Edgar Filing: TIMKEN CO

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 rates ranging from 4.25% to 11.50% with various maturity dates

FORM 11-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

x	ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

¨	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

THE TIMKEN COMPANY SAVINGS AND INVESTMENT PENSION PLAN

(Full title of the Plan)

THE TIMKEN COMPANY, 1835 Dueber Avenue, S.W., Canton, Ohio 44706

(Name of issuer of the securities held pursuant to the Plan

and the address of its principal executive office)

The Timken Company Savings and Investment Pension Plan

Financial Statements and Supplemental Schedules

December 31, 2012 and 2011, and

Year Ended December 31, 2012

Table of Contents


Report of Independent Registered Public Accounting Firm			1

Financial Statements

Statements of Net Assets Available for Benefits			2
Statement of Changes in Net Assets Available for Benefits			3
Notes to Financial Statements			4

Supplemental Schedules
Schedule H, Line 4a – Schedule of Delinquent Participant Contributions			28
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)			29

Exhibit 23 – Consent of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

The Timken Company, Administrator of

The Timken Company Savings and

Investment Pension Plan

We have audited the accompanying statements of net assets available for benefits of The Timken Company Savings and Investment Pension Plan as of December 31, 2012 and 2011, and the related statement of changes in net assets available for benefits for the year ended December 31, 2012. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of The Timken Company Savings and Investment Pension Plan at December 31, 2012 and 2011, and the changes in its net assets available for benefits for the year ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of delinquent participant contributions and assets (held at end of year) as of December 31, 2012, are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Such information has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

Cleveland, Ohio

July 1, 2013

/s/ Ernst & Young LLP

The Timken Company Savings and Investment Pension Plan

Statements of Net Assets Available for Benefits


	December 31,
	2012			2011
Assets
Investments, at fair value:
Interest in The Master Trust Agreement for The Timken Company Defined Contribution Plans	$	1,140,160,288		$	765,670,778

Receivables:
Contributions receivable from participants		4,113,092			3,246,854
Contributions receivable from The Timken Company		3,871,563			2,767,664
Participant notes receivable		26,422,913			14,865,429

		34,407,568			20,879,947


Total assets reflecting investments at fair value		1,174,567,856			786,550,725

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		(2,851,834	)		(361,915	)

Net assets available for benefits	$	1,171,716,022		$	786,188,810

See accompanying notes.

The Timken Company Savings and Investment Pension Plan

Statement of Changes in Net Assets Available for Benefits

Year Ended December 31, 2012


Additions
Investment income:
Net investment gain from The Master Trust Agreement for The Timken Company Defined Contribution Plans	$	131,424,017

Interest income from participant notes		962,091
Participant rollovers		1,608,450

Contributions:
Participants		34,156,947
The Timken Company		24,427,407

		58,584,354

Total additions		192,578,912


Deductions
Benefits paid directly to participants		68,508,979
Administrative expenses		725,367

Total deductions		69,234,346


Net increase prior to transfers		123,344,566
Transfers in		262,182,646

Net increase		385,527,212

Net assets available for benefits:
Beginning of year		786,188,810

End of year	$	1,171,716,022

See accompanying notes.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements

December 31, 2012 and 2011, and

Year Ended December 31, 2012

1. Description of the Plan

The following description of The Timken Company Savings and Investment Pension 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. Copies of the handbook are available from the Plan Administrator, The Timken Company (the Company).

General

The Plan is a defined contribution plan available to salaried employees of The Timken Company, The Timken Corporation, Timken LLC, Timken Boring Specialties, LLC, Timken Housed Units, TSB Metal Recycling, Timken Gears & Services Inc., Timken Drives LLC, MPB Corporation, Timken Alcor Aerospace Technologies, Inc., Timken Aerospace Transmissions, and Timken Aerospace Bearing Inspection, and to nonbargaining hourly employees at the following locations: Rutherfordton, North Carolina; Honea Path, South Carolina; Tyger River, South Carolina; Canton, Georgia; Pulaski, Tennessee; Mascot, Tennessee; Ogden, Utah; Carlyle, Illinois; Lenexa, Kansas; Carolina Service Center; Indiana Service Center; Bucyrus, Ohio; Gaffney, South Carolina; Lincolnton, North Carolina; and hourly employees of Timken LLC, Timken Boring Specialties, LLC, Timken Housed Units, Timken Gears & Services Inc., Timken Drives LLC, MPB Corporation, Timken Alcor Aerospace Technologies, Inc., Timken Aerospace Transmissions, and Timken Aerospace Bearing Inspection. Employees of these entities become eligible to participate in the Plan the first of the month following 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).

