- Legislation Continues to Support Energy Efficient Products
BELOIT, Wis., May 6 /PRNewswire-FirstCall/ -- Regal Beloit
Corporation (NYSE:RBC) today reported financial results for the
first quarter ended March 28, 2009. Net sales of $443.3 million
decreased 17.4% as compared to the $536.3 million reported for the
first quarter of 2008. Diluted earnings per share were $0.39 as
compared to $0.95 for the first quarter of 2008. (Note: prior year
financial results have been restated to reflect the impact of the
change in accounting for the Company's convertible senior
subordinated notes as prescribed in FASB Staff Position APB 14-1:
Accounting for Convertible Debt Instruments That May Be Settled in
Cash upon Conversion (Including Partial Cash Settlement.)) "While
the first quarter proved to be as challenging as we anticipated, I
am pleased with the response of our associates in delivering
results consistent with our expectations. We have and will continue
to take advantage of all available business opportunities and
reduce costs throughout our Company while continuing to invest in
high efficiency products and lean processes. We believe these
actions and our focus on strong fundamentals will position us well
to seize the opportunities that we expect will arise as the
business environment begins to improve," commented Henry Knueppel,
Chairman and Chief Executive Officer. Sales for the first quarter
of 2009 were $443.3 million, a 17.4% decrease over the $536.3
million reported for the first quarter of 2008. First quarter 2009
sales included $29.7 million of sales related to the Hwada and
Dutchi businesses acquired in 2008 and the Customer Power
Technology acquisition completed on January 2, 2009. In the
Electrical segment, sales decreased 17.4%, including the impact of
the acquisitions noted above. Exclusive of the acquired businesses,
Electrical segment sales decreased 23.7%, largely due to global
generator sales decreasing 12%, commercial and industrial motors
sales in North America decreasing 23% and residential HVAC motor
sales decreasing 22%. Sales in the Mechanical segment decreased 17%
from the prior year period. From a geographic perspective,
Asia-based sales decreased 24.2% as compared to the first quarter
of 2008. In total, sales to regions outside of the United States
were 26.7% of total sales for the first quarter of 2009 in
comparison to 25.6% for the comparable period of 2008. The negative
impact of foreign currency exchange rate changes decreased total
sales by 2.4%. From an energy efficiency standpoint, sales of high
efficiency products represented 12.9% of total sales for the
quarter. The gross profit margin for the first quarter was 20.4% as
compared to the 22.8% reported for the comparable period of 2008.
The decrease is driven by higher commodity costs and the fixed cost
absorption impact of lower sales volumes. In addition, costs
related to the ongoing plant rationalizations increased cost of
sales by approximately $2.4 million. Operating expenses were $62.4
million (14.1% of sales) in the three months ended March 28, 2009
versus $64.5 million (12.0% of sales) in 2008. Operating expenses
included approximately $5.1 million for the Dutchi and Hwada
businesses. Income from operations was $28.2 million versus $57.6
million in the comparable period of 2008. As a percent of sales,
income from operations was 6.4% for the first quarter versus 10.7%
in the comparable period of 2008. Net interest expense was $7.0
million versus $8.0 million in the comparable period of 2008. The
decrease was driven by lower interest rates in 2009 versus the
comparable period of 2008. The impact of the change in accounting
for the Company's convertible senior subordinated notes as
prescribed in APB 14-1 was a pretax non-cash interest charge in the
amount of $1.1 million. The comparable amount for 2008 is $1.2
million. The effective tax rate for the three months ended March
28, 2009 was 34.1% versus 35.4% for the first quarter of 2008. The
decrease in the effective tax rate results primarily from the
global distribution of income. Net income attributable to Regal
Beloit Corporation for the three months ended March 28, 2009 was
$12.8 million, a decrease of 59.3% versus the $31.4 million
reported in the first quarter of 2008. Fully diluted earnings per
share was $0.39 as compared to $0.95 per share reported in the
first quarter of 2008. The Company ended the first quarter with
total debt of $587.3 million as compared to $575.4 million at the
end of the fourth quarter of 2008. Cash and cash equivalents
increased $16.8 million during the first quarter to $82.1 million.
"As we move into the second quarter, the difficult sales
environment is expected to continue. We do not believe that the
normal seasonal pick up in sales will materialize and we believe
that inventory liquidation by our customers will continue well into
the second quarter," continued Henry Knueppel, Chairman and Chief
Executive Officer. "We also plan to continue to aggressively reduce
our inventory levels to maximize our cash position which we expect
will negatively impact our gross margin by approximately $7.5
million. Additionally, costs related to our plant rationalizations
will add an estimated $3.0 million to cost of sales for the second
quarter. Given these factors, we are estimating second quarter
earnings per share to be in the range of $0.38 to $0.46," concluded
Henry Knueppel, Chairman and Chief Executive Officer. Regal Beloit
will be holding a conference call pertaining to this news release
at 10:30 AM CT (11:30 AM ET) on Thursday, May 7. Interested parties
should call 866-394-7807, referencing Regal Beloit conference ID
96496426. International callers should call 763-488-9117 using the
same conference ID. A replay of the call will be available through
May 15, 2009 at 800-642-1687, conference ID 96496426. International
callers should call 706-645-9291 using the same conference ID.
Regal Beloit Corporation is a leading manufacturer of mechanical
and electrical motion control and power generation products serving
markets throughout the world. Regal Beloit Corporation is
headquartered in Beloit, Wisconsin, and has manufacturing, sales,
and service facilities throughout the United States, Canada,
Mexico, Europe and Asia. CAUTIONARY STATEMENT This Press Release
contains "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements represent our management's judgment regarding future
events. In many cases, you can identify forward-looking statements
by terminology such as "may," "will," "plan," "expect,"
"anticipate," "estimate," "believe," or "continue" or the negative
of these terms or other similar words. Actual results and events
could differ materially and adversely from those contained in the
forward-looking statements due to a number of factors, including:
-- economic changes in global markets where we do business, such as
reduced demand for the products we sell, weakness in the housing
and commercial real estate markets, currency exchange rates,
inflation rates, interest rates, recession, foreign government
policies and other external factors that we cannot control; --
unanticipated fluctuations in commodity prices and raw material
costs; -- cyclical downturns affecting the global market for
capital goods; -- unexpected issues and costs arising from the
integration of acquired companies and businesses; -- marketplace
acceptance of new and existing products including the loss of, or a
decline in business from, any significant customers; -- the impact
of capital market transactions that we may effect; -- the
availability and effectiveness of our information technology
systems; -- unanticipated costs associated with litigation matters;
-- actions taken by our competitors, including new product
introductions or technological advances, and other events affecting
our industry and competitors; -- difficulties in staffing and
managing foreign operations; -- other domestic and international
economic and political factors unrelated to our performance, such
as the current substantial weakness in economic and business
conditions and the stock markets as a whole; and -- other risks and
uncertainties described from time to time in our reports filed with
the U.S. Securities and Exchange Commission, or SEC, which are
incorporated by reference. All subsequent written and oral
forward-looking statements attributable to us or to persons acting
on our behalf are expressly qualified in their entirety by the
applicable cautionary statements. The forward-looking statements
included in this press release are made only as of their respective
dates, and we undertake no obligation to update these statements to
reflect subsequent events or circumstances. See also Item 1A - Risk
Factors in the Company's Annual Report on Form 10-K filed on
February 25, 2009. STATEMENTS OF INCOME In Thousands of Dollars
(Unaudited) Three Months Ended (As Adjusted)* March 28, March 29,
2009 2008 Net Sales $443,274 $536,343 Cost of Sales 352,704 414,244
Gross Profit 90,570 122,099 Operating Expenses 62,378 64,487 Income
From Operations 28,192 57,612 Interest Expense 7,119 8,413 Interest
Income 133 384 Income Before Taxes & Noncontrolling Interests
21,206 49,583 Provision For Income Taxes 7,230 17,558 Net Income
13,976 32,025 Less: Net Income Attributable to Noncontrolling
Interests, net of tax 1,189 598 Net Income Attributable to Regal
Beloit Corporation $12,787 $31,427 Earnings Per Share of Common
Stock: Basic $0.41 $1.00 Assuming Dilution $0.39 $0.95 Cash
Dividends Declared $0.16 $0.15 Weighted Average Number of Shares
Outstanding: Basic 31,457,282 31,316,878 Assuming Dilution
32,594,802 33,117,034 *The Company adopted at the beginning of 2009
Financial Accounting Standards Board ("FASB") Staff Position
("FSP") No. APB 14-1, "Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)" ("FSP APB 14-1"). The adoption of FSP APB 14-1
required an adjustment of previously reported amounts assigned to
the debt portion of the Company's convertible debt and related
cumulative interest expense. CONDENSED BALANCE SHEETS In Thousands
of Dollars (As Adjusted From Audited (Unaudited) Statements)* March
28, December 27, ASSETS 2009 2008 Current Assets: Cash and Cash
Equivalents $82,078 $65,250 Trade Receivables and Other Current
Assets 410,187 436,094 Inventories 327,324 359,918 Total Current
Assets 819,589 861,262 Net Property, Plant and Equipment 352,685
358,372 Other Noncurrent Assets 797,607 803,862 Total Assets
$1,969,881 $2,023,496 LIABILITIES AND EQUITY Accounts Payable
$152,991 $202,456 Other Current Liabilities 180,463 228,546
Long-Term Debt 580,283 560,127 Deferred Income Taxes 71,302 72,119
Other Noncurrent Liabilities 111,686 122,807 Total Liabilities
$1,096,725 $1,186,055 Equity 873,156 837,641 Total Liabilities and
Equity $1,969,881 $2,023,696 *The Company adopted at the beginning
of 2009 Financial Accounting Standards Board ("FASB") Staff
Position ("FSP") No. APB 14-1, "Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including
Partial Cash Settlement)" ("FSP APB 14-1"). The adoption of FSP APB
14-1 required an adjustment of previously reported amounts assigned
to the debt portion of the Company's convertible debt and related
cumulative interest expense. SEGMENT INFORMATION In Thousands of
Dollars (Unaudited) Mechanical Segment Electrical Segment Three
Months Ending Three Months Ending March 28, March 29, March 28,
March 29, 2009 2008 2009 2008 Net Sales $51,912 $62,550 $391,362
$473,793 Income from Operations $6,286 $10,047 $21,906 $47,565
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW In Thousands of
Dollars (Unaudited) Three Months Ended (As Adjusted)* March 28,
March 29, 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $13,976 $32,025 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 15,277 14,152 Excess tax benefits from stock-based
compensation (1,675) (452) (Gain) loss on sale of assets, net (91)
70 Stock-based compensation expense 773 882 Non-cash convertible
debt deferred financing costs 1,063 1,194 Change in assets and
liabilities, net of acquisitions (10,725) (13,005) Net cash
provided by operating activities 18,598 34,866 CASH FLOWS FROM
INVESTING ACTIVITIES: Additions to property, plant and equipment
(8,143) (13,646) Business acquisitions, net of cash acquired
(1,500) 374 Sale of property, plant and equipment 306 1,149 Net
cash used in investing activities (9,337) (12,123) CASH FLOWS FROM
FINANCING ACTIVITIES: Net repayments of short-term borrowings
(8,265) - Payments of long-term debt (56) (113) Net borrowings
(repayments) under revolving credit facility 19,150 (8,200)
Dividends paid to shareholders (5,024) (4,700) Purchases of
treasury stock - (4,191) Proceeds from the exercise of stock
options 512 1,364 Excess tax benefits from stock-based compensation
1,675 452 Net cash provided by (used in) financing activities 7,992
(15,388) EFFECT OF EXCHANGE RATES ON CASH (425) 602 Net increase in
cash and cash equivalents 16,828 7,957 Cash and cash equivalents at
beginning of period 65,250 42,574 Cash and cash equivalents at end
of period $82,078 $50,531 *The Company adopted at the beginning of
2009 Financial Accounting Standards Board ("FASB") Staff Position
("FSP") No. APB 14-1, "Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)" ("FSP APB 14-1"). The adoption of FSP APB 14-1
required an adjustment of previously reported amounts assigned to
the debt portion of the Company's convertible debt and related
cumulative interest expense. DATASOURCE: Regal Beloit Corporation
CONTACT: David A. Barta, Vice President, Chief Financial Officer of
Regal Beloit Corporation, +1-608-361-7405 Web Site:
http://www.regal-beloit.com/
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