presently or formerly operated by the Company. In addition, the Company, through one of its subsidiaries, has currently been identified as a potentially responsible party for investigation and remediation under the Comprehensive Environmental Response, Compensation and Liability Act, known as the Superfund, or similar state laws with respect to one site. Claims for investigation and remediation have been asserted against numerous other unrelated entities, which are believed to be financially solvent and are expected to fulfill their proportionate share of the obligation.
On December 28, 2004, the United States Environmental Protection Agency (“USEPA”) sent Lovejoy, LLC. ("Lovejoy") a Special Notice Letter that identified Lovejoy as a potentially responsible party, together with at least 14 unrelated parties, at the Ellsworth Industrial Park Site, Downers Grove, DuPage County, Illinois (the “Site”). The Company acquired Lovejoy in 2016. Lovejoy’s Downers Grove property is situated within the Ellsworth Industrial Complex. The USEPA and the Illinois Environmental Protection Agency (“IEPA”) allege there have been one or more releases or threatened releases of hazardous substances, allegedly including, but not limited to, a release or threatened release on or from Lovejoy's property, at the Site. The relief sought by the USEPA and IEPA includes further investigation and potential remediation of the Site and reimbursement of response costs. Lovejoy’s allocated share of past and future costs related to the Site, including for investigation and/or remediation, could be significant. All previously pending property damage and personal injury lawsuits against Lovejoy related to the Site were settled or dismissed prior to our acquisition of Lovejoy.
The Company had total environmental accruals of $4.7 million and $4.8 million for various known environmental matters that are probable and reasonably estimable at June 30, 2023andDecember 31, 2022, respectively, which includes the Lovejoy matter described above. These accruals were recorded based upon the best estimate of costs to be incurred in light of the progress made in determining the magnitude of remediation costs, the timing and extent of remedial actions required by governmental authorities and the amount of the Company’s liability in proportion to other responsible parties.
Product Warranties:
In addition to the contingencies above, the Company provides limited warranties on certain of its products. The product warranty liability included in "Other current liabilities" on the Consolidated Balance Sheets was $27.1 million and $23.5 million at June 30, 2023 and December 31, 2022, respectively. The balances at the end of each respective period represent the best estimates of costs for future claims for products that are still under warranty. The increase in the liability for the first six months of 2023 primarily relates to additional accruals for certain products sold into the automotive and renewable energy sectors. Accrual estimates are based on actual claims and expected trends that continue to mature. Management believes that any significant change to these assumptions will not have a material effect on the Company's consolidated financial position; however, the effect of any such change may be material to the results of operations of any particular period in which such change occurs.
The primary measurement used by managementfollowing is a rollforward of the consolidated product warranty accrual for the six months ended June 30, 2023 and twelve months ended December 31, 2022:
June 30,
2023		December 31,
2022
Beginning balance, January 1$23.5 $11.7 
Expense5.0 14.7 
Payments(1.4)(2.9)
Ending balance$27.1 $23.5 
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Note 14 - Equity
The following tables present the changes in the components of equity for the three and six months ended June 30, 2023 and 2022, respectively:
  The Timken Company Shareholders 
 TotalStated
Capital		Other
Paid-In
Capital		Retained EarningsAccumulated
Other
Comprehensive
Loss		Treasury
Stock		Non
controlling
Interest
Balance at March 31, 2023$2,436.3 $40.7 $853.3 $2,030.8 $(156.8)$(420.0)$88.3 
Net income129.5 125.2 4.3 
Foreign currency translation adjustment(27.9)(27.6)(0.3)
Pension and other postretirement liability
   adjustments (net of income tax benefit
   of $0.5 million)
(1.6)(1.6)
Change in fair value of derivative financial
   instruments, net of reclassifications		(0.3)(0.3)
Dividends declared to noncontrolling interest— 
Dividends - $0.33 per share(23.8)(23.8)
Sale of shares of Timken India Limited229.0 194.5 8.1 26.4 
Stock-based compensation expense6.1 6.1 
Stock purchased at fair market value(100.5)(100.5)
Stock option exercise activity4.5 4.5 
Payments related to tax withholding for
   stock-based compensation		(1.3)(1.3)
Balance at June 30, 2023$2,650.0 $40.7 $1,058.4 $2,132.2 $(178.2)$(521.8)$118.7 
  The Timken Company Shareholders 
 TotalStated
Capital		Other
Paid-In
Capital		Retained EarningsAccumulated
Other
Comprehensive
Loss		Treasury
Stock		Non
controlling
Interest
Balance at December 31, 2022$2,352.9 $40.7 $829.6 $1,932.1 $(181.9)$(352.2)$84.6 
Net income255.2 247.5 7.7 
Foreign currency translation adjustment(0.2)(0.2)
Pension and other postretirement liability
   adjustments (net of income tax benefit
   of $1.0 million)
(3.1)(3.1)
Change in fair value of derivative financial
   instruments, net of reclassifications		(1.1)(1.1)
Dividends - $0.64 per share(47.4)(47.4)
Sale of shares of Timken India Limited229.0 194.5 8.1 26.4 
Stock-based compensation expense17.1 17.1 
Stock purchased at fair market value(154.5)(154.5)
Stock option exercise activity17.2 17.2 
Payments related to tax withholding for
   stock-based compensation		(15.1)(15.1)
Balance at June 30, 2023$2,650.0 $40.7 $1,058.4 $2,132.2 $(178.2)$(521.8)$118.7 
On June 20, 2023, the Company completed the sale of 7.6 million shares of Timken India Limited (“TIL”), a subsidiary of the Company, generating net proceeds of $229 million after estimated income taxes of $55 million and transaction costs. The sale reduced the Company’s ownership in TIL from 67.8 percent to measure the financial performance of each segment is earnings before interest and taxes ("EBIT").57.7 percent.
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2017201620172016
Net sales:    
Mobile Industries$422.8
$353.1
$1,214.2
$1,104.1
Process Industries348.6
304.3
1,011.6
910.9
 $771.4
$657.4
$2,225.8
$2,015.0
     
Segment EBIT:    
Mobile Industries$34.9
$25.9
$100.1
$95.3
Process Industries61.7
42.0
164.9
123.7
Total EBIT, for reportable segments$96.6
$67.9
$265.0
$219.0
Corporate expenses(12.0)(10.9)(37.8)(34.8)
Continued Dumping & Subsidy Offset Act income
(expense), net		—
(0.2)—
53.6
Interest expense(10.1)(8.0)(26.5)(25.1)
Interest income0.7
0.4
2.0
1.1
Income before income taxes$75.2
$49.2
$202.7
$213.8


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Table of Contents

Note 14 - Equity (continued)
  The Timken Company Shareholders 
 TotalStated
Capital		Other
Paid-In
Capital		Retained EarningsAccumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Non
controlling
Interest
Balance at March 31, 2022$2,355.0 $40.7 $795.4 $1,711.1 $(42.5)$(233.6)$83.9 
Net income105.6 105.0 0.6 
Foreign currency translation adjustment(113.1)(114.2)1.1 
Pension and other postretirement liability
   adjustments (net of income tax benefit of
   $0.5 million)
(1.4)(1.4)
Change in fair value of derivative financial
   instruments, net of reclassifications		2.2 2.2 
Dividends - $0.31 per share(22.9)(22.9)
Stock-based compensation expense8.5 8.5 
Stock purchased at fair market value(44.3)(44.3)
Stock option exercise activity0.2 0.2 
Payments related to tax withholding for
stock-based compensation		(0.6)(0.6)
Balance at June 30, 2022$2,289.2 $40.7 $804.1 $1,793.2 $(155.9)$(278.5)$85.6 
  The Timken Company Shareholders 
 TotalStated
Capital		Other
Paid-In
Capital		Retained EarningsAccumulated
Other
Comprehensive
Income		Treasury
Stock		Non
controlling
Interest
Balance at December 31, 2021$2,377.7 $40.7 $786.9 $1,616.4 $(23.0)$(126.1)$82.8 
Net income227.5 223.2 4.3 
Foreign currency translation adjustment(135.7)(134.2)(1.5)
Pension and other postretirement liability
   adjustments (net of income tax benefit
   of $1.0 million)
(2.9)(2.9)
Change in fair value of derivative financial
   instruments, net of reclassifications		4.2 4.2 
Dividends - $0.61 per share(46.4)(46.4)
Stock-based compensation expense15.6 15.6 
Stock purchased at fair market value(144.3)(144.3)
Stock option exercise activity1.6 1.6 
Payments related to tax withholding for
   stock-based compensation		(8.1)(8.1)
Balance at June 30, 2022$2,289.2 $40.7 $804.1 $1,793.2 $(155.9)$(278.5)$85.6 
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Note 1415 - Impairment and Restructuring Charges
Impairment and restructuring charges by segment are comprised of the following:
For the three months ended SeptemberJune 30, 2017:2023:
Engineered BearingsIndustrial MotionTotal
Severance and related benefit costs$1.5 $0.8 $2.3 
Exit costs0.2 — 0.2 
Total$1.7 $0.8 $2.5 
 Mobile IndustriesProcess IndustriesCorporateTotal
Severance and related benefit costs$1.3
$—
$—
$1.3
Total$1.3
$—
$—
$1.3

For the threesix months ended SeptemberJune 30, 2016:2023:
 Mobile IndustriesProcess IndustriesCorporateTotal
Impairment charges$1.2
$—
$—
$1.2
Severance and related benefit costs2.9
0.4
—
3.3
Exit costs0.3
0.5
—
0.8
Total$4.4
$0.9
$—
$5.3

Engineered BearingsIndustrial MotionTotal
Impairment charges$— $28.3 $28.3 
Severance and related benefit costs2.2 0.7 2.9 
Exit costs0.2 — 0.2 
Total$2.4 $29.0 $31.4 

For the ninethree months ended SeptemberJune 30, 2017:2022:
Engineered BearingsIndustrial MotionTotal
Impairment charges$8.8 $— $8.8 
Severance and related benefit costs0.6 0.4 1.0 
Exit costs0.2 — 0.2 
Total$9.6 $0.4 $10.0 
 Mobile IndustriesProcess IndustriesCorporateTotal
Severance and related benefit costs$3.1
$0.1
$—
$3.2
Exit costs0.1
—
0.5
0.6
Total$3.2
$0.1
$0.5
$3.8

For the ninesix months ended SeptemberJune 30, 2016:2022:
 Mobile IndustriesProcess IndustriesCorporateTotal
Impairment charges$3.8
$—
$—
$3.8
Severance and related benefit costs7.7
4.9
—
12.6
Exit costs1.6
0.7
—
2.3
Total$13.1
$5.6
$—
$18.7

Engineered BearingsIndustrial MotionTotal
Impairment charges$8.8 $— $8.8 
Severance and related benefit costs1.0 0.3 1.3 
Exit costs0.8 0.1 0.9 
Total$10.6 $0.4 $11.0 
The following discussion explains the impairment and restructuring charges recorded for the periods presented; however, it is not intended to reflect a comprehensive discussion of all amounts in the tables above.

Engineered Bearings:
On September 29, 2016,January 16, 2023, the Company announced the closure of its bearing plant in Pulaski, Tennessee ("Pulaski"), whichGaffney, South Carolina. The Company expects to transfer its remaining operations to other bearing manufacturing facilities in North America. The closure of this facility is expected to close duringoccur by the end of the fourth quarter of 20172023 and is expected to affect approximately 120225 employees. During the three and nine months ended September 30, 2017, theThe Company recognized severance and related benefitexpects to incur approximately $10 million to $12 million of pretax costs of $0.2 million and $1.3 million, respectively,in total related to this closure. During the three months and six months ended SeptemberJune 30, 2016,2023, the Company recorded severance and related benefit costsbenefits of $0.9 million and $1.7 million, respectively, related to this closure. The Company has incurred cumulative pretax costs related to this closure of $8.1$6.1 million as of SeptemberJune 30, 2017,2023, including rationalization costs recorded in cost of products sold.


20
Table of Contents
In August 2016, the Company completed the consultation process to close the manufacturing operations in Benoni, South Africa ("Benoni") affecting 85 employees. Benoni will continue to recondition bearingsNote 15 - Impairment and assemble rail bearings. Restructuring Charges (continued)
During the three months ended SeptemberJune 30, 2016,2022, the Company recorded impairment charges of $0.5 million and severance and related benefit costs of $0.8$8.8 million related to this closure.certain assets of its joint venture in Russia. As a result of Russia's invasion of Ukraine (and associated sanctions), the Company suspended its operations in Russia. Refer to Russia Operations in Management's Discussion and Analysis for additional information.

On March 17, 2016,July 19, 2021, the Company announced the closure of its bearing plantmanufacturing facility in Altavista, Virginia ("Altavista").Villa Carcina, Italy. The Company transferred the manufacturing of its single-row tapered roller bearing production to other bearing facilities in Europe, Asia and the United States. The Company completed the closure of this manufacturingthe facility on MarchOctober 31, 2017.2022, and it affected approximately 110 employees. During the three months ended SeptemberJune 30, 2016,2022, the Company recorded impairment charges of $0.7 million and severance and related benefitbenefits of $0.4 million and exit costs of $0.2$0.4 million related to this closure. During the ninesix months ended SeptemberJune 30, 2016,2022, the Company recorded impairment charges of $3.1 million and severance and related benefitbenefits of $0.8 million and exit costs of $1.7$1.0 million in connection withrelated to this closure. The Company has incurred cumulative pretax costs related to this closure of $11.5$9.8 million as of SeptemberJune 30, 2017,2023, including rationalization costs recorded in cost of products sold. On November 1, 2022, the Company completed the sale of this facility.

Industrial Motion:
During the third quarter of 2022, the Company announced certain organizational changes, which included the appointment of executive leaders for its Engineered Bearings and Industrial Motion product groups. After evaluating the impact from the organizational changes and revising segment results through the balance of 2022, the Company concluded that it will operate under two new reportable segments, Engineered Bearings and Industrial Motion, effective January 1, 2023. In conjunction with this change in segmented results, the Company reallocated its goodwill to new reporting units under these two segments. In addition, the Company was required to review goodwill for impairment under these new reporting units. As a result of this goodwill impairment review, the Company recognized a pretax goodwill impairment loss of $28.3 million during the three months and nine months ended September 30, 2017,March 31, 2023.
On February 4, 2020, the Company recognized $0.7 millionannounced the closure of its chain manufacturing facility in Indianapolis, Indiana. This facility was part of the Diamond Chain Company ("Diamond Chain") acquisition completed on April 1, 2019. The Company transferred the majority of its Diamond Chain product line to its chain manufacturing facility in Fulton, Illinois. The chain plant ceased operations on April 30, 2023 and $1.5 million, respectively, of severance and related benefit costs to eliminateaffected approximately 50240 employees at the Indianapolis facility. The Company hired approximately 130 full-time positions in the aggregate. The amounts recognized for the three months and nine months ended September 30, 2017 primarilyFulton, Illinois related to the Mobile Industries segment. During the nine months ended September 30, 2016, thethis closure. The Company recognized $7.7 million of severance and related benefitincurred cumulative pretax costs to eliminate approximately 175 positions. Of the $7.7 million charge for the first nine months of 2016, $2.9 million related to the Mobile Industries segment and $4.8this closure of $14.8 million related to the Process Industries segment.

as of June 30, 2023, including rationalization costs recorded in cost of products sold.
Consolidated Restructuring Accrual:
The following is a rollforward of the consolidated restructuring accrual for the ninesix months ended SeptemberJune 30, 20172023 and the twelve months ended December 31, 2016:2022:
 September 30,
2017		December 31,
2016
Beginning balance, January 1$10.1
$11.3
Expense3.8
17.8
Payments(9.2)(19.0)
Ending balance$4.7
$10.1

June 30,
2023		December 31,
2022
Beginning balance, January 1$3.1 $7.0 
Expense3.1 5.8 
Payments(2.1)(9.7)
Ending balance$4.1 $3.1 
The restructuring accrualsaccrual at SeptemberJune 30, 20172023 and December 31, 2016 were2022 was included in other current liabilities on the Consolidated Balance Sheets.
21
Table of Contents

