...Jun.25th 2014 Background Timken Company Overview Founded in 1898 by Henry Timken and incorporated in 1904, The Timken Company (“Timken” or “the company”), is headquartered in Canton, Ohio. Timken is the largest manufacturer of tapered roller bearings and alloy seamless mechanical steel tubing in the United States and a leading global manufacturer of highly-engineered bearings, alloy and specialty steels, and a provider of related products and services. Timken is the largest North American-based bearings manufacturer. The company has operations in 29 countries on six continents. As of December 31, 2005, Timken employed approximately 27,000 people. On February 18, 2003, Timken completed the acquisition of The Torrington Company (Torrington), a manufacturer of needle bearings used in transmission and wheel applications. Torrington is now integrated into the company, and has added tremendous scale to Timken’s operations. Torrington Company Overview Founded in 1866 as Excelsior Needle Company, a maker of sewing-machine needles, The Torrington Company was an old-line industrial firm. Torrington operated its business in two segments that were familiar to Timken: automotive and industrial. Sales were approximately equal across the two segments. The OEM business focused on higher-margin niche products. Torrington’s 2002 sales were split as follows: 73% in North America, 17% in Europe, and 10% elsewhere. The company employed 10,500 workers at 27 plants worldwide, and served...
Words: 1897 - Pages: 8
...Some suggested answers for the Timken case: 1) Synergies are likely to come mostly from expanding the economies of “scope”. The quote on p.1 is revealing: “… the two companies shared many of the same customers but had few products in common, (therefore) customers would surely appreciate that Timken’s sales representatives could meet more of their needs.” Further on p.8: “… the combined companies… would have many complementary products… (and) only a 5% overlap in their product offerings… (while) the two companies’ customer lists overlapped by approximately 80%.” Timken was already going through a restructuring intended to add new products to its portfolio and add additional components (“bundling”) to further differentiate their products from (cheap) foreign imports. It seems like an acquisition of Torrington would fit perfectly with this goal (see the detail on p.8 about the potential combination of friction and lubrication functions). Also, the merging parties may enjoy economies of scale: they planned to use Timken’s international distribution network to deliver Torrington’s products. p.8 offers some details about efficiencies from the reduced combined sales force and concentrated list of suppliers (both of which are economies of scale) 2) To value do a DCF valuation of Torrington on a stand-alone basis, first we need estimates of stand-alone (i.e., with Ingersoll-Rand, IR) cash flows: those can be inferred from Exhibit 5 (with the corrections that I emailed...
Words: 1589 - Pages: 7
...I. Statement of the Problem Timken Company has been a leader in the bearing company since the early 1900s began to seek ways to expand in 2002. They came up with the decision to acquire a subsidiary of Ingeroll-Rand called Torrington Company, another producer of metal bearings. The acquisition seems to be the right move since the two companies share 80% of the same customers and have a 5% overlap in products they offer. The problem arises when it comes to how to finance the acquisition. Timken is afraid that if they take on anymore debt they will cause credit agencies to downgrade their investment-grade rating. The challenge now lies in developing a financial plan that will allow Timken Company to acquire Torrington without dropping its investment grade. II Alternative Choices 1. Finance with all equity 2. Finance with all debt 3. Finance with mixture of debt and equity Calculations to Use 1. NPV 2. WACC 3. Debt to Capital Ratio 4. EBIT Interest Coverage III. Analysis of Alternatives We first begin by accessing if the company is worth acquiring by calculating NPV using the estimated cash flows of Torrington from Exhibit 5. To use NPV we must first calculate our required rate of return. This can be done by finding the CAPM and WACC for Timken. We begin by finding the cost of debt which can be seen in Exhibit 9. Timken is rated BBB, so we can assume our cost of debt is 7.23%. Then we find CAPM to get the cost of equity. We find that the risk...
