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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
tkr-20210930_g1.jpg
FORM 10-Q  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
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)
 
Ohio34-0577130
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
4500 Mount Pleasant Street NW
North CantonOhio 44720-5450
(Address of principal executive offices) (Zip Code)
234.262.3000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Shares, without par valueTKRThe New York Stock Exchange
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       No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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      No  
Indicate the number of shares outstanding of each of the issuer's classes of common shares, as of the latest practicable date.
Class
Outstanding at September 30, 2021
Common Shares, without par value75,859,536 shares


THE TIMKEN COMPANY
INDEX TO FORM 10-Q REPORT



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
THE TIMKEN COMPANY AND SUBSIDIARIES

Consolidated Statements of Income
(Unaudited)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2021202020212020
(Dollars in millions, except per share data)
Net sales$1,037.3 $894.6 $3,125.6 $2,621.5 
Cost of products sold769.4 630.9 2,256.2 1,848.6 
Gross Profit267.9 263.7 869.4 772.9 
Selling, general and administrative expenses140.7 132.7 434.2 398.1 
Impairment and restructuring charges2.9 12.0 8.2 18.7 
Operating Income124.3 119.0 427.0 356.1 
Interest expense(14.8)(16.3)(45.0)(52.3)
Interest income0.5 0.9 1.7 3.0 
Non-service pension and other postretirement income 0.5 15.3 5.9 13.4 
Other income (expense), net1.5 (1.0)0.3 1.1 
Income Before Income Taxes112.0 117.9 389.9 321.3 
Provision for income taxes20.4 26.6 75.1 84.2 
Net Income91.6 91.3 314.8 237.1 
Less: Net income attributable to noncontrolling interest3.5 2.5 8.6 5.7 
Net Income Attributable to The Timken Company$88.1 $88.8 $306.2 $231.4 
Net Income per Common Share Attributable to The Timken Company
  Common Shareholders
Basic earnings per share$1.16 $1.18 $4.03 $3.07 
Diluted earnings per share$1.14 $1.16 $3.97 $3.04 
See accompanying Notes to the Consolidated Financial Statements.


Consolidated Statements of Comprehensive Income
(Unaudited) 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2021202020212020
(Dollars in millions)
Net Income$91.6 $91.3 $314.8 $237.1 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments(32.9)63.5 (54.1)9.2 
Pension and postretirement liability adjustments(1.5)(1.2)(4.8)(4.0)
Change in fair value of marketable securities (0.1)  
Change in fair value of derivative financial instruments2.5 (1.8)4.5 (0.2)
Other comprehensive (loss) income, net of tax(31.9)60.4 (54.4)5.0 
Comprehensive Income, net of tax59.7 151.7 260.4 242.1 
Less: comprehensive income (loss) attributable to noncontrolling interest3.7 3.0 7.8 (0.1)
Comprehensive Income Attributable to The Timken Company$56.0 $148.7 $252.6 $242.2 
See accompanying Notes to the Consolidated Financial Statements.
1

Consolidated Balance Sheets
(Unaudited)
(Dollars in millions)September 30,
2021
December 31,
2020
ASSETS
Current Assets
Cash and cash equivalents$261.8 $320.3 
Restricted cash0.8 0.8 
Accounts receivable, less allowances (2021 – $17.5 million; 2020 – $16.5 million)
700.2 581.1 
Unbilled receivables85.7 110.9 
Inventories, net974.1 841.3 
Deferred charges and prepaid expenses31.0 39.9 
Other current assets141.8 106.0 
Total Current Assets2,195.4 2,000.3 
Property, Plant and Equipment, net1,035.3 1,035.6 
Other Assets
Goodwill1,029.4 1,047.6 
Other intangible assets685.0 741.4 
Operating lease assets109.8 118.2 
Non-current pension assets4.0 2.0 
Deferred income taxes66.9 77.0 
Other non-current assets19.8 19.5 
Total Other Assets1,914.9 2,005.7 
Total Assets$5,145.6 $5,041.6 
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt$27.9 $119.8 
Current portion of long-term debt11.1 10.9 
Short-term operating lease liabilities25.7 27.2 
Accounts payable, trade406.2 351.4 
Salaries, wages and benefits134.9 135.7 
Income taxes payable25.6 16.1 
Other current liabilities214.6 186.9 
Total Current Liabilities846.0 848.0 
Non-Current Liabilities
Long-term debt1,417.0 1,433.9 
Accrued pension benefits162.2 163.0 
Accrued postretirement benefits50.6 41.3 
Long-term operating lease liabilities68.5 75.5 
Deferred income taxes130.6 148.7 
Other non-current liabilities94.3 106.0 
Total Non-Current Liabilities1,923.2 1,968.4 
Shareholders’ Equity
Class I and II Serial Preferred Stock, without par value:
Authorized – 10,000,000 shares each class, none issued
  