Note 1516 - Retirement Benefit Plans
The following table sets forth the net periodic benefit cost for the Company’s defined benefit pension plans. The amounts for the three and ninesix months ended SeptemberJune 30, 20172023 are based on calculations prepared by the Company's actuaries and represent the Company’s best estimate of eachthat period’s proportionate share of the amounts to be recorded for the year ending December 31, 2017.2023.
 U.S. PlansInternational PlansTotal
 Three Months Ended
September 30,		Three Months Ended
September 30,		Three Months Ended
September 30,
 201720162017201620172016
Components of net periodic benefit cost:      
Service cost$3.1
$3.3
$0.4
$0.4
$3.5
$3.7
Interest cost6.2
6.6
1.9
2.6
8.1
9.2
Expected return on plan assets(7.0)(7.4)(2.9)(2.6)(9.9)(10.0)
Amortization of prior service cost0.3
0.4
0.1
0.1
0.4
0.5
Net periodic benefit cost$2.6
$2.9
$(0.5)$0.5
$2.1
$3.4

U.S. PlansInternational PlansTotal
 Three Months Ended
June 30,		Three Months Ended
June 30,		Three Months Ended
June 30,
 202320222023202220232022
Components of net periodic benefit cost (credit):
Service cost$0.2 $1.8 $0.5 $0.4 $0.7 $2.2 
Interest cost4.5 4.1 2.9 1.4 7.4 5.5 
Expected return on plan assets(2.1)(5.0)(2.8)(2.4)(4.9)(7.4)
Amortization of prior service cost0.1 0.3 — 0.1 0.1 0.4 
Recognition of net actuarial
   (gains) losses		(1.0)11.6 — — (1.0)11.6 
Net periodic benefit cost (credit)$1.7 $12.8 $0.6 $(0.5)$2.3 $12.3 
 U.S. PlansInternational PlansTotal
 Nine Months Ended
September 30,		Nine Months Ended
September 30,		Nine Months Ended
September 30,
 201720162017201620172016
Components of net periodic benefit cost:      
Service cost$9.2
$9.9
$1.2
$1.1
$10.4
$11.0
Interest cost18.5
20.0
5.6
8.2
24.1
28.2
Expected return on plan assets(21.0)(22.3)(8.3)(8.0)(29.3)(30.3)
Amortization of prior service cost1.0
1.2
0.1
0.1
1.1
1.3
Recognition of actuarial loss4.4
—
—
—
4.4
—
Net periodic benefit cost$12.1
$8.8
$(1.4)$1.4
$10.7
$10.2
U.S. PlansInternational PlansTotal
 Six Months Ended
June 30,		Six Months Ended
June 30,		Six Months Ended
June 30,
 202320222023202220232022
Components of net periodic benefit cost (credit):
Service cost$0.4 $3.7 $0.8 $0.8 $1.2 $4.5 
Interest cost9.0 8.2 5.3 2.9 14.3 11.1 
Expected return on plan assets(4.2)(10.2)(5.3)(4.9)(9.5)(15.1)
Amortization of prior service cost0.1 0.6 0.1 0.1 0.2 0.7 
Recognition of net actuarial
   (gains) losses		(1.9)14.2 — — (1.9)14.2 
Net periodic benefit cost (credit)$3.4 $16.5 $0.9 $(1.1)$4.3 $15.4 
DuringFor the first three and six months of 2017, the Company recognized actuarial losses of $4.4 million as a resultended June 30, 2023, lump sum payments related to new retirees exceeded annual interest and service costs for one of the Company's U.S. defined benefit pension plans, triggering a remeasurement of plan assets and obligations for onethis plan. As a result of this remeasurement, the Company’s United StatesCompany recognized net actuarial ("U.S."mark-to-market") defined benefit pension plans. The remeasurement was duegains of $1.0 million and $1.9 million during the three and six months ended June 30, 2023.
For the three and six months ended June 30, 2022, the Company expected to make lump sum payments exceedingrelated to new retirees in excess of annual interest and service and interest costs for this plan.two of the Company's U.S. defined pension plans. This triggered a remeasurement of assets and obligations for these plans. As a result of these remeasurements, the Company recognized net actuarial ("mark-to-market") losses of $11.6 million and $14.2 million during the three and six months ended June 30, 2022.
22
Table of Contents

Note 1617 - Other Postretirement Benefit Plans
The following table sets forth the net periodic benefit cost for the Company’s other postretirement benefit plans. The amounts for the three and ninesix months ended SeptemberJune 30, 20172023 are based on calculations prepared by the Company's actuaries and represent the Company’s best estimate of eachthat period’s proportionate share of the amounts to be recorded for the year ending December 31, 2017.2023.
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2023202220232022
Net periodic benefit credit:
Service cost$— $0.1 $— $0.1 
Interest cost0.5 0.3 1.0 0.7 
Amortization of prior service credit(2.1)(2.5)(4.2)(5.0)
Net periodic benefit credit$(1.6)$(2.1)$(3.2)$(4.2)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2017201620172016
Components of net periodic benefit cost:    
Service cost$—
$0.1
$0.1
$0.3
Interest cost2.3
2.7
6.8
8.2
Expected return on plan assets(1.4)(1.6)(4.2)(4.9)
Amortization of prior service cost(0.3)0.2
(0.8)0.7
Net periodic benefit cost$0.6
$1.4
$1.9
$4.3
23


Note 17 - Income Taxes

The Company's provision for income taxes in interim periods is computed by applying the estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period(s) in which they occur.
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2017201620172016
Provision for income taxes$21.1
$15.2
$28.5
$65.8
Effective tax rate28.1%30.9%14.1%30.8%

The income tax expense for the third quarter and first nine months of 2017 was calculated using the forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. The effective tax rate differs from the U.S. federal statutory rate of 35% primarily due to the projected mix of earnings in international jurisdictions with relatively lower tax rates and tax benefits related to foreign tax credits, which are partially offset by losses in jurisdictions with no tax benefit due to valuation allowances.

Income tax expense increased for the third quarter of 2017 compared to the third quarter of 2016 primarily due to the significant increase in pre-tax earnings, primarily in non-U.S. jurisdictions. The expense was partially offset by favorable U.S. tax deductions, tax credits and favorable discrete tax amounts.

Income tax expense for the nine months ended September 30, 2017 is lower than the nine months ended September 30, 2016 primarily due to the net reversal of accruals for prior year uncertain tax positions recorded discretely and favorable U.S. tax deductions and tax credits.

The following table is a rollforward of the Company's gross unrecognized tax benefits for the nine months ended September 30, 2017:
 September 30,
2017
Beginning balance, January 1$39.1
Tax positions related to the prior years: 
  Additions5.6
  Reductions(1.3)
  Lapses in statutes of limitation(28.6)
Ending Balance$14.8



Note 18 - Accumulated Other Comprehensive Income (Loss)
The following tables present details about components of accumulated other comprehensive (loss) income for the three and six months ended June 30, 2023 and 2022, respectively:
Foreign currency translation adjustmentsPension and other postretirement liability adjustmentsChange in fair value of derivative financial instrumentsTotal
Balance at March 31, 2023$(208.3)$49.3 $2.2 $(156.8)
Sale of shares of Timken India Limited8.1 — — 8.1 
Other comprehensive loss before
   reclassifications and income taxes		(27.9)(0.1)(0.9)(28.9)
Amounts reclassified from accumulated other
   comprehensive (loss) income before income
   taxes		— (2.0)0.4 (1.6)
Income tax benefit— 0.5 0.2 0.7 
Net current period other comprehensive loss,
   net of income taxes		(27.9)(1.6)(0.3)(29.8)
Noncontrolling interest0.3 — — 0.3 
Net current period other comprehensive loss,
net of income taxes, noncontrolling interest and
sale of shares of Timken India Limited		(19.5)(1.6)(0.3)(21.4)
Balance at June 30, 2023$(227.8)$47.7 $1.9 $(178.2)
Foreign currency translation adjustmentsPension and other postretirement liability adjustmentsChange in fair value of derivative financial instrumentsTotal
Balance at December 31, 2022$(235.7)$50.8 $3.0 $(181.9)
Sale of shares of Timken India Limited8.1 — — 8.1 
Other comprehensive loss before
   reclassifications and income taxes		(0.2)(0.1)(1.7)(2.0)
Amounts reclassified from accumulated other
   comprehensive (loss) income before income
   taxes		— (4.0)0.1 (3.9)
Income tax benefit— 1.0 0.5 1.5 
Net current period other comprehensive loss,
   net of income taxes		(0.2)(3.1)(1.1)(4.4)
Noncontrolling interest— — — — 
Net current period other comprehensive income
(loss), net of income taxes, noncontrolling
interest and sale of shares of Timken India
Limited		7.9 (3.1)(1.1)3.7 
Balance at June 30, 2023$(227.8)$47.7 $1.9 $(178.2)
24
Note 18 - Accumulated Other Comprehensive Income (Loss) (continued)
Foreign currency translation adjustmentsPension and other postretirement liability adjustmentsChange in fair value of derivative financial instrumentsTotal
Balance at March 31, 2022$(100.3)$55.1 $2.7 $(42.5)
Other comprehensive (loss) income before
   reclassifications and income taxes		(113.1)0.2 3.9 (109.0)
Amounts reclassified from accumulated other
   comprehensive (loss) income before income
   taxes		— (2.1)(0.7)(2.8)
Income tax benefit (expense)— 0.5 (1.0)(0.5)
Net current period other comprehensive (loss)
   income, net of income taxes		(113.1)(1.4)2.2 (112.3)
Noncontrolling interest(1.1)— — (1.1)
Net current period other comprehensive (loss)
income, net of income taxes and noncontrolling
interest		(114.2)(1.4)2.2 (113.4)
Balance at June 30, 2022$(214.5)$53.7 $4.9 $(155.9)
Foreign currency translation adjustmentsPension and other postretirement liability adjustmentsChange in fair value of derivative financial instrumentsTotal
Balance at December 31, 2021$(80.3)$56.6 $0.7 $(23.0)
Other comprehensive (loss) income before
   reclassifications and income taxes		(135.7)0.4 7.1 (128.2)
Amounts reclassified from accumulated other
   comprehensive (loss) income before income
   taxes		— (4.3)(1.6)(5.9)
Income tax benefit (expense)1.0 (1.3)(0.3)
Net current period other comprehensive (loss)
   income, net of income taxes		(135.7)(2.9)4.2 (134.4)
Noncontrolling interest1.5 — — 1.5 
Net current period other comprehensive (loss)
income, net of income taxes and noncontrolling
interest		(134.2)(2.9)4.2 (132.9)
Balance at June 30, 2022$(214.5)$53.7 $4.9 $(155.9)
Other comprehensive (loss) income before reclassifications and income taxes includes the effect of foreign currency.

25
Note 19 - Fair Value
Fair value is defined as the price that would be expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The FASB provides accounting rules that classify the inputs used to measure fair value into the following hierarchy:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 – Unobservable inputs for the asset or liability.

The following tables present the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of SeptemberJune 30, 20172023 and December 31, 2016:2022:
 September 30, 2017
 TotalLevel 1Level 2Level 3
Assets:    
Cash and cash equivalents$125.4
$120.5
$4.9
$—
Cash and cash equivalents measured at net asset value11.8
—
—
—
Restricted cash3.3
3.3
—
—
Short-term investments16.5
—
16.5
—
Short-term investments measured at net asset value0.2
—
—
—
Foreign currency hedges1.6
—
1.6
—
Total Assets$158.8
$123.8
$23.0
$—
Liabilities:    
Foreign currency hedges$3.9
$—
$3.9
$—
Total Liabilities$3.9
$—
$3.9
$—

 June 30, 2023
 TotalLevel 1Level 2Level 3
Assets:
Cash and cash equivalents$304.2 $304.2 $— $— 
Cash and cash equivalents measured at net asset value40.0 
Restricted cash8.0 8.0 — — 
Short-term investments38.2 — 38.2 — 
Interest rate swap contracts1.0 — 1.0 — 
Foreign currency forward contracts1.7 — 1.7 — 
     Total assets$393.1 $312.2 $40.9 $— 
Liabilities:
Foreign currency forward contracts$30.2 $— $30.2 $— 
     Total liabilities$30.2 $— $30.2 $— 

 December 31, 2016
 TotalLevel 1Level 2Level 3
Assets:    
Cash and cash equivalents$129.6
$125.0
$4.6
$—
Cash and cash equivalents measured net asset value19.2
—
—
—
Restricted cash2.7
2.7
—
—
Short-term investments9.4
—
9.4
—
Short-term investments measured at net asset value2.3
—
—
—
Foreign currency hedges9.9
—
9.9
—
Total Assets$173.1
$127.7
$23.9
$—
Liabilities:    
Foreign currency hedges$2.1
$—
$2.1
$—
Total Liabilities$2.1
$—
$2.1
$—

 December 31, 2022
 TotalLevel 1Level 2Level 3
Assets:
Cash and cash equivalents$292.1 $289.3 $2.8 $— 
Cash and cash equivalents measured at net asset value39.5 
Restricted cash9.1 9.1 — — 
Short-term investments39.2 — 39.2 — 
Interest rate swap contracts3.1 — 3.1— 
Foreign currency forward contracts4.5 — 4.5 — 
     Total assets$387.5 $298.4 $49.6 $— 
Liabilities:
Foreign currency forward contracts$19.8 $— $19.8 $— 
     Total liabilities$19.8 $— $19.8 $— 
Cash and cash equivalents are highly liquid investments with maturities of three months or less when purchased and are valued at the redemptionredemption value. Short-term investments are investments with maturities between four months and one year, and generally are valued at amortized cost, which approximatesapproximates fair value. A portion of the cash and cash equivalents and short-term investments are valued based on net asset value. The Company uses publicly available market interest rates to measure the fair value of its interest rate swap contracts. The Company uses publicly available foreign currency forward and spot rates to measure the fair value of its foreign currency forward contracts.


26
Note 19 - Fair Value (continued)
In addition, the Company remeasures certain assets at fair value, using Level 3 inputs, as a result of the occurrence of triggering events such as purchase accounting for acquisitions or goodwill impairment.
No other material assets were measured at fair value on a nonrecurring basis during the six months ended June 30, 2023 and 2022, respectively.
Financial Instruments:
The Company’s financial instruments consist primarily of cash and cash equivalents, short-term investments, accounts receivable, trade accounts payable, short-term borrowings and long-term debt. Due to their short-term nature, the carrying value of cash and cash equivalents, short-term investments, accounts receivable, trade accounts payable and short-term borrowings are a reasonable estimate of their fair value. Due to the nature of fair value calculations for variable-rate debt, the carrying value of the Company's long-term variable-rate debt is a reasonable estimate of its fair value. The fair value of the Company’s long-term fixed-rate debt, based on Level 2 inputs (quoted market prices), was $1,361.3 million and $1,353.5 million at June 30, 2023 and December 31, 2022, respectively. The carrying value of this debt was $1,421.7 million and $1,417.9 million at June 30, 2023 and December 31, 2022, respectively. The difference between fair value and carrying value primarily reflects the net impact of changes in prevailing interest rates and credit spreads since the fixed-rate debt was issued.
The Company does not believe it has significant concentrations of risk associated with the counterparties to its financial instruments.

2017
No assets were measured at fair value on a nonrecurring basis for the nine months ended September 30, 2017.

2016
The following table presents those assets measured at fair value on a nonrecurring basis for the nine months ended September 30, 2016 using Level 3 inputs:
 Carrying ValueFair Value AdjustmentFair Value
Long-lived assets held for sale:   
Land$0.2
$(0.2)$—
Total long-lived assets held for sale$0.2
$(0.2)$—
    
Long-lived assets held and used:   
Altavista bearing plant$5.6
$(3.1)$2.5
Equipment at Benoni bearing plant0.5
(0.5)—
Total long-lived assets held and used$6.1
$(3.6)$2.5

Assets held for sale of $0.2 million were written down to their fair value of zero during the first quarter of 2016, resulting in an impairment charge of $0.2 million. The fair value of these assets was based on the price that the Company expected to receive when it disposed of these assets.

