UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

THE TIMKEN COMPANY

(Exact name of registrant as specified in its charter)

OHIO		34-0577130
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
1835 Dueber Ave., SW, Canton, OH		44706-2798
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ                    No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o                    No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o                    No þ

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at September 30, 2009
Common Stock, without par value		96,846,164 shares

 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE TIMKEN COMPANY AND SUBSIDIARIES

Consolidated Statement of Income
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
(Dollars in thousands, except per share data)
Net sales		$	763,644			$	1,336,352			$	2,367,021			$	3,942,848
Cost of products sold			634,082				954,812				1,957,473				2,968,817
Gross Profit			129,562				381,540				409,548				974,031
Selling, administrative and general expenses			107,244				176,491				358,699				517,568
Impairment and restructuring charges			19,613				2,379				84,074				7,442
Operating Income (Loss)			2,705				202,670				(33,225	)			449,021
Interest expense			(10,319	)			(11,003	)			(27,188	)			(33,375	)
Interest income			348				1,428				1,254				4,294
Other (expense) income, net			(4,519	)			(3	)			3,319				15,820
(Loss) Income From Continuing Operations Before Income Taxes			(11,785	)			193,092				(55,840	)			435,760
Provision for income taxes			7,116				68,121				2,900				155,078
(Loss) Income From Continuing Operations			(18,901	)			124,971				(58,740	)			280,682
(Loss) Income from discontinued operations, net of income taxes			(30,803	)			6,539				(59,912	)			26,099
Net (Loss) Income			(49,704	)			131,510				(118,652	)			306,781
Less: Net income (loss) attributable to noncontrolling interest			424				1,097				(4,877	)			2,960
Net (Loss) Income Attributable to The Timken Company		$	(50,128	)		$	130,413			$	(113,775	)		$	303,821
Amounts Attributable to The Timken Company’s Common Shareholders:
(Loss) Income from continuing operations		$	(19,325	)		$	123,874			$	(53,863	)		$	277,722
(Loss) Income from discontinued operations, net of income taxes			(30,803	)			6,539				(59,912	)			26,099
Net (Loss) Income Attributable to The Timken Company		$	(50,128	)		$	130,413			$	(113,775	)		$	303,821
Net (Loss) Income per Common Share Attributable to The Timken Company Common Shareholders
(Loss) earnings per share — Continuing Operations		$	(0.20	)		$	1.28			$	(0.56	)		$	2.89
(Loss) earnings per share — Discontinued Operations			(0.32	)			0.07				(0.62	)			0.27
Basic (loss) earnings per share		$	(0.52	)		$	1.35			$	(1.18	)		$	3.16
Diluted (loss) earnings per share — Continuing Operations		$	(0.20	)		$	1.28			$	(0.56	)		$	2.87
Diluted (loss) earnings per share — Discontinued Operations			(0.32	)			0.07				(0.62	)			0.27
Diluted (loss) earnings per share		$	(0.52	)		$	1.35			$	(1.18	)		$	3.14
Dividends per share		$	0.09			$	0.18			$	0.36			$	0.52

See accompanying Notes to Consolidated Financial Statements.

Consolidated Balance Sheet

		(Unaudited)
		September 30,				December 31,
		2009				2008
(Dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents		$	382,878			$	133,383
Restricted cash			248,158				—
Accounts receivable, less allowances: 2009 — $58,101; 2008 — $55,043			458,393				575,915
Inventories, net			716,948				1,000,493
Deferred income taxes			69,633				83,438
Deferred charges and prepaid expenses			17,536				9,671
Current assets, discontinued operations			364,494				182,861
Other current assets			58,657				47,704
Total Current Assets			2,316,697				2,033,465
Property, Plant and Equipment — Net			1,425,960				1,516,972
Other Assets
Goodwill			222,225				221,435
Other intangible assets			134,437				140,898
Deferred income taxes			310,928				314,960
Non-current assets, discontinued operations			—				269,625
Other non-current assets			47,774				38,695
Total Other Assets			715,364				985,613
Total Assets		$	4,458,021			$	4,536,050
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt		$	63,323			$	91,482
Accounts payable and other liabilities			352,558				423,523
Salaries, wages and benefits			147,848				217,090
Income taxes payable			—				22,467
Deferred income taxes			5,060				5,131
Current liabilities, discontinued operations			44,181				21,512
Current portion of long-term debt			268,537				17,108
Total Current Liabilities			881,507				798,313
Non-Current Liabilities
Long-term debt			469,057				515,250
Accrued pension cost			786,545				830,019
Accrued postretirement benefits cost			611,743				613,045
Deferred income taxes			8,479				8,540
Non-current liabilities, discontinued operations			—				23,860
Other non-current liabilities			109,717				83,985
Total Non-Current Liabilities			1,985,541				2,074,699
Shareholders’ Equity
Class I and II Serial Preferred Stock without par value:
Authorized — 10,000,000 shares each class, none issued
Common stock without par value:
Authorized — 200,000,000 shares
Issued (including shares in treasury) (2009 — 97,020,355 shares; 2008 — 96,891,501 shares)
Stated capital			53,064				53,064
Other paid-in capital			839,719				838,315
Earnings invested in the business			1,431,701				1,580,084
Accumulated other comprehensive loss			(747,157	)			(819,633	)
Treasury shares at cost (2009 — 174,191 shares; 2008 — 344,948 shares)			(4,493	)			(11,586	)
Total Shareholders’ Equity			1,572,834				1,640,244
Noncontrolling Interest			18,139				22,794
Total Equity			1,590,973				1,663,038
Total Liabilities and Equity		$	4,458,021			$	4,536,050

See accompanying Notes to Consolidated Financial Statements.

