MANAgEMENT’s dIsCussION ANd ANAlYsIs OF FINANCIAl CONdITION ANd rEsulTs OF OPErATIONs 17 THE TIMKEN COMPANY Simultaneously  the Company works to optimize its existing business with specific initiatives aimed at transformation and execution.  This includes diversifying the overall portfolio of businesses and products to create further value and profitability  which can include  addressing or repositioning underperforming product lines and segments  revising market sector or geographic strategies and divesting  non-strategic assets. The Company drives execution by embracing a continuous improvement culture that is charged with lowering  costs  eliminating waste  increasing efficiency  encouraging organizational agility and building greater brand equity. The Company’s strategy balances corporate aspirations for sustained growth with a determination to optimize the Company’s existing  business portfolio  thereby generating strong profits and cash flows. Timken pursues its growth strategy through differentiation  and expansion. The Timken Company (Timken or the Company) designs  manufactures  sells and services highly-engineered anti-friction bearings and  assemblies  high-quality alloy steels and mechanical power transmission systems  as well as provides a broad spectrum of related  products and services. The Company has four operating segments: (1) Mobile Industries; (2) Process Industries; (3) Aerospace and  Defense; and (4) Steel. The following is a description of the Company’s operating segments: (Dollars in millions  except per share data) ITEM 7. MANAgEMENT’s dIsCussION ANd ANAlYsIs OF FINANCIAl CONdITION ANd rEsulTs OF OPErATIONs OvErvIEw •  Mobile Industries  provides bearings  mechanical power transmission components  drive- and roller-chains  augers and related  products and services to original equipment manufacturers and suppliers of agricultural  construction and mining equipment   passenger cars  light trucks  medium and heavy-duty trucks  rail cars and locomotives  as well as to automotive and heavy truck  aftermarket distributors. •  Process Industries  provides bearings  mechanical power transmission components  industrial chains  and related products and  services to original equipment manufacturers and suppliers of power transmission  energy and heavy industries machinery and  equipment. This includes rolling mills  cement and aggregate processing equipment  paper mills  sawmills  printing presses   cranes  hoists  drawbridges  wind energy turbines  gear drives  drilling equipment  coal conveyors  coal crushers  marine and food  processing equipment. This segment also serves the aftermarket through its global network of authorized industrial distributors. •  aerospace and Defense  provides bearings  helicopter transmission systems  rotor head assemblies  turbine engine components   gears and other precision flight-critical components for commercial and military aviation applications and provides aftermarket  services  including repair and overhaul of engines  transmissions and fuel controls  as well as aerospace bearing repair and  component reconditioning. Additionally  this segment manufactures precision bearings  higher-level assemblies and sensors for  manufacturers of health and positioning control equipment. •  steel  produces more than 450 grades of carbon and alloy steel  which are sold as ingots  bars and tubes in a variety of chemistries   lengths and finishes. This segment’s metallurgical expertise and operational capabilities result in customized solutions for the  automotive  industrial and energy sectors. Timken ®  specialty steels feature prominently in a wide variety of end products including  oil country drill pipe  bits and collars  gears  hubs  axles  crankshafts and connecting rods  bearing races and rolling elements  and  bushings  fuel injectors and wind energy shafts. • For differentiation  the Company leverages its technological capabilities to enhance existing products and services and to create  new products that capture value for its customers. The Company recently broadened its product offering by expanding a line of  spherical  cylindrical and housed bearings  developing new products and services – including the new Ecoturn ®  seal for the railroad  industry – and introducing numerous new custom-developed grades of specialty alloy steel. • Regarding expansion  the Company’s strategy is to grow in attractive market sectors  with particular emphasis on those industrial  markets that value the reliability offered by the Company’s products and create significant aftermarket demand  thereby providing  a lifetime of opportunity in both product sales and services. The Company’s strategy also encompasses expanding its portfolio in  new geographic spaces with an emphasis in Asia. The Company’s acquisition strategy is directed at complementing its existing  portfolio and expanding the Company’s market position globally.