Feb. 8, 2007 — The Timken Co. announced net income of $35.3 million on sales of $1.2 billion for the fourth quarter, and net income of $222.5 million on sales of $5.0 billion for all of 2006. Sales exclude Latrobe Steel, which the company sold in December and has accounted for as discontinued operations.

Fourth-Quarter Results—Net income per diluted share of $0.37 included $0.20 income per diluted share from discontinued operations. Excluding special items, the company’s adjusted earnings per diluted share were $0.30, including earnings of $0.07 per diluted share from discontinued operations. Special items included income from CDSOA disbursements, losses on divestitures and charges related to restructuring, rationalization and goodwill impairment. Excluding special items, results were affected negatively by lower automotive demand, an increase in the company’s warranty reserves, higher Industrial manufacturing costs and the sale of Latrobe Steel.

Sales of $1.2 billion reflect an increase of 3% over fourth-quarter 2005 sales. Strong sales in industrial markets were partially offset by weaker demand from North American automotive customers.

Full Year Results—Net income per diluted share of $2.36 including $0.49 earnings per diluted share from discontinued operations, which reflects the operations of Latrobe Steel and the gain on its sale. Income from continuing operations was $176.4 million ($1.87 per diluted share) reflects a decrease from net income of $233.7 million ($2.52 per diluted share) in 2005.

Sales of $5.0 billion represent a 3% increase over 2005 sales. Timken says it benefited from strength in global industrial markets, partially offset by declines in demand from the company’s North American automotive customers during the second half of 2006.

Excluding the impact of special items, adjusted net income was $2.48 per diluted share, including earnings of $0.35 per diluted share from discontinued operations. On a continuing operations basis, the company earned income of $200.8 million ($2.13 per diluted share), excluding special items, compared to $206.9 million ($2.24 per diluted share) in 2005. Special items included disbursements received under the Continued Dumping and Subsidy Offset Act (CDSOA), which were more than offset by losses on divestitures and charges related to restructuring, rationalization and goodwill impairment.

“Timken benefited from strong industrial markets in 2006, although lower automotive demand constrained our overall performance,” said James W. Griffith, Timken’s President and CEO. “More importantly, we advanced sweeping changes across the company, including initiatives to grow in Asia and key industrial markets, investments to differentiate our alloy steel products, restructuring of our Automotive business and divestment of underperforming assets and Latrobe Steel. These actions are positioning the company to create even greater value for customers and shareholders in 2007 and beyond.”

During 2006, the company added capacity and capabilities in aerospace and large industrial bearing products, including the acquisition of Turbo Engines in the fourth quarter. The company also continued to build the infrastructure to support its Asian growth initiative by investing in three new plants. The company’s portfolio was refined with the divestiture of Timken’s automotive steering business, its European precision steel components business and Latrobe Steel.

Steel Group Results— Steel Group sales in the fourth quarter, including inter-segment sales, were $357.9 million, an increase of 9% from the prior-year period. Fourth-quarter EBIT was $39.5 million, compared to $35.1 million a year ago. The Steel Group benefited from strong volumes and prices, partially offset by raw material costs not fully recovered by surcharges during the quarter.

Sales for the Steel Group, including inter-segment sales, reached a record $1.5 billion in 2006, up 4% from 2005. The sales growth reflected strong industrial, energy and service center market segments, while sales to automotive customers were lower. For 2006, EBIT increased to a record $206.7 million from $175.8 million in 2005, driven by strong volumes in key market segments and price increases. Surcharges offset continued high raw material and energy costs. In 2006, the Steel Group also set records in output, productivity, quality and energy-efficiency.

Timken says Steel Group Performance is anticipated to continue at historically high levels in 2007, as markets are expected to remain strong.

Outlook—The company expects earnings per diluted share for 2007 from continuing operations, excluding special items, to be $2.50 to $2.70 for the year and $0.50 to $0.60 for the first quarter, compared to $2.13 and $0.62, respectively, for the same periods in 2006. Timken anticipates global industrial markets will remain strong, and targeted investments in Industrial bearing capacity are expected to become operational throughout the year.

The company expects improved Automotive performance compared to the second half of 2006 as it benefits from its operating improvement initiatives. In addition, the Steel Group is expected to continue performing at a high level of profitability.

Timken supplies innovative friction management and power transmission products and services. Approximately 25,000 employees and operations in 27 countries generated sales of $5.0 billion in 2006.