EX-99.1

FORWARD-LOOKING

STATEMENTS

SAFE

HARBOR

AND

NON-GAAP

FINANCIAL

INFORMATION

Certain statements in this presentation (including statements regarding the company's forecasts, beliefs,

estimates and expectations) that are not historical in nature are "forward-looking" statements within the

meaning of the Private Securities Litigation Reform Act of 1995.

In particular, the statements related to

Timken’s plans, outlook, future financial performance, targets, projected sales, cash flows, and liquidity,

including

the

information

under

the

heading

“The

Strategy

Working:

Key

Takeaways,”

“Attractiveness

/Strategic Priorities,”

“2013 Full Year Outlook,”

“Sales,”

“Earnings Per Share,”

“Free Cash Flow,”

“Capital

Spending,”

“Pension,”

and “Return on Invested Capital”

are forward-looking. The company cautions that

actual results may differ materially from those projected or implied in forward-looking statements due to

a variety of important factors, including: the company’s ability to respond to the changes in its end

markets that could affect demand for the company’s products; unanticipated changes in business

relationships with customers or their purchases from the company; changes in the financial health of the

company’s customers, which may have an impact on the company’s revenues, earnings and impairment

charges; fluctuations in raw-material and energy costs and their impact on the operation of the

company’s surcharge mechanisms; the impact of the company’s last-in, first-out accounting; weakness

in global or regional economic conditions and financial markets;

changes in the expected costs

associated with product warranty claims; the ability to integrate acquired companies to achieve

satisfactory operating results; the impact on operations of general economic conditions, higher or lower

raw-material and energy costs, fluctuations in customer demand, the company’s ability to achieve the

benefits of its ongoing programs, initiatives & capital investments, and retention of CDSOA distributions.

Additional factors are discussed in the company’s filings with the Securities and Exchange Commission,

including the company’s annual report on Form 10-K for the year ended Dec. 31, 2012, quarterly reports

on Form 10-Q and current reports on Form 8-K. The company undertakes no obligation to update or

revise any forward-looking statement.

This presentation includes certain non-GAAP financial measures as defined by the rules and regulations

of the Securities and Exchange Commission. A reconciliation of those measures to the most

directly comparable GAAP equivalent is provided in the Appendix to this presentation.

OUR

BUSINESS

Sales: $1.7 Billion

EBIT

Margin:

14.6%

High-performance,

customized alloy steels

Note: Based on 2012 financial results. EBIT Margin is defined as EBIT divided by net sales.

Steel segment sales include $101.2 million of inter-segment sales.

2012 Total

Sales: $5.0

Billion

Sales: $1.3 Billion

EBIT

Margin:

20.5%

Global growth beyond

bearings, diversified,

strong aftermarket

Sales: $347 million

EBIT

Margin:

10.5%

Diversified into

transmissions and

aftermarket

Sales: $1.7 Billion

EBIT

Margin:

12.4%

Transformed

portfolio, more

aftermarket focus

Aerospace

& Defense

Process

Industries

27%

Mobile

Industries

34%

Steel

32%

STRONG

TIES

BETWEEN

BUSINESS

DRIVE

VALUE

•

Best in class provider of high

performance products for demanding

conditions

•

Technical knowledge

•

Research synergies

•

Production capabilities

•

Application engineering

•

Supply-chain efficiencies

•

Manufacturing efficiencies

•

Value-based pricing

•

Ability to leverage

investments across platform

•

Customer service and delivery

Process Industries | Mobile Industries

Steel | Aerospace & Defense

•

Automotive

Common End-

Market Sectors

•

Construction

•

Energy

Shared

Customers

Shared

Expertise

Operating

Efficiencies

Combined platform drives performance and value

•

Aerospace & Defense

•

Mining

•

Agriculture

•

Industrial Machinery

•

Rail

•

Heavy Truck

(1)

Source: Most recent company filings and FactSet as of February 22, 2013. Represents average of 2008 through 2012. Tax rate

assumed at 35% for U.S. companies and 26% for NSK, NTN, and JTEKT. Results exclude U.S. Continued Dumping Subsidy Offset Act

(CDSOA) receipts and impairment and restructuring expense. See Appendix for reconciliation of EBITDA and ROIC to the most directly

comparable GAAP equivalents. EBITDA and ROIC are not defined under U.S. GAAP and should not be considered in isolation or as a

substitute for measures of our performance prepared in accordance with GAAP. Because not all companies use identical calculations,

the presentation of EBITDA and ROIC may not be comparable to other similarly titled measures of other companies.

