The Timken Company (USA) reported second quarter 2002 sales and earnings were both improved from second quarter 2001.

Sales hit $660.8 million in the quarter, up from $634.4 million in 2001, while earnings before interest and taxes (EBIT) rose 91% to $34.5 million from $18.1 million in 2001. A primary contributor was gross margin improvement, improving strongly from 2.8% in 2001 to 5.2% in the most recent quarter.

Chairman and CEO, W.R. "Tim" Timken Jr., said, "The path we have taken for the last 18 months continues to strengthen our financial performance. While we are benefiting from ongoing strength in the automotive industry, we are also deriving strength from internal performance in terms of increasing productivity and manufacturing efficiencies. Indeed, although certain of our industrial markets continue to lag, we expect to continue realizing gains from our manufacturing strategy work and cost reduction efforts."

Timken is in the midst of a multi-year, international restructuring effort designed to make the company more efficient on a worldwide scale. The company expects to realize annualized savings from the program of $80 million in 2002. The restructuring, combined with the economic climate, has impacted Timken's workforce, however. Almost 2,000 jobs have been eliminated since early 2001 -- about 1,100 from restructuring and the other 900 due to the global economic slowdown.

Commenting on the remainder of the year, "Industrial activity in the second half of this year should be stronger than last year's second half, but the industrial recovery is proceeding slowly. We haven't yet begun to see appreciable improvement in many industrial segments. We continue to experience a strong automotive sector, although we expect some seasonal adjustment in the second half," said Mr. Timken.

Second quarter 2002 sales hit $219.2 million, up from $195.0 million in 2001, while EBIT was $3.7 million, up from $0.1 million in 2001. Results were helped by overall increased volumes, impacts related to the restructuring, and administrative headcount reductions.

Negatively impacting earnings were losses from currency exchanges, capacity constraints due to moving equipment between facilities, and one-time costs associated with winning new automotive aftermarket distributor accounts.

Second quarter 2002 sales were 228.1 million, up slightly from $221.9 million in 2001. However, EBIT rose sharply to $16.3 million from $11.3 million in 2001. Again, the company credited cost reductions from the restructuring effort along with administrative headcount cuts.

While sales to the general industrial market customers improved, aerospace and rail dropped off.

Second quarter 2002 sales were $225.4 million, flat from 2001. EBIT, however, more than doubled to $14.7 million from $7 million a year ago.