Words: 631 - Pages: 3
...In 2002, the Timken Company was considering acquiring the Torrington Company from Ingersoll-Rand. The acquisition would make a clear statement to the market about Timken’s commitment to remain a worldwide leader in the bearing industry by combining more than 100 years of bearing manufacturing and development experience. Because the two companies shared many of the same customers but had few products in common, customers would surely appreciate that Timken’s sales representatives could meet more of their needs. Timken’s potential annual cost savings from consolidating manufacturing facilities and processes were estimated to be more than $80 million. If the price paid for Torrington were too high, Ingersoll-Rand, rather than Timken, would capture the value of the synergies. In addition, given the large size of the acquisition, Timken was concerned about the impact on its balance sheet. If Ingersoll-Rand demanded a cash deal and if Timken raised the money with new debt, the increased leverage would almost certainly prompt credit agencies to downgrade Timken’s investment-grade rating. The Bearing Industry Bearings of various sizes and specifications found their way into everything from space shuttles to household appliances, automobiles, dentist drills, roller skates, and computer disk drives. In 2001, U.S. establishments involved in ball- and roller-bearing manufacturing employed more than 33,000 workers. The bearing industry was facing a variety of complex problems. Policies...
Words: 4307 - Pages: 18
...Timken Company Case Student’s Name Institution The Timken Company Case 1. How does Torrington fit with the Timken Company? What are the expected synergies? There are many ways in which Torrington fits with the Timken Company. Firstly, it is apparent that both companies understand the problems of their businesses and industry. This is because they both do business in the automotive and industrial bearings market. This means that the management will not change significantly. Instead, it will get reinforced. The fact that the acquisition will facilitate reconciliation of management styles and also accounting standards means that they fit each other. In fact it can be said that some of the reasons for acquisition include, but are not limited to acquiring new managerial skills, achieving economies of scale, increase return on investment. 2. What is your stand alone valuation of Torrington? It should be noted that the greatest challenge in valuation is estimating the potential value of synergies which should necessarily be the result of increase in cash flows. For the case of Torrington, what is needed is to make incremental investments planning. This entails determining the hidden cost which are bound to bring overvaluation of the target. Such overvaluation can lead to value destructions and not value creation. The case tends to support the fact that acquisition is worthwhile in some elements while opposing the acquisition in other elements. The first valuation index supporting...
Words: 892 - Pages: 4
...The company was founded by Henry Timken in St. Louis, Missouri in 1899 and incorporated as The Timken Roller Bearing Axle Company. A year earlier, in 1898, Timken got a patent for the tapered roller bearing for which the company would become known. At the time, Timken was a carriage-maker in St. Louis and held three patents for carriage springs. However, it was his patent for tapered roller bearings that allowed his company to become successful. Tapered roller bearings were a breakthrough at the end of the 19th century because bearings used in wheel axles had not changed much since ancient times. They relied on bearings enclosed in a case that held lubricants. These were called "friction bearings" and depended on lubricants to function. Without proper lubrication, these bearings would fail due to excessive heat caused by friction. Timken was able to significantly reduce the friction on his bearings by using a "cup" and "cone" design incorporating tapered bearings which actually rolled, which reduced the load placed on the bearings by distributing the weight and load evenly across the cups, cones, and bearings. The company moved to Canton, Ohio in 1901 as the automobile industry began to overtake the carriage industry. Timken chose this location because of its proximity to the American car manufacturing centers of Detroit, Michigan and Cleveland, Ohio, and because it was close to the American steel-making centers of Pittsburgh, Pennsylvania and Cleveland. Ray Harroun,...
Words: 564 - Pages: 3
...The Timken Company Case 46 THE TIMKEN COMPANY In 2002, The Timken Company was considering acquiring The Torrington Company from Ingersoll-Rand. The acquisition would make a clear statement to the market about Timken’s commitment to remain a worldwide leader in the bearing industry as it would result in the combination of more than 100 years of bearing manufacturing and development experience. Because the two companies shared many of the same customers but had few products in common, customers would surely appreciate the ability to have more of their needs met by Timken’s sales representatives. Moreover, Timken’s potential annual cost savings from consolidating manufacturing facilities and processes were estimated to be more than $80 million. If the price paid for Torrington were too high, Ingersoll-Rand, rather than Timken, would capture the value of the synergies. In addition, given the large size of the acquisition, Timken was concerned about the impact on its balance sheet. If Ingersoll-Rand demanded a cash deal and Is this essay helpful? Upgrade your account to read more and access more than 650,000 just like it! get better grades if Timken raised the money with new debt, the increased leverage would almost certainly prompt credit agencies to downgrade Timken’s investment-grade rating. The Bearing Industry Bearings of various sizes and specifications found their way into everything from space shuttles to household appliances, automobiles, dentist drills, roller...
