RELATIONAL, CALSTRS ASK HOLDERS TO VOTE FOR CALSTRS PROPOSAL

(The following is a reformatted version of a press release
issued by Relational Investors LLC and received via electronic
mail. The release was confirmed by the sender.) 
RELATIONAL INVESTORS LLC AND CALSTRS QUESTION TIMKEN BOARD’S
WILLINGNESS TO ACT IN THE BEST INTERESTS OF ALL SHAREHOLDERS
FOLLOWING MEETING WITH BOARD MEMBERS 
Timken Family-Influenced Board Continues to REBUT Investment
Community Consensus To Separate Company’s Two Core Businesses
And Eliminate The Stock’s Long-Standing “Conglomerate” Discount 
Relational and CalSTRS Urge Shareholders To VOTE FOR CalSTRS’
Proxy Proposal To Unlock Shareholder Value At Timken By
Separating The Company’s Steel And Bearings Businesses And
Having Them Trade Independently 
San Diego, April 2, 2013 -- Relational Investors LLC
(“Relational”) and the California State Teachers’ Retirement
System (“CalSTRS”), collectively owners of 7.28% of the shares
of The Timken Company (NYSE: TKR) (“Timken” or “the Company”),
called into question the ability of the family-influenced Board
of Directors to act in the best interest of all of the Company’s
shareholders following today’s meeting at the Company’s Canton,
Ohio headquarters. The Board is unwilling to separate Timken’s
Steel and Bearings businesses to unlock shareholder value and
continues to support the Company’s “conglomerate” structure
which impairs its stock price. 
Anne Sheehan, director of Corporate Governance at CalSTRS,
commented, “Timken’s Board invited CalSTRS to meet with
representatives of management and the Board today. The meeting
followed the filing of our February 27, 2013 shareholder
presentation. From the outset, we have tried to work with the
Board to unlock the Company’s inherent value for all
shareholders through the separate public trading of Timken’s
Steel and Bearings businesses. It is clear that there is
consensus in the investment community supporting this initiative
based on published analyst reports, calls with the Company’s
investors, and Timken’s stock price. Nevertheless, the Board has
consistently turned a blind eye to what the marketplace is
saying.” 
Ralph Whitworth, founder and principal of Relational, said,
“Despite Timken’s preempting today’s meeting with a press
release yesterday, we hoped that at today’s meeting Timken’s
management and Board would finally understand the powerful value
proposition that flows from the overwhelmingly compelling and
detailed case we have presented to create value through two
separately traded companies. Instead, while the meeting was
cordial, we met with the same amorphous arguments and faulty
math that has characterized the company’s response all along.
Fortunately, the shareholders will have the opportunity to speak
on May 7th by voting on CalSTRS’ proposal to split the company’s
shares between the Bearings and Steel businesses.” 
“Since November 15, 2012, shortly before Relational and CalSTRS
filed their Schedule 13D advocating the separation of Timken’s
Steel and Bearings businesses, Timken’s stock price has
outperformed its peers by 41%, or over $15 per share. Timken’s
Board must know that if it maintains the Company’s conglomerate
structure rather than separating its businesses as recommended,
that it is likely that the price of Timken’s shares will fall
precipitously.” 
Specific Reponses to Timken’s Flawed Math and Amorphous
Arguments: 
Timken contends that separating Bearings and Steel will result
in a significant loss of synergies between the businesses. 
·         Timken’s synergies analysis is, however, highly flawed
and contrived. It does not reflect the clear opportunity to
mitigate dis-synergies as Timken’s closest competitor, SKF, did
so successfully following the separation of its bearings and
steel businesses. Indeed the mid-point of Timken’s projected
dis-synergies of $6-8 per share is no more than $2.65 per share
higher than what we projected in our conservative analysis.
There is ample opportunity to mitigate this incremental dis-synergy through normal and customary supply arrangements. 
Timken contends that Relational’s sum-of-the-parts estimate far
exceeds the median of analyst calculations. 
