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The eBearing News
December 15, 2003
Timken Receiving $70+ Million
CDSOA Payout
copyright © 2003 eBearing Inc.
The Timken Company (USA) announced it will be receiving at least USD $70 million this year in its
largest-ever payout under the Continued Dumping and Subsidy Offset Act (CDSOA).
This is the third year of CDSOA payouts.
• eBearing's information section about the CDSOA
In 2001, Timken's CDSOA payout was $31 million.
• article: Timken receiving $31 million CDSOA payout for 2001
In 2002, Timken's CDSOA payout was $54 million.
• article: Timken receiving $54 million CDSOA payout for 2002
Ultimately, however, the total amount Timken collects is going to be far higher because it will now
include a portion of the payouts to Torrington, acquired by Timken in February 2003.
Torrington's 2003 payout schedule has not yet been released, but the company's payout in
2002 was $68 million, up from $50 million in 2001.
Timken hinted in its third quarter conference call that Torrington's payout might be lower in 2003
due to cyclicality.
The larger factor is that, as part of the acquisition agreement, Timken has agreed to give Torrington's former
owners, Ingersoll-Rand, 80% of Torrington's CDSOA payouts in 2003 and 2004.
• article: Torrington receives $68 million CDSOA payout for 2002
For example, if Torrington's CDSOA payout this year is $60 million, Timken would end up receiving
its own $70 million, plus $12 million (20% of Torrington's $60 million), for a total of $82 million.
In 2001, Timken and Torrington combined to collect $81 million, or 35% of the total $230
million distributed. The average CDSOA payout last year was approximately $165,000.
For 2002, the two bearing industry recipients pulled in $122 million in CDSOA payouts, by far the largest
industry collection. Together, Timken and Torrington accounted for 37% of the total $329 million paid in
2002 to all claimants from all U.S. industries.
In 2001, Timken allocated $2.5 million (8.5% of the total) to Automotive Bearings
and $27.1 million (91.5% of the total) to Industrial Bearings. For 2002, those allocations changed
dramatically, with Automotive receiving $10.8 million (21.5% of the total) and Industrial
receiving $39.4 million (78.5% of the total).
This year, Timken said it will use the CDSOA money exclusively to pay down debt, which it incurred to fund the
Torrington acquisition. The debt level and payback schedule also played a role in its recent debt downgrade
by Moody's. In the third quarter, Timken paid down debt by $78 million, then used $55 million from an October
2003 share offering to pay it down further.
• article: Moody's downgrades Timken debt to junk status
Update: January 2004
Timken later reported netting $68,367,000 after expenses. The company also said it had to refund
$2,808,000 of 2002's payout due to a, "miscalculation by the U.S. Treasury Department of funds
received in 2002."
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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