-----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, DOQSg6UFYV9p1c2kmgF/yVwOFj40nvX795N72sQkgiImwsdnXMn5eoWi6k9A0kjW ayBlcyQDzl4kYGrV5sRQXg== /in/edgar/work/20000728/0000082811-00-000029/0000082811-00-000029.txt : 20000921 0000082811-00-000029.hdr.sgml : 20000921 ACCESSION NUMBER: 0000082811-00-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGAL BELOIT CORP CENTRAL INDEX KEY: 0000082811 STANDARD INDUSTRIAL CLASSIFICATION: [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: 680640 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 0001.txt 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 June 30, 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. 20,988,905 Shares, Common Stock, $.01 Par Value - ----------------------------------------------------------------------------- 1 REGAL-BELOIT CORPORATION FORM 10-Q For Quarter Ended June 30, 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 4 - Submission of Matters to a Vote of Security Holders 9 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) ------------- ------------- June 30, 2000 Dec. 31, 1999 ------------- ------------- Current Assets: Cash and Cash Equivalents . . . . . . . . . $ 3,365 $ 1,729 Receivables, less reserves of $1,981 in 2000 and $1,758 in 1999 . . . . . . . . . . . 83,683 76,374 Inventories. . . . . . . . . . . . . . . . . 104,363 103,966 Other Current Assets . . . . . . . . . . . . 16,935 16,179 --------- --------- Total Current Assets. . . . . . . . . . . 208,346 198,248 Property, Plant and Equipment at Cost. . . . . 275,076 267,122 Less - Accumulated Depreciation. . . . . . . (122,919) (115,749) --------- --------- Net Property, Plant and Equipment . . . . 152,157 151,373 Goodwill . . . . . . . . . . . . . . . . . . . 149,500 143,314 Other Noncurrent Assets. . . . . . . . . . . . 12,458 12,165 --------- --------- Total Assets. . . . . . . . . . . . . . . $522,461 $505,100 ========= ========= LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Accounts Payable . . . . . . . . . . . . . . $ 27,989 $ 28,382 Federal and State Income Taxes . . . . . . . 2,151 352 Other Current Liabilities. . . . . . . . . . 46,106 38,144 --------- --------- Total Current Liabilities. . . . . . . 76,246 66,878 Long-Term Debt . . . . . . . . . . . . . . . . 143,063 148,166 Deferred Income Taxes. . . . . . . . . . . . . 37,072 37,090 Other Noncurrent Liabilities . . . . . . . . . 307 340 Shareholders' Investment: Common Stock, $.01 par value, 50,000,000 shares authorized, 20,988,905 issued in 2000 and 20,985,905 issued in 1999. . . . . . . 210 210 Additional Paid-In Capital . . . . . . . . . 41,606 41,585 Retained Earnings. . . . . . . . . . . . . . 225,128 211,287 Accumulated Other Comprehensive Income (Loss) (1,171) (456) --------- --------- Total Shareholders' Investment. . . . . . 265,773 252,626 --------- --------- Total Liabilities and Shareholders' Investment. . . $522,461 $505,100 ========= ========= See accompanying notes.
