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 Timken’s 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 company’s ability to respond to the changes in its end markets that could affect demand for the company’s products; unanticipated changes in business relationships with customers or their purchases from the company; changes in the financial health of the company’s customers, which may have an impact on the company’s revenues, earnings and impairment charges; fluctuations in raw-material and energy costs and their impact on the operation of the company’s surcharge mechanisms; the impact of the company’s last-in, first-out accounting; weakness in global 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 company’s 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.

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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%

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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.

Passenger Car Aerospace & Defense  34% of sales are outside the U. sales abroad represent nearly 50% of the portfolio 4 .S.S.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.  Excluding Steel Group.Diverse Global Portfolio 2010 Sales: $4. growing faster outside the U.

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 5 .Timken Position in Asia  2010 Sales: $470 million. 12% of Timken  Employment: 4.

The Strategy is Working • Enhance existing products and services • Leverage technology to create value • Capture lifetime of opportunity • Attractive industrial markets • Developing geographies • Channels. 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 6 . services.

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 7 .

distribution components  Challenging. paper Food processing Wind energy & services Aerospace aftermarket Focused Acquisitions  Focus on “Power Transmission Adjacent Products”  High aftermarket. seal. services. distribution • • • • • Aerospace engines Wood. critical end-user applications  Target market segments that value Timken’s brand promise 8 . lubrication) for Multi-megawatt Wind Turbines Attractive Markets  Expanding in diverse industries. highly engineered. pulp. channels. services.Strategic Accomplishments Record New Products New steel products Spherical roller bearings (wear-resistant type shown) Type-E Housed Units Integrated Systems (bearing.

Water Treatment  Cement.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. Sugar  Military Marine *Expected closing pending certain government and regulatory approvals. Pulp & Paper. 9 .

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.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. heavy truck auto/heavy truck aftermarkets  Continuing automotive OE attrition  Sustained margins  Strong cash flow 10 .

consistent. cylindrical and housed units  QM acquisition  Continued expansion in Asia  Gains in wind energy 11 . 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.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.

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. 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 . 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.

& Defense 5% Rail 3% Off-Highway 12%  Serving niche high-end applications where demands on performance are significant  Special machining characteristics  Resistance to heat.Steel Group Segment Overview  Market leadership position in high quality air-melted alloy steel bars... 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 . precision components and value-added services  Bars: 1” to 16”  Tubes: 2” to 13” Sector Profile 2010 Sales: $1. tubes. stresses or wear  High strength or other traits.4 billion Aero. Industrial Machinery 24% Light Vehicles 34% Heavy/Med.

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 .

73 –versus a loss of $0.1 billion. Free cash flow is defined as net cash provided by operating activities (includes pension contributions) minus capital expenditures and dividends. or 10.2010 Results  Sales of $4. 16 . up 29% from prior year  EBIT of $440 million.8% of sales  EPS of $2. manufacturing rationalization/ integration/reorganization and special charges and credits. See Appendix for GAAP Reconciliations on these items.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.

5 billion.3% of sales  Record first-quarter EPS of $1. 17 . or $115 million in excess of total debt • Liquidity of $1.29 from prior year  Free cash flow. 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.13 – versus $0. up 37% from prior year  EBIT of $180 million. See Appendix for GAAP Reconciliations.2011 Results – 1st Quarter  Sales of $1. 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.3 billion. or 14.

000 $1. Historical results exclude the discontinued operations of Latrobe Steel (2006 divestment) and the Needle Roller Bearings (NRB) business (2009 divestment).000 1 $0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 0 Note: 2003 includes Torrington acquisition as acquired February 2003.000 3 2 $2.000 $6. 2011 18 .000 4 $4.Sales Net Sales ($ in Millions) 2013 Target* 10-15% CAGR $7.000 including organic & inorganic growth 6 5 CAGR 2002-2009: 4% $5.000 CAGR 1991-2001: 4% $3. NRB discontinued operations for 2003 and 2004 are based on internal estimates. *2013 Target as of February 16.

00 $4.75-$5.00 $3.000 $3.Earnings Per Share (GAAP) Net Sales ($ in Millions) Earnings Per Share 2013 EPS Target* $4. 2011 19 .00 $2.00 $0.000 $5.000 $4.00 ($1.000 $2. Historical results exclude the discontinued operations of Latrobe Steel (2006 divestment) and the Needle Roller Bearings (NRB) business (2009 divestment).000 $1.00 $5.000 $0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 including organic & inorganic growth $6. NRB discontinued operations for 2003 and 2004 are based on internal estimates. EPS assumes dilution.00 $1. *2013 Target as of February 16.000 $6. such as restructuring and reorganization expenses.00) Note: Earnings are reported on a GAAP basis and include the impact of special items. 2003 includes Torrington acquisition as acquired February 2003.25 $7. CDO payments and goodwill amortization.

