T HE T IMKEN C OMPANY Investor Presentation M ARCH 2014 F ORWARD -L - - PowerPoint PPT Presentation

THE TIMKEN COMPANY

Investor Presentation MARCH 2014

FORWARD-LOOKING STATEMENTS SAFE HARBOR AND NON-GAAP FINANCIAL I NFORMATION

Certain statements in this presentation (including statements regarding the company's forecasts, 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 expectations regarding each company's future financial performance, plans for executing the spinoff, the taxable nature of the spinoff, future prospects of the companies as independent companies, revenue and market growth and similar statements, including the information in the sections titled, “Overview of Planned Separation”, “Steel Separation Update” and “Cost Reduction Initiatives” are forward-looking. The company cautions that actual results may differ materially from those projected or implied in forward-looking statements due to a variety of important factors, including: each 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 each company; changes in the financial health of each company's customers, which may have an impact on each company's revenues, earnings and impairment charges; fluctuations in raw material and energy costs and their impact on the operation of each company's surcharge mechanisms; the impact of each company's last-in, first-out accounting; weakness in global or regional economic conditions and financial markets; changes in the expected costs associated with product warranty claims; the ability to achieve satisfactory operating results in the integration of acquired companies; the impact on operations of general economic conditions; higher or lower raw material and energy costs; fluctuations in customer demand; the impact on each company’s pension obligations due to changes in interest rates

• r investment performance; each company’s ability to achieve the benefits of announced programs, initiatives, and capital

investments; each company’s ability to fund its pension plans; the timing and amount of any additional repurchases of the company’s common shares; the timing and amount of dividends on the company’s common shares; changes to the actual amount of one-time spinoff costs compared to the company’s estimate; the taxable nature of the spinoff; and the company’s ability to successfully complete the spinoff. Additional factors are discussed in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended Dec. 31, 2013, quarterly reports on Form 10-Q and current reports on Form 8-K. Except as required by the federal securities laws, the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. This presentation includes certain non-GAAP financial measures as defined by the rules and regulations of the Securities and Exchange Commission. A reconciliation of those measures to the most directly comparable GAAP equivalent is provided in the Appendix to this presentation.

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Strategic Update & Review

TIMKEN OVERVIEW

• A global industrial technology leader
• Deep knowledge of materials, friction management and mechanical

power transmission

• Focused on improving the reliability and efficiency of industrial machinery

and equipment all around the world

• High-performance steel, bearings and related mechanical

components support diversified markets worldwide

• Established in 1899 and headquartered in Canton, Ohio
• 2013 sales: $4.3B
• Global footprint with operations in 28 countries comprising

19,000 associates

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• Bearings
• Specialty steel bars & tubes
• Transmission components
• Gearboxes
• Engineered chain
• Related products & services

CREATE UNPARALLELED VALUE

Offering a broad array of m echanical pow er transm ission com ponents, high-perform ance steel and related solutions and services. Extending our know ledge, products, services and channels to m eet custom er needs, w herever they are in the w orld. Delivering exceptional results w ith a passion for superior execution. Using our know ledge of m etallurgy, friction m anagem ent and m echanical pow er transm ission to create unique solutions used in dem anding applications.

TIMKEN STRATEGY TO DELIVER SHAREHOLDER VALUE

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• Markets
• Geographies
• Products
• Performance

A MULTI-FACETED TRANSFORMATION

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GEOGRAPHIC & END-MARKET DIVERSIFICATION

Note: Based on 2013 sales of $4.3 billion

I ndustrial Autom otive

• Broad-based end markets and customers
• Increased sales from demanding applications
• Expanded channels into aftermarket; represents nearly 30% of 2013 global sales
• Emerging markets: a source of growth with 10% 10-Year CAGR

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Europe 12% Asia Pacific 11% Latin Am erica 6% U.S. 67% RoW 4%

Geographic Sales End-Market Sector Mix Portfolio Diversification

18% 17% 12% 10% 9% 7% 7% 6% 4% 4% 3% 2% 3% I ndustrial Afterm arket I ndustrial Machinery Light Truck Passenger Car Energy Aerospace & Defense Rail On-Highw ay Afterm arket Agriculture Heavy Truck Mining Construction Other

PRODUCT LINE EXPANSION & DIVERSIFICATION

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Bearings Specialty Steels Pow er Transm ission Services Related Products

Growth Synergies

• Capture lifetime of revenue opportunity
• Leverage distribution channel
• Opportunities for cross-selling and development of product lines
• Global expansion

NEW ACQUISITIONS, NEW CAPABILITIES

Differentiated perform ance • I ndustrial focus • Strong afterm arket • Supply chain synergy

Note: Sales for Philadelphia Gear, Drives and Wazee Companies reflect last 12-month sales at time of purchase. Interlube, Smith Services, and Standard Machine sales reflect full-year 2012.