Words: 328 - Pages: 2
...The bearing industry Bearings industry of various sizes and specifications found their way into everything from space shuttles to household appliances, automobiles, dentist drills, roller skates, and computer disk drives. The bearing industry was facing a variety of complex problems. Policies favoring the steel industry were not always in the best interest of the bearing industry, which, as manufacturers of secondary steel products, was in the middle of the production chain. Because bearings were essential components of military and civilian machinery and equipment, the federal government had historically been a major customer. By following the life Cycle we have the stages of the industry in U.S which Timken operates: [pic] Start-up : Before 1990 , with increasing competition from Europe and Japan, the industry started a new segment . Fast growth : between the stage 1990 to 1998 , Shipments of ball and roller bearings grew steadily and peaking in 1998 at more than $5.8 billion .1999 and 2000, the value of shipments remained relatively strong Moderate growth: in 2001 ,the industry faced economic recession, decreased automotive demand, and the terrorist attacks on September 11, 2001. the value of shipments dropped dramatically , sinking to $5.3 billion, the lowest since 1995. There had been moderate growth in the sector in 2002, led by automotive production, which had risen 5% owing to sales incentives, including 0% financing . Plateau and Decline : the...
Words: 6456 - Pages: 26
...With these developments, it is obvious that conflicts between parties of different nationalities occur and liability to tax on income of foreigners especially among those engaging in trading venture. Whilst the laws affecting domicile and residence may be sufficiently settled, it is paramount for courts to pursue a detailed analysis to ascertain specific preliminary issues so as to avoid controversial rulings. Courts often handle numerous financial cases that involve what can be best described as foreign or international elements. In such cases, court must decide whether it has the jurisdiction under the Family Law Act 1975 to make a decision on such cases. In the event that it is determined that the court is invested with the jurisdiction to determine the case, the court has to consider whether there is a system of law in foreign country that also has the jurisdiction to handle the case. As it was addressed in the case Attorney General of New Zealand v Ortiz [1984] AC 1, these benefits and costs to either party if the case resolution is made in foreign country as compared with the apparent country should also be a subject of concern. [1] Legal systems in most countries around the world adopt community property regime, which takes effect at the inception of marriage or at the time of divorce. For instance, California and Massachusetts in the United States have adopted community property regimes that support equal division of assets upon divorce. However, this provision...
Words: 659 - Pages: 3
...Adapted from Bernhardt & Kinnear (1988). Cases in marketing management, pp. 6-16. Plano, TX: Business Publications, Inc. Pay careful attention to the following points. They are often used by instructors to evaluate either a written or oral analysis. 1. Be complete. Each area of the situation analysis must be discussed, problems and opportunities identified, alternative presented and evaluated using the situation analysis and relevant financial analysis, and a decision must be made. An analysis that omits part of the situation analysis or only recognizes one alternative is not a good analysis. Second, each area must be covered in-depth and within insight. 2. Avoid rehashing case facts. Every case has a lot of factual information. A good analysis uses facts that are relevant to the situation at hand to make summary points of analysis. A poor analysis just restates or rehashes theses facts without making relevant summary comments. 3. Make reasonable assumptions. Every case is incomplete in terms of some piece of information that you would like to have. A good case analysis must make realistic assumptions to fill in the gaps of information in the case. For example, the case may not describe the purchase decision process for the product of interest. A poor analysis would either omit mentioning this or just state that no information is available. A good analysis would attempt to present this purchase decision process by classifying the product and drawing upon real life...
Words: 487 - Pages: 2
...are given. It is understandable then that we should seek out more opportunities to apply our skills and make more positive impacts within our jurisdictions. It is this general attitude that led us to get involved in investigating cold cases. How We Got Started Mark had, for several years, been consulting with our Coroner’s Division as a forensic anthropologist. During this time he came to learn that there were numerous coroners’ cases in which the identity of the decedent was unknown. These cases were kept in three-ring binders on a shelf in the Sergeant’s office. Over the years, in the course of this forensic work, we would discuss these cases and the progress that was being made on them. The conversation usually ran along the lines of us asking “any luck with that 1980 homicide victim?” and the sergeant answering “well, we’ve gotten so many new cases that I haven’t been able to even look at it yet.” This went on for a few years and through two different sergeants. One day we, as a crime analysis unit, were brainstorming about how we could broaden our “client base”, as it were. We had been successful in integrating ourselves into our Investigations Bureau and had been involved in numerous major cases. And, of course, we had always been active in producing tactical and strategic analyses for our patrol personnel. But we knew that we could be doing more, particularly given the size and responsibilities of our agency. It was during...