Results include discontinued operations until divested. A reconciliation to GAAP and description of this measure can be found in the Appendix. 2011 20 .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. *2013 Target as of February 16.

21 .35% 30% 20% 10% 0% -10% -20% -30% Note: 2003 includes Torrington acquisition as acquired February 2003. Results include discontinued operations until divested.Net Debt Net Debt ($ in Millions) Net Debt /Capital $1. Net Debt / Capital (leverage) defined as Net Debt / (Net Debt + Equity).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% . A reconciliation to GAAP and description of this measure can be found in the Appendix.

A reconciliation to GAAP and description of this measure can be found in the Appendix. : 6. : 7.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% ’91–’01 Avg. Results include discontinued operations until divested.8% 2011 2013 Note: The company uses NOPAT/Average Invested Capital as a type of ratio that indicates return on capital (ROIC).2% ’02–’09 Avg. *2013 Target as of February 16. 2011 22 .

Capital Allocation  Organic growth and performance improvement initiatives • • Targeted in industrial market sectors. 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. wind.5 million shares remaining 23 . aerospace. heavy industries.

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 .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.

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 .

• Excluding Steel Group.1 Billion Latin America 4% Rest of World 6% United States 66% Europe 12% 28 . growing faster outside the U. sales abroad represent nearly 50% of the portfolio Asia 12% 2010 Sales: $4.Geographic Sales Profile  Diversified global scope.  34% of sales are outside the U.S.S.

$2. Adjusted Revised Margins 20% 15% Adjusted Revised $1.$Mils.000 $300 Earnings (EBIT) .Mobile Industries 2010 Performance Summary Performance Update Key Accomplishments  Sales up 25% to $1.500 $200 $100 10% 5% 0% $1. Revised EBIT is inclusive of special items.6 billion  Growth drivers: Market recoveries in light vehicles. 29 . strong cash flow Revenue . 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. off highway. See appendix for reconciliation.000 $0 -5% -10% 2008 2009 2010 $500 2008 2009 2010 -$100 2008 2009 2010 Note: Adjusted EBIT excludes the impact of special items.$Mils.

$Mils. 30 .$Mils. Revised EBIT is inclusive of special items.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 . $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. See appendix for reconciliation. $500 $400 $300 $200 $100 $0 2008 2009 2010 $0 Earnings (EBIT) .

$1. 31 .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. Revised EBIT is inclusive of special items.000 $150 $250 $200 Earnings (EBIT) .$Mils. See appendix for reconciliation.200 $1. cylindrical and housed units • QM acquisition Business drivers • Distribution recovered in 2nd half • Heavy industry markets lagged • Continued expansion in Asia • Gains in wind energy Revenue .$Mils. 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.

See appendix for reconciliation.$Mils. inventory restocking  Improved capacity utilization  Strong earnings rebound.Steel 2010 Performance Summary Performance Update  Sales up 90% to $1.000 $1. $2. Adjusted Revised Margins 20% 15% Adjusted Revised 10% 5% 0% -5% -10% 2006 2007 2008 2009 2010 -15% 2006 2007 2008 2009 2010 Note: Adjusted EBIT excludes the impact of special items. 32 .$Mils.500 $1. Revised EBIT is inclusive of special items.4 billion  Pricing  Secure iron source Key Accomplishments  Growth drivers: Demand recovery.000 $500 $0 2006 2007 2008 2009 2010 $200 $100 $0 -$100 $300 Earnings (EBIT) . 2x cost of capital  Accelerated ramp up  Daido steel source  Working Capital control  Capital Investment Revenue .

