-----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, PuzwQANcUqYavTcbEoXVzjehqIc4l204MJsoAGpjQvv9ntMP+aVurMN4Uyra0Car gRzWR6AvSgc3iscQmWz5GQ== 0000082811-98-000015.txt : 19980506 0000082811-98-000015.hdr.sgml : 19980506 ACCESSION NUMBER: 0000082811-98-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980505 SROS: AMEX 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: 98609974 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, 1998 ------------------------------------------------------------ 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. 20,896,290 Shares, Common Stock, $.01 Par Value - ----------------------------------------------------------------------------- 1 REGAL-BELOIT CORPORATION FORM 10-Q For Quarter Ended March 31, 1998 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 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, 1998 Dec. 31, 1997 -------------- ------------- Current Assets: Cash and cash equivalents . . . . . . . . . . . . . . . $ 5,118 $ 3,351 Receivables, less reserves of $2,743 in 1998 and $2,620 in 1997 . . . . . . . . . . . . . . . . . 73,379 69,660 Inventories. . . . . . . . . . . . . . . . . . . . . . . 87,577 85,527 Other current assets . . . . . . . . . . . . . . . . . . 15,541 14,021 ---------- --------- Total Current Assets. . . . . . . . . . . . . . . . . 181,615 172,559 ---------- --------- Property, Plant and Equipment at Cost. . . . . . . . . . . 236,957 233,614 Less - accumulated depreciation. . . . . . . . . . . . . (86,772) (82,355) ---------- --------- Net Property, Plant and Equipment. . . . . . . . . . 150,185 151,259 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . 150,046 151,358 Other Noncurrent Assets. . . . . . . . . . . . . . . . . . 10,163 10,449 ---------- --------- Total Assets. . . . . . . . . . . . . . . . . . . . . $492,009 $485,625 ---------- --------- LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Accounts payable . . . . . . . . . . . . . . . . . . . . $ 19,770 $ 23,590 Federal and state income taxes . . . . . . . . . . . . . 6,173 5,696 Other current liabilities. . . . . . . . . . . . . . . . 38,360 42,646 --------- --------- Total Current Liabilities. . . . . . . . . . . . . 64,303 71,932 --------- --------- Long-term Debt . . . . . . . . . . . . . . . . . . . . . . 196,251 192,261 Deferred Income Taxes. . . . . . . . . . . . . . . . . . . 32,138 31,726 Other Noncurrent Liabilities . . . . . . . . . . . . . . . 279 279 Shareholders' Investment: Common stock, $.01 par value, 50,000,000 shares authorized, 20,889,290 issued in 1998 and 20,830,226 issued in 1997. . . . . . . . . . . . . 209 208 Additional paid-in capital . . . . . . . . . . . . . . . 40,500 38,904 Retained earnings. . . . . . . . . . . . . . . . . . . . 158,264 150,357 Cumulative Translation Adjustments . . . . . . . . . . . 65 (42) --------- --------- Total Shareholders Investment. . . . . . . . . . . . 199,038 189,427 --------- --------- Total Liabilities and Shareholders Investment. . . . $492,009 $485,625 ========= ========= 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, ----------------------------- 1998 1997 ---------- ---------- Net Sales . . . . . . . . . . . . . . . . . . . . . $137,818 $ 70,570 Cost of Sales . . . . . . . . . . . . . . . . . . . 98,080 50,199 ---------- ---------- Gross Profit . . . . . . . . . . . . . . . . . . 39,738 20,371 Operating Expenses . . . . . . . . . . . . . . . . . 19,870 8,309 ---------- ---------- Income from Operations . . . . . . . . . . . . . 19,868 12,062 Interest Expense . . . . . . . . . . . . . . . . . . 2,988 53 Interest Income . . . . . . . . . . . . . . . . . . 130 363 ---------- ---------- Income Before Taxes . . . . . . . . . . . . . . . 17,010 12,372 Provision for Income Taxes . . . . . . . . . . . . . 6,596 4,666 ---------- ---------- Net Income . . . . . . . . . . . . . . . . . . . $ 10,414 $ 7,706 ========== ========== Per Share of Common Stock: Earnings Per Share . . . . . . . . . . . . . . . $.50 $.37 ========== ========== Earnings Per Share - Assuming Dilution. . . . . . $.49 $.36 ========== ========== Cash Dividends Declared . . . . . . . . . . . . . $.12 $.12 ========== ========== Average Number of Shares Outstanding . . . . . . . . 20,861,291 20,773,553 ========== ========== Average Number of Shares - Assuming Dilution . . . . 21,331,969 21,248,189 ========== ========== 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, ---------------------------- 1998 1997 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,414 $ 7,706 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation, amortization and deferred income taxes. . . . . . . . 