The Timken Company

Investor Presentation

June 2011

Emerging with Higher Value

INVESTOR RELATIONS CONTACT: Steve Tschiegg, Director - Capital Markets & Investor Relations PH: (330) 471-7446 E-mail: steve.tschiegg@timken.com

Safe Harbor
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 Timkens plans, outlook, future financial performance and liquidity, including the information under the headings Outlook and Target are forwardlooking. 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 companys ability to respond to the changes in its end markets that could affect demand for the companys products; unanticipated changes in business relationships with customers or their purchases from the company; changes in the financial health of the companys customers, which may have an impact on the companys revenues, earnings and impairment charges; fluctuations in raw-material and energy costs and their impact on the operation of the companys surcharge mechanisms; the impact of the companys last-in, first-out accounting; weakness in global economic conditions and financial markets; changes in the expected costs associated with product warranty claims; the impact on operations of general economic conditions, higher or lower raw-material and energy costs, fluctuations in customer demand, and the companys ability to achieve the benefits of its ongoing programs and initiatives. These and additional factors are described in greater detail in the company's Annual Report on Form 10-K for the year ended December 31, 2010, page 44. The company undertakes no obligation to update or revise any forward-looking statement.

About The Timken Company

A leading provider of friction management and power transmission solutions to diverse markets, including:
Aerospace Mining Energy / Wind Rail Construction Truck Automotive Distribution

Established in 1899 Headquartered in Canton, Ohio 2010 sales: $4.1 billion

Global manufacturing footprint with operations in 29 countries

20,000 associates
Timken 2010 Sales: $4.1 billion
Mobile Industries 39% Process Industries 22% Aerospace & Defense 8% Steel Group 31%

Note: Segment sales are based on 2010 actual. Process Industries and Steel Group sales exclude inter-segment sales of $3 million and $103 million respectively.

Diverse Global Portfolio

2010 Sales: $4.1 Billion
Agriculture Other Mining Construction Heavy / Medium Truck Metals Rail Light Truck Auto Aftermarket
Energy

Portfolio Diversification

Industrial Machinery

Broad-based end markets and customers

Increased sales from demanding applications

Expanded channels into the aftermarket
Global Diversification

Diversified global scope, growing faster outside the U.S.

Passenger Car Aerospace & Defense

34% of sales are outside the U.S.

Excluding Steel Group, sales abroad represent nearly 50% of the portfolio

Timken Position in Asia

2010 Sales: $470 million, 12% of Timken Employment: 4,500 Industrial market focus:
Infrastructure Energy Aftermarket Services

China and India home markets Expanding in ASEAN Indonesia Growing brand reputation Broader product range Significant industrial bearing manufacturing capacity & supply chain Strong local organizations

The Strategy is Working

Enhance existing products and services Leverage technology to create value Capture lifetime of opportunity

Attractive industrial markets

Developing geographies Channels, services, distribution

Structure portfolio for value creation Fix/Exit under-performing areas

Refine lean operating model

Improve efficiency and reduce cost structure

Increase agility Deliver greater profitability

Strategic Accomplishments
Improved leverage
Reduced asset intensity SAP investment Working capital improvement Reduced structural S&A costs

Increased productivity
Lean performance: sustaining flexible force Improved manufacturing throughput Streamlined supply chain logistics Leverage greater returns on higher volume

Less cycle vulnerability

Each business better positioned to earn cost of capital through the cycle Dramatically changed portfolio via structural acquisitions, divestitures and organic business development

High-margin Aerospace & Defense and Process Industries businesses moving into the up cycle

Strategic Accomplishments
Record New Products

New steel products

Spherical roller bearings

(wear-resistant type shown)

Type-E Housed Units

Integrated Systems (bearing, seal, lubrication) for Multi-megawatt Wind Turbines

Attractive Markets
Expanding in diverse industries, channels, services, distribution Aerospace engines Wood, pulp, paper Food processing Wind energy & services Aerospace aftermarket

Focused Acquisitions
Focus on Power Transmission Adjacent Products High aftermarket, services, distribution components Challenging, highly engineered, critical end-user applications Target market segments that value Timkens brand promise

Philadelphia Gear Acquisition

Gearbox Repair & Manufacturing
Key Terms
Purchase Price: $200 million Sales (LTM 3/31/11): $85 million Expected to be accretive to 2012 earnings & exceed cost of capital in 2014 To be integrated into Process Industries segment Closing: by 3Q-2011*

Service & Product Offering

Gear Drive Repair On-Site Technical Services

Enclosed Gearing
Replacement Parts

End-Markets Served
Power Generation (Coal Fired) Oil & Gas Mining Municipal, Water Treatment Cement, Pulp & Paper, Sugar Military Marine

*Expected closing pending certain government and regulatory approvals.

