What changed in this filing

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Item 1. Financial Statements

2023-11-01 compared with 2023-08-03 · 244 added, 170 removed, 742 unchanged (36% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

9 unchanged sentences

Non-service pension and other postretirement (expense) income ( 0.9 ) 1.3 ( 0.8 ) ( 5.3 )

Other income (expense), net 2.3 ( 1.1 ) 5.4 ( 0.9 )

Other income, net 0.4 2.3 5.8 1.4

Income Before Income Taxes 124.2 117.1 469.0 426.8

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

11 unchanged sentences

Consolidated Balance Sheets

(Dollars in millions) June 30,

(Dollars in millions) September 30,

2023 December 31,

53 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(Dollars in millions)

39 unchanged sentences

Short-term debt activity, net 202.1 17.0

Noncontrolling interest dividends paid ( 0.6 ) ( 0.5 )

Proceeds from the sale of shares in Timken India Limited 284.8 —

14 unchanged sentences

Intangible asset amortization expense is now classified separately.

The 2022 presentation has been revised to conform to the 2023 presentation resulting in a reduction in the cost of products sold for the three and six months ended June 30, 2022.

The 2022 presentation has been revised to conform to the 2023 presentation resulting in a reduction in the cost of products sold for the three and nine months ended September 30, 2022.

Note 2 - Significant Accounting Policies

10 unchanged sentences

Acquisitions:

During the first six months of 2023, the Company completed two acquisitions.

On April 4, 2023, the Company acquired Leonardo Top S.a.r.l.

("Nadella"), a leading European manufacturer of linear guides, telescopic rails, actuators and systems and other specialized industrial motion solutions, from ICG plc.

During the first nine months of 2023, the Company completed four acquisitions.

On September 29, 2023, the Company acquired 100 % of the capital stock of Rosa Sistemi S.p.A.

("Rosa"), a European designer and manufacturer of roller guideways, linear bearings, customized linear systems and actuators, commercialized ball guideways and precision ball screws.

Rosa employs approximately 65 people and has its headquarters, R&D and high-precision manufacturing facility in Milan, Italy.

Rosa expects 2023 revenue to be approximately $ 15 million.

Results for Rosa will be reported in the Industrial Motion segment.

On September 5, 2023, the Company acquired 100 % of the capital stock of D-C Filtration Holdings Corp.

("Des-Case"), a Tennessee-based manufacturer of specialty filtration products for industrial lubricants.

Des-Case has manufacturing facilities in Tennessee and the Netherlands and employs approximately 120 people.

Des-Case expects 2023 revenue to be approximately $ 40 million.

Results for Des-Case are reported in the Industrial Motion segment.

On April 4, 2023, the Company acquired 100 % of the capital stock of Leonardo Top S.a.r.l.

("Nadella"), a leading European manufacturer of linear guides, telescopic rails, actuators and systems and other specialized industrial motion solutions.

Based in Italy, Nadella employs approximately 450 people and operates manufacturing facilities in Europe and China.

1 unchanged sentence

Results for Nadella are reported in the Industrial Motion segment.

On January 31, 2023, the Company acquired the assets of American Roller Bearing Company ("ARB"), a North Carolina-based manufacturer of industrial bearings.

On January 31, 2023, the Company acquired substantially all of the assets of American Roller Bearing Company ("ARB"), a North Carolina-based manufacturer of industrial bearings.

ARB, which boasts a large U.S.

installed base and strong aftermarket business, operates manufacturing facilities in Hiddenite and Morganton, North Carolina.

ARB reported revenue of approximately $ 35 million in 2022.

ARB employs approximately 190 people and reported revenue of approximately $ 35 million in 2022.

Results for ARB are reported in the Engineered Bearings segment.

The total purchase price for these acquisitions was $ 466.9 million, net of cash acquired of $ 24.3 million.

The Company also assumed $ 11.7 million of long-term debt in conjunction with the acquisition of Nadella.

The Company incurred acquisition-related costs of $ 3.7 million to complete these acquisitions.

The following table presents the preliminary purchase price allocation at fair value for the 2023 acquisitions as of June 30, 2023.

The following table presents the preliminary purchase price allocation at fair value for the 2023 acquisitions as of September 30, 2023.

Initial Purchase

4 unchanged sentences

Property, plant and equipment 35.2

Operating lease assets 4.2

Goodwill 207.5

8 unchanged sentences

Long-term debt 6.2

Long-term operating lease liabilities 2.1

Deferred income taxes 61.5

2 unchanged sentences

Net assets acquired $ 466.9

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.

Note 3 - Acquisitions and Divestitures (continued)

In determining the fair value of the amounts above related to Des-Case and Rosa, the Company utilized a benchmarking approach based on the Company’s prior acquisitions and similar industry acquisitions to determine the preliminary fair values for identified intangible assets.

Upon completion of the final fair value assessment, the fair values of the assets acquired, liabilities assumed and resulting goodwill may differ materially from the preliminary assessment.

Any changes to the initial estimates of the fair value of the assets acquired and liabilities assumed will be recorded to those assets and liabilities and residual amounts will be allocated to goodwill.

In determining the fair value of the amounts above related to Nadella and ARB, 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 judgment 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.