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Decem ber 3 1 , 2 0 1 2 October 1 , 2 0 1 1 March 13, 2013 July 1 , 2 0 1 1 April 1 2 , 2 0 1 3 May 1 3 , 2 0 1 3 Sales: $ 1 7 M Product Offering Electric motor repair and field technical services Sales: $ 3 0 M Product Offering Critical motor and generator services, and up-tower wind maintenance and repair Sales: $ 1 3 M Product Offering Manufacturing and installation of lubrication delivery systems and related components Sales: $ 1 0 0 M Product Offering Engineered chains and augers Sales: $ 3 1 M Product Offering Gearbox service and repair, open gearing, large fabrication, machining and field technical services Sales: $ 85M Product Offering Engineered gear drive repair and manufacture

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Sales: $ 1 .2 B Global growth beyond bearings, diversified, strong aftermarket Sales: $ 1 .5 B Transformed portfolio, more aftermarket focus Sales: $ 3 3 0 M Diversified into Transmissions and Aftermarket

OUR BUSINESS TODAY

Sales: $ 1 .4 B High-performance, customized alloy steels

Note: Based on 2013 financial results. Steel segment sales figure noted above includes $75M of inter-segment sales.

2 0 1 3 Total Sales $ 4 .3 B

Mobile I ndustries 3 4 % Steel 3 0 % Process I ndustries 2 8 % Aerospace 8 %

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MOBILE I NDUSTRIES

($ Millions)

2013 Financial Performance 2 0 1 3 Sector Profile Segm ent Overview

Off- Highw ay 2 7 % Rail 1 9 % Light Truck 1 8 % On- Highw ay Aft Mkt 1 7 % Passenger Car 1 0 % Heavy Truck 9 %

• Bearings, power transmission

components & related products/ services

• Customers: OEM and aftermarket

distributors

• Continued portfolio shift toward

higher growth, higher margin markets Sales EBIT EBIT Margin $1,475 $165 11.2%

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PROCESS I NDUSTRIES

($ Millions)

2013 Financial Performance 2 0 1 3 Sector Profile Segm ent Overview

Service 1 6 % Metals 6 % Machinery 6 % Energy 6 %

• Precision-engineered bearings and

related mechanical components and services for diverse industrial market sectors

• Diversified global customer base

and product portfolio

• Consistent, profitable business
• Growing market share in spherical

& cylindrical roller bearings, housed units, other bearings & services Sales EBIT EBIT Margin $1,236 $202 16.3%

Gear Drives 4 % I nfrastructure 1 % After Market 6 1 %

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• Flight critical components and

services for fixed-wing and rotorcraft applications

• Strong aftermarket channel
• Precision bearings, assemblies,

encoders, sensors for critical motion market sector

• Health and motion control

AEROSPACE

($ Millions)

2013 Financial Performance 2 0 1 3 Sector Profile Segm ent Overview

Defense 5 0 % Civil 3 9 % Motion Control 1 1 %

Sales EBIT EBIT Margin $330 $27 8.1%

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• Leadership position in high quality

air-melted alloy steel bars, seamless mechanical tubes, precision components, value-added services

• Bars: 1” to 16” | Tubes: 2” to 13”
• Thermal treat
• Machining
• Providing customized solutions for

demanding applications used in high- stress environments

STEEL

($ Millions)

2013 Financial Performance 2 0 1 3 OEM Sector Profile ( 1) Segm ent Overview

Pass Car 2 6 % Light Truck 2 2 %

Sales EBIT EBIT Margin $1,381 $140 10.2%

Other ( 2 ) 1 2 % Mining 3 % I ndustrial 5 % Oil & Gas 2 0 %

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Sales figure noted above includes $75M of inter- segment sales

(1) Distribution sales were 20%

• f 2013 sales

(2) Other: ≤ 2% each of

Construction, Metal Recycle, Rail, Military/ Defense, Heavy/ Med. Truck, Agriculture

