RBC RBC Bearings Incorporated

BELOIT, Wis., Oct. 31 /PRNewswire-FirstCall/ -- REGAL-BELOIT CORPORATION (NYSE:RBC) today reported strong increases in net sales and earnings for the third quarter ended September 30, 2006. Net sales increased 21.2% to $419.3 million from $345.9 million in the third quarter of 2005. Net income increased 60.5% to $29.7 million as compared to $18.5 million in the comparable period of 2005. Diluted earnings per share increased 50.8% to $.89 as compared to $.59 for the third quarter of 2005. In the Electrical Segment, sales increased 24.9% to $370.4 million. Included in the results for the quarter were $11.7 million of sales attributable to the Sinya motor business acquired during the second quarter of 2006. The sales increase was again driven by strong channel demand in commercial and industrial motors, generators, and HVAC motors. Sales in the Mechanical Segment decreased 0.8% to $48.9 million. Sales in the Mechanical Segment were impacted by the May 2006 sale of the Cutting Tools business which reduced sales by approximately $3.9 million from the comparable period of 2005. The gross profit margin for the third quarter of 2006 was 24.6%, which is a 250 basis point improvement over the gross profit margin of 22.1% in the third quarter of 2005. The increase was a result of higher volume, productivity and positive product mix, offset, in part, by continued increases in raw material costs. Income from operations was $53.0 million (12.7% of sales), a 53.2% increase over the $34.6 million (10.0% of sales) reported for the third quarter of 2005. As a result of the 2006 implementation of FAS 123R, operating expenses for the third quarter of 2006 included $.8 million of expense related to equity compensation as compared to $.1 million in the third quarter of 2005. Net income in the third quarter of 2006 was $29.7 million, a 60.5% increase from the $18.5 million reported in the third quarter of 2005. "We are extremely pleased with our record third quarter performance. Solid markets for our products coupled with contributions from our strategic initiatives provided the basis for our strong results," said Henry Knueppel, Chairman and Chief Executive Officer. "While the housing related and HVAC markets were more challenging, the contributions from new and higher value content products more than offset those market challenges." "We expect normal seasonal sales in the fourth quarter, noting that HVAC business will face a tougher comparison because of the strong sales in the fourth quarter of 2005," Knueppel added. "Based on this view of our markets and the continued contributions from our strategic initiatives, we are forecasting fourth quarter earnings per share to be in the range of $.64 to $.71 per share. Overcoming a difficult fourth quarter comparison and targeting new records for fourth quarter sales and earnings is a testament to the strength of our people and our initiatives." REGAL-BELOIT will be holding a telephone conference call pertaining to this news release at 1:30 PM CST (2:30 PM EST) on Tuesday, October 31, 2006. Interested parties should call 866-868-1109, access code 16108930. A replay of the call will be available through November 10, 2006 at 877-213-9653, access code 16108930. 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 the United States, 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 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 acquisitions of the HVAC motors and capacitors businesses and the Commercial AC motors business from General Electric Company; marketplace acceptance of our 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, including continued decline in new housing starts 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. STATEMENTS OF EARNINGS In Thousands of Dollars (Unaudited) Three Months Ended Nine Months Ended September 30, September 28, September 30, September 28, 2006 2005 2006 2005 Net Sales $419,301 $345,894 $1,252,896 $1,052,485 Cost of Sales 316,231 269,296 952,521 827,643 Gross Profit 103,070 76,598 300,375 224,842 Operating Expenses 50,021 41,990 145,842 128,560 Income From Operations 53,049 34,608 154,533 96,282 Interest Expense 5,038 5,706 15,287 17,053 Interest Income 170 309 430 385 Income Before Taxes and Minority Interest 48,181 29,211 139,676 79,614 Provision For Income Taxes 17,623 9,771 50,812 28,408 Income Before Minority Interest 30,558 19,440 88,864 51,206 Minority Interest in Income, Net of Tax 818 923 2,027 1,958 Net Income $29,740 $18,517 $86,837 $49,248 Per Share of Common Stock: Earnings Per Share - Basic $.96 $.62 $2.82 $1.68 Earnings Per Share - Assuming Dilution $.89 $.59 $2.60 $1.62 Cash Dividends Declared $.14 $.13 $.41 $.38 Average Number of Shares Outstanding- Basic 30,888,136 29,912,663 30,802,048 29,339,151 Average Number of Shares Outstanding- Assuming Dilution 33,440,015 31,234,336 33,347,817 30,399,710 CONDENSED BALANCE SHEETS In Thousands of Dollars ASSETS (Unaudited) (Audited) Current Assets: Sept. 30, 2006 Dec. 31, 2005 Cash and Cash Equivalents $40,186 $32,747 Receivables and Other Current Assets 309,532 230,217 Inventories 241,366 224,316 Total Current Assets 591,084 487,280 Net Property, Plant and Equipment 263,722 244,329 Goodwill 547,372 546,168 Purchased Intangible Assets, Net 43,565 45,674 Other Noncurrent Assets 21,307 19,103 Total Assets $1,467,050 $1,342,554 Liabilities and Shareholders' Investment Accounts Payable $95,349 $82,513 Other Current Liabilities 179,196 136,278 Long-Term Debt 362,176 386,332 Other Noncurrent Liabilities 96,795 89,435 Shareholders' Investment 733,534 647,996 Total Liabilities and Shareholders' Investment $1,467,050 $ 1,342,554 SEGMENT INFORMATION In Thousands of Dollars (Unaudited) Mechanical Segment Third Quarter Nine Months Sept. 30, Sept. 28, Sept. 30, Sept. 28, 2006 2005 2006 2005 Net Sales $48,931 $49,318 $154,934 $149,465 Income from Operations $5,458 $5,061 $16,299 $10,936 (Unaudited) Electrical Segment Third Quarter Nine Months Sept. 30, Sept. 28, Sept. 30, Sept. 28, 2006 2005 2006 2005 Net Sales $370,370 $296,576 $1,097,962 $903,020 Income from Operations $47,591 $29,547 $138,234 $85,346 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of Dollars) (Unaudited) Nine Months Ended September 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $86,837 Adjustments to reconcile net income to net cash provided by operating activities; Depreciation and amortization 25,835 Gain on sale of assets (1,881) Stock-based compensation expense 2,665 Change in assets and liabilities (60,646) Net cash provided by operating activities 52,810 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (37,689) Purchases of short-term investments, net (5,853) Business acquisitions, net of cash acquired (10,962) Sale of property, plant and equipment 15,555 Net cash used in investing activities (38,949) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt, net (23,933) Proceeds from commercial paper borrowings, net 22,737 Dividends paid to shareholders (12,301) Proceeds from the exercise of stock options 5,132 Excess tax benefits from stock-based compensation 1,960 Net cash used in financing activities (6,405) EFFECT OF EXCHANGE RATE ON CASH (17) NET INCREASE IN CASH AND CASH EQUIVALENTS 7,439 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 32,747 CASH AND CASH EQUIVALENTS AT END OF PERIOD $40,186 DATASOURCE: REGAL-BELOIT CORPORATION CONTACT: David A. Barta, Vice President, Chief Financial Officer of REGAL-BELOIT, +1-608-364-8808, Ext. 106 Web site: http://www.regal-beloit.com/

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