Consolidated Statement of Cash Flows
(Unaudited)

		Nine Months Ended
		September 30,
		2009				2008
(Dollars in thousands)
CASH PROVIDED (USED)
Operating Activities
Net (loss) income attributable to The Timken Company		$	(113,775	)		$	303,821
Loss (earnings) from discontinued operations			59,912				(26,099	)
Net (loss) income attributable to noncontrolling interest			(4,877	)			2,960
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			150,835				154,965
Impairment charges			36,142				52
Loss (gain) on disposals of property, plant and equipment			3,608				(14,935	)
Deferred income tax (benefit) provision			(886	)			20,490
Stock based compensation expense			11,561				13,171
Pension and other postretirement expense			77,092				62,342
Pension and other postretirement benefit payments			(89,216	)			(55,783	)
Changes in operating assets and liabilities:
Accounts receivable			128,359				(81,248	)
Inventories			311,517				(213,384	)
Accounts payable and accrued expenses			(169,367	)			97,129
Other — net			(9,862	)			(15,316	)
Net Cash Provided by Operating Activities — Continuing Operations			391,043				248,165
Net Cash Provided by Operating Activities — Discontinued Operations			33,272				60,691
Net Cash Provided By Operating Activities			424,315				308,856
Investing Activities
Capital expenditures			(80,953	)			(176,250	)
Proceeds from disposals of property, plant and equipment			2,940				30,095
Acquisitions			(353	)			(57,178	)
Other			4,233				3,984
Net Cash Used by Investing Activities — Continuing Operations			(74,133	)			(199,349	)
Net Cash Used by Investing Activities — Discontinued Operations			(1,534	)			(10,063	)
Net Cash Used by Investing Activities			(75,667	)			(209,412	)
Financing Activities
Cash dividends paid to shareholders			(34,608	)			(50,083	)
Net proceeds from common share activity			654				16,879
Accounts receivable securitization financing borrowings			—				225,000
Accounts receivable securitization financing payments			—				(130,000	)
Proceeds from issuance of long-term debt			254,051				773,301
Payments on long-term debt			(53,378	)			(846,987	)
Short-term debt activity — net			(37,039	)			(852	)
Increase in restricted cash			(248,158	)			—
Net Cash Used by Financing Activities			(118,478	)			(12,742	)
Effect of exchange rate changes on cash			19,325				(14,483	)
Increase In Cash and Cash Equivalents			249,495				72,219
Cash and cash equivalents at beginning of year			133,383				42,884
Cash and Cash Equivalents at End of Period		$	382,878			$	115,103

See accompanying Notes to the Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)

Note 1 — Basis of Presentation

The accompanying Consolidated Financial Statements (unaudited) for The Timken Company (the Company) have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by the accounting principles generally accepted in the United States (U.S. GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. Certain amounts in the 2008 Consolidated Financial Statements and notes have been reclassified to conform to the 2009 presentation.

On July 29, 2009, the Company announced it had signed an agreement to sell the assets of its Needle Roller Bearings (NRB) operations to JTEKT Corporation. The financial results for the NRB operations have been reclassified to Discontinued Operations for all periods presented. Refer to Note 18 — Divestitures for further discussion.

During the second quarter of 2009, the Company evaluated the classification of its investments held by the Company’s operations in India and concluded that a large portion of these investments should be considered Cash and cash equivalents on the Company’s Consolidated Balance Sheet. The Company’s conclusion was based on the short-term and highly-liquid nature of the investments. At December 31, 2008, the Company held $23,640 of investments, of which $17,077 has been reclassified from Other current assets to Cash and cash equivalents to conform to the 2009 presentation for these investments.

Management has evaluated and disclosed all material events occurring subsequent to the date of the financial statements up to November 9, 2009, the filing date of this quarterly report on Form 10-Q.

Note 2 — New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued final accounting rules that established the Accounting Standards Codification (the Codification) as a single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and regulations of the Securities and Exchange Commission (SEC), as well as interpretive releases are also sources of authoritative U.S. GAAP for SEC registrants. The new accounting rules established two levels of U.S. GAAP — authoritative and non-authoritative. The Codification supersedes all existing non-SEC accounting and reporting standards and was effective for the Company beginning July 1, 2009. The Codification was not intended to change or alter existing U.S. GAAP, and as a result, the new accounting rules establishing the Accounting Standards Codification did not have an impact on the Company’s results of operations and financial condition.

In September 2006, the FASB issued new accounting rules concerning fair value measurements. The new accounting rules establish a framework for measuring fair value that is based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information to develop those assumptions. Additionally, the new rules expand the disclosures about fair value measurements to include separately disclosing the fair value measurements of assets or liabilities within each level of the fair value hierarchy. In February 2008, the FASB delayed the effective date for nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. The implementation of the new accounting rules for nonfinancial assets and nonfinancial liabilities, effective January 1, 2009, did not have a material impact on the Company’s results of operations and financial condition.

In December 2007, the FASB issued new accounting rules related to business combinations. The new accounting rules provide revised guidance on how acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interest and goodwill acquired in a business combination. The new accounting rules expand required disclosures surrounding the nature and financial effects of business combinations. The new accounting rules are effective, on a prospective basis, for fiscal years beginning after December 15, 2008. The implementation of the new accounting rules for business combinations, effective January 1, 2009, did not have a material impact on the Company’s results of operations and financial condition.

Note 2 — New Accounting Pronouncements (continued)

In December 2007, the FASB issued new accounting rules on noncontrolling interests. The new accounting rules establish requirements for ownership interests in subsidiaries held by parties other than the Company (sometimes called “minority interests”) to be clearly identified, presented, and disclosed in the consolidated statement of financial position within equity, but separate from the parent’s equity. All changes in the parent’s ownership interests are required to be accounted for consistently as equity transactions, and any noncontrolling equity investments in deconsolidated subsidiaries must be measured initially at fair value. The new accounting rules on noncontrolling interests are effective, on a prospective basis, for fiscal years beginning after December 15, 2008. However, presentation and disclosure requirements must be retrospectively applied to comparative financial statements. The implementation of new accounting rules on noncontrolling interests, effective January 1, 2009, did not have a material impact on the Company’s results of operations and financial condition.