The amounts in the table above represent the preliminary purchase price allocation for the 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.

The purchase price allocation for Rosa and Des-Case are preliminary due to the proximity of the acquisition date to September 30, 2023, and as a result no elements of the purchase price allocation have been finalized.

The purchase price allocation for Nadella is preliminary with respect to most assets acquired and liabilities assumed.

The purchase price allocation for ARB is substantially complete.

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 revised estimated values of those assets or liabilities as of that date.

6 unchanged sentences

Total intangible assets $ 220.8

On November 4, 2022, the Company completed the acquisition of GGB Bearing Technology ("GGB"), a global technology and market leader of premium 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.

On November 4, 2022, the Company completed the acquisition of GGB Bearing Technology ("GGB"), a global leader in premium engineered metal-polymer plain bearings, for $ 300.3 million, net of cash acquired of $ 19.8 million.

GGB's revenue was approximately $ 200 million for the 2022.

GGB's products are used mainly in industrial applications, including pumps and compressors, HVAC, off-highway, energy, material handling and aerospace.

2 unchanged sentences

On May 31, 2022, the Company completed the acquisition of Spinea, s.r.o.

("Spinea"), a European technology leader and manufacturer of highly engineered cycloidal reduction gears and actuators, with full year 2022 sales of approximately $ 40 million.

Spinea’s solutions primarily serve high-precision automation and robotics applications in the factory automation platform.

("Spinea"), a European technology leader and manufacturer of highly engineered cycloidal reduction gears and actuators, with 2022 sales of approximately $ 40 million.

Spinea’s solutions primarily serve high-precision automation and robotics applications in the factory automation sector.

Spinea is located in Presov, Slovakia.

2 unchanged sentences

Note 3 - Acquisitions and 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:

The following table presents the updated purchase price allocation at fair value, net of cash acquired, for the 2022 acquisitions, as of September 30, 2023:

Initial Purchase Price Allocation Adjustments Updated Purchase Price Allocation

16 unchanged sentences

Net assets acquired $ 453.7 $ ( 2.2 ) $ 451.5

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 Spinea was finalized during the second 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 related impacts on deferred income taxes.

The purchase price allocation for GGB is substantially complete with only minor adjustments expected.

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.

1 unchanged sentence

Divestitures:

On September 20, 2023, the Company entered into a definitive agreement to sell Jiangsu TWB Bearings Co., Ltd.

During the third quarter of 2023, the business met the held for sale criteria, and the Company reclassified its assets and liabilities accordingly.

Assets held for sale of $ 16.6 million are included in other current assets, and liabilities held for sale of $ 7.3 million are included in other current liabilities, on the Consolidated Balance Sheet.

As a result of the carrying value of the legal entity exceeding the estimated sales price less costs to sell, the Company recorded an impairment charge of $ 1.0 million for the three months ended September 30, 2023.

The impairment charge is included in the impairment and restructuring line on the Consolidated Statement of Income.

The sale of TWB was completed on October 16, 2023.

Operating results of this legal entity are included the Engineered Bearings segment.

Note 3 - Acquisitions and Divestitures (continued)

On February 28, 2023, the Company completed the sale of all of its membership interests in S.E.

5 unchanged sentences

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.

For the first six months of 2023, the Company recorded a loss of $ 1.2 million due to the payment of a working capital adjustment.

During the three months ended September 30, 2022, the ADS business met the held for sale criteria, and the Company recorded impairment charges of $ 29.3 million in advance of the sale as a result of the carrying value of the business exceeding the estimated sales price less costs to sell.

On September 1, 2022, the Company completed the divestiture of Timken-Rus Service Company ooo ("Timken Russia"), one of its two subsidiaries in Russia.

Timken Russia had net sales of $ 4.8 million in 2022.

The results of operations of Timken Russia were reported in the Engineered Bearings segment.

The Company recorded proceeds of $ 1.0 million, net of cash divested of $ 5.3 million, and recognized a loss of $ 2.1 million on the sale of the business during the three months ending September 30, 2022.

The loss was reflected in other income, net in the Consolidated Statement of Income.

Note 4 - Segment Information

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

7 unchanged sentences

Unallocated corporate expense ( 17.0 ) ( 9.1 ) ( 47.9 ) ( 35.4 )

Corporate pension and other postretirement

benefit related income (expense) (1)

Corporate pension and other postretirement benefit

related (expense) income (1)

( 0.2 ) ( 1.0 ) 1.7 ( 15.2 )

3 unchanged sentences

Income before income taxes $ 124.2 $ 117.1 $ 469.0 $ 426.8

(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.

(1) Corporate pension and other postretirement benefit related (expense) income represents actuarial (losses) and gains that resulted from the remeasurement of pension and other postretirement plan assets and obligations as a result of changes in assumptions or experience.