Machinery 1 2 %

The transform ation has positioned the com pany for its next evolution…

OUR FUTURE: TWO STRONG COMPANIES

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The execution of a plan to build tw o independent m arket-leading public com panies W e are com m itted to drive value for our shareholders and our custom ers

OVERVIEW OF PLANNED SEPARATION

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Tim ing & Approvals Structure and Com pany Make-up Expected Capital Structure & Financial Policies

• Tax-free spin-off of TimkenSteel Corporation
• Two separate publicly traded companies(1)
• The Timken Company: $3.0B revenue global bearings & power transmission
• TimkenSteel: $1.4B revenue engineered steel
• Upon spin, 100% of TimkenSteel to be owned by Timken shareholders
• Targeted completion mid-2014
• Subject to regulatory approval, legal opinion on tax-free nature of the

transaction and final approval by Timken Board of Directors

• Strong balance sheets and fully funded pension obligations
• Financial policies aligned with investment-grade metrics
• Liquidity for growth and investment
• Focus on return of capital to shareholders via dividends and share repurchases

Experienced Leadership

( post separation)

The Timken Company

• President & CEO Rich Kyle
• CFO Phil Fracassa

(1) Revenue figures are based on 2013 segment sales, including intercompany sales for the Steel segment.

TimkenSteel Corporation

• Chairman & CEO Tim Timken, Jr.
• CFO Chris Holding

STEEL SEPARATION UPDATE

• Project launched on September 5, 2013; proceeding as planned with

targeted mid-2014 completion

• Initial draft Form 10 filed with the SEC on February 11, 2014
• TimkenSteel common shares expected to trade on the NYSE under

ticker “TMST”

• Timken expects to incur one-time separation costs of approximately

$105M ($14M incurred in 2013) to effectuate the transaction

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Note: Estimate of one-time separation costs identified above were established on January 30, 2014.

Financial Review

2013 RESULTS

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Note: See Appendix for reconciliation of EBI T, EBI T Margin, adjusted EBI T, adjusted EBI T margin and adjusted EPS to their most directly comparable GAAP equivalents. CDSOA is a reference to the US Continued Dumping Subsidy and Offset Act.

Sales of $ 4 .3 B, dow n 1 3 % YoY

• Lower demand for off-highway, industrial distribution

and oil & gas, negative impact of light-vehicle sector market strategy and lower surcharges

• Top line benefited from pricing and acquisitions

(i.e. Wazee, Interlube, Smith Services, Standard Machine)

EBI T of $ 4 4 0 M ( 1 0 .1 % of sales) vs. prior year of $ 7 9 4 M ( 1 5 .9 % of sales)

• Decrease driven by lower volume, unfavorable sales

mix and higher manufacturing costs, which were partially offset by pricing, lower material costs and lower SG&A and restructuring expense

• 2012 EBIT includes CDSOA receipts of $108M
• Excluding unusual items, EBIT of $467M, or 10.7% ,

compares to EBIT of $724M, or 14.5% a year ago

EPS of $ 2 .7 4 per diluted share vs. prior year $ 5 .0 7

• Excluding unusual items, EPS of $3.09 compares to

$4.76 a year ago $ 4 ,9 8 7 $ 4 ,3 4 1 $ 3 ,5 0 0 $ 4 ,0 0 0 $ 4 ,5 0 0 $ 5 ,0 0 0 $ 5 ,5 0 0 2012 2013

Sales ( $ Mils.)

1 4 .5 % 1 0 .7 % 0 % 5 % 1 0 % 1 5 % 2 0 % 2012 2013

EBI T Margin ( Adjusted)

2013 RESULTS

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Note: Free cash flow (FCF) is defined as net cash provided by operating activities (includes pension contributions) minus capital expenditures and dividends. See Appendix for reconciliation of FCF to the most directly comparable GAAP equivalent.