In March 2008, the FASB issued new accounting rules about derivative instruments and hedging activities, which amended previous accounting for derivative instruments and hedging activities. The new accounting rules require entities to provide greater transparency through additional disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for, and (c) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. The new accounting rules are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The implementation of the new accounting rules on derivative instruments and hedging activities, effective January 1, 2009, expanded the disclosures on derivative instruments and related hedged items and did not have a material impact on the Company’s results of operations and financial condition. See Note 16 — Derivative Instruments and Hedging Activities for the expanded disclosures.

In June 2008, the FASB issued new accounting rules on the two-class method of calculating earnings per share. The new accounting rules clarify that unvested share-based payment awards that contain rights to receive nonforfeitable dividends are participating securities. The new accounting rules provide guidance on how to allocate earnings to participating securities and compute earnings per share using the two-class method. The new accounting rules are effective for fiscal years beginning after December 31, 2008, and interim periods within those fiscal years. The new accounting rules on the two-class method of calculating earnings per share did not have a material impact on the Company’s disclosure of earnings per share. See Note 10 — Earnings Per Share for the computation of earnings per share using the two-class method.

In December 2008, the FASB issued new accounting rules on employers’ disclosures about postretirement benefit plan assets. The new accounting rules require the disclosure of additional information about investment allocation, fair values of major categories of assets, development of fair value measurements and concentrations of risk. These new accounting rules are effective for fiscal years ending after December 15, 2009. The adoption of the new accounting rules on employers’ disclosures about postretirement benefit plan assets is not expected to have a material impact on the Company’s results of operations and financial condition.

In May 2009, the FASB issued new accounting rules for subsequent events. The new accounting rules establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The new accounting rules are effective for interim or annual financial periods ending after June 15, 2009 and were adopted by the Company in the second quarter of 2009. The adoption of the new accounting rules for subsequent events did not have a material impact on the Company’s results of operations and financial condition.

Note 3 — Inventories

		September 30, 2009				December 31, 2008
Inventories:
Manufacturing supplies		$	64,140			$	71,756
Work in process and raw materials			278,267				413,273
Finished products			374,541				515,464
Inventories — net		$	716,948			$	1,000,493

An actual valuation of the inventory under the last-in, first-out (LIFO) method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation. The LIFO reserve at September 30, 2009 and December 31, 2008 was $274,950 and $298,195, respectively. The Company’s Steel segment recognized a decrease in its LIFO reserve of $4,130 and $20,318, respectively, during the third quarter and first nine months of 2009 as a result of expected lower year-end inventory quantities and material costs, especially scrap steel costs.

Note 4 — Property, Plant and Equipment

The components of property, plant and equipment are as follows:

		September 30,				December 31,
		2009				2008
Property, Plant and Equipment:
Land and buildings		$	622,843			$	606,255
Machinery and equipment			3,032,108				2,985,799
Subtotal			3,654,951				3,592,054
Less allowances for depreciation			(2,228,991	)			(2,075,082	)
Property, Plant and Equipment — net		$	1,425,960			$	1,516,972

At September 30, 2009 and December 31, 2008, machinery and equipment included approximately $114,500 and $120,400, respectively, of capitalized software. Depreciation expense for the three months ended September 30, 2009 and 2008 was $44,992 and $46,488, respectively. Depreciation expense for the nine months ended September 30, 2009 and 2008 was $139,552 and $138,721, respectively. Depreciation expense on capitalized software for the three months ended September 30, 2009 and 2008 was approximately $5,600 and $4,800, respectively. Depreciation expense on capitalized software for the nine months ended September 30, 2009 and 2008 was approximately $15,900 and $13,300, respectively.

With the exception of the net assets of the NRB operations, there were no assets held for sale at September 30, 2009. Assets held for sale were $7,020 at December 31, 2008 and primarily consisted of three buildings comprising the Company’s former office complex in Torrington, Connecticut. In January 2009, the Company sold one of these buildings and recognized a pretax gain of $1,322. During the second quarter of 2009, in anticipation of the loss that the Company expected to record upon completion of the sale of the remaining buildings comprising the office complex, the Company recorded an impairment charge of $6,376. The Company finalized the sale of these remaining buildings on July 20, 2009 and recognized an additional loss of $689.

On February 15, 2008, the Company completed the sale of its former seamless steel tube manufacturing facility located in Desford, England for approximately $28,400. The Company recognized a pretax gain of approximately $20,200 during the first quarter of 2008 and recorded the gain in Other income (expense), net in the Company’s Consolidated Statement of Income.

Note 5 — Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2009 are as follows:

		Beginning Balance				Acquisitions				Other				Ending Balance
Segment:
Process Industries		$	49,810			$	—			$	78			$	49,888
Aerospace and Defense			161,990				347				359				162,696
Steel			9,635				6				—				9,641
Total		$	221,435			$	353			$	437			$	222,225

Acquisitions represent opening balance sheet allocation adjustments for acquisitions completed in 2008. Other primarily includes foreign currency translation adjustments.

