Timken Issues Letter to Holders, Urges Holders to Vote Against Spinoff Proposal

The Timken Company (NYSE: TKR) today announced that it sent aletter to its shareholders, urging them to support the Company's provenstrategy to create shareholder value and vote AGAINST Proxy Statement Item No.6, the shareholder proposal to spin-off the Steel business. (Logo:  http://photos.prnewswire.com/prnh/20100210/TIMKENLOGO )Included below is the full text of the letter, which can also be found atwww.TimkenDrivesValue.com:April 15, 2013Dear Fellow Timken Shareholder:BE SURE TO SIGN AND RETURN YOUR PROXY CARD TO HAVE YOUR VOTE COUNTEDCALSTRS AND RELATIONAL INVESTORS WANT TO DISRUPT EXECUTION OF THE TIMKENCOMPANY'S PROVEN VALUE-CREATION STRATEGYVOTE AGAINST THE SHAREHOLDER PROPOSAL TO SPIN-OFF THE STEEL BUSINESSThe Timken Company Board and management team are committed to act in the bestinterests of ALL SHAREHOLDERS and to continue executing the Company's provenstrategy. We urge you to protect the long-term value of your investment inThe Timken Company by voting against the misguided proposal by The CaliforniaState Teachers' Retirement System (CalSTRS) and Relational Investors to forceseparation of the Timken Steel business from its Bearings & Power Transmission(B&PT) business.  The CalSTRS and Relational Investors ill-advised proposalasks you to sacrifice long-term value creation and jeopardize the strength ofthe Company in exchange for illusory short-term gains. YOUR VOTE AT THE MAY 7^th ANNUAL MEETING IS IMPORTANTIF YOU HAVE NOT ALREADY VOTED, PLEASE USE THE ENCLOSED PROXY CARD TO VOTETODAY AGAINST PROXY STATEMENT ITEM #6Timken is successfully executing its carefully considered plan to deliverlong-term value to Timken shareholders.  In recent years, we have transformedTimken into a global industrial technology leader with products that improvethe efficiency and reliability of the machinery that keeps industry in motion. We produce mechanical components and engineered steel used in some of theworld's most demanding applications. Relational Investors has acknowledged the strengths of The Timken Company'scurrent business model and the performance it has generated, complimenting themanagement team on its ability to execute."When you look at the underlying performance of both of these segments of thecompany, they are superior to virtually all of their peers actually in bothsegments.  This company is run very, very well and managed very, very well. They have very good, what we call operating metrics when you look at theirprofit margins and you look at what we call their asset turns..."– Ralph Whitworth, WHBC radio interview, December 5, 2012By highlighting our success but demanding we take action to separate thebusinesses, CalSTRS and Relational Investors demonstrate their fundamentallack of understanding of the integrated strategy driving that success.  Ifthey knew us, they would understand how we leverage strengths across our Steeland B&PT businesses, share research and technical expertise, and benefit fromsupply chain and operating efficiencies.  All of this differentiates Timkenfrom our competitors and allows us to deliver value-added solutions acrosscommon end markets and customers. By demanding that we move forward toseparate Timken Steel from the rest of the Company, they are compromising ourfuture success and competitive advantage.  Under current circumstances, itjust doesn't make sense.WALL STREET ANALYSTS EXPRESS DOUBT ABOUT THE PROPOSAL, SUPPORT THE COMPANY'SINTEGRATED BUSINESS MODEL AND OUR PLAN TO DRIVE SHAREHOLDER VALUE "The activist situation, which we feel will ultimately end with the companystaying intact, could cause some shareholder churn once resolved, but we viewthat as a temporary situation and, to be fair, based on our conversations withinvestors we do not know many investors who own the stock for the activistpromoted idea of splitting the company between its Steel business and Bearingsbusinesses."- David Raso, ISI research note, April 7, 2013 "We are raising our price target to $66 from $58 to reflect our higherconviction with respect to margins through the cycle and what should beimproving free cash flow. Overall, we think TKR has been proactive inrepositioning its businesses, investing in efficiency initiatives and capacityexpansions, funding the pension plan, and making acquisitions. We think all ofthese actions suggest TKR is well positioned for longer-term growth with lessvolatility and risk. As investors come to more fully appreciate the Company'spotential for value creation, we expect the shares to trade more in line withother high-quality Industrial Consumables Companies peers…"– Steve Barger, KeyBanc research note, March 27, 2013 "I'm not particularly convinced that (split-up) would be the best move forTimken… You'd lose all the synergies you get in the (combined business units)and you'd then have two separate corporate structures."- Eli Lustgarten, Longbow Research as quoted in Crain's Cleveland Business on December 3, 2012 DON'T BE FOOLED BY CALSTRS AND RELATIONAL'S MISLEADING CAMPAIGNYour Board and management team maintain an ongoing and open dialogue withshareholders. In fact, we have met with Relational Investors three times, mostrecently on April 2, in a meeting we requested that also included CalSTRS. Despite attempts at reasoned dialogue, we now know that CalSTRS and RelationalInvestors are only interested in aggressively promoting their agenda based onfalse, misleading and inflammatory statements regarding the Board and theCompany – statements designed to distract from the truth.We want to address important flaws in the claims made by CalSTRS andRelational Investors:  The Reality - The CalSTRS / Relational Investors proposal is not merely a request to evaluate a spin-off, it seeks to "effectuate" a spin-off of the Steel business.CalSTRS and Relational  Investors have indicated thereis no downside to supporting - The Timken Board has gone to great lengths totheir proposal carefully evaluate a separation of the businesses, with input from outside advisors, multiple times in the past, including as recently as last year, and determined it is NOT in the best interests of shareholders.   - The depth and breadth of the supply chain, technology and knowledge-sharing benefits across our businesses are key competitive advantages for us that create significant value for our shareholders and could not be replicated through normal supply agreements if the businesses were separated.  Our estimate of these benefits results from detailed, factual analysis based on years of operating as anCalSTRS and Relational integrated company.Investors fundamentallymisunderstand and   mischaracterize the synergiesbetween our businesses - CalSTRS and Relational first claimed that the synergies between our businesses were minimal.  Then they claimed that we weren't proposing actions to mitigate the loss of synergies following a split.  If synergies are minimal, why are they worried about mitigating the loss of those synergies?  Their arguments are inconsistent.    - Total shareholder returns were 75% and 40% for the three- and five-year periods ending November 27[i], the day prior to the proposal becoming public, ranking Timken second in its peer group[ii] for both time periods.CalSTRS and Relational  Investors claim undue creditfor the Company's share price - Since the proposal was announced in November,performance Timken posted fourth quarter EPS above analyst consensus ($0.80 vs. $0.62) and a 2015 EPS midpoint target of $7.00, almost 40% above 2012.  They also fail to note that the general market increased by 14% since then.   - The Timken Board, 75% of which is independent, has a proven track record of making difficult decisions, including divestitures and plant closings, to drive valueCalSTRS and Relational for ALL shareholders.Investors are simply wrong intheir assessment of The Timken  Company's Board structure andgovernance - We have had separate Chairman and CEO roles for nearly a century, decades before this became best practice in corporate governance.   Don't be misled by CalSTRS and Relational Investors' aggressive, misguidedcampaign designed to attempt to turn a quick profit at the expense ofinvestors who care about generating long-term value.VOTE AGAINST THE MISGUIDED PROPOSAL TO SPIN-OFF THE STEEL BUSINESSYour Board and management team have carefully reviewed the shareholderproposal and have concluded it is not in the best interests of shareholders.Support the Company's strategy to achieve long-term value through continuedsuccessful execution of its strategic plan.  Please cast your vote todayAGAINST this unwise shareholder proposal.  For more information, please visitwww.TimkenDrivesValue.com. Thank you for your continued support of The Timken Company.On behalf of the Board of Directors of The Timken Company,Joseph W. RalstonLead Independent Director