September 30,

2023 December 31, 2022

6 unchanged sentences

Note 5 - Revenue

The following table presents details deemed most relevant to the users of the financial statements about total revenue for the three and six months ended June 30, 2023 and 2022:

The following table presents details deemed most relevant to the users of the financial statements about total revenue for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended Three Months Ended

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

Engineered Bearings Industrial Motion Total Engineered Bearings Industrial Motion Total

5 unchanged sentences

Net sales $ 775.6 $ 367.1 $ 1,142.7 $ 779.7 $ 356.7 $ 1,136.4

Six Months Ended Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended Nine Months Ended

September 30, 2023 September 30, 2022

Engineered Bearings Industrial Motion Total Engineered Bearings Industrial Motion Total

6 unchanged sentences

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 Ended Six Months Ended

Revenue by sales channel June 30, 2023 June 30, 2022

The following table presents the approximate percent of revenue by sales channel for the nine months ended September 30, 2023 and 2022:

Nine Months Ended Nine Months Ended

Revenue by sales channel September 30, 2023 September 30, 2022

Original equipment manufacturers 60 % 60 %

1 unchanged sentence

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.

During the nine months ended September 30, 2023 and September 30, 2022, approximately 9 % 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 nine months ended September 30, 2023 and September 30, 2022.

Finally, business with the United States ("U.S.") government or its contractors represented approximately 6 % and 7 % of total net sales during the nine months ended September 30, 2023 and September 30, 2022, respectively.

Remaining Performance Obligations:

2 unchanged sentences

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 a t June 30, 2023.

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 $ 202.0 million at September 30, 2023.

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, 2022:

The following table contains a rollforward of unbilled receivables for the nine months ended September 30, 2023 and the twelve months ended December 31, 2022:

September 30,

2023 December 31,

4 unchanged sentences

Ending balance $ 136.1 $ 103.9

There were no impairment losses recorded on unbilled receivables for the six months ended June 30, 2023 and the twelve months ended December 31, 2022.

There were no impairment losses recorded on unbilled receivables for the nine months ended September 30, 2023 and the twelve months ended December 31, 2022.

Deferred Revenue:

The following table contains a rollforward of deferred revenue for the six months ended June 30, 2023 and the twelve months ended December 31, 2022:

The following table contains a rollforward of deferred revenue for the nine months ended September 30, 2023 and the twelve months ended December 31, 2022:

September 30,

2023 December 31,

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

Effective tax rate 26.8 % 22.8 % 26.2 % 25.5 %

Income tax expense for the three and six months ended June 30, 2023 was calculated using forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate.

Income tax expense for the three and nine months ended September 30, 2023 was 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.

The effective 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 mix of earnings in non-U.S.

jurisdictions with relatively higher tax rates.

The effective tax rate of 26.0 % for the six months ended June 30, 2023 was lower than the effective tax rate for the six 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 mix of earnings in non-U.S.

federal statutory rate of 21% primarily due to the actual and projected mix of earnings in non-U.S.

jurisdictions with relatively higher tax rates.

The effective tax rate of 26.8 % for the three months ended September 30, 2023 was higher than the effective tax rate for the three months ended September 30, 2022 primarily due to an increase in the mix of earnings in non-U.S.

jurisdictions with relatively higher tax rates and the net unfavorable impact of discrete tax items in comparison to the year ago period.

The effective tax rate of 26.2 % for the nine months ended September 30, 2023 was higher than the effective tax rate for the nine months ended September 30, 2022 primarily due to 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.

Note 7 - 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 six months ended June 30, 2023 and 2022, respectively:

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 nine months ended September 30, 2023 and 2022:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

8 unchanged sentences

Diluted earnings per share $ 1.23 $ 1.18 $ 4.63 $ 4.16

The dilutive effect of performance-based restricted stock units are included once they meet minimum performance thresholds.

The dilutive effect of performance-based restricted stock units is taken into account once they have met 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 exercise price exceeds the average market price of the Company’s common shares during the periods presented.

There were no antidilutive stock options outstanding during the three and six months ended June 30, 2023 and 2022.

There were no antidilutive stock options outstanding during the three and nine months ended September 30, 2023 and 2022.

Note 8 - Inventories

The components of inventories at June 30, 2023 and December 31, 2022 were as follows:

The components of inventories at September 30, 2023 and December 31, 2022 were as follows:

September 30,

2023 December 31,

11 unchanged sentences

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.

The LIFO reserve at September 30, 2023 and December 31, 2022 was $ 231.9 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.

6 unchanged sentences

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:

The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 were as follows:

Engineered Bearings Industrial Motion Total

9 unchanged sentences

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, 2023 Balance at December 31, 2022

The following table displays intangible assets as of September 30, 2023 and December 31, 2022:

Balance at September 30, 2023 Balance at December 31, 2022

Amount Accumulated

15 unchanged sentences

Total intangible assets $ 1,525.6 $ ( 590.3 ) $ 935.3 $ 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 June 30, 2023 and 2022, respectively.

Amortization expense for intangible assets was $ 53.1 million and $ 37.4 million for the nine months ended September 30, 2023 and 2022, respectively.