Common shares, without par value:
Authorized – 200,000,000 shares
Issued (including shares in treasury) (2021 – 77,070,597 shares; 2020 – 75,834,668 shares)
Stated capital40.7 40.7 
Other paid-in capital781.7 740.7 
Retained earnings1,576.2 1,339.5 
Accumulated other comprehensive (loss) income(12.3)41.3 
Treasury shares at cost (2021 – 1,211,061 shares; 2020 – 158,836 shares)
(89.4)(9.3)
Total Shareholders’ Equity2,296.9 2,152.9 
Noncontrolling Interest79.5 72.3 
Total Equity2,376.4 2,225.2 
Total Liabilities and Equity$5,145.6 $5,041.6 
See accompanying Notes to the Consolidated Financial Statements.
2

Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
September 30,
 20212020
(Dollars in millions)
CASH PROVIDED (USED)
Operating Activities
Net income$314.8 $237.1 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization126.5 125.2 
Impairment charges4.5 0.1 
Loss on sale of assets1.0 1.7 
Acquisition-related gain(0.9) 
Deferred income tax benefit(6.4)(6.7)
Stock-based compensation expense15.6 19.2 
Pension and other postretirement benefit expense (income)2.9 (3.9)
Pension and other postretirement benefit contributions and payments(18.2)(12.9)
Changes in operating assets and liabilities:
Accounts receivable(127.5)(27.6)
Unbilled receivables25.1 (11.9)
Inventories(144.2)47.9 
Accounts payable, trade60.5 2.8 
Other accrued expenses50.2 49.4 
Income taxes(0.3)12.4 
Other, net(19.0)24.4 
Net Cash Provided by Operating Activities284.6 457.2 
Investing Activities
Capital expenditures(103.6)(85.7)
Acquisitions, net of cash received(7.2)(6.7)
Investments in short-term marketable securities, net(5.4)(10.4)
Other, net0.3 1.4 
Net Cash Used in Investing Activities(115.9)(101.4)
Financing Activities
Cash dividends paid to shareholders(69.5)(65.0)
Purchase of treasury shares(56.6)(42.3)
Proceeds from exercise of stock options25.4 18.2 
Payments related to tax withholding for stock-based compensation(23.5)(12.0)
Borrowings on accounts receivable facility186.1 10.0 
Payments on accounts receivable facility(244.1)(110.0)
Proceeds from long-term debt215.0 550.0 
Payments on long-term debt(224.4)(635.2)
Deferred financing costs (1.6)
Short-term debt activity, net(30.3)46.0 
Noncontrolling interest dividends paid(0.5)(15.8)
Net Cash Used in Financing Activities(222.4)(257.7)
Effect of exchange rate changes on cash(4.8)(0.3)
(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash(58.5)97.8 
Cash, cash equivalents and restricted cash at beginning of year321.1 216.2 
Cash, Cash Equivalents and Restricted Cash at End of Period$262.6 $314.0 
See accompanying Notes to the Consolidated Financial Statements.
3

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in millions, except per share data)
Note 1 - Basis of Presentation
The accompanying Consolidated Financial Statements (unaudited) for The Timken Company (the "Company" or "Timken") 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 accompanying Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Note 2 - Significant Accounting Policies
The Company's significant accounting policies are detailed in "Note 1 - Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2020.

Recent Accounting Pronouncements:

New Accounting Guidance Adopted:
In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, “Income Taxes (ASC 740) – Simplifying the Accounting for Income Taxes,” which is intended to reduce complexity in the accounting for income taxes while maintaining or improving the usefulness of information provided to financial statement users. The guidance amends certain existing provisions under ASC 740 to address a number of distinct items. This standard is effective for public companies in fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted ASU 2019-12 effective January 1, 2021, and the impact of the adoption was not material to the Company's results of operations and financial condition.