3 REGAL-BELOIT CORPORATION STATEMENTS OF INCOME (In Thousands of Dollars, Except Per Share Data)
(Unaudited) ---------------------------------------------- Three Months Ended Six Months Ended June 30, June 30, ----------------------- ---------------------- 2000 1999 2000 1999 ----------- ---------- ---------- ---------- Net Sales . . . . . . . . $ 143,439 $ 137,063 $ 286,068 $ 264,323 Cost of Sales . . . . . . 102,558 99,434 204,415 190,129 ----------- ---------- ---------- ---------- Gross Profit . . . . . 40,881 37,629 81,653 74,194 Operating Expenses . . . . 22,668 19,110 45,353 38,269 ----------- ---------- ---------- ---------- Income from Operations 18,213 18,519 36,300 35,925 Interest Expense . . . . . 2,362 2,299 4,718 4,585 Interest Income . . . . . 59 51 76 93 ----------- ---------- ---------- ---------- Income Before Taxes . . 15,910 16,271 31,658 31,433 Provision for Income Taxes . 6,445 6,506 12,779 12,590 ----------- ---------- ---------- ---------- Net Income . . . . . . $ 9,465 $ 9,765 $ 18,879 $ 18,843 =========== ========== ========== ========== Per Share of Common Stock: Earnings Per Share $.45 $.47 $.90 $.90 =========== ========== ========== ========== Earnings Per Share - Assuming Dilution $.45 $.46 $.90 $.89 =========== ========== ========== ========== Cash Dividends Declared $.12 $.12 $.24 $.24 =========== ========== ========== ========== Average Number of Shares Outstanding 20,988,169 20,952,700 20,987,235 20,942,910 ========== ========== ========== ========== Average Number of Shares - Assuming Dilution 20,988,169 21,189,977 21,010,737 21,155,741 ========== ========== ========== ========== See accompanying notes.
4 REGAL-BELOIT CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (In Thousands of Dollars)
(Unaudited) ------------------------- Six Months Ended June 30, ------------------------- 2000 1999 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 18,879 $ 18,843 Adjustments to reconcile net income to net cash provided from operating activities, net of acquisitions: Depreciation, amortization and deferred income taxes. 11,705 11,533 Change in assets and liabilities: Current assets, other than cash . . . . . . . . . . (7,446) (480) Current liabilities, other than notes payable . . . 4,137 123 ---------- ----------- Net cash provided from operating activities . . $ 27,275 $ 30,019 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment, net of retirements (7,745) (4,281) Sale of property, plant and equipment. . . . . . 2,653 ---- Business acquisitions. . . . . . . . . . . . . . (10,030) (33,901) Other, net . . . . . . . . . . . . . . . . . . . (435) (340) ---------- ---------- Net cash used in investing activities . . . . (15,557) (38,522) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of (additions to) long-term debt, net. (5,048) 12,979 Dividends to shareholders. . . . . . . . . . . . (5,037) (5,023) Other, net . . . . . . . . . . . . . . . . . . . 21 500 ---------- ---------- Net cash (used in) provided from financing activities . (10,064) 8,456 EFFECT OF EXCHANGE RATE ON CASH (18) (32) ---------- ---------- Net increase (decrease) in cash and cash equivalents 1,636 (79) Cash and cash equivalents at beginning of period 1,729 3,548 ---------- --------- Cash and cash equivalents at end of period . . . $ 3,365 $ 3,469 ========== ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during year for: Interest. . . . . . . . . . . . . . . . . . . $ 4,740 $ 4,920 Income Taxes. . . . . . . . . . . . . . . . . $ 10,691 $ 11,916 See accompanying notes.
5 REGAL-BELOIT CORPORATION NOTES TO FINANCIAL STATEMENTS June 30, 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 87% 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: June 30, 2000 December 31, 1999 ------------- ----------------- Raw Material 13% 14% Work-in Process 22% 26% Finished Goods 65% 60% 3. ACQUISITIONS The financial statements on pages 3-5 incorporate the results of operations and the assets and liabilities of Thomson Technology Inc. ("TTI") after June 29, 2000, the date TTI was acquired by the Company at a purchase price of approximately $10,000,000. TTI is a Vancouver, BC, Canada based manufacturer of power systems controls for the worldwide power generation market. The referenced financial statements also include 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. Neither TTI's nor Lincoln Motors' operating results and assets and liabilities, either singularly or in combination, are material to the operating results or financial position of the Company. 4. COMPREHENSIVE INCOME The Company's comprehensive income is solely impacted by the amount of the cumulative translation adjustment recorded to shareholders' equity. For the quarter ended June 30, 2000, the impact was $468,000 of expense resulting in net comprehensive income of $8,997,000 for the quarter. The impact in the second quarter of 1999 was $306,000 of expense resulting in net comprehensive income of $9,459,000. In the first six months of 2000, the impact is an expense of $715,000 resulting in net comprehensive income of $18,164,000. The impact in the first six months of 1999 was $789,000 of expense resulting in net comprehensive income of $18,054,000. 6 5. BUSINESS SEGMENTS The Company operates two strategic businesses that are reportable segments: the Mechanical Group and the Electrical Group.
