UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2010

OR

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

For the transition period from                 to                

Commission file number: 1-1169

THE TIMKEN COMPANY

(Exact name of registrant as specified in its charter)

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

330.438.3000
(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 [ x ]           No [   ]

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 [ x ]           No [   ]

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 “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ x ]            Accelerated filer [   ]

Non-accelerated filer [   ]          (Do not check if a smaller reporting company)       Smaller reporting company [   ]

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

Yes [   ]          No [ x ]

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, 2010
Common Stock, without par value		97,096,315 shares

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE TIMKEN COMPANY AND SUBSIDIARIES

Consolidated Statements of Income
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
(Dollars in millions, except per share data)
Net sales		$	1,059.7			$	763.6			$	2,984.8			$	2,367.0
Cost of products sold			794.6				634.1				2,228.7				1,957.5
Gross Profit			265.1				129.5				756.1				409.5
Selling, general and administrative expenses			140.3				107.3				414.0				358.7
Impairment and restructuring charges			2.9				19.6				9.4				84.1
Operating Income (Loss)			121.9				2.6				332.7				(33.3	)
Interest expense			(9.1	)			(10.3	)			(28.7	)			(27.2	)
Interest income			0.8				0.4				2.3				1.3
Other (expense) income, net			(2.8	)			(4.6	)			(0.7	)			3.3
Income (Loss) From Continuing Operations Before Income Taxes			110.8				(11.9	)			305.6				(55.9	)
Provision for income taxes			38.6				7.1				122.7				2.9
Income (Loss) From Continuing Operations			72.2				(19.0	)			182.9				(58.8	)
(Loss) income from discontinued operations, net of income taxes			(1.1	)			(30.8	)			3.4				(59.9	)
Net Income (Loss)			71.1				(49.8	)			186.3				(118.7	)
Less: Net income (loss) attributable to noncontrolling interest			0.8				0.4				1.8				(4.9	)
Net Income (Loss) Attributable to The Timken Company		$	70.3			$	(50.2	)		$	184.5			$	(113.8	)
Amounts Attributable to The Timken Company’s Common Shareholders:
Income (loss) from continuing operations, net of income taxes		$	71.4			$	(19.4	)		$	181.1			$	(53.9	)
(Loss) income from discontinued operations, net of income taxes			(1.1	)			(30.8	)			3.4				(59.9	)
Net Income (Loss) Attributable to The Timken Company		$	70.3			$	(50.2	)		$	184.5			$	(113.8	)
Net Income (Loss) per Common Share Attributable to The Timken Company’s Common Shareholders
Earnings (loss) per share - Continuing Operations		$	0.74			$	(0.20	)		$	1.87			$	(0.55	)
Earnings (loss) per share - Discontinued Operations			(0.01	)			(0.32	)			0.04				(0.62	)
Basic earnings (loss) per share		$	0.73			$	(0.52	)		$	1.91			$	(1.17	)
Diluted earnings (loss) per share - Continuing Operations		$	0.73			$	(0.20	)		$	1.86			$	(0.55	)
Diluted earnings (loss) per share - Discontinued Operations			(0.01	)			(0.32	)			0.03				(0.62	)
Diluted earnings (loss) per share		$	0.72			$	(0.52	)		$	1.89			$	(1.17	)
Dividends per share		$	0.13			$	0.09			$	0.35			$	0.36

See accompanying Notes to the Consolidated Financial Statements.

Consolidated Balance Sheets

		(Unaudited)
		September 30,				December 31,
		2010				2009
(Dollars in millions, except share data)
ASSETS
Current Assets
Cash and cash equivalents		$	899.8			$	755.5
Accounts receivable, less allowances: 2010 - $30.8 million; 2009 - $41.6 million			552.2				411.2
Inventories, net			771.4				671.2
Deferred income taxes			62.1				61.5
Deferred charges and prepaid expenses			14.0				11.8
Other current assets			69.3				111.3
Total Current Assets			2,368.8				2,022.5
Property, Plant and Equipment - Net			1,256.6				1,335.2
Other Assets
Goodwill			228.2				221.7
Other intangible assets			125.2				132.1
Deferred income taxes			231.4				248.6
Other non-current assets			38.8				46.8
Total Other Assets			623.6				649.2
Total Assets		$	4,249.0			$	4,006.9
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt		$	3.6			$	26.3
Accounts payable			257.8				156.0
Salaries, wages and benefits			218.5				142.5
Income taxes payable			54.2				-
Deferred income taxes			9.1				9.2
Other current liabilities			162.3				189.3
Current portion of long-term debt			10.0				17.1
Total Current Liabilities			715.5				540.4
Non-Current Liabilities
Long-term debt			479.4				469.3
Accrued pension cost			554.9				690.9
Accrued postretirement benefits cost			594.3				604.2
Deferred income taxes			6.6				6.1
Other non-current liabilities			104.3				100.4
Total Non-Current Liabilities			1,739.5				1,870.9
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) (2010 - 98,153,317 shares; 2009 - 97,034,033 shares)
Stated capital			53.1				53.1
Other paid-in capital			876.4				843.4
Earnings invested in the business			1,553.6				1,402.9
Accumulated other comprehensive loss			(676.0	)			(717.1	)
Treasury shares at cost (2010 - 1,057,002 shares; 2009 - 179,963 shares)			(30.0	)			(4.7	)
Total Shareholders’ Equity			1,777.1				1,577.6
Noncontrolling interest			16.9				18.0
Total Equity			1,794.0				1,595.6
Total Liabilities and Equity		$	4,249.0			$	4,006.9

See accompanying Notes to the Consolidated Financial Statements.