On March 17, 2016, the Company announced the closure of its Altavista bearing plant. The Company completed the closure of this manufacturing facility on March 31, 2017. The Altavista bearing plant, with a carrying value of $5.6 million, was written down to its fair value of $3.2 million during the first quarter of 2016, resulting in an impairment charge of $2.4 million. The fair value for the plant was based on the price that the Company expected to receive from the sale of this facility. During the third quarter of 2016, the Company reevaluated the fair value of this facility. The Altavista bearing plant was written down to its fair value of $2.5 million during the third quarter of 2016, resulting in an additional impairment of $0.7 million. During the second quarter of 2017, this facility was reclassified to assets held for sale and included in other current assets on the Consolidated Balance Sheet. On July 14, 2017, this facility was sold for a pretax gain of approximately $1.6 million.

In August 2016, the Company completed the consultation process to close the manufacturing operations in Benoni. The Benoni facility will continue to recondition bearings and assemble rail bearings. Equipment at this facility, with a carrying value of $0.5 million, was written down to its fair value of zero during the third quarter of 2016, resulting in an impairment charge of $0.5 million. The fair value for the equipment was based on the price that the Company expected to receive from the sale of the equipment.

Financial Instruments:
The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash, short-term investments, accounts receivable net, accounts payable, trade, short-term borrowings and long-term debt. Due to their short-term nature, the carrying value of cash and cash equivalents, restricted cash, short-term investments, accounts receivable net, accounts payable, trade and short-term borrowings are a reasonable estimate of their fair value. Due to the nature of fair value calculations for variable-rate debt, the carrying value of the Company's long-term variable rate debt is a reasonable estimate of its fair value. The fair value of the Company’s long-term fixed-rate debt, based on quoted market prices, was $723.9 million and $532.2 million at September 30, 2017 and December 31, 2016, respectively. The carrying value of this debt was $684.3 million and $507.3 million at September 30, 2017 and December 31, 2016, respectively. The fair value of long-term fixed-rate debt was measured using Level 2 inputs.


Note 1920 - Derivative Instruments and Hedging Activities

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign currency exchange rate risk commodity price risk and interest rate risk. Forward exchange contracts on various foreign currencies are entered into in order to manage the foreign currency exchange rate risk associated with certain of the Company’sCompany's commitments denominated in foreign currencies.

 From time to time, interest rate swaps are used to manage interest rate risk associated with the Company’s fixed and floating-rate borrowings.
The Company designates certain foreign currency forward contracts as cash flow hedges of forecasted revenues and expenses and certain interest rate hedges as fair valuecash flow hedges of fixed-rate borrowings.

On September 8, 2020, the Company entered into a $100 million floating-to-fixed rate swap on the 2023 Term Loan, which hedges the change in the 1-month LIBOR rate between October 30, 2020 and September 11, 2023 to a fixed rate. The Company repaid the LIBOR-based 2023 Term Loan on December 5, 2022 and replaced it with the SOFR-based 2027 Term Loan. The Company amended the interest rate for the swap from LIBOR to SOFR commencing January 2023. The Company’s risk management objective is to hedge the risk of changes in the monthly interest expense attributable to changes in the benchmark interest rate.
On September 15, 2020, the Company designated €54.5 million of its €150.0 million fixed-rate senior unsecured notes, maturing on September 7, 2027 (the "2027 Notes"), as a hedge against its net investment in one of its European subsidiaries. The objective of the hedge transaction is to protect the net investment in the foreign operations against changes in the exchange rate between the U.S. dollar and the Euro. The net impact for the three and six months ended June 30, 2023, respectively, was a loss of $0.4 million and $1.1 million to accumulated comprehensive (loss) income with a corresponding offset to other income (expense), which partially offsets the impact of the foreign currency adjustment on the 2027 Notes.
The Company entered into $350 million of floating-to-fixed 10-year Treasury rate locks during the first quarter of 2022, prior to issuing the 2032 Notes. This fixed the 10-year Treasury yield and settled at pricing of the 2032 Notes, resulting in $6.5 million of cash proceeds received by the Company. This amount was recorded to accumulated comprehensive income and will be amortized as a reduction in interest expense over the 10-year tenor of the 2032 Notes.
The Company does not purchase or hold any derivativederivative financial instruments for trading purposes. As of SeptemberJune 30, 20172023 and December 31, 2016,2022, the Company had $223.2$573.1 million and $282.8$635.6 million, respectively, of outstanding foreign currency forward contracts at notional value. Refer to Note 1819 - Fair Value for the fair value disclosure of derivative financial instruments.

27
Note 20 - Derivative Instruments and Hedging Activities (continued)
Cash Flow Hedging Strategy:

For certain derivative instruments that are designated and qualify as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion), or hedge components excluded from the assessment of effectiveness, are recognized in the Consolidated Statement of Income during the current period.

To protect against a reduction in the value of forecasted foreign currency cash flows resulting from export sales, over the next year, the Company has instituted a foreign currency cash flow hedging program. The Company hedges portions of its forecasted revenue or expensecash flows denominated in certain foreign currencies with forward contracts. When the dollar strengthens significantly against these foreign currencies, the decline in the present value of future foreign currency revenue is offset by gains in the fair value of the forward contracts designated as hedges. Conversely,Conversely, when the dollar weakens, the increase in the present value of future foreign currency cash flows is offset by losses in the fair value of the forward contracts.

 As of June 30, 2023 and December 31, 2022, the Company had $74.8 million and $82.3 million, respectively, of outstanding foreign currency forward contracts at notional value that were classified as cash flow hedges.
The maximum length of time over which the Company hedges its exposure to the variability in future cash flows for forecastedforecast transactions is generally 18eighteen months or less.
Fair Value Hedging Strategy:

For derivative instruments that are designated and qualify as fair value hedges (i.e., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in the same line item associated with the hedged item (i.e., in interest expense when the hedged item is fixed-rate debt).

Purpose for Derivative Instruments not Designateddesignated as Hedging Instruments:

For derivative instruments that are not designated as hedging instruments, the instruments are typically are forward contracts. In general, the practice is to reduce volatility by selectively hedging transaction exposures including intercompany loans, accounts payable and accounts receivable. Intercompany loans between entities with different functional currencies typically are hedged with a forward contract at the inception of the loan with a maturity date atcorresponding to the maturity of the loan. The revaluation of these contracts, as well as the revaluation of the underlying balance sheet items, is recorded directly to the income statement so the adjustment generally offsets the revaluation of the underlying balance sheet items to protect cash payments and reduce income statement volatility.


As of June 30, 2023 and December 31, 2022, the Company had $498.3 million and $553.3 million, respectively, of outstanding foreign currency forward contracts at notional value that were not designated as hedging instruments. The following table presents the fair value of the Company's derivative instruments. Those balances are presented in the other non-current assets/liabilities accounts within the Consolidated Balance Sheets.
 Derivative AssetsDerivatives Liabilities
Derivatives designated as hedging instrumentsFair Value at 9/30/17Fair Value at 12/31/16Fair Value at 9/30/17Fair Value at 12/31/16
Foreign currency forward contracts$0.3
$2.3
$2.9
$0.5
     
Derivatives not designated as hedging instruments    
Foreign currency forward contracts1.3
7.6
1.0
1.6
Total Derivatives$1.6
$9.9
$3.9
$2.1


The following tables present the impact of derivative instruments not designated as hedging instruments for the three and theirsix months ended June 30, 2023 and 2022, respectively, and the related location within the Consolidated Statements of Income:
Amount of gain or (loss) recognized in income
Three Months Ended
June 30,		Six Months Ended
June 30,
Derivatives not designated as hedging instruments:Location of gain or (loss) recognized in income2023202220232022
Foreign currency forward contractsOther expense, net$(13.9)$(6.0)$(16.5)$(7.0)
 
Amount of gain or (loss) recognized in
 Other Comprehensive Income on derivative instruments
 Three Months Ended
September 30,		Nine Months Ended
September 30,
Derivatives in cash flow hedging relationships2017201620172016
Foreign currency forward contracts$(1.6)$(0.5)$(4.7)$(2.5)
Interest rate swaps(2.4)—
(2.4)—
Total$(4.0)$(0.5)$(7.1)$(2.5)

 Amount of gain or (loss) reclassified from Accumulated Other Comprehensive Loss into income (effective portion)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
Derivatives in cash flow hedging relationships2017201620172016
Foreign currency forward contracts$(0.9)$(0.4)$(0.2)$0.4
Interest rate swaps—
(0.1)(0.2)(0.3)
Total$(0.9)$(0.5)$(0.4)$0.1
28
  
Amount of gain or (loss) recognized in
 income on derivative instruments
  Three Months Ended
September 30,		Nine Months Ended
September 30,
Derivatives not designated as hedging instrumentsLocation of gain or (loss) recognized in income on derivative2017201620172016
Foreign currency forward contractsOther income (expense), net$2.7
$(0.2)$(5.6)$(4.5)



Note 20 - Continued Dumping and Subsidy Offset Act

The U.S. Continued Dumping and Subsidy Offset Act ("CDSOA") provides for distribution of monies collected by U.S. Customs and Border Protection ("U.S. Customs") on entries of merchandise subject to antidumping orders that entered the U.S. prior to October 1, 2007 to qualifying domestic producers where the domestic producers have continued to invest in their technology, equipment and people. During the third quarter of 2016, the Company recognized CDSOA expense of $0.2 million. During the first nine months of 2016, the Company recognized pretax CDSOA income, net of related expenses, of $53.6 million.

In September 2002, the World Trade Organization ruled that CDSOA payments are not consistent with international trade rules. In February 2006, U.S. legislation was enacted that ended CDSOA distributions for imports covered by antidumping duty orders entering the U.S. after September 30, 2007. Instead, any such antidumping duties collected would remain with the U.S. Treasury.

CDSOA has been the subject of significant litigation since 2002 and U.S. Customs has withheld CDSOA distributions for certain years while litigation was ongoing. However, much of the CDSOA litigation that involves antidumping orders where Timken is a qualifying domestic producer has concluded.

Subsequently, the Company was notified by letters dated March 25, 2016 and June 24, 2016 that funds were being distributed to the Company. On April 1, 2016 and July 1, 2016, the Company received CDSOA distributions of $48.1 million and $6.3 million, respectively, representing funds that would have been distributed to the Company at the end of calendar years 2011 through 2015.

While some of the challenges to CDSOA have been resolved, others are still in litigation. Since there continue to be legal challenges to CDSOA, U.S. Customs has advised all affected domestic producers that it is possible that CDSOA distributions could be subject to clawback. Management of the Company believes that the likelihood of any clawback is remote.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions, except per share data)

OverviewOVERVIEW
Introduction:

The Timken Company engineers,designs and manufactures a growing portfolio of engineered bearings and markets bearings, transmissions, gearboxes, belts, chain, lubrication systems, couplings, industrial clutches and brakesmotion products, and related productsservices. With more than a century of knowledge and offers a varietyinnovation, the Company continuously improves the reliability and efficiency of power system rebuildglobal machinery and repair services.equipment to move the world forward. The Company’s growing product and services portfolio features many strong industrial brands, such as Timken®, Fafnir®, Philadelphia Gear®, GGB®, Drives®, Cone Drive®, Rollon®, Lovejoy®, Diamond®, BEKA®, Groeneveld® and Groeneveld®Nadella®. Timken applies its deep knowledge of metallurgy, friction management and mechanical 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 focuses on providing value to diverse markets worldwide through both original equipment manufacturers ("OEMs") and aftermarket channels. Withemploys more than 14,000 19,000 people operatingglobally in 31 countries, Timken makes the world more productive and keeps industry in motion. 46 countries. The Company operates under two reportable segments: (1) Mobile IndustriesEngineered Bearings and (2) Process Industries.Industrial Motion. The following further describes these business segments:

•Timken’s Engineered Bearings segment features a broad range of product designs serving original equipment manufacturers (OEMs) and end-users worldwide. Timken is a leading authority on tapered roller bearings and leverages its position by applying engineering know-how and technology across its entire bearing portfolio, which includes tapered, spherical and cylindrical roller bearings; plain bearings, metal-polymer bearings and rod end bearings; thrust and specialty ball bearings; and housed or mounted bearings. The Engineered Bearings portfolio features Timken® and GGB® brands and serves customers across global industries, including wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail and more.
•
Mobile Industries
•Timken’s Industrial Motion segment includes a diverse and growing portfolio of engineered products, including industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, couplings and industrial clutches and brakes that keep systems running efficiently. Industrial Motion also includes industrial drivetrain services, which return equipment to like-new condition. The Industrial Motion portfolio features many strong brands: Philadelphia Gear®, Cone Drive®, Rollon®, Nadella®, Groeneveld®, BEKA®, Diamond®, Drives®, Timken® Belts, Lovejoy® and PT Tech®. Industrial Motion products are used across a broad range of industries, including solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical and more. serves OEM customers that manufacture off-highway equipment for the agricultural, mining and construction markets; on-highway vehicles including passenger cars, light trucks and medium- and heavy-duty trucks; rail cars and locomotives; outdoor power equipment; and rotorcraft and fixed-wing aircraft. Beyond service parts sold to OEMs, aftermarket sales to individual end users, equipment owners, operators and maintenance shops are handled through the Company's extensive network of authorized automotive and heavy-truck distributors.

•
Process Industries serves OEM and end-user customers in industries that place heavy demands on the fixed operating equipment they make or use in heavy and other general industrial sectors. This includes metals, cement and aggregate production; coal and wind power generation; oil and gas extraction and refining; pulp and paper and food processing; and health and critical motion control equipment. Other applications include marine equipment, gear drives, cranes, hoists and conveyors. This segment also supports aftermarket sales and service needs through its global network of authorized industrial distributors.

Timken creates value by understanding customer needs and applying its know-how to serve a broad range of customers in attractive market sectors.markets and industries across the globe. The Company’s business strengths include its channel mix andproduct technology, end-market diversity, serving a broad range of customersgeographic reach and industries across the globe.aftermarket mix. Timken collaborates with OEMs to improve equipment efficiency with its engineered products and captures subsequent equipment replacement cycles by selling largely through independent channels in the aftermarket. Timken focuses its international efforts and footprint in regions of the world where strong macroeconomic factors such as urbanization, infrastructure development and sustainability create demand for its products and services.


The Timken Business Model is the specific framework for how the Company evaluates opportunities and differentiates itself in the market.
timkenbusinessmodela27.jpg
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The Company's strategy has three primary elements:
The Company’s Strategy is to apply the Timken Business Model and leverage the Company’s competitive differentiators and strengths to create customer value and drive increased growth and profitability by:

Outgrowing Our Markets.Profitable Growth. The Company intends to expand into new and existing markets by leveraging its collective knowledge of metallurgy, friction management and mechanical power transmissionindustrial motion to create value for Timken customers. Using a highly collaborative technical selling approach, the Company places particular emphasis on creating unique solutions for challenging and/or demanding applications. The Company intends to grow in attractive market sectors around the world, emphasizing those spaces that are highly fragmented, demand high service and value the reliability and efficiency offered by Timken products. The Company also targets those applications that offer significant aftermarket demand, thereby providing product and services revenue throughout the equipment’s lifetime.

Operating WithOperational Excellence. Timken operates with a relentless drive for exceptional results and a passion for superior execution. The Company embraces a continuous improvement culture that is charged with increasing efficiency, lowering costs, eliminating waste, encouraging organizational agility and building greater brand equity to fuel future growth. This requires the Company’s ongoing commitment to attract, retain and develop the best talent across the world.

Deploying Capital Deployment to Drive Shareholder Value. The Company is intently focused on providing the highest returns for shareholders through its capital allocation framework, which includes: (1) investing in the core business through capital expenditures, research and development and initiatives to drive profitable organic growth initiatives;growth; (2) pursuing strategic acquisitions to broaden ourits portfolio and capabilities across diverse markets, with a focus on bearings, adjacent power transmissionindustrial motion products and related services; and (3) returning capital to shareholders through dividends and share repurchasesrepurchases; and dividends.(4) maintaining a strong balance sheet and sufficient liquidity. As part of this framework, the Company may also may restructure, reposition or divest underperforming product lines or assets.