(2)

Comparable companies include: AK Steel, Allegheny Technologies, Altra, Carpenter Technology, JTEKT, Kennametal, NSK, NTN, Nucor,

SKF, Steel Dynamics, and US Steel.

THE

STRATEGY

WORKING: TIMKEN

HAS

DELIVERED

TOP

QUARTILE

PERFORMANCE

•

Timken has delivered

top quartile performance

versus comparable

companies in:

•

EBITDA margin

•

Return on invested

capital (ROIC)

5 Year Average

(1)

(2)

16%

14%

12%

10%

9.7%

14.9%

6.8%

13.3%

EBITDA Margin

ROIC

Comparable Company Average

Timken

DELIVERING

STRONG

TOTAL

SHAREHOLDER

RETURNS

S&P 500

Source:

Factset as of December 31, 2012.

(1)

Bearings & Power Transmission (B&PT) comparable companies include: Altra, JTEKT, Kennametal, NSK, NTN, and SKF.

(2)

Steel comparable companies include: AK Steel, Allegheny Technologies, Carpenter Technology, Nucor, Steel Dynamics,

and US Steel.

Timken

Kennametal

Carpenter

Altra

Nucor

SKF

Allegheny

NSK

Steel Dynamics

JTEKT

NTN

US Steel

AK Steel

S&P 500

SKF

Altra

Timken

Kennametal

NSK

Carpenter

Nucor

Steel Dynamics

JTEKT

Allegheny

NTN

US Steel

AK Steel

S&P 500

111.1%

99.6%

79.8%

60.4%

43.4%

27.9%

1.9%

(5.6%)

(16.3%)

(27.4%)

(27.5%)

(38.8%)

(55.6%)

(76.1%)

(120.0%)

(40.0%)

0.0%

40.0%

80.0%

120.0%

160.0%

(80.0%)

77.2%

55.9%

33.6%

12.4%

(2.9%)

(14.2%)

(26.6%)

(42.5%)

(47.8%)

(55.5%)

(60.7%)

(71.4%)

(78.5%)

(88.1%)

(120.0%)

(40.0%)

0.0%

40.0%

80.0%

Steel

(2)

(80.0%)

B&PT

(1)

Timken

Last 3 Years –

Total Shareholder Return

Last 5 Years –

Total Shareholder Return

•

Capture lifetime of revenue opportunity

•

Leverage distribution channel

•

Opportunities for cross-selling and development of product lines

•

Global expansion

Sales: $100M

Product Offering

Engineered chains

and augers

Sales: $85M

Product Offering

Engineered gear

drive repair and

manufacture

Sales: $30M

Product Offering

Critical motor and

generator services, and

up-tower wind

maintenance and repair

Sales: $23M

Product Offering

Mounted spherical

roller bearings and

couplings

NEW

ACQUISITIONS, NEW

CAPABILITIES

Differentiated performance •

Industrial focus •

Strong aftermarket •

Supply chain synergy

October 1, 2011

July 1, 2011

December 31, 2012

September 21, 2010

Growth Synergies

Note: Sales for Wazee Companies, Philadelphia Gear and Drives reflect last 12-month sales at time of purchase. QM Bearings

sales reflect full-year 2011.

DELIVERING SUPERIOR FINANCIAL PERFORMANCE

3 year average EBIT Margins

3 year average ROIC

14%

19%

13%

10%

15%

20%

25%

Mobile

Process

Aerospace

Steel

Timken

15%

19%

17%

10%

15%

20%

25%

Mobile

Process

Aerospace

Steel

Timken

Note: The above data represents an average of 2010 through 2012. Segment returns have been adjusted to reflect a

proportionate amount of unallocated corporate expenses. Tax rate assumed at 35% for ROIC calculations. Results exclude

CDSOA receipts and impairment and restructuring charges. See Appendix for reconciliation of ROIC and consolidated EBIT to

the most directly comparable GAAP equivalents.

MOBILE

INDUSTRIES

•

Bearings, power transmission components

and related products and services

•

Serves diverse market sectors

•

Customers: OEM and aftermarket

distributors

•

Portfolio shift toward attractive markets;

•

In 2005 passenger car and light truck

was 54% of the portfolio versus 29% in

2012

2012 sales: $1.7B

•

Profitability turn-around; achieving

returns in excess of cost of capital

•

Capitalizing on mining, agricultural and

commercial transportation demand while

managing strategic pricing initiative

•

Strategy –

provide high-value power

transmission products and services

focused on demanding applications to

global OE and aftermarket channels

Based on 2012 sales of $1.7 billion.