Consolidated Statements of Cash Flows

(Unaudited)

		Nine Months Ended
		September 30,
		2010				2009
(Dollars in millions)
CASH PROVIDED (USED)
Operating Activities
Net income (loss) attributable to The Timken Company		$	184.5			$	(113.8	)
(Earnings) loss from discontinued operations			(3.4	)			59.9
Net income (loss) attributable to noncontrolling interest			1.8				(4.9	)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization			142.2				150.8
Impairment charges			2.0				36.1
Loss on disposals of property, plant and equipment			3.7				3.6
Deferred income tax provision (benefit)			15.3				(0.9	)
Stock-based compensation expense			12.1				11.6
Pension and other postretirement expense			69.0				77.1
Pension contributions and other postretirement benefit payments			(164.4	)			(89.2	)
Changes in operating assets and liabilities:
Accounts receivable			(140.9	)			128.4
Inventories			(95.2	)			311.5
Accounts payable and accrued expenses			146.2				(144.2	)
Income taxes			131.5				7.6
Other - net			5.6				(14.3	)
Net Cash Provided by Operating Activities - Continuing Operations			310.0				419.3
Net Cash Provided by Operating Activities - Discontinued Operations			3.4				4.9
Net Cash Provided By Operating Activities			313.4				424.2
Investing Activities
Capital expenditures			(61.2	)			(81.0	)
Acquisitions (net of cash acquired)			(16.1	)			(0.4	)
Proceeds from disposals of property, plant and equipment			1.0				2.9
Investments			(30.0	)			-
Other			(0.9	)			4.3
Net Cash Used by Investing Activities - Continuing Operations			(107.2	)			(74.2	)
Net Cash Used by Investing Activities - Discontinued Operations			-				(1.5	)
Net Cash Used by Investing Activities			(107.2	)			(75.7	)
Financing Activities
Cash dividends paid to shareholders			(33.8	)			(34.6	)
Net proceeds from common share activity			29.5				0.7
Purchase of treasury shares			(29.2	)			-
Proceeds from issuance of long-term debt			15.4				254.1
Increase in restricted cash			-				(248.2	)
Payments on long-term debt			(12.6	)			(53.4	)
Short-term debt activity - net			(22.2	)			(37.0	)
Other			(3.5	)			-
Net Cash Used by Financing Activities			(56.4	)			(118.4	)
Effect of exchange rate changes on cash			(5.5	)			19.3
Increase In Cash and Cash Equivalents			144.3				249.4
Cash and cash equivalents at beginning of year			755.5				133.4
Cash and Cash Equivalents at End of Period		$	899.8			$	382.8

See accompanying the Notes to the Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in millions, except share and 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 and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. Certain amounts in the 2009 Consolidated Financial Statements have been reclassified to conform to the 2010 presentation.

During the first quarter of 2009, the Company recorded two adjustments related to its 2008 Consolidated Financial Statements. Net income (loss) attributable to noncontrolling interest increased by $6.1 million (after-tax) due to a correction of an error related to the $18.4 million goodwill impairment loss the Company recorded in the fourth quarter of 2008 for the Mobile Industries segment. In recording this goodwill impairment loss, the Company did not recognize that a portion of the loss related to two separate subsidiaries in India and South Africa of which the Company holds less than 100% ownership. In addition, income (loss) from continuing operations before income taxes decreased by $3.4 million, or $0.04 per share, ($2.0 million after-tax or $0.02 per share) due to a correction of an error related to $3.4 million of in-process research and development costs that were recorded in other current assets with the anticipation of being paid for by a third-party. However, the Company subsequently realized that the balance could not be substantiated through a contract with a third party. The net effect of these errors understated 2008 net income attributable to The Timken Company of $267.7 million by $4.1 million. Furthermore, the net effect of these errors overstated the Company’s first quarter 2009 net income attributable to The Timken Company of $0.9 million by $4.1 million. Had these adjustments been recorded in the fourth quarter of 2008, rather than the first quarter of 2009, the results for the first quarter of 2009 would have been a net loss attributable to The Timken Company of $3.2 million. Management of the Company concluded the effect of the first quarter adjustments was immaterial to the Company’s 2008 and first-quarter 2009 financial statements, as well as to the full-year 2009 financial statements.

Note 2 – New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued new accounting guidance that amended the accounting and disclosure requirements for the consolidation of variable interest entities. The implementation of the new accounting guidance related to variable interest entities, effective January 1, 2010, did not have a material impact on the Company’s results of operations and financial condition.

Note 3 – Inventories

		September 30,				December 31,
		2010				2009
Inventories, net:
Manufacturing supplies		$	59.4			$	53.0
Work in process and raw materials			361.0				269.1
Finished products			351.0				349.1
Total Inventories, net		$	771.4			$	671.2

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, 2010 and December 31, 2009 was $247.9 million and $237.7 million, respectively. The Company recognized an increase in its LIFO reserve of $3.6 million and $10.2 million during the third quarter and first nine months of 2010 compared to a decrease in its LIFO reserve of $12.9 million and $26.2 million during the third quarter and first nine months of 2009.