Amortization expense related to intangible assets acquired as part of a business combination is reported in amortization of intangible assets on the Consolidated Statement of Income, and 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;

Amortization expense for intangible assets is projected to be approximately $ 68 million in 2023;

$ 67 million in 2024;

3 unchanged sentences

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,

The following table displays other current liabilities as of September 30, 2023 and December 31, 2022:

(Dollars in millions) September 30,

2023 December 31,

12 unchanged sentences

Note 11 - Financing Arrangements

Short-term debt at June 30, 2023 and December 31, 2022 was as follows:

Short-term debt at September 30, 2023 and December 31, 2022 was as follows:

September 30,

2023 December 31,

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

Variable-rate Term Loan (1) , maturing on August 16, 2024, with an interest rate of 4.95 % at September 30, 2023

Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 4.45 % to 7.33 % at September 30, 2023 and 2.38 % to 5.50 % at December 31, 2022

Short-term debt $ 241.6 $ 46.3

On August 16, 2023, the Company entered into a € 200 million variable-rate term loan ("2024 Term Loan"), maturing on August 16, 2024.

Proceeds from the 2024 Term Loan were used to repay borrowings on the Senior Credit Facility and Accounts Receivable Facility, as well as for general corporate purposes.

Lines of credit for certain of the Company's foreign subsidiaries provide for short-term borrowings up to $ 226.9 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:

At September 30, 2023, the Company’s foreign subsidiaries had borrowings outstanding of $ 30.1 million and bank guarantees of $ 2.3 million, which reduced the aggregate availability under these facilities to $ 194.5 million.

Long-term debt at September 30, 2023 and December 31, 2022 was as follows:

September 30,

2023 December 31,

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 6.42 % and Euro of 4.51 % at September 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, 2022

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

Variable-rate Accounts Receivable Facility with an interest rate of 6.29 % at September 30, 2023 and 5.01 % at December 31, 2022

Variable-rate Term Loan (1) , maturing on December 5, 2027, with an interest rate of 6.54 % at September 30, 2023 and 5.55 % at December 31, 2022

Fixed-rate Senior Unsecured Notes (1) , maturing on September 1, 2024, with an interest rate of 3.875 %

13 unchanged sentences

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.

however, availability under the Accounts Receivable Facility was not reduced by any such borrowing base limitations at September 30, 2023.

As of September 30, 2023, there were $ 78.0 million in outstanding borrowings under the Accounts Receivable Facility, which reduced the availability under this facility to $ 22.0 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.

On December 5, 2022, the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of a $ 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.

At September 30, 2023, the Company had $ 49.1 million of outstanding borrowings and $ 2.0 million of letters of credit under the Senior Credit Facility, which reduced the availability under this facility to $ 698.9 million.

The Credit Agreement has two financial covenants:

2 unchanged sentences

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:

At September 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 and certain indirect taxes.

At September 30, 2023, outstanding letters of credit totaled $ 56.6 million, most with expiration dates within 12 months.

The maturities of long-term debt (including $ 7.9 million of finance leases) subsequent to September 30, 2023 are as follows:

Thereafter 357.3

The table above excludes $ 12.0 million of unamortized premiums and fees that are netted against long-term debt at June 30, 2023.

The table above excludes $ 10.1 million of unamortized premiums and fees that are netted against long-term debt at September 30, 2023.

Note 12 - Supply Chain Financing

1 unchanged sentence

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 Company or 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.

2 unchanged sentences

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:

The following table is a rollforward of the outstanding obligations for the Company’s supplier finance program for the nine months ended September 30, 2023:

September 30,

Confirmed obligations outstanding, January 1 $ 14.4

2 unchanged sentences

Confirmed obligations outstanding, ending balance $ 19.7

The obligations outstanding at June 30, 2023 were included in accounts payable, trade on the Consolidated Balance Sheet.

The obligations outstanding at September 30, 2023 were included in accounts payable, trade on the Consolidated Balance Sheet.

Note 13 - Contingencies

6 unchanged sentences

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 USEPA and the Illinois Environmental Protection Agency (“IEPA”) allege there have been one or more releases or threatened releases of hazardous substances, 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.

1 unchanged sentence

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, 2023 and December 31, 2022, respectively, which includes the Lovejoy matter described above.

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 September 30, 2023 and December 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.

1 unchanged sentence

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.

The product warranty liability included in "Other current liabilities" on the Consolidated Balance Sheets was $ 22.0 million and $ 23.5 million at September 30, 2023 and December 31, 2022, respectively.

The balances at the end of each respective period represent the best estimates of costs for existing and future claims for products that are still under warranty.

The liability primarily relates to accruals for products sold into the automotive and renewable energy sectors.

Accrual estimates are based on actual claims and expected trends that continue to mature.

1 unchanged sentence

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 following is a rollforward of the consolidated product warranty accrual for the six months ended June 30, 2023 and twelve months ended December 31, 2022:

The following is a rollforward of the consolidated product warranty accrual for the nine months ended September 30, 2023 and twelve months ended December 31, 2022:

September 30,

2023 December 31,

4 unchanged sentences

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 following tables present the changes in the components of equity for the three and nine months ended September 30, 2023 and 2022, respectively:

The Timken Company Shareholders

3 unchanged sentences

Loss Treasury

Balance at March 31, 2023 $ 2,436.3 $ 40.7 $ 853.3 $ 2,030.8 $ ( 156.8 ) $ ( 420.0 ) $ 88.3

Balance at June 30, 2023 $ 2,650.0 $ 40.7 $ 1,058.4 $ 2,132.2 $ ( 178.2 ) $ ( 521.8 ) $ 118.7