0) 2.8 563.5 (2.3 (54. except share data) Net sales Cost of products sold Manufacturing rationalization / reorganization expenses . general & administrative expenses (SG&A) Rationalization / reorganization expenses .0 465.5) (94.5 $ 2.7 3.4 1.5 8.9 0.021.2) 440.6 $ 4.0 (66.7 (54.028.9 $ 33 .0) (34.027.2 582.2 1.1) 436.141. 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 3.2 30.5 123.9 1.9 1.8 563.9 (4.6) 7.8 164.6) 2.0) 269.4 (20.7 1.0) (34.9 1.7 $ 288.550.0 (40.3 590.5 (28.3 5.2 469.4 (138.2 291.6 2.0 121.2) 32.5 (72.cost of products sold Gross Profit Selling.0 431.1 (134.055.SG&A Impairment and restructuring Operating Income (Loss) Other income (expense) Special items .5 2.7 469.2) 136.7 3.8 $ AS ADJUSTED (1) Full Year Full Year 2009 2010 $ 4.7 (40.5) 83.1 464.5 30.0 2. net Income (Loss) From Continuing Operations Provision (benefit) for income taxes Income (Loss) From Continuing Operations Income (loss) from discontinued operations.other income (expense) Earnings (Loss) Before Interest and Taxes (EBIT) (2) Interest expense.0) $ 274.2) 405.6) 276.055.2 1.141.550.028.Reconciliation to GAAP 2010 (continued next page) (Unaudited) CONDENSED CONSOLIDATED STATEMENT OF INCOME (Dollars in millions.4 291.5 $ 3.8 52.1 21.6 139.

EBIT and EBIT margin on a segment basis exclude certain special items set forth above. except share data) Net Income (Loss) per Common Share Attributable to The Timken Company Common Shareholders Basic Earnings (Loss) Per Share .135.75) (1.273 97.83 $ $ $ (0.783 96.53 (0.516.98 $ $ $ 0.135. including decisions concerning the allocation of resources and assessment of performance.assuming dilution AS REPORTED Full Year Full Year 2010 2009 AS ADJUSTED (1) Full Year Full Year 2009 2010 $ $ $ 2.Continuing Operations Basic Earnings (Loss) Per Share .273 97.202 (0.81 96.783 2.39) $ $ $ 2. (3) Discontinued Operations relate to the sale of the Needle Roller Bearings (NRB) operations to JTEKT Corporation on December 31.32 96. EBIT and EBIT Margin are important financial measures used in the management of the business.21) $ 0.39) 96.53 (0.64) (0. Management believes that the Adjusted Consolidated Statement of Income may be helpful in understanding the company's performance and therefore useful to investors. 34 .76 0.08 $ 2. 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.21) 0.516.32 2. manufacturing rationalization/reorganization and special charges and credits for all periods shown.Discontinued Operations Earnings (Loss) Per Share Diluted Earnings (Loss) Per Share .135.202 0.73 0. (2) EBIT is defined as operating income plus other income (expense).Reconciliation to GAAP 2010 (Unaudited) CONDENSED CONSOLIDATED STATEMENT OF INCOME (Dollars in millions.135. 2009.95 $ 2.07 2.535.783 (1) "Adjusted" statements exclude the impact of impairment and restructuring.95 96.Discontinued Operations Earnings (Loss) Per Share Average Shares Outstanding Average Shares Outstanding .535.75) $ (1.98 2.Continuing Operations Diluted Earnings (Loss) Per Share .64) (0. EBIT Margin is EBIT as a percentage of net sales.783 96.