The following highlightsitems highlight some of the Company's recentmore significant strategic accomplishments:accomplishments during the six months ended June 30, 2023:

•On April 4, 2023, the Company acquired Nadella, a leading European manufacturer of linear guides, telescopic rails, actuators and systems and other specialized industrial motion solutions. With revenue of €100 million in 2022, Nadella will further Timken's strategy to expand and scale its leading industrial motion product portfolio.
•On July 3, 2017,June 20, 2023, the Company completed the acquisitionsale of Groeneveld,7.6 million shares of TIL, a leading providersubsidiary of automated lubrication solutions usedthe Company, generating net proceeds of $229 million after estimated income taxes of $55 million and transaction costs. The transaction reduced the Company's ownership in on-TIL from 67.8 percent to 57.7 percent.
•The Company paid its 403rd and off-highway applications. Groeneveld, located in Gorinchem, Netherlands, with manufacturing facilities in Italy, had annual sales404th consecutive quarterly dividends, including a dividend of $0.33 per share during the second quarter, an increase of 6% from the prior quarter. The Company also repurchased 1.9 million common shares, or nearly 3% of outstanding common shares.
•On January 31, 2023, the Company acquired the assets of ARB, a North Carolina-based manufacturer of industrial bearings. ARB, which boasts a large U.S. installed base and strong aftermarket business, reported revenue of approximately $105$35 million for the twelve months ended May 31, 2017. Based on markets and customers served, substantially allin 2022. ARB's product offerings join Timken's industry-leading portfolio of the results for Groeneveld are reported in the Mobile Industries segment starting in the third quarterengineered bearings solutions.
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On July 5, 2017, the Company announced that the Company's majority-owned subsidiary, Timken India, entered into a definitive agreement to acquire ABC Bearings, a manufacturer of tapered, cylindrical and spherical roller bearings and slewing rings in India. The transaction is structured as a merger of ABC Bearings into Timken India, whereby shareholders of ABC Bearings will receive shares of Timken India as consideration. The transaction is subject to receipt of various approvals in India, which are expected to be completed in the first half of 2018. ABC Bearings, located in Mumbai, India, operates primarily out of manufacturing facilities in Bharuch, Gujarat and Dehradun, Uttarakhand and had annual sales of approximately $29 million for the twelve months ended May 31, 2017.
















Overview:
 Three Months Ended
June 30,		  
 20232022$ Change% Change
Net sales$1,272.3 $1,153.7 $118.6 10.3 %
Net income129.5 105.6 23.9 22.6 %
Net income attributable to noncontrolling interest4.3 0.6 3.7 NM
Net income attributable to The Timken Company$125.2 $105.0 $20.2 19.2 %
Diluted earnings per share$1.73 $1.42 $0.31 21.8 %
Average number of shares – diluted72,512,991 74,182,793 — (2.3)%
 Three Months Ended
September 30,		  
 20172016$ Change% Change
Net sales$771.4
$657.4
$114.0
17.3%
Net income54.1
34.0
20.1
59.1%
Net income attributable to noncontrolling interest0.6
0.4
0.2
50.0%
Net income attributable to The Timken Company53.5
33.6
19.9
59.2%
Diluted earnings per share$0.68
$0.43
$0.25
58.1%
Average number of shares – diluted78,804,296
78,617,476
—
0.2%
Nine Months Ended
September 30,		   Six Months Ended
June 30,		 
20172016$ Change% Change 20222021$ Change% Change
Net sales$2,225.8
$2,015.0
$210.8
10.5 %Net sales$2,535.1 $2,278.3 $256.8 11.3 %
Net income174.2
148.0
26.2
17.7 %Net income255.2 227.5 27.7 12.2 %
Net income attributable to noncontrolling interest—
0.3
(0.3)(100.0)%Net income attributable to noncontrolling interest7.7 4.3 3.4 79.1 %
Net income attributable to The Timken Company174.2
147.7
26.5
17.9 %Net income attributable to The Timken Company$247.5 $223.2 $24.3 10.9 %
Diluted earnings per share$2.21
$1.86
$0.35
18.8 %Diluted earnings per share$3.39 $2.98 $0.41 13.8 %
Average number of shares – diluted78,889,930
79,471,756
—
(0.7)%Average number of shares – diluted72,907,804 74,877,248 — (2.6)%
The increase in net sales for the third quarter of 2017three months ended June 30, 2023 compared with the three months ended June 30, 2022 was third quarter of 2016 was primarily due to higher demand across most end markets and the benefit of acquisitions. The increase in net income for the third quarter of 2017 compared with the third quarter of 2016 was primarily due to the impact of higher volume, the benefit of acquisitions, favorable manufacturing performance,driven by the favorable impact of foreign currency exchange rate changesacquisitions (net of divestitures) and lower impairmentorganic growth in both the Industrial Motion and restructuring charges. These factors wereEngineered Bearings segments, partially offset by higher SG&A expense andthe unfavorable price/mix.

The increase in net sales for the first nine months of 2017 compared with the first nine months of 2016 was primarily due to higher end-market demand and the net benefit of acquisitions. The change in net income for the first nine months of 2017 compared with the first nine months of 2016 was primarily due to the impact of higher volume, lower income tax expense as a result of the net reversal of accruals for uncertain tax positions related to prior years, the benefit of acquisitions, lower restructuring charges, the favorable impact of foreign currency exchange rate changes and favorable manufacturing performance. These factors were partially offset by pre-tax CDSOA income of $53.6 million recognized in 2016 that did not reoccur in 2017, unfavorable price/mix, higher SG&A expense and a pension mark-to-market remeasurement charge recorded during the first quarter of 2017.


Outlook:
The Company expects 2017 full-year net sales to increase approximately 12% compared with 2016 primarily driven by higher demand in the industrial distribution, off-highway, heavy industries and heavy truck sectors and the benefit of acquisitions, partially offset by lower demand in the rail sector. The Company's earnings are expected to be higher in 2017 compared with 2016, primarily due to the impact of higher volume, favorable manufacturing performance, lower restructuring charges, lower income tax expense and the benefit of acquisitions. These factors are expected to be partially offset by unfavorable price/mix, higher material and logistics costs, increased SG&A expense and the expected absence of CDSOA income in 2017. The results for 2016 include the impacts of pension and other postretirement benefit mark-to-market remeasurement charges, which are not accounted for in the 2017 outlook because the amount will not be known until the fourth quarter.

The Company expects to generate operating cash of approximately $280 million in 2017, a decrease from 2016 of approximately $124 million or 31%, driven by the absence of CDSOA receipts, higher tax payments and unfavorable working capital, partially offset by higher operating income. The Company expects capital expenditures to be between 3% and 3.5% of net sales in 2017, compared with 5% of net sales in 2016.

The Statement of Income

Sales:
 Three Months Ended
September 30,		  
 20172016$ Change% Change
Net Sales$771.4
$657.4
$114.0
17.3%
 Nine Months Ended
September 30,		  
 20172016$ Change% Change
Net Sales$2,225.8
$2,015.0
$210.8
10.5%
Net sales increased for the third quarter of 2017 compared with the third quarter of 2016, primarily due to higher organic revenue of $61 million, the benefit of acquisitions of $44 million and the favorable impact of foreign currency exchange rate changes. The increase in organic sales volumenet income for the three months ended June 30, 2023 compared with the three months ended June 30, 2022 was driven by higher demand across most ofprimarily due to the Company's market sectors led by industrial distributionfavorable price/mix, lower material and off-highway,logistics costs and lower impairment and restructuring charges, partially offset by lower demand in the automotive market sector.higher manufacturing and selling, general and administrative ("SG&A") costs, as well as higher interest expense.
Net sales increased for the first nine months of 2017 compared with the first nine months of 2016, primarily due to higher organic revenue of $121 million and the benefit of acquisitions of $86 million. The increase in organicnet sales volume was driven by higher demand across most of the Company's market sectors led by industrial distribution and off-highway, partially offset by lower demand in the rail and automotive market sectors.

Gross Profit:
 Three Months Ended
September 30,		  
 20172016$ ChangeChange
Gross profit$217.0
$169.7
$47.3
27.9%
Gross profit % to net sales28.1%25.8%—
230 bps
 Nine Months Ended
September 30,		  
 20172016$ ChangeChange
Gross profit$599.3
$537.3
$62.0
11.5%
Gross profit % to net sales26.9%26.7% 20 bps
Gross profit increased infor the thirdsix quarter of 2017months ended June 30, 2023 compared with the thirdsix quarter of 2016, primarily due tomonths ended June 30, 2022 was driven by organic growth in both the Engineered Bearings and Industrial Motion segments and the favorable impact of higher sales volumeacquisitions (net of $23 million,divestitures), partially offset by the benefit of acquisitions of $18 million, favorable manufacturing performance of $14 million and the favorableunfavorable impact of foreign currency exchange rate changes. These factors wereThe increase in net income for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 was primarily due to the favorable price/mix, the impact of higher volume and lower material and logistics costs, partially offset by higher manufacturing and SG&A costs, as well as higher impairment and restructuring charges and interest expense.
Outlook:
The Company expects 2023 full-year revenue to be up approximately 8% compared to 2022, driven by continued organic growth and the benefit of acquisitions (net of divestitures). The Company's earnings are expected to be up in 2023 compared with 2022, due to the favorable impact of price/mix and lower material and logistics costs, partially offset by higher manufacturing and SG&A costs, higher impairment and restructuring charges, the unfavorable impact of foreign currency exchange rate changes and higher interest expense.
The Company expects to generate a higher amount of cash from operating activities in 2023 compared to 2022, primarily driven by higher earnings and improved working capital performance. The Company expects higher capital expenditures in 2023 compared to 2022, but relatively in line with 2022 spending as a percentage of sales (4.0%).
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THE STATEMENT OF INCOME
Operating Income:
Three Months Ended
June 30,
20232022$ ChangeChange
Net sales$1,272.3 $1,153.7 $118.6 10.3%
Cost of products sold866.9 801.3 65.6 8.2%
Selling, general and administrative expenses184.9 155.9 29.0 18.6%
Amortization of intangible assets17.3 10.6 6.7 63.2%
Impairment and restructuring charges2.5 10.0 (7.5)(75.0%)
Operating income$200.7 $175.9 24.8 14.1%
Operating income % to net sales15.8 %15.2 %60  bps
Six Months Ended
June 30,
20232022$ ChangeChange
Net sales$2,535.1 $2,278.3 $256.8 11.3%
Cost of products sold1,712.9 1,587.6 125.3 7.9%
Selling, general and administrative expenses371.7 310.0 61.7 19.9%
Amortization of intangible assets30.8 21.5 9.3 43.3%
Impairment and restructuring charges31.4 11.0 20.4 NM
Operating income$388.3 $348.2 40.1 11.5%
Operating income % to net sales15.3 %15.3 %—  bps
Net sales increased for the three months ended June 30, 2023 compared with the three months ended June 30, 2022. The increase was driven by the benefit of acquisitions (net of divestitures) of $77 million and organic growth (including pricing) of $52 million, partially offset by the unfavorable impact of foreign currency exchange rate changes of $11 million. Net sales increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022. The increase was driven by organic growth (including pricing) of $176 million and the benefit of acquisitions (net of divestitures) of $122 million, partially offset by the unfavorable impact of foreign currency exchange rate changes of $41 million.
Operating income increased for the three months ended June 30, 2023 compared with the three months ended June 30, 2022, due to favorable impact of higher sales net of cost of products sold, and lower impairment and restructuring charges, partially offset by higher SG&A expenses and increased amortization expense. Operating income increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022, due to favorable impact of higher sales net of cost of products sold, partially offset by higher SG&A expenses, higher impairment and restructuring charges and increased amortization expense.
•Cost of products sold increased for the three months ended June 30, 2023 compared with the three months ended June 30, 2022, due to the incremental cost of goods sold from acquisitions (net of divestitures) of $55 million and higher manufacturing costs of $39 million, partially offset by lower material and logistics costs of $9$22 million and unfavorable price/mix.
Gross profitthe impact of foreign currency exchange rate changes of $6 million. Cost of products sold increased infor the first ninesix months of 2017ended June 30, 2023 compared with the first six months ended June 30, 2022, due to higher manufacturing costs, net of favorable mix impact, of $94 million and the incremental cost of goods sold from acquisitions (net of divestitures) of $89 million, partially offset by lower material and logistics costs of $36 million and the impact of foreign currency exchange rate changes of $22 million. The higher manufacturing costs for the three and six months ended June 30, 2023 compared with the three and six months ended June 30, 2022 reflect continued labor and input cost inflation, as well as the impact of reduced inventory build in the 2023 periods compared to the same periods a year ago.

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•nineSG&A expenses increased for the three months of 2016,ended June 30, 2023 compared with the three months ended June 30, 2022, primarily due to the impact of acquisitions and increased spending to support the higher volume of $43 million, the benefit of acquisitions of $33 millionsales and favorable manufacturing performance of $29 million. These factors were partially offset by unfavorable price/mix of $22 million and higher material and logistics costs of $20 million.


Selling, General and Administrative Expenses:
 Three Months Ended
September 30,		  
 20172016$ ChangeChange
Selling, general and administrative expenses$134.0
$107.2
$26.8
25.0%
Selling, general and administrative expenses % to net sales17.4%16.3%—
110 bps
 Nine Months Ended
September 30,		  
 20172016$ ChangeChange
Selling, general and administrative expenses$377.4
$331.3
$46.1
13.9%
Selling, general and administrative expenses % to net sales17.0%16.4%—
60 bps
The increase inbusiness activity levels. SG&A expenses inincreased for the third quarter and first ninesix months of 2017ended June 30, 2023 compared with the third quarter and first ninesix months of 2016 wasended June 30, 2022, primarily due to higher incentive compensation expense and the impact of acquisitions.acquisitions, higher compensation costs and increased spending to support the higher sales and business activity levels.

•Amortization of intangible assets increased for the three and six months ended June 30, 2023 compared with the three and six months ended June 30, 2022, primarily due to the addition of intangible assets from the GGB acquisition, which was completed in the fourth quarter of 2022, and the Nadella acquisition, which was completed in the second quarter of 2023.

Impairment and Restructuring:
 Three Months Ended
September 30,		  
 20172016$ Change% Change
Impairment charges$—
$1.2
$(1.2)(100.0)%
Severance and related benefit costs1.3
3.3
(2.0)(60.6)%
Exit costs—
0.8
(0.8)(100.0)%
Total$1.3
$5.3
$(4.0)(75.5)%
 Nine Months Ended
September 30,		  
 20172016$ Change% Change
Impairment charges$—
$3.8
$(3.8)(100.0)%
Severance and related benefit costs3.2
12.6
(9.4)(74.6)%
Exit costs0.6
2.3
(1.7)(73.9)%
Total$3.8
$18.7
$(14.9)(79.7)%
•Impairment and restructuring charges of $1.3 million and $3.8 millionwere lower for the three months ended June 30, 2023 compared with the three months ended June 30, 2022, primarily due to impairment charges recorded in the thirdsecond quarter and first nine months of 2017, respectively, were primarily comprised of severance and related benefit costs2022 related to initiatives to reduce headcount and right-size the Company's manufacturing footprint, includingoperations in Russia. As a result of Russia's invasion of Ukraine (and associated sanctions), the planned closure of the Pulaski bearing plant.
Company suspended its operations in Russia. Refer to Russia Operations below for additional information. Impairment and restructuring charges were higher for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 primarily due to the impairment of $5.3 milliongoodwill, partially offset by the Russia-related charges in 2022 discussed above. During the first quarter of 2023, the Company reviewed goodwill for impairment for its reporting units due to the change in reporting segments that went into effect on January 1, 2023. As a result of this analysis the Company determined that one of the new reporting units within the Industrial Motion segment could not support the carrying value of its goodwill, and $18.7subsequently recorded a pretax impairment loss of $28.3 million in the thirdfirst quarter and first nine months of 2016, respectively, were primarily comprised of severance and related benefit costs related to initiatives to reduce headcount and right-size the Company's manufacturing footprint, including the planned closures of the Altavista, Pulaski and Benoni bearing plants. In addition, the Company also recognized impairment charges associated with the planned closure of the Altavista and Benoni bearing plants of $1.2 million and $3.6 million, respectively, during the third quarter and first nine months of 2016.2023.


