CANTON, Ohio -- The Timken Co. has reported sales of $1.1 billion in the third quarter of 2010, an increase of 39 percent over the same period a year ago. The company said this sales increase reflects stronger global demand across most of the company's end-markets and higher material surcharges.

The company generated income from continuing operations, net of non-controlling interest, in the third quarter of $71.4 million, or 73 cents per diluted share, compared with last year's third-quarter loss of $19.4 million, or 20 cents per share. Excluding special items, the company posted $78.1 million in income from continuing operations, net of non-controlling interest, or 80 cents per diluted share, compared with income of $7.4 million, or 8 cents per diluted share, a year ago.

The increase in third-quarter earnings reflects the combined effects of stronger demand, greater manufacturing efficiencies, surcharges and pricing, partially offset by higher material and selling and administrative costs, the company said.

"The company's strong profitability and cash flow demonstrate a structural improvement in our level of performance," said James Griffith, Timken president and CEO. "We are growing the company in global markets where we create value, and are well positioned to accelerate that growth."

As of Sept. 30, total debt was $493 million, or 21.6 percent of capital. The company had cash of $900 million, or $407 million in excess of total debt, compared with a net cash position of $243 million as of Dec. 31, 2009. The increase in net cash reflects strong cash flow from earnings, partially offset by pension contributions and working-capital requirements.

For the first nine months of 2010, sales were $3 billion, an increase of 26 percent from the same period in 2009. Income from the company's continuing operations, net of non-controlling interest, for the first nine months of 2010 was $181.1 million, or $1.86 per diluted share, compared with a loss of $53.9 million, or 55 cents per share, a year ago. Special items, net of tax, in the first nine months of 2010 totaled $34.4 million of expense compared with $75.2 million of expense in the prior-year period. Special items in 2010 primarily related to a one-time non-cash charge of $21.6 million to record the deferred tax impact of U.S. health care legislation enacted in the first quarter and expense for severance and manufacturing rationalization.

Excluding special items, income from the company's continuing operations, net of non-controlling interest, was $215.5 million, or $2.22 per diluted share, in the first nine months of 2010, versus income of $21.3 million, or $0.22 per diluted share, in the prior-year period. During the first nine months of 2010, the company benefited from increased demand, improved manufacturing performance and cost-reduction initiatives, partially offset by higher selling and administrative costs.

For the full-year 2010, Timken anticipates an increase in sales of approximately 25 to 30 percent over 2009, driven primarily by stronger demand in the Steel and Mobile Industries segments.

The company is raising its 2010 full-year earnings estimate, excluding special items, to a range of $2.80 to $2.90 per diluted share, compared with its prior estimate of $2.40 to $2.60 per diluted share. The company expects to generate cash from operating activities of approximately $400 million and free cash flow (after capital expenditures and dividends) of approximately $250 million for the full year 2010.