Free Cash Flow of $ 1 7 M vs. $ 2 3 8 M in prior year

• From operating activities after pension contributions, CapEx of $326M and dividends of $88M
• CapEx includes ~ $125M for Steel investment program
• Includes $66M of discretionary pension contributions, net of tax

Strong Balance Sheet

• Cash position of $385M or $91M net debt (3% net debt to capital)
• Repurchased 3.4M shares for $189M; ~ 4M shares remaining under authorization (as of year-end 2013)
• Invested $65M in strategic acquisitions
• Year-end pension net asset of $157M, compared to liability of $398M at year-end 2012
• Global pensions funded at roughly 105% compared to 89% a year ago
• Improvement driven by increase in the discount rate, favorable asset returns and pension

contributions

• Total liquidity of $1.2B

COST REDUCTION I NITIATIVES

• Launched 4Q13 to address lower

market demand within bearings and power transmission business

• Pre-tax costs of ~ $20M ($6M

incurred in 4Q13) to achieve targeted annual pre-tax SG&A savings of ~ $25M

• Operations further aligned with

market needs during 2013 through on-going initiatives

• Supply chain improvements
• Work force reductions
• Plant capacity rationalizations
• Manufacturing cost reductions
• Launched 4Q13
• Pre-tax costs of ~ $15M ($6M

incurred in 4Q13) related to a corporate cost-reduction initiative targeted to generate $20M of annualized SG&A savings

• Savings intended to mitigate the

incremental enterprise costs associated with operating TimkenSteel as an independent public company Responding to Market Demand Mitigate SG&A Impact of Separation

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Note: Estimate of pre-tax costs and targeted annual pre-tax SG&A savings identified above were established on January 30, 2014.

SALES

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Net Sales ($ Mils.)

Note: 2003 includes Torrington acquisition as acquired February 2003. Historical results exclude the discontinued operations of Latrobe Steel (2006 divestment) and the Needle Roller Bearings (NRB) business (2009 divestment). NRB discontinued operations for 2003 and 2004 are based on internal estimates.

$ 0 $ 1 ,0 0 0 $ 2 ,0 0 0 $ 3 ,0 0 0 $ 4 ,0 0 0 $ 5 ,0 0 0 $ 6 ,0 0 0 $ 7 ,0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Sales

’91 to ’01 Cycle: 4 % CAGR ’02 to ’09 Cycle: 4 % CAGR

EARNINGS PER SHARE

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Net Sales ($ Mils.) ( $ 1 ) $ 0 $ 1 $ 2 $ 3 $ 4 $ 5 $ 6 $ 0 $ 1 ,0 0 0 $ 2 ,0 0 0 $ 3 ,0 0 0 $ 4 ,0 0 0 $ 5 ,0 0 0 $ 6 ,0 0 0 $ 7 ,0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EPS

Note: Earnings are reported on a GAAP basis and include the impact of special items, such as restructuring and reorganization expenses, CDSOA 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

’91 to ’01 Cycle ’02 to ’09 Cycle

Sales EPS

FREE CASH FLOW

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FCF ($ Mils.)

• $ 1 5 0
• $ 5 0

$ 5 0 $ 1 5 0 $ 2 5 0 $ 3 5 0 $ 4 5 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

’91 to ’01 Cycle: $16 M ’02 to ’09 Cycle: $87 M

Note: Free cash flow (FCF) is defined as net cash provided by operating activities (includes pension contributions) minus capital expenditures and dividends. Results include discontinued operations until divested. See Appendix for reconciliation of FCF to the most directly comparable GAAP equivalent.

NET DEBT

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Net Debt ($ Mils.)

Note: 2003 includes Torrington acquisition as acquired February 2003. Net debt is not a GAAP measure. Net Debt / Capital (leverage) is defined as Net Debt / (Net Debt + Equity). See Appendix for reconciliation of Net Debt to the most directly comparable GAAP equivalent.

Net Debt/ Capital

• 3 0 %
• 2 0 %
• 1 0 %

0 % 1 0 % 2 0 % 3 0 % 4 0 % 5 0 %

• $ 6 0 0
• $ 4 0 0
• $ 2 0 0

$ 0 $ 2 0 0 $ 4 0 0 $ 6 0 0 $ 8 0 0 $ 1 ,0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Long-term Leverage Target: 30 % - 35%

CAPITAL ALLOCATION

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• Target spend in industrial sectors with

strong aftermarket: energy, infrastructure, heavy industries, aerospace and rail

• Emerging market growth

CapEx

• Focus: Industrial & aftermarket,

international

• Accretive to earnings in Year 1
• Earn cost of capital within 3 years

Acquisitions

• Dividends: 90+ years of consecutive

quarterly payout

• Continued share repurchase: ~ 4M shares

remaining under Board authorized program (as of year-end 2013)

Dividends/ Repurchases

• No discretionary contributions planned for

2014

Pension/OPEB Funding

• $ 3 2 6 M invested in grow th,

continuous im provem ent and m aintenance

• I nterlube
• Sm ith Services
• Standard Machine
• Rail bearing reconditioning

assets

• A total of $ 2 7 7 M returned

to holders

• 366 th consecutive

dividend paid

• 3.4M shares repurchased
• Discretionary contributions
• f $ 6 6 M, net of tax ( 1 Q1 3 )
• ~ 105 % funded at YE1 3

2013 HIGHLIGHTS

Note: Pension/ OPEB 2014 discretionary contribution plan identified above was established on January 30, 2014.