BUSINESS SEGMENTS (continued) (In Thousands of Dollars) -------------------------------------------------------------------- Mechanical Group Electrical Group --------------------------------- --------------------------------- Second Quarter Six Months Second Quarter Six Months --------------- ---------------- -------------- ----------------- 2000 1999 2000 1999 2000 1999 2000 1999 ------- ------ ------- ------- ------ ------ ------- -------- Net Sales $62,889 65,509 126,279 129,004 80,550 71,554 159,789 $135,319 Income from Operations $ 8,085 9,187 16,897 18,259 10,128 9,332 19,403 $ 17,666 Income from Operations as a % of Net Sales 12.9% 14.0% 13.4% 14.2% 12.6% 13.0% 12.1% 13.1%
Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations ----------------------------------- RESULTS OF OPERATIONS - --------------------- The Company's second quarter 2000 net sales of $143,439,000 were 4.7% higher than net sales of $137,063,000 in the second quarter of 1999. For the six months ended June 30, 2000, net sales were $286,068,000, 8.2% higher than $264,323,000 in the first six months of 1999. The increased sales in both the second quarter and first half of 2000 were due primarily to the additional sales from the May 1999 acquisition of Lincoln Motors. Sales of the Company's Mechanical Group decreased 4.0% and 2.1% in the second quarter and first half of 2000 from the comparable periods of 1999, respectively. Continued softness in the markets served by the Mechanical Group accounted for the lower sales. Electrical Group sales, excluding Lincoln Motors, increased nearly 5% from comparable 1999 in both the second quarter and first half of 2000. Growth in the Marathon Electric motors product lines was the primary reason for the higher sales. (See Note 5 for business segment data.) Gross profit for the Company was $40,881,000 in the second quarter, an 8.6% increase from second quarter 1999, and was $81,653,000 for the first half of 2000, 10.1% higher than comparable 1999. Gross profit margin improved to 28.5% in the second quarter from 27.5% a year previously, while the gross profit margin in the first half of 2000 of 28.5% increased from 28.1% in comparable 1999. Improvement in Electrical Group gross profit margin, due primarily to higher sales volumes, accounted for the increased margin in both time periods. Operating expenses increased 18.6% to $22,668,000 in the second quarter of 2000 from $19,110,000 a year earlier, and 18.5% to $45,353,000 in the first half of 2000 from $38,269,000 in the first six months of 1999. As a percent of net sales, second quarter and first half 2000 operating expenses were 15.8% and 15.9%, respectively, as compared to 13.9% and 14.5% in the comparable periods of 1999. The impact of the Lincoln Motors acquisition in May 1999 and higher freight costs in 2000 due to increased fuel prices were the primary reasons for the higher operating expenses in dollars and as a percent of sales. Income from operations for the Company was $18,213,000 (12.7% of sales) in the second quarter of 2000, a 1.7% decrease from $18,519,000 (13.5% of sales) last year. Comparable figures for the first six months were $36,300,000 (12.7% of sales) and $35,925,000 (13.6% of sales), a 1.0% increase from 1999. Increased operating expenses as a percent of sales more than offset improved gross profit margins, resulting in the reduced operating income margins. 7 Interest expense was $2,362,000 in the second quarter and $4,718,000 in the first half of 2000, increases of 2.7% and 2.9%, respectively, from $2,299,000 and $4,585,000 in the comparable periods of 1999. The increases were the result of increased interest rates in the U.S. partially offset by lower average long-term debt outstanding. The Company's effective tax rates in 2000 are up slightly from the rates in the comparable periods of 1999 due primarily to a slightly higher effective overall state tax rate. Net income earned in 2000 was $9,465,000 for the second quarter and $18,879,000 for the first half, down 3.1% for the second quarter and virtually unchanged in the first half, respectively, from $9,765,000 and $18,843,000 earned in the comparable periods last year. Net income margin was 6.6% in both the second quarter and first half of 2000 versus 7.1% in the same periods of 1999, for the reasons discussed above. Earnings per share (diluted) were $.45 versus $.46 for the second quarters of 2000 and 1999, respectively, and $.90 versus $.89 for the first halves of 2000 and 1999. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Working capital at June 30, 2000 was $132,100,000 a .6% increase from $131,370,000 at December 31, 1999. The slight increase was due to higher accounts receivable for the most part offset by increased accrued income taxes and other current liabilities. The Company's cash flow from operations in the second quarter of 2000 was $14,653,000 compared to $19,987,000 in 1999. Lower accounts receivable and inventory reductions in the second quarter this year versus last year explain the reduced operating cash flow. Six months 2000 cash flow from operations of $27,275,000 compares to $30,019,000 in the same period of 1999. Free cash flow in the first half of 2000, which is after subtracting $7,745,000 of capital expenditures and $5,037,000 of dividends, was $14,493,000, below the $20,715,000 of comparable 1999. The 2000 year-to-date free cash flow was used for debt retirement and to fund the approximately $10,000,000 purchase price of Thomson Technology Inc. on June 29, 2000. (See Note 3.) Outstanding commitments for future capital expenditures at June 30, 2000 was approximately $3,330,000. Outstanding long-term debt at June 30, 2000 was $143,063,000, an increase of $974,000 from March 31, 2000 but $5,103,000 lower than at December 31, 1999. Approximately $9,000,000 of debt reduction in April and May 2000 was offset by the borrowing of the TTI acquisition purchase price discussed above. The Company's funded debt to EBITDA ratio at the end of the quarter was 1.49:1 while the capitalization ratio was 35.0%. The Company maintains a $190,000,000 unsecured long-term revolving credit facility (the "Facility") under which $142,000,000 of debt was outstanding at June 30, 2000. Including approximately $2,000,000 of standby letters of credit, the Company had $46,000,000 of available borrowing capacity under the Facility at June 30, 2000. Additionally, the Company maintains a short-term demand credit line of $10,000,000 against which there were no borrowings at June 30, 2000. 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 8 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. PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- (a) The Annual Meeting of shareholders of Regal-Beloit Corporation was held on April 19, 2000. (b) The terms of Directors John M. Eldred, John A. McKay, and G. Frederick Kasten, Jr., J. Reed Coleman, Frank E. Bauchiero and Stephen N. Graff were continued. (c) Matters voted on at the Annual Meeting and the results of each vote were as follows: (1) Elect three Class A Directors for a term of three years. For Withheld ---------- -------- James L. Packard 17,589,110 160,965 Henry W. Knueppel 17,588,881 161,194 Paul W. Jones 17,585,195 164,880 (2) Ratify the appointment of Arthur Andersen LLP as independent public accountants for the Company for the year ending December 31, 2000. For Against Abstain ---------- ------- ------- 17,703,554 36,882 9,639 Item 6. Exhibits and Reports on Form 8-K -------------------------------- There were no exhibits or reports on Form 8-K filed during the quarter ended June 30, 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: July 28, 2000 ---------------- 9 EX-27 2 0002.txt
5 6-MOS DEC-31-2000 JUN-30-2000 3,365,000 0 83,683,000 1,981,000 104,363,000 208,346,000 275,076,000 122,919,000 522,461,000 76,246,000 143,063,000 0 0 210,000 265,563,000 522,461,000 286,068,000 286,068,000 204,415,000 204,415,000 45,353,000 0 4,718,000 31,658,000 12,779,000 18,879,000 0 0 0 18,879,000 .90 .90
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