Note 5 — Goodwill and Other Intangible Assets (continued)

The following table displays intangible assets as of September 30, 2009 and December 31, 2008:

		As of September 30, 2009												As of December 31, 2008
		Gross								Net				Gross								Net
		Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		Amount				Amortization				Amount				Amount				Amortization				Amount
Intangible assets subject to amortization:
Customer relationships		$	79,139			$	13,353			$	65,786			$	79,139			$	10,020			$	69,119
Engineering drawings			2,000				2,000				—				2,000				2,000				—
Know-how			2,123				917				1,206				2,123				785				1,338
Land-use rights			7,948				2,894				5,054				7,060				2,462				4,598
Patents			4,432				2,803				1,629				4,432				2,459				1,973
Technology use			35,000				3,471				31,529				35,000				2,048				32,952
Trademarks			6,565				4,960				1,605				6,632				4,670				1,962
PMA licenses			8,792				1,832				6,960				8,792				1,753				7,039
Non-compete agreements			2,710				1,092				1,618				2,710				493				2,217
Unpatented technology			7,625				5,159				2,466				7,625				4,655				2,970
		$	156,334			$	38,481			$	117,853			$	155,513			$	31,345			$	124,168
Intangible assets not subject to amortization:
Goodwill		$	222,225			$	—			$	222,225			$	221,435			$	—			$	221,435
Tradename			1,400				—				1,400				1,400				—				1,400
Land-use rights			—				—				—				146				—				146
Industrial license agreements			964				—				964				964				—				964
FAA air agency certificates			14,220				—				14,220				14,220				—				14,220
		$	238,809			$	—			$	238,809			$	238,165			$	—			$	238,165
Total intangible assets		$	395,143			$	38,481			$	356,662			$	393,678			$	31,345			$	362,333

Amortization expense for intangible assets for the three months ended September 30, 2009 and 2008 was $3,153 and $3,483, respectively. Amortization expense for intangible assets for the nine months ended September 30, 2009 and 2008 was $10,101 and $10,256, respectively. Amortization expense for intangible assets is estimated to be approximately $13,400 for 2009; $11,400 in 2010; $11,000 in 2011; $10,600 in 2012 and $8,100 in 2013.

Note 6 — Equity Investments

The Company’s investments in less than majority-owned companies in which it has the ability to exercise significant influence are accounted for using the equity method except when they qualify as variable interest entities and are consolidated.

Equity investments are reviewed for impairment when circumstances (such as lower-than-expected financial performance or change in strategic direction) indicate that the carrying value of the investment may not be recoverable. If impairment does exist, the equity investment is written down to its fair value with a corresponding charge to the Consolidated Statement of Income. An impairment charge of $1,346 was recorded during the third quarter of 2009 relating to the Company’s equity investment in Endorsia.com International AB.

Investments accounted for under the equity method were $12,943 and $13,634 at September 30, 2009 and December 31, 2008, respectively, and were reported in Other non-current assets on the Consolidated Balance Sheet.

Note 6 — Equity Investments (continued)

The Company’s Mobile Industries segment has a joint venture with Advanced Green Components, LLC (AGC). AGC is engaged in the business of converting steel to machined rings for tapered bearings and other related products. During the third quarter of 2006, AGC refinanced its long-term debt of $12,240. The Company guaranteed half of this obligation. The Company concluded the refinancing represented a reconsideration event to evaluate whether AGC was a variable interest entity. The Company concluded that AGC was a variable interest entity and that the Company was the primary beneficiary. Therefore, the Company consolidated AGC, effective September 30, 2006. At September 30, 2009, net assets of AGC were $910, primarily consisting of the following: inventory of $5,397; property, plant and equipment of $20,691; short-term and long-term debt of $18,050; and other non-current liabilities of $7,365. All of AGC’s assets are collateral for its obligations. Except for AGC’s indebtedness for which the Company is a guarantor, AGC’s creditors have no recourse to the general credit of the Company.

The Company has no other variable interest entities, other than AGC, for which it is a primary beneficiary.

Note 7 — Financing Arrangements

Short-term debt at September 30, 2009 and December 31, 2008 was as follows:

		September 30,				December 31,
		2009				2008
Variable-rate lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 0.85% to 10.50%		$	63,323			$	91,482
Short-term debt		$	63,323			$	91,482

The lines of credit for certain of the Company’s foreign subsidiaries provide for borrowings up to $383,325. At September 30, 2009, the Company had borrowings outstanding of $63,323, which reduced the availability under these facilities to $320,002.

The Company has a $175,000 Accounts Receivable Securitization Financing Agreement (Asset Securitization Agreement), renewable every 364 days. Under the terms of the Asset Securitization Agreement, which expires on December 18, 2009, the Company sells, on an ongoing basis, certain domestic trade receivables to Timken Receivables Corporation, a wholly-owned consolidated subsidiary that in turn uses the trade receivables to secure borrowings, which are funded through a vehicle that issues commercial paper in the short-term market. Borrowings under the agreement are limited to certain borrowing base calculations. Any amounts outstanding under this Asset Securitization Agreement would be reported on the Company’s Consolidated Balance Sheet in Short-term debt. As of September 30, 2009, there were no outstanding borrowings under the Asset Securitization Agreement. Although the Company had no outstanding borrowings under the Asset Securitization Agreement as of September 30, 2009, certain borrowing base limitations reduced the availability under the Asset Securitization Agreement to $75,647. The yield on the commercial paper, which is the commercial paper rate plus program fees, is considered a financing cost and is included in Interest expense in the Consolidated Statement of Income.

Note 7 — Financing Arrangements (continued)

Long-term debt at September 30, 2009 and December 31, 2008 was as follows:

		September 30,				December 31,
		2009				2008
Fixed-rate Medium-Term Notes, Series A, due at various dates through May 2028, with interest rates ranging from 6.74% to 7.76%		$	175,000			$	175,000
Fixed-rate Senior Unsecured Notes, due September 15, 2014, with an interest rate of 6.0%			249,658				—
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.34% at September 30, 2009)			12,200				12,200
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (1.59% at September 30, 2009)			9,500				9,500
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.99% at September 30, 2009)			17,000				17,000
Variable-rate Unsecured Canadian Note			—				47,104
Fixed-rate Senior Unsecured Notes, maturing on February 15, 2010 with an interest rate of 5.75%			250,993				252,357
Variable-rate credit facility with US Bank for Advanced Green Components, LLC, maturing on July 17, 2010 (2.32% at September 30, 2009)			12,240				12,240
Other			11,003				6,957
			737,594				532,358
Less current maturities			268,537				17,108
Long-term debt		$	469,057			$	515,250

On September 9, 2009, the Company completed a public offering of $250,000 of fixed-rate 6.0% unsecured Senior Notes, due in 2014. The net proceeds from the sale of the notes will be used for the repayment of the Company’s fixed-rate 5.75% unsecured Senior Notes maturing on February 15, 2010.