Plan Mergers

Effective June 29, 2012, the assets and liabilities of MPB Employees’ Savings Plan and The Hourly Pension Investment Plan were transferred to and merged into the Plan. Effective November 30, 2012, the assets and liabilities of the Timken Drives, LLC Retirement Savings Plan were transferred to and merged into the Plan. The net assets transferred into the Plan are reflected on the December 31, 2012 statement of changes in net assets available for benefits as a transfer into The Plan.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Contributions

Under the provisions of the Plan, participants may elect to contribute between 1% and 20% of their gross earnings directly to the Plan, depending on their monthly wages and subject to Internal Revenue Service (IRS) limitations. The Company matches such employee contributions, “Matching Contributions,” at an amount equal to 100% of the first 3% of the participant’s gross earnings deferred to the Plan, and 50% of the next 3% of gross earnings deferred to the Plan. Participants may also roll over amounts representing distributions from other qualified defined benefit or defined contribution plans.

The Plan provides for a quarterly 401(k) Plus Contribution by the Company for employees hired prior to January 1, 2004 at the Company’s facilities in Altavista, Virginia; Asheboro, North Carolina; St. Clair, Ohio; Tryon Peak, North Carolina; and the Indiana Service Center, and who did not have five years of Continuous Service and 50 points (in Continuous Service and age) as of December 31, 2003. This contribution is based on the participant’s full years of service at amounts ranging from 2.5% to 8.0% of the participant’s eligible compensation.

The Plan provides for a quarterly “Core Contribution” by the Company for all plan participants except employees of Timken Drives LLC and Timken Housed Units, those accruing service under a defined benefit pension plan sponsored by the Company, and those receiving a 401(k) Plus Contribution. This contribution is based on the participant’s full years of service and age as of December 31 of the previous calendar year. Core Contribution amounts range from 1.0% to 4.5% of the participant’s eligible compensation.

Effective January 1, 2012 employees of Timken Boring Specialties LLC became eligible for Core Contributions. Those classified by the Company as members of the TIS Reliability Services Division of the Company became eligible for Core Contributions effective April 1, 2012.

The Plan provides for a quarterly “Timken Drives 401(k) Plus Contribution” by the Company for employees of Timken Drives, LLC. This contribution is based on the participant’s full years of service in amounts of 1.0% (for those with 25-29 years of services) or 2.0% (for those with 30 or more years of service) of the participant’s eligible compensation.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Effective April 15, 2010, any employee hired prior to 2007 who had not enrolled as a participant in the Plan as of February 22, 2010; and any employee hired after 2006 who, prior to February 22, 2010, had elected not to participate in the Plan, were automatically enrolled in the Plan at a 3% deferral rate. If the participant makes no further changes to his/her deferral rate, then each year following the year in which the participant was automatically enrolled in the Plan the participant’s deferral rate will be increased by 1% until a deferral rate of 6% has been attained. Matching Contributions are made in common stock of the Company.

Participants are not allowed to diversify the Matching Contributions made in common shares of the Company 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. 401(k) Plus Contributions and Core Contributions are invested based on the participant’s investment election. If a participant fails to make investment elections, his/her deferrals will default to an appropriate Vanguard Target Retirement Fund, based on the participant’s age.

Participants have access to their account information and the ability to make account transfers and contribution changes daily through an automated telecommunications system and through the Internet.

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

Participant Accounts

Each participant’s account is 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. Plan earnings are allocated based on the participant’s share of net earnings or losses of their respective elected investment options. Allocations of administrative expenses are based on 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.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Vesting

Participants are immediately vested in their contributions and Matching Contributions plus actual earnings thereon. Participants vest in the 401(k) Plus Contributions and Core Contributions after the completion of three years of service. Participants vest in the Base Contributions (contributions made prior to 2007) on a five-year graduated vesting scale based on years of continuous service. Participants who ceased employment on December 31, 2009, as a direct result of the sale of Timken’s Needle Roller Bearing assets became fully vested in their account.

Forfeitures

Under the provisions of the Plan, if a participant leaves the Company with less than three years of Continuous Service, all Core Contributions and any earnings on those contributions are forfeited and used to fund other Company contributions for eligible associates. In addition, if a participant leaves the Company with less than five years of Continuous Service, any non-vested matching contributions, company retirement contributions, base contributions, and any earnings on those contributions are forfeited and used to fund other Company contributions for eligible associates. Forfeitures balances as of December 31, 2012 and 2011 were approximately $174,600 and $780,500, respectively.