Note 4 – Property, Plant and Equipment

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

		September 30,				December 31,
		2010				2009
Property, Plant and Equipment:
Land and buildings		$	607.8			$	611.7
Machinery and equipment			2,813.2				2,786.4
Subtotal			3,421.0				3,398.1
Less allowances for depreciation			(2,164.4	)			(2,062.9	)
Property, Plant and Equipment - net		$	1,256.6			$	1,335.2

At September 30, 2010 and December 31, 2009, machinery and equipment included approximately $103.2 million and $104.3 million, respectively, of capitalized software. Depreciation expense for the three months ended September 30, 2010 and 2009 was $44.5 million and $45.8 million, respectively. Depreciation expense for the first nine months ended September 30, 2010 and 2009 was $134.6 million and $140.6 million, respectively. Depreciation expense on capitalized software for the three months ended September 30, 2010 and 2009 was approximately $4.7 million and $5.6 million, respectively. Depreciation expense on capitalized software for the nine months ended September 30, 2010 and 2009 was approximately $12.6 million and $15.9 million, respectively.

Note 5 – Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill for the nine months ended September 30, 2010 is as follows:

		Beginning																Ending
		Balance				Acquisitions				Impairment				Other				Balance
Segment:
Process Industries		$	49.5			$	7.6			$	-			$	(0.9	)		$	56.2
Aerospace and Defense			162.6				-				-				(0.2	)			162.4
Steel			9.6				-				-				-				9.6
Total		$	221.7			$	7.6			$	-			$	(1.1	)		$	228.2

The change related to acquisitions reflects the preliminary purchase price allocation due to the QM Bearings and Power Transmission, Inc. acquisition completed on September 21, 2010. Other primarily includes foreign currency translation adjustments.

The following table displays intangible assets as of September 30, 2010 and December 31, 2009:

		As of September 30, 2010												As of December 31, 2009
		Gross								Net				Gross								Net
		Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		Amount				Amortization				Amount				Amount				Amortization				Amount
Intangible assets subject to amortization:
Customer relationships		$	79.1			$	17.5			$	61.6			$	79.1			$	14.3			$	64.8
Engineering drawings			2.0				2.0				-				2.0				2.0				-
Know-how			2.0				1.0				1.0				2.1				0.9				1.2
Industrial license agreements			0.1				0.1				-				-				-				-
Land-use rights			8.1				3.2				4.9				7.9				3.0				4.9
Patents			4.4				3.2				1.2				4.4				2.9				1.5
Technology use			35.6				5.7				29.9				35.6				4.2				31.4
Trademarks			6.0				5.0				1.0				6.0				4.7				1.3
PMA licenses			8.8				2.5				6.3				8.8				2.2				6.6
Non-compete agreements			2.7				1.7				1.0				2.7				1.2				1.5
Unpatented technology			7.6				5.9				1.7				7.6				5.3				2.3
		$	156.4			$	47.8			$	108.6			$	156.2			$	40.7			$	115.5
Intangible assets not subject to amortization:
Goodwill		$	228.2			$	-			$	228.2			$	221.7			$	-			$	221.7
Tradename			1.4				-				1.4				1.4				-				1.4
Industrial license agreements			1.0				-				1.0				1.0				-				1.0
FAA air agency certificates			14.2				-				14.2				14.2				-				14.2
		$	244.8			$	-			$	244.8			$	238.3			$	-			$	238.3
Total intangible assets		$	401.2			$	47.8			$	353.4			$	394.5			$	40.7			$	353.8

Amortization expense for intangible assets for the three months and nine months ended September 30, 2010 was $2.4 million and $7.2 million, respectively. Amortization expense for intangible assets is estimated to be approximately $11.4 million for 2010; $11.0 million in 2011; $10.6 million in 2012; $8.1 million in 2013 and $7.7 million in 2014.

Note 6 – Financing Arrangements

Short-term debt at September 30, 2010 and December 31, 2009 was as follows:

		September 30,				December 31,
		2010				2009
Variable-rate lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 3.95% to 4.62% and 1.98% to 5.05% at September 30, 2010 and December 31, 2009, respectively		$	3.6			$	26.3
Short-term debt		$	3.6			$	26.3

The lines of credit for certain of the Company’s foreign subsidiaries provide for borrowings up to $292.0 million. At September 30, 2010, the Company had borrowings outstanding of $3.6 million, which reduced the availability under these facilities to $288.4 million.

The Company has a $100 million Accounts Receivable Securitization Financing Agreement (Asset Securitization Agreement), which expires November 15, 2010. Under the terms of the Asset Securitization Agreement, 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, 2010, there were no outstanding borrowings under the Asset Securitization Agreement. The cost of this credit facility, 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.

Long-term debt at September 30, 2010 and December 31, 2009 was as follows:

		September 30,				December 31,
		2010				2009
Fixed-rate Medium-Term Notes, Series A, due at various dates through May 2028, with interest rates ranging from 6.74% to 7.76%		$	175.0			$	175.0
Fixed-rate Senior Unsecured Notes, due September 15, 2014, with an interest rate of 6.0%			249.7				249.7
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.24% at September 30, 2010)			12.2				12.2
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.37% at September 30, 2010)			9.5				9.5
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.38% at September 30, 2010)			17.0				17.0
Variable-rate credit facility with US Bank for Advanced Green Components, LLC, maturing on July 17, 2011 (1.44% at September 30, 2010)			4.8				6.1
Variable-rate credit facility with US Bank for Advanced Green Components, LLC, guaranteed by The Timken Company, maturing on July 17, 2011 (3.76% at September 30, 2010)			2.5				5.6
Other			18.7				11.3
			489.4				486.4
Less current maturities			10.0				17.1
Long-term debt		$	479.4			$	469.3

On July 10, 2009, the Company entered into a new $500 million Amended and Restated Credit Agreement (Senior Credit Facility). At September 30, 2010, the Company had no outstanding borrowings under its Senior Credit Facility but had letters of credit outstanding totaling $17.2 million, which reduced the availability under the Senior Credit Facility to $482.8 million. This Senior Credit Facility matures on July 10, 2012. Under the 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, 2010, the Company was in full compliance with the covenants under the Senior Credit Facility.