On July 10, 2009, the Company entered into a new $500,000 million Amended and Restated Credit Agreement (new Senior Credit Facility). At September 30, 2009, the Company had no outstanding borrowings under its new Senior Credit Facility but had letters of credit outstanding totaling $35,543, which reduced the availability under the new Senior Credit Facility to $464,457. This new Senior Credit Facility matures on July 10, 2012. Under the new Senior Credit Facility, the Company has three financial covenants: a consolidated leverage ratio, a consolidated interest coverage ratio and a consolidated minimum tangible net worth test. At September 30, 2009, the Company was in full compliance with the covenants under the new Senior Credit Facility.

In December 2005, the Company entered into an unsecured loan in Canada. The Company repaid a portion of this loan in June 2009 and repaid the remaining balance on July 10, 2009.

The Company is the guarantor of $6,120 of AGC’s $12,240 credit facility. Refer to Note 6 — Equity Investments for additional discussion. Effective as of July 17, 2009, AGC renewed its $12,240 credit facility with US Bank for another 365 days. The Company continues to guarantee half of this obligation.

Note 8 — Product Warranty

The Company provides limited warranties on certain of its products. The Company accrues liabilities for warranty based upon specific claims and a review of historical warranty claim experience in accordance with accounting rules for contingencies established by the FASB. Should the Company become aware of a specific potential warranty claim for which liability is probable and reasonably estimable, a specific charge is recorded and accounted for accordingly. Adjustments are made quarterly to the accruals as claim data and historical experience change. The following is a rollforward of the warranty accruals for the nine months ended September 30, 2009 and the twelve months ended December 31, 2008:

		September 30,				December 31,
		2009				2008
Beginning balance, January 1		$	13,515			$	12,571
Expense			3,922				7,525
Payments			(9,209	)			(6,581	)
Ending balance		$	8,228			$	13,515

The product warranty accrual at September 30, 2009 and December 31, 2008 was included in Accounts payable and other liabilities on the Consolidated Balance Sheet.

Note 9 — Equity

														Earnings				Accumulated
										Other				Invested				Other
						Stated				Paid-In				in the				Comprehensive				Treasury				Noncontrolling
		Total				Capital				Capital				Business				Income				Stock				Interest
Balance at December 31, 2008		$	1,663,038			$	53,064			$	838,315			$	1,580,084			$	(819,633	)		$	(11,586	)		$	22,794
Net loss			(118,652	)											(113,775	)											(4,877	)
Foreign currency translation adjustment			54,341																54,341
Pension and postretirement liability adjustment (net of income tax of $12,949)			18,823																18,823
Unrealized loss on marketable securities (net of income tax of $41)			(76	)															(61	)							(15	)
Change in fair value of derivative financial instruments, net of reclassifications			(627	)															(627	)
Total comprehensive loss			(46,191	)
Capital investment of Timken XEMC (Hunan) Bearings Co.			1,000																								1,000
Dividends declared to noncontrolling interest			(763	)																							(763	)
Dividends — $0.36 per share			(34,608	)											(34,608	)
Issuance of 170,757 shares from treasury and 128,853 shares from authorized			8,497								1,404												7,093
Balance at September 30, 2009		$	1,590,973			$	53,064			$	839,719			$	1,431,701			$	(747,157	)		$	(4,493	)		$	18,139

The total comprehensive loss for the three months ended September 30, 2009 was $5,663. The total comprehensive income for the three and nine months ended September 30, 2008 was $41,558 and $272,002, respectively.

Note 10 — Earnings Per Share

The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the three and nine months ended September 30, 2009 and 2008:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Numerator:
(Loss) income from continuing operations attributable to The Timken Company		$	(19,325	)		$	123,874			$	(53,863	)		$	277,722
Less: distributed and undistributed earnings allocated to nonvested stock			—				(833	)			—				(1,902	)
(Loss) income from continuing operations available to common shareholders for basic earnings per share and diluted earnings per share		$	(19,325	)		$	123,041			$	(53,863	)		$	275,820
Denominator:
Weighted-average number of shares outstanding — basic			96,176,091				95,878,978				96,111,847				95,574,420
Effect of dilutive options			—				224,152				—				394,239
Weighted-average number of shares outstanding, assuming dilution of stock options			96,176,091				96,103,130				96,111,847				95,968,659
Basic (loss) earnings per share from continuing operations		$	(0.20	)		$	1.28			$	(0.56	)		$	2.89
Diluted (loss) earnings per share from continuing operations		$	(0.20	)		$	1.28			$	(0.56	)		$	2.87

In periods in which a net loss has occurred, as is the case for the three and nine months ended September 30, 2009, the dilutive effect of stock options is not recognized and thus is not utilized in the calculation of dilutive earnings per share.

The exercise prices for certain stock options that the Company has awarded exceed the average market price of the Company’s common stock. Such stock options are antidilutive and were not included in the computation of diluted earnings per share. The antidilutive stock options outstanding were 40,350 and 536,456, respectively, for the three months and nine months ended September 30, 2008.

Note 11 — Segment Information

The primary measurement used by management to measure the financial performance of each segment is adjusted EBIT (earnings before interest and taxes, excluding the effect of amounts related to certain items that management considers not representative of ongoing operations such as impairment and restructuring, manufacturing rationalization and integration costs, one-time gains and losses on disposal of non-strategic assets, allocated receipts received or payments made under the U.S. Continued Dumping and Subsidy Offset Act (CDSOA) and gains and losses on the dissolution of subsidiaries).

