-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MZpeeRujh9wUnGyJ8yN78ZpISojruW2Quh+hxcY4pyCbL1ThItobgLu7JEBDXQMT /BIYxJiNTgB5fAFNG36iaA== 0000082811-00-000015.txt : 20000504 0000082811-00-000015.hdr.sgml : 20000504 ACCESSION NUMBER: 0000082811-00-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGAL BELOIT CORP CENTRAL INDEX KEY: 0000082811 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 390875718 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07283 FILM NUMBER: 618010 BUSINESS ADDRESS: STREET 1: 200 STATE ST CITY: BELOIT STATE: WI ZIP: 53511 BUSINESS PHONE: 6083648800 MAIL ADDRESS: STREET 1: 200 STATE STREET CITY: BELOIT STATE: WI ZIP: 53511-6254 FORMER COMPANY: FORMER CONFORMED NAME: BELOIT TOOL CORP DATE OF NAME CHANGE: 19730522 FORMER COMPANY: FORMER CONFORMED NAME: RECORD A PUNCH CORP DATE OF NAME CHANGE: 19690320 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 2000 ------------------------------------------------------------ Commission File Number 1-7283 ------------------------------------------------------- REGAL-BELOIT CORPORATION - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Wisconsin 39-0875718 - ----------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 200 State Street, Beloit, Wisconsin 53511-6254 - ----------------------------------------------------------------------------- (Address of principal executive offices) (608) 364-8800 - ----------------------------------------------------------------------------- (Registrant's telephone number, including area code) - ----------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate the number of shares outstanding of each of the issuers' classes of common stock as of the latest practicable date. 20,987,905 Shares, Common Stock, $.01 Par Value - ----------------------------------------------------------------------------- 1 REGAL-BELOIT CORPORATION FORM 10-Q For Quarter Ended March 31, 2000 INDEX Page No. -------- PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Condensed Balance Sheets. . . . . . . . . . . 3 Statements of Income. . . . . . . . . . . . . 4 Condensed Statements of Cash Flows. . . . . . 5 Notes to Financial Statements . . . . . . . . 6 - 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . 7 - 8 PART II - OTHER INFORMATION Item 6 - Reports on Form 8-K . . . . . . . . . . . . 9 Signature . . . . . . . . . . . . . . . . . . . . . . 9 2 PART I FINANCIAL INFORMATION 1. Financial Statements --------------------
REGAL-BELOIT CORPORATION CONDENSED BALANCE SHEETS (In Thousands of Dollars) (From Audited ASSETS (Unaudited) Statements) -------------- -------------- March 31, 2000 Dec. 31, 1999 -------------- -------------- Current Assets: Cash and Cash Equivalents . . . . . . . . . . . . . . . $ 4,144 $ 1,729 Receivables, less reserves of $1,888 in 2000 and $1,758 in 1999 . . . . . . . . . . . . . . . . . 83,412 76,374 Inventories. . . . . . . . . . . . . . . . . . . . . . . 106,194 103,966 Other Current Assets . . . . . . . . . . . . . . . . . . 17,064 16,179 ---------- ---------- Total Current Assets. . . . . . . . . . . . . . . . . 210,814 198,248 Property, Plant and Equipment at Cost. . . . . . . . . . . 267,175 267,122 Less - Accumulated Depreciation. . . . . . . . . . . . . (119,416) (115,749) ---------- --------- Net Property, Plant and Equipment . . . . . . . . . . 147,759 151,373 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . 142,352 143,314 Other Noncurrent Assets. . . . . . . . . . . . . . . . . . 12,466 12,165 ---------- ---------- Total Assets. . . . . . . . . . . . . . . . . . . . . $ 513,391 $ 505,100 ========== ========== LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Accounts Payable . . . . . . . . . . . . . . . . . . . . $ 26,376 $ 28,382 Federal and State Income Taxes . . . . . . . . . . . . . 5,930 352 Other Current Liabilities. . . . . . . . . . . . . . . . 42,302 38,144 ---------- ---------- Total Current Liabilities. . . . . . . . . . . . . 74,608 66,878 Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . 142,089 148,166 Deferred Income Taxes. . . . . . . . . . . . . . . . . . . 37,086 37,090 Other Noncurrent Liabilities . . . . . . . . . . . . . . . 324 340 Shareholders' Investment: Common Stock, $.01 par value, 50,000,000 shares authorized, 20,987,905 issued in 2000 and 20,985,905 issued in 1999. . . . . . . . . . . . . 210 210 Additional Paid-In Capital . . . . . . . . . . . . . . . 41,595 41,585 Retained Earnings. . . . . . . . . . . . . . . . . . . . 218,182 211,287 Accumulated Other Comprehensive Income . . . . . . . . . (703) (456) ---------- ---------- Total Shareholders' Investment. . . . . . . . . . . . 259,284 252,626 ---------- ---------- Total Liabilities and Shareholders' Investment. . . . $ 513,391 $ 505,100 ========== ========== See accompanying notes.