9

Mobile Industries
Segment Overview
Bearings, power transmission components and related products and services Serves diverse market sectors Light Vehicle Auto Aftermarket Off Highway Heavy Truck Rail Customers: OEMs and aftermarket distributors

Sector Profile
2010 Sales: $1.6 billion
Off Highway 21%
Light Truck 29%

Auto & Truck Aftermarket 14% Rail 11%

Passenger Car 13%

Heavy Truck 12%

2010 Achievements
Completed portfolio re-pricing Effectively managed OE attrition Penetration in strategic markets Strong operational performance

2011 Outlook
Revenues expected to be up modestly Growth in off-highway, rail, heavy truck auto/heavy truck aftermarkets Continuing automotive OE attrition Sustained margins

Strong cash flow

10

Process Industries
Segment Overview
Bearings and power transmission products and related services for broad industrial markets

Sector Profile
2010 Sales: $903 million
Service 4%
Energy 22%

Diverse and global customer base

~65% aftermarket; consistent, profitable business

Industrial Machinery 29%

Gear Drives 12% Infrastructure 6% Metals 27%

2010 Achievements
Accelerated growth in new products:

2011 Outlook
Key markets will continue to rebound and grow Strong leverage from manufacturing investments Expand Asia growth initiatives Penetrate global wind energy market Expand new products and services Growth launch in Latin America & ASEAN regions

spherical, cylindrical and housed units

QM acquisition Continued expansion in Asia Gains in wind energy

11

Aerospace and Defense

Segment Overview
Power transmission systems and flightcritical components for civil and military aircraft: Helicopter transmissions Bearings Rotor head assemblies Gears Turbine engine Housings components Aftermarket engine overhaul, replacement parts, bearing and component repair Health and positioning control applications

Sector Profile
2010 Sales: $338 million
Health & Position'g Control 18% Commercial Aero. 24%

Defense Aero. 42%

General Aviation 16%

2010 Achievements
Implemented business systems infrastructure Rationalized footprint Qualified over 150 new parts

2011 Outlook
Strengthening commercial aerospace Continued weakness in general aviation Defense spending uncertain Improving positioning control markets globally Margin improvement Strong cash flow

12

Steel Group
Segment Overview
Market leadership position in high quality air-melted alloy steel bars, tubes, precision components and value-added services
Bars: 1 to 16 Tubes: 2 to 13

Sector Profile
2010 Sales: $1.4 billion
Aero. & Defense 5%

Rail 3%

Off-Highway 12%

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...
Industrial Machinery 24%

Light Vehicles 34%

Heavy/Med. Truck 2% Oil & Gas 20%

2010 Achievements
Pricing

2011 Outlook
Sustained market recovery for light vehicle market Initial stage recovery for heavy & mediumduty truck market

Secure iron source

Accelerated ramp up Daido steel source Working capital control Capital investment

Higher oil prices drive world rig count growth

Strong industrial demand expected through 2011

13

The Path Forward

Build on the momentum Execute for results: superior returns Advance the portfolio: diversified, balanced Accelerate growth: organic investments + acquisitions that fit Strengthen the team: global breadth & depth

14

Financial Review

2010 Results
Sales of $4.1 billion, up 29% from prior year

EBIT of $440 million, or 10.8% of sales

EPS of $2.73 versus a loss of $0.64 from prior year Free cash flow of $146 million

Strong balance sheet

Note: EBIT and EPS reflect continuing operations and include the impact of special items: impairment and restructuring, manufacturing rationalization/ integration/reorganization and special charges and credits. Free cash flow is defined as net cash provided by operating activities (includes pension contributions) minus capital expenditures and dividends. See Appendix for GAAP Reconciliations on these items.