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Net sales to external customers:
Mobile Industries		$	327,572			$	426,489			$	920,385			$	1,397,565
Process Industries			186,392				316,904				616,884				895,622
Aerospace and Defense			100,272				104,711				318,767				302,208
Steel			149,408				488,248				510,985				1,347,453
		$	763,644			$	1,336,352			$	2,367,021			$	3,942,848
Intersegment sales:
Process Industries		$	577			$	972			$	2,199			$	2,252
Steel			8,539				48,291				30,365				133,002
		$	9,116			$	49,263			$	32,564			$	135,254
Segment EBIT, as adjusted:
Mobile Industries		$	13,745			$	8,684			$	(601	)		$	43,387
Process Industries			16,081				73,296				94,626				180,929
Aerospace and Defense			19,114				9,819				55,955				24,036
Steel			(20,266	)			133,802				(60,435	)			267,499
Total EBIT, as adjusted, for reportable segments			28,674				225,601				89,545				515,851
Unallocated corporate expense			(10,310	)			(19,024	)			(35,802	)			(54,724	)
Impairment and restructuring			(19,613	)			(2,379	)			(84,074	)			(7,442	)
Rationalization and integration charges			(1,488	)			48				(5,228	)			(3,447	)
(Loss) gain on sale of non-strategic assets, net of dissolution of subsidiary			(2,587	)			(558	)			(608	)			19,987
Interest expense			(10,319	)			(11,003	)			(27,188	)			(33,375	)
Interest income			348				1,428				1,254				4,294
Intersegment eliminations			3,510				(1,021	)			6,261				(5,384	)
(Loss) Income from Continuing Operations before Income Taxes		$	(11,785	)		$	193,092			$	(55,840	)		$	435,760

Intersegment sales represent sales between the segments. These sales are eliminated upon consolidation.

The following table presents assets employed by segment for the periods ended September 30, 2009 and December 31, 2008:

		September 30, 2009				December 31, 2008
Mobile Industries		$	1,575,195			$	1,299,095
Process Industries			824,591				885,689
Aerospace and Defense			541,019				606,753
Steel			951,254				1,078,597
Corporate			201,468				213,430
		$	4,093,527			$	4,083,564
Discontinued operations			364,494				452,486
		$	4,458,021			$	4,536,050

Note 12 — Impairment and Restructuring Charges

Impairment and restructuring charges by segment are comprised of the following:

For the three months ended September 30, 2009:

		Mobile				Process				Aerospace and
		Industries				Industries				Defense				Steel				Corporate				Total
Impairment charges		$	—			$	—			$	—			$	—			$	—			$	—
Severance expense and related benefit costs			11,371				6,477				745				19				195				18,807
Exit costs			565				241				—				—				—				806
Total		$	11,936			$	6,718			$	745			$	19			$	195			$	19,613

For the nine months ended September 30, 2009:

		Mobile				Process				Aerospace and
		Industries				Industries				Defense				Steel				Corporate				Total
Impairment charges		$	2,965			$	29,847			$	1,984			$	—			$	—			$	34,796
Severance expense and related benefit costs			27,467				11,319				2,247				3,223				2,055				46,311
Exit costs			1,359				1,607				—				1				—				2,967
Total		$	31,791			$	42,773			$	4,231			$	3,224			$	2,055			$	84,074

For the three months ended September 30, 2008:

		Mobile				Process				Aerospace and
		Industries				Industries				Defense				Steel				Corporate				Total
Impairment charges		$	—			$	—			$	—			$	—			$	—			$	—
Severance expense and related benefit costs			588				(147	)			—				—				—				441
Exit costs			1,724				190				—				24				—				1,938
Total		$	2,312			$	43			$	—			$	24			$	—			$	2,379

For the nine months ended September 30, 2008:

		Mobile				Process				Aerospace and
		Industries				Industries				Defense				Steel				Corporate				Total
Impairment charges		$	—			$	52			$	—			$	—			$	—			$	52
Severance expense and related benefit costs			3,805				(148	)			—				—				—				3,657
Exit costs			1,723				1,621				—				389				—				3,733
Total		$	5,528			$	1,525			$	—			$	389			$	—			$	7,442

The following discussion explains the major impairment and restructuring charges recorded for the periods presented; however, it is not intended to reflect a comprehensive discussion of all amounts in the tables above.

Note 12 — Impairment and Restructuring Charges (continued)

Selling and Administrative Reductions

In March 2009, the Company announced the realignment of its organization to improve efficiency and reduce costs as a result of the economic downturn. The Company initially targeted pretax savings of approximately $30,000 to $40,000 in annual selling and administrative costs. In April 2009, in light of the Company’s revised forecast indicating significantly reduced sales and earnings for the year, the Company expanded the target to approximately $80,000. The implementation of these savings began in the first quarter of 2009 and is expected to be significantly completed by the end of the fourth quarter of 2009, with full-year savings expected to be achieved in 2010. As the Company streamlines its operating structure, it expects to cut its sales and administrative associate workforce by up to 400 positions in 2009, incurring severance costs of approximately $15,000 to $20,000. During the first nine months of 2009, the Company recognized $10,613 of severance and related benefit costs related to this initiative eliminating approximately 270 associates. Of the $10,613 charge for the first nine months of 2009, $4,524 related to the Mobile Industries segment, $1,944 related to the Process Industries segment, $552 related to the Aerospace and Defense segment, $1,538 related to the Steel segment and $2,055 related to Corporate.