Segment Overview

Geographic Sales

Attractiveness/Strategic Priorities

Sector Profile

Rail 17%

Off-

Highway

30%

Light Truck

19%

Passenger

Car 10%

Heavy

Truck 10%

On-

Highway

Aft Mkt

14%

Latin

America

Asia

ROW

Europe

U.S.

10%

12%

17%

56%

PROCESS

INDUSTRIES

•

Precision-engineered bearings and related

mechanical components and services for

diverse industrial markets

•

Diverse and global customer base

•

~60% aftermarket in 2012; consistent,

profitable business

•

Diversified product portfolio

•

52% tapered roller bearings in 2012

versus 96% in 2000

•

Growing market share in spherical &

cylindrical roller bearings, housed units,

other bearings & services

2012 sales: $1.3B

•

Extensive global portfolio of differentiated

mechanical power transmission products

and services

•

Strong distribution channels to maximize

lifetime profit

•

Aggressive annual sales growth; gaining

share and unlocking new mechanical

power transmission opportunities

•

Strategy -

focus on end-user value chain

and needs

Based on 2012 sales of $1.3 billion.

Segment Overview

Sector Profile

Geographic Sales

Attractiveness/Strategic Priorities

Latin

America

ROW

Europe

Asia

U.S.

16%

22%

51%

Machinery

Energy

Gear Drives

Infrastructure

Metals 8%

Service 13%

Aftermarket

61%

AEROSPACE

& DEFENSE

•

Power transmission systems and

flight-critical components for civil

and military aircraft

•

Top 10 aerospace platforms represent

~ 40% of sales in 2012

•

Aftermarket engine overhaul,

replacement parts, bearing and

component repair

•

Strong aftermarket channel

•

Health and positioning control applications

2012 sales: $0.3B

•

Leverage strong commercial and

improving general aviation market

sectors serving diverse platforms while

defense market sectors have bottomed

•

Strong execution combined with

improving markets and targeted

channels have led to growth and a

return to attractive profitability

•

Strategy –

provide a globally diverse

portfolio focused on growing platforms

through OE & aftermarket channels

Segment Overview

Sector Profile

Product Offering Beyond Bearings

Attractiveness/Strategic Priorities

Motion

Control

Civil 38%

Defense

20%

42%

STEEL

•

Market leadership position in high quality

air-melted alloy steel bars, tubes,

precision components and value-added

services

•

Bars: 1”

to 16”

•

Serving niche high-end applications

where demands on performance are

significant

•

Special machining characteristics

•

Resistance to heat, stresses or wear

•

High strength or other traits

•

Tubes: 2”

to 13”

2012 sales: $1.7B

Differentiated Solutions

•

An improved variable cost structure

•

More than half of our specialized products

cannot be competitively replicated in

North America today

•

450 grades of high-performance steels;

for power transmission applications

•

Know-how to design custom solutions

with strength where it matters

•

Efficient supply chains

Segment Overview

Attractiveness/Strategic Priorities

Sector Profile

Passenger Car

15%

Light

Truck

13%

Heavy

/Med.Truck

Oil & Gas

26%

General

Industrial

12%

Distribution

10%

Machinery 7%

Industrial

Bearings 6%

Mining 3%

Constr. 2%

Rail 2%

Military & Def

Agriculture

Power

Generation

2012 RESULTS

Sales of $5.0B, down 4% from prior year

•

Reduced light vehicle, heavy truck, industrial machinery, and

oil & gas market demand in the second half, as well as lower

surcharges and currency negatively impacted sales

•

Top line benefited from pricing, the Philadelphia Gear and

Drives acquisitions, and strength in the rail and aerospace &

defense markets

EBIT of $794M, or 15.9% of sales

•

Includes CDSOA receipts of $108M & St. Thomas plant

closure costs of $29M

•

Earnings benefited from improved pricing, lower material

costs, LIFO income and acquisitions, partially offset by lower

volume, mix, surcharges and manufacturing costs

EPS of $5.07 per diluted share vs. prior year $4.59

•

Includes CDSOA receipts of $0.69 per share & St. Thomas

plant closure costs of $0.28 per share

Note: See Appendix for reconciliation of EBIT to the most directly comparable GAAP equivalent. CDSOA is a reference to

the US Continued Dumping Subsidy and Offset Act.

$5,170

$4,987

2011

2012

Sales

($ Mils.)

