EX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1
 

NEWS RELEASE
FOR RELEASE ON OR AFTER: April 30, 2007
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
   
David A. Barta
Vice President,
Chief Financial Officer
608-361-7405
 
Page 1
 
REGAL BELOIT REPORTS 11%
EARNINGS PER SHARE INCREASE
ON STRENGTH OF INDUSTRIAL MARKETS

April 30, 2007 (Beloit, WI): Regal Beloit Corporation (NYSE:RBC) today reported financial results for the first quarter ended March 31, 2007. Strong performances by our industrial businesses offset a weak residential HVAC market. The residential HVAC market experienced record year-over-year decline driven by the weak housing market and a comparison to a strong 2006 industry performance which was the result of the 13 SEER legislation that went into effect in January of 2006. The Company’s initiatives continued to gain traction and had a significant impact on the Company’s performance. New products and acquisition growth fueled sales growth, while Lean Six Sigma helped support operating margins.

Net sales increased 5.1% to $418.6 million from $398.3 million in the first quarter of 2006. In the Electrical segment, sales increased 6.2% as industrial motor and generator sales increases of 20% and 24% respectively, offset a 14% decline in residential HVAC revenues. Motors sales growth was also aided by $17.9 million of sales attributed to the Sinya motor business acquired in the second quarter of 2006. Sales in the Mechanical segment were down 2.1% from the prior year period; however, the sale of substantially all of the assets of the Company’s cutting tools business in May 2006 reduced segment sales by approximately $4.7 million for the quarter.

The gross profit margin for the first quarter of 2007 was 23.2% as compared to the 23.4% reported for the first quarter of 2006. The reduction was a result of continued increases in material costs and lower liquidations in our HVAC business. Material cost increases were partially offset by higher selling prices and productivity improvements. Income from operations was $47.3 million or 11.3% of sales, an 8.5% increase over the $43.6 million or 11.0% of sales reported for the first quarter of 2006. Net income in the first quarter of 2007 was $26.8 million, a 12.7% increase from $23.8 million reported in the first quarter of 2006. Diluted earnings per share increased 11.1% to $.80 as compared to $.72 for the first quarter of 2006. 

“We are pleased with our results for the first quarter, especially considering the most challenging residential HVAC market in decades and the continued material cost pressures,” commented Henry W. Knueppel, Chairman and CEO, “The two-thirds of our business that is commercial and industrial performed well during the quarter. While we are not expecting the HVAC market to strengthen significantly in the second quarter, we remain confident in our future as evidenced by the recent 7.1% increase in our quarterly dividend. We expect the EPS for the second quarter to be in the range of $.99 to $1.06.”
 
Regal Beloit Corporation
News Release
Page 2 of 5

Regal Beloit will be holding a conference call to discuss first quarter financial results at 1:30 PM CDT (2:30 PM EDT) today. Interested parties should call 800-288-8960, access code 871624. A replay of the call will be available through May 14, 2007 at 800-475-6701, access code 871624.
 
 
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

This news 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 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;
·  
difficulties in staffing and managing foreign operations;
·  
other risks and uncertainties including but not limited to those described in Item 1A-Risk Factors of the Company’s Annual Report on Form 10-K filed on February 28, 2007 and 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 news 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 28, 2007.
 
Regal Beloit Corporation
News Release
Page 3 of 5
STATEMENTS OF INCOME 
In Thousands of Dollars
 
     
(Unaudited) 
  
   
 Three Months Ended 
  
     
March 31, 
    
April 1, 
  
     
2007
    
2006
  
Net Sales
  
$
418,646
  
$
398,326
 
               
Cost of Sales
   
321,419
    
305,046
  
               
Gross Profit
   
97,227
    
93,280
 
               
Operating Expenses
   
49,896
    
49,662
 
               
Income From Operations
    
47,331
    
43,618
 
               
Interest Expense
    
5,066
    
4,795
 
               
Interest Income
   
89
    
120
  
               
Income Before Taxes & Minority Interest
   
42,354
    
38,943
 
               
Provision For Income Taxes 
    
14,690
    
14,342
 
               
Income Before Minority Interest 
    
27,664
    
24,601
 
               
Minority Interest in Income, Net of Tax
   
851
    
813
 
               
Net Income
 
$
26,813
  
$
23,788
 
               
Per Share of Common Stock:
         