07) 0.74 $ $ 0.6) (0.9 $ 269.4) $ (72.06 0.00 0.7 (2.3 EPS $ 0.08) $ 0.3 80.diluted.4) 288.69) (0.0) (24.75) (61. 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.31 $ 0.01 (0.04) $ 7.0 (58.3 $ 4.5 0.6 1.73 0.1 $ $ $ 267.04 0.04) (0.0) $ $ $ 2.25) (0.5) 4. discontinued operations Adjusted income (loss) from discontinued operations.4 0.4) $ overall effective tax rate on Adjusted pre-tax income in interim periods.12 (0.3 (2.95 $ EPS (5) $ (134.4 (50.21) 0. Continued Dumping and Subsidy Offset Act (CDSOA) receipts and gain/loss on sale of non-strategic assets.8) (0.3 1.74 0.00) 2.6 0.02 (0.88 0.40 (0.61) (0.7) (0.0 $ (4.4 (20.4 $ EPS 2.08 2.73 $ 0.00) 0.1 2.76 0.0 86.03 1.81 0.01 0.1) 50.SG&A Impairment and restructuring Special items .52) 0.00 0.9 $ 288.83 0.32 (0. net of income taxes Net income (loss) from continuing operations attributable to The Timken Company Pre-tax special items: Manufacturing rationalization/reorganization expenses .64) 0.13) (7.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.4 $ (7.0) $ (1.22 0.7) $ 22.3) 0.01 0.4 86.53 (0. the impact of discrete tax items recorded during the respective periods.00 0.8 7.1 12.5) $ (12. 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.2) $ 0.0 1.2) $ (0.87 0.3 (7.05) (0.09 $ $ 274. Fourth Quarter 2010 (Dollars in millions.13) 0.91 0.02 (7.4 5.4 39.4) 73.5 2.6 (0.2) 30.04 $ (0.9 164.4 $ $ $ $ 86.54 (0.1 29.cost of products sold Rationalization/reorganization expenses .Reconciliation to GAAP 2010 Reconciliation of net income (loss) attributable to The Timken Company and EPS .06) 0.3) (0.21) (12.9 $ $ (20.0) $ (4.6) $ 52.64) (0.4) 8.8) (6.01 0.00 (0. net of income taxes Special items.02) (0.09 0.08 $ (0.4 $ $ 73.39) (72. except share data) Net income (loss) attributable to The Timken Company Less: Income (loss) from discontinued operations.8 21.75) 0.09 0.3) (3.6) (61. Management believes adjusted earnings per share are more representative of the company's performance and therefore useful to investors.08) 0.87 (5) $ $ EPS (20.05 0.0 $ $ 2.1 9.95 2.71 0.2 2.4 267.02) (0.08) (0.7 $ (66.21) $ $ 9. 35 .2) $ (0. as well as adjustments to reflect the use of one Full Year 2009 2010 (5) 2009 (5) $ $ 90. This reconciliation is provided as additional relevant information about the company's performance.3 4.22 (0.

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.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.5) 179.6 $ 9.6 (0.6) 83.8 (1. Management also believes that it is appropriate to compare GAAP income from continuing operations before income taxes to Consolidated EBIT.6 36 .2 $ 74. Three Months Ended March 31.5 $ 9. Management believes Consolidated earnings before interest and taxes (EBIT) are more representative of the company's performance and therefore useful to investors.

0% -23.1% 28.1% 22.1% 24.8% 30.3% 38.3% 36.9% (a) Total Debt is the sum of Commercial Paper.2% 26.056 1.032 1.2% 38.9% 27.3% 24.5% 28.0% 24.066 38.046 1.2% 37.270 1.4% 25.5% 30.5% 25.0% -5.8% 29.7% 33.7% 25.090 1. Short-Term Debt. Current Portion of long-term debt and Long-term debt Results include discontinued operations until divested.6% 20.476 1.4% 39.0% 32.1% 40.7% 27.663 1.7% 19.9% 24.9% 20.3% 30.5% 24.8% -18.5% 28.596 1.8% 30.3% 20.942 2.005 21.1% 33.497 1.8% 26.8% 21.961 1. 37 .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 1.4% 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 1.9% 43.4% 26.

146 723 1.2% 13.074 2.1% 32.0% (10) 25 5 84 125 149 184 129 78 64 273 1.282 8.7% 10.6% 37.2% 14.8% 321 985 1.022 303 922 1.824 1. as well as the the impact of discrete tax items recorded during the year.108 2.519 1.456 2.379 624 1.2% 36. (2) (3) (4) 38 . EBIT is defined as operating income plus other income (expense) .134 0.317 -0. This tax provision excludes the tax effect of pre-tax special items on the company's effective tax rate.7% 29.7% 12.392 1.090 1.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% 37.046 1. The company uses NOPAT/Average Invested Capital as a type of ratio that indicates return on capital (ROIC). curr.961 2.447 4.049 1. 8.279 1.8% 39.9% 735 1.308 469 1.399 0.6% 37.129 359 1.0% 12.5% 779 1.4% 35.075 1.497 2.070 1.684 2.246 2. 31.9% 38.225 1.476 2. portion of LT-debt & LT-debt.134 598 1.596 2.9% 277 685 962 1.459 8.507 4.8% GAAP Operating Income exclude discontinued operations for Latrobe Steel (divested Dec.6% 30.9% 33.8% 40.623 2.0% 32.5% -1.4% 280 733 1.1% 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 39.465 513 1.032 1.6% 36.3% 266 1.306 1.net.012 987 211 821 1.270 2. Total Debt is the sum of commercial paper.005 1.218 2.177 514 1.942 2.5% 3 69 65 169 266 208 239 307 (38) 292 497 782 1. 2009).056 1.5% 12.175 5.937 721 1.9% 450 1.5% 9.3% 35.032 1. ST-debt.6% 20. Average Invested Capital is the sum of Total Debt and Shareholders' Equity taken at the beginning and ending of each year and then averaged. 2006) for years 2004 through 2006 and the Needle Roller Bearings business for years 2007 through 2009 (divested Dec. NOPAT is defined as EBIT less an estimated provision for income taxes.341 8.526 1.019 1.496 1.2% 514 1.7% 12.2% 461 609 1.7% 38.299 1.511 5.292 1.8% 35.

pension contributions) minus capital expenditures and dividends. Results include discontinued operations until divested. Results include discontinued operations until divested.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. 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. 39 .