16

2011 Results 1st Quarter

Sales of $1.3 billion, up 37% from prior year

EBIT of $180 million, or 14.3% of sales

Record first-quarter EPS of $1.13 versus $0.29 from prior year Free cash flow, a use of $235 million
Includes working capital requirements of $175 million and $150 million discretionary pension contributions

Strong balance sheet

Cash position of $638 million, or $115 million in excess of total debt Liquidity of $1.5 billion, with no significant debt maturities until 2014
Note: Free cash flow is defined as net cash provided by operating activities (includes pension contributions) minus capital expenditures and dividends. See Appendix for GAAP Reconciliations.

17

Sales
Net Sales ($ in Millions)
2013 Target* 10-15% CAGR
$7,000 $6,000 including organic & inorganic growth 6

CAGR 2002-2009: 4%
$5,000

4
$4,000

CAGR 1991-2001: 4%
$3,000

2 $2,000 $1,000 1

$0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

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.

*2013 Target as of February 16, 2011 18

Earnings Per Share (GAAP)

Net Sales ($ in Millions) Earnings Per Share
2013 EPS Target* $4.75-$5.25
$7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 including organic & inorganic growth $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 ($1.00)

Note: Earnings are reported on a GAAP basis and include the impact of special items, such as restructuring and reorganization expenses, CDO payments and goodwill amortization. EPS assumes dilution. 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.

*2013 Target as of February 16, 2011 19

Free Cash Flow

Free Cash Flow ($ in Millions)
$500

$400

$300

2013 Target* $200M-$250M 02-09 Avg: $87M

$200

91-01 Avg: $16M

$100

$0

-$100 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Note: Free cash flow defined as net cash provided by operating activities (includes pension contributions) minus capital expenditures and dividends. A reconciliation to GAAP and description of this measure can be found in the Appendix. Results include discontinued operations until divested.

*2013 Target as of February 16, 2011 20

Net Debt
Net Debt ($ in Millions) Net Debt /Capital

$1,000 $800 $600 $400 $200 $0 -$200 -$400 -$600 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

50% 40%

Target leverage of 30% - 35%

30% 20% 10% 0% -10% -20% -30%

Note: 2003 includes Torrington acquisition as acquired February 2003. Net Debt / Capital (leverage) defined as Net Debt / (Net Debt + Equity). A reconciliation to GAAP and description of this measure can be found in the Appendix. Results include discontinued operations until divested.

21

Return on Invested Capital

Return on Invested Capital Cost of Capital
2013 Target* 13-15%

16% 14% 12% 10% 8% 6% 4% 2% 0% -2% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Cost of Capital ~ 9% 9101 Avg. : 6.2% 0209 Avg. : 7.8%

2011

2013

Note: The company uses NOPAT/Average Invested Capital as a type of ratio that indicates return on capital (ROIC). A reconciliation to GAAP and description of this measure can be found in the Appendix. Results include discontinued operations until divested.

*2013 Target as of February 16, 2011 22

Capital Allocation
Organic growth and performance improvement initiatives
Targeted in industrial market sectors; wind, aerospace, heavy industries, oil & gas Asia Growth

Acquisitions
Industrial and aftermarket focus Market-leading position Strong management team International focus Accretive to earnings / cash in year one Earn cost of capital within three years

Pension / OPEB funding Dividends and share repurchase

356th consecutive quarterly dividend paid in June 2011 Authorized share repurchase program 2.5 million shares remaining

23

Incentive Compensation
Short-Term
(Cash) Program Annual Performance Award Plan (APA) Short-term operational business priorities

Intermediate
(Cash) Intermediate Incentive Plan (IIP) Mid-term strategic business priorities

Long-Term
(Equity) Restricted Shares Non Qualified Stock Options

Objective

Long-term shareholder value creation 400 Senior Managers and above coupled with certain ownership requirements 4 Years 10 Years

Participants Time Horizon

5,700 Associates globally 1 Year 40% 30% Corporate EBIT/BIC Business Unit EBIT/BIC BU working capital % sales Customer service or New business sales ratio

150 General Managers & above

3 Years

Metrics

15% 15%

50% EPS 50% ROIC

Share price

24

The Strategy is Working

Enhance existing products and services Leverage technology to create value Capture lifetime of opportunity

Attractive industrial markets

Developing geographies Channels, services, distribution

Structure portfolio for value creation Fix/Exit under-performing areas

Refine lean operating model

Improve efficiency and reduce cost structure

Increase agility Deliver greater profitability

25

The Timken Company

Investor Presentation

June 2011

Appendix

Geographic Sales Profile

Diversified global scope, growing faster outside the U.S. 34% of sales are outside the U.S.
Excluding Steel Group, sales abroad represent nearly 50% of the portfolio
Asia 12%