               
Earnings Per Share
 
$
.87
  
$
.77 .66
  
               
Earnings Per Share - Assuming Dilution 
  
$
.80
  
$
.72 .63
  
               
Cash Dividends Declared 
  
$
.14
  
$
.13 .13
  
               
Average Number of Shares Outstanding
   
30,814,3124
    
30,700,533
  
               
Average Number of Shares - Assuming Dilution
    
33,547,519
    
32,957,209 32,316,793
  
               


Regal Beloit Corporation
News Release
Page 4 of 5

CONDENSED BALANCE SHEETS
In Thousands of Dollars
  
 
ASSETS
          
Current Assets:  
(Unaudited) 
  
(Audited) 
  
   
March 31,
2007 
  
December 30,
2006
  
Cash and Cash Equivalents
 
$
43,086
  
$
36,520
  
               
Receivables and Other Current Assets
   
299,511
    
257,510
  
               
Inventories
    
269,488
    
275,138
  
               
Total Current Assets
   
612,085
    
569,168
  
               
Net Property, Plant and Equipment
   
273,024
    
268,880
  
               
Goodwill
   
546,187
    
546,152
  
               
Other Noncurrent Assets
   
50,910
    
53,359
  
               
Total Assets
  
$
1,482,206
  
$
1,437,559
  
               
Liabilities and Shareholders’ Investment
             
               
Accounts Payable
 
$
120,377
  
$
108,050
  
               
Commercial Paper Borrowings
    
49,125
    
49,000
  
               
Other Current Liabilities
    
108,735
    
101,871
  
               
Long-Term Debt
    
323,542
    
323,946
  
               
Other Noncurrent Liabilities
   
105,597
    
104,717
  
               
Shareholders’ Investment
   
774,830
    
749,975
  
               
Total Liabilities and Shareholders’ Investment
  
$
1,482,206
  
$
1,437,559
  

 
SEGMENT INFORMATION
In Thousands of Dollars
 
   
(Unaudited)
  
   
Mechanical Segment
 
Electrical Segment
  
   
Three Months Ended
  
Three Months Ended
  
   
March 31,
2007
  
April 1,
2006
  
March 31,
2007
  
April 1,
2006
  
                   
Net Sales
  
$
51,846
  
$
52,961
  
$
366,800
  
$
345,365
  
                           
Income from Operations
 
$
6,326
  
$
3,707
  
$
41,005
  
$
39,911
  

Regal Beloit Corporation
News Release
Page 5 of 5
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands of Dollars
 
   
 (Unaudited)
Three Months Ended 
  
 CASH FLOWS FROM OPERATING ACTIVITIES:    
March 31, 2007 
    
April 1, 2006
  
Net income
  
$
26,813
  
$
23,788
 
Adjustments to reconcile net income to net cash provided
              
by operating activities; net of effect of acquisitions
             
Depreciation and amortization
    
9,883
    
8,115
  
Minority interest
    
851
    
813
  
Excess tax benefit from stock-based compensation
    
(3,310
)
  
(450
)
Loss (gain) on sale of assets
    
8
    
(8
)
Stock-based compensation expense
    
865
    
867
  
Change in assets and liabilities, net
    
(24,703
)
  
(35,377
)
Net cash provided by used in operating activities
    
10,407
    
(2,252
)
               
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Additions to property, plant and equipment
    
(12,163
)
  
(7,257
)
Purchases of short-term investments
    
-
    
(4,225
)
Business acquisitions, net of cash acquired
    
(565
)
  
(565
)
Sale of property, plant and equipment
    
-
    
5,207
  
Net cash (used) in investing activities
    
(12,728
)
  
(6,840
)
               
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Proceeds from short-term borrowing
    
9,200
    
-
  
Payments of long-term debt
    
(225
)
  
(197
)
Net (repayments) borrowings under revolving credit
              
facility
    
(200
)
  
3,500
  
Proceeds from commercial paper borrowings, net
    
125
    
5,000
  
Dividends paid to shareholders
    
(4,345
)
  
(3,985
)
Proceeds from the exercise of stock options
    
747
    
1,363
  
Excess tax benefits from stock-based compensation
    
3,310
    
450
  
Net cash provided by financing activities
    
8,612
    
6,131
  
               
EFFECT OF EXCHANGE RATE ON CASH
    
275
    
(66
)
               
Net increase (decrease) in cash and cash equivalents
    
6,566
    
(3,027
)
Cash and cash equivalents at beginning of period
    
36,520
    
32,747
  
Cash and cash equivalents at end of period
  
$
43,086
  
$
29,720