RBC RBC Bearings Incorporated

REGAL-BELOIT Second Quarter Earnings Per Share Doubles Net Income Increases 142% BELOIT, Wis., July 26 /PRNewswire-FirstCall/ -- REGAL-BELOIT CORPORATION (NYSE:RBC) today announced its second quarter 2005 financial results. Net income in the second quarter of 2005 was $18.4 million, a 141.8% increase from $7.6 million reported in the second quarter of 2004. For the first six months of 2005, net income increased 112.1% to $30.7 million from $14.5 for the same period of 2004. Earnings per share were $.62 and $1.03 for the second quarter and first half of 2005, respectively, increases of 100% and 77.6% from $.31 and $.58 in the comparable periods in 2004. Second quarter net sales increased 107.5% to $368.8 million from $177.7 million reported in the second quarter of 2004. Sales attributable to the Commercial AC motor and HVAC motor and capacitor acquisitions of 2004 were $177.5 million in the quarter. Second quarter sales in the Electrical segment increased 150.7% including the sales attributable to the acquired businesses. Approximately 93% of the sales increase is attributable to sales from the acquired businesses. Sales in the Mechanical segment, which reflect the impact of the sale of the Illinois Gear business in May 2005, increased .8%. Six months sales of the Company of $706.6 million reflect an increase of 107.4% as compared to the $340.7 million reported for the same period in 2004. Sales attributable to the acquisitions for this period were $332.6 million. Income from operations increased 152.7% to $35.8 million from $14.2 million reported for the second quarter of 2004. For the first six months of 2005, income from operations was $61.7 million as compared to $26.7 million for the same period of 2004. The gross profit for the second quarter of 2005 was 21.6%, as compared to the 23.0% reported in the second quarter last year and the 20.3% reported in the first quarter of 2005. Our price increases and productivity improvements were offset by the impact of continued raw material inflation. However, our efforts to obtain additional pricing and productivity improvements continue to gain traction. The Company's long-term debt decreased to $536.9 million at the end of the second quarter of 2005 from $563.6 million at the end of the first quarter of 2005. "We continue to be extremely pleased with our financial performance and the progress on our strategic initiatives," said Henry W. Knueppel, President and CEO. "Despite continued cost pressures from raw materials and the cooler weather that impacted sales into the HVAC channel, we delivered strong sales and income results. Our legacy Electrical businesses reported strong revenue growth and we continue to see strong results from the acquisitions." "Earnings for the third quarter, which reflect the seasonal pattern of our business, are projected to be in a range of $.52- $.56 per share using the second quarter's average diluted shares," Knueppel added. "Reflected in this guidance is our belief that we will continue to see strong performances from our legacy businesses and results from the acquisitions that are in line with the previously announced guidance." REGAL-BELOIT will be holding a telephone conference call pertaining to this news release at 9:00 AM CDT (10:00 AM EDT) on Tuesday, July 26, 2005. Interested parties should call 866-297-6315, referencing the REGAL-BELOIT conference call, access code 12302867. A replay of the call will be available through August 5, 2005 at 877-213-9653, access code 12302867. 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 North America, and in 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 press release may be forward looking statements. Forward-looking statements represent our management's judgment regarding future events. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors, including: unexpected issues and costs arising from the integration of acquired companies and businesses, such as our recent acquisitions of the HVAC motors and capacitors businesses and the Commercial AC motors business from General Electric Company; marketplace acceptance of our recent acquisitions, including the loss of, or a decline in business from, any significant customers; unanticipated fluctuations in commodity prices and raw material costs and issues affecting our ability to pass increased costs on to our customers; cyclical downturns affecting the markets for capital goods; substantial increases in interest rates that impact the cost of our outstanding debt; the impact of capital market transactions that the Company may effect; unanticipated costs associated with litigation matters; the success of our management in increasing sales and maintaining or improving the operating margins of our businesses; actions taken by our competitors; difficulties in staffing and managing foreign operations; our ability to satisfy various covenant requirements under our credit facility; and other risks and uncertainties described from time to time in our reports filed with U.S. Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. The forward-looking statements included in this press release are made only as of the date of this release, and we undertake no obligation to update these statements to reflect subsequent events or circumstances. STATEMENT OF INCOME In Thousands of Dollars (Unaudited) Three Months Ended Six Months Ended June 29, June 29, June 29, June 29, 2005 2004 2005 2004 Net Sales $368,768 $177,652 $706,591 $340,736 Cost of Sales 288,950 136,811 558,329 261,708 Gross Profit 79,818 40,841 148,262 79,028 Operating Expenses 44,007 26,667 86,586 52,322 Income From Operations 35,811 14,174 61,676 26,706 Interest Expense 5,894 1,509 11,348 2,836 Interest Income 28 29 76 32 Income Before Income Taxes and Minority Interest 29,945 12,694 50,404 23,902 Provision For Income Taxes 10,996 4,558 18,638 8,594 Income Before Minority Interest 18,949 8,136 31,766 15,308 Minority Interest in Income, Net of Tax 504 507 1,035 819 Net Income $18,445 $7,629 $30,731 $14,489 Per Share of Common Stock: Earnings Per Share- Basic $.63 $.31 $1.06 $.59 Earnings Per Share- Assuming Dilution $.62 $.31 $1.03 $.58 Cash Dividends Declared $.13 $.12 $ .25 $.24 Average Number of Share Outstanding- Basic 29,064,518 24,450,391 29,049,209 24,744,342 Average Number of Shares-Assuming Dilution 29,720,400 24,677,155 29,982,397 24,977,674 Condensed Balance Sheet In Thousands of Dollars (Unaudited) (Audited) Assets June 29, 2005 December 31, 2004 Current Assets Cash and Cash Equivalents $29,066 $31,275 Receivables, less reserves of $2,742 in 2005 and $2,376 in 2004 200,178 176,941 Inventories 234,642 246,816 Other Current Assets 34,697 19,887 Total Current Assets 498,583 474,919 Net Property, Plant and Equipment 249,872 253,673 Goodwill 554,038 544,440 Purchased Intangible Assets, Net 48,866 52,058 Other Noncurrent Assets 23,924 26,962 Total Assets $1,375,283 $1,352,052 Liabilities and Shareholders' Investment Current Liabilities $199,447 $195,209 Long Term Debt 536,895 547,350 Other Noncurrent Liabilities 73,669 71,314 Shareholders' Investment 565,272 538,179 Total Liabilities and Shareholders' Investment $ 1,375,283 $ 1,352,052 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 2004 Annual Report and Securities and Exchange Commission filings. 2. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year. Certain items, such as income taxes, LIFO charges and various other accruals, are included in these statements base on estimates for the entire year. SEGMENT INFORMATION In Thousands of Dollars (Unaudited) Mechanical Segment Three Months Ended Six Months Ended June 29, June 29, June 29, June 29, 2005 2004 2005 2004 Net Sales $51,546 $51,142 $100,147 $98,040 Income From Operations $3,139 $3,889 $5,876 $6,634 (Unaudited) Electrical Segment Three Months Ended Six Months Ended June 29, June 29, June 29, June 29, 2005 2004 2005 2004 Net Sales $317,222 $126,510 $606,444 $242,696 Income From Operations $32,672 $10,285 $55,800 $20,072 DATASOURCE: REGAL-BELOIT CORPORATION CONTACT: Dave Barta, Chief Financial Officer, ext 106, or Ken Kaplan, Treasurer & Secretary, ext. 104, both of REGAL-BELOIT Corporation, +1-608-364-8808 Web site: http://www.regal-beloit.com/

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