2010 Sales: $4.1 Billion

Latin America 4%

Rest of World 6%

United States 66%

Europe 12%

28

Mobile Industries 2010 Performance Summary

Performance Update Key Accomplishments

Sales up 25% to $1.6 billion Growth drivers: Market recoveries in light vehicles, off highway, heavy truck and automotive aftermarket Leveraged the economic recovery / manufacturing costs

Completed portfolio re-pricing Effectively managed OE attrition Penetration in strategic markets Strong operational performance

Record profitability; strong cash flow

Revenue - $Mils.
$2,000
$300

Earnings (EBIT) - $Mils.

Adjusted Revised

Margins
20%
15% Adjusted Revised

$1,500

$200 $100

10% 5% 0%

$1,000
$0

-5% -10%
2008 2009 2010

$500 2008 2009 2010

-$100

2008

2009

2010

Note: Adjusted EBIT excludes the impact of special items. Revised EBIT is inclusive of special items. See appendix for reconciliation.

29

Aerospace & Defense 2010 Performance Summary

Performance Update Key Accomplishments

Late-cycle weakness in civil and defense markets

Implemented business systems infrastructure

Inventory destocking
Earned 6% adjusted margin for the full year

Rationalized footprint
Qualified over 150 new parts

Revenue - $Mils.
$500 $400 $300 $200 $100 $0
2008 2009 2010
$0

Earnings (EBIT) - $Mils.

$80 $60 $40 $20
Adjusted Revised

Margins
20% 15% 10% 5% 0%
Adjusted Revised

2008

2009

2010

2008

2009

2010

Note: Adjusted EBIT excludes the impact of special items. Revised EBIT is inclusive of special items. See appendix for reconciliation.

30

Process Industries 2010 Performance Summary

Performance Update
Metrics
Double digit growth Margin expansion YOY Strong working capital management

Key Accomplishments
Accelerated growth in new products: spherical,

cylindrical and housed units

QM acquisition

Business drivers Distribution recovered in 2nd half

Heavy industry markets lagged

Continued expansion in Asia

Gains in wind energy

Revenue - $Mils.
$1,200 $1,000
$150 $250 $200

Earnings (EBIT) - $Mils.

Adjusted Revised

Margins
20% 15% 10% 5% 0%
Adjusted Revised

$800

$100 $50
$0

$600 $400

2008

2009

2010

2008

2009

2010

2008

2009

2010

Note: Adjusted EBIT excludes the impact of special items. Revised EBIT is inclusive of special items. See appendix for reconciliation.

31

Steel 2010 Performance Summary

Performance Update Sales up 90% to $1.4 billion Pricing Secure iron source Key Accomplishments

Growth drivers: Demand recovery, inventory restocking

Improved capacity utilization Strong earnings rebound; 2x cost of capital

Accelerated ramp up
Daido steel source Working Capital control Capital Investment

Revenue - $Mils.
$2,000 $1,500 $1,000 $500 $0 2006 2007 2008 2009 2010
$200 $100 $0 -$100 $300

Earnings (EBIT) - $Mils.

Adjusted Revised

Margins
20%
15%

Adjusted

Revised

10%
5%

0%
-5%

-10%
2006 2007 2008 2009 2010

-15%

2006 2007 2008 2009 2010

Note: Adjusted EBIT excludes the impact of special items. Revised EBIT is inclusive of special items. See appendix for reconciliation.

32

Reconciliation to GAAP 2010

(continued next page)
(Unaudited) CONDENSED CONSOLIDATED STATEMENT OF INCOME (Dollars in millions, except share data) Net sales Cost of products sold Manufacturing rationalization / reorganization expenses - cost of products sold Gross Profit Selling, general & administrative expenses (SG&A) Rationalization / reorganization expenses - SG&A Impairment and restructuring Operating Income (Loss) Other income (expense) Special items - other income (expense) Earnings (Loss) Before Interest and Taxes (EBIT) (2) Interest expense, net Income (Loss) From Continuing Operations Provision (benefit) for income taxes Income (Loss) From Continuing Operations Income (loss) from discontinued operations, net of income taxes (3) Net Income (Loss) Less: Net Income (Loss) Attributable to Noncontrolling Interest Net Income (Loss) Attributable to The Timken Company