14.1%

15.9%

2011

2012

EBIT Margin

Note: Free cash flow is defined as net cash provided by operating activities (includes pension contributions) minus capital

expenditures and dividends. Net debt is not a GAAP measure. See Appendix for reconciliation of Free Cash Flow and Net

Debt to the most directly comparable GAAP equivalents.

Free Cash Flow of $240M vs. $(70)M use of cash in prior year

•

From operating activities after pension contributions, capital

expenditures and dividends

•

Includes $245M of discretionary pension and post-retirement

benefit contributions and $68M of CDSOA receipts, both net of tax

Strong Balance Sheet

•

Cash position of $586M and debt of $479M, or $107M net cash

•

Pension & post-retirement benefit liability 89% funded resulting

from contributions and favorable asset returns that more than

offset an unfavorable decline in discount rate

•

Repurchased 2.5 million shares for $112 million; 7.5 million shares

remaining under authorization

•

Liquidity of $1.4B

2012 RESULTS

Note: Free cash flow is defined as net cash provided by operating activities (includes pension contributions) minus capital

expenditures and dividends. The Company has included in its outlook charges totaling ~$20 million, net of tax, related to

the previously announced St. Thomas, Ontario, Canada and Sao Paulo, Brazil plant closures.

Sales: down approximately 5%

2013 FULL

YEAR

OUTLOOK

* Excluding discretionary pension & VEBA trust (OPEB) contributions, net of tax

January

Sales (vs. 2012)

Down 5%

Mobile Industries

Down 5-10%

Process Industries

Flat

Aerospace & Defense

Up 7-12%

Steel

Down 7-12%

Earnings Per Share (EPS)

$3.75 -

$4.05

Includes:

Restructuring costs

~$(0.20)

Free Cash Flow ($ Millions)

Cash from operations

$330M

Less: CapEx

$360M

Less: Dividends

$90M

Free Cash Flow

$(120)M

Add: Pension/VEBA contributions, net of tax

$180M

Free Cash Flow*

$60M

•

Weakening demand in mobile, oil

& gas and industrial end markets

•

Mobile market strategy expected

to result in $150 million of exited

business

EPS Estimate: $3.75 to $4.05

per diluted share

•

Includes restructuring costs of

roughly $0.20 related to two

previously announced plant

closures

2013 FCF Estimate: $(120)M

•

$60M excluding discretionary

pension/VEBA trust contributions

Outlook

•

2013 Sales Estimate:

down ~5% Y-O-Y

•

Weakening demand in

mobile, oil & gas and

industrial end markets

•

Mobile market

strategy expected to

result in $150 million

of exited business

•

2015 Sales Target:

3-year CAGR of

+6 to 11%

•

Global GDP growth of

2.5% in 2013 &

growth in 2014-2015

of 3.5% to 4%

•

Roughly half of growth

from inorganic

investments

SALES

Net Sales

($ Mils.)

Note: 2003 includes Torrington acquisition as acquired February 2003. Historical results exclude the discontinued operations

of Latrobe Steel (2006 divestment) and the Needle Roller Bearings (NRB) business (2009 divestment). NRB discontinued

operations for 2003 and 2004 are based on internal estimates.

Net Sales Midpoint

Estimate / Target

’91 to ’01 Cycle:

4% CAGR

’02 to ‘09 Cycle:

4% CAGR

$8,000

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Outlook

•

2013 EPS Estimate:

$3.75 to $4.05 per

diluted share

•

Includes restructuring

costs of roughly $0.20

related to two previously

announced plant closures

•

2015 EPS Target:

$6.75 to $7.25 per

diluted share

•

Assumes redeployment of

capital including inorganic

growth

EARNINGS

PER

Net Sales

($ Mils.)

Earnings

Per Share

EPS Midpoint

Estimate / Target

’91 to ’01 Cycle

’02 to ‘09 Cycle

Net Sales Midpoint

Estimate / Target

$8,000

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

1991

1993

1995

1997

1999

2007

2001

2003

2005

2009

2011

2013

2015

$8.00

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

$0.00

($1.00)

Note:

Earnings

are

reported

GAAP

basis

and

include

the

impact

special

items,

such

restructuring

and

reorganization

expenses,

CDSOA

payments

and

goodwill

amortization.

EPS

assumes

dilution.

2003

includes

Torrington

acquisition

acquired

February

2003.

Historical

results

exclude

the

discontinued operations of Latrobe Steel (2006 divestment) and the Needle Roller Bearings (NRB) business (2009 divestment). NRB discontinued

operations

for

2003

and

2004

are

based

internal

estimates.

