Off-Highway

• Gained global customer source approval for Timken® products manufactured in China, Czech Republic, Poland and Romania.
• Completed design, development and performance evaluation tests on several forward-integrated bearing products for supply, beginning in 2004.
• Helped key customers improve life of mechanical components by providing engineered surfaces solutions for non-bearing products in final drive systems.

2004 Outlook

Slow growth is expected in North America in 2004, while European business levels off at 2003’s pace. Better growth expected in emerging markets in Asia and Latin America.

Industrial Equipment

• Organized the business into three main groups: consumer/super precision, power transmission and heavy industry.
• Capitalized on the integration of Timken and Torrington to land a $2.5 million order from VAI Industries UK, Ltd. for tapered, ball and cylindrical bearings.
• Continued to achieve significant growth in emerging markets.

2004 Outlook

Growth is expected in all emerging markets. Expect some strengthening in U.S. and European markets.

Rail

• Led the U.S. rail industry to adopt Timken® AP-2™ Class K bearing design as the new standard, beginning in 2004.
• Captured significant U.S. transit car orders for 2004 with a total value exceeding $5 million.
• Earned 100% of the bearing business for Talgo’s fastest-ever passenger train, which will run between Barcelona and Madrid, Spain.
• Obtained significant market share in the Brazilian rail market during peak car builds.
• Supplied a major order for Timken® AP™ bearings for Moscow passenger trains.

2004 Outlook

Timken expects greater demand in North America as rail car production increases. Global rail market expected to see moderate growth with strong growth in Brazil, China and Russia. Opportunities for reconditioning services will continue to grow worldwide.

Aerospace/Defense

• Achieved sales growth despite a decline in the market.
• Received award from U.S. Department of Defense for superior service (only bearing company to receive this award).
• Became the sole bearing supplier for the Rolls-Royce Model 250 aircraft engine.
• Won business from the British Royal Navy for bearings used in radar systems.
• Received $20 million in U.S. federal funding for next-generation hybrid bearing development.

2004 Outlook

Anticipate gradual recovery in the U.S. aerospace market and growth in the European and Asian aerospace markets over the next cycle. Defense business expected to remain steady or grow.

Distribution Management

• Broadened the geographic scope of our online presence by extending The Timken Store on Endorsia.com and PTPlace.com to distributors in Europe, Asia and North America.
• Integrated Torrington-branded products into PTPlace.com.
• Launched five types of Timken grease for industrial applications in the U.S. and expanded sales of single-point lubricators in North America and Europe.
• Expanded Timken Industrial Services by introducing condition monitoring equipment. Key customers were offered condition monitoring equipment and services.

2004 Outlook

A mild economic recovery is expected in North American industrial markets. Distribution markets in Europe and the Middle East should remain flat, while China will see strong growth. Growth in all other regions of Asia is expected to be moderate.