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.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Payment of Benefits

On termination of service, a participant may receive a lump-sum amount equal to the vested balance of their account or elect to receive installment payments of their vested assets over a period of time not to exceed their life expectancy. If a participant’s vested account balance is greater than $1,000, they may leave their vested assets in the Plan until age 70¹/₂.

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.

Transfers between Plans

Certain participants who change job positions within the Company and, as a result, are covered under a different defined contribution plan offered by the Company may be eligible to transfer his or her account balance between plans.

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.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

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, 2012 or 2011. 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 five other defined contribution plans sponsored by the 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 and supplemental schedules. Actual results could differ from those estimates.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

2. Accounting Policies (continued)

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-04, Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRS. ASU 2011-04 amended Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, to converge the fair value measurement guidance in U.S. GAAP and International Financial Reporting Standards (IFRS). Some of the amendments clarify the application of existing fair value measurement requirements, while other amendments change a particular principle in ASC 820. In addition, ASU 2011-04 requires additional fair value disclosures although certain of these new disclosures will not be required for nonpublic entities. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Since ASU 2011-04 only clarifies existing fair value measurements and affects fair value measurement disclosures, adoption of ASU 2011-04 did not have an effect on the Plan’s net assets available for benefits or its changes in net assets available for benefits.

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, 2012 and 2011 was 88.87%, and 69.18%, respectively.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

3. Investments (continued)

The following tables present the fair value of investments in the Master Trust and the Plan’s ownership percentage in each investment fund of the Master Trust:

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

92.09

Morgan Stanley Small Company Growth

—

14,814,070

—

14,814,070

89.20

American Funds EuroPacific Growth

—

89,314,155

—

89,314,155

93.19

American Funds Washington Mutual Investors

—

22,783,272

—

22,783,272

88.67

American Beacon Small Cap Value

—

22,868,397

—

22,868,397

89.31

Vanguard Target Retirement Income

—

23,368,634

—

23,368,634

94.02

Vanguard Target Retirement 2015

—

70,820,300

—

70,820,300

93.00

Vanguard Target Retirement 2025

—

38,937,796

—

38,937,796

92.93

Vanguard Target Retirement 2035

—

35,355,304

—

35,355,304

92.27

Vanguard Target Retirement 2045

—

16,125,154

—

16,125,154

92.15

Vanguard Target Retirement 2020

—

6,806,720

—

6,806,720

91.08

Vanguard Target Retirement 2030

—

2,645,284

—

2,645,284

82.22

Vanguard Target Retirement 2040

—

1,665,490

—

1,665,490

89.39

Vanguard Target Retirement 2050

—

800,347

—

800,347

75.57

JPMorgan S&P 500 Index

—

32,466,044

—

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

87.06

JPMorgan Equity Index

—

140,491,194

—

140,491,194

99.86

Nuveen Winslow Large-Cap Growth

—

63,736,701

—

63,736,701

88.44

SSgA Russell 2000-A Index

—

48,444,488

—

48,444,488

92.05

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

Adjustment from fair value to contract value

—

(3,346,510

)

—

(3,346,510

)