Net income 90.9 87.9 3.0

9 unchanged sentences

( 23.4 ) ( 23.4 )

Sale of shares of Timken India Limited 229.0 194.5 8.1 26.4

Stock-based compensation expense 5.8 5.8

3 unchanged sentences

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

Balance at September 30, 2023 $ 2,597.1 $ 40.7 $ 1,068.3 $ 2,196.7 $ ( 240.9 ) $ ( 587.0 ) $ 119.3

The Timken Company Shareholders

14 unchanged sentences

( 70.8 ) ( 70.8 )

Dividends declared to noncontrolling interest ( 0.6 ) ( 0.6 )

Sale of shares of Timken India Limited 229.0 194.5 8.1 26.4

4 unchanged sentences

stock-based compensation ( 16.4 ) ( 16.4 )

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.

Balance at September 30, 2023 $ 2,597.1 $ 40.7 $ 1,068.3 $ 2,196.7 $ ( 240.9 ) $ ( 587.0 ) $ 119.3

On June 20, 2023, the Company completed the sale of 7.6 million shares of Timken India Limited (“TIL”), a publicly-traded 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 57.7 percent.

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Comprehensive

Income (Loss) Treasury

Balance at March 31, 2022 $ 2,355.0 $ 40.7 $ 795.4 $ 1,711.1 $ ( 42.5 ) $ ( 233.6 ) $ 83.9

Loss Treasury

Balance at June 30, 2022 $ 2,289.2 $ 40.7 $ 804.1 $ 1,793.2 $ ( 155.9 ) $ ( 278.5 ) $ 85.6

Net income 90.4 87.0 3.4

6 unchanged sentences

instruments, net of reclassifications 1.8 1.8

Dividends paid to noncontrolling interest ( 0.5 ) ( 0.5 )

Dividends - $ 0.31 per share

3 unchanged sentences

Stock option exercise activity 2.6 2.6

Restricted share activity — 3.8 ( 3.8 )

Payments related to tax withholding for

stock-based compensation ( 1.4 ) ( 1.4 )

Balance at June 30, 2022 $ 2,289.2 $ 40.7 $ 804.1 $ 1,793.2 $ ( 155.9 ) $ ( 278.5 ) $ 85.6

Balance at September 30, 2022 $ 2,178.8 $ 40.7 $ 817.2 $ 1,857.4 $ ( 289.0 ) $ ( 332.7 ) $ 85.2

The Timken Company Shareholders

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Capital Retained Earnings Accumulated

Comprehensive

Income Treasury

Comprehensive Loss Treasury

Balance at December 31, 2021 $ 2,377.7 $ 40.7 $ 786.9 $ 1,616.4 $ ( 23.0 ) $ ( 126.1 ) $ 82.8

7 unchanged sentences

instruments, net of reclassifications 6.0 6.0

Dividends paid to noncontrolling interest ( 0.5 ) ( 0.5 )

Dividends - $ 0.92 per share

3 unchanged sentences

Stock option exercise activity 4.2 4.2

Restricted share activity — 3.8 ( 3.8 )

Payments related to tax withholding for

stock-based compensation ( 9.5 ) ( 9.5 )

Balance at June 30, 2022 $ 2,289.2 $ 40.7 $ 804.1 $ 1,793.2 $ ( 155.9 ) $ ( 278.5 ) $ 85.6

Balance at September 30, 2022 $ 2,178.8 $ 40.7 $ 817.2 $ 1,857.4 $ ( 289.0 ) $ ( 332.7 ) $ 85.2

Note 15 - Impairment and Restructuring Charges

Impairment and restructuring charges by segment are comprised of the following:

For the three months ended June 30, 2023:

For the three months ended September 30, 2023:

Engineered Bearings Industrial Motion Total

Impairment charges $ 4.9 $ — $ 4.9

Severance and related benefit costs 1.6 1.8 3.4

1 unchanged sentence

Total $ 6.9 $ 2.0 $ 8.9

For the six months ended June 30, 2023:

For the nine months ended September 30, 2023:

Engineered Bearings Industrial Motion Total

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Total $ 9.3 $ 31.0 $ 40.3

For the three months ended June 30, 2022:

For the three months ended September 30, 2022:

Engineered Bearings Industrial Motion Total

3 unchanged sentences

Total $ 1.2 $ 30.1 $ 31.3

For the six months ended June 30, 2022:

For the nine months ended September 30, 2022:

Engineered Bearings Industrial Motion Total

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On January 16, 2023, the Company announced the closure of its bearing plant in Gaffney, South Carolina.

The Company expects to transfer its remaining operations to other bearing manufacturing facilities in North America.

The Company expects to transfer its remaining operations to other bearing manufacturing facilities.

The closure of this facility is expected to occur by the end of the fourth quarter of 2023 and is expected to affect approximately 225 employees.

The Company expects to incur approximately $ 12 million to $ 14 million of pretax costs in total related to this closure.

During the three months and six months ended June 30, 2023, the Company recorded severance and related benefits of $ 0.9 million and $ 1.7 million, respectively, related to this closure.

The Company incurred cumulative pretax costs related to this closure of $ 6.1 million as of June 30, 2023, including rationalization costs recorded in cost of products sold.