FREE

CASH

FLOW

Free Cash Flow

($ Mils.)

’91-’01 Cycle Avg: $16M

’02-’09 Cycle Avg: $87M

Note: Free cash flow is defined as net cash provided by operating activities (includes pension contributions) minus capital expenditures

and dividends. Results include discontinued operations until divested. See Appendix for reconciliation of Free Cash Flow to the most

directly comparable GAAP equivalent. VEBA is in reference to the company’s voluntary employee benefit association trust.

Outlook

•

2013 FCF Estimate:

$(120)M

after,

Free Cash Flow

Midpoint Estimate / Target

•

High CapEx declining to

targeted range by 2015

•

Increased dividends and

moderate pension

contributions

•

CapEx of $360M

•

Dividends of $90M

•

Discretionary pension /

VEBA trust contributions

of $180M (net of tax)

•

2015 FCF Target:

$425-$475M

$450

$350

$250

$150

$50

-$50

-$150

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

PENSION

PBO

Funded %

Discount

Rate

Note: Discount rate noted is for Timken’s domestic pension fund which represents the majority of the company’s global

pension assets. PBO funded percent denotes the Company’s pension benefit obligation (PBO) funded status.

84%

Outlook

•

2013 discretionary

Pension & VEBA

trust (OPEB)

contributions

totaling ~$280M

(or ~$180M, net of

tax)

89%

•

Pension plans expected

to be essentially fully

funded by year-end

•

Long-term strategy to

reduce liability through

lump-sum and

potential annuitization

programs

10.0%

9.0%

7.0%

8.0%

6.0%

5.0%

4.0%

3.0%

2.0%

2000

2002

2004

2006

2008

2010

2012

100%

80%

60%

40%

20%

Improved pension

•

Discretionary contributions

of $245M, net of tax

•

Returning cash to

shareholders

•

90+ years of

consecutive

quarterly dividends

•

Industrial &

aftermarket focus

•

International

•

Accretive to

earnings in year 1

•

Earn cost of capital

in 3 years

•

Discretionary

contributions as

capital structure and

cash flow permit

•

Target spend in industrial

sectors:

oil

gas,

infrastructure, heavy

industries and aerospace

•

Asia growth

2012 CAPITAL

ALLOCATION

HIGHLIGHTS

Capital Spend

Dividends /

Repurchase

•

$300M spent on

growth, continuous

improvement and

maintenance

•

$200M returned to

shareholders

Dividend raised 15%

to $0.23/quarter

2.5 million shares

repurchased

Strong Capital Redeployment

•

Wazee (12/31/12)

•

Strong balance sheet to

Acquisitions

Pension / OPEB

Funding

fund future acquisitions

funded status to

89% by year end

Award

Cash

Restricted Stock Units

(in cash or shares)

Equity –

Restricted Stock

Units

Equity

–

Non

Qualified Stock

Options

Participants

6,000 Associates Globally

160 Senior Leadership

Associates

265 Mid-level

Managers

160 Senior

Leadership

Associates

Time Horizon

1 Year

3 Years

4 Year Vesting

with

a 10 Year Term

4 Year Vesting

with

a 10 Year Term

Metrics

40%

Corporate EBIT/BIC

50% EPS

50% ROIC

Share Price

30%

Business Unit EBIT/BIC

15%

BU Working Capital % of

Sales

15%

Customer Service or

New Business Sales Ratio

INCENTIVE

COMPENSATION

Note: EBIT/BIC is a pre-tax return on invested capital (ROIC) measure. BIC denotes beginning invested capital.

The incentive compensation plan depicted above is effective January 2012.

Annual

Long-Term

Long-term Shareholder

Value Creation

3-Year Strategic

Business Priorities

Short-term Operational

Business Priorities

Objective

GAAP RECONCILIATION

EBIT AND

EBITDA

($ Mils.)

This reconciliation is provided as additional relevant information about the Company’s performance. Management

believes consolidated earnings before interest and taxes (EBIT) are representative of the Company’s

performance and therefore useful to investors. Consolidated earnings before interest, taxes, depreciation and

amortization

(EBITDA)

are

another

important

measure

financial

performance

and

cash

generation

the

business and therefore useful to investors. Management also believes that it is appropriate to compare GAAP net

income to consolidated EBIT and EBITDA.

Source: Company filings and Factset as of January 31, 2013

EBIT margin is defined as earnings before interest and tax divided by net sales. EBITDA margin is defined as

earnings before interest, tax, depreciation and amortization divided by net sales.