·         Timken, however, intentionally uses many analyst sum-of-the-parts valuations from November and December of last year,
which are way out-of-date. The three 2013 valuations that Timken
does include average $66, an 18% increase from the current stock
price, and that is after substantial excess price performance
since we announced our split initiative. 
Timken contends that the peer group Relational uses is too
narrow.
·         A broader peer group analysis does not however
materially change Timken’s share price discount, nor does it
change our conclusion that separation will enhance Timken’s
shareholder value. Timken should know that broadening the peer
group to include, for example, Japanese companies is
inappropriate because their margins, geography, and products are
not appropriately comparable. 
Timken contends that its diversification benefits shareholders. 
·         Timken, however, uses its three-year share price
performance to justify its conglomerate business strategy. They
unfairly include Timken’s outperformance against its peers since
November 28th when Relational and CalSTRS announced their plan
to push for a separation. Of course, shareholders do not need
Timken’s Board to ”diversify” for them; they are perfectly
willing and, in fact, prefer to select “pure-play” investments
and set weightings to suit their specific objectives. The
significant discount investors apply to Timken’s stock reflects
the market’s clear preference for pure-play steel or bearings
alternatives. The irony of this argument is that diversification
actually causes the discount! 
Timken contends that they practice strong corporate governance. 
·         The Timken Family, however, holds 3 of 11 Board seats;
the $9M compensation received by executive Chairman Ward Timken,
Jr., is grossly out-of-line with other executive chairmen in
Timken’s peer group; the Company’s pay-for-performance scheme
received a “D” rating in 2012 from Glass Lewis, a prominent
independent shareholder advisory service; and the Board has a
history of ignoring proposals receiving a majority vote; the
Board has long been unwilling to thoughtfully consider
maximizing long-term shareholder value through a separation. 
Shareholders have every reason to demand that the Timken Board
stop hiding behind wrong assertions and act in the best
interests of all Timken shareholders. 
We urge shareholders to VOTE FOR the CalSTRS proxy proposal to
unlock shareholder value through the separation of Timken’s
Steel and Bearings businesses. 
For more information about the value-enhancing potential of
CalSTRS’ proposal, please visit www.UnlockTimken.com. 
SHAREHOLDER PRESENTATION 
On February 28, 2013, Relational and CalSTRS filed a
comprehensive presentation for Timken shareholders entitled:
“Why a Separation of Timken’s Steel and Bearings Businesses Can
Unlock Significant Shareholder Value”
(http://www.sec.gov/Archives/edgar/data/98362/000110465913015663
/a13-). The presentation demonstrates the financial and
operational logic of CalSTRS’ shareholder proxy proposal, which
would enable Timken shareholders to vote for separating the two
businesses. 
About Relational Investors LLC:
Relational Investors LLC, founded in 1996, is a privately held,
multi-billion dollar asset management firm and registered
investment adviser. Relational invests in publicly traded
companies that it believes are undervalued in the marketplace.
The firm seeks to engage the management, board of directors, and
shareholders of its portfolio companies in a productive dialogue
designed to build a consensus for positive change to improve
shareholder value. 
About the California State Teachers Retirement System:  The
California State Teachers’ Retirement System, with a portfolio
valued at $161.5 billion as of February 28, 2013, is the largest
educator-only pension fund in the world. CalSTRS administers a
hybrid retirement system, consisting of traditional defined
benefit, cash balance and voluntary defined contribution plans,
as well as disability and survivor benefits. For 100 years,
CalSTRS has served California’s public school educators and
their families, who now number 862,000 from the state’s 1,600
school districts, county offices of education and community
college districts. 
Media Contact:
Robert Siegfried/Donald C. Cutler
Kekst and Company
212-521-4800 or 415-852-3903 
Investor Contact:
Okapi Partners LLC
Bruce H. Goldfarb/Charles W. Garske/Geoffrey Sorbello
212-297-0720
info@okapipartners.com 
(bjh) NY 
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