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REGAL-BELOIT CORPORATION STATEMENTS OF INCOME (In Thousands of Dollars, Except Per Share Data) (Unaudited) -------------------------- Three Months Ended -------------------------- March 31, -------------------------- 2000 1999 ---------- ---------- Net Sales . . . . . . . . . . . . . . . . . . . . . . . $ 142,629 $ 127,260 Cost of Sales . . . . . . . . . . . . . . . . . . . . . 101,857 90,695 ---------- ---------- Gross Profit . . . . . . . . . . . . . . . . . . . . 40,772 36,565 Operating Expenses . . . . . . . . . . . . . . . . . . . 22,685 19,159 ---------- ---------- Income from Operations . . . . . . . . . . . . . . . 18,087 17,406 Interest Expense . . . . . . . . . . . . . . . . . . . . 2,356 2,286 Interest Income . . . . . . . . . . . . . . . . . . . . 17 42 ---------- ---------- Income Before Taxes . . . . . . . . . . . . . . . . . 15,748 15,162 Provision for Income Taxes . . . . . . . . . . . . . . . 6,334 6,084 ---------- ---------- Net Income . . . . . . . . . . . . . . . . . . . . . $ 9,414 $ 9,078 ========== ========== Per Share of Common Stock: Earnings Per Share . . . . . . . . . . . . . . . . . $.45 $.43 ========== ========== Earnings Per Share - Assuming Dilution. . . . . . . . $.45 $.43 ========== ========== Cash Dividends Declared . . . . . . . . . . . . . . . $.12 $.12 ========== ========== Average Number of Shares Outstanding . . . . . . . . . . 20,986,301 20,933,011 ========== ========== Average Number of Shares - Assuming Dilution . . . . . . 21,033,305 21,121,506 ========== ========== See accompanying notes.
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REGAL-BELOIT CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (In Thousands of Dollars) (Unaudited) ---------------------------- Three Months Ended March 31, ---------------------------- 2000 1999 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,414 $ 9,078 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation, amortization and deferred income taxes. . . . . 5,831 5,770 Change in assets and liabilities: Current assets, other than cash . . . . . . . . . . . . . . (10,389) (5,202) Current liabilities, other than notes payable . . . . . . . 7,766 386 ---------- ---------- Net cash provided from operating activities . . . . . . $ 12,622 $ 10,032 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment . . . . . . . . . . . (3,908) (2,323) Sale of property, plant and equipment. . . . . . . . . . . . . . 2,581 --- Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (340) (396) ---------- ---------- Net cash used in investing activities . . . . . . . . . . . . (1,667) (2,719) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt. . . . . . . . . . . . . . . . . . . (6,024) (5,011) Dividends to shareholders. . . . . . . . . . . . . . . . . . . . (2,518) (2,509) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 194 ---------- ---------- Net cash (used in) provided from financing activities . . . . (8,531) (7,326) EFFECT OF EXCHANGE RATE ON CASH. . . . . . . . . . . . . . . . . . (9) (20) ---------- ---------- Net increase (decrease) in cash and cash equivalents . . . . . . 2,415 (33) Cash and cash equivalents at beginning of period . . . . . . . . 1,729 3,548 ---------- ---------- Cash and cash equivalents at end of period . . . . . . . . . . . $ 4,144 $ 3,515 ========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during year for: Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,404 $ 2,410 Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . $ 424 $ 375 See accompanying notes.