Interest Income and Expense:
 Three Months Ended
June 30,		  
 20232022$ Change% Change
Interest expense$(28.3)$(18.3)$(10.0)54.6 %
Interest income1.9 1.0 $0.9 90.0 %
Three Months Ended
September 30,		   Six Months Ended
June 30,		 
20172016$ Change% Change 20232022$ Change% Change
Interest expense$(10.1)$(8.0)$(2.1)26.3%Interest expense$(52.4)$(32.6)$(19.8)60.7 %
Interest income$0.7
$0.4
$0.3
75.0%Interest income3.4 1.6 $1.8 112.5 %
 Nine Months Ended
September 30,		  
 20172016$ Change% Change
Interest expense$(26.5)$(25.1)$(1.4)5.6%
Interest income$2.0
$1.1
$0.9
81.8%
InterestThe increase in interest expense increased for the third quarterthree and six months ended June 30, 2023 compared with the first ninethree and six months of 2017 compared to the third quarter and the first nine months of 2016, primarilyended June 30, 2022 was due to borrowings associated with the Groeneveld acquisition. Refer to increased debt levels and higher average interest rates.
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Note 8 - Financing Arrangements to the Consolidated Financial Statements for further discussion.Table of Contents


Other Income (Expense):
Three Months Ended
June 30,		  
 20232022$ Change% Change
Non-service pension and other postretirement income (expense)$— $(7.9)$7.9 (100.0)%
Other income (expense)2.3 (1.1)3.4 NM
Total other income (expense)$2.3 $(9.0)$11.3 (125.6)%
 Three Months Ended
September 30,		  
 20172016$ Change% Change
CDSOA expense$—
$(0.2)$0.2
(100.0)%
Other income (expense), net2.9
(0.1)3.0
NM
Total other income (expense)$2.9
$(0.3)$3.2
NM
 Nine Months Ended
September 30,		  
 20172016$ Change% Change
CDSOA income$—
$53.6
$(53.6)(100.0)%
Other income (expense), net9.1
(1.8)10.9
NM
Total other income$9.1
$51.8
$(42.7)(82.4)%
Six Months Ended
June 30,		  
 20232022$ Change% Change
Non-service pension and other postretirement income (expense)$0.1 $(6.6)$6.7 (101.5)%
Other income (expense)5.4 (0.9)6.3 NM
Total other income (expense)$5.5 $(7.5)$13.0 (173.3)%
CDSOANon-service pension and other postretirement income (expense) increased for the three and six months ended June 30, 2023 compared with the three and six months ended June 30, 2022. The Company recognized pension remeasurement gains in 2023 compared to pension remeasurement losses in 2022. This favorable impact was partially offset by the first impact of a lower expected return on pension plan assets and higher interest expense on pension plan obligations. Rnine months of 2016 represents income recorded in connection with funds distributed to the Company from monies collected by U.S. Customs from antidumping cases. Referefer to Note 2016 - Continued Dumping Retirement Benefit Plans and Subsidy Offset Act to the Consolidated Financial Statements for further discussion.

The increase in other income (expense), net for the third quarter of 2017 was primarily due to the gain on the sale of the former manufacturing facility in Altavista and lower foreign currency exchange losses. The increase in other income (expense), net for the first nine months of 2017 was primarily due to lower foreign currency exchange losses and the gain on the sale of former manufacturing facilities in Benoni and Altavista during the second and third quarter of 2017, respectively.



Income Tax Expense:
 Three Months Ended
September 30,		  
 20172016$ ChangeChange
Income tax expense$21.1
$15.2
$5.9
38.8%
Effective tax rate28.1%30.9%—
NM
 Nine Months Ended
September 30,		  
 20172016$ ChangeChange
Income tax expense$28.5
$65.8
$(37.3)(56.7)%
Effective tax rate14.1%30.8%—
NM
The effective tax rate for the three months ended September 30, 2017 is 28.1%. The income tax expense increase from the three months ended September 30, 2016 is driven by $9.1 million of additional expense at the U.S. statutory rate as a result of the increase in income before income taxes and additional expense related to losses in jurisdictions with no tax benefit. These increases are partially offset by favorable U.S. tax deductions and tax credits, and discrete tax amounts.

The effective tax rate for the nine months ended September 30, 2017 is 14.1%. The decrease in income tax expense when compared to the first nine months ended September 30, 2016 was primarily due to the net reversal of accruals for prior year uncertain tax positions (including interest) of $33.9 million in the second quarter of 2017 and favorable U.S. tax deductions and tax credits.

Refer to Note 17 - Income TaxesOther Postretirement Benefit Plans in to the Notes to the Consolidated Financial Statements for additional information.
Other income (expense) increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 due to gains on divestitures of $4.8 million primarily related to the sale of SE Setco, a 50% owned joint venture.
Income Tax Expense:
 Three Months Ended
June 30,		  
 20232022$ ChangeChange
Provision for income taxes$47.1 $44.0 $3.1 7.0 %
Effective tax rate26.7 %29.4 %(270) bps
 Six Months Ended
June 30,		  
 20232022$ ChangeChange
Provision for income taxes$89.6 $82.2 $7.4 9.0 %
Effective tax rate26.0 %26.5 %(50) bps
Income tax expense increased $3.1 million for the three months ended June 30, 2023 compared with the three months ended June 30, 2022 due to higher pre-tax earnings and an increase in the mix of earnings in non-U.S. jurisdictions with relatively higher tax rates, partially offset by the net favorable impact of discrete tax items in comparison to the year ago period.
Income tax expense increased $7.4 million for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 due to higher pre-tax earnings and an increase in the mix of earnings in non-U.S. jurisdictions with relatively higher tax rates, partially offset by the net favorable impact of discrete tax items in comparison to the year ago period.
Refer to Note 6 - Income Taxes for more information on the computation of the income tax expense in interim periods.

34
Business Segments

BUSINESS SEGMENTS
The Company's reportable segments are product-based business unitsgroups that serve different industry sectors. While the segments often operate using shared infrastructure, each reportable segment is managed to address specific customer needscustomers in these diverse market sectors.industrial markets. The primary measurement used by management to measure the financial performance of each segment is EBIT.EBITDA. Refer to Note 134 - Segment Information in the Notes to the Consolidated Financial Statements for the reconciliation of EBITEBITDA by segment to consolidated income before income taxes.

The presentation of segment results below includes a reconciliation of the changes in net sales for each segment reported in accordance with U.S. GAAP to net sales adjusted to remove the effects of acquisitions and divestitures completed in 20172023 and 20162022 and foreign currency exchange rate changes. The effects of acquisitions, divestitures and foreign currency exchange rate changes on net sales are removed to allow investors and the Company to meaningfully evaluate the percentage change in net sales on a comparable basis from period to period.

The following items highlightitem represents the Company's acquisitions and divestitures completed in 20162023 and 2022:
•and the first nine months of 2017.
The Company acquired GroeneveldNadella during the second quarter of 2023. Results for Nadella are reported in the Industrial Motion segment.
•The Company acquired ARB during the first quarter of 2023. Results for ARB are reported in the Engineered Bearings segment.
•The Company acquired GGB during the fourth quarter of 2022. Results for GGB are reported in the Engineered Bearings segment.
•The Company completed the sale of ADS during the fourth quarter of 2022. Results for ADS were reported in the Industrial Motion segment.
•The Company completed the sale of Timken-Rus Service Company ooo ("Timken Russia") during the third quarter of 2017. Based on markets and customer served, substantially all of the results2022. Results for Groeneveld areTimken Russia were reported in the Mobile IndustriesEngineered Bearings segment.
•The Company acquired Torsion Control Products and PT TechSpinea during the second quarter of 2017. Based on markets and customers served, substantially all of the results2022. Results for both businessesSpinea are reported in the Mobile IndustriesIndustrial Motion segment.
35
Engineered Bearings Segment:
 Three Months Ended
June 30,		  
 20232022$ ChangeChange
Net sales$857.2$798.3$58.9 7.4%
EBITDA$185.5$167.5$18.0 10.7%
EBITDA margin21.6 %21.0 %60  bps
 Three Months Ended
June 30,		  
 20232022$ Change% Change
Net sales$857.2 $798.3 $58.9 7.4 %
Less: Acquisitions57.4 57.4 NM
Divestitures(1.3)(1.3)NM
         Currency(10.1)(10.1)NM
Net sales, excluding the impact of acquisitions,
   divestitures and currency		$811.2 $798.3 $12.9 1.6 %
 Six Months Ended
June 30,		  
 20232022$ ChangeChange
Net sales$1,757.9$1,570.7$187.2 11.9%
EBITDA$390.5$335.8$54.7 16.3%
EBITDA margin22.2 %21.4 %80  bps
 Six Months Ended
June 30,		  
 20232022$ Change% Change
Net sales$1,757.9 $1,570.7 $187.2 11.9 %
Less: Acquisitions113.1 113.1 NM
Divestitures(4.8)(4.8)NM
         Currency(32.3)(32.3)NM
Net sales, excluding the impact of acquisitions,
   divestitures and currency		$1,681.9 $1,570.7 $111.2 7.1 %
The Company acquired EDT during the fourth quarter of 2016. Based on markets and customers served, substantially all of the results for EDT are reported in the Process Industries segment.
The Company acquired Lovejoy during the third quarter of 2016. Based on markets and customers served, substantially all of the results for Lovejoy are primarily reported in the Process Industries segment.

Mobile Industries Segment:
 Three Months Ended
September 30,		  
 20172016$ ChangeChange
Net sales$422.8
$353.1
$69.7
19.7%
EBIT$34.9
$25.9
$9.0
34.7%
EBIT margin8.3%7.3%—
100 bps
 Three Months Ended
September 30,		  
 20172016$ Change% Change
Net sales$422.8
$353.1
$69.7
19.7%
Less: Acquisitions42.2
—
42.2
NM
         Currency4.5
—
4.5
NM
Net sales, excluding the impact of acquisitions and currency$376.1
$353.1
$23.0
6.5%
 Nine Months Ended
September 30,		  
 20172016$ ChangeChange
Net sales$1,214.2
$1,104.1
$110.1
10.0%
EBIT$100.1
$95.3
$4.8
5.0%
EBIT margin8.2%8.6%—
(40) bps

 Nine Months Ended
September 30,		  
 20172016$ Change% Change
Net sales$1,214.2
$1,104.1
$110.1
10.0%
Less: Acquisitions54.2
—
54.2
NM
         Currency3.7
—
3.7
NM
Net sales, excluding the impact of acquisitions and currency$1,156.3
$1,104.1
$52.2
4.7%
The Mobile IndustriesEngineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $23.0$12.9 million or 6.5%1.6% in the third quarter of 2017three months ended June 30, 2023 compared with the third quarter of 2016, reflecting organic growththree months ended June 30, 2022. The increase reflects higher pricing across the segment and higher sales volume in the off-highwayrenewable energy, rail and heavy truckindustries sectors, partially offset by lower demandsales volume in the automotive sector. EBITdistribution, auto/truck and general industrial sectors. EBITDA increased by $9.0$18.0 million or 34.7% in10.7% for the third quarter of 2017three months ended June 30, 2023 compared with the third quarter of 2016,three months ended June 30, 2022, primarily due to the impact of higher volume of $9 million, favorable manufacturing performance of $7 million,price/mix, lower material and logistics costs, the benefit of acquisitions and lower Russia related charges, partially offset by higher manufacturing costs, the impact of $6 million, lower restructuring chargesvolume, and the favorableunfavorable impact of foreign currency exchange rate changes. These factors were partially offset by higher SG&A expense of $9 million, higher material and logistics costs of $6 million and unfavorable price/mix.
The Mobile IndustriesEngineered Bearings segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased$52.2 $111.2 million or4.7% 7.1% in the first ninesix months of 2017ended June 30, 2023 compared with the first ninesix months of 2016, reflecting organic growthended June 30, 2022. The increase reflects higher pricing across the segment and higher sales volume in the off-highwayrenewable energy, rail and heavy truckindustries sectors, partially offset by decreased demandlower sales volume in the raildistribution and automotiveauto/truck sectors. EBITEBITDA increased by $4.8$54.7 million or 5.0% in16.3% for the first ninesix months of 2017ended June 30, 2023 compared with the first ninesix months of 2016ended June 30, 2022, primarily due to higher volume of $19 million,favorable price/mix, lower material and logistics costs and the benefit of acquisitions, of $9 million, favorablepartially offset by higher manufacturing performance of $8 million, lower restructuring charges of $6 millionand SG&A costs, and the unfavorable impact of foreign currency exchange rate changeschanges.
36
Full-year sales for the Mobile Industries segment are expected to be up approximately 13% in 2017 compared with 2016. This reflects improved demand in the off-highway and heavy truck sectors, the benefit of acquisitions and the favorable impact of foreign currency exchange rate changes, partially offset by lower demand in the rail sector. EBIT for the Mobile Industries segment is expected to increase in 2017 compared with 2016 primarily due to the impact of higher volume and the impact of acquisitions, mostly offset by unfavorable price/mix and higher SG&A expense. The results for 2016 include the impacts of pension and other postretirement benefit mark-to-market remeasurement charges, which are not accounted for in the 2017 outlook because the amount will not be known until the fourth quarter.

Process IndustriesIndustrial Motion Segment:
 Three Months Ended
June 30,		  
 20232022$ ChangeChange
Net sales$415.1$355.4$59.7 16.8%
EBITDA$80.9$65.1$15.8 24.3%
EBITDA margin19.5 %18.3 %120  bps
 Three Months Ended
September 30,		  
 20172016$ ChangeChange
Net sales$348.6
$304.3
$44.3
14.6%
EBIT$61.7
$42.0
$19.7
46.9%
EBIT margin17.7%13.8%—
390 bps
 Three Months Ended
June 30,		  
 20232022$ Change% Change
Net sales$415.1 $355.4 $59.7 16.8 %
Less: Acquisitions31.3 31.3 NM
         Divestitures(10.3)(10.3)NM
         Currency(1.1)(1.1)NM
Net sales, excluding the impact of acquisitions,
   divestitures and currency		$395.2 $355.4 $39.8 11.2 %
 Six Months Ended
June 30,		  
 20232022$ ChangeChange
Net sales$777.2$707.6$69.6 9.8%
EBITDA$129.1$127.5$1.6 1.3%
EBITDA margin16.6 %18.0 %(140) bps
 Three Months Ended
September 30,		  
 20172016$ Change% Change
Net sales$348.6
$304.3
$44.3
14.6%
Less: Acquisitions2.2
—
2.2
NM
         Currency4.4
—
4.4
NM
Net sales, excluding the impact of acquisitions and currency$342.0
$304.3
$37.7
12.4%
 Nine Months Ended
September 30,		  
 20172016$ ChangeChange
Net sales$1,011.6
$910.9
$100.7
11.1%
EBIT$164.9
$123.7
$41.2
33.3%
EBIT margin16.3%13.6% 270 bps
Nine Months Ended
September 30,		   Six Months Ended
June 30,		 
20172016$ Change% Change 20232022$ Change% Change
Net sales$1,011.6
$910.9
$100.7
11.1%Net sales$777.2 $707.6 $69.6 9.8 %
Less: Acquisitions32.3
—
32.3
NMLess: Acquisitions36.6 36.6 NM
Divestitures Divestitures(23.1)(23.1)NM
Currency0.2
—
0.2
NM Currency(8.5)(8.5)NM
Net sales, excluding the impact of acquisitions and currency$979.1
$910.9
$68.2
7.5%
Net sales, excluding the impact of acquisitions,
divestitures and currency		Net sales, excluding the impact of acquisitions,
divestitures and currency		$772.2 $707.6 $64.6 9.1 %
The Process IndustriesIndustrial Motion segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $37.7$39.8 million or 12.4%11.2% in the third quarter of 2017three months ended June 30, 2023 compared with the same period in 2016.three months ended June 30, 2022. The increase was primarily drivenreflects higher pricing across the segment and higher sales volume in the drive systems, services and automatic lubrication systems platforms, partially offset by organic growthlower sales volume in industrial distribution, heavy industriesthe belts and wind market sectors. EBITchain platform. EBITDA increased $19.7$15.8 million or 46.9% in24.3% for the third quarter of 2017three months ended June 30, 2023 compared with the third quarter of 2016three months ended June 30, 2022 primarily due to favorable price/mix and the impact of higher sales volume, of $18 million and favorable manufacturing performance of $7 million, partially offset by higher SG&A expense and higher material and logistics costs.
The Process IndustriesIndustrial Motion segment's net sales, excluding the effects of acquisitions, divestitures and foreign currency exchange rate changes, increased $68.2$64.6 million or 7.5%9.1% in the six months ended June 30, 2023 compared with the six months ended June 30, 2022. The increase reflects higher pricing across the segment and higher sales volume in the drive systems, services, automatic lubrication systems and linear motion platforms, partially offset by lower sales volume in the belts and chain platform. EBITDA increased $1.6 million or 1.3% for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 primarily due to favorable price/mix, the impact of higher sales volume and lower material and logistics costs, mostly offset by higher impairment and restructuring charges, and higher manufacturing and SG&A costs. The higher impairment and restructuring charges were primarily related to the impairment of goodwill for one of the segment's reporting units.

