Regal-Beloit

July 15, 2011 – 5:06 pm

Regal-BeloitBusiness Profile
Regal Beloit is a leading manufacturer and marketer mechanical and electrical products. The Company’s electrical products offerings include Heating, ventilating and air-conditioning (HVAC) electric motors, a complete line of DC and AC industrial and commercial electric motors, electrical connecting devices and connectors, and electric controls and generators. Regal Beloit’s mechanical products offerings include gearboxes and gears, marine and automotive transmissions systems, and actuators such as ring and pinions and manual valves.

With increasing convergence of electrical and mechanical products in the motion control and other similar industrial applications, the Company focuses on enhancing its market share cross selling and combining its electrical and mechanical product lines.

The Company serves a diverse set of customers through over 20 established brands and using a multiple channel distribution model. Regal Beloit’s target clients include distributors, original equipment manufacturers and end users in various sectors. The Company’s sales organizations comprise internal direct sales force, and distributors. Regal Beloit’s has an international presence through its manufacturing, engineering, distribution and sales facilities across US, Canada, Mexico, China, India and Europe.

Regal-Beloit Regal-Beloit Regal-Beloit

Regal Beloit primarily focuses on:
• Grabbing new opportunities for its products;
• Leveraging its Asian manufacturing base;
• Achieving improvement in operating margins by leveraging global manufacturing and sourcing
• Deploying lean six sigma to improve efficiency;
• Developing new products;
• Building excellence in processes and people resources; and
• Acquiring selectively to grow

As of December 30, 2006, Regal Beloit employed nearly 13,600 people across the world.

The Company’s common stock is registered and listed on the New York Stock Exchange under the ticker “RBC”.

Financial Performance: The Company’s worldwide net sales increased 13.4% to $1.62 billion in 2006 from $1.429 billion in 2005. Sinya Motor which the Company acquired in 2006, contributed $36.5 million to the net sales. Divestiture of the Illinois Gear division in May 2005 and assets of cutting tools division in May 2006 reduced the net sales by sales of the Company by $14.0 million in 2006. Electrical segment contributed $1.419 billion to the Company’s net sales, up 15.6% from $1.228 billion in 2005. Mechanical segment accounted for $201.0 million of net sales, same as in 2005.

Regal Beloit’s gross profit margin increased to 24.0% in 2006 versus 21.8% in 2005 primarily resulting from productivity gains and Lean Six Sigma initiatives, partly offset by increases in material costs. The Company’s net income and EPS increased to $109.8 million in 2006 and $3.28 per share, respectively from $69.6 million and $2.25 per share in 2005.

As of December 30, 2006, the Company order backlog was $174.6 million, versus $140.4 million as on December 31, 2005.

Management of the Company anticipates a tough operating environment in the near term owing to continued competitive pressures and increasing energy and raw material costs.

The Company has organized itself in to two primary operating business segments:

Mechanical and Electrical:

Electrical Segment: Regal Beloit’s electrical segment offers a comprehensive range of DC and AC industrial and commercial electric motors, electric controls and generators, HVAC motors, electrical connecting devices and capacitors. The segment was formed in mid 1990’s to manufacture electric motors in order to complement product offering of Mechanical segment and to generate cross selling opportunities. The Company strengthened its industrial electric motor offering through several acquisition including Marathon Electric Manufacturing Corporation in 1997, the Motors business of Lincoln Electric Holdings in 1999 and LEESON Electric Corporation in 2000. Further, the Company also acquired two electric motor businesses from General Electric Company including commercial AC motors business as well as HVAC motors and capacitors business.

Following are the brief description of these businesses:

LEESON Electric: Manufactures AC motors of up to 800 horsepower (hp) and DC motors of up to 5 hp; gear reducers; and gear motors and drives. Its products are primarily used in power transmission, food processing, pump, industrial machinery, and fitness equipment markets.

Lincoln Motors: The business manufactures AC motors ranging from 1/4 to 800 hp. These motors are used in commercial and industrial pumps, compressors, machine tools and elevators.

Marathon Electric: The division manufactures AC motors up to 800 hp which are primarily used in HVAC, pumps, fans and blowers, power transmissions, compressors, processing and industrial manufacturing and agriculture equipments.

Marathon Generators: Manufactures AC generators ranging from 5 KW to 4 MW, which are primarily used in the standby and prime power, refrigeration, industrial and irrigation sectors.

Marathon Special Products: The division manufactures terminal and power blocks, and fuse holders primarily used in the HVAC, electric control panel, telecommunications, transportation and utilities markets.

Thomson Technology: The business produces automatic transfer switches and paralleling switchgear and controls primarily used in the electric power generation sector.

Mechanical Segment: The segment provides a wide range of motion control systems and products such as custom and standard worm gear, helical and bevel gear; marine transmissions; automotive transmissions; ring and pinions; gear motors; and valve actuators. The segment sold most of the assets of its cutting tool business in May 2006.

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