RETURN ON I NVESTED CAPITAL

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Long-term Cost of Capital: ~ 9%

• 2 %

0 % 2 % 4 % 6 % 8 % 1 0 % 1 2 % 1 4 % 1 6 % 1 8 % 2 0 % 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ROI C Cost of Capital

’91 to ’01 Cycle Avg: 6.2% ’02 to ’09 Cycle Avg: 7.8%

Note: The company uses NOPAT/ Avg. Invested Capital as a type of ratio that indicates return on invested capital (ROIC). See Appendix for reconciliation of ROIC to the most directly comparable GAAP equivalent.

Appendix

GAAP RECONCILIATION OF EBIT & EBIT (UNADJUSTED & ADJUSTED) MARGIN

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(Dollars in millions, except share data) 2013 Percentage to Net Sales 2012 Percentage to Net Sales Net Income 263.0 $ 6.1 % 495.9 $ 9.9 % Provision for income taxes 154.1 3.5 % 270.1 5.4 % Interest expense 24.4 0.6 % 31.1 0.6 % Interest income (1.9) —% (2.9) (0.1)% Consolidated earnings before interest and taxes (EBIT) 439.6 $ 10.1 % 794.2 $ 15.9 % Adjustments: Steel separation-related costs (1) 13.0 0.3 % — —% Severance due to cost-reduction initiatives (2) 5.9 0.1 % — —% Gain on sale of real estate in Brazil (3) (5.4) (0.1)% — —% Charges due to plant closures (4) 10.6 0.2 % 37.8 0.8 % CDSOA expense (receipts) (5) 2.8 0.1 % (108.0) (2.2)% Consolidated earnings before interest and taxes (EBIT), after adjustments 466.5 $ 10.7 % 724.0 $ 14.5 %

(5) CDSOA receipts for the year ended December 31, 2012 were $108.0 million.

Reconciliation of EBIT Margin, After Adjustments, to Net Income as a Percentage of Sales and EBIT, After Adjustments, to Net Income: December 31,

(1) Steel separation-related costs include severance costs and professional costs associated with the Company's proposed spinoff of the steel

business.

(2) Severance due to cost-reduction initiatives relate to reductions in headcount in the bearing and power transmission business. (3) Gain on the sale of real estate relates to the sale of the former manufacturing facility in Sao Paulo, Brazil. (4) Charges due to plant closures relate to the Company's former manufacturing facilities in Sao Paulo, Brazil and St. Thomas, Ontario, Canada.

The following reconciliation is provided as additional relevant information about the Company's performance. Management believes that EBIT and EBIT margin, after adjustments, are representative of the Company's core operations and therefore useful to investors. Twelve Months Ended

GAAP RECONCILIATION OF ADJUSTED EPS

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(Dollars in millions, except share data) 2013 EPS 2012 EPS Net Income Attributable to The Timken Company 262.7 $ 2.74 $ 495.5 $ 5.07 $ Adjustments: Tax expense on cash repatriation (1) 26.2 0.28

• Reversal of income tax reserves (2)

(12.3) (0.13)

• Steel separation-related costs (3)

10.3 0.11

• Severance due to cost-reduction initiatives (4)

3.9 0.04

• Gain on sale of real estate in Brazil (5)

(5.4) (0.06)

• Charges due to plant closures (6)

8.3 0.09 37.1 0.38 CDSOA expense (receipt) (7) 1.8 0.02 (68.0) (0.69) Net Income Attributable to The Timken Company, after adjustments 295.5 $ 3.09 $ 464.6 $ 4.76 $ Reconciliation of Net Income Attributable to The Timken Company, After Adjustments, to GAAP Net Income Attributable to The Timken Company and Adjusted Earnings Per Share to GAAP Earnings Per Share: Twelve Months Ended This reconciliation is provided as additional relevant information about the Company's performance. Management believes that net income attributable to the Timken Company and diluted earnings per share, adjusted to remove: (a) tax expense on cash repatriation; (b) reversal of income tax reserves; (c) Steel separation-related costs; (d) severance due to cost-reduction initiatives; (e) gain on sale of real estate in Brazil; (f) charges due to plant closures; and (g) CDSOA expense (receipt) are representative of the Company's performance and therefore useful to investors. December 31,