37
Unallocated Corporate
 Three Months Ended
June 30,		  
 20232022$ ChangeChange
Unallocated corporate expense$(13.2)$(13.4)$0.2 (1.5 %)
Unallocated corporate expense % to net sales(1.0)%(1.2)%20  bps
 Six Months Ended
June 30,		  
 20232022$ ChangeChange
Unallocated corporate expense$(30.9)$(26.3)$(4.6)17.5 %
Unallocated corporate expense % to net sales(1.2)%(1.2)%—  bps
Unallocated corporate expense increased for the six months ended June 30, 2023 compared with the six months ended June 30, 2022 primarily due to increased spending for professional services and other corporate expenses.




38
CASH FLOW
Six Months Ended
June 30,		 
 20232022$ Change
Net cash provided by operating activities$222.6 $77.1 $145.5 
Net cash used in investing activities(412.0)(198.7)(213.3)
Net cash provided by financing activities209.0 177.4 31.6 
Effect of exchange rate changes on cash(8.0)(7.7)(0.3)
Increase in cash and cash equivalents and restricted cash$11.6 $48.1 $(36.5)
Operating Activities:
The increase in net cash provided by operating activities for the first ninesix months of 20172023 compared with the first ninesix months of 2016. The increase was primarily driven by organic growth in industrial distribution and heavy industries market sector. EBIT increased $41.2 million or 33.3% in the first nine months of 2017 compared with the first nine months of 2016 primarily due to the impact of higher volume of $34 million, favorable manufacturing performance of $21 million, lower restructuring charges of $5 million and the benefit of acquisitions, partially offset by unfavorable price/mix of $20 million and higher SG&A expense.
Full-year sales for the Process Industries segment are expected to be up approximately 11% in 2017 compared with 2016. This reflects expected growth across most end market sectors, led by industrial distribution and the benefit of acquisitions and the favorable impact of foreign currency exchange rate changes. EBIT for the Process Industries segment is expected to increase in 2017 compared with 2016 primarily due to the impact of higher volume, the benefit of acquisitions and lower restructuring charges, partially offset by unfavorable price/mix and higher SG&A expense. The results for 2016 include the impacts of pension and other postretirement benefit mark-to-market remeasurement charges, which are not accounted for in the 2017 outlook because the amount will not be known until the fourth quarter.

Corporate:
 Three Months Ended
September 30,		  
 20172016$ ChangeChange
Corporate expenses$12.0
$10.9
$1.1
10.1%
Corporate expenses % to net sales1.6%1.7%—
(10) bps
 Nine Months Ended
September 30,		  
 20172016$ Change Change
Corporate expenses$37.8
$34.8
$3.0
8.6%
Corporate expenses % to net sales1.7%1.7%—
—


The Balance Sheet

The following discussion is a comparison of the Consolidated Balance Sheets at September 30, 2017 and December 31, 2016.

Current Assets:
 September 30,
2017		December 31,
2016		$ Change% Change
Cash and cash equivalents$137.2
$148.8
$(11.6)(7.8)%
Restricted cash3.3
2.7
0.6
22.2 %
Accounts receivable, net542.2
438.0
104.2
23.8 %
Inventories, net687.5
553.7
133.8
24.2 %
Deferred charges and prepaid expenses39.9
20.3
19.6
96.6 %
Other current assets64.2
48.4
15.8
32.6 %
Total current assets$1,474.3
$1,211.9
$262.4
21.7 %
Refer to the "Cash Flows" section for discussion on the change in cash and cash equivalents. Accounts receivable, net increased primarily due to higher sales in September 2017 compared to December 2016, current-year acquisitions and the impact of foreign currency exchange rate changes.
Inventories, net increased due to higher demand, current-year acquisitions and the impact of foreign currency exchange rate changes. Deferred charges and prepaid expenses at September 30, 2017 included a prepayment of U.S. income taxes for 2017. Other current assets primarily increased due to an increase in short-term investments and current-year acquisitions.

Property, Plant and Equipment, Net: 
 September 30,
2017		December 31,
2016		$ Change% Change
Property, plant and equipment$2,360.6
$2,233.0
$127.6
5.7%
Accumulated depreciation(1,518.4)(1,428.6)(89.8)6.3%
Property, plant and equipment, net$842.2
$804.4
$37.8
4.7%
The increase in property, plant and equipment, net in the first nine months of 20172022 was primarily due to a decrease in cash used for working capital expendituresitems of $56 million, current-year acquisitions of $32$134.0 million and the impactan increase in net income of foreign currency exchange rate changes of $27$27.7 million, partially offset by current-year depreciation of $73 million.

Other Assets:
 September 30,
2017		December 31,
2016		$ Change% Change
Goodwill$510.3
$357.5
$152.8
42.7 %
Non-current pension assets31.6
32.1
(0.5)(1.6)%
Other intangible assets428.9
271.0
157.9
58.3 %
Deferred income taxes47.9
51.4
(3.5)(6.8)%
Other non-current assets28.4
34.9
(6.5)(18.6)%
Total other assets$1,047.1
$746.9
$300.2
40.2 %
The increase in goodwill was primarily due to $148 million of goodwill acquired from current-year acquisitions. The increase in other intangible assets was primarily due to $175 million of intangible assets acquired from the current-year acquisitions and current-year expenditures for software of $6 million, partially offset by current-year amortization of $29 million.


Current Liabilities:
 September 30,
2017		December 31,
2016		$ Change% Change
Short-term debt$41.1
$19.2
$21.9
114.1 %
Current portion of long-term debt5.0
5.0
—
— %
Accounts payable248.1
176.2
71.9
40.8 %
Salaries, wages and benefits112.2
85.9
26.3
30.6 %
Income taxes payable7.4
16.9
(9.5)(56.2)%
Other current liabilities154.9
149.5
5.4
3.6 %
Total current liabilities$568.7
$452.7
$116.0
25.6 %
The increase in short-term debt was primarily due to higher borrowings of $16 million under foreign lines of credit. The increase in accounts payable was primarily due to increased purchasing activity, as well as higher days outstanding driven by the Company's initiative to extend payment terms with its suppliers.
The increase in accrued salaries, wages and benefits was primarily due to higher accruals for incentive compensation expense, as well as current-year acquisitions. The decrease in income taxes was primarily due to the Company being in a prepaid position with respect to U.S. income taxes at September 30, 2017 as reflected on the balance sheet; at December 31, 2016, the Company had a current income tax payable balance that included $13.7 million payable for U.S. income taxes.

Non-Current Liabilities:
 September 30,
2017		December 31,
2016		$ Change% Change
Long-term debt$959.8
$635.0
$324.8
51.1 %
Accrued pension cost160.3
154.7
5.6
3.6 %
Accrued postretirement benefits cost126.7
131.5
(4.8)(3.7)%
Deferred income taxes44.9
3.9
41.0
NM
Other non-current liabilities47.3
74.5
(27.2)(36.5)%
Total non-current liabilities$1,339.0
$999.6
$339.4
34.0 %
The increase in long-term debt was primarily due to additional borrowings of $176.5 million under the 2027 Notes and $117.8 million under the 2020 Term Loan to finance the Groeneveld acquisition, as well as additional borrowings of $20 million classified as long-term under the Accounts Receivable Facility and additional borrowings of $8 million under the Company's Senior Credit Facility.
The increase in deferred income taxes was primarily due to current-year acquisitions of $42 million. The decrease in other non-current liabilities was primarily driven by the reversal of accruals for uncertain tax positions of $34 million due to the expiration of statutes of limitation in various jurisdictions.

Shareholders’ Equity:
 September 30,
2017		December 31,
2016		$ Change% Change
Common stock$951.3
$960.0
$(8.7)(0.9)%
Earnings invested in the business1,400.2
1,289.3
110.9
8.6 %
Accumulated other comprehensive loss(41.0)(77.9)36.9
(47.4)%
Treasury shares(887.5)(891.7)4.2
(0.5)%
Noncontrolling interest32.9
31.2
1.7
5.4 %
Total shareholders’ equity$1,455.9
$1,310.9
$145.0
11.1 %
Earnings investedreduction in the business in the first nine months of 2017 increased by net income attributable to the Company of $174.2 million, partially offset by dividends declared of $62.4 million.
The decrease in accumulated other comprehensive loss was primarily due to foreign currency adjustments of $40.9 million. The foreign currency translation adjustments were due to the weakening of the U.S. dollar relative to other foreign currencies, including the Romanian Leu, Chinese Yuan, Indian Rupee and Polish Zloty. See "Other Matters - Foreign Currency" for further discussion regarding the impact of foreign currency translation.




Cash Flows
 Nine Months Ended
September 30,		 
 20172016$ Change
Net cash provided by operating activities$142.9
$278.7
$(135.8)
Net cash used in investing activities(407.4)(143.3)(264.1)
Net cash provided by (used in) financing activities236.3
(139.7)376.0
Effect of exchange rate changes on cash16.6
3.7
12.9
Decrease in cash and cash equivalents$(11.6)$(0.6)$(11.0)

Operating Activities:
Operating activities provided net cash of $142.9 million in the first nine months of 2017, compared with net cash of $278.7 million provided in the first nine months of 2016. The decrease was primarily due to the unfavorable impactbenefit of income taxes on cash of $79.6 million and a net unfavorable change in working capital items of $71.5 million, partially offset by higher net income of $26.2$43.3 million. Refer to the tables below for additional detail of the impact of each line item on net cash provided by operating activities.

The following table displays the impact of working capital items on cash during the first ninesix months of 20172023 and 2016,2022, respectively:
 Nine Months Ended
September 30,		 
 20172016$ Change
Cash Provided (Used):   
Accounts receivable$(61.6)$12.2
$(73.8)
Inventories(85.4)(13.6)(71.8)
Trade accounts payable55.7
15.0
40.7
Other accrued expenses15.9
(17.5)33.4
 Cash used by working capital items$(75.4)$(3.9)$(71.5)

 Six Months Ended
June 30,
 20232022$ Change
Cash (used in) provided by:
Accounts receivable$(87.4)$(149.3)$61.9 
Unbilled receivables(17.7)(2.9)(14.8)
Inventories15.3 (126.1)141.4 
Trade accounts payable(14.9)(6.1)(8.8)
Other accrued expenses(29.1)16.6 (45.7)
Cash used in working capital items$(133.8)$(267.8)$134.0 
The following table displays the impact of income taxes on cash during the first ninesix months of 20172023 and 2016,2022, respectively:
Nine Months Ended
September 30,		  Six Months Ended
June 30,
20172016$ Change 20232022$ Change
Accrued income tax expense$28.5
$65.8
$(37.3)Accrued income tax expense$89.6 $82.2 $7.4 
Income tax payments(77.2)(32.5)(44.7)Income tax payments(119.4)(68.3)(51.1)
Other miscellaneous items(3.4)(5.8)2.4
Other itemsOther items0.3 (0.1)0.4 
Change in income taxes$(52.1)$27.5
$(79.6)Change in income taxes$(29.5)$13.8 $(43.3)
Investing Activities:
NetThe increase in net cash used in investing activities of $407.4 million infor the first ninesix months of 2017 increased $264.1 million from the same period in 2016 primarily due to an increase of $284.4 million in cash used for acquisitions, partially offset by a $21.9 million reduction in capital expenditures.

Financing Activities:
Net cash provided by financing activities was $236.3 million in2023 compared with the first ninesix months of 2017 compared with net cash of $139.7 million used in financing activities in the first nine months of 2016. The increase2022 was primarily due to an increase in net borrowings of $323.1 million, primarily needed to fund the Groeneveld acquisition that closed on July 3, 2017, and less cash used for acquisitions of $172.3 million, an increase in share repurchasesnet investments in short-term marketable securities of $42$24.2 million duringand an increase in capital expenditures of $16.1 million
Financing Activities:
The increase in net cash provided by financing activities for the first ninesix months of 20172023 compared with the first ninesix months of 2016.2022 was primarily due to cash proceeds of $284.8 million on the sale of shares of TIL, a subsidiary of the Company, in the second quarter of 2023, partially offset by a decrease in net borrowings of $247.6 million.
39

Liquidity and Capital Resources:LIQUIDITY AND CAPITAL RESOURCES

Reconciliation of total debt to net debt and the ratio of net debt to capital:

Net Debt:
June 30,
2023		December 31,
2022
Short-term debt, including current portion of long-term debt$53.2 $49.0 
Long-term debt2,046.5 1,914.2 
Total debt$2,099.7 $1,963.2 
Less: Cash and cash equivalents344.3 331.6 
Net debt$1,755.4 $1,631.6 
 September 30,
2017		December 31,
2016
Short-term debt$41.1
$19.2
Current portion of long-term debt5.0
5.0
Long-term debt959.8
635.0
Total debt$1,005.9
$659.2
Less: Cash and cash equivalents137.2
148.8
 Restricted cash3.3
2.7
Net debt$865.4
$507.7

Ratio of Net Debt to Capital:
 September 30,
2017		December 31,
2016
Net debt$865.4
$507.7
Shareholders’ equity1,455.9
1,310.9
Net debt plus shareholders’ equity (capital)$2,321.3
$1,818.6
Ratio of net debt to capital37.3%27.9%

June 30,
2023		December 31,
2022
Net debt$1,755.4 $1,631.6 
Total equity2,650.0 2,352.9 
Net debt plus total equity (capital)$4,405.4 $3,984.5 
Ratio of net debt to capital39.8 %40.9 %
The Company presents net debt because it believes net debt is more representative of the Company's financial position than total debt due to the amount of cash and cash equivalents held by the Company.Company and the ability to utilize such cash and cash equivalents to reduce debt if needed.

At SeptemberJune 30, 2017, $137.0 million of2023, the Company's $137.2Company had strong liquidity with $344.3 million of cash and cash equivalents on the Consolidated Balance Sheet, as well as $630.0 million available under committed credit lines. Of the $344.3 million of cash and cash equivalents, $331.8 million resided in jurisdictions outside the U.S. It is the Company's practice to use available cash in the U.S. to pay down its Senior Credit Facility or Accounts Receivable Facility in order to minimize total interest expense.United States. Repatriation of non-U.S. cash could be subject to domestic and foreign taxes and some portion may be subject to governmental restrictions. Part of the Company's strategy is to grow in attractive market sectors, many of which are outside the U.S.United States. This strategy includes making investments in facilities, equipment and potential new acquisitions. The Company plans to fund these investments, as well as meet working capital requirements, with cash and cash equivalents and unused lines of credit within the geographic location of these investments where feasible.
On December 5, 2022, the Company entered into the Credit Agreement, which is comprised of the $750.0 million Senior Credit Facility and the $400.0 million 2027 Term Loan that each mature on December 5, 2027. The Credit Agreement amended and restated the Company's previous revolving credit agreement that was set to mature on June 25, 2024, and replaced the $350.0 million 2023 Term Loan. The Credit Agreement also replaced interest rates based on LIBOR with interest rates based on SOFR. At June 30, 2023, the Company had $133.2 million of outstanding borrowings and $1.8 million of letters of credit under the Senior Credit Facility, which reduced the availability under this facility to $615.0 million. The Credit Agreement has two financial covenants: a consolidated leverage ratio and a consolidated interest coverage ratio. The maximum consolidated leverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0. As of June 30, 2023, the Company's consolidated leverage ratio was 1.85 to 1.0. The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.0 to 1.0. As of June 30, 2023, the Company's consolidated interest coverage ratio was 10.47 to 1.0.
The interest rate under the Senior Credit Facility is variable with a spread based on the Company's debt rating. The average rate on outstanding U.S. dollar borrowings was 6.27% and the average rate on outstanding Euro borrowings was 4.07% as of June 30, 2023. In addition, the Company pays a facility fee based on the applicable rate, which is variable with a spread based on the Company's debt rating, multiplied by the aggregate commitments of all of the lenders under the Senior Credit Facility. As of June 30, 2023, the Company carried investment-grade credit ratings with both Moody's (Baa2) and S&P Global (BBB-).