—

192,608,608

—

48,420

192,657,028

85.22

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

88.87

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

3. Investments (continued)


	December 31, 2011
	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
Investments, at Fair Value:
The Timken Company Common Stock Fund	$	2,676,111	$	296,932,589	$	—	$	—		$	—	$	—	$	—	$	—	$	299,608,700			69.58	%
Morgan Stanley Small Company Growth		—		—		14,124,854		—			—		—		—		—		14,124,854			74.83	%
American Funds EuroPacific Growth		—		—		72,122,610		—			—		—		—		—		72,122,610			72.76	%
American Funds Washington Mutual Investors		—		—		16,322,636		—			—		—		—		—		16,322,636			76.91	%
American Beacon Small Cap Value		—		—		19,995,849		—			—		—		—		—		19,995,849			75.59	%
Vanguard Target Retirement Income		—		—		9,032,047		—			—		—		—		—		9,032,047			87.03	%
Vanguard Target Retirement 2005		—		—		8,463,967		—			—		—		—		—		8,463,967			80.69	%
Vanguard Target Retirement 2015		—		—		61,428,882		—			—		—		—		—		61,428,882			68.39	%
Vanguard Target Retirement 2025		—		—		30,074,232		—			—		—		—		—		30,074,232			72.03	%
Vanguard Target Retirement 2035		—		—		30,092,816		—			—		—		—		—		30,092,816			75.67	%
Vanguard Target Retirement 2045		—		—		12,163,963		—			—		—		—		—		12,163,963			74.54	%
Vanguard Target Retirement 2020		—		—		43,531		—			—		—		—		—		43,531			0.19	%
Vanguard Target Retirement 2030		—		—		38,305		—			—		—		—		—		38,305			0.17	%
Vanguard Target Retirement 2040		—		—		25,722		—			—		—		—		—		25,722			100.00	%
Vanguard Target Retirement 2050		—		—		14,981		—			—		—		—		—		14,981			0.00	%
JPMorgan S&P 500 Index		—		—		—		30,539,328			—		—		—		—		30,539,328			0.00	%
The Timken Company - JPM Bond Fund				—		—		4,674,307			26,998,221		54,716,595		16,543,959		—		102,933,082			68.67	%
JPMorgan Equity Index		—		—		—		123,489,446			—		—		—		—		123,489,446			76.37	%
Nuveen Winslow Large-Cap Growth		—		—		—		63,463,896			—		—		—		—		63,463,896			71.99	%
SSgA Russell 2000-A Index		—		—		—		41,177,230			—		—		—		—		41,177,230			72.40	%

	$	2,676,111	$	296,932,589	$	273,944,395	$	263,344,207		$	26,998,221	$	54,716,595	$	16,543,959	$	—	$	935,156,077


JPMorgan Stable Value Fund:
JPMorgan Liquidity Fund		—		—		—		14,307,860			—		—		—		—		14,307,860
JPMorgan Intermediate Bond Fund		—		—		—		157,273,471			—		—		—		—		157,273,471
Wrapper Value		—		—		—		—			—		—		—		25,677		25,677
Adjustments from fair value to contract value		—		—		—		(536,503	)		—		—		—		—		(536,503	)

	$	—	$	—	$	—	$	171,044,828		$	—	$	—	$	—	$	25,677	$	171,070,505			67.46	%



Net Assets of Master Trust	$	2,676,111	$	296,932,589	$	273,944,395	$	434,389,035		$	26,998,221	$	54,716,595	$	16,543,959	$	25,677	$	1,106,226,582			69.18	%

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

3. Investments (continued)

Investment gain for the Master Trust is as follows:


	Year Ended
	December 31,
	2012
Net appreciation in fair value of investments
Cash and Cash Equivalents	$	80,338
Company Stock		75,276,788
Registered Investment Companies		33,309,625
Common Collective Funds		39,233,737
Government and Agency Securities		1,098,395
Mortgage and Asset Backed Securities		3,566,455
Corporate Bonds		793,191

	$	153,358,529
Net appreciation in investment contracts		3,417,037
Interest and dividends		14,630,061

Total Master Trust	$	171,405,627

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

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 FASB ASC 820 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.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

4. Fair Value (continued)

The following tables present the fair value hierarchy for those investments of the Master Trust measured at fair value on a recurring basis as of December 31, 2012 and 2011:

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

—

Registered Investment Companies:

Morgan Stanley Small Company Growth

14,814,070

—

American Funds EuroPacific Growth

89,314,155

—

American Funds Washington Mutual Investors

22,783,272

—

American Beacon Small Cap Value

22,868,397

—

Vanguard Target Retirement Income

23,368,634

—

Vanguard Target Retirement 2015

70,820,300

—

Vanguard Target Retirement 2020

6,806,720

—

Vanguard Target Retirement 2025

38,937,796

—

Vanguard Target Retirement 2030

2,645,284

—

Vanguard Target Retirement 2035

35,355,304

—

Vanguard Target Retirement 2040

1,665,490

—

Vanguard Target Retirement 2045

16,125,154

—

Vanguard Target Retirement 2050

800,347

—

Common Collective Funds:

JPMorgan S&P 500 Index

32,466,044

—

32,466,044

—

SSgA Russell 2000-A Index

48,444,488

—

48,444,488

—

JPMorgan Equity Index

140,491,194

—

140,491,194

—

Nuveen Winslow 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 Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