During the three and nine months ended September 30, 2023, the Company recorded severance and related benefits of $ 1.4 million and $ 3.1 million, respectively, related to this closure.

The Company has incurred cumulative pretax costs related to this closure of $ 10.2 million as of September 30, 2023, including rationalization costs recorded in cost of products sold.

Note 15 - Impairment and Restructuring Charges (continued)

During the three months ended June 30, 2022, the Company recorded impairment charges of $ 8.8 million related to 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.

As a result of Russia's invasion of Ukraine (and associated sanctions), the Company suspended its operations in Russia in 2022.

During the three and nine months ended September 30, 2023, the Company recorded impairment charges of $ 3.9 million related to certain assets of its joint venture in Russia.

During the nine months ended September 30, 2022, the Company recorded impairment charges of $ 9.0 million related to certain assets of its joint venture in Russia.

The Company continues to evaluate strategic options for its joint venture stake.

Refer to Russia Operations in Management's Discussion and Analysis for additional information.

During the three months ended September 30, 2023, the Company classified TWB as assets held for sale and recorded impairment charges of $ 1.0 million.

The Company completed the sale of TWB on October 16, 2023.

On July 19, 2021, the Company announced the closure of its bearing manufacturing facility in 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 the facility on October 31, 2022, and it affected approximately 110 employees.

During the three months ended June 30, 2022, the Company recorded severance and related benefits of $ 0.4 million and exit costs of $ 0.4 million related to this closure.

During the six months ended June 30, 2022, the Company recorded severance and related benefits of $ 0.8 million and exit costs of $ 1.0 million related to this closure.

The Company incurred cumulative pretax costs related to this closure of $ 9.8 million as of June 30, 2023, including rationalization costs recorded in cost of products sold.

The Company transferred its remaining operations to other bearing manufacturing facilities.

The Company completed the closure of this facility on October 31, 2022, and it affected approximately 110 employees.

During the three and nine months ended September 30, 2022, the Company recorded severance and related benefits of $ 0.4 million and $ 1.2 million, and exit costs of $ 0.3 million and $ 1.3 million, respectively, related to this closure.

The Company has incurred cumulative pretax costs related to this closure of $ 9.8 million as of September 30, 2023, including rationalization costs recorded in cost of products sold.

On November 1, 2022, the Company completed the sale of this facility.

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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.

After evaluating the impact from the organizational changes and related segmentation implications through the balance of 2022, the Company concluded that it would begin operating 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.

1 unchanged sentence

As a result of this goodwill impairment review, the Company recognized a pretax goodwill impairment loss of $ 28.3 million during the three months ended March 31, 2023.

During the three months ended September 30, 2022, the Company classified the ADS business as assets held for sale and recorded impairment charges of $ 29.3 million.

The Company subsequently completed the sale of the ADS business on November 1, 2022.

On February 4, 2020, the Company announced the closure of its chain manufacturing facility in Indianapolis, Indiana.

3 unchanged sentences

The Company hired approximately 130 full-time positions in Fulton, Illinois related to this closure.

The Company incurred cumulative pretax costs related to this closure of $ 14.8 million as of June 30, 2023, including rationalization costs recorded in cost of products sold.

The Company incurred cumulative pretax costs related to this closure of $ 14.5 million as of September 30, 2023, including rationalization costs recorded in cost of products sold.

In addition, during the three and nine months ended September 30, 2023, the Company recorded severance and related benefits of $ 0.8 million and $ 1.1 million, respectively, related to one of its automatic lubrication systems facilities in Europe.

Note 15 - Impairment and Restructuring Charges (continued)

Consolidated Restructuring Accrual:

The following is a rollforward of the consolidated restructuring accrual for the six months ended June 30, 2023 and twelve months ended December 31, 2022:

The following is a rollforward of the consolidated restructuring accrual for the nine months ended September 30, 2023 and twelve months ended December 31, 2022:

September 30,

2023 December 31,

3 unchanged sentences

Ending balance $ 5.4 $ 3.1

The restructuring accrual at June 30, 2023 and December 31, 2022 was included in other current liabilities on the Consolidated Balance Sheets.

The restructuring accrual at September 30, 2023 and December 31, 2022 was included in other current liabilities on the Consolidated Balance Sheets.

Note 16 - 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 six months ended June 30, 2023 are based on calculations prepared by the Company's actuaries and represent the Company’s best estimate of that period’s proportionate share of the amounts to be recorded for the year ending December 31, 2023.

The amounts for the three and nine months ended September 30, 2023 are based on calculations prepared by the Company's actuaries and represent the Company’s best estimate of that period’s proportionate share of the amounts to be recorded for the year ending December 31, 2023.