40
The Company has a $100 million Accounts Receivable Facility, which matures on November 30, 2018.2024. The Accounts Receivable Facility is subject to certain borrowing base limitations and is secured by certain domestic trade accounts receivable of the Company. Certain borrowing base limitations reducedAs of June 30, 2023, the availabilityCompany had $85 million of outstanding borrowings under the Accounts Receivable Facility to $80.3and no borrowing base limitations. There was $15 million at September 30, 2017. As of September 30, 2017, the Company had $74.8 million in outstanding borrowings, which reduced the availability under the facility to $5.5 million. The interest rate on the Accounts Receivable Facility is variable and was 2.07% as of SeptemberJune 30, 2017, which reflects the prevailing commercial paper rate plus facility fees.

The Company has a $500 million Senior Credit Facility, which matures on June 19, 2020. At September 30, 2017, the Senior Credit Facility had outstanding borrowings of $91.2 million, which reduced the availability to $408.8 million. The Senior Credit Facility has two financial covenants: a consolidated leverage ratio and a consolidated interest coverage ratio. At September 30, 2017, the Company was in full compliance with the covenants under the Senior Credit Facility and its other debt agreements. The maximum consolidated leverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0 (3.75 to 1.0 for a limited period up to four quarters following an acquisition with a purchase price of $200 million or greater). As of September 30, 2017, the Company's consolidated leverage ratio was 2.23 to 1.0. The minimum consolidated interest coverage ratio permitted under the Senior Credit Facility is 3.5 to 1.0. As of September 30, 2017, the Company's consolidated interest coverage ratio was 13.57 to 1.0.


The interest rate under the Senior Credit Facility is variable and represents a blended U.S. Dollar and Euro rate with a spread based on the Company's debt rating. This rate was 1.59% as of September 30, 2017. In addition, the Company pays a facility fee based on the consolidated leverage ratio multiplied by the aggregate commitments of all of the lenders under the Senior Credit Facility.

2023.
Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which provide for borrowings of up to approximately $250.0 million in the aggregate. Most of these credit lines are uncommitted.$246.1 million. At SeptemberJune 30, 2017,2023, the Company had borrowings outstanding of $35.5$49.8 million and bank guarantees of $2.0$2.7 million, which reduced the aggregate availability under these facilities to $212.5$193.6 million.

The Company expects that any cash requirements in excess of cash on hand and cash generated from operating activities will be met by the committed funds available under its Accounts Receivable Facility and the Senior Credit Facility. Management believes it has sufficient liquidity to meet its obligations through at least the term of the Senior Credit Facility.

The Company expects to remain in compliance with its debt covenants. However,On March 28, 2022, the Company may need to limit itsissued the 2032 Notes in the aggregate principal amount of $350 million with an interest rate of 4.125%, maturing on April 1, 2032. Proceeds from the 2032 Notes were used for general corporate purposes, which included repayment of borrowings under the Senior Credit Facility or other facilities in order to remain in compliance. As of September 30, 2017,and the Company could have borrowed the full amounts available under the Senior Credit Facility and Accounts Receivable Facility and still would have beenoutstanding at the time of issuance.
At June 30, 2023, the Company was in full compliance with all applicable covenants on its debt covenants.
The Company issued €150 million of 2027 Notes, which mature on September 7, 2027. On September 18, 2017, the Company entered into a €100 million 2020 Term Loan, which matures on September 18, 2020. Refer to Note 8 - Financing Arrangements for additional information.

outstanding debt.
The Company expects to generate a higher amount of cash from operations of approximately $280 millionoperating activities in 2017, a decrease from 2016 of approximately $124 million or 31%,2023 compared to 2022, primarily driven by the absence of CDSOA receipts, higher tax paymentsearnings and unfavorableimproved working capital partially offset by higher operating income.performance. The Company expects higher capital expenditures in 2023 compared to be between 3% and 3.5%2022, but relatively in line with 2022 spending as a percentage of net sales in 2017, compared with 5% of net sales in 2016.(4.0%).

Financing Obligations and Other Commitments:
During the first ninesix months of 2017,2023, the Company made cash contributions and payments of $8.8$6.3 million to its global defined benefit pension plans and $0.9 million to its other postretirement benefit plans. The Company currently expects to make contributions to its global defined benefit pension plans of approximately $25 million in 2017 totaling approximately $10 million. Returns for the Company's U.S. defined benefit plan pension assets for the first nine months of 2017 were approximately 10.1%. Returns for the Company's global defined benefit pension plan assets in 2016 were 8.5%, which was above the weighted-average expected rate of return of 5.78% predominantly due to both strong returns in equity and fixed-income markets.2023. The Company expects to record pension expense of approximately $15 million in 2017, including the mark-to-market remeasurement lossesmake payments of approximately $4 million recorded duringto its other postretirement benefit plans in 2023. Excluding mark-to-market charges, the first quarter,Company expects higher pension and other postretirement benefits expense in 2023 compared with pension expense of $73.4 million in 2016, which included approximately $60 million of mark-to-market remeasurement losses. The amount for 2017 does not include actuarial gains and losses that will be recognized immediately through earnings as a result of the remeasurement ofto 2022 primarily due to lower expected returns on pension plan assets and obligations in the fourth quarter of 2017.
higher interest expense.
The Company does not have any off-balance sheet arrangements with unconsolidated entities or other persons.

Critical Accounting Policies and Estimates:CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's financial statements are prepared in accordance with accounting principles generally accepted in the U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The Company reviews its critical accounting policies throughout the year. The Company has concluded that there have been no significant changes to its critical accounting policies or estimates, as described in its Annual Report on Form 10-K for the year ended December 31, 2016,2022, during the ninesix months ended SeptemberJune 30, 20172023.
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other than the change in accounting principles described below.Table of Contents

Benefit Plans:OTHER MATTERS
Effective January 1, 2017, the Company voluntarily changed its accounting principles for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans, with retrospective application to prior periods. Prior to 2017, the Company amortized, as a component of pension and other postretirement expense, unrecognized actuarial gains and losses (included within Accumulated other comprehensive income (loss)) over the average remaining service period of active plan participants expected to receive benefits under the plan, or average remaining life expectancy of inactive plan participants when all or almost all of individual plan participants were inactive. The Company also historically calculated the market-related value of plan assets based on a five-year market adjustment. Under the new principles, actuarial gains and losses will be immediately recognized through net periodic benefit cost in the Statement of Income, upon the annual remeasurement in the fourth quarter, or on an interim basis if specific events trigger a remeasurement. In addition, the Company has changed its accounting policy for measuring the market-related value of plan assets from a calculated amount (based on a five-year smoothing of asset returns) to fair value. The Company believes these changes are preferable as they result in an accelerated recognition of actuarial gains and losses and changes in fair value of plan assets in its Consolidated Statement of Income, which provides greater transparency and better aligns with fair value principles by fully reflecting the impact of interest rate and economic changes on the Company's pension and other postretirement benefit liabilities and assets in the Company's operating results in the year in which the gains and losses are incurred.

Other Matters

Foreign Currency:

Assets and liabilities of subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rates of exchange prevailing each month during the quarter.reporting period. Related translation adjustments are reflected as a separate component of accumulated other comprehensive income (loss).loss. Foreign currency gains and losses resulting from transactions, and the related hedging activity, are included in the Consolidated StatementStatements of Income.

For the ninesix months ended SeptemberJune 30, 2017,2023, the Company recorded positivenegative foreign currency translation adjustments of $40.9$0.2 million that increaseddecreased shareholders' equity, compared with a positivenegative foreign currency translation adjustments of $3.3$134.2 million that increaseddecreased shareholders' equity for the ninesix months ended SeptemberJune 30, 2016.2022. The foreign currency translation adjustments for the ninesix months ended SeptemberJune 30, 20172023 were positively impacted by the weakening of the U.S. dollar relative to other foreign currencies, including the Romanian Leu, Chinese Yuan, Indian Rupee and Polish Zloty.Euro.

Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the third quarterthree months ended June 30, 2023 totaled $1.7 million of 2017 were $1.2 million,net gains, compared with losses$2.3 million of $2.8 millionnet gains during the third quarter of 2016.three months ended June 30, 2022. Foreign currency exchange gains and losses, net of hedging activity, resulting from transactions included in the Company's operating results for the first ninesix months ended June 30, 2023 totaled $1.3 million of 2017 were $2.6 million,net losses, compared with losses$4.6 million of $5.8net gains during the six months ended June 30, 2022.
Russia Operations:
The Company had two subsidiaries in Russia prior to Russia's invasion of Ukraine in February 2022, including Timken Russia, which was 100% owned by Timken and a 51%-owned joint venture to serve the Russian rail market ("Rail JV"). As a result of Russia's invasion of Ukraine (and associated sanctions), the Company suspended operations and recorded property, plant and equipment impairment charges of $9.0 million and inventory write-downs of $4.1 million during the first year ended December 31, 2022. During the third quarter of 2022, the Company sold its Timken Russia business resulting in a loss of $2.7 million on the sale. After giving effect to these impairments and write-downs, as well as the sale of Timken Russia, as of June 30, 2023, the Company has net assets (net of noncontrolling interest of $4.4 million), totaling $7.1 million on its Consolidated Balance Sheet related to its Rail JV. Net assets include $6.9 million of cash and cash equivalents that the Company has classified as restricted as the Company is presently unable to repatriate these funds to one of its subsidiaries outside of Russia. The Company will continue to monitor the events in Russia and Ukraine and may record additional asset impairments or other losses in the future.
Quarterly Dividend:
On August 2, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.33 per common share. The quarterly dividend will be paid on August 28, 2023 to shareholders of record as of August 15, 2023. This will be the 405nineth monthsconsecutive quarterly dividend paid on the common shares of 2016.the Company.

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Forward-Looking Statements

NON-GAAP MEASURES
Supplemental Non-GAAP Measures:
In addition to results reported in accordance with U.S. GAAP, the Company provides information on non-GAAP financial measures. These non-GAAP financial measures include adjusted net income, adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margins, segment adjusted EBITDA and segment adjusted EBITDA margins, ratio of net debt to adjusted EBITDA (for the trailing 12 months), net debt, ratio of net debt to capital and free cash flow. This information is intended to supplement GAAP financial measures and is not intended to replace GAAP financial measures. Net debt and the ratio of net debt to capital is disclosed in the "Liquidity and Capital Resources" section of Management's Discussion and Analysis of Financial Condition and Results of Operations.
Adjusted Net Income and Adjusted EBITDA:
Adjusted net income and adjusted earnings per share represent net income attributable to The Timken Company and diluted earnings per share, respectively, adjusted for intangible amortization, impairment, restructuring and reorganization charges, acquisition costs, including transaction costs and the amortization of the inventory step-up, property losses and recoveries, actuarial gains and losses associated with the remeasurement of the Company's defined benefit pension and other postretirement benefit plans, gains and losses on the sale of real estate, gains and losses on divestitures, the income tax impact of these adjustments, as well as other discrete income tax items, and other items from time to time that are not part of the Company's core operations. Management believes adjusted net income and adjusted earnings per share are useful to investors as they are representative of the Company's core operations and are used in the management of the business.
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, adjusted for items that are not part of the Company's core operations. These items include intangible amortization, impairment, restructuring and reorganization charges, acquisition costs, including transaction costs and the amortization of the inventory step-up, property losses and recoveries, actuarial gains and losses associated with the remeasurement of the Company's defined benefit pension and other postretirement benefit plans, gains and losses on the sale of real estate, gains and losses on divestitures, and other items from time to time that are not part of the Company's core operations. Management believes adjusted EBITDA is useful to investors as it is representative of the Company's core operations and is used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.

43
Reconciliation of net income attributable to The Timken Company to adjusted net income, adjusted EBITDA and adjusted EBITDA Margin:
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Net Sales$1,272.3$1,153.7$2,535.1 $2,278.3 
Net Income Attributable to The Timken Company125.2105.0247.5 223.2 
Net Income Attributable to The Timken Company
     as a Percentage of Sales		9.8 %9.1 %9.8 %9.8 %
Adjustments:
Acquisition intangible amortization17.310.630.8 21.5 
Impairment, restructuring and reorganization
     charges (1)
6.12.136.1 3.7 
Corporate pension and other postretirement benefit
     related (income) expense (2)
(1.0)11.6(1.9)14.2 
Russia-related charges (3)
(0.1)8.40.2 13.0 
Acquisition-related charges (4)
3.81.68.5 2.7 
Loss (gain) on divestitures and sale of certain
     assets (5)
0.4(0.1)(4.4)(0.1)
Noncontrolling interest of above adjustments—(4.5)(0.2)(5.8)
Provision for income taxes (6)
(5.6)(2.9)(17.0)(10.8)
Adjusted Net Income$146.1$131.8$299.6 $261.6 
Net income attributable to noncontrolling interest4.30.67.7 4.3 
Provision for income taxes (as reported)47.144.089.6 82.2 
Interest expense28.318.352.4 32.6 
Interest income(1.9)(1.0)(3.4)(1.6)
Depreciation and amortization expense (7)
50.840.796.2 82.1 
Less: Acquisition intangible amortization17.3 10.6 30.8 21.5 
Less: Noncontrolling interest—(4.5)(0.2)(5.8)
Less: Provision for income taxes (6)
(5.6)(2.9)(17.0)(10.8)
Adjusted EBITDA$263.0 $231.2 $528.5 $456.3 
Adjusted EBITDA Margin (% of net sales)20.7 %20.0 %20.8 %20.0 %
Diluted earnings and adjusted earnings per share in the table below are based on net income attributable to The Timken Company and adjusted net income, respectively, in the table above.
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Diluted earnings per share (EPS)$1.73 $1.42 $3.39 $2.98 
Adjusted EPS$2.01 $1.78 $4.11 $3.49 
Diluted Shares72,512,991 74,182,793 72,907,804 74,877,248 