4. Fair Value (continued)


	Assets at Fair Value as of December 31, 2011
	Total		Level 1		Level 2		Level 3
Assets:
Cash and Cash Equivalents:
JPMorgan US Government Money Market	$	2,676,111	$	—	$	2,676,111	$	—
Company Stock:
The Timken Company Common Stock		296,932,589		296,932,589		—		—
Registered Investment Companies:
Morgan Stanley Small Company Growth		14,124,854		14,124,854		—		—
American Funds EuroPacific Growth		72,122,610		72,122,610		—		—
American Funds Washington Mutual Investors		16,322,636		16,322,636		—		—
American Beacon Small Cap Value		19,995,849		19,995,849		—		—
Vanguard Target Retirement Income		9,032,047		9,032,047		—		—
Vanguard Target Retirement 2005		8,463,967		8,463,967		—		—
Vanguard Target Retirement 2015		61,428,882		61,428,882		—		—
Vanguard Target Retirement 2020		43,531		43,531		—		—
Vanguard Target Retirement 2025		30,074,232		30,074,232		—		—
Vanguard Target Retirement 2030		38,305		38,305		—		—
Vanguard Target Retirement 2035		30,092,816		30,092,816		—		—
Vanguard Target Retirement 2040		25,722		25,722		—		—
Vanguard Target Retirement 2045		12,163,963		12,163,963		—		—
Vanguard Target Retirement 2050		14,981		14,981		—		—
Common Collective Funds:
JPMorgan S&P 500 Index		30,539,328		—		30,539,328		—
SSgA Russell 2000-A Index		41,177,230		—		41,177,230		—
JPMorgan Equity Index		123,489,446		—		123,489,446		—
Nuveen Winslow Large-Cap Growth		63,463,896		—		63,463,896		—
The Timken Company - JPM Bond Fund:
Common Collective Fund:
JPMorgan Liquidity Fund		4,674,307		—		4,674,307		—
Government and Agency Securities		26,998,221		—		26,998,221		—
Mortgage and Asset Backed Securities		54,716,595		—		54,716,595		—
Corporate Bonds		16,543,959		—		16,543,959		—
JPMorgan Stable Value Fund:
Common Collective Funds:
JPMorgan Liquidity Fund		14,307,860		—		14,307,860		—
JPMorgan Intermediate Bond Fund		157,273,471		—		157,273,471		—
Wrapper Value		25,677		—		—		25,677

Total assets	$	1,106,763,085	$	570,876,984	$	535,860,424	$	25,677

During 2011, the fair value of the Timken Company Common Stock Fund held in the Master Trust was presented as a Level 2 asset. The prior period disclosure has been corrected to reflect separate presentation of the common stock as a Level 1 asset. In addition, during 2011, the JPMorgan Stable Value Fund was presented as a Level 3 asset. The prior period disclosure has been corrected to reflect separate presentation of the Stable Value Fund as a Level 2 asset, excluding the wrapper which is a Level 3 asset.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

4. Fair Value (continued)

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.

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 JPMorgan 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 Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

4. Fair Value (continued)

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 Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

4. Fair Value (continued)

The following tables present a summary of changes in the fair value of the Master Trust’s Level 3 assets as of December 31, 2012 and December 31, 2011:


	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


	Wrapper Value		Total

Balance, January 1, 2011	$	—	$	—
Unrealized gains		25,677		25,677

Balance, December 31, 2011	$	25,677	$	25,677

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

4. Fair Value (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

48,420

Replacement Cost

Swap Yield Rate

0.50

Duration

3.05

Payout Date

N/A

Payout Percentage

N/A

The following table summarizes investments measured at fair value based on net asset value (NAVs) per share as of December 31, 2012 and 2011, respectively:


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 Winslow 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
JPMorgan Mortgage Private Placement Fund	$	8,682,881	Not applicable	Daily	Trade Day + 1 day

December 31, 2011	Fair Value		Redemption Unfunded Commitments	Redemption Frequency	Redemption Notice Period
JPMorgan S&P 500 Index	$	30,539,328	Not applicable	Daily	Trade Day
The Timken Company - JPM Bond Fund	$	102,933,082	Not applicable	Daily	Trade Day
SSgA Russell 2000-A Index	$	41,177,230	Not applicable	Daily	Trade Day
JPMorgan Equity Index	$	123,489,446	Not applicable	Daily	Trade Day + 1 day
Nuveen Winslow Large Cap Growth	$	63,463,896	Not applicable	Daily	Trade Day
JPMorgan Liquidity	$	14,307,860	Not applicable	Daily	Trade Day
JPMorgan Intermediate Bond	$	157,273,471	Not applicable	Daily	Trade Day