(4) Severance due to cost-reduction initiatives relate to reductions in headcount in the bearings and power transmission business, net of tax. (1) Includes the impact from a one-time non-cash tax charge on the repatriation of overseas cash related to a global cash planning initiative. (7) CDSOA receipts for the year ended December 31, 2012 were $108.0 million, net of tax expense of $40.0 million. (6) Charges due to plant closures relate to the Company's former manufacturing facilities in Sao Paulo, Brazil and St. Thomas, Ontario,

Canada, net of tax.

(5) Gain on the sale of real estate relates to the sale of the former manufacturing facility in Sao Paulo, Brazil. (3) Steel separation-related costs include severance costs and professional costs associated with the Company's proposed spinoff of the

steel business, net of tax.

(2) Includes the impact of tax benefits associated with the reversal of certain income tax reserves from prior years.

GAAP RECONCILIATION OF FREE CASH FLOW

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(Dollars in millions) 2013 2012 Net cash provided by operating activities 430.0 $ 624.1 $ Less: capital expenditures (325.8) (297.2) Less: cash dividends paid to shareholders (87.5) (89.0) Free cash flow 16.7 237.9 Plus: discretionary pension and postretirement benefit contributions, net of the tax benefit (1) 66.3 245.0 Plus: CDSOA receipts, net of tax expense (2) 1.8 (68.0) Free cash flow adjusted for discretionary pension contributions and CDSOA 84.8 $ 414.9 $

Reconciliations of Free Cash Flow and Free Cash Flow, After Adjustments, to GAAP Net Cash Provided by Operating Activities:

Management believes that free cash flow and free cash flow less discretionary pension and postretirement benefit contributions and CDSOA receipts are useful to investors because they are meaningful indicators of cash generated from operating activities available for the execution of its business strategy. (1) There were no discretionary pension and postretirement benefit contributions during the fourth quarter of 2013. The discretionary pension and postretirement benefit contributions for the year ended December 31, 2013 were $105.0 million, net of a tax benefit of $38.7 million. There were no discretionary pension and postretirement benefit contributions during the fourth quarter of 2012. The discretionary pension and postretirement benefit contributions for the year ended December 31, 2012 were $364.1 million, net of a tax benefit of $119.1 million. (2) CDSOA receipts for the year ended December 31, 2012 were $108.0 million, net of tax expense of $40.0 million. Twelve Months Ended December 31,

(1) Free cash flow is defined as net cash provided by operating activities (including pension contributions) minus capital expenditures and dividends. Results include discontinued operations until divested. Reconciliation of Free Cash Flow to GAAP Net Cash Provided (Used) by Operating Activities Management believes that free cash flow is useful to investors because it is a meaningful indicator of cash generated from operating activities available for the execution of its business strategy.

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GAAP RECONCILIATION OF FREE CASH FLOW

( $ Mils.)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Net Cash Provided by Operating Activities 140 116 154 147 224 186 312 292 277 157 Capital expenditures (140) (136) (89) (114) (129) (151) (233) (238) (165) (159) Cash dividends paid to shareholders (23) (22) (25) (26) (28) (30) (39) (45) (45) (44) Free Cash Flow(1) (23) (43) 39 6 67 5 40 9 68 (46) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Net Cash Provided by Operating Activities 178 206 204 121 319 337 337 569 588 313 209 624 430 Capital expenditures (91) (85) (119) (155) (221) (296) (314) (272) (114) (116) (205) (297) (326) Cash dividends paid to shareholders (40) (32) (42) (47) (55) (58) (63) (67) (43) (51) (76) (89) (88) Free Cash Flow(1) 47 89 43 (81) 43 (17) (40) 230 430 146 (72) 238 17

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

Reconciliation of Net Debt to Total Debt and the Ratio of Net Debt to Capital Management believes Net Debt is an important measure of Timken's financial position, due to the amount of cash and cash equivalents.

( $ Mils.)