5 REGAL-BELOIT CORPORATION NOTES TO FINANCIAL STATEMENTS March 31, 2000 1. BASIS OF PRESENTATION The condensed financial statements include the accounts of Regal-Beloit Corporation and its wholly owned subsidiaries and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested these statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest Annual Report on Form 10-K. 2. INVENTORIES Cost for approximately 86% of the Company's inventory is determined using the last-in, first-out (LIFO) inventory valuation method. The approximate percentage distribution between major classes of inventories is as follows: March 31, 2000 December 31, 1999 -------------- ----------------- Raw Material 13% 14% Work-in Process 24% 26% Finished Goods 63% 60% 3. ACQUISITION The financial statements on pages 3-5 incorporate the results of operations and the assets and liabilities of Lincoln Motors, after May 28, 1999, the date the business was acquired by the Company at a purchase price of approximately $32,100,000. The Lincoln Motors operating results and assets purchased are not material to the operating results or financial position of the Company. 4. COMPREHENSIVE INCOME The Company's comprehensive income is impacted by the amount of the cumulative translation adjustment recorded to shareholders' equity. For the quarter ended March 31, 2000, the impact was $247,000 of expense resulting in net comprehensive income of $9,167,000 for the quarter. The impact in the first quarter of 1999 was $483,000 of expense resulting in net comprehensive income of $8,595,000. 6 5. BUSINESS SEGMENTS The Company operates two strategic businesses that are reportable segments: the Mechanical Group and the Electrical Group.
(In Thousands of Dollars) ------------------------------------- Mechanical Group Electrical Group ---------------- ---------------- First Quarter First Quarter ---------------- ---------------- 2000 1999 2000 1999 ------- ------ ------- ------ Net Sales $63,390 $63,495 $79,239 $63,765 Income from Operations $ 8,812 $ 9,072 $ 9,275 $ 8,334 Income from Operations as a % of Net Sales 13.9% 14.3% 11.7% 13.1%
Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations ----------------------------------- RESULTS OF OPERATIONS - --------------------- Net sales for the first quarter of 2000 were $142,629,000, 12.1% higher than net sales of $127,260,000 in the first quarter of 1999. The increased sales were due to the combination of additional sales from the May 1999 Lincoln Motors acquisition and 2.3% sales growth in the Company's other operations. Both of the Company's business segments' net sales improved from the fourth quarter of 1999, the Mechanical Group by 3.0% and the Electrical Group by 3.6%. Increased orders following broad-based weakness in the markets for the Company's products during 1999 were the primary reason for the higher sales. (See Note 5 to the accompanying financial statements for business segment data.) Gross profit for the Company increased in the first quarter to $40,772,000, 11.5% higher than $36,565,000 in comparable 1999. Gross profit margin in the first quarter decreased slightly to 28.6% from 28.7% the previous year. Operating expenses rose 18.4% to $22,685,000 in the first three months of 2000 from $19,159,000 a year earlier. As a percent of net sales, first quarter 2000 operating expenses rose to 15.9% from 15.1% a year ago. The principal factors in the dollar and percent increases were the Lincoln Motors acquisition and higher distribution expense resulting from increased fuel costs. Income from operations for the Company in the first quarter 2000 was $18,087,000, 3.9% above $17,406,000 in comparable 1999 due primarily to increased sales. As a percent of net sales, income from operations was 12.7% in 2000 as compared to 13.7% a year previously. The decrease in operating margin was due primarily to the impact on the Company of the Lincoln Motors operations, which as expected have been only modestly profitable during the period of integration with the Company and to the aforementioned increase in distribution expenses. Interest expense in the first quarter of 2000 was $2,356,000, 3.1% above $2,286,000 in comparable 1999 due to the effects of increased interest rates partially offset by lower outstanding long-term debt. The Company's effective tax rate was 40.2% in 2000's first quarter versus 40.1% a year earlier. Net income earned in the first quarter of 2000 rose 3.7% to $9,414,000 from $9,078,000 in the first three months of 1999. Earnings per share (diluted) were $.45 in 2000 compared to $.43 a year ago. 7 LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Working capital at March 31, 2000 was $136,206,000, a 3.7% increase from $131,370,000 at December 31, 1999. The increase was due primarily to higher accounts receivable. The current ratio decreased from 3.0:1 at year-end 1999 to 2.8:1 at March 31, 2000. Cash flow from operations was $12,622,000 in the first quarter of 2000 compared to $10,032,000 a year previously. Free cash flow in the quarter was $8,777,000 versus $5,200,000 in comparable 1999. This permitted long-term debt to be reduced $6,077,000 from year-end 1999 and $19,117,000 from March 31, 1999 to $142,089,000 at March 31, 2000. The Company's funded debt to EBITDA ratio at the end of the quarter was 1.47:1 while the capitalization ratio was 35.4%. The Company paid an annualized interest rate of approximately 6.4% on its outstanding debt at March 31, 2000. Outstanding commitments for future capital expenditures at the end of the first quarter were approximately $1,957,000. The Company maintains a $190,000,000 unsecured long-term revolving credit facility (the "Facility") under which $141,000,000 of debt was outstanding at March 31, 2000. Including approximately $2,000,000 of standby letters of credit, the Company had $47,000,000 of available borrowing capacity under the Facility at March 31, 1999. Additionally, the Company maintains two short-term credit lines of $10,000,000 each, one of which expires at May 27, 2000. No borrowings were outstanding against these two credit lines. Management believes that the credit facilities it has in place provide sufficient borrowing capacity for the Company to finance its operations for the foreseeable future. Management further believes that future external growth from acquisitions can be adequately funded from a combination of free cash flow, current credit facilities and the Company's ability to further leverage its equity with additional long-term indebtedness. 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 Item 2. of this Form 10-Q may be forward looking statements. Actual results may differ materially from those contemplated. Forward looking statements involve risks and uncertainties, including but not limited to, the following risks: 1) cyclical downturns affecting the markets for capital goods, 2) substantial increases in interest rates that impact the cost of the Company's outstanding debt, 3) the success of Management in increasing sales and maintaining or improving the operating margins of its businesses, 4) the availability of or material increases in the costs of select raw materials or parts, and 5) actions taken by competitors. Investors are directed to the Company's documents, such as its Annual Report on Form 10-K and Form 10-Q's filed with the Securities and Exchange Commission. 8 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- On January 31, 2000, the registrant filed a current report on Form 8-K pertaining to a Shareholder Rights Agreement between the registrant and BankBoston dated January 28, 2000. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REGAL-BELOIT CORPORATION (Registrant) /S/ Kenneth F. Kaplan ------------------------ Kenneth F. Kaplan Vice President - Chief Financial Officer and Secretary (Principal Accounting and Financial Officer) DATE: May 3, 2000 ----------------- 9 EX-27 2
5 3-MOS DEC-31-2000 MAR-31-2000 4,144,000 0 83,412,000 1,888,000 106,194,000 210,814,000 267,175,000 119,416,000 513,391,000 74,608,000 142,089,000 0 0 210,000 259,074,000 513,391,000 142,629,000 142,629,000 101,857,000 101,857,000 22,685,000 0 2,356,000 15,748,000 6,334,000 9,414,000 0 0 0 9,414,000 .45 .45
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