Manufacturing Workforce Reductions

During the third quarter and first nine months of 2009, the Company recorded $13,555 and $28,819, respectively, in severance and related benefit costs, including a curtailment of pension benefits of $1,611 for the first nine months of 2009, to eliminate approximately 3,000 associates to properly align its business as a result of the current downturn in the economy and expected market demand. Of the $13,555 charge, $10,268 related to the Mobile Industries segment, $2,304 related to the Process Industries segment and $983 related to the Aerospace and Defense segment. Of the $28,819 charge, $20,603 related to the Mobile Industries segment, $4,836 related to the Process Industries segment, $1,695 related to the Aerospace and Defense segment and $1,685 related to the Steel segment.

Bearings and Power Transmission Reorganization

In August 2007, the Company announced the realignment of its management structure. During the first quarter of 2008, the Company began to operate under two major business groups: the Steel Group and the Bearings and Power Transmission Group. The Bearings and Power Transmission Group includes three reportable segments: Mobile Industries, Process Industries and Aerospace and Defense. The Company realized pretax savings of approximately $18,000 in 2008 as a result of these changes. During the first nine months of 2008, the Company recorded $1,948 of severance and related benefit costs related to this initiative.

Torrington Campus

On July 20, 2009, the Company sold the remaining portion of its Torrington, Connecticut office complex. In anticipation of the loss that the Company expected to record upon completion of the sale of the office complex, the Company recorded an impairment charge of $6,376 during the second quarter of 2009. During the third quarter of 2009, the Company recorded an additional loss of $689 in Other (expense) income, net on the sale of the remaining portion of this office complex.

Mobile Industries

In March 2007, the Company announced the planned closure of its manufacturing facility in Sao Paulo, Brazil. The closure of this manufacturing facility was subsequently delayed to serve higher customer demand. However, with the current downturn in the economy, the Company believes it will close this facility before the end of 2010. This closure is targeted to deliver annual pretax savings of approximately $5,000, with expected pretax costs of approximately $25,000 to $30,000, which includes restructuring costs and rationalization costs recorded in cost of products sold and selling, administrative and general expenses. Due to the delay in the closure of this manufacturing facility, the Company expects to realize the $5,000 of annual pretax savings by the end of 2010, once this facility closes. Mobile Industries has incurred cumulative pretax costs of approximately $21,978 as of September 30, 2009 related to this closure. During the third quarter and first nine months of 2009, the Company recorded $1,322 and $2,520, respectively, of severance and related benefit costs and exit costs of $699 and $1,467, respectively, associated with the planned closure of the Company’s Sao Paulo, Brazil manufacturing facility. During the third quarter and first nine months of 2008, the Company recorded $611 and $1,613, respectively, of severance and related benefit costs and exit costs of $807 associated with the planned closure of the Company’s San Paulo, Brazil manufacturing facility.

In addition to the above charges, the Company recorded impairment charges of $897 during the first quarter of 2009 related to an impairment of fixed assets at one of its facilities in France as a result of the carrying value of these assets exceeding expected future cash flows.

Note 12 — Impairment and Restructuring Charges (continued)

Process Industries

In May 2004, the Company announced plans to rationalize its three bearing plants in Canton, Ohio within the Process Industries segment. This rationalization initiative is expected to deliver annual pretax savings of approximately $35,000 through streamlining operations and workforce reductions, with pretax costs of approximately $70,000 to $80,000 (including pretax cash costs of approximately $45,000 to $50,000), by the end of 2009.

The Company recorded exit costs of $241 during the third quarter of 2009 related to Process Industries’ rationalization plans. During the first nine months of 2009, the Company recorded impairment charges of $27,651 and exit costs of $1,607. During the third quarter and first nine months of 2008, the Company recorded exit costs of $190 and $1,621, respectively, as a result of Process Industries’ rationalization plans. The significant impairment charge recorded during the first nine months of 2009 is a result of the rapid deterioration of the market sectors served by one of the rationalized plants, resulting in the carrying value of the fixed assets for this plant exceeding its estimated future cash flows and being written down to their fair value. The Company now expects to close this facility by the end of 2009. The Process Industries segment has incurred cumulative pretax costs of approximately $67,973 (including approximately $25,300 of pretax cash costs) through September 30, 2009 for these rationalization plans including rationalization costs recorded in cost of products sold and selling, administrative and general expenses. The Process Industries segment has realized approximately $15,000 in annual pretax savings through September 30, 2009 as a result of these actions.

In October 2009, the Company announced the consolidation of its distribution centers in Bucyrus, Ohio and Spartanburg, South Carolina into a larger, leased facility in the region near the existing Spartanburg location. The closure of the Bucyrus Distribution Center will displace approximately 290 associates. During the third quarter of 2009, the Company recorded $4,482 of severance and related benefit costs related to this closure.

Steel

In April 2007, the Company completed the closure of its seamless steel tube manufacturing facility located in Desford, England. The Company recorded $389 of exit costs during the first nine months of 2008 related to this action.

The following is a rollforward of the consolidated restructuring accrual for the nine months ended September 30, 2009 and the twelve months ended December 31, 2008:

		September 30,				December 31,
		2009				2008
Beginning balance, January 1		$	17,021			$	19,062
Expense			47,667				12,709
Payments			(29,775	)			(14,750	)
Ending balance		$	34,913			$	17,021

The restructuring accrual at September 30, 2009 and December 31, 2008 is included in Accounts payable and other liabilities on the Consolidated Balance Sheet. The restructuring accrual at September 30, 2009 excludes costs related to the curtailment of pension benefit plans of $1,611. The accrual at September 30, 2009 includes $27,481 of severance and related benefits, with the remainder of the balance primarily representing environmental exit costs. The majority of the $27,481 accrual relating to severance and related benefits is expected to be paid by the end of 2010. In addition to the restructuring accrual presented above, the Company has $1,846 of restructuring accruals at September 30, 2009 related to the NRB operations that will be retained by the Company. The expense related to these retained restructuring accruals has been reclassified to discontinued operations.