AS REPORTED Full Year Full Year 2010 2009 3,141.6 $ 4,055.5 $ 2,550.7 3,028.3 5.5 8.2 582.7 1,021.7 469.8 563.0 2.9 0.8 164.1 21.7 (54.1) 436.2 1.9 1.5 (2.0) 2.3 (54.2) 440.0 (40.0) (34.5) (94.2) 405.5 (28.2) 136.0 (66.0) 269.5 (72.6) 7.4 (138.6) 276.9 (4.6) 2.1 (134.0) $ 274.8 $

AS ADJUSTED (1) Full Year Full Year 2009 2010 $ 4,055.5 $ 3,141.6 2,550.7 3,028.3 590.9 1,027.2 469.8 563.0 121.1 464.2 1.9 1.5 123.0 465.7 (40.0) (34.5) 83.0 431.2 30.6 139.8 52.4 291.4 (20.2) 32.2 291.4 1.5 2.5 30.7 $ 288.9 $

33

Reconciliation to GAAP 2010

(Unaudited) CONDENSED CONSOLIDATED STATEMENT OF INCOME (Dollars in millions, except share data) Net Income (Loss) per Common Share Attributable to The Timken Company Common Shareholders Basic Earnings (Loss) Per Share - Continuing Operations Basic Earnings (Loss) Per Share - Discontinued Operations Earnings (Loss) Per Share Diluted Earnings (Loss) Per Share - Continuing Operations Diluted Earnings (Loss) Per Share - Discontinued Operations Earnings (Loss) Per Share Average Shares Outstanding Average Shares Outstanding - assuming dilution AS REPORTED Full Year Full Year 2010 2009 AS ADJUSTED (1) Full Year Full Year 2009 2010

$ $ $

2.76 0.07 2.83

$ $ $

(0.64) (0.75) (1.39)

$ $ $

2.98 2.98

$ $ $

0.53 (0.21) 0.32

2.73 0.08 $ 2.81 96,535,273 97,516,202

(0.64) (0.75) $ (1.39) 96,135,783 96,135,783

2.95 $ 2.95 96,535,273 97,516,202

0.53 (0.21) $ 0.32 96,135,783 96,135,783

(1) "Adjusted" statements exclude the impact of impairment and restructuring, manufacturing rationalization/reorganization and special charges and credits for all periods shown. Management believes that the Adjusted Consolidated Statement of Income may be helpful in understanding the company's performance and therefore useful to investors. (2) EBIT is defined as operating income plus other income (expense). EBIT Margin is EBIT as a percentage of net sales. EBIT and EBIT margin on a segment basis exclude certain special items set forth above. EBIT and EBIT Margin are important financial measures used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. Management believes that reporting EBIT and EBIT Margin best reflect the performance of the company's business segments and EBIT disclosures are responsive to investors. (3) Discontinued Operations relate to the sale of the Needle Roller Bearings (NRB) operations to JTEKT Corporation on December 31, 2009.

34

Reconciliation to GAAP 2010

Reconciliation of net income (loss) attributable to The Timken Company and EPS - diluted. This reconciliation is provided as additional relevant information about the company's performance. Management believes adjusted earnings per share are more representative of the company's performance and therefore useful to investors. Management also believes that it is appropriate to compare GAAP income from continuing operations to adjusted income from continuing operations in light of special items related to impairment and restructuring and manufacturing rationalization/reorganization costs, Continued Dumping and Subsidy Offset Act (CDSOA) receipts and gain/loss on sale of non-strategic assets. Fourth Quarter 2010 (Dollars in millions, except share data) Net income (loss) attributable to The Timken Company Less: Income (loss) from discontinued operations, net of income taxes Net income (loss) from continuing operations attributable to The Timken Company Pre-tax special items: Manufacturing rationalization/reorganization expenses - cost of products sold Rationalization/reorganization expenses - SG&A Impairment and restructuring Special items - other (income) expense Provision for income taxes (6) Special items attributable to noncontrolling interest Adjusted net income from continuing operations attributable to The Timken Company Add: adjusted (loss) from discontinued operations Adjusted net income attributable to The Timken Company Income (loss) from continuing operations Less: Net income (loss) attributable to noncontrolling interest Net income (loss) from continuing operations attributable to The Timken Company Income (loss) from discontinued operations, net of income taxes Special items, discontinued operations Adjusted income (loss) from discontinued operations, net of income taxes
(5) EPS amounts may not sum due to rounding differences (6) Provision for income taxes includes the tax impact on pre-tax special items, the impact of discrete tax items recorded during the respective periods, as well as adjustments to reflect the use of one

