- Annual Operating Cash Flow Exceeded $314 million - Energy
Efficient Products Continue To Drive Sales Mix - Long-Term Benefits
of Plant Rationalizations Continue To Be Realized - Short-Term
Benefits In Fourth Quarter Due to Raw Materials, Hedging and Tax
Rate BELOIT, Wis., Feb. 3 /PRNewswire-FirstCall/ -- Regal Beloit
Corporation (NYSE:RBC) today reported financial results for the
fourth quarter ended January 2, 2010. Net sales of $463.3 million
decreased 4.1% as compared to the $483.0 million reported for the
fourth quarter of 2008. Diluted earnings per share were $0.90 as
compared to $0.63 for the fourth quarter of 2008. For the full year
of 2009, sales were $1.826 billion as compared to $2.246 billion in
2008. Full year diluted earnings per share were $2.63 per share as
compared to $3.78 per share for 2008. "We are pleased to report
solid fourth quarter and full year results, despite the difficult
global economy," commented Henry Knueppel, Chairman and Chief
Executive Officer. "We are particularly pleased with our strong
cash performance, our growth in energy efficient products and our
plant rationalization and productivity results." Sales for the
three months ended January 2, 2010, were $463.3 million, a 4.1%
decrease from the $483.0 million reported for the three months
ended December 27, 2008. Fourth quarter sales of high efficiency
products were 16.5% of total sales as compared to 12.0% for the
fourth quarter 2008. Full year sales of high efficiency products
were 17.2% as compared to 12.8% for 2008. In the Electrical
segment, sales decreased 2.4% from the prior year fourth quarter,
largely due to global generator sales decreasing 34.0%, commercial
and industrial motors sales in North America decreasing 14.9%, and
residential HVAC motor sales increasing 13.2%. Sales in the
Mechanical segment decreased 17.1% from the prior year fourth
quarter. From a geographic perspective, Asia Pacific sales
increased 0.7% as compared to the fourth quarter of 2008. In total,
sales to regions outside of the United States were 28.6% of total
sales for the quarter ended January 2, 2010 in comparison to 28.9%
for the comparable period of 2008. The positive impact of foreign
currency exchange rates increased total sales by 1.4%. The gross
profit margin for the three months ended January 2, 2010, was 27.0%
as compared to the 23.7% reported for the comparable period of
2008. The gross profit margin for the Electrical segment was 27.6%
for the three months ended January 2, 2010, versus 22.6% in the
comparable period of 2008. This increase is driven by cost
reduction efforts, including the benefit from the recent plant
consolidations, the mix benefit from high efficiency products and
lower net material costs including the benefits from hedging and
the impact of LIFO. The benefit from favorable raw material costs
are temporary in nature and are not expected to repeat to the same
degree in future quarters. The Mechanical segment gross profit was
21.8% in the three months ended January 2, 2010, versus 32.3% in
the comparable period of 2008. The Mechanical segment decrease was
primarily driven by the negative fixed cost absorption impact of
lower production volumes. Operating expenses were $71.6 million
(15.5% of sales) in the three months ended January 2, 2010, versus
$75.0 million (15.5% of sales) in the comparable period of 2008.
Operating expenses for the quarter included an incremental amount
of $5.2 million resulting from the reduction of the carrying value
of certain assets, offset by reductions in variable expenses, such
as sales commissions, and the impact of cost reduction activities.
Income from operations was $53.5 million for the three months ended
January 2, 2010, versus $39.6 million in the comparable period of
2008. As a percent of sales, income from operations was 11.6% for
the three months ended January 2, 2010, versus 8.2% in the
comparable period of 2008. As a percent of sales, Electrical
segment operating profit was 12.4% in the fourth quarter of 2009
versus 6.9% in the comparable period of 2008. Mechanical segment
operating profit was 3.6% of sales in the fourth quarter of 2009
versus 18.2% in the comparable period of 2008. Net interest expense
was $4.5 million for the three months ended January 2, 2010, versus
$7.4 million in the comparable period of 2008. The decrease is
driven primarily by lower effective interest rates in 2009 versus
the comparable period of 2008, lower average debt outstanding and
higher cash balances. The effective tax rate for the three months
ended January 2, 2010, was 27.7% versus 33.9% in the prior year
period. The decrease in the effective rate is driven primarily by
the global distribution of income and the resolution of certain tax
matters. Net income attributable to Regal Beloit Corporation for
the three months ended January 2, 2010, was $34.7 million, an
increase of 68.4% versus the $20.6 million reported in the
comparable period of 2008. Fully diluted earnings per share were
$0.90 as compared to $0.63 per share reported in the fourth 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 required by recent
accounting guidance.) The average number of diluted shares was
38,410,038 during the three months ended January 2, 2010 as
compared to 32,623,311 during the comparable period of 2008. For
the full year ended January 2, 2010, net sales decreased 18.7% to
$1.826 billion. Full year 2009 sales included $57.8 million of
incremental sales from businesses acquired in 2008 and 2009. The
gross profit margin increased 90 basis points primarily driven by
cost reductions, including the consolidation of three of the
Company's manufacturing facilities, the mix benefit of high
efficiency products and lower raw material costs. These benefits
were partially offset by the absorption impact of lower production
volumes. Income from operations was $159.5 million or 8.7% of sales
as compared with $230.4 million or 10.3% of sales reported for
fiscal year 2008. Net income attributable to Regal Beloit
Corporation for fiscal year 2009 was $95.0 million or 5.2% of sales
as compared with $125.5 million or 5.6% of sales for fiscal year
2008. Diluted earnings per share were $2.63 as compared to $3.78
per share reported for the prior year. Due to the weighting of both
our earnings and the weighted average number of shares outstanding
as impacted by our stock offering completed in the second quarter,
the sum of the four quarters' earnings per share does not equal the
year to date earnings per share. Cash flow from operations was
$79.4 million for the three months ended January 2, 2010, comprised
of net income of $35.5 million, non-cash expenses of $24.1 million
and a reduction of net assets of $19.8 million. Full year cash flow
from operations was $314.9 million. The Company ended the year with
total debt of $476.5 million as compared to $530.6 million at the
end of the third quarter of 2009 and $575.4 million at the end of
2008. Cash, cash equivalents and short term investments ended the
year at $380.0 million versus $365.0 million at the end of the
third quarter of 2009 and $65.3 million at the end of 2008. "We
expect to see improving markets for our products in the first
quarter of 2010 versus the first quarter of 2009, primarily as a
result of somewhat stronger international markets and the absence
of the inventory destocking we experienced in 2009," continued Mr.
Knueppel. "However, raw material costs have increased, which will
substantially offset the benefits of volume gains. Thus our
productivity efforts will drive income performance in the first
quarter. We are expecting first quarter earnings to be in the range
of $.76 to $.84." Regal Beloit will be holding a conference call
pertaining to this news release at 11:00 AM CT (12:00 PM ET) on
Thursday February 4, 2010. To listen to the call via the internet,
please go to http://www.regalbeloit.com/ or at
http://event.meetingstream.com/r.htm?e=191340&s=1&k=0518566ACC16F62CF5E9482075
EE0488. Individuals who would like to participate by phone should
dial 866-394-7807, referencing Regal Beloit conference ID 54094708.
International callers should dial 763-488-9117 using the same
conference ID. A telephone replay of the call will be available
through March 4, 2010, at 800-642-1687, conference ID 54094708.
International callers should call 706-645-9291 using the same
conference ID. A webcast replay will be available for 90 days and
can be accessed at
http://www.regalbeloit.com/rbceventspresentations.htm or at
http://event.meetingstream.com/r.htm?e=191340&s=1&k=0518566ACC16F62CF5E9482075
EE0488. Regal Beloit Corporation is a leading manufacturer of
mechanical and electrical motion control and power generation
products serving markets throughout the world. Regal Beloit is
headquartered in Beloit, Wisconsin, and has manufacturing, sales,
and service facilities throughout the United States, Canada,
Mexico, Europe and Asia. Regal Beloit's common stock is a component
of the S&P Mid Cap 400 Index and the Russell 2000 Index.
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. CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS Unaudited In Thousands of
Dollars, Except Shares Outstanding, Dividends Declared and Per
Share Data Three Months Ended Fiscal Year Ended
--------------------- -------------------- (As (As Adjusted)*
Adjusted)* ------- ---------- ------- ---------- January December
January December 2, 2010 27, 2008 2, 2010 27, 2008 ------- --------
------- -------- Net Sales $463,261 $482,983 $1,826,277 $2,246,249
Cost of Sales 338,097 368,376 1,402,053 1,745,569 ------- -------
--------- --------- Gross Profit 125,164 114,607 424,224 500,680
Operating Expenses 71,622 75,016 264,704 270,249 ------ ------
------- ------- Income From Operations 53,542 39,591 159,520
230,431 Interest Expense 5,304 7,536 23,284 32,647 Interest Income
851 146 1,719 1,479 --- --- ----- ----- Income Before Taxes &
Noncontrolling Interests 49,089 32,201 137,955 199,263 Provision
For Income Taxes 13,579 10,915 39,276 70,349 ------ ------ ------
------ Net Income 35,510 21,286 98,679 128,914 Less: Net Income
Attributable to Noncontrolling Interests, net of tax 852 640 3,631
3,389 --- --- ----- ----- Net Income Attributable to Regal Beloit
Corporation $34,658 $20,646 $95,048 $125,525 ======= =======
======= ======== Earnings Per Share of Common Stock: Basic $0.94
$0.66 $2.76 $4.00 ===== ===== ===== ===== Assuming Dilution $0.90
$0.63 $2.63 $3.78 ===== ===== ===== ===== Cash Dividends Declared
$0.16 $0.16 $0.64 $0.63 ===== ===== ===== ===== Weighted Average
Number of Shares Outstanding: Basic 37,030,588 31,393,295
34,498,674 31,343,330 ========== ========== ========== ==========
Assuming Dilution 38,410,038 32,623,311 36,131,607 33,250,689
========== ========== ========== ========== * The Company adopted
new accounting guidance related to Convertible debt which requires
an adjustment to previously disclosed condensed consolidated
financial statements. The adjustment affected convertible debt,
equity and interest expense. CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited In Thousands of Dollars (As Adjusted From Audited
(Unaudited) Statements)* January 2, December 27, ASSETS 2010 2008
---------- ------------ Current Assets: Cash and Cash Equivalents
$262,422 $65,250 Short-Term Investments 117,553 - Trade Receivables
and Other Current Assets 330,562 436,094 Inventories 268,839
359,918 ------- ------- Total Current Assets 979,376 861,262 Net
Property, Plant and Equipment 343,071 358,372 Other Noncurrent
Assets 789,790 803,862 ------- ------- Total Assets $2,112,237
$2,023,496 ========== ========== LIABILITIES AND EQUITY Accounts
Payable $161,902 $202,456 Other Current Liabilities 147,164 228,546
Long-Term Debt 468,065 560,127 Deferred Income Taxes 72,418 72,119
Other Noncurrent Liabilities 82,620 122,607 ------ ------- Total
Liabilities $932,169 $1,185,855 Equity 1,180,068 837,641 ---------
------- Total Liabilities and Equity $2,112,237 $2,023,496
========== ========== * The Company adopted new accounting guidance
related to Convertible debt which requires an adjustment to
previously disclosed condensed consolidated financial statements.
The adjustment affected convertible debt, equity and interest
expense. SEGMENT INFORMATION Unaudited In Thousands of Dollars
Mechanical Segment Electrical Segment -------------------
------------------- Three Months Ending Three Months Ending
-------------------- ------------------- Jan. 2, Dec. 27, Jan. 2,
Dec. 27, 2010 2008 2010 2008 ------- -------- ------- -------- Net
Sales $46,205 $55,718 $417,056 $427,265 Income from Operations
1,682 10,115 51,860 29,476 Fiscal Year Ended Fiscal Year Ended
-------------------- ------------------- Jan. 2, Dec. 27, Jan. 2,
Dec. 27, 2010 2008 2010 2008 ------- -------- ------- -------- Net
Sales $188,609 $247,607 $1,637,668 $1,998,642 Income from
Operations 14,495 38,899 145,025 191,532 CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW Unaudited In Thousands of Dollars Fiscal
Year Ended ------------------------ (As Adjusted)* January 2,
December 28, 2010 2008 ---------- ------------ CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $98,679 $125,525 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 69,144 61,601 Excess tax benefits
from stock-based compensation (2,808) (2,463) Loss on property, net
5,172 124 Stock-based compensation expense 4,752 4,580 Non-cash
convertible debt deferred financing costs 1,063 4,938 Change in
assets and liabilities, net of acquisitions 138,917 (40,106)
------- ------- Net cash provided by operating activities 314,919
154,199 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to
property, plant and equipment (33,604) (52,209) Purchases of
investment securities, net (117,553) - Business acquisitions, net
of cash acquired (1,500) (49,702) Sale of property, plant and
equipment 1,033 2,238 ----- ----- Net cash used in investing
activities (151,624) (99,673) CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of short-term borrowings (6,866) (11,820) Payments
of long-term debt (215) (324) Net repayments under revolving credit
facility (17,066) (162,700) Net proceeds from long-term borrowings
- 165,200 Repayments of convertible debt (75,802) - Net proceeds
from the sale of common stock 150,370 - Dividends paid to
shareholders (21,607) (19,426) Distributions to noncontrolling
interests (4,468) (3,044) Purchases of treasury stock - (4,191)
Proceeds from the exercise of stock options 5,767 2,880 Excess tax
benefits from stock-based compensation 2,808 2,463 Financing fees
paid - (454) --- ---- Net cash provided by (used in) financing
activities 32,921 (31,416) EFFECT OF EXCHANGE RATES ON CASH 956
(434) --- ---- Net increase in cash and cash equivalents 197,172
22,676 Cash and cash equivalents at beginning of period 65,250
42,574 ------ ------ Cash and cash equivalents at end of period
$262,422 $65,250 ======== ======= * The Company adopted new
accounting guidance related to Convertible debt which requires an
adjustment to previously disclosed condensed consolidated financial
statements. The adjustment affected convertible debt, equity and
interest expense. DATASOURCE: Regal Beloit Corporation CONTACT:
John M. Perino, Vice President, Investor Relations of Regal Beloit
Corporation, +1-608-361-7501 Web Site: http://www.regal-beloit.com/
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