Plans International Plans Total

Three Months Ended

June 30, Three Months Ended

September 30, Three Months Ended

September 30,

2023 2022 2023 2022 2023 2022

4 unchanged sentences

Amortization of prior service cost 0.1 0.3 — — 0.1 0.3

Recognition of net actuarial

(gains) losses ( 1.0 ) 11.6 — — ( 1.0 ) 11.6

Recognition of net actuarial losses 0.2 1.0 — — 0.2 1.0

Net periodic benefit cost (credit) $ 2.8 $ 3.3 $ 0.2 $ ( 0.4 ) $ 3.0 $ 2.9

Plans International Plans Total

Six Months Ended

June 30, Six Months Ended

Nine Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022 2023 2022

7 unchanged sentences

Net periodic benefit cost (credit) $ 6.2 $ 19.8 $ 1.1 $ ( 1.5 ) $ 7.3 $ 18.3

For the three and six months ended June 30, 2023, lump sum payments related to new retirees exceeded annual interest and service costs for one of the Company's U.S.

For the three and nine months ended September 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 assets and obligations for this plan.

As a result of this remeasurement, the Company recognized net actuarial ("mark-to-market") gains 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 related to new retirees in excess of annual interest and service costs for two of the Company's U.S.

As a result of this remeasurement, the Company recognized a net actuarial ("mark-to-market") loss of $ 0.2 million during the three months ended September 30, 2023 and a mark-to-market gain of $ 1.7 million during the nine months ended September 30, 2023.

For the three and nine months ended September 30, 2022, the Company expected full-year lump sum payments related to new retirees to exceed annual interest and service costs for 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.

As a result of these remeasurements, the Company recognized net mark-to-market losses of $ 1.0 million and $ 15.2 million during the three and nine months ended September 30, 2022, respectively.

Note 17 - Other Postretirement Benefit Plans

The following table sets forth the net periodic benefit cost for the Company’s other postretirement benefit plans.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

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:

The following tables present details about components of accumulated other comprehensive (loss) income for the three and nine months ended September 30, 2023 and 2022, respectively:

Foreign currency translation adjustments Pension and other postretirement liability adjustments Change in fair value of derivative financial instruments Total

Balance at March 31, 2023 $ ( 208.3 ) $ 49.3 $ 2.2 $ ( 156.8 )

Sale of shares of Timken India Limited 8.1 — — 8.1

Other comprehensive loss before

Balance at June 30, 2023 $ ( 227.8 ) $ 47.7 $ 1.9 $ ( 178.2 )

Other comprehensive loss (income) before

reclassifications and income taxes ( 65.1 ) — 2.1 ( 63.0 )

2 unchanged sentences

taxes — ( 1.9 ) 0.8 ( 1.1 )

Income tax benefit — 0.5 0.2 0.7

Income tax benefit (expense) — 0.5 ( 0.9 ) ( 0.4 )

Net current period other comprehensive (loss)

net of income taxes ( 27.9 ) ( 1.6 ) ( 0.3 ) ( 29.8 )

income, net of income taxes ( 65.1 ) ( 1.4 ) 2.0 ( 64.5 )

Noncontrolling interest 1.8 — — 1.8

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 )

income, net of income taxes, noncontrolling

interest and sale of shares of Timken India

Limited ( 63.3 ) ( 1.4 ) 2.0 ( 62.7 )

Balance at September 30, 2023 $ ( 291.1 ) $ 46.3 $ 3.9 $ ( 240.9 )

Foreign currency translation adjustments Pension and other postretirement liability adjustments Change in fair value of derivative financial instruments Total

1 unchanged sentence

Sale of shares of Timken India Limited 8.1 — — 8.1

Other comprehensive loss before

Other comprehensive loss (income) before

reclassifications and income taxes ( 65.3 ) ( 0.1 ) 0.4 ( 65.0 )

2 unchanged sentences

taxes — ( 5.9 ) 0.9 ( 5.0 )

Income tax benefit — 1.0 0.5 1.5

Income tax benefit (expense) — 1.5 ( 0.4 ) 1.1

Net current period other comprehensive (loss)

net of income taxes ( 0.2 ) ( 3.1 ) ( 1.1 ) ( 4.4 )

income, net of income taxes ( 65.3 ) ( 4.5 ) 0.9 ( 68.9 )

Noncontrolling interest 1.8 — — 1.8

Net current period other comprehensive income

(loss), net of income taxes, noncontrolling

Net current period other comprehensive (loss)

income, net of income taxes, noncontrolling

interest and sale of shares of Timken India

Limited ( 55.4 ) ( 4.5 ) 0.9 ( 59.0 )

Balance at June 30, 2023 $ ( 227.8 ) $ 47.7 $ 1.9 $ ( 178.2 )

Balance at September 30, 2023 $ ( 291.1 ) $ 46.3 $ 3.9 $ ( 240.9 )

Note 18 - Accumulated Other Comprehensive Income (Loss) (continued)

Foreign currency translation adjustments Pension and other postretirement liability adjustments Change in fair value of derivative financial instruments Total

Balance at March 31, 2022 $ ( 100.3 ) $ 55.1 $ 2.7 $ ( 42.5 )

Balance at June 30, 2022 $ ( 214.5 ) $ 53.7 $ 4.9 $ ( 155.9 )

Other comprehensive (loss) income before

10 unchanged sentences

interest ( 133.5 ) ( 1.4 ) 1.8 ( 133.1 )

Balance at June 30, 2022 $ ( 214.5 ) $ 53.7 $ 4.9 $ ( 155.9 )

Balance at September 30, 2022 $ ( 348.0 ) $ 52.3 $ 6.7 $ ( 289.0 )

