Change in Accounting Principles (Notes)

6 Months Ended

Jun. 30, 2017

Accounting Changes [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Note 2 - Change in Accounting Principles

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. 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.

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
	June 30, 2017									June 30, 2016
	Previous Accounting Method			As Reported			Effect of Accounting Change			As Previously Reported		Revised		Effect of Accounting Change
Cost of products sold	$	551.1		$	548.8		$	(2.3	)	$	491.3	$	489.1	$	(2.2	)
Gross profit	199.5			201.8			2.3			182.3		184.5		2.2
Selling, general and administrative expense	126.5			123.8			(2.7		)	110.2		108.0		(2.2		)
Pension settlement expenses	1.1			—			(1.1		)	0.4		—		(0.4		)
Operating income	71.1			77.2			6.1			68.8		73.6		4.8
Income before income taxes	67.8			73.9			6.1			64.9		69.7		4.8
(Benefit) provision for income taxes	(10.2		)	(8.1		)	2.1			20.0		21.5		1.5
Net income	78.0			82.0			4.0			44.9		48.2		3.3
Net income attributable to The Timken Company	$	78.5		$	82.5		$	4.0		$	44.9	$	48.2	$	3.3
Basic earnings per share	$	1.01		$	1.06		$	0.05		$	0.57	$	0.61	$	0.04
Diluted earnings per share	$	0.99		$	1.04		$	0.05		$	0.57	$	0.61	$	0.04

Consolidated Statements of Income:

	Six Months Ended
	June 30, 2017							June 30, 2016
	Previous Accounting Method		As Reported		Effect of Accounting Change			As Previously Reported		Revised		Effect of Accounting Change
Cost of products sold	$	1,074.2	$	1,072.1	$	(2.1	)	$	994.4	$	990.0	$	(4.4	)
Gross profit	380.2		382.3		2.1			363.2		367.6		4.4
Selling, general and administrative expense	247.0		243.4		(3.6		)	228.5		224.1		(4.4		)
Pension settlement expenses	11.8		—		(11.8		)	1.6		1.2		(0.4		)
Operating income	118.9		136.4		17.5			119.7		128.9		9.2
Income before income taxes	110.0		127.5		17.5			155.4		164.6		9.2
Provision for income taxes	1.3		7.4		6.1			47.6		50.6		3.0
Net income	108.7		120.1		11.4			107.8		114.0		6.2
Net income attributable to The Timken Company	$	109.3	$	120.7	$	11.4		$	107.9	$	114.1	$	6.2
Basic earnings per share	$	1.40	$	1.55	$	0.15		$	1.36	$	1.44	$	0.08
Diluted earnings per share	$	1.38	$	1.53	$	0.15		$	1.35	$	1.43	$	0.08

Consolidated Statements of Comprehensive Income:

	Three Months Ended
	June 30, 2017									June 30, 2016
	Previous Accounting Method			As Reported			Effect of Accounting Change			As Previously Reported			Revised			Effect of Accounting Change
Net Income	$	78.0		$	82.0		$	4.0		$	44.9		$	48.2		$	3.3
Foreign currency translation adjustments	11.5			11.5			—			(18.4		)	(13.8		)	4.6
Pension and postretirement liability adjustment	4.0			—			(4.0		)	8.3			0.4			(7.9		)
Other comprehensive income (loss), net of tax	14.1			10.1			(4.0		)	(9.4		)	(12.7		)	(3.3		)
Comprehensive Income, net of tax	92.1			92.1			—			35.5			35.5			—
Less: comprehensive income (loss) attributable to noncontrolling interest	(1.1		)	(1.1		)	—			0.2			0.1			(0.1		)
Comprehensive Income attributable to The Timken Company	$	93.2		$	93.2		$	—		$	35.3		$	35.4		$	0.1

	Six Months Ended
	June 30, 2017							June 30, 2016
	Previous Accounting Method		As Reported		Effect of Accounting Change			As Previously Reported			Revised		Effect of Accounting Change
Net Income	$	108.7	$	120.1	$	11.4		$	107.8		$	114.0	$	6.2
Foreign currency translation adjustments	31.9		31.9		—			(3.6		)	1.5		5.1
Pension and postretirement liability adjustment	11.5		0.1		(11.4		)	12.0			0.8		(11.2		)
Other comprehensive income, net of tax	41.2		29.8		(11.4		)	6.8			0.7		(6.1		)
Comprehensive Income, net of tax	149.9		149.9		—			114.6			114.7		0.1
Less: comprehensive income attributable to noncontrolling interest	1.4		1.4		—			1.2			1.2		—
Comprehensive Income attributable to The Timken Company	$	148.5	$	148.5	$	—		$	113.4		$	113.5	$	0.1

Consolidated Balance Sheets:

	June 30, 2017									December 31, 2016
	Previous Accounting Method			As Reported			Effect of Accounting Change			As Previously Reported			Revised			Effect of Accounting Change
Inventories, net	$	609.1		$	617.0		$	7.9		$	545.8		$	553.7		$	7.9
Total current assets	1,651.6			1,659.5			7.9			1,204.0			1,211.9			7.9
Deferred income taxes	49.4			46.4			(3.0		)	54.4			51.4			(3.0		)
Total other assets	770.4			767.4			(3.0		)	749.9			746.9			(3.0		)
Total assets	3,233.6			3,238.5			4.9			2,758.3			2,763.2			4.9
Earnings invested in the business	1,595.6			1,367.7			(227.9		)	1,528.6			1,289.3			(239.3		)
Accumulated other comprehensive loss	(282.8		)	(50.1		)	232.7			(322.0		)	(77.9		)	244.1
Total shareholders' equity	1,382.2			1,387.0			4.8			1,274.9			1,279.7			4.8
Noncontrolling interest	32.5			32.6			0.1			31.1			31.2			0.1
Total equity	1,414.7			1,419.6			4.9			1,306.0			1,310.9			4.9
Total liabilities and shareholders' equity	$	3,233.6		$	3,238.5		$	4.9		$	2,758.3		$	2,763.2		$	4.9

Consolidated Statements of Cash Flows:

	Six Months Ended
	June 30, 2017							June 30, 2016
	Previous Accounting Method		As Reported		Effect of Accounting Change			As Previously Reported			Revised		Effect of Accounting Change
Net income attributable to The Timken Company	$	109.3	$	120.7	$	11.4		$	107.9		$	114.1	$	(6.2	)
Deferred income tax provision (benefit)	1.6		7.7		6.1			(0.2		)	2.8		(3.0		)
Pension and other postretirement expense	27.4		9.9		(17.5		)	18.9			9.7		9.2