Full Year 2009 2010

(5)

2009
(5)

$ $ 90.3 4.0 86.3 1.4 0.1 12.3 (2.0) (24.3) (0.4) 73.4 $ $ 73.4 86.6 0.3

EPS $ 0.91 0.04 0.87 0.01 0.00 0.12 (0.02) (0.25) (0.00) 0.74 $ $ 0.74 0.88 0.00 0.87

(5)

$ EPS (20.2) $ (0.21) (12.7) (0.13) (7.5) 4.6 1.3 80.0 1.4 (50.3) 0.1 29.6 (0.08) 0.05 0.01 0.83 0.01 (0.52) 0.00 0.31 $ 0.09 0.40 (0.07) 0.00 (0.08) (0.13) 0.22 0.09

$ $ 274.8 7.4 267.4 5.5 0.8 21.7 (2.3) (3.8) (0.4) 288.9 $ 288.9 $ 269.5 2.1 $ $ $ 267.4

EPS 2.81 0.08 2.73 0.06 0.01 0.22 (0.02) (0.04) (0.00) 2.95

$ EPS (5) $ (134.0) $ (1.39) (72.6) (0.75) (61.4) 8.2 2.9 164.1 2.0 (58.8) (6.1) 50.9 $ $ (20.2) 30.7 $ (66.0) $ (4.6) (61.4) $ (72.6) $ 52.4 (20.2) $ (0.64) 0.09 0.03 1.71 0.02 (0.61) (0.06) 0.53 (0.21) 0.32 (0.69) (0.05) (0.64) (0.75) 0.54 (0.21)

$ $

9.4 39.0

$ $

2.95 2.76 0.02

(7.2) $ 0.3 (7.5) $ (12.7) $ 22.1 9.4 $

$ $ $

86.3 $ 4.0 $ (4.0) $

2.73 $ 0.08 $ (0.08) $

0.04 $ (0.04) $

7.4 $ (7.4) $

overall effective tax rate on Adjusted pre-tax income in interim periods.

35

Reconciliation to GAAP 1Q 2011

Reconciliation of GAAP income from continuing operations before income taxes This reconciliation is provided as additional relevant information about the company's performance. Management believes Consolidated earnings before interest and taxes (EBIT) are more representative of the company's performance and therefore useful to investors. Management also believes that it is appropriate to compare GAAP income from continuing operations before income taxes to Consolidated EBIT. Three Months Ended March 31, 2011 2010 (Dollars in millions) (Unaudited) Income from continuing operations before income taxes Pre-tax reconciling items: Interest expense Interest income Consolidated earnings before interest and taxes (EBIT) $ 171.2 $ 74.6

9.8 (1.5) 179.5 $

9.6 (0.6) 83.6

36

Reconciliation to GAAP

Total Debt (a) Less: Cash Net Debt Equity Total Debt to Capital Net Debt to Capital

1991 273 2 271

1992 321 8 313

1993 277 5 271

1994 280 12 267

1995 211 7 204

1996 303 5 297

1997 359 10 350

1998 469 0 469

1999 450 8 442

2000 514 11 503

1,019 985 685 733 821 922 1,032 1,056 1,046 1,005 21.1% 24.5% 28.7% 27.6% 20.5% 24.7% 25.8% 30.8% 30.1% 33.8% 21.0% 24.1% 28.4% 26.7% 19.9% 24.4% 25.3% 30.8% 29.7% 33.4%
3 months

Total Debt (a) Less: Cash Net Debt Equity Total Debt to Capital Net Debt to Capital

2001 497 33 464

2002 461 82 379

2003 735 29 706

2004 779 51 728

2005 721 65 656

2006 598 101 497

2007 723 30 693

2008 624 133 490

2009 513 756 (243)

2010 514 877 (363)

2011 522 638 (115)

782 609 1,090 1,270 1,497 1,476 1,961 1,663 1,596 1,942 2,066 38.9% 43.1% 40.3% 38.0% 32.5% 28.8% 26.9% 27.3% 24.3% 20.9% 20.2% 37.2% 38.4% 39.3% 36.5% 30.5% 25.2% 26.1% 22.8% -18.0% -23.0% -5.9%

(a) Total Debt is the sum of Commercial Paper, Short-Term Debt, Current Portion of long-term debt and Long-term debt Results include discontinued operations until divested.