6,023 2,714 Change in assets and liabilities: . . . . . . . . . . . . . . . . . Current assets, other than cash . . . . . . . . . . . . . . . . . (7,252) (308) Current liabilities, other than notes payable . . . . . . . . . . (6,155) 1,886 --------- ---------- Net cash provided from operating activities . . . . . . . . . 3,030 11,998 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment, net of retirements . . . . (3,487) (1,971) Business acquisition . . . . . . . . . . . . . . . . . . . . . . . . . ----- (277,433) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 (50) --------- ---------- Net cash used in investing activities . . . . . . . . . . . . . . . (3,381) (279,454) CASH FLOWS FROM FINANCING ACTIVITIES: Additions to long-term debt. . . . . . . . . . . . . . . . . . . . . . 4,000 242,000 Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . . . (9) (129) Dividends to shareholders. . . . . . . . . . . . . . . . . . . . . . . (2,500) (2,477) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632 984 --------- ---------- Net cash provided from financing activities . . . . . . . . . . . . 2,123 240,378 EFFECT OF EXCHANGE RATE ON CASH. . . . . . . . . . . . . . . . . . . . . (5) (80) --------- ---------- Net increase (decrease) in cash and cash equivalents . . . . . . . . . 1,767 (27,158) Cash and cash equivalents at beginning of period . . . . . . . . . . . 3,351 38,402 --------- ---------- Cash and cash equivalents at end of period . . . . . . . . . . . . . . $ 5,118 $ 11,244 ========= ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during year for: Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,038 $ 67 Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,547 $ 19 See accompanying notes.
5 REGAL-BELOIT CORPORATION NOTES TO FINANCIAL STATEMENTS MARCH 31, 1998 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 82% 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: 3-31 12-31 1998 1997 ---- ----- Raw Material 13% 13% Work-in Process 24% 23% Finished Goods 63% 64% 3. ACQUISITION The Statement of Income incorporates, after March 26, 1997, the results of operations of Marathon Electric Manufacturing Corporation, which was acquired by the Company on March 26, 1997. Marathon Electric operations did not have a material impact on the Statement of Income in the first quarter of 1997. 4. IMPACT OF NEW ACCOUNTING PRONOUNCEMENT Financial Accounting Standard No. 130 ("SFAS 130"), "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive income and its components. Adoption of SFAS 130 is required by the Company as of the December 31, 1998 statements. The impact for the first quarter of 1998 was $107,000 of additional comprehensive income relating to the cumulative translation adjustment recorded, resulting in net comprehensive income of $10,521,000 for the quarter. 6 Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations ----------------------------------- RESULTS OF OPERATIONS - --------------------- Net sales for the first quarter of 1998 were $137,818,000, a 95% increase from net sales of $70,570,000 in 1997's first quarter. Mechanical Group net sales of $72,751,000 were 3.1% above 1997 first quarter sales of $70,570,000. Electrical Group net sales were $65,067,000 in the first quarter of 1998. The Electrical Group was formed upon the acquisition of Marathon Electric on March 26, 1997. Electrical Group net sales increased 3.6% over the pre-acquisition sales of Marathon Electric in the first quarter of 1997. This increase occurred despite a reduction in sales of the generator product line to the Asian market. The Company's Asian exposure is limited and generator sales continued to grow well domestically and elsewhere in the world. Mechanical Group total net sales growth was in line with general economic growth. Company gross profit in the first quarter of 1998 nearly doubled from comparable 1997. Gross profit margin was virtually unchanged from the prior year. Operating expenses were $19,870,000 in the quarter compared to $8,309,000 a year ago. As a percent of net sales, operating expenses in 1998 were 14.4% versus 11.8% in 1997's first quarter. The increase in the percent was due to Electrical Group operating expenses being a greater percent of net sales than those of the Mechanical Group. Income from operations of $19,868,000 in the first quarter of 1998 was 64.7% higher than the $12,062,000 a year ago. As a percent of net sales, income from operations decreased from 17.1% in the first quarter of 1997 to 14.4% in 1998 due to the higher operating expenses to net sales percent of the Electrical Group as compared to the Mechanical Group. Interest expense was $2,988,000 in 1998's first quarter