Note 13 — Retirement and Postretirement Benefit Plans

The following table sets forth the net periodic benefit cost for the Company’s retirement and postretirement benefit plans. The amounts for the three and nine months ended September 30, 2009 are based on actuarial calculations prepared during 2008. The net periodic benefit cost recorded for the three and nine months ended September 30, 2009 is the Company’s best estimate of each period’s proportionate share of the amounts to be recorded for the year ended December 31, 2009.

		Pension								Postretirement
		Three Months ended								Three Months ended
		September 30,								September 30,
		2009				2008				2009				2008
Components of net periodic benefit cost
Service cost		$	9,645			$	9,010			$	656			$	781
Interest cost			39,459				39,793				9,721				9,794
Expected return on plan assets			(48,526	)			(50,254	)			—				—
Amortization of prior service cost			2,880				3,143				(561	)			(544	)
Recognized net actuarial loss			8,984				7,247				934				900
Curtailment loss			2,811				—				3,399				—
Amortization of transition asset			(23	)			(23	)			—				—
Net periodic benefit cost		$	15,230			$	8,916			$	14,149			$	10,931

		Pension								Postretirement
		Nine Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Components of net periodic benefit cost
Service cost		$	28,829			$	27,107			$	1,970			$	2,344
Interest cost			117,605				120,047				29,162				30,511
Expected return on plan assets			(144,771	)			(151,488	)			—				—
Amortization of prior service cost			8,615				9,443				(1,684	)			(1,633	)
Recognized net actuarial loss			26,806				21,801				2,803				4,282
Curtailment loss			4,422				—				3,399				—
Amortization of transition asset			(64	)			(72	)			—				—
Net periodic benefit cost		$	41,442			$	26,838			$	35,650			$	35,504

The net periodic benefit for defined benefit pension and postretirement plans retained by NRB are classified as discontinued operations. As a result of the pending sale of the NRB operations, the Company recognized a pretax curtailment loss of $2,811 for the pension benefit obligations and $3,399 for postretirement benefit obligations.

Note 14 — Income Taxes

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Provision for income taxes		$	7,116			$	68,121			$	2,900			$	155,078
Effective tax rate			(60.4	)%			35.3	%			(5.2	)%			35.6	%

The Company’s provision for income taxes in interim periods is computed in accordance with interim period income tax accounting rules by applying the appropriate annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items, including interest on prior year tax liabilities, are recorded during the period in which they occur.

Note 14 — Income Taxes (continued)

The effective tax rates on the pretax losses for the third quarter and first nine months of 2009 were unfavorable relative to the U.S. federal statutory tax rate primarily due to losses at certain foreign subsidiaries where no tax benefit could be recorded, as well as the net impact of discrete tax adjustments recorded during the periods. These items were partially offset by the earnings in certain foreign jurisdictions where the effective tax rate is less than 35% and the net effect of other U.S. tax items. Application of interim period income tax accounting rules has caused significant volatility in the 2009 quarterly effective tax rates. For the full year of 2009, the Company expects its effective tax rate to be in the range of 25% to 30%.

In the first nine months of 2009, the Company’s unrecognized tax benefits increased by $5,200. This increase represents an increase of $14,200 for tax positions related to prior years, offset by a decrease of $9,000 related to lapses in statutes of limitation. As of September 30, 2009, the Company had approximately $76,900 of total gross unrecognized tax benefits. Included in this amount is approximately $38,200, which represents the amount of unrecognized tax benefits that would favorably impact the Company’s effective income tax rate in any future periods if such benefits were recognized.

Note 15 — Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The FASB provides accounting rules that classify the inputs used to measure fair value into the following hierarchy:

Level 1 —		Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 —		Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 —		Unobservable inputs for the asset or liability.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2009:

		Fair Value at September 30, 2009
		Total				Level 1				Level 2				Level 3
Assets:
Available-for-sale securities		$	6,035			$	6,035			$	—			$	—
Foreign currency hedges			627				—				627				—
Interest rate swaps			992				—				992				—
Total Assets		$	7,654			$	6,035			$	1,619			$	—
Liabilities:
Foreign currency hedges		$	7,159			$	—			$	7,159			$	—
Total Liabilities		$	7,159			$	—			$	7,159			$	—

The Company uses publicly available foreign currency forward and spot rates to measure the fair value of its foreign currency forward contracts. The Company’s interest rate swaps are remeasured each period using observable market interest rates.

The Company does not believe it has significant concentrations of risk associated with the counterparts to its financial instruments.

Note 15 — Fair Value (continued)

The following table presents the fair value hierarchy for those assets measured at fair value on a nonrecurring basis as of September 30, 2009:

		Fair Value at September 30, 2009																Total Gains
		Total				Level 1				Level 2				Level 3				(Losses)
Assets:
Long-lived assets held for sale		$	301,033			$	—			$	—			$	301,033			$	(38,087	)
Long-lived assets held and used			3,537				—				—				3,537				(32,515	)
Total Assets		$	304,570			$	—			$	—			$	304,570			$	(70,602	)

The following table presents the long-lived assets that have been adjusted to their fair value in the first nine months of 2009:

		Carrying				Fair Value				Fair Value at
		Value				Adjustment				Sept. 30, 2009
Long-lived assets held for sale:
Net assets of the NRB operations		$	334,728			$	(33,695	)		$	301,033
Torrington campus office complex			4,392				(4,392	)			—
Total long-lived assets held for sale:		$	339,120			$	(38,087	)		$	301,033
Long-lived assets held and used:
Process Industries’ facilities		$	29,815			$	(27,652	)		$	2,163
Torrington campus office complex			1,984				(1,984	)			—
Endorsia.com International AB			2,346				(1,346	)			1,000
Other assets			1,907				(1,533	)			374
Total long-lived assets held and used:		$	36,052			$	(32,515	)		$	3,537