New Accounting Guidance Issued and Not Yet Adopted:
In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This guidance is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022. The Company is currently assessing which of its various contracts will require an update for a new reference rate and will determine the timing for implementation of this guidance after completing that analysis.


4

Note 3 - Acquisitions
On August 20, 2021, the Company completed the acquisition of the assets of Intelligent Machine Solutions ("iMS"), a manufacturer of industrial robotics and automation solutions, with annual sales of approximately $6.0 million. iMS is headquartered in Norton Shores, Michigan. The purchase price due at closing for this acquisition was $7.4 million, subject to customary post-closing adjustments. In addition, the seller has the opportunity to earn $3.0 million of contingent performance-based consideration between January 1, 2022 and June 30, 2024. This additional component will be accounted for as compensation expense over that period because the payment is contingent in part upon the continued employment of a former executive of the seller. Based on markets and customers served, results for iMS are primarily reported in the Process Industries segment.

The following table presents the purchase price allocation at fair value for the iMS acquisition:
Initial Purchase Price Allocation
Total assets acquired$9.9 
Total liabilities assumed2.5 
Net assets acquired$7.4 
In determining the fair value of the amounts above, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being valued. The estimation of fair value required significant judgment related to future net cash flows, discount rates, competitive trends, market comparisons and other factors. Inputs were generally determined by taking into account independent appraisals and historical data, supplemented by current and anticipated market conditions.

The amounts in the table above represent the preliminary purchase price allocation for iMS. This purchase price allocation is based on preliminary information and is subject to change as additional information concerning final asset and liability valuations are obtained. As of September 30, 2021, no elements of the purchase price allocation have been finalized. During the applicable measurement period, the Company will adjust assets and liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date. The above purchase price allocation is subject to change as additional information concerning final asset and liability valuations is obtained.

On November 30, 2020, the Company completed the acquisition of the assets of Aurora Bearing Company ("Aurora"). With annual sales of approximately $30 million, Aurora serves a diverse range of industrial sectors, including aerospace and defense, racing, off-highway equipment and packaging. Aurora is headquartered in Montgomery, Illinois. The total purchase price for this acquisition was $17.2 million, including a post-closing net working capital adjustment. Based on markets and customers served, results for Aurora are reported in both the Mobile Industries segment and the Process Industries segment.

5

Note 3 - Acquisitions (continued)
The following table presents the purchase price allocation at fair value, net of cash acquired, for the Aurora acquisition as of September 30, 2021:
Initial Purchase
Price Allocation
AdjustmentsFinal Purchase
Price Allocation
Assets:
Accounts receivable$2.7 $ $2.7 
Inventories16.4 0.4 16.8 
Other current assets0.1  0.1 
Property, plant and equipment10.9  10.9 
   Total assets acquired$30.1 $0.4 $30.5 
Liabilities:
Accounts payable, trade$0.8 $ $0.8 
Other current liabilities0.9 (0.4)0.5 
   Total liabilities assumed1.7 (0.4)1.3 
   Net assets acquired$28.4 $0.8 $29.2 
As a result of applying the accounting rules on business combinations, the Company recognized a bargain purchase gain of $12.0 million on the acquisition of Aurora. The Company recognized $0.9 million of the bargain purchase price gain during the first nine months of 2021 primarily due to the net working capital adjustment. The Company believes it was able to negotiate a bargain purchase price for the business due to some historic operational performance challenges, as well as the seller's desire to exit the business in an expedited manner in an exclusive process with the Company.




6

Note 4 - Revenue
The following table presents details deemed most relevant to the users of the financial statements about total revenue for the three and nine months ended September 30, 2021 and 2020, respectively:
Three Months EndedThree Months Ended
September 30, 2021September 30, 2020
MobileProcessTotalMobileProcessTotal
United States$235.3 $194.2 $429.5 $220.7 $163.2 $383.9 
Americas, excluding the United States54.9 47.4 102.3 45.1 36.0 81.1 
Europe / Middle East / Africa118.2 137.5 255.7 92.7 114.3 207.0 
China27.7 125.9 153.6 27.6 117.8 145.4 
Asia-Pacific, excluding China51.2 45.0 96.2 42.5 34.7 77.2 
Net sales$487.3 $550.0 $1,037.3 $428.6 $466.0 $894.6 
Nine Months EndedNine Months Ended
September 30, 2021September 30, 2020
MobileProcessTotalMobileProcessTotal
United States$715.6 $582.0 $1,297.6 $645.5 $529.5 $1,175.0 
Americas, excluding the United States156.0 139.7 295.7 120.7 100.3 221.0 
Europe / Middle East / Africa369.6 401.9 771.5 280.2 342.8 623.0 
China94.3 388.6 482.9 75.8 320.8 396.6 
Asia-Pacific, excluding China150.5 127.4 277.9 115.7 90.2 205.9 
Net sales$1,486.0 $1,639.6 $3,125.6 $1,237.9 $1,383.6 $2,621.5 
When reviewing revenue by sales channel, the Company separates net sales to original equipment manufacturers ("OEMs") from sales to distributors and end users. The following table presents the percent of revenue by sales channel for the nine months ended September 30, 2021 and 2020, respectively:
Nine Months Ended
Revenue by sales channelSeptember 30, 2021September 30, 2020
Original equipment manufacturers61%60%
Distribution/end users39%40%
In addition to disaggregating revenue by segment, geography and by sales channel as shown above, the Company believes information about the timing of transfer of goods or services, type of customer and distinguishing service revenue from product sales is also relevant. During the nine months ended September 30, 2021 and September 30, 2020, approximately 8% and 12%, respectively, of total net sales were recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized as of a point in time. Approximately 4% and 5% of total net sales represented service revenue during each of the nine months ended September 30, 2021 and September 30, 2020, respectively. Finally, the United States ("U.S.") government or its contractors represented approximately 7% and 9% of total net sales during the nine months ended September 30, 2021 and September 30, 2020, respectively.

Remaining Performance Obligations:
Remaining performance obligations represent the transaction price of orders meeting the definition of a contract for which work has not been performed and excludes unexercised contract options. Performance obligations having a duration of more than one year are concentrated in contracts for certain products and services provided to the U.S. government or its contractors. The aggregate amount of the transaction price allocated to remaining performance obligations for such contracts with a duration of more than one year was approximately $417.8 million at September 30, 2021.


7

Note 4 - Revenue (continued)
Unbilled Receivables:
The following table contains a rollforward of unbilled receivables for the nine months ended September 30, 2021 and the twelve months ended December 31, 2020:
September 30,
2021
December 31,
2020
Beginning balance, January 1$110.9 $129.2 
Additional unbilled revenue recognized287.6 393.6 
Less: amounts billed to customers(312.8)(411.9)
Ending balance$85.7 $110.9 
There were no impairment losses recorded on unbilled receivables for the nine months ended September 30, 2021 and September 30, 2020, respectively.
Note 5 - Segment Information
The primary measurement used by management to measure the financial performance of each segment is earnings before interest, taxes, depreciation and amortization ("EBITDA").
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2021202020212020
Net sales:
Mobile Industries$487.3 $428.6 $1,486.0 $1,237.9 
Process Industries550.0 466.0 1,639.6 1,383.6 
Net sales$1,037.3 $894.6 $3,125.6 $2,621.5 
Segment EBITDA:
Mobile Industries$53.2 $64.0 $200.1 $177.9 
Process Industries129.7 109.2 401.9 343.0 
Total EBITDA, for reportable segments$182.9 $173.2 $602.0 $520.9 
Unallocated corporate expense(11.7)(10.6)(34.9)(28.2)
Corporate pension and other postretirement benefit
   related (expense) income (1)
(3.9)11.9 (8.3)3.1 
Acquisition-related gain (2)
0.3  0.9  
Depreciation and amortization(41.3)(41.2)(126.5)(125.2)
Interest expense(14.8)(16.3)(45.0)(52.3)
Interest income0.5 0.9 1.7 3.0 
Income before income taxes$112.0 $117.9 $389.9 $321.3 
(1) Corporate pension and other postretirement benefit related (expense) income represents actuarial (losses) and gains that resulted from the remeasurement of pension and other postretirement plan assets and obligations as a result of changes in assumptions or experience.
(2) The acquisition-related gain represents measurement period adjustments to the bargain purchase gain on the acquisition of Aurora, which closed on November 30, 2020. See Note 3 - Acquisitions for additional information.
8

Note 6 - Income Taxes
The Company's provision for income taxes in interim periods is computed by applying the estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period(s) in which they occur.
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2021202020212020
Provision for income taxes$20.4 $26.6 $75.1 $84.2 
Effective tax rate18.2 %22.6 %19.3 %26.2 %
Income tax expense for the three and nine months ended September 30, 2021 was calculated using forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the release of accruals for uncertain tax positions related to the settlement of the 2017 and 2018 U.S. federal tax years and adjustments in other foreign jurisdictions, and favorable U.S. permanent book-tax differences. These items were partially offset by the unfavorable impact of earnings in foreign jurisdictions with higher tax rates.

The effective tax rate of 18.2% for the three months ended September 30, 2021 was lower than the rate for the three months ended September 30, 2020 primarily due to the release of accruals for uncertain tax positions and favorable U.S. permanent book-tax differences, including the new elective Global Intangible Low Tax Income ("GILTI") high tax exemption rules. These impacts were partially offset by a greater percentage of earnings in higher tax rate jurisdictions.

The effective tax rate of 19.3% for the nine months ended September 30, 2021 was lower than the rate for the nine months ended September 30, 2020 primarily due to the release of accruals for uncertain tax positions and favorable U.S. permanent book-tax differences, including the tax impact from stock-based compensation awards and the new elective GILTI high tax exemption rules. These impacts were partially offset by a greater percentage of earnings in higher tax rate jurisdictions.
9

Note 7 - 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, 2021 and 2020, respectively:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Numerator:
Net income attributable to The Timken Company$88.1 $88.8 $306.2 $231.4 
Less: undistributed earnings allocated to nonvested stock    
Net income available to common shareholders for basic
   and diluted earnings per share
$88.1 $88.8 $306.2 $231.4 
Denominator:
Weighted average number of shares outstanding - basic76,068,582 75,223,462 75,980,355 75,288,567 
Effect of dilutive securities:
Stock options and awards - based on the treasury
   stock method
955,391 1,062,674 1,177,259 843,353 
Weighted average number of shares outstanding assuming
   dilution of stock options and awards
77,023,973 76,286,136 77,157,614 76,131,920 
Basic earnings per share$1.16 $1.18 $4.03 $3.07 
Diluted earnings per share $1.14 $1.16 $3.97 $3.04 
The dilutive effect of stock options and awards includes all outstanding stock options and awards except stock options that are considered antidilutive. Stock options are antidilutive when the exercise price exceeds the average market price of the Company’s common shares during the periods presented. The antidilutive stock options outstanding during the three months ended September 30, 2021 and 2020 were zero. The antidilutive stock options outstanding during the nine months ended September 30, 2021 and 2020 were zero and 902,169, respectively.
Note 8 - Inventories
The components of inventories at September 30, 2021 and December 31, 2020 were as follows:
September 30,
2021
December 31,
2020
Manufacturing supplies$36.7 $34.8 
Raw materials123.1 99.5 
Work in process383.6 320.3 
Finished products491.9 441.2 
     Subtotal1,035.3 895.8 
Allowance for obsolete and surplus inventory(61.2)(54.5)
     Total Inventories, net$974.1 $841.3 
Inventories are valued at net realizable value, with approximately 60% valued on the first-in, first-out ("FIFO") method and the remaining 40% valued on the last-in, first-out ("LIFO") method. The majority of the Company's domestic inventories are valued on the LIFO method, and all the Company's international inventories are valued on the FIFO method.

The LIFO reserve at September 30, 2021 and December 31, 2020 was $191.0 million and $172.1 million, respectively. An actual valuation of the inventory under the 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.
10

Note 9 - Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill for the nine months ended September 30, 2021 were as follows:
Mobile
Industries
Process
Industries
Total
Beginning balance$384.6 $663.0 $1,047.6 
Acquisitions 5.8 5.8 
Foreign currency translation adjustments and other changes(10.9)(13.1)(24.0)
Ending balance$373.7 $655.7 $1,029.4 
The acquisition of iMS added $5.8 million of goodwill. The goodwill for iMS is expected to be 100% tax deductible.
The following table displays intangible assets as of September 30, 2021 and December 31, 2020:
 Balance at September 30, 2021Balance at December 31, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Intangible assets
subject to amortization:
Customer relationships$521.2 $(183.2)$338.0 $532.2 $(161.9)$370.3 
Technology and know-how272.3 (83.0)189.3 277.2 (72.0)205.2 
Trade names14.3 (9.4)4.9 14.2 (8.8)5.4 
Capitalized software278.5 (259.6)18.9 276.4 (254.6)21.8 
Other4.8 (3.9)0.9 4.7 (3.7)1.0 
$1,091.1 $(539.1)$552.0 $1,104.7 $(501.0)$603.7 
Intangible assets not subject to amortization:
Trade names$124.3 $124.3 $129.0 $129.0 
FAA air agency certificates8.7 8.7 8.7 8.7 
$133.0 $133.0 $137.7 $137.7 
Total intangible assets$1,224.1 $(539.1)$685.0 $1,242.4 $(501.0)$741.4 
Amortization expense for intangible assets was $41.7 million and $42.1 million for the nine months ended September 30, 2021 and 2020, respectively. Amortization expense for intangible assets is projected to be $54.9 million in 2021; $49.1 million in 2022; $46.0 million in 2023; $43.9 million in 2024; and $42.8 million in 2025. Substantially all amortization expense for intangible assets is recorded in Cost of product sold on the Consolidated Statement of Income.
11

Note 10 - Financing Arrangements
Short-term debt at September 30, 2021 and December 31, 2020 was as follows:
September 30,
2021
December 31,
2020
Variable-rate Accounts Receivable Facility with an interest rate of 0.96% at December 31, 2020
$ $58.0 
Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 0.50% to 1.10% at September 30, 2021 and 0.24% to 1.75% at December 31, 2020
27.9 61.8 
Short-term debt$27.9 $119.8 
The Company has a $100 million Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility"), which matures on November 30, 2021. The Company intends to renew the Accounts Receivable Facility prior to its maturity. Under the terms of the Accounts Receivable Facility, 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 that are funded through a vehicle that issues commercial paper in the short-term market. Borrowings under the Accounts Receivable Facility may be limited to certain borrowing base limitations; however, availability under the Accounts Receivable Facility was not reduced by any such borrowing base limitations at September 30, 2021. As of September 30, 2021, there were no outstanding borrowings under the Accounts Receivable Facility. The cost of this facility, which is the prevailing commercial paper rate plus facility fees, is considered a financing cost and is included in interest expense in the Consolidated Statements of Income.

The lines of credit for certain of the Company's foreign subsidiaries provide for short-term borrowings up to $287.4 million in the aggregate. Most of these lines of credit are uncommitted. At September 30, 2021, the Company’s foreign subsidiaries had borrowings outstanding of $27.9 million and bank guarantees of $0.5 million, which reduced the aggregate availability under these facilities to $259.0 million.

Long-term debt at September 30, 2021 and December 31, 2020 was as follows:
September 30,
2021
December 31,
2020
Variable-rate Senior Credit Facility with an average interest rate on U.S. Dollar of 1.12% and Euro of 1.05% at September 30, 2021 and U.S. Dollar of 2.01% and Euro of 1.48% at December 31, 2020
$9.2 $9.7 
Variable-rate Term Loan(1), maturing on September 11, 2023, with an interest rate of 1.21% at September 30, 2021 and 1.63% at December 31, 2020
323.2 329.6 
Fixed-rate Senior Unsecured Notes(1), maturing on September 1, 2024, with an interest rate of 3.875%
349.4 349.0 
Fixed-rate Euro Senior Unsecured Notes(1), maturing on September 7, 2027, with an interest rate of 2.02%
173.4 182.9 
Fixed-rate Senior Unsecured Notes(1), maturing on December 15, 2028, with an interest rate of 4.50%
396.8 396.5 
Fixed-rate Medium-Term Notes, Series A(1), maturing at various dates through May 2028, with interest rates ranging from 6.74% to 7.76%
154.7 154.7 
Fixed-rate Bank Loan, maturing on June 30, 2033, with an interest rate of 2.15%
16.8 18.8 
Other4.6 3.6 
Total debt$1,428.1 $