Advanced Green Components, LLC (AGC) is a joint venture of the Company. The Company is the guarantor of $2.5 million of AGC’s $7.3 million credit facility with US Bank. Effective as of July 17, 2010, AGC renewed its credit facility with US Bank for another 365 days.

Lines of credit for certain of the Company’s foreign subsidiaries also provide for long-term borrowings up to $27.1 million. At September 30, 2010, the Company had borrowings outstanding of $15.8 million, which reduced the availability under these long-term facilities to $11.3 million.

Note 7 – 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 contingent liabilities. 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, 2010 and the twelve months ended December 31, 2009:

		September 30,				December 31,
		2010				2009
Beginning balance, January 1		$	5.4			$	13.5
Expense			3.1				4.7
Payments			(0.9	)			(12.8	)
Ending balance		$	7.6			$	5.4

The product warranty accrual at September 30, 2010 and December 31, 2009 was included in other current liabilities on the Consolidated Balance Sheet.

Note 8 – Equity

						The Timken Company Shareholders
														Earnings				Accumulated
										Other				Invested				Other
						Stated				Paid-In				in the				Comprehensive				Treasury				Noncontrolling
		Total				Capital				Capital				Business				Income				Stock				Interest
Balance at December 31, 2009		$	1,595.6			$	53.1			$	843.4			$	1,402.9			$	(717.1	)		$	(4.7	)		$	18.0
Net income			186.3												184.5												1.8
Foreign currency translation adjustment			(5.8	)															(5.8	)
Pension and postretirement liability adjustment (net of income tax of $2.1 million)			47.8																47.8
Unrealized loss on marketable securities			(0.2	)															(0.2	)
Change in fair value of derivative financial instruments, net of reclassifications			(0.7	)															(0.7	)
Total comprehensive loss			227.4
Change in ownership of Timken Bearing Services South Africa			(3.5	)							(1.0	)															(2.5	)
Dividends declared to noncontrolling interest			(0.4	)																							(0.4	)
Dividends - $0.35 per share			(33.8	)											(33.8	)
Tax benefit from compensation			2.0								2.0
Stock-based compensation expense			12.1								12.1
Issuance (tender) of 877,039 shares from treasury			(22.9	)							2.4												(25.3	)
Issuance of 1,119,284 shares from authorized			17.5								17.5
Balance at September 30, 2010		$	1,794.0			$	53.1			$	876.4			$	1,553.6			$	(676.0	)		$	(30.0	)		$	16.9

The total comprehensive income for the three months and nine months ended September 30, 2010 was $138.9 million and $227.4 million, respectively. The total comprehensive income for the three months and nine months ended September 30, 2009 was $5.7 million and $46.2 million, respectively.

The pension and postretirement liability adjustment of $47.8 million for the nine months ended September 30, 2010 includes a $14.1 million prior period adjustment (benefit) related to deferred taxes on post-retirement prescription drug benefits, specifically the employer subsidy provided by the U.S. government under Medicare Part D. Refer to Note 13 — Income Taxes in the Notes to the Consolidated Financial Statements for further discussion on this prior period adjustment.

Note 9 – 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 months and nine months ended September 30, 2010 and 2009:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Numerator:
Income (Loss) from continuing operations attributable to The Timken Company		$	71.4			$	(19.4	)		$	181.1			$	(53.9	)
Less: undistributed earnings (loss) allocated to nonvested stock			0.3				(0.2	)			0.8				(0.6	)
Income (Loss) from continuing operations available to common shareholders for
basic earnings (loss) per share and diluted earnings (loss) per share			71.1				(19.2	)			180.3				(53.3	)
Denominator:
Weighted average number of shares outstanding - basic			96,400,592				96,176,091				96,373,151				96,111,847
Effect of dilutive options			1,011,089				-				640,933				-
Weighted average number of shares outstanding, assuming dilution of stock options			97,411,681				96,176,091				97,014,084				96,111,847
Basic earnings (loss) per share from continuing operations		$	0.74			$	(0.20	)		$	1.87			$	(0.55	)
Diluted earnings (loss) per share from continuing operations		$	0.73			$	(0.20	)		$	1.86			$	(0.55	)

The exercise prices for certain stock options that the Company has awarded may 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. There were no antidilutive stock options outstanding for the three months ended September 30, 2010 and 3,759,975 shares of antidilutive stock options in the three months ended September 30, 2009. The antidilutive stock options outstanding were 1,307,303 and 4,275,871 for the nine months ended September 30, 2010 and 2009, respectively.

Note 10 – 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,
		2010				2009				2010				2009
Net sales to external customers:
Mobile Industries		$	404.1			$	327.6			$	1,172.0			$	920.4
Process Industries			233.7				186.4				650.6				616.9
Aerospace and Defense			81.0				100.2				255.8				318.7
Steel			340.9				149.4				906.4				511.0
		$	1,059.7			$	763.6			$	2,984.8			$	2,367.0
Intersegment sales:
Process Industries		$	0.8			$	0.6			$	2.1			$	2.2
Steel			30.4				8.5				73.3				30.4
		$	31.2			$	9.1			$	75.4			$	32.6
Segment EBIT, as adjusted:
Mobile Industries		$	60.6			$	13.7			$	171.5			$	(0.6	)
Process Industries			37.2				16.0				93.0				94.6
Aerospace and Defense			3.8				19.1				23.8				55.9
Steel			41.3				(20.2	)			104.2				(60.4	)
Total EBIT, as adjusted, for reportable segments		$	142.9			$	28.6			$	392.5			$	89.5
Unallocated corporate expenses			(17.6	)			(10.3	)			(49.2	)			(35.8	)
Impairment and restructuring			(2.9	)			(19.6	)			(9.4	)			(84.1	)
Rationalization and integration charges			(2.7	)			(1.5	)			(4.8	)			(5.2	)
Other			0.4				(2.6	)			0.3				(0.6	)
Interest expense			(9.1	)			(10.3	)			(28.7	)			(27.2	)
Interest income			0.8				0.4				2.3				1.3
Intersegment adjustments			(1.0	)			3.4				2.6				6.2
Income (loss) from continuing operations before income taxes		$	110.8			$	(11.9	)		$	305.6			$	(55.9	)