12-Months Ended

12/31/2012

12/31/2011

12/31/2010

12/31/2009

12/31/2008

Net Income

$495.9

$456.6

$276.9

($139)

$271

Income from discontinued operations, net of tax

0.0

(7.4)

72.6

11.3

Provision for income taxes

270.1

240.2

136.0

(28.2)

157.1

Interest Expense

31.1

36.8

38.2

41.9

44.4

Interest Income

(2.9)

(5.6)

(3.7)

(1.9)

(5.8)

Impairment and Restructuring

29.5

14.4

21.7

164.1

32.8

Receipt of CDSOA Distribution

(108.0)

1.1

(2.0)

(3.6)

(9.1)

EBIT

$715.7

$743.5

$459.7

$106.3

$501.9

Revenue

$4,987.0

$5,170.2

$4,055.5

$3,141.6

$5,663.7

% EBIT Margin

14.4%

11.3%

3.4%

8.9%

3-Year Average EBIT Margin

13.4%

5-Year Average EBIT Margin

10.5%

Depreciation and Amortization

198.0

192.5

189.7

201.5

200.8

EBITDA

$913.7

$936.0

$649.4

$307.8

$702.7

% EBITDA Margin

18.3%

18.1%

16.0%

9.8%

12.4%

3-Year Average EBITDA Margin

17.5%

5-Year Average EBITDA Margin

14.9%

(1)

Return on Invested Capital calculated as Net Operating Profit After Taxes / (Average Total Debt + Average Shareholders’

Equity). Tax rate assumed at 35%.

Source: Company filings and Factset as of January 31, 2013

GAAP

RECONCILIATION

ROIC

Reconciliation of ROIC to GAAP Operating Income

Management believes ROIC is representative of the company’s performance and therefore useful to investors.

($ Mils.)

12-Months Ended

12/31/2012

12/31/2011

12/31/2010

12/31/2009

12/31/2008

GAAP Operating Income

$692.9

$729.1

$436.2

($54.1)

$462.0

GAAP Other Income / Expenses

101.3

(1.1)

3.8

(0.1)

16.2

Impairment and Restructuring

29.5

14.4

21.7

164.1

32.8

Receipt of CDSOA Distribution

(108.0)

1.1

(2.0)

(3.6)

(9.1)

EBIT

$715.7

$743.5

$459.7

$106.3

$501.9

Tax Rate

35.0%

Provision for Income taxes

$250.5

$260.2

$160.9

$37.2

$175.7

NOPAT

$465.2

$483.3

$298.8

$69.1

$326.2

Total Debt

$479.0

$515.1

$513.7

$512.7

$623.9

Shareholder's Equity

2,232.3

2,042.5

1,941.8

1,595.6

1,663.0

Invested Capital

2,711.3

2,557.6

2,455.5

2,108.3

2,286.9

Average Invested Capital

2,634.5

2,506.6

2,281.9

2,197.6

2,485.4

ROIC

(1)

17.7%

19.3%

13.1%

3.1%

13.1%

3-Year Average ROIC

16.7%

5-Year Average ROIC

13.3%

GAAP RECONCILIATION

SEGMENT

ROIC

Reconciliation of ROIC to GAAP Operating Income

Management believes ROIC is representative of the company’s performance and therefore useful to investors.

($ Mils.)

2010

2011

2012

2010

2011

2012

2010

2011

2012

2010

2011

2012

2010

2011

2012

GAAP Operating Inc

183

218

183

118

261

250

(3)

129

251

230

437

728

687

Impairment/Restructuring

(0)

EBIT

197

232

210

122

262

251

(3)

129

251

230

458

742

716

Tax Rate

35.0%

Provision for Taxes

(1)

160

260

251

NOPAT

128

151

137

170

163

(2)

163

149

298

482

466

Invested Capital

879

840

1,273

553

692

1,277

391

362

581

632

663

1,114

2,456

2,558

2,726

Avg Invested Capital

860

1,057

511

623

984

378

377

472

533

647

888

2,282

2,507

2,642

ROIC

14.9%

17.5%

12.9%

15.5%

27.3%

16.6%

1.8%

-0.4%

3.4%

15.7%

25.2%

16.8%

13.0%

19.2%

17.6%

3 year average ROIC

15.0%

19.5%

1.7%

19.1%

16.8%

Mobile

Process

Aerospace

Steel

Timken

GAAP RECONCILIATION

EBIT

($ Mils.)