Words: 412 - Pages: 2
...BUSINESS CASE Presented to the Accountancy Department De La Salle University In partial fulfillment Of the course requirements In ACCTBA2 (C33) March 2, 2015 A stakeholder is typically concerned with an organization delivering intended results and meeting its financial objectives. In general, a stakeholder can be one of two types: internal (from within an organization) or external (outside of an organization). The stakeholders in this situation are Lanie Marquez and Tim Rodriguez who are also partners in the retail distribution business and their capital contributions are as follows P500,000 and P300,000 respectively they are an internal stakeholder since they are also the owners. The total Capital of both stakeholders is P800,000 and with a monthly salary for both partners at P15,000 on the assumption that both of them will contribute to manage the business equally. Assuming that both managed the business equally the total salary for the year for Lanie and Tim are P180,000 each. They share profit and loss equally and no interest will be given on capital contributed. The problem for this situation is that Lanie is starting to get concerned with the behavior of her other partner Tim. He only manages the business 50% of the time, which will mean that his salary of P15,000 will need to decrease by also 50% since he does not manage the business equally with his partner. The business has seen a downturn in the profit outcome and for the current financial...
Words: 758 - Pages: 4
...Ralph’s Grocery and United Food and Commercial Workers Union The case that I chose for the week 6 critical thinking assignment concerns Ralph’s Grocery Company, located in California. It applies to this week’s material due to the fact that the case involves unlawful suspension and discharge of an employee, as reviewed by the National Labor Relations Board. Background In May 2011, Vittorio Razi was an employee at Ralph’s Grocery and was suspended and terminated after he refused to take a drug test without first consulting with his UFCW Local 324 representative. The company (Respondent) says that on the day in question, Razi’s behavior was in question, acting nervous, anxious, agitated, and slurred speech. After a couple managers discussed the...
Words: 750 - Pages: 3
... Many people wonder why their own teeth stain so easily. The enamel on your teeth and chromogens are what stains your teeth, but what exact beverage stains teeth the most? I chose this topic because I was curious to know what stains teeth the most. It affects us daily because it could rot your teeth or you can’t pick up hot chicks anymore. So what causes teeth to stain? The temperature causes teeth to expand or contract making it easier for stains. So hot and cold drinks affect that. Color in foods and beverages come from chromogens. Chromogens are intensely pigmented compounds that stick to teeth enamel. Chromogens cause a lot of trouble when they mix and react with other stain causing and stain promoting factors. Tannis may be natural or synthetic tannis is another factor that stains teeth. Tooth enamel is porous making it extremely susceptible to stains. The darker the liquid the darker the stain. There are some examples that stain teeth. Not only sodas bad but also Gatorade. Beets are bad for you also. Mostly cause they’re concentrated. Berries dark skins stain teeth. Ketchup is also really bad because of its bright red color and high levels of acid. Dark liquids and sauces you put on your foods also stain teeth. Colored candy and popsicles both contain colorants that will transfer to the teeth and embed in the porous enamel. Fruit juices, especially grape and cranberry, leave a colorful tinge on the teeth and tongue. Colored sodas instantly discolor teeth. The citric acids...
Words: 594 - Pages: 3
...efficient investigative products and services. As a result, the coverage requirements for ANACI and NACLC investigations have been enhanced to support a common content baseline for all agencies. Note that these enhancements apply only to those ANACI and NACLC cases submitted on an SF 86. The purpose of this FIN is to provide you with information concerning what case coverage changes have been made. The case price adjustments necessary to support these changes will be reflected in the FY 2007 case prices. ANACIINACLC Cases Currently, listed and developed issues which are identified in ANACI and NACLC cases (for non-DoD customers) are not pursued beyond the normal scope of the investigation. These cases are returned to the requesting agency so that the agency may decide whether to adjudicate the case based upon the information in hand, conduct additional follow-up themselves, or request a Reimbursable Suitability Investigation (RSI) from FISD to cover the additional issues. Beginning with FY 2007, expansion of these issues will become a standard part of both the ANACI and NACLC products. Effective October 1, 2006, issues apparent at scheduling or developed during the course of the investigation and which fall within the 5-year case coverage period, unless otherwise noted, will be expanded upon according to the following chart (exception: issues which are known to have been covered in previous investigations, or which would reasonably have been expected to...
Words: 772 - Pages: 4