37

Reconciliation to GAAP (Dollars in millions)

1990 GAAP Operating Income(1) GAAP Other Income / (Expenses) Earnings Before Interest and Taxes (EBIT)(2) Provision for income taxes Adjusted tax rate Net Operating Profit After Taxes (NOPAT)(3) Invested Capital: Total Debt Shareholders' Equity Total Average Invested Capital(4) ROIC: NOPAT / Average Invested Capital(4) GAAP Operating Income(1) GAAP Other Income / (Expenses) Earnings Before Interest and Taxes (EBIT)(2) Provision for income taxes Adjusted tax rate Net Operating Profit After Taxes (NOPAT)(3) Invested Capital: Total Debt Shareholders' Equity Total Average Invested Capital(4) ROIC: NOPAT / Average Invested Capital(4)
(1)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 (9) 42 14 132 203 247 280 225 133 106 (8) (2) (6) 2 (5) (5) 7 (16) (10) (7) (17) 41 8 135 198 242 287 209 123 99 (6) 15 3 51 73 93 102 80 45 35 37.6% 37.6% 37.6% 37.6% 36.9% 38.3% 35.7% 38.2% 36.8% 35.0% (10) 25 5 84 125 149 184 129 78 64 273 1,019 1,292 1,317 -0.8% 321 985 1,306 1,299 1.9% 277 685 962 1,134 0.4% 280 733 1,012 987 211 821 1,032 1,022 303 922 1,225 1,129 359 1,032 1,392 1,308 469 1,056 1,526 1,459 8.9% 450 1,046 1,496 1,511 5.2% 514 1,005 1,519 1,507 4.3%

266 1,075 1,341

8.5% 12.2% 13.2% 14.1%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (18) 79 98 237 327 219 295 462 (54) 436 22 37 10 12 68 80 5 16 (0) 4 4 115 108 249 395 299 300 478 (54) 440 2 46 43 80 129 91 61 171 (16) 148 39.8% 39.8% 40.0% 32.1% 32.6% 30.6% 20.4% 35.7% 29.9% 33.5% 3 69 65 169 266 208 239 307 (38) 292 497 782 1,279 1,399 0.2% 461 609 1,070 1,175 5.9% 735 1,090 1,824 1,447 4.5% 779 1,270 2,049 1,937 721 1,497 2,218 2,134 598 1,476 2,074 2,146 723 1,961 2,684 2,379 624 1,623 2,246 2,465 513 1,596 2,108 2,177 514 1,942 2,456 2,282

8.7% 12.5%

9.7% 10.0% 12.5%

-1.7% 12.8%

GAAP Operating Income exclude 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). EBIT is defined as operating income plus other income (expense) - net. NOPAT is defined as EBIT less an estimated provision for income taxes. This tax provision excludes the tax effect of pre-tax special items on the company's effective tax rate, as well as the the impact of discrete tax items recorded during the year. The company uses NOPAT/Average Invested Capital as a type of ratio that indicates return on capital (ROIC). Average Invested Capital is the sum of Total Debt and Shareholders' 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.

(2) (3)

(4)

38

Reconciliation to GAAP (Dollars in millions)

GAAP Net Cash Provided by Operating Activities GAAP Capital expenditures GAAP Cash dividends paid to shareholders Free Cash Flow (1)

1991 140 (140) (23) (23)

1992 116 (136) (22) (43)

1993 154 (89) (25) 39

1994 147 (114) (26) 6

1995 224 (129) (28) 67

1996 186 (151) (30) 5

1997 312 (233) (39) 40

1998 292 (238) (45) 9

1999 277 (165) (45) 68

2000 157 (159) (44) (46)

3 months

Net Cash Provided by Operating Activities Capital expenditures Cash dividends paid to shareholders Free Cash Flow (1)

2001 178 (91) (40) 47

2002 206 (85) (32) 89

2003 204 (119) (42) 43

2004 121 (155) (47) (81)

2005 319 (221) (55) 43

2006 337 (296) (58) (17)

2007 337 (314) (63) (40)

2008 569 (272) (67) 230

2009 588 (114) (43) 430

2010 313 (116) (51) 146

2011 (198) (20) (18) (235)

(1) Free cash flow defined as net cash provided by operating activities (incld. pension contributions) minus capital expenditures and dividends. Results include discontinued operations until divested.