while only $53,000 a year earlier. The higher interest cost is due entirely to the debt incurred to purchase Marathon Electric a year ago. The Company's effective tax rate in the first quarter of 1998 was 38.8% versus 37.7% in comparable 1997. The increase was due primarily to the non-deductibility for tax purposes of amortized goodwill associated with the Marathon Electric acquisition. Net income of $10,414,000 in the quarter was 35.1% greater than the $7,706,000 earned in comparable 1997. Earnings per share were $.50 in 1998 versus $.37 a year ago and assuming dilution, $.49 versus $.36. During the first quarter of 1998, the Company made final purchase accounting adjustments to the value of the assets and liabilities acquired in the acquisition of Marathon Electric in March 1997. These adjustments were not material. The Company is currently in the process of implementing the required changes to its computer software programs and operating systems to be Year 2000 compliant and expects to complete these changes in 1998. The Company is also 7 communicating with its suppliers and customers concerning Year 2000 compliance. Management believes the costs to become Year 2000 compliant will not be material to the Company's financial condition or results of operations. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Working capital at March 31, 1998 was $117,312,000, 16.5% higher than $100,627,000 at December 31, 1997. The increase was due primarily to seasonal rises in accounts receivable and inventories coupled with reductions in accounts payable and other current liabilities. The Company's current ratio increased to 2.8:1 at March 31, 1998 from 2.4:1 at year-end 1997. At March 31, 1998, the Company's outstanding long-term debt was $196,251,000, an increase of $3,990,000 from December 31, 1997. Virtually all the outstanding debt was borrowed under the Company's $225,000,000 unsecured revolving credit facility (the "Facility"). At March 31, 1998, the Company had $29,000,000 of available borrowing capacity under the Facility and an additional $10,000,000 under a supplemental $10,000,000 line of credit with its lead bank. The Company's funded debt to EBITDA ratio at March 31, 1998 was 1.88:1, up slightly from 1.86:1 at year-end 1997, and its capitalization ratio was 49.6%, down from 50.4% at year-end 1997 and from 59.5% one year ago. The Company paid an annual interest rate of approximately 6.1% on its outstanding debt at March 31, 1998. The Company's cash flow from operations in the first quarter of 1998 was $3,030,000. Cash provided by net income, depreciation and amortization was for the most part offset by seasonal increases in accounts receivable and inventories and reductions in current liabilities. Free cash flow was a negative $2,957,000 after reducing cash flow from operations by $3,487,000 of net capital expenditures and by $2,500,000 of dividends paid to shareholders. Outstanding commitments for capital items at March 31, 1998 totaled approximately $2,200,000. The Company believes that the combination of cash generated by operations and available borrowing capacity is adequate to finance the Company's operations for the foreseeable future. CAUTIONARY STATEMENT - -------------------- The following is a "Safe Harbor" Statement 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 are forward looking statements. Actual results may differ materially from those contemplated by the forward looking statements. These 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, 3) availability of or material increases in the costs of select raw materials, and 4) actions taken by competitors with regard to such matters as product offering, pricing, and delivery. Investors are directed to the Company's documents, such as its Annual Report on Form 10-K, Form 10-Q's, and Annual Report, filed with the Securities and Exchange Commission. 8 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- There were no exhibits or reports on Form 8-K filed during the quarter ended March 31, 1998. 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) KENNETH F. KAPLAN ------------------------------- Kenneth F. Kaplan Vice President - Chief Financial Officer and Secretary (Principal Accounting and Financial Officer) DATE: May 5, 1998 ------------------- 9 EX-27 2
5 3-MOS DEC-31-1998 MAR-31-1998 5,118,000 0 73,379,000 2,743,000 87,577,000 181,615,000 236,957,000 86,772,000 492,009,000 64,303,000 196,251,000 0 0 209,000 198,829,000 492,009,000 137,818,000 137,818,000 98,080,000 98,080,000 19,870,000 0 2,988,000 17,010,000 6,596,000 10,414,000 0 0 0 10,414,000 .50 .49
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