Year Ended

(Dollars in millions) (Unaudited)

December 31,

2012

Percentage to

Net Sales

December 31,

2011

Percentage to

Net Sales

Net Income

495.9

9.9

456.6

8.8

Provision for income taxes

270.1

5.4

240.2

4.6

Interest expense

31.1

0.6

36.8

0.7

Interest income

(2.9)

(0.1)%

(5.6)

(0.1)%

Consolidated earnings before interest and taxes (EBIT)

794.2

15.9

728.0

14.1

Reconciliation of EBIT Margin to Net Income as a Percentage of Sales and EBIT to Net Income:

The following reconciliation is provided as additional relevant information about the Company's performance. Management believes that EBIT

and EBIT margin are representative of the Company's core operations and therefore useful to investors.

GAAP RECONCILIATION

FREE

CASH

FLOW

($ Mils.)

(Dollars in millions) (Unaudited)

December 31,

2012

December 31,

2011

Net cash provided (used) by operating activities

626.1

211.7

Less: capital expenditures

(297.2)

(205.3)

Less: cash dividends paid to shareholders

(89.0)

(76.0)

Free cash flow

239.9

(69.6)

Plus: discretionary pension and postretirement benefit

contributions, net of the tax benefit (1)

245.0

256.0

Less: CDSOA receipts, net of tax expense (2)

(68.0)

—

Free cash flow less discretionary contributions

postretirement contributions and CDSOA

416.9

186.4

Reconciliation of Free Cash Flow to GAAP Net Cash Provided by Operating Activities:

Management believes that free cash flow and free cash flow less discretionary pension and

postretirement contributions and CDSOA receipts are useful to investors because they are meaningful

indicators of cash generated from operating activities available for the execution of its business

strategy.

Year Ended

($ Mils.)

(Dollars in millions) (Unaudited)

December 31,

2012

December 31,

2011

Short-term debt

23.9

36.3

Long-term debt

455.1

478.8

Total Debt

479.0

515.1

Less: Cash, cash equivalents and restricted cash

(586.4)

(468.4)

Net (Cash) Debt

(107.4)

46.7

Total equity

2,246.6

2,042.5

Ratio of Total Debt to Capital

17.6

20.1

Ratio of Net Debt to Capital

(5.0)%

2.2

Reconciliation of Total Debt to Net Debt and the Ratio of Net Debt to Capital:

This reconciliation is provided as additional relevant information about The Timken Company's financial

position. Capital is defined as total debt plus total shareholders' equity. Management believes Net

Debt is an important measure of Timken's financial position, due to the amount of cash and cash

equivalents.

GAAP

RECONCILIATION

NET

DEBT

GAAP

RECONCILIATION

FREE

CASH

FLOW

Free cash flow is defined as net cash provided by operating activities (including pension contributions) minus

capital

expenditures

and

dividends.

Results

include

discontinued

operations

until

divested.

Reconciliation of Free Cash Flow to GAAP Net Cash Provided (Used) by Operating Activities

Management believes that 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.

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Net Cash Provided by Operating Activities

140

116

154

147

224

186

312

292

277

157

Capital expenditures

(140)

(136)

(89)

(114)

(129)

(151)

(233)

(238)

(165)

(159)

Cash dividends paid to shareholders

(23)

(22)

(25)

(26)

(28)

(30)

(39)

(45)

(44)

Free Cash Flow

(1)

(23)

(43)

(46)

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Net Cash Provided by Operating Activities

178

206

204

121

319

337

569

588

313

212

626

Capital expenditures

(91)

(85)

(119)

(155)

(221)

(296)

(314)

(272)

(114)

(116)

(205)

(297)

Cash dividends paid to shareholders

(40)

(32)

(42)

(47)

(55)

(58)

(63)

(67)

(43)

(51)

(76)

(89)

Free Cash Flow

(1)

(81)

(17)

(40)

230

430

146

(69)

240

(1)

GAAP RECONCILIATION

NET

DEBT

Note: (a) Total Debt is the sum of commercial paper, short-term debt, current portion of long-term debt and long-term debt

Reconciliation of Net Debt to Total Debt and the Ratio of Net Debt to Capital

Management believes Net Debt is an important measure of Timken's financial position, due to the amount of

cash and cash equivalents.

($ Mils.)