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

Note 11 – Impairment and Restructuring Charges

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

For the three months ended September 30, 2010:

		Mobile				Process				Aerospace
		Industries				Industries				& Defense				Steel				Corporate				Total
Impairment charges		$	1.5			$	0.5			$	-			$	-			$	-			$	2.0
Severance expense and related benefit costs			(0.1	)			(0.6	)			0.5				-				-				(0.2	)
Exit costs			0.8				0.1				0.2				-				-				1.1
Total		$	2.2			$	-			$	0.7			$	-			$	-			$	2.9

For the three months ended September 30, 2009:

		Mobile				Process				Aerospace
		Industries				Industries				& Defense				Steel				Corporate				Total
Severance expense and related benefit costs		$	11.4			$	6.5			$	0.7			$	-			$	0.2			$	18.8
Exit costs			0.6				0.2				-				-				-				0.8
Total		$	12.0			$	6.7			$	0.7			$	-			$	0.2			$	19.6

For the nine months ended September 30, 2010:

		Mobile				Process				Aerospace
		Industries				Industries				& Defense				Steel				Corporate				Total
Impairment charges		$	1.5			$	0.5			$	-			$	-			$	-			$	2.0
Severance expense and related benefit costs			1.6				1.0				1.9				(0.1	)			0.6				5.0
Exit costs			1.7				0.2				0.5				-				-				2.4
Total		$	4.8			$	1.7			$	2.4			$	(0.1	)		$	0.6			$	9.4

For the nine months ended September 30, 2009:

		Mobile				Process				Aerospace
		Industries				Industries				& Defense				Steel				Corporate				Total
Impairment charges		$	3.0			$	29.8			$	2.0			$	-			$	-			$	34.8
Severance expense and related benefit costs			27.5				11.3				2.2				3.2				2.1				46.3
Exit costs			1.4				1.6				-				-				-				3.0
Total		$	31.9			$	42.7			$	4.2			$	3.2			$	2.1			$	84.1

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.

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. During the first nine months of 2010, the Company recorded $0.7 million of severance and related benefit costs related to this initiative to eliminate approximately 25 associates, which primarily related to Corporate. During the first nine months of 2009, the Company recorded $10.6 million of severance and related benefit costs related to this initiative to eliminate approximately 270 associates. Of the $10.6 million charge for the first nine months of 2009, $4.5 million related to the Mobile Industries segment, $2.1 million related to Corporate, $1.9 million related to the Process Industries segment, $1.5 million related to the Steel segment and $0.6 million related to the Aerospace and Defense segment.

Manufacturing Workforce Reductions

During the third quarter and first nine months of 2010, the Company recorded $0.5 million and $4.6 million, respectively, in severance and related benefit costs to eliminate approximately 180 associates to properly align its business as a result of the downturn in the economy and expected market demand. The $0.5 million charge for the third quarter of 2010 primarily related to the Aerospace and Defense segment. Of the $4.6 million charge for the first nine months of 2010, $1.8 million related to the Aerospace and Defense segment, $1.4 million related to the Mobile Industries segment and $1.4 million related to the Process Industries segment. In addition, the Company recorded $0.4 million and $1.4 million, respectively, of exit costs in the third quarter and first nine months of 2010 related to these reductions. During the third quarter and first nine months of 2009, the Company recorded $13.6 million and $28.8 million, respectively, in severance and related benefit costs, including a curtailment of pension benefits of $1.6 million for the first nine months of 2009, to eliminate approximately 3,000 associates to properly align its business as a result of the economic downturn and expected market demand. Of the $13.6 million charge for the third quarter of 2009, $10.3 million related to the Mobile Industries segment, $2.3 million related to the Process Industries segment and $1.0 million related to the Aerospace and Defense segment. Of the $28.8 million charge for the first nine months of 2009, $20.6 million related to the Mobile Industries segment, $4.8 million related to the Process Industries segment, $1.7 million related to the Aerospace and Defense segment and $1.7 million related to the Steel segment.

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 this property, the Company recorded an impairment charge of $6.4 million during the second quarter of 2009. During the third quarter of 2009, the Company recorded an additional loss of approximately $0.7 million 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 closure of its manufacturing facility in Sao Paulo, Brazil. The Company completed the closure of this manufacturing facility on March 31, 2010. The Company expects to incur pretax costs of up to approximately $30 million, which includes restructuring costs and rationalization costs recorded in cost of products sold and selling, general and administrative expenses. Mobile Industries has incurred cumulative pretax costs of approximately $27.6 million as of September 30, 2010 related to this closure. During the third quarter and first nine months of 2010, the Company recorded $1.1 million of impairment charges associated with the closure of the Company’s Sao Paulo, Brazil manufacturing facility. The impairment charges were recorded as a result of the carrying value of certain machinery and equipment exceeding their expected future cash flows. In addition, the Company recorded $0.3 million of severance and related benefit costs during the first nine months of 2010. During the third quarter and first nine months of 2009, the Company recorded $1.3 million and $2.5 million, respectively, of severance and related benefit costs and exit costs of $0.7 million and $1.5 million, respectively, associated with the closure of this facility.