Management believes that free cash flow is useful to investors because it is a meaningful indicator of cash generated from operating activities that is available for the execution of its business strategy.

Results include discontinued operations until divested.

39

Reconciliation to GAAP
Revised Segment Results
(Dollars in millions) Net sales to external customers: (Dollars in millions) Mobile Industries Process Industries Aerospace and Defense Steel Mobile Process Industries Steel Mobile Industries, as adjusted Impairment and Restructuring Other Special items Mobile Industries, revised Process Industries, as adjusted Impairment and Restructuring Other Special items Process Industries, revised Aerospace and Defense, as adjusted Impairment and Restructuring Other Special items Aerospace and Defense, revised Steel, as adjusted Impairment and Restructuring Other Special items Steel, revised Unallocated corporate expenses, as adjusted Impairment and Restructuring Other Special items Unallocated corporate expenses, revised Total Segment EBIT, revised Segment EBIT, revised Total Interest expense Interest income Intersegment adjustments Income (loss) from continuing operations before income taxes $ $ $ $ $ $ $ $ $ Intersegment sales: $

1st Qtr 2010 367.5 205.9 92.1 248.2 913.7 0.7 22.1 22.8 42.4 (2.6) (0.2) 39.6 26.9 (1.6) (1.2) 24.1 12.8 (0.7) (0.2) 11.9 19.9 19.9 (13.8) (0.6) -

2nd Qtr 2010 $ 400.4 211.0 82.7 317.3 $ 1,011.4 $ 0.6 20.8 21.4 68.5 0.1 $ 68.6 28.9 (0.2) (0.4) $ 28.3 7.2 (1.0) (0.1) $ 6.1 43.0 0.1 (0.1) $ 43.0 (17.8) (17.8) $ 128.2 (10.0) 0.9 1.1 $ 120.2 $ $ $ $ $ $ $

3rd Qtr 2010 404.1 233.7 81.0 340.9 $ 1,059.7 $ 0.8 30.4 31.2 60.6 (2.1) (1.4) 57.1 37.2 (0.1) (0.3) 36.8 3.8 (0.7) (0.6) 2.5 41.3 41.3 (17.6) (17.6) $ 120.1 (9.1) 0.8 (1.0) 110.8 $ $ $ $ $ $ $

4th Qtr 2010 388.3 249.4 82.5 350.5 $ 1,070.7 $ 0.3 1.3 29.3 30.9 52.0 (8.8) (0.9) 42.3 45.2 (1.3) 0.5 44.4 (2.6) (2.2) 1.0 (3.8) $ 42.1 (0.1) 42.0 (17.6) (17.6) $ 107.3 (9.5) 1.4 0.7 99.9 $ $ $ $ $

Year 2010 $ 1,560.3 900.0 338.3 1,256.9 $ 4,055.5 $ 0.3 3.4 102.6 106.3 223.5 (13.4) (2.5) 207.6 138.2 (3.2) (1.4) 133.6 21.2 (4.6) 0.1 16.7 146.3 0.1 (0.2) 146.2 (66.8) (0.6) (67.4) $ 436.7 (38.2) 3.7 3.3 405.5 $ $ $ $ $ $

Year 2009 $ 1,245.0 806.0 417.7 672.9 $ 3,141.6 $ 2.7 42.0 44.7 30.5 (108.4) (7.6) (85.5) $ 118.5 (45.3) (0.6) 72.6 72.5 (5.0) (2.1) 65.4 (57.9) (3.3) (2.2) (63.4) $ (48.7) (2.1) (0.6) (51.4) $ (62.3) $ (41.9) 1.9 8.1 (94.2) $ $ $

Year 2008 $ 1,771.9 1,163.0 411.9 1,694.0 $ 5,040.8 $ 3.1 158.0 161.1 35.8 (27.2) 0.7 9.3 218.7 (3.8) 0.0 214.9 41.5 3.4 44.9 264.0 (1.5) 18.9 281.4 (68.4) (0.3) 0.3 (68.4) 482.1 (44.4) 5.8 (3.9) 439.6

$ Segment EBIT $

$ $

$ $

$ $

$ $

$ $

$ $

(14.4) $ 81.1 (9.6) 0.6 2.5 74.6 $

40