RBC RBC Bearings Incorporated

REGAL-BELOIT Reports 22% Increase in Full Year 2004 Earnings Per Share BELOIT, Wis., Feb. 10 /PRNewswire-FirstCall/ -- James L. Packard, Chairman and Chief Executive Officer of REGAL-BELOIT CORPORATION (NYSE:RBC), today announced fourth quarter and full year 2004 financial results. Net income in the fourth quarter of 2004 was $7.0 million, a 14.2% increase from $6.1 million reported in the fourth quarter of 2003. For the full year, net income rose 20.7% to $30.4 million as compared to the $25.2 million reported for the full year of 2003. Diluted earnings per share were $.28 and $1.22 for the fourth quarter and full year, respectively, increases of 16.7% and 22.0% from $.24 and $1.00 per share in the comparable periods of 2003. The fourth quarter results also included the impact of the favorable resolution of certain tax matters which offset, on an after tax basis, the non-cash adjustment of certain pension plans. The pension plan adjustment reduced income from operations by $2.1 million, or $1.3 million after-tax. The resolution of the tax matters resulted in a favorable income tax adjustment of $1.4 million. Fourth quarter net sales of the Company increased 45.9% to $221.9 million from $152.1 million in the fourth quarter of 2003, establishing another quarterly sales record for the Company. Excluding the impact of the Commercial AC motor acquisition in August 2004, sales were $181.9 million, an increase of 19.6%. The record sales performance was driven by strong demand throughout the Company's various markets. Sales for the quarter were strong in both operating segments with Mechanical Group sales increasing 15.0% and Electrical Group sales increasing 21.5% excluding the impact of the acquisition. For the full year, sales increased 22.2% to $756.6 million as compared to $619.1 million in 2003. Excluding the impact of the acquisition of the Commercial AC motor business, sales increased 13.5%. Income from operations increased 13.8% to $13.0 million from $11.4 million reported for the fourth quarter of 2003. The gross profit for the quarter was 20.3% of sales as compared to 24.1% in the same period last year. Material inflation continued to reduce the margin performance of the Company as previous price increases by the Company did not offset the added levels of inflation that occurred in the quarter. Additionally, the Company experienced a significant increase in health benefit costs during the quarter. For the full year, income from operations increased 16.8% to $55.2 million from $47.2 million. Gross margins finished the year at 22.1% versus the 23.7% reported in 2003. The Company's debt increased to $547.6 million at the end of the year from $275.3 million at the end of the third quarter. The increase was primarily due to the purchase of General Electric's HVAC motor business which was completed on December 31, 2004 at a price of approximately $400 million, of which $270 million was paid in cash and the balance in common stock of the Company. A balance sheet will not be published until a valuation for the recent acquisition is complete. "While 2004 certainly presented challenges related to raw material costs, we are extremely pleased with our overall results and are excited about the future for REGAL-BELOIT," said Packard, Chairman and CEO. "We have continued to execute our strategy and are continuing to see the benefits. The recent acquisitions, including the acquisition of CMT announced this week, have doubled the size of our Company on an annualized basis and firmly positioned REGAL-BELOIT as a market leader in both the electric motor and the mechanical power transmission businesses." "Earnings for the first quarter are projected to be in a range of $.37 - $.41 per share," Packard added. "This guidance is inclusive of the guidance previously provided for the businesses acquired from GE and reflects the seasonality of the HVAC business." REGAL-BELOIT will be holding a telephone conference call pertaining to this news release at 10:00 AM CST (11:00 AM EST) on Thursday, February 10, 2005. Interested parties should call 866-297-6315, referencing the REGAL-BELOIT conference call. A replay of the call will be available through February 18, 2005 at 877-213-9653, access code 10870377. 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 United States, and in Canada, Mexico, Europe and Asia. 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 this news release may be forward looking statements. Actual results may differ 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) our success in increasing sales and maintaining or improving the operating margins of our existing businesses and in integrating acquisitions, 4) the availability of or material increases in the costs of select raw materials or parts, 5) actions taken by our competitors, and 6) our ability to satisfy various covenant requirements under our credit facility. 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. STATEMENT OF INCOME (Unaudited) In Thousands of Dollars Three Months Ended Twelve Months Ended December 31, December 31, 2004 2003 2004 2003 Net Sales $221,933 $152,098 $756,557 $619,098 Cost of Sales 176,845 115,392 589,497 472,343 Gross Profit 45,088 36,706 167,060 146,755 Operating Expenses 32,135 25,324 111,898 99,529 Income From Operations 12,953 11,382 55,162 47,226 Interest Expense 2,229 1,555 6,787 6,462 Interest Income 95 29 182 79 Income Before Income Taxes and Minority Interest 10,819 9,856 48,557 40,843 Provision For Income Taxes 2,732 3,401 15,728 14,791 Income Before Minority Interest 8,087 6,455 32,829 26,052 Minority Interest in Income, Net of Tax 1,069 310 2,395 846 Net Income $7,018 $6,145 $30,434 $25,206 Per Share of Common Stock: Earnings Per Share $.29 $25 $1.24 $1.01 Earnings Per Share- Assuming Dilution $.28 $.24 $1.22 $1.00 Cash Dividends Declared $.12 $.12 $.48 $.48 Average Number of Shares Outstanding 24,463,251 25,031,656 24,602,868 25,029,942 Average Number of Shares- Assuming Dilution 24,936,956 25,268,363 24,904,287 25,246,088 SEGMENT INFORMATION In Thousands of Dollars (Unaudited) Mechanical Group Three Months Ended Twelve Months Ended December 31, December 31, 2004 2003 2004 2003 Net Sales $51,431 $44,744 $199,590 $180,741 Income From Operations $4,065 $3,158 $15,720 $13,349 (Unaudited) Electrical Group Three Months Ended Twelve Months Ended December 31, December 31, 2004 2003 2004 2003 Net Sales $170,502 $107,354 $556,967 $438,357 Income From Operations $8,888 $8,224 $39,442 $33,877 NOTES TO FINANCIAL STATEMENTS 1. Certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted from these statements and, therefore, these statements should be read in conjunction with the Company's 2003 Annual Report and Securities and Exchange Commission filings DATASOURCE: REGAL-BELOIT CORPORATION CONTACT: Dave Barta, VP, Chief Financial Officer, +1-608-364-8808, ext. 106, or Ken Kaplan, VP, Treasurer & Secretary, +1-608-364-8808, ext. 104, both of REGAL-BELOIT CORPORATION Web site: http://www.regal-beloit.com/

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