In addition to the above charges, the Company recorded impairment charges of $0.8 million during the first nine months 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.

Process Industries

In May 2004, the Company announced plans to rationalize its three bearing plants in Canton, Ohio within the Process Industries segment. The Company expects to incur pretax costs of approximately $70 million to $80 million (including pretax cash costs of approximately $40 million), by the end of 2010.

The Company recorded impairment charges of $27.7 million and exit costs of $1.6 million during the first nine months of 2009 as a result of the Process Industries’ rationalization plans. The significant impairment charge recorded during the first nine months of 2009 was 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 their projected future cash flows. The Company then arrived at fair value by either valuing the assets in use, where the assets were still producing product, or in exchange, where the assets had been idled. The fair value was determined based on market comparisons of similar assets. The Company closed this plant at the end of 2009. Including rationalization costs recorded in cost of products sold and selling, general and administrative expenses, the Process Industries segment has incurred cumulative pretax costs of approximately $70.5 million as of September 30, 2010 for these rationalization plans.

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 surrounding the existing Spartanburg location. The closure of the Bucyrus Distribution Center will displace approximately 260 employees. During the third quarter of 2009, the Company recorded $4.5 million of severance and related benefit costs related to this closure. During the third quarter of 2010, the Company reduced its accruals for severance and related benefits by $0.7 million. The Company expects to complete the closure of the Bucyrus Distribution Center during the first quarter of 2011.

The following is a rollforward of the consolidated restructuring accrual for the nine months ended September 30, 2010 and the twelve months ended December 31, 2009:

		September 30,				December 31,
		2010				2009
Beginning balance, January 1		$	34.0			$	17.0
Expense			7.4				55.6
Payments			(24.2	)			(38.6	)
Ending balance		$	17.2			$	34.0

The restructuring accrual at September 30, 2010 and December 31, 2009 was included in other current liabilities on the Consolidated Balance Sheet. The restructuring accrual at December 31, 2009 excludes costs related to the curtailment of pension benefit plans of $0.9 million. The accrual at September 30, 2010 includes $10.0 million of severance and related benefits, with the remainder of the balance primarily representing environmental exit costs. The majority of the $10.0 million accrual relating to severance and related benefits is expected to be paid by the end of 2011.

Note 12 – 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 months and nine months ended September 30, 2010 are based on actuarial calculations prepared during 2009 and updated in June 2010. The net periodic benefit cost recorded for the three months ended and nine months ended September 30, 2010 is the Company’s best estimate of each period’s proportionate share of the amounts to be recorded for the year ended December 31, 2010.

		Pension								Postretirement
		Three Months Ended								Three Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Components of net periodic benefit cost
Service cost		$	8.4			$	9.6			$	0.5			$	0.7
Interest cost			39.6				39.5				8.8				9.7
Expected return on plan assets			(50.2	)			(48.5	)			-				-
Amortization of prior service cost (credit)			2.4				2.9				(0.4	)			(0.6	)
Amortization of net actuarial loss			13.0				9.0				1.0				0.9
Curtailments and settlements			-				2.8				-				3.4
Net periodic benefit cost		$	13.2			$	15.3			$	9.9			$	14.1

		Pension								Postretirement
		Nine Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Components of net periodic benefit cost
Service cost		$	24.9			$	28.8			$	1.6			$	2.0
Interest cost			118.6				117.6				26.3				29.1
Expected return on plan assets			(150.3	)			(144.7	)			-				-
Amortization of prior service cost (credit)			7.1				8.6				(1.1	)			(1.7	)
Amortization of net actuarial loss			38.9				26.8				3.0				2.8
Curtailments and settlements			-				4.4				-				3.4
Net periodic benefit cost		$	39.2			$	41.5			$	29.8			$	35.6

On February 12, 2009, the Company was informed of alleged irregularities in the operation of an equity-related investment in its defined benefit pension plans. A court-appointed receiver is now in control of the investment firm and is conducting an ongoing investigation into the matter. In the fourth quarter of 2009, the Company reduced the value of this investment to its estimated net realizable value of $19.3 million (the original investment was $50 million), reflecting the receiver’s preliminary findings. The actual net realizable value of this investment may be more or less than estimated. In July 2010, the Company received $20 million of insurance proceeds related to this loss.

Note 13 – Income Taxes

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Provision for income taxes		$	38.6			$	7.1			$	122.7			$	2.9
Effective tax rate			34.8%				(60.4)%				40.2%				(5.2)%

The Company’s provision for income taxes in interim periods is computed in accordance with Accounting Standards Codification 740 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(s) in which they occur.

The effective tax rate on the pretax income for the third quarter of 2010 was favorable relative to the U.S. federal statutory tax rate of 35% primarily due to earnings in certain foreign jurisdictions where the effective tax rate is less than 35% and the U.S. manufacturing deduction, partially offset by losses at certain foreign subsidiaries where no tax benefit could be recorded, U.S. state and local tax and the net effect of other U.S. tax items.

The effective tax rate on the pretax income for the first nine months of 2010 was unfavorable relative to the U.S. federal statutory tax rate of 35% primarily due to a $21.6 million charge recorded to reflect the deferred tax impact of the enactment of the U.S. Patient Protection and Affordable Care Act (as amended) enacted in the first quarter of 2010, losses at certain foreign subsidiaries where no tax benefit could be recorded, U.S. state and local taxes and the net effect of other U.S. tax items. These increases were partially offset by the earnings in certain foreign jurisdictions where the effective tax rate is less than 35%.

The effective tax rates on the pretax losses for the third quarter and the first nine months of 2009 were unfavorable relative to the U.S. federal statutory tax rate of 35% primarily due to losses in certain foreign jurisdictions 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 earnings in certain foreign jurisdictions where the effective tax rate is less than 35% and the net effect of other U.S. items.

In the first nine months of 2010, the Company’s unrecognized tax benefits decreased by $15.3 million. This related to a decrease of $19.2 million related to settlements with tax authorities, a decrease of $3.0 million related to lapses in statutes of limitation, offset by an increase of $6.6 million for tax positions related to prior years, and an increase of $0.3 million related to tax positions in the current year. As of September 30, 2010, the Company has approximately $62.5 million of total gross unrecognized tax benefits. Included in this amount is approximately $45.6 million, 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.

In the first quarter of 2010, the Company recorded a $14.1 million adjustment to other comprehensive income for deferred taxes on postretirement prescription drug benefits, specifically the employer subsidy provided by the U.S. government under the Medicare Part D program (the Medicare subsidy). The Company determined it had provided deferred taxes on postretirement benefit plan accruals recorded through other comprehensive income net of the Medicare subsidy, rather than on a gross basis. The cumulative impact of this error resulted in a cumulative understatement of deferred tax assets totaling $14.1 million and a corresponding overstatement of accumulated other comprehensive loss. Management concluded the effect of the adjustment was not material to the Company’s prior three fiscal years and the first quarter of 2010 financial statements, as well as the estimated full-year 2010 financial statements.

Note 14 – Acquisitions and Divestitures

On September 21, 2010, the Company completed the acquisition of the business of QM Bearings and Power Transmission, Incorporated (QM), based in Ferndale, Washington, for $16.9 million. QM manufactures spherical roller-bearing steel-housed units and elastomeric and steel couplings used in demanding processes applications such as sawmill, logging and cement operations. QM had sales of more than $14 million in the last twelve months. The Company has preliminarily allocated the purchase price to assets of $19.1 million, including $0.8 million of cash and cash equivalents, $2.3 million of accounts receivable, $5.7 million of inventory, $1.4 million of property, plant and equipment and $7.6 million of goodwill, and liabilities of $2.2 million.

On December 31, 2009, the Company completed the sale of the assets of its Needle Roller Bearings (NRB) operations to JTEKT Corporation (JTEKT). The Company received approximately $304 million in cash proceeds for these operations and retained certain receivables, subject to post-sale working capital adjustments. The NRB operations primarily serve the automotive original-equipment market sectors and manufacture highly engineered needle roller bearings, including an extensive range of radial and thrust needle roller bearings bearing assemblies and loose needles for automotive and industrial applications. The NRB operations have facilities in the United States, Canada, Europe and China. Results for 2009 for the NRB operations are presented as discontinued operations.

The following results of operations for this business have been treated as discontinued operations for all periods presented.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Net sales		$	-			$	103.0			$	-			$	288.9
Cost of goods sold			-				89.9				-				284.8
Gross profit			-				13.1				-				4.1
Selling, administrative and general expenses			-				15.9				-				45.7
Impairment and restructuring charges			-				48.6				-				53.8
Interest expense, net			-				-				-				0.1
Other (expense) income, net			-				(0.6	)			-				(1.5	)
(Loss) before income taxes on operations			-				(52.0	)			-				(97.0	)
Income tax benefit on operations			-				21.2				-				37.1
(Loss) gain on divestiture			(1.5	)			-				5.4				-
Income tax benefit (expense) on disposal			0.4				-				(2.0	)			-
(Loss) income from discontinued operations		$	(1.1	)		$	(30.8	)		$	3.4			$	(59.9	)

During the third quarter of 2010, the Company recorded an adjustment related to its 2009 Consolidated Financial Statements. (Loss) income from discontinued operations, net of income taxes, decreased $1.3 million (after-tax) due to a correction of an error related to a foreign currency translation adjustment for the Company’s Canadian operations that were sold as part of the NRB divestiture. The Company realized during the third quarter of 2010 that this adjustment should have been written-off in the fourth quarter of 2009 and recognized as part of the loss on the sale of the NRB operations. Management of the Company concluded the effect of the third quarter adjustment was immaterial to the Company’s 2009 and third-quarter 2010 financial statements, as well as to the full-year 2010 financial statements.

As of September 30, 2010, there were no assets or liabilities remaining from the divestiture of the NRB operations.

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, 2010:

		Fair Value at September 30, 2010
		Total				Level 1				Level 2				Level 3
Assets:
Cash and cash equivalents		$	899.8			$	899.8			$	-			$	-
Short-term investments			30.0				30.0				-				-
Foreign currency hedges			1.6				-				1.6				-
Total Assets		$	931.4			$	929.8			$	1.6			$	-
Liabilities:
Foreign currency hedges		$	4.9			$	-			$	4.9			$	-
Total Liabilities		$	4.9			$	-			$	4.9			$	-

Cash and cash equivalents are highly liquid investments with maturities of three month or less when purchased and are valued at redemption value. Short-term investments are investments with maturities between four months and one year and are valued at amortized cost. The Company uses publicly available foreign currency forward and spot rates to measure the fair value of its foreign currency forward contracts.

The following table presents the fair value hierarchy for those assets measured at fair value on a nonrecurring basis for the nine months ended September 30, 2010:

		Fair Value at September 30, 2010																Total
		Total				Level 1				Level 2				Level 3				Losses
Assets:
Long-lived assets held and used		$	0.7			$	-			$	-			$	0.7			$	(2.0	)
Total Assets		$	0.7			$	-			$	-			$	0.7			$	(2.0	)

The following table presents the long-lived assets that have been adjusted to their fair value for the first nine months of 2010:

		Carrying				Fair Value
		Value				Adjustment				Fair Value
Long-lived assets held and used:
Machinery and equipment at Brazil subsidiary		$	1.2			$	(1.1	)		$	0.1
Other fixed assets			1.5				(0.9	)			0.6
Total long-lived assets held and used		$	2.7			$	(2.0	)		$	0.7

During the third quarter of 2010, machinery and equipment associated with the manufacturing facility in Sao Paulo, Brazil, with a carrying value of $1.2 million were written down to their fair value of $0.1 million, resulting in an impairment charge of $1.1 million. During 2010, other fixed assets at various locations with a carrying value of $1.5 million were written down to their fair value of $0.6 million, resulting in the recognition of impairment charges of $0.9 million. The fair value for these assets was based on the price that would be received in a current transaction to sell the assets on a standalone basis, considering the age and physical attributes of the equipment compared to the cost of similar used machinery and equipment, as these assets have been idled.

Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable, commercial paper, short-term borrowings and accounts payable are a reasonable estimate of their fair value due to the short-term nature of these instruments. The fair value of the Company’s long-term fixed-rate debt, based on quoted market prices, was $488.8 million and $440.1 million at September 30, 2010 and December 31, 2009, respectively. The carrying value of this debt was $443.2 million and $430.6 million at September 30, 2010 and December 31, 2009, respectively.

Note 16 – Derivative Instruments and Hedging Activities

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are commodity price risk, foreign currency exchange rate risk and interest rate risk. Forward contracts on various commodities are entered into to manage the price risk associated with forecasted purchases of natural gas used in the Company’s manufacturing process. Forward contracts on various foreign currencies are entered into to manage the foreign currency exchange rate risk on forecasted revenue denominated in foreign currencies. Other forward exchange contracts on various foreign currencies are entered into to manage the foreign currency exchange rate risk associated with certain of the Company’s commitments denominated in foreign currencies. Interest rate swaps are entered into to manage interest rate risk associated with the Company’s fixed and floating-rate borrowings.

The Company designates certain foreign currency forward contracts as cash flow hedges of forecasted revenues, and certain interest rate hedges as fair value hedges of fixed-rate borrowings. The majority of the Company’s natural gas forward contracts are not subject to any hedge designation as they are considered within the normal purchases exemption.

The Company does not purchase or hold any derivative financial instruments for trading purposes.

As of September 30, 2010, the Company had $214.5 million of outstanding foreign currency forward contracts at notional value. The total notional value of foreign currency hedges as of December 31, 2009 was $248.0 million.

Cash Flow Hedging Strategy

For certain derivative instruments that are designated as and qualify as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion), or hedge components excluded from the assessment of effectiveness, are recognized in the Consolidated Statement of Income during the current period.

To protect against a reduction in the value of forecasted foreign currency cash flows resulting from export sales over the next year, the Company has instituted a foreign currency cash flow hedging program. The Company hedges portions of its forecasted intra-group revenue or expense denominated in foreign currencies with forward contracts. When the dollar strengthens significantly against the foreign currencies, the decline in the present value of future foreign currency revenue is offset by gains in the fair value of the forward contracts designated as hedges. Conversely, when the dollar weakens, the increase in the present value of future foreign currency cash flows is offset by losses in the fair value of the forward contracts.

Fair Value Hedging Strategy

For derivative instruments that are designated and qualify as fair value hedges (i.e., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in the same line item associated with the hedged item (i.e., in “interest expense” when the hedged item is fixed-rate debt).

The following table presents the fair value and location of all assets and liabilities associated with the Company’s hedging instruments within the Consolidated Balance Sheet:

				Asset Derivatives								Liability Derivatives
				Fair Value at								Fair Value at
		Balance Sheet		Sept. 30,				Dec. 31,				Sept. 30,				Dec. 31,
		Location		2010				2009				2010				2009
Derivatives designated as hedging instruments
Foreign currency forward contracts		Other non-current liabilities		$	0.8			$	0.7			$	3.3			$	1.9
Derivatives not designated as hedging instruments
Foreign currency forward contracts		Other non-current assets/liabilities		$	0.8			$	2.0			$	1.6			$	4.0
Total derivatives				$	1.6			$	2.7			$	4.9			$	5.9
The following tables present the impact of derivative instruments and their location within the unaudited Consolidated Statement of Income:
				Amount of gain or (loss)								Amount of gain or (loss)
				recognized in income on								recognized in income on
				derivative								derivative
		Location of gain or (loss)		Three Months Ended								Nine Months Ended
Derivatives in Fair Value		recognized in income on		September 30,								September 30,
Hedging Relationships		derivative		2010				2009				2010				2009
Interest rate swaps		Interest expense		$	-			$	(0.7	)		$	-			$	(1.3	)
Natural gas forward contracts		Other (expense) income, net			-				-				-				(1.6	)
Total				$	-			$	(0.7	)		$	-			$	(2.9	)
				Amount of gain or (loss)								Amount of gain or (loss)
				recognized in income on								recognized in income on
				derivative								derivative
		Location of gain or (loss)		Three Months Ended								Nine Months Ended
Hedge items in Fair		recognized in income on		September 30,								September 30,
Value Hedge Relationships		derivative		2010				2009				2010				2009
Fixed-rate debt		Interest expense		$	-			$	0.7			$	-			$	1.3
Natural gas		Other (expense) income, net			-				-				-				1.2
Total				$	-			$	0.7			$	-			$	2.5