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Total Debt (a)

273

321

277

280

211

303

359

469

450

514

Less: Cash

Net Debt

271

313

271

267

204

297

350

469

442

503

Equity

1,019

985

685

733

821

922

1,032

1,056

1,046

1,005

Total Debt to Capital

21.1%

24.5%

28.7%

27.6%

20.5%

24.7%

25.8%

30.8%

30.1%

33.8%

Net Debt to Capital

21.0%

24.1%

28.4%

26.7%

19.9%

24.4%

25.3%

30.8%

29.7%

33.4%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Total Debt (a)

497

461

735

779

721

598

723

624

513

514

515

479

Less: Cash

101

133

756

877

468

586

Net Debt

464

379

706

728

656

497

693

490

(243)

(363)

(107)

Equity

782

609

1,090

1,270

1,497

1,476

1,961

1,663

1,596

1,942

2,043

2,247

Total Debt to Capital

38.9%

43.1%

40.3%

38.0%

32.5%

28.8%

26.9%

27.3%

24.3%

20.9%

20.1%

17.6%

Net Debt to Capital

37.2%

38.4%

39.3%

36.5%

30.5%

25.2%

26.1%

22.8%

-18.0%

-23.0%

2.2%

-5.0%

GAAP RECONCILIATION OF ROIC

Reconciliation of ROIC to GAAP Operating Income

Management believes ROIC is representative of the company’s performance and therefore useful to investors.

($ Mils.)

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

GAAP Operating Income

(1)

(9)

132

203

247

280

225

133

106

GAAP Other Income / (Expenses)

(8)

(2)

(6)

(5)

(16)

(10)

(7)

Earnings Before Interest and Taxes (EBIT)

(2)

(17)

135

198

242

287

209

123

Provision for income taxes

(6)

102

Adjusted tax rate

37.6%

36.9%

38.3%

35.7%

38.2%

36.8%

35.0%

Net Operating Profit After Taxes (NOPAT)

(3)

(10)

125

149

184

129

Invested Capital:

Total Debt

266

273

321

277

280

211

303

359

469

450

514

Shareholders' Equity

1,075

1,019

985

685

733

821

922

1,032

1,056

1,046

1,005

Total

1,341

1,292

1,306

962

1,012

1,032

1,225

1,392

1,526

1,496

1,519

Average Invested Capital

(4)

1,317

1,299

1,134

987

1,022

1,129

1,308

1,459

1,511

1,507

ROIC: NOPAT / Average Invested Capital

(4)

-0.8%

1.9%

0.4%

8.5%

12.2%

13.2%

14.1%

8.9%

5.2%

4.3%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

GAAP Operating Income

(1)

(18)

237

327

219

295

462

(54)

436

729

693

GAAP Other Income / (Expenses)

(0)

(1)

101

Earnings Before Interest and Taxes (EBIT)

(2)

115

108

249

395

299

300

478

(54)

440

728

794

Provision for income taxes

129

171

(16)

148

251

280

Adjusted tax rate

39.8%

40.0%

32.1%

32.6%

30.6%

20.4%

35.7%

29.9%

33.5%

34.5%

35.3%

Net Operating Profit After Taxes (NOPAT)

(3)

169

266

208

239

307

(38)

292

477

514

Total Debt

497

461

735

779

721

598

723

624

513

514

515

479

Shareholders' Equity

782

609

1,090

1,270

1,497

1,476

1,961

1,623

1,596

1,942

2,043

2,247

Total

1,279

1,070

1,824

2,049

2,218

2,074

2,684

2,246

2,108

2,456

2,558

2,726

Average Invested Capital

(4)

1,399

1,175

1,447

1,937

2,134

2,146

2,379

2,465

2,177

2,282

2,507

2,642

ROIC: NOPAT / Average Invested Capital

(4)

0.2%

5.9%

4.5%

8.7%

12.5%

9.7%

10.0%

12.5%

-1.7%

12.8%

19.0%

19.5%

(1)

GAAP Operating Income excludes discontinued operations for Latrobe Steel (divested Dec. 8, 2006) for years 2004 through 2006 and the Needle Roller Bearings business

for years 2007 through 2009 (divested Dec. 31, 2009).

(2)

EBIT

defined

operating

income

plus

other

income

(expense)

net.

(3)

NOPAT

defined

EBIT

less

estimated

provision

for

income

taxes.

This

tax

provision

excludes

the

tax

effect

pre-tax

special

items

the

company's

effective

tax

rate,

as well as the the impact of discrete tax items recorded during the year.

(4)

The company uses NOPAT/Average Invested Capital as a type of ratio that indicates return on invested capital (ROIC). Average Invested Capital is the sum of Total Debt and Share-

holders' Equity taken at the beginning and ending of each year and then averaged. Total Debt is the sum of commercial paper, ST-debt, curr. portion of LT-debt & LT-debt.

Invested Capital: