TKR_OHR 6.20.14 11-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 11-K
 
 
ý
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
OR
o
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission file number: 1-1169
 
OH&R INVESTMENT PLAN
(Full title of the Plan)

 
 

THE TIMKEN COMPANY, 4500 Mt. Pleasant St., NW,
North Canton, OH 44720-5450
(Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office)
 



Table of Contents
OH&R Investment Plan



December 31, 2013 and 2012, and
Year Ended December 31, 2013

Table of Contents

Unaudited Financial Statements
 
 
 
 
 
Supplemental Schedule
 
 
 




Table of Contents
OH&R Investment Plan



Statements of Net Assets Available for Benefits
(unaudited)

 
December 31,
Assets
2013
 
2012
Investments, at fair value:
 
 
 
Interest in The Master Trust Agreement for The Timken Company Defined Contribution Plans
$
1,294,911

 
$
1,166,727

Receivables:
 
 
 
Participant notes receivable
18,446

 
23,113

Total Assets reflecting investments at fair value
1,313,357

 
1,189,840

 
 
 
 
Adjustment from fair value to contract value for interest in The Master Trust Agreement for The Timken Company Defined Contribution Plans relating to fully benefit-responsive investment contracts
(111
)
 
(7,462
)
Net assets available for benefits
$
1,313,246

 
$
1,182,378

 
 
 
 
See accompanying notes.
 
 
 


1

Table of Contents
OH&R Investment Plan


Statement of Changes in Net Assets Available for Benefits

Year Ended December 31, 2013
(unaudited)

Additions
 
Investment income:
 
Net investment gain from The Master Trust Agreement for The Timken Company Defined Contribution Plans
$
150,773

Interest income from participant notes
892

 
151,665

Deductions
 
Benefits paid directly to participants
20,348

Administrative expenses
449

Total deductions
20,797

Net increase
130,868

Net assets available for benefits:
 
Beginning of year
1,182,378

End of year
$
1,313,246

 
 
See accompanying notes.
 


2

OH&R Investment Plan
Notes to Financial Statements (unaudited)
December 31, 2013 and 2012 and
Year Ending December 31, 2013


1. Description of the Plan
The following description of the OH&R Investment Plan (the Plan) provides only general information. Participants should refer to the Total Rewards handbook (Summary Plan Description) for a more complete description of the Plan’s provisions.

General
OH&R Special Steels Company (the Company) was a subsidiary of Latrobe Steel Company, which was a subsidiary of The Timken Company (Timken). Effective December 8, 2006, The Timken Company sold Latrobe Steel Company. As a result of this transaction, all participants in the Plan terminated their employment with The Timken Company and the Plan will no longer have any new participants or contributions. However, The Timken Company, the Plan Administrator, will continue to sponsor the Plan for those participants who have elected not to transfer their accounts to another plan. The Plan is a defined contribution plan, which covered full-time employees of the Marlborough division of Latrobe Steel Company (those formerly employed by Houghton & Richards Companies) and employees of the Vienna division of Latrobe Steel Company (those formerly employed by Ohio Alloy Steels, Inc.), collectively, OH&R. Full-time employees of the Company became eligible to participate in the Plan the first of the month following or coincident with the completion of one full calendar month of full-time service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Contributions
Under the provisions of the Plan, participants were able to elect to contribute up to 20% of his or her gross earnings directly to the Plan subject to Internal Revenue Service (IRS) limitations. Participants were also able to contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. The Company matched employee contributions,
“Matching Contributions,” at an amount equal to 100% of the first 3% of the participant’s gross earnings and 50% of the next 3% of the participant’s gross earnings.

The Plan also provided for a “Core Contribution” by the Company for employees at the Vienna Division who did not have five years of Credited Service or 50 points (in Credited Service and age) as of December 31, 2003. This contribution was based on the participant’s full years of service and age as of December 31 of the previous calendar year. Core Contribution amounts ranged from 1.0% to 4.5% of the participant’s eligible compensation. For the employees of the Marlborough Division, the Plan provided for a “Base Contribution” determined as an allocation of 1% of the participant’s prior quarter’s earnings and was paid quarterly.

Upon enrollment, a participant was required to direct their contribution in 1% increments to any of the Plan’s fund options. The Matching Contributions and Base Contributions were invested in The Timken Company Common Stock Fund. Participants were not allowed to direct the investment of the Matching Contributions or Base Contributions made in Timken common shares until (i) attaining age 55, (ii) the third anniversary of the date on which such participant is hired, (iii) the date such participant obtains three years of Continuous Service, or (iv) following retirement. Core Contributions were invested based on the participant’s investment election. Participants have access to their account information and the ability to make changes daily through an automated telecommunication system and through the Internet.

Participants were able to elect to have their vested dividends in The Timken Company Common Stock Fund distributed to them in cash rather than automatically reinvested in Timken common shares.

Participant Accounts
Each participant’s account was credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings, and is charged administrative expenses, as appropriate. Allocations of administrative expenses are based on the participant’s account balances, as defined. Forfeited balances of terminated participants’ nonvested accounts are used to reduce future Company contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting
Participants were immediately vested in their contributions and Matching Contributions plus actual earnings thereon. Vesting in the Core Contribution portion of their account plus actual earnings thereon occurred after completion of three years of service. Vesting of the Base Contribution portion of their account plus actual earnings thereon occurred over a period of three years with 50% vested after one year and an additional 25% in years two and three. Participants, who ceased employment on December 8, 2006, as a direct result of the sale of Latrobe Steel Company, became fully vested in their account.


3

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)

Participant Notes Receivable
Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms generally cannot exceed five years for general purpose loans and 30 years for residential loans. The loans are secured by the balance in the participant’s account and bear interest at an interest rate of 1% in excess of the prime rate, as published the first business day of each month in the Wall Street Journal. Principal and interest are paid ratably through payroll deductions.

Payment of Benefits
As a result of their termination of service to The Timken Company due to the sale of Latrobe Steel Company, participants having a vested account balance greater than $1,000 were given the option of (i) transferring their account balance to another plan, (ii) receiving a lump-sum amount equal to the vested balance of their account, (iii) receiving installment payments of their vested assets over a period of time not to exceed their life expectancy, or (iv) leaving their vested account balance in the Plan. Participants having a vested account balance less than $1,000 received a lump-sum amount equal to their vested account balance. Participants electing to leave their vested assets in the Plan may do so until age 70 1/2 after which time the lump-sum or installment distribution options would apply.

Hardship withdrawals are allowed for participants incurring an immediate and severe financial need, as defined by the Plan. Hardship withdrawals are strictly regulated by the IRS and a participant must exhaust all available loan options and distributions prior to requesting a hardship withdrawal.

Plan Termination
Although it has not expressed any interest to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, the Plan’s trustee, JP Morgan (Trustee), shall distribute to each participant the vested balance in their separate account.

2. Accounting Policies

Basis of Accounting
The financial statements have been prepared on the accrual basis of accounting.

Participant Notes Receivable
Participant notes receivable represents participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2013 or 2012. If a participant ceases to make loan repayments and the Plan Administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a benefit payment is recorded.

Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value and are invested in The Master Trust Agreement for The Timken Company Defined Contribution Plans (Master Trust), which was established for the investment of assets of the Plan and the four other defined contribution plans sponsored by The Timken Company.

The Plan’s trustee maintains a collective investment trust of common shares of the Company in which the Company’s defined contribution plans participate on a unit basis. Timken common shares are traded on a national securities exchange and participation units in The Timken Company Common Stock Fund are valued at the last reported sales price on the last business day of the plan year.

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date.

Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

4

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)


3. Investments
The Plan’s assets are held in the Master Trust, commingled with assets of other Company-sponsored benefit plans.
Each participating plan’s interest in the investment funds (i.e., separate accounts) of the Master Trust is based on account balances of the participants and their elected investment funds. The Master Trust assets are allocated among the participating plans by assigning to each plan those transactions (primarily contributions, benefit payments, and plan-specific expenses) that can be specifically identified and by allocating among all plans, in proportion to the fair value of the assets assigned to each plan, income and expenses resulting from the collective investment of the assets of the Master Trust. The Plan’s ownership percentage in the Master Trust as of December 31, 2013 and 2012 was 0.09% and 0.09%, respectively.
The following tables present the fair value of investments in the Master Trust and the Plan's percentage interest in each investment fund of the Master Trust:
 
December 31, 2013
 
Cash and Cash Equivalents
 
Company Stock
 
Registered Investment Companies
 
Common Collective
 
Government and Agency Securities
 
Mortgage and Asset Backed Securities
 
Corporate Bonds
 
Wrap Contracts
 
Total Assets
 
Plan's Ownership Percentage
Investment, at Fair Value:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Timken Company Common Stock Fund
$
2,272,411

 
$
311,718,611

 
$

 
$

 
$

 
$

 
$

 
$

 
313,991,022

 
0.06
%
Morgan Stanley Small Company Growth

 

 
26,341,600

 

 

 

 

 

 
26,341,600

 
0.00
%
American Funds EuroPacific Growth

 

 
122,203,443

 

 

 

 

 

 
122,203,443

 
0.01
%
American Funds Washington Mutual Investors

 

 
37,090,782

 

 

 

 

 

 
37,090,782

 
0.00
%
American Beacon Small Cap Value

 

 
32,171,620

 

 

 

 

 

 
32,171,620

 
0.00
%
Vanguard Target Retirement Income

 

 
25,366,044

 

 

 

 

 

 
25,366,044

 
0.41
%
Vanguard Target Retirement 2015

 

 
74,178,696

 

 

 

 

 

 
74,178,696

 
0.24
%
Vanguard Target Retirement 2025

 

 
49,463,045

 

 

 

 

 

 
49,463,045

 
0.00
%
Vanguard Target Retirement 2035

 

 
42,757,483

 

 

 

 

 

 
42,757,483

 
0.02
%
Vanguard Target Retirement 2045

 

 
20,055,670

 

 

 

 

 

 
20,055,670

 
0.00
%
Vanguard Target Retirement 2020

 

 
14,424,622

 

 

 

 

 

 
14,424,622

 
0.00
%
Vanguard Target Retirement 2030

 

 
6,253,997

 

 

 

 

 

 
6,253,997

 
0.00
%
Vanguard Target Retirement 2040

 

 
2,596,672

 

 

 

 

 

 
2,596,672

 
0.00
%
Vanguard Target Retirement 2050

 

 
2,152,852

 

 

 

 

 

 
2,152,852

 
0.00
%
JPMorgan S&P 500 Index

 

 

 
40,380,646

 

 

 

 

 
40,380,646

 
0.00
%
The Timken Company - JPM Bond Fund

 

 

 
7,415,239

 
24,596,335

 
66,456,847

 
18,282,643

 

 
116,751,064

 
0.04
%
JPMorgan Equity Index

 

 

 
180,551,056

 

 

 

 

 
180,551,056

 
0.13
%
Nuveen Winslow Large-Cap Growth

 

 

 
80,486,000

 

 

 

 

 
80,486,000

 
0.16
%
SSgA Russell 2000-A Index

 

 

 
69,365,489

 

 

 

 

 
69,365,489

 
0.01
%
 
$
2,272,411

 
$
311,718,611

 
$
455,056,526

 
$
378,198,430

 
$
24,596,335

 
$
66,456,847

 
$
18,282,643

 
$

 
$
1,256,581,803

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
JPMorgan Stable Value Fund:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
JPMorgan Liquidity Fund

 

 

 
5,763,603

 

 

 

 

 
5,763,603

 
 
JPMorgan Intermediate Bond Fund

 

 

 
184,514,113

 

 

 

 

 
184,514,113

 
 
Wrapper Value

 

 

 

 

 

 

 
45,074

 
45,074

 
 
Adjustment from fair value to contract value

 

 

 
(51,241
)
 

 

 

 

 
(51,241
)
 
 
 
$

 
$

 
$

 
$
190,226,475

 
$

 
$

 
$

 
$
45,074

 
$
190,271,549

 
0.22
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Assets of Master Trust
$
2,272,411

 
$
311,718,611

 
$
455,056,526

 
$
568,424,905

 
$
24,596,335

 
$
66,456,847

 
$
18,282,643

 
$
45,074

 
$
1,446,853,352

 
0.09
%

5

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)

 
December 31, 2012
 
Cash and Cash Equivalents
 
Company Stock
 
Registered Investment Companies
 
Common Collective
 
Government and Agency Securities
 
Mortgage and Asset Backed Securities
 
Corporate Bonds
 
Wrap Contracts
 
Total Assets
 
Plan's Ownership Percentage
Investment, at Fair Value:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Timken Company Common Stock Fund
$
1,576,982

 
$
319,117,974

 
$

 
$

 
$

 
$

 
$

 
$

 
$
320,694,956

 
0.05
%
Morgan Stanley Small Company Growth

 

 
14,814,070

 

 

 

 

 

 
14,814,070

 
0.00
%
American Funds EuroPacific Growth

 

 
89,314,155

 

 

 

 

 

 
89,314,155

 
0.01
%
American Funds Washington Mutual Investors

 

 
22,783,272

 

 

 

 

 

 
22,783,272

 
0.00
%
American Beacon Small Cap Value

 

 
22,868,397

 

 

 

 

 

 
22,868,397

 
0.00
%
Vanguard Target Retirement Income

 

 
23,368,634

 

 

 

 

 

 
23,368,634

 
0.49
%
Vanguard Target Retirement 2015

 

 
70,820,300

 

 

 

 

 

 
70,820,300

 
0.17
%
Vanguard Target Retirement 2025

 

 
38,937,796

 

 

 

 

 

 
38,937,796

 
0.00
%
Vanguard Target Retirement 2035

 

 
35,355,304

 

 

 

 

 

 
35,355,304

 
0.02
%
Vanguard Target Retirement 2045

 

 
16,125,154

 

 

 

 

 

 
16,125,154

 
0.00
%
Vanguard Target Retirement 2020

 

 
6,806,720

 

 

 

 

 

 
6,806,720

 
0.00
%
Vanguard Target Retirement 2030

 

 
2,645,284

 

 

 

 

 

 
2,645,284

 
0.00
%
Vanguard Target Retirement 2040

 

 
1,665,490

 

 

 

 

 

 
1,665,490

 
0.00
%
Vanguard Target Retirement 2050

 

 
800,347

 

 

 

 

 

 
800,347

 
0.00
%
JPMorgan S&P 500 Index

 

 

 
 
 

 

 

 

 
32,466,044

 
0.00
%
The Timken Company - JPM Bond Fund

 

 

 
8,055,932

 
34,150,439

 
68,750,278

 
24,012,101

 

 
134,968,750

 
0.08
%
JPMorgan Equity Index

 

 

 
140,491,194

 

 

 

 

 
140,491,194

 
0.09
%
Nuveen Winslow Large-Cap Growth

 

 

 
63,736,701

 

 

 

 

 
63,736,701

 
0.15
%
SSgA Russell 200-A Index

 

 

 
48,444,488

 

 

 

 

 
48,444,488

 
0.01
%
 
$
1,576,982

 
$
319,117,974

 
$
346,304,923

 
$
293,194,359

 
$
34,150,439

 
$
68,750,278

 
$
24,012,101

 
$

 
$
1,087,107,056

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
JPMorgan Stable Value Fund:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
JPMorgan Liquidity Fund

 

 

 
32,235,856

 

 

 

 

 
32,235,856

 
 
JPMorgan Intermediate Bond Fund

 

 

 
155,036,381

 

 

 

 

 
155,036,381

 
 
JPMorgan Mortgage Private Placement Fund

 

 

 
8,682,881

 

 

 

 

 
8,682,881

 
 
Wrapper Value

 

 

 

 

 

 

 
48,420

 
48,420

 
 
Adjustment from fair value to contract value

 

 

 
(3,346,510
)
 

 

 

 

 
(3,346,510
)
 
 
 
$

 
$

 
$

 
$
192,608,608

 
$

 
$

 
$

 
$
48,420

 
$
192,657,028

 
0.22
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Assets of Master Trust
$
1,576,982

 
$
319,117,974

 
$
346,304,923

 
$
485,802,967

 
$
34,150,439

 
$
68,750,278

 
$
24,012,101

 
$
48,420

 
$
1,279,764,084

 
0.09
%

6

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)


Investment gain for the Master Trust is as follows:
 
 
Year Ended
 
 
December 31, 2013
Net appreciation (depreciation) in fair value of investments
 
 
Company Stock
$
50,558,388

 
Registered Investment Companies
67,374,435

 
Common Collective Funds
97,044,046

 
Government and Agency Securities
(1,452,287
)
 
Mortgage and Asset Backed Securities
(120,969
)
 
Corporate Bonds
(470,409
)
 
 
$
212,933,204

 
Net appreciation in investment contracts
3,017,381

 
Interest and dividends
19,025,947

 
Total Master Fund
$
234,976,532


4. Fair Value

The fair value framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, are described as follows:

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.

Level 2 – Inputs to the valuation methodology include:
• quoted prices for similar assets or liabilities in active markets;
• quoted prices for identical or similar assets or liabilities in inactive markets;
• inputs other than quoted prices that are observable for the asset or liability;
• inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

7

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)


The following tables present the fair value hierarchy for those investment of the Master Trust measured at fair value on a recurring basis as of December 31, 2013 and 2012:

 
Assets at Fair Value as of
 
December 31, 2013
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Cash and Cash Equivalents:
 
 
 
 
 
 
 
JPMorgan US Government Money Market
$
2,272,411

 
$

 
$
2,272,411

 
$

Company Stock:
 
 
 
 
 
 
 
The Timken Company Common Stock
311,718,611

 
311,718,611

 

 

Registered Investment Companies:
 
 
 
 
 
 
 
Morgan Stanley Small Company Growth
26,341,600

 
26,341,600

 

 

American Funds EuroPacific Growth
122,203,443

 
122,203,443

 

 

American Funds Washington Mutual Investors
37,090,782

 
37,090,782

 

 

American Beacon Small Cap Value
32,171,620

 
32,171,620

 

 

Vanguard Target Retirement Income
25,366,044

 
25,366,044

 

 

Vanguard Target Retirement 2015
74,178,696

 
74,178,696

 

 

Vanguard Target Retirement 2020
14,424,622

 
14,424,622

 

 

Vanguard Target Retirement 2025
49,463,045

 
49,463,045

 

 

Vanguard Target Retirement 2030
6,253,997

 
6,253,997

 

 

Vanguard Target Retirement 2035
42,757,483

 
42,757,483

 

 

Vanguard Target Retirement 2040
2,596,672

 
2,596,672

 

 

Vanguard Target Retirement 2045
20,055,670

 
20,055,670

 

 

Vanguard Target Retirement 2050
2,152,852

 
2,152,852

 

 

Common Collective Funds:
 
 
 
 
 
 
 
JPMorgan S&P 500 Index
40,380,646

 

 
40,380,646

 

SSgA Russel 2000-A Index
69,365,489

 

 
69,365,489

 

JPMorgan Equity Index
180,551,056

 

 
180,551,056

 

Nuveen Windslow Large-Cap Growth
80,486,000

 

 
80,486,000

 

The TImken Company-JPM Bond Fund:
 
 
 
 
 
 
 
Common Collective Fund:
 
 
 
 
 
 
 
JPMorgan Liquidity Fund
7,415,239

 

 
7,415,239

 

Government and Agency Securities
24,596,335

 

 
24,596,335

 

Mortgage and Asset Backed Securities
66,456,847

 

 
66,456,847

 

Corporate Bonds
18,282,643

 

 
18,282,643

 

JPMorgan Stable Value Fund:
 
 
 
 
 
 
 
Common Collective Funds:
 
 
 
 
 
 
 
JPMorgan Liquidity Fund
5,763,603

 

 
5,763,603

 

JPMorgan Intermediate Bond Fund
184,514,113

 

 
184,514,113

 

Wrapper Value
45,074

 

 

 
45,074

Total assets
$
1,446,904,593

 
$
766,775,137

 
$
680,084,382

 
$
45,074





8

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)

 
Assets at Fair Value as of
 
December 31, 2012
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Cash and Cash Equivalents:
 
 
 
 
 
 
 
JPMorgan US Government Money Market
$
1,576,982

 
$

 
$
1,576,982

 
$

Company Stock:
 
 
 
 
 
 
 
The Timken Company Common Stock
319,117,974

 
319,117,974

 

 

Registered Investment Companies:
 
 
 
 
 
 
 
Morgan Stanley Small Company Growth
14,814,070

 
14,814,070

 

 

American Funds EuroPacific Growth
89,314,155

 
89,314,155

 

 

American Funds Washington Mutual Investors
22,783,272

 
22,783,272

 

 

American Beacon Small Cap Value
22,868,397

 
22,868,397

 

 

Vanguard Target Retirement Income
23,368,634

 
23,368,634

 

 

Vanguard Target Retirement 2015
70,820,300

 
70,820,300

 

 

Vanguard Target Retirement 2020
6,806,720

 
6,806,720

 

 

Vanguard Target Retirement 2025
38,937,796

 
38,937,796

 

 

Vanguard Target Retirement 2030
2,645,284

 
2,645,284

 

 

Vanguard Target Retirement 2035
35,355,304

 
35,355,304

 

 

Vanguard Target Retirement 2040
1,665,490

 
1,665,490

 

 

Vanguard Target Retirement 2045
16,125,154

 
16,125,154

 

 

Vanguard Target Retirement 2050
800,347

 
800,347

 

 

Common Collective Funds:
 
 
 
 
 
 
 
JPMorgan S&P 500 Index
32,466,044

 

 
32,466,044

 

SSgA Russel 2000-A Index
48,444,488

 

 
48,444,488

 

JPMorgan Equity Index
140,491,194

 

 
140,491,194

 

Nuveen Windslow Large-Cap Growth
63,736,701

 

 
63,736,701

 

The TImken Company-JPM Bond Fund:
 
 
 
 
 
 
 
Common Collective Fund:
 
 
 
 
 
 
 
JPMorgan Liquidity Fund
8,055,932

 

 
8,055,932

 

Government and Agency Securities
34,150,439

 

 
34,150,439

 

Mortgage and Asset Backed Securities
68,750,278

 

 
68,750,278

 

Corporate Bonds
24,012,101

 

 
24,012,101

 

JPMorgan Stable Value Fund:
 
 
 
 
 
 
 
Common Collective Funds:
 
 
 
 
 
 
 
JPMorgan Liquidity Fund
32,235,856

 

 
32,235,856

 

JPMorgan Intermediate Bond Fund
155,036,381

 

 
155,036,381

 

JPMorgan Mortgage Private Placement Fund
8,682,881

 

 
8,682,881

 

Wrapper Value
48,420

 

 

 
48,420

Total assets
$
1,283,110,594

 
$
665,422,897

 
$
617,639,277

 
$
48,420


The investment strategy for American Funds Washington Mutual Investors is to invest in common stocks of established companies that are listed on, or meet the financial listing requirements of, the New York Stock Exchange and have a strong record of earnings and dividends.


9

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)

The Timken Company Common Stock Fund participates in units and is valued based on the closing price of Timken common shares traded on a national securities exchange. Registered investment companies are valued based on quoted market prices reported on the active market on which the individual securities are traded.

The JP Morgan S&P 500 Index Fund and the JPMorgan Equity Index Fund include investments that provide exposure to a broad equity market and are designed to mirror the aggregate price and dividend performance of the S&P 500 Index. The fair values of the investments in this category have been determined using the net asset value per share.

The Timken Company – JPM Bond Fund includes investments that seek to maximize total return by investing primarily in a diversified portfolio of intermediate- and long-term debt securities. The fair value for The Timken Company – JPM Bond Fund is based on the value of the underlying assets. The JP Morgan Liquidity Fund is valued using the net asset value per share. The Government and Agency Securities are valued at the closing price on the date of the last transaction. Mortgage and Asset Backed Securities are valued based on quoted prices for similar assets in active markets. Corporate Bonds are valued at the closing price on the date of the last transaction.

The SSgA Russell 2000-A Index Fund includes investments seeking an investment return that approximates as closely as practicable, before expenses, the performance of the Russell 2000 Index over the long term. The fund includes exposure to stocks of small U.S. companies. The fair value of the investments in this category has been determined using the net asset value per share.

The Nuveen Winslow Large-Cap Growth Fund is a portfolio that invests at least 80% of its net assets in equity securities of U.S. companies with market capitalization in excess of $4 billion at the time of purchase. The fair value of the investments in this category has been determined using the net asset value per share on the active market on which the individual securities are traded.

The Stable Value Fund is invested in the JPMorgan Liquidity, JPMorgan Intermediate Bond, and JPMorgan Private Placement Common Collective Funds. The fair value of the investment in these funds has been estimated using the net asset value per share. The JPMorgan Liquidity Fund invests in a diversified portfolio of fixed and floating rate short-term money market instruments and U.S. Treasury securities. The JPMorgan Mortgage Private Placement invests primarily in privately placed fixed rate and floating rate mortgages and leasebacks secured by apartment complexes and single family homes, as well as commercial properties, such as office buildings, shopping centers, retail stores and warehouses. The JPMorgan Intermediate Bond Fund is designed as a fixed income portfolio strategy for stable value funds and other conservative fixed income investors.

The following tables present a summary of changes in the fair value of the Master Trust’s Level 3 assets as of December 31, 2013 and December 31, 2012, respectively:

 
 
Wrapper Value
 
Total
Balance,
January 1, 2013
$
48,420

 
$
48,420

Unrealized Gains
(3,346
)
 
(3,346
)
Balance,
December 31, 2013
$
45,074

 
$
45,074

 
 
 
 
 
 
 
Wrapper Value
 
Total
Balance,
January 1, 2012
$
25,677

 
$
25,677

Unrealized Gains
22,743

 
22,743

Balance,
December 31, 2012
$
48,420

 
$
48,420



10

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)

The following table represents the Plan’s level 3 financial instruments, the valuation techniques used to measure the fair value of those financial instruments, and the significant unobservable inputs and the ranges of values for those inputs:

Instrument
 
Fair Value
 
Principal Valuation Technique
 
Unobservable Inputs
 
Range of Significant Input Values
 
Weighted Average
Synthetic guaranteed investment contract wrapper
 
$
45,074

 
Replacement Cost
 
Swap Yield Rate
 
0.81
%
 
0.81
%
 
 
 
 
 
 
Duration
 
3.05

 
 
 
 
 
 
 
 
Payout Date
 
N/A
 
 
 
 
 
 
 
 
Payout Percentage
 
N/A
 
 


The following tables summarize investments measured at fair value based on net asset value (NAVs) per share as of December 31, 2013 and 2012, respectively:
December 31, 2013
 
Fair Value
 
Redemption Unfunded Commitments
 
Redemption Frequency
 
Redemption Notice Period
JPMorgan S&P 500 Index
 
$
40,380,646

 
Not applicable
 
Daily
 
Trade Day
The Timken Company - JPM Bond Fund
 
$
116,751,064

 
Not applicable
 
Daily
 
Trade Day
SSgA Russell 2000-A Index
 
$
69,365,489

 
Not applicable
 
Daily
 
Trade Day
JPMorgan Equity Index
 
$
180,551,056

 
Not applicable
 
Daily
 
Trade Day + 1 day
Nuveen Windslow Large Cap Growth
 
$
80,486,000

 
Not applicable
 
Daily
 
Trade Day
JPMorgan Liquidity
 
$
5,763,603

 
Not applicable
 
Daily
 
Trade Day
JPMorgan Intermediate Bond
 
$
184,514,113

 
Not applicable
 
Daily
 
Trade Day
December 31, 2012
 
Fair Value
 
Redemption Unfunded Commitments
 
Redemption Frequency
 
Redemption Notice Period
JPMorgan S&P 500 Index
 
$
32,466,044

 
Not applicable
 
Daily
 
Trade Day
The Timken Company - JPM Bond Fund
 
$
134,968,750

 
Not applicable
 
Daily
 
Trade Day
SSgA Russell 2000-A Index
 
$
48,444,488

 
Not applicable
 
Daily
 
Trade Day
JPMorgan Equity Index
 
$
140,491,194

 
Not applicable
 
Daily
 
Trade Day + 1 day
Nuveen Windslow Large Cap Growth
 
$
63,736,701

 
Not applicable
 
Daily
 
Trade Day
JPMorgan Liquidity
 
$
32,235,856

 
Not applicable
 
Daily
 
Trade Day
JPMorgan Intermediate Bond
 
$
155,036,381

 
Not applicable
 
Daily
 
Trade Day
JP Morgan Mortgage Private Placement Fund
 
$
8,682,881

 
Not applicable
 
Daily
 
Trade Day + 1 day



11

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)


5. Non-Participant-Directed Investments
Information about the net assets and the significant components of changes in net assets related to non-participant-directed investments is as follows:
 
December 31,
 
2013
 
2012
Investments, at fair value:
 
 
 
Interest in Master Trust related to The Timken Company Common Stock Fund
$
176,421

 
$
154,525

 
Year Ended
 
December 31, 2013
Change in net assets:
 
Net appreciation in fair value of investments
$
23,130

Dividends
2,917

Benefits paid directly to participants
(4,006
)
Expenses
(152
)
 
$
21,889


6. Investment Contracts
The Master Trust invests in synthetic guaranteed investment contracts (SGICs), or a Stable Value Fund, that credit a stated interest rate for a specified period of time. The Stable Value Fund provides principal preservation plus accrued interest through fully benefit-responsive wrap contracts issued by a third party which back the underlying assets owned by the Master Trust. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The investment contract issuer is contractually obligated to repay the principal at a specified interest rate that is guaranteed to the Plan.

Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the fully benefit-responsive investment contracts. Contract value represents contributions made under the contracts, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.

The Plan’s wrapper contracts permit all allowable participant-initiated transactions to occur at contract value. There are no events known to the Plan that are probable of occurring and which would limit its ability to transact at contract value with the issuer of the wrapper contract, which also limit the ability of the Plan to transact at contract value with participants. The wrapper contracts cannot be terminated by its issuer at a value other than contract value or prior to the scheduled maturity date, except under a limited number of very specific circumstances including termination of the Plan or failure to qualify, material misrepresentations by the Plan sponsor or investment manager, failure by these same parties to meet material obligations under the contract, or other similar types of events.

There are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rates for the wrap contracts are calculated on a quarterly basis (or more frequently if necessary) using contract value, market value of the underlying fixed income portfolio, the yield of the portfolio, and the duration of the index, but cannot be less than zero. The crediting rate is most affected by the change in the annual effective yield to maturity of the underlying securities, but is also affected by the difference between the contract value and the market value of the covered investments.


12

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)

 
 
December 31,
Average Yields for SGICs
 
2013
 
2012
Based on actual earnings
 
1.0
%
 
1.0
%
Base on interest rate credited to participants
 
2.0
%
 
2.0
%


7. Reconciliation of Financial Statements to the Form 5500
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
 
December 31, 2013

 
December 31, 2012

Net assets available for Benefits per the financial statements
$
1,313,246

 
$
1,182,378

Adjustments from contract value to fair value for fully benefit-responsive investment contracts
111

 
7,462

Net assets available for benefits per the Form 5500
$
1,313,357

 
$
1,189,840

The fully benefit-responsive investment contracts have been adjusted from fair value to contract value for purposes of the financial statements. For purposes of the Form 5500, the investment contracts will be stated at fair value.

The following is a reconciliation of total additions per the financial statements to total income per the Form 5500 for the year ended December 31, 2013:
 
December 31, 2013
Total additions per the financial statements
$
151,665

Less: Adjustment from fair value to contract value for fully benefit-responsive investment contracts at December 31, 2012
(7,462
)
Add: Adjustment from fair value to contract value for fully benefit-responsive investment contracts at December 31, 2013
111

Total income per the Form 5500
$
144,314


8. Risks and Uncertainties
The Master Trust invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.


13

Table of Contents
OH&R Investment Plan
Notes to Financial Statements (continued)

9. Income Tax Status
The Plan has received a determination letter from the IRS dated September 17, 2013, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code), and therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes that the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax-exempt.

Accounting principles generally accepted in the United States require plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2013, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes it is no longer subject to income tax examinations for years prior to 2010.

10. Related-Party Transactions
Related-party transactions included the investments in the common stock of the Company and the investment funds of the Trustee. Such transactions are exempt from being prohibited transactions.
The following is a summary of transactions in Timken common shares with the Master Trust for the year ended December 31, 2013:
 
Dollars
Purchased
$
32,600,902

Issued to participants for payment of benefits
$
2,579,161

Purchases and benefits paid to participants include Timken common shares valued at quoted market prices at the date of purchase or distribution.
Certain legal and accounting fees and certain administrative expenses relating to the maintenance of participant records are paid by the Company. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.


11. Spinoff of Steel Business

On September 5, 2013, the Company announced that its board of directors had approved a plan to pursue a separation of its steel business from its bearing and power transmission business through a spinoff, creating a new independent publicly traded steel company, TimkenSteel Corporation. The transaction is expected to be tax-free to shareholders and is expected to be completed by June 30, 2014, subject to certain conditions including, among others, approval of the Company's board of directors, declaration of the effectiveness of the registration statement on Form 10 and receipt of an opinion of our tax counsel regarding the tax free nature of the spinoff. In connection with the spinoff, participant accounts for employees and retirees of the steel business will be transferred into a newly created Plan.

14








Supplemental Schedule

15

Table of Contents
OH&R Investment Plan


EIN #34-0577130      Plan #002
Schedule H, Line 4i - Schedule of Assets
(Held at End of Year)
Year Ended December 31, 2013
 
Identity of Issuer, Borrower, Lessor, or Similar Party
 
Description of Investment, Including Maturity Date, Rate of
 Interest, Collateral, Par, or Maturity Value
  
Current Value
Participant notes receivable*
 
Interest rate of 4.25% maturing in 2017
  
$
18,446


* Indicates party in interest to the Plan
 


16



SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other person who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
OH&R INVESTMENT PLAN
 
 
 
 
Date:
June 30, 2014
By:
/s/ J. Ted Mihaila
 
 
 
J. Ted Mihaila
 
 
 
Senior Vice President and Controller


17