The Timken Company Savings and Investment Pension 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,
	2012		2011
Investments, at fair value:
Interest in Master Trust related to The Timken Company Common Stock Fund	$	295,335,255	$	208,475,584
Receivables:
Contributions receivable from The Timken Company		1,933,684		1,643,793

	$	297,268,939	$	210,119,377


	Year Ended
	December 31,
	2012
Change in net assets:
Net appreciation in fair value of investments	$	55,755,038
Dividends		5,101,099
Contributions		22,017,206
Benefits paid directly to participants		(13,749,548	)
Expenses		(126,384	)
Transfers to participant-directed accounts (net)		18,152,151

	$	87,149,562

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

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.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

6. Investment Contract (continued)


	December 31,
Average Yields for SGICs	2012		2011
Based on actual earnings		1.0%		2.0%
Based 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,		December 31,
	2012		2011
Net assets available for benefits per the financial statements	$	1,171,716,022	$	786,188,810
Adjustments from contract value to fair value for fully benefit-responsive investment contracts		2,851,834		361,915

Net assets available for benefits per the Form 5500	$	1,174,567,856	$	786,550,725

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 Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

7. Reconciliation of Financial Statements to the Form 5500 (continued)

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, 2012:


	December 31,
	2012
Total additions per the financial statements	$	192,578,912
Less: Adjustment from fair value to contract value for fully benefit-responsive investment contracts at December 31, 2011		(361,915	)
Add: Adjustment from fair value to contract value for fully benefit-responsive investment contracts at December 31, 2012		2,851,834

Total income per the Form 5500	$	195,068,831

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.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

9. Income Tax Status

The Plan has received a determination letter from the IRS dated April 23, 2003, 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 Internal Revenue Service, 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, as amended, is qualified and the related trust is tax-exempt. The Plan Administrator will take steps to ensure that the Plan’s operations remain in compliance with the Code, including taking appropriate action, when necessary, to bring the Plan’s operations into compliance.

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, 2012, 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 2009.

The Timken Company Savings and Investment Pension Plan

Notes to Financial Statements (continued)

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, 2012:


	Dollars
Purchased	$	100,029,036
Issued to participants for payment of benefits	$	1,737,409

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. Subsequent Event

On June 20, 2013, the Plan Administrator approved the transfer of the assets and liabilities of The Timken Company Employee Savings Plan (the ESP Plan) to be merged into The Timken Company Savings and Investment Pension Plan. The merger is effective as of the close of business on June 28, 2013. The net assets transferred out of the ESP Plan will be reflected on the 2013 statement of changes in net assets available for benefits as a transfer between plans.

Supplemental Schedules

The Timken Company Savings and Investment Pension Plan

EIN #34-0577130 Plan #011

Schedule H, Line 4a – Schedule of Delinquent Participant Contributions

Year Ended December 31, 2012


Participant Contributions Transferred Late to Plan		Total that Constitutue Nonexempt Prohibited Transactions
Check here if Late Participant Loan Repayments are Included: x		Contributions Not Corrected	Contributions Corrected Outside VFCP			Contributions Pending Correction in VFCP	Total Fully Corrected Under VFCP and PTE 2002-51
$	657.93		$	657.93	(1)
$	6,853.39		$	6,853.39	(2)
$	858.46		$	858.46	(3)

(1)	Represents 2011 loan deductions that were not being deposited into one associate’s account. The Company received a “no action” letter from the Department of Labor (DOL) on April 12, 2012 and filed Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, during 2012.

(2)	Represents delinquent loan repayments from various 2012 pay periods. The Company requested a “no action” letter from the DOL on June 5, 2013 and plans to file the required form 5330.

(3)	Represents delinquent participant contributions for the last pay period in 2012. The company requested a “no action” letter from the DOL on June 5, 2013 and plans to file the required form 5330.

The Timken Company Savings and Investment Pension Plan

EIN #34-0577130 Plan #011

Schedule H, Line 4i – Schedule of Assets

(Held at End of Year)

Year Ended December 31, 2012

*	Indicates party in interest to the Plan.

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.


	THE TIMKEN COMPANY SAVINGS AND INVESTMENT PENSION PLAN

Date: July 1, 2013	By:	/s/ Scott A. Scherff
		Scott A. Scherff
		Corporate Secretary and Vice President – Ethics and Compliance