2 (3.4 44.0 338.7 (3.5 (5.4 0.1) $ 6.1 43.6 138.8) $ 128.6) 0.5 0.7 317.2) 1.5 41.0 (17.5) 1.9 (13.1 (0.3 29.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.1) 0.4) $ 28.6) (17.4) (7.6) $ 107.1 248. as adjusted Impairment and Restructuring Other Special items Mobile Industries.5 $ 0. revised Process Industries. revised Unallocated corporate expenses.0 (17.5 (108.7) (2.1) $ 43.4 31.7 672. revised Total Interest expense Interest income Intersegment adjustments Income (loss) from continuing operations before income taxes $ $ $ $ $ $ $ $ $ Intersegment sales: $ 1st Qtr 2010 367. as adjusted Impairment and Restructuring Other Special items Steel.0) 0.2 60.4) $ 81.6) (51.3 (17.3 1.2) (1.0 (3.560.4 (2.070.6 2.4) $ (62.1) (0.7 22.6 28.3) (0.1 $ 120.3 (68.2) 0.6 $ 40 .3 3.1 (9.6 26.1 (94.1) (1.9 $ 3.8 42.6 (2.2 (66. revised Aerospace and Defense.4 $ 0.1 (0.8 (27.1 $ 68.6) (67.3 218.2) 24.1 35.5 350.1 233. as adjusted Impairment and Restructuring Other Special items Process Industries.3 1.2 $ $ $ $ $ $ $ 3rd Qtr 2010 404.9 52.7 30.3) (2.7) (0.0 214.3 223.0 44.2) 3.8 3.141.2 (10.3 0.6 $ Segment EBIT $ $ $ $ $ $ $ $ $ $ $ $ $ (14.8) (0.8) (17.6) (85.0 0.3 $ 1.9) (3.5) 207.4 211.3 7.5 44.7 42.0 (1.2) 146.7 99.9) 439.9 264.4) (2.5 $ 1.7 81.0) (2.8 $ 3.3 45.0 411.4) 5.9 92.3) 0.9) 42.3 405.9) 1.059.4 (2.3 (9.163.8 (1.0 $ 5.1 22.2) (63.4) 482.2) 39.0 (8. revised Total Segment EBIT.6 20.4) 133.1 37.6 $ 2.4 102.4) $ 436.2) 11. revised Segment EBIT.0) (0.9 (1.3) 36. as adjusted Impairment and Restructuring Other Special items Aerospace and Defense.9 (0.1) 42.1 12.3 30.8 21.9 281.6) (0.4 82.771.3) 0.2 913.4 (68.5) 18.8 $ $ $ $ $ $ $ 4th Qtr 2010 388.3 900.9 8.8) 0.0 82.3 41.9 $ $ $ $ $ Year 2010 $ 1.8) (0.7 $ 0.0 340.6 72.8 (3.9 $ 1.694.4) $ (48. revised Steel.5 (13.4) (0.6) 72.6) - 2nd Qtr 2010 $ 400.1 16.6) 2.0 806.2 (4.2 (1.8 30.0 417.055.7) (0.0) 110.3) $ (41.9 1.256.0 161.6 106.3 249.5 $ $ $ $ $ $ Year 2009 $ 1.6 21.1) (0.1 (0.2) (0.1) 65.6) $ 120.4 68.7 $ 0. as adjusted Impairment and Restructuring Other Special items Unallocated corporate expenses.6) 0.7 (38.1 (9.5 (45.6) (1.2 (1.6) (2.5) $ 118.040.245.8 (0.4 (57.2 (0.9 41.8 (0.4) 57.5 205.7 9.1 158.7 146.9 1.9 1.2) $ $ $ Year 2008 $ 1.8) $ 42.6) (17.011.7 0.9 19.9 $ 4.1 (44.9 19.5 3.5 74.7 3.8) (0.

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