44

Reconciliation of segment EBITDA to segment adjusted EBITDA and segment adjusted EBITDA margin:
Three Months Ended June 30, 2023
Engineered BearingsIndustrial MotionUnallocated CorporateTotal
Net Sales$857.2$415.1$—$1,272.3
EBITDA185.580.9(12.2)254.2
Impairment, restructuring and reorganization
     charges (1)
4.11.50.15.7
Corporate pension and other postretirement benefit
     related income (2)
——(1.0)(1.0)
Russia-related charges (3)
(0.1)——(0.1)
Acquisition-related charges (4)
0.13.10.63.8
Loss on divestitures and sale of certain assets (5)
—0.4—0.4
Adjusted EBITDA$189.6$85.9$(12.5)$263.0
Adjusted EBITDA Margin (% of net sales)22.1 %20.7 %NM20.7 %
Three Months Ended June 30, 2022
Engineered BearingsIndustrial MotionUnallocated CorporateTotal
Net Sales$798.3$355.4$—$1,153.7
EBITDA167.565.1(25.0)207.6
Impairment, restructuring and reorganization
     charges (1)
0.61.5—2.1
Corporate pension and other postretirement
     benefit related expense (2)
——11.611.6
Russia-related charges (3)
8.4——8.4
Acquisition-related charges (4)
—1.00.61.6
Loss (gain) on divestitures and sale of certain
     assets (5)
0.1(0.2)—(0.1)
Adjusted EBITDA$176.6$67.4$(12.8)$231.2
Adjusted EBITDA Margin (% of net sales)22.1 %19.0 %NM20.0 %
Six Months Ended June 30, 2023
Engineered BearingsIndustrial MotionUnallocated CorporateTotal
Net Sales$1,757.9 $777.2 $— $2,535.1 
EBITDA390.5 129.1 (29.0)490.6 
Impairment, restructuring and reorganization
     charges (1)
5.2 30.2 0.1 35.5 
Corporate pension and other postretirement benefit
     related income (2)
— — (1.9)(1.9)
Russia-related charges (3)
0.2 — — 0.2 
Acquisition-related charges (4)
2.3 3.1 3.1 8.5 
(Gain) loss on divestitures and sale of certain
     assets (5)
(4.8)0.4 — (4.4)
Adjusted EBITDA$393.4 $162.8 $(27.7)$528.5 
Adjusted EBITDA Margin (% of net sales)22.4 %20.9 %NM20.8 %
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Six Months Ended June 30, 2022
Engineered BearingsIndustrial MotionUnallocated CorporateTotal
Net Sales$1,570.7 $707.6 $— $2,278.3 
EBITDA335.8 127.5 (40.5)422.8 
Impairment, restructuring and reorganization
     charges (1)
1.6 2.1 — 3.7 
Corporate pension and other postretirement
     benefit related expense (2)
— — 14.2 14.2 
Russia-related charges (3)
13.0 — — 13.0 
Acquisition-related charges (4)
— 1.4 1.3 2.7 
Gain on divestitures and sale of certain assets (5)
$0.1 $(0.2)— $(0.1)
Adjusted EBITDA$350.5 $130.8 $(25.0)$456.3 
Adjusted EBITDA Margin (% of net sales)22.3 %18.5 %NM20.0 %
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; and (iv) impairment of assets. Impairment, restructuring and reorganization charges for 2023 included $28.3 million related to the impairment of goodwill. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.
(2) Corporate pension and other postretirement benefit related (income) expense represents actuarial (gains) and losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial (gains) and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to Note 16 - Retirement Benefit Plans and Note 17 - Other Postretirement Benefit Plans for additional discussion.
(3) Russia-related charges include impairments and allowances recorded against certain property, plant and equipment, inventory and trade receivables to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations. In addition to impairments and allowances recorded, the Company recorded a loss on the divestiture of its Timken Russia business during the fourth quarter of 2022. Refer to Russia Operations on page 42 above for additional information.
(4) Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact.
(5) Represents the net loss (gain) resulting from divestitures and the sale of certain assets.
(6) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods.
(7) Depreciation and amortization shown excludes depreciation recognized in reorganization charges, if any.
Free Cash Flow:
Free cash flow represents net cash provided by (used in) operating activities less capital expenditures. Management believes free cash flow is useful to investors because it is a meaningful indicator of cash generated from operating activities available for the execution of its business strategy.
Reconciliation of net cash provided by operating activities to free cash flow:
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Net cash provided by operating activities$144.0 $78.3 $222.6 $77.1 
Capital expenditures(49.6)(40.9)(91.3)(75.2)
Free cash flow$94.4 $37.4 $131.3 $1.9 
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Ratio of Net Debt to Adjusted EBITDA:
The ratio of net debt to adjusted EBITDA for the trailing twelve months represents total debt less cash and cash equivalents divided by adjusted EBITDA for the trailing twelve months. The Company presents net debt to adjusted EBITDA because it believes it is more representative of the Company's financial position as it is reflective of the Company's ability to cover its net debt obligations with results from its core operations. Net income for the trailing twelve months ended June 30, 2023 and December 31, 2022 was $444.7 million and $417.0 million, respectively. Net debt to adjusted EBITDA for the trailing twelve months was 1.9 at June 30, 2023 and December 31, 2022.
Reconciliation of Net income to Adjusted EBITDA for the trailing twelve months:
Twelve Months Ended
June 30,
2023		December 31,
2022
Net income$444.7 $417.0 
Provision for income taxes141.3 133.9 
Interest expense94.4 74.6 
Interest income(5.6)(3.8)
Depreciation and amortization178.7 164.0 
Consolidated EBITDA853.5 785.7 
Adjustments:
Impairment, restructuring and reorganization charges (1)
$71.3 $39.5 
Corporate pension and other postretirement benefit related (income) expense (2)
(13.2)2.9 
Acquisition-related charges (3)
20.6 14.8 
Gain on divestitures and sale of certain assets (4)
(7.2)(2.9)
Russia-related charges (5)
2.8 15.6 
Tax indemnification and related items0.3 0.3 
   Total adjustments74.6 70.2 
Adjusted EBITDA$928.1 $855.9 
Net Debt$1,755.4 $1,631.6 
Ratio of Net Debt to Adjusted EBITDA1.9 1.9 
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; and (iv) impairment of assets. Impairment, restructuring and reorganization charges for the twelve months ended December 31, 2022 and June 30, 2023 included $29.3 million related to the sale of ADS. In addition, impairment, restructuring and reorganization charges for the twelve months ended June 30, 2023 included $28.3 million related to the impairment of goodwill. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.
(2) Corporate pension and other postretirement benefit related (income) expense represents actuarial (gains) and losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial (gains) and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement.
(3) Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact.
(4) Represents the net gain resulting from divestitures and the sale of certain assets.
(5) Russia-related charges include allowances and impairments recorded against certain trade receivables, inventory and other assets to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations. In addition to impairments and allowances recorded, the Company recorded a loss on the divestiture of its Timken Russia business during the fourth quarter of 2022. Refer to Russia Operations on page 42 in Management Discussion and Analysis for additional information.
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FORWARD-LOOKING STATEMENTS
Certain statements set forth in this Form 10-Q and in the Company's Annual Report on Form 10-K for the year ended December 31, 20162022 that are not historical in nature (including the Company's forecasts, beliefs and expectations) are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, Management's Discussion and Analysis contains numerous forward-looking statements. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Form 10-Q. The Company cautions readers that actual results may differ materially from those expressed or implied in forward-looking statements made by or on behalf of the Company due to a variety of factors, such as:

•deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which the Company conductsor its customers or suppliers conduct business, including additional adverse effects from thea global economic slowdown or recession, terrorism, or hostilities. This includes: political risks associated with the potential instability of governments and legal systems in countries in which the Company or its customers or suppliers conduct business, and changes in currency valuations;valuations and recent world events that have increased the risks posed by international trade disputes, tariffs and sanctions;
•negative impacts to the Company's business, results of operations, financial position or liquidity, disruption to the Company's supply chains, negative impacts to customer demand or operations, and availability and health of employees, as a result of COVID-19 or other pandemics and associated governmental measures such as restrictions on travel and manufacturing operations;
•the effects of fluctuations in customer demand on sales, product mix and prices in the industries in which the Company operates. This includes: the ability of the Company to respond to rapid changes in customer demand, disruptions to the Company's supply chain, logistical issues associated with port closures or congestion, delays or increased costs, the effects of customer or supplier bankruptcies or liquidations, the impact of changes in industrial business cycles, the effects of distributor inventory corrections reflecting de-stocking of the supply chain and whether conditions of fair trade continue in the U.S.Company's markets;
•competitive factors, including changes in market penetration, increasing price competition by existing or new foreign and domestic competitors, the introduction of new products or services by existing and new competitors, competition for skilled labor and new technology that may impact the way the Company’s products are produced, sold or distributed;
•changes in operating costs. This includes: the effect of changes in the Company’s manufacturing processes; changes in costs associated with varying levels of operations and manufacturing capacity; availability and cost of raw materials and energy; disruptions to the Company's supply chain and logistical issues associated with port closures or congestion, delays or increased costs; changes in the expected costs associated with product warranty claims; changes resulting from inventory management and cost reduction initiatives and different levels of customer demands;initiatives; the effects of unplanned plant shutdowns; the effects of government-imposed restrictions, commercial requirements and Company goals associated with climate change and emissions or other waste reduction initiatives; and changes in the cost of labor and benefits;
•the impact of inflation on employee expenses, shipping costs, raw material costs, energy and fuel costs and other production costs;
•the success of the Company’s operating plans, announced programs, initiatives and capital investments; the ability to complete previously announced transactions; the ability to integrate acquired companies;companies and to address material issues both identified and not uncovered during the Company's due diligence review; and the ability of acquired companies to achieve satisfactory operating results, including results being accretive to earnings;earnings, realization of synergies and expected cash flow generation;
•the Company’s ability to maintain appropriate relations with unions or works councils that represent Company associates in certain locations in order to avoid disruptions of business; the continued attraction, retention and development of management and other key employees, the successful development and execution of succession plans and management of other human capital matters;
•unanticipated litigation, claims, investigations or assessments. This includes: claims, investigations or problems related to intellectual property, product liability or warranty, foreign export, sanctions and trade laws, government procurement regulations, competition and anti-bribery laws, climate change, environmental or health and safety issues, data privacy and taxes;

48
•changes in worldwide financial and capital markets includingimpacting the availability of financing on satisfactory terms, as a result of financial stress affecting the banking system or otherwise, and the rising interest rates,rate environment, which affect the Company’s cost of funds and/or ability to raise capital, as well as customer demand and the ability of customers to obtain financing to purchase the Company’s products or equipment that contain the Company’s products;
•the Company's ability to satisfy its obligations and comply with covenants under its debt agreements, maintain favorable credit ratings and its ability to renew or refinance borrowings on favorable terms;
•the impact on the Company's pension obligations and assets due to changes in interest rates, investment performance and other tactics designed to reduce risk; and
retention of CDSOA distributions; and
•
those items identified under Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.•those items identified under Item 1A. "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 or this Form 10-Q.
Additional risks relating to the Company's business, the industries in which the Company operates, or the Company's common shares may be described from time to time in the Company's filings with the Securities and Exchange Commission. All of these risk factors are difficult to predict, are subject to material uncertainties that may affect actual results and may be beyond the Company's control.
Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered to be a complete list. 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to information appearing under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q. Furthermore, a discussion of market risk exposures is included in Part II, Item 7A. Quantitative and Qualitative Disclosure about Market Risk, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2022. There have been no material changes in reported market risk since the inclusion of this discussion in the Company’s Annual Report on Form 10-K referenced above.
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ITEM 4. CONTROLS AND PROCEDURES

(a)Disclosure Controls and Procedures

(a)Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)). Based upon that evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.
(b)Changes in Internal Control Over Financial Reporting

(b)Changes in Internal Control Over Financial Reporting
During the Company’s most recent fiscal quarter ended June 30, 2023, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

On April 4, 2023, the Company completed the acquisition of Nadella. The results of this acquisition are included in the Company's consolidated financial statements for the first six months of 2023. The total and net assets of Nadella represented 6% of the Company's total assets and 12% of the Company's net assets as of June 30, 2023. The net sales of Nadella represented 1% of the Company's consolidated net sales for the first six months of 2023.

On January 31, 2023, the Company completed the acquisition of ARB. The results of this acquisition are included in the Company's consolidated financial statements for the first six months of 2023. The total and net assets of ARB represented less than 1% of the Company's total assets and net assets as of June 30, 2023. The net sales of ARB represented less than 1% of the Company's consolidated net sales for the first six months of 2023.
The scope of the Company's assessment of the effectiveness of internal control over financial reporting will not include the ARB and Nadella acquisition's noted above. This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from the Company's scope in the year of acquisition.
On November 4, 2022, the Company completed the acquisition of GGB. The results of this acquisition are included in the Company's consolidated financial statements for the first six months of 2023. The total and net assets of GGB represented 6% of the Company's total assets and 13% of the Company's net assets as of June 30, 2023. The net sales of GGB represented 4% of the Company's consolidated net sales for the first six months of 2023.
On May 31, 2022, the Company completed the acquisition of Spinea. The results of this acquisition are included in the Company's consolidated financial statements for the first six months of 2023. The total and net assets of Spinea represented 3% of the Company's total assets and 5% of the Company's net assets as of June 30, 2023. The net sales of Spinea represented less than 1% of the Company's consolidated net sales for the first six months of 2023.
The Company is currently integrating these acquisitions into its internal control framework and processes, and as prescribed by U.S Securities and Exchange Commission rules and regulations, the Company will include Spinea and GGB in the internal control over financial reporting assessment as of December 31, 2023.
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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various claims and legal actions arising in the ordinary course of business. U.S. Securities and Exchange Commission ("SEC") regulations require us to disclose certain information about environmental proceedings when a governmental authority is a party to the proceedings if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to such regulations, the Company uses the maximum permitted threshold of $1 million or more for purposes of determining whether disclosure of any such proceedings is required. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Item 1A. Risk Factors

OurThe Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2022, included a detailed discussion of our risk factors. There have been no material changes to the risk factors included in the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2016.2022. Investors should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Common Shares

The following table provides information about purchases by the Company of its common shares during the quarter ended June 30, 2023.
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)
4/1/2023 - 4/30/2023270,298 $77.59 270,000 4,858,990 
5/1/2023 - 5/31/2023476,532 74.88 460,000 4,398,990 
6/1/2023 - 6/30/2023535,833 82.62 535,000 3,863,990 
Total1,282,663 $78.68 1,265,000 — 
(1)September 30, 2017Of the shares purchased in. April, May and June, 298, 16,532 and 833, respectively, represent common shares of the Company that were owned and tendered by employees to exercise stock options and to satisfy withholding obligations in connection with the exercise of stock options or vesting of restricted shares.
(2)For shares tendered in connection with the vesting of restricted shares, the average price paid per share is an average calculated using the daily high and low of the Company's common shares as quoted on the New York Stock Exchange at the time of vesting. For shares tendered in connection with the exercise of stock options, the price paid is the real-time trading stock price at the time the options are exercised.
(3)On February 12, 2021, the Company's Board of Directors approved a new share purchase plan, effective March 1, 2021, pursuant to which the Company may purchase up to ten million of its common shares, in the aggregate. This share purchase plan expires on February 28, 2026. Under this plan, the Company may purchase shares from time to time in open market purchases or privately negotiated transactions, and it may make all or part of the purchases pursuant to accelerated share repurchases or Rule 10b5-1 plans.
Item 5. Other Information
During the fiscal quarter ended June 30, 2023 no director or officer (as defined in Exchange Act Rule 16a-1(f)) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Regulation 408(a) of Regulation S-K.
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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)

7/1/17 - 7/31/1766,761
$46.96
64,000
9,368,000
8/1/17 - 8/31/17233,321
44.31
206,000
9,162,000
9/1/17 - 9/30/1743,397
46.36
42,000
9,120,000
Total343,479
$45.09
312,000
9,120,000
Table of Contents
(1)Of the shares purchased in July, August and September, 2,761, 27,321 and 1,397, respectively, represent common shares of the Company that were owned and tendered by employees to exercise stock options and to satisfy withholding obligations in connection with the exercise of stock options and vesting of restricted shares.
(2)For shares tendered in connection with the vesting of restricted shares, the average price paid per share is an average calculated using the daily high and low of the Company's common shares as quoted on the New York Stock Exchange at the time of vesting. For shares tendered in connection with the exercise of stock options, the price paid is the real-time trading stock price at the time the options are exercised.
(3)On February 6, 2017, the Board of Directors of the Company approved a share purchase plan pursuant to which the Company may purchase up to ten million of its common shares in the aggregate. This share repurchase plan expires on February 28, 2021. The Company may purchase shares from time to time in open market purchases or privately negotiated transactions. The Company may make all or part of the purchases pursuant to accelerated share repurchases or Rule 10b5-1 plans.

Item 6. Exhibits

3.1
Amended Articles of Incorporation of the Registrant, effective May 11, 2023.
1231.1
Computation of Ratio of Earnings to Fixed Charges.
31.1
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.
31.2
Certification of Philip D. Fracassa, Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) of The Timken Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32
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 and principal accounting officer) of The Timken Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
Financial statements from the quarterly report on Form 10-Q of The Timken Company for the quarter ended SeptemberJune 30, 2017,2023 filed on October 25, 2017,August 3, 2023, 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.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
THE TIMKEN COMPANY 
Date: August 3, 2023
THE TIMKEN COMPANY
Date: October 25, 2017By: /s/ Richard G. Kyle
Richard G. Kyle

President and Chief Executive Officer

(Principal Executive Officer)
Date: October 25, 2017August 3, 2023By: /s/ Philip D. Fracassa
Philip D. Fracassa

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

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