Foreign currency translation adjustments Pension and other postretirement liability adjustments Change in fair value of derivative financial instruments Total

12 unchanged sentences

interest ( 267.7 ) ( 4.3 ) 6.0 ( 266.0 )

Balance at June 30, 2022 $ ( 214.5 ) $ 53.7 $ 4.9 $ ( 155.9 )

Balance at September 30, 2022 $ ( 348.0 ) $ 52.3 $ 6.7 $ ( 289.0 )

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

5 unchanged sentences

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 June 30, 2023 and December 31, 2022:

June 30, 2023

The following tables present the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022:

September 30, 2023

Total Level 1 Level 2 Level 3

3 unchanged sentences

Short-term investments 41.8 — 41.8 —

Interest rate swap contracts 1.0 — 1.0 —

Foreign currency forward contracts 2.5 — 2.5 —

13 unchanged sentences

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 redempti on value.

Short-term investments are investments with maturities between four months and one year, and generally are valued at amortized cost, which approximat es fair value.

Cash and cash equivalents are highly liquid investments with maturities of 90 days or less when purchased and are valued at redemption value.

Short-term investments are investments with maturities between 91 days and one year, and generally are valued at amortized cost, which approximates fair value.

A portion of the cash and cash equivalents and short-term investments are valued based on net asset value.

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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 w ere measured at fair value on a nonrecurring basis during the six months ended June 30, 2023 and 2022, respectively.

During the third quarter of 2023, TWB was reclassified to assets held for sale.

In conjunction with this reclassification, the legal entity, with a carrying value of $ 10.3 million, was written down to $ 9.3 million, which represents its estimated fair value less the cost to sell, resulting in an impairment charge of $ 1.0 million.

The fair value for these net assets was determined based on an estimate of the value expected to be received upon the sale of this business.

See Note 3 - Acquisitions and Divestitures for further discussion.

During the third quarter of 2023, property, plant and equipment and leased assets at the Company's joint venture in Russia, with a carrying value of $ 3.9 million, were written down to their estimated fair value, resulting in an impairment charge of $ 3.9 million.

The fair value for these assets was determined based on the best estimate of the price that would be realized in a current transaction to sell the business and related assets to a third party.

No other material assets were measured at fair value on a nonrecurring basis during the nine months ended September 30, 2023 and 2022, respectively.

Financial Instruments:

1 unchanged sentence

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 calculati ons for variable-rate debt, the carrying value of the Company's long-term variable-rate debt is a reasonable estima te 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.

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 $ 1,328.3 million and $ 1,353.5 million at September 30, 2023 and December 31, 2022, respectively.

The carrying value of this debt was $ 1,416.5 million and $ 1,417.9 million at September 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.

10 unchanged sentences

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 (th e "2027 Notes"), as a hedge against its net investment in one of its European subsidiaries.

The swap matured on September 11, 2023.

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 net impact for the three and nine months ended September 30, 2023, respectively, was a gain of $ 1.8 million and $ 0.7 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.

1 unchanged sentence

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 derivativ e financial instruments for trading purposes.

As of June 30, 2023 and December 31, 2022, the Company had $ 573.1 million and $ 635.6 million, respectively, of outstanding foreign currency forward contracts at notional value.

The Company does not purchase or hold any derivative financial instruments for trading purposes.

As of September 30, 2023 and December 31, 2022, the Company had $ 699.5 million and $ 635.6 million, respectively, of outstanding foreign currency forward contracts at notional value.

Refer to Note 19 - Fair Value for the fair value disclosure of derivative financial instruments.

Note 20 - Derivative Instruments and Hedging Activities (continued)

Cash Flow Hedging Strategy:

3 unchanged sentences

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.

Co nverse ly, 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.

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 September 30, 2023 and December 31, 2022, the Company had $ 67.2 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 forecast transactions is generally eighteen months or less.

Note 20 - Derivative Instruments and Hedging Activities (continued)

Purpose for Derivative Instruments not designated as Hedging Instruments:

3 unchanged sentences

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 d esignated as hedging instruments.

The following table presents the impact of derivative instruments not designated as hedging instruments for the three and six months ended June 30, 2023 and 2022, respectively, and the related location within the Consolidated Statements of Income:

As of September 30, 2023 and December 31, 2022, the Company had $ 632.3 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 impact of derivative instruments not designated as hedging instruments for the three and nine months ended September 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

September 30, Nine Months Ended

September 30,

Derivatives not designated as hedging instruments:

1 unchanged sentence

Foreign currency forward contracts Other expense, net $ 0.3 $ ( 1.1 ) $ ( 16.2 ) $ ( 8.0 )

Note 21 - Subsequent Events

On October 12, 2023, the Company reached an agreement to acquire Engineered Solutions Group, also known as Innovative Mechanical Solutions ("iMECH").

iMECH manufactures thrust bearings, radial bearings, specialty coatings and other components primarily used in the energy industry.

iMECH is expected to have revenue of approximately $ 30 million for the full year of 2023.

The business employs approximately 70 people and is based in Houston, Texas.

The transaction, which is subject to customary closing conditions, is expected to close in the fourth quarter and will be funded with cash and borrowings from existing credit facilities.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements