EX-99 2 newsrelease.htm REGAL-BELOIT CORPORATION 2006 THIRD QUARTER NEWS RELEASE REGAL-BELOIT Corporation 2006 Third Quarter News Release
 



 
NEWS RELEASE
FOR RELEASE ON OR AFTER: October 31, 2006
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
David A. Barta
Vice President, Chief Financial Officer
608-364-8808, Ext. 106
 
Page 1 of 5
 
REGAL-BELOIT THIRD QUARTER NET INCOME
INCREASES 61%

October 31, 2006 (Beloit, WI): REGAL-BELOIT CORPORATION (NYSE:RBC) today reported strong increases in net sales and earnings for the third quarter ended September 30, 2006. Net sales increased 21.2% to $419.3 million from $345.9 million in the third quarter of 2005. Net income increased 60.5% to $29.7 million as compared to $18.5 million in the comparable period of 2005. Diluted earnings per share increased 50.8% to $.89 as compared to $.59 for the third quarter of 2005.

In the Electrical Segment, sales increased 24.9% to $370.4 million. Included in the results for the quarter were $11.7 million of sales attributable to the Sinya motor business acquired during the second quarter of 2006. The sales increase was again driven by strong channel demand in commercial and industrial motors, generators, and HVAC motors. Sales in the Mechanical Segment decreased 0.8% to $48.9 million. Sales in the Mechanical Segment were impacted by the May 2006 sale of the Cutting Tools business which reduced sales by approximately $3.9 million from the comparable period of 2005.

The gross profit margin for the third quarter of 2006 was 24.6%, which is a 250 basis point improvement over the gross profit margin of 22.1% in the third quarter of 2005. The increase was a result of higher volume, productivity and positive product mix, offset, in part, by continued increases in raw material costs. Income from operations was $53.0 million (12.7% of sales), a 53.2% increase over the $34.6 million (10.0% of sales) reported for the third quarter of 2005. As a result of the 2006 implementation of FAS 123R, operating expenses for the third quarter of 2006 included $.8 million of expense related to equity compensation as compared to $.1 million in the third quarter of 2005. Net income in the third quarter of 2006 was $29.7 million, a 60.5% increase from the $18.5 million reported in the third quarter of 2005.
 
“We are extremely pleased with our record third quarter performance. Solid markets for our products coupled with contributions from our strategic initiatives provided the basis for our strong results,” said Henry Knueppel, Chairman and Chief Executive Officer. “While the housing related and HVAC markets were more challenging, the contributions from new and higher value content products more than offset those market challenges.”

“We expect normal seasonal sales in the fourth quarter, noting that HVAC business will face a tougher comparison because of the strong sales in the fourth quarter of 2005,” Knueppel added. “Based on this view of our markets and the continued contributions from our strategic initiatives, we are forecasting fourth quarter earnings per share to be in the range of $.64 to $.71 per share. Overcoming a difficult fourth quarter comparison and targeting new records for fourth quarter sales and earnings, is a testament to the strength of our people and our initiatives.”


 
 
NEWS RELEASE
FOR RELEASE ON OR AFTER: October 31, 2006
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
David A. Barta
Vice President, Chief Financial Officer
608-364-8808, Ext. 106
 
Page 2 of 5
 
REGAL-BELOIT will be holding a telephone conference call pertaining to this news release at 1:30 PM CST (2:30 PM EST) on Tuesday, October 31, 2006. Interested parties should call 866-868-1109, access code 16108930. A replay of the call will be available through November 10, 2006 at 877-213-9653, access code 16108930.

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.

CAUTIONARY STATEMENT
The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: With the exception of historical facts, the statements contained in this press release may be forward-looking statements. Forward-looking statements represent our management’s judgment regarding future events. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors, including: unexpected issues and costs arising from the integration of acquired companies and businesses, such as our acquisitions of the HVAC motors and capacitors businesses and the Commercial AC motors business from General Electric Company; marketplace acceptance of our acquisitions, including the loss of, or a decline in business from, any significant customers; unanticipated fluctuations in commodity prices and raw material costs and issues affecting our ability to pass increased costs on to our customers; cyclical downturns, including continued decline in new housing starts affecting the markets for capital goods; substantial increases in interest rates that impact the cost of our outstanding debt; the impact of capital market transactions that the Company may effect; unanticipated costs associated with litigation matters; the success of our management in increasing sales and maintaining or improving the operating margins of our businesses; actions taken by our competitors; difficulties in staffing and managing foreign operations; our ability to satisfy various covenant requirements under our credit facility; and other risks and uncertainties described from time to time in our reports filed with U.S. Securities and Exchange Commission. 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 the date of this release, and we undertake no obligation to update these statements to reflect subsequent events or circumstances.


 
 
NEWS RELEASE
FOR RELEASE ON OR AFTER: October 31, 2006
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
David A. Barta
Vice President, Chief Financial Officer
608-364-8808, Ext. 106
 
Page 3 of 5
 
STATEMENTS OF EARNINGS 
In Thousands of Dollars
 
     
(Unaudited)
 
     
Three Months Ended 
 
Nine Months Ended 
 
   
 September 30,
 
September 28, 
 
September 30, 
 
September 28, 
 
     
2006 
 
2005 
 
2006
 
2005 
 
Net Sales
 
$
419,301
 
$
345,894
 
$
1,252,896
 
$
1,052,485
 
                           
Cost of Sales
   
316,231
   
269,296
   
952,521
   
827,643
 
                           
Gross Profit
   
103,070
   
76,598
   
300,375
   
224,842
 
                           
Operating Expenses
   
50,021
   
41,990
   
145,842
   
128,560
 
                           
Income From Operations
   
53,049
   
34,608
   
154,533
   
96,282
 
                           
Interest Expense
   
5,038
   
5,706
   
15,287
   
17,053
 
                           
Interest Income
   
170
   
309
   
430
   
385
 
                           
Income Before Taxes and Minority Interest
   
48,181
   
29,211
   
139,676
   
79,614
 
                           
Provision For Income Taxes
   
17,623
   
9,771
   
50,812
   
28,408
 
                           
Income Before Minority Interest
   
30,558
   
19,440
   
88,864
   
51,206
 
                           
Minority Interest in Income, Net of Tax
   
818
   
923
   
2,027
   
1,958
 
                           
Net Income
 
$
29,740
 
$
18,517
 
$
86,837
 
$
49,248
 
                           
Per Share of Common Stock:
                         
                           
Earnings Per Share - Basic
 
$
.96
 
$
.62
 
$
2.82
 
$
1.68
 
                           
Earnings Per Share - Assuming Dilution
 
$
.89
 
$
.59
 
$
2.60
 
$
1.62
 
                           
Cash Dividends Declared
 
$
.14
 
$
.13
 
$
.41
 
$
.38
 
                           
Average Number of Shares Outstanding-Basic
   
30,888,136
   
29,912,663
   
30,802,048
   
29,339,151
 
Average Number of Shares Outstanding-
                         
Assuming Dilution
   
33,440,015
   
31,234,336
   
33,347,817
   
30,399,710
 

 

 
 
NEWS RELEASE
FOR RELEASE ON OR AFTER: October 31, 2006
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
David A. Barta
Vice President, Chief Financial Officer
608-364-8808, Ext. 106
 
Page 4 of 5
 
CONDENSED BALANCE SHEETS
In Thousands of Dollars  
 
 ASSETS
 
 
 (Unaudited) 
 
 (Audited)
 
 Current Assets:  
 Sept. 30, 2006 
 
 Dec. 31, 2005 
 
               
Cash and Cash Equivalents
 
$
40,186
 
$
32,747
 
               
Receivables and Other Current Assets
   
309,532
   
230,217
 
               
Inventories
   
241,366
   
224,316
 
               
Total Current Assets
   
591,084
   
487,280
 
               
Net Property, Plant and Equipment
   
263,722
   
244,329
 
               
Goodwill
   
547,372
   
546,168
 
               
Purchased Intangible Assets, Net
   
43,565
   
45,674
 
               
Other Noncurrent Assets
   
21,307
   
19,103
 
               
Total Assets
 
$
1,467,050
 
$
1,342,554
 
               
Liabilities and Shareholders’ Investment
             
               
Accounts Payable
 
$
95,349
 
$
82,513
 
               
Other Current Liabilities
   
179,196
   
136,278
 
               
Long-Term Debt
   
362,176
   
386,332
 
               
Other Noncurrent Liabilities
   
96,795
   
89,435
 
               
Shareholders’ Investment
   
733,534
   
647,996
 
               
Total Liabilities and Shareholders’ Investment
 
$
1,467,050
 
$
1,342,554
 
 


SEGMENT INFORMATION
In Thousands of Dollars

   
(Unaudited)
   
Mechanical Segment
 
Electrical Segment
   
Third Quarter
 
Nine Months
 
Third Quarter
 
Nine Months
   
Sept. 30,
2006
 
Sept. 28,
2005
 
Sept. 30,
2006
 
Sept. 28,
2005
 
Sept. 30,
2006
 
Sept. 28,
2005
 
Sept. 30,
2006
 
Sept. 28,
2005
Net Sales
$
48,931
$
49,318
$
154,934
     $
149,465
$
370,370
$
296,576
$
1,097,962
$
903,020
Income from
Operations
 
$
 
5,458
 
$
 
5,061
 
$
 
16,299
 
$
 
10,936
 
$
 
47,591
 
$
 
29,547
 
$
 
138,234
 
$
 
85,346




 
 
NEWS RELEASE
FOR RELEASE ON OR AFTER: October 31, 2006
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
David A. Barta
Vice President, Chief Financial Officer
608-364-8808, Ext. 106
 
Page 5 of 5
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
 
   
 (Unaudited) 
 
   
 Nine Months Ended 
 
     
September 30, 
 
     
2006 
 
 CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income
 
$
86,837
 
         
Adjustments to reconcile net income to net cash provided by operating activities;
       
         
Depreciation and amortization
   
25,835
 
         
Gain on sale of assets
   
(1,881
)
         
Stock-based compensation expense
   
2,665
 
         
Change in assets and liabilities
   
(60,646
)
         
Net cash provided by operating activities
   
52,810
 
         
CASH FLOWS FROM INVESTING ACTIVITIES:
       
Additions to property, plant and equipment
   
(37,689
)
         
Purchases of short-term investments, net
   
(5,853
)
         
Business acquisitions, net of cash acquired
   
(10,962
)
         
Sale of property, plant and equipment
   
15,555
 
         
Net cash used in investing activities
   
(38,949
)
         
CASH FLOWS FROM FINANCING ACTIVITIES:
       
Repayment of long-term debt, net
   
(23,933
)
         
Proceeds from commercial paper borrowings, net
   
22,737
 
         
Dividends paid to shareholders
   
(12,301
)
         
Proceeds from the exercise of stock options
   
5,132
 
         
Excess tax benefits from stock-based compensation
   
1,960
 
         
Net cash used in financing activities
   
(6,405
)
         
EFFECT OF EXCHANGE RATE ON CASH
   
(17
)
         
NET INCREASE IN CASH AND CASH EQUIVALENTS
   
7,439
 
         
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
   
32,747
 
         
CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
40,186
 

# # #
Corporate Offices
200 State Street ● Beloit, WI 53511-6254
608-364-8808 ● Fax: 608-364-8818
Website:   www.regal-beloit.com