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GAAP RECONCILIATION OF NET DEBT

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total Debt (a) 273 321 277 280 211 303 359 469 450 514 Less: Cash 2 8 5 12 7 5 10 8 11 Net Debt 271 313 271 267 204 297 350 469 442 503 Equity 1,019 985 685 733 821 922 1,032 1,056 1,046 1,005 Total Debt to Capital 21.1% 24.5% 28.7% 27.6% 20.5% 24.7% 25.8% 30.8% 30.1% 33.8% Net Debt to Capital 21.0% 24.1% 28.4% 26.7% 19.9% 24.4% 25.3% 30.8% 29.7% 33.4% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total Debt (a) 497 461 735 779 721 598 723 624 513 514 515 479 476 Less: Cash 33 82 29 51 65 101 30 133 756 877 468 586 385 Net Debt 464 379 706 728 656 497 693 490 (243) (363) 47 (107) 91 Equity 782 609 1,090 1,270 1,497 1,476 1,961 1,663 1,596 1,942 2,043 2,247 2,649 Total Debt to Capital 38.9% 43.1% 40.3% 38.0% 32.5% 28.8% 26.9% 27.3% 24.3% 20.9% 20.1% 17.6% 15.2% Net Debt to Capital 37.2% 38.4% 39.3% 36.5% 30.5% 25.2% 26.1% 22.8% -18.0% -23.0% 2.2%

• 5.0%

3.3%

Reconciliation of ROI C to GAAP Operating I ncom e

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

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( $ Mils.)

GAAP RECONCILIATION OF ROIC

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 GAAP Operating Income(1) (9) 42 14 132 203 247 280 225 133 106 GAAP Other Income / (Expenses) (8) (2) (6) 2 (5) (5) 7 (16) (10) (7) Earnings Before Interest and Taxes (EBIT)(2) (17) 41 8 135 198 242 287 209 123 99 Provision for income taxes (6) 15 3 51 73 93 102 80 45 35 Adjusted tax rate 37.6% 37.6% 37.6% 37.6% 36.9% 38.3% 35.7% 38.2% 36.8% 35.0% Net Operating Profit After Taxes (NOPAT)(3) (10) 25 5 84 125 149 184 129 78 64 Invested Capital: Total Debt 266 273 321 277 280 211 303 359 469 450 514 Shareholders' Equity 1,075 1,019 985 685 733 821 922 1,032 1,056 1,046 1,005 Total 1,341 1,292 1,306 962 1,012 1,032 1,225 1,392 1,526 1,496 1,519 Average Invested Capital(4) 1,317 1,299 1,134 987 1,022 1,129 1,308 1,459 1,511 1,507 ROIC: NOPAT / Average Invested Capital(4)

• 0.8%

1.9% 0.4% 8.5% 12.2% 13.2% 14.1% 8.9% 5.2% 4.3% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 GAAP Operating Income(1) (18) 79 98 237 327 219 295 462 (54) 436 729 693 436 GAAP Other Income / (Expenses) 22 37 10 12 68 80 5 16 (0) 4 (1) 101 4 Earnings Before Interest and Taxes (EBIT)(2) 4 115 108 249 395 299 300 478 (54) 440 728 794 440 Provision for income taxes 2 46 43 80 129 91 61 171 (16) 148 251 280 163 Adjusted tax rate 39.8% 39.8% 40.0% 32.1% 32.6% 30.6% 20.4% 35.7% 29.9% 33.5% 34.5% 35.3% 37.0% Net Operating Profit After Taxes (NOPAT)(3) 3 69 65 169 266 208 239 307 (38) 292 477 514 277 Invested Capital: Total Debt 497 461 735 779 721 598 723 624 513 514 515 479 476 Shareholders' Equity 782 609 1,090 1,270 1,497 1,476 1,961 1,623 1,596 1,942 2,043 2,247 2,649 Total 1,279 1,070 1,824 2,049 2,218 2,074 2,684 2,246 2,108 2,456 2,558 2,726 3,125 Average Invested Capital(4) 1,399 1,175 1,447 1,937 2,134 2,146 2,379 2,465 2,177 2,282 2,507 2,642 2,925 ROIC: NOPAT / Average Invested Capital(4) 0.2% 5.9% 4.5% 8.7% 12.5% 9.7% 10.0% 12.5%

• 1.7%

12.8% 19.0% 19.5% 9.5%

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

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

(2) EBIT is defined as operating income plus other income (expense) - net. (3) 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 w ell as the the impact of discrete tax items recorded during the year.

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

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