Nov. 1, 2009 (PR Newswire) -- BELOIT, Wis., Nov. 1 /PRNewswire-FirstCall/ -- Regal Beloit Corporation (NYSE: RBC) today reported financial results for the third quarter ended September 26, 2009. Net sales of $465.2 million decreased 25.0% as compared to the $620.6 million reported for the third quarter of 2008. Diluted earnings per share were $0.82 as compared to $1.07 for the third quarter of 2008.

"We are pleased to report another sequential improvement in earnings and cash flow," commented Henry Knueppel, Chairman and Chief Executive Officer. "These improvements were driven primarily by continued penetration of our new energy efficiency products and execution of our previously announced plant rationalizations and productivity efforts. We also benefited from temporary tail winds in commodity costs and tax settlements."

Sales for the three months ended September 26, 2009 were $465.2 million, a 25.0% decrease from the $620.6 million reported for the three months ended September 27, 2008. Third quarter 2009 sales included $11.7 million of incremental sales related to the fourth quarter 2008 Dutchi acquisition and the first quarter 2009 CPT acquisition. Sales of high efficiency products were 19.3% of total sales.

In the Electrical segment, sales decreased 24.2% from the prior year third quarter, including the impact of the acquisitions noted above. Exclusive of the acquired businesses, Electrical segment sales decreased 26.3%, largely due to global generator sales decreasing 55.2%, commercial and industrial motors sales in North America decreasing 29.6%, and residential HVAC motor sales decreasing 8.3%. Sales in the Mechanical segment decreased 32.6% from the prior year third quarter.

From a geographic perspective, Asia-based sales decreased 28.3% as compared to the third quarter of 2008. In total, sales to regions outside of the United States were 25.6% of total sales for the three months ended September 26, 2009 in comparison to 26.8% for the comparable period of 2008. The negative impact of foreign currency exchange rates decreased total sales by 1.1%.

The gross profit margin for the three months ended September 26, 2009 was 24.5% as compared to the 21.4% reported for the comparable period of 2008. The gross profit margin for the Electrical segment was 24.6% for the three months ended September 26, 2009 versus 20.6% in the comparable period of 2008. This increase is driven by the mix benefit from high efficiency products, lower material costs and cost reduction efforts, including the benefit from the recent plant closures. The benefit from favorable raw material costs are temporary in nature and are not expected to repeat to the same degree in future quarters. The Mechanical segment gross profit was 23.3% in the three months ended September 26, 2009 versus 28.0% in the comparable period of 2008. The Mechanical segment decrease was primarily driven by the negative fixed cost absorption impact of lower production volumes.

Operating expenses were $65.6 million (14.1% of sales) in the three months ended September 26, 2009 versus $67.1 million (10.8% of sales) in the comparable period of 2008. Operating expenses included an incremental amount of approximately $4.0 million related to the Dutchi and CPT businesses offset by reductions in variable expenses, such as sales commissions, and the impact of cost reduction activities. Other operating expense increases included increased bad debt, legal, and restructuring expense. Electrical segment operating expenses were 13.7% of sales for the three months ended September 26, 2009 versus 10.5% in the comparable period of 2008. Mechanical operating expenses were 17.8% and 13.8% of sales for the three months ended September 26, 2009 and September 27, 2008, respectively.

Income from operations was $48.3 million for the three months ended September 26, 2009 versus $65.7 million in the comparable period of 2008. As a percent of sales, income from operations was 10.4% for the three months ended September 26, 2009 versus 10.6% in the comparable period of 2008. As a percent of sales, Electrical segment operating profit was 10.9% in the third quarter of 2009 versus 10.2% in the comparable period of 2008. Mechanical segment operating profit was 5.6% of sales in the third quarter of 2009 versus 14.3% in the comparable period of 2008.

Net interest expense was $5.0 million for the three months ended September 26, 2009 versus $7.9 million in the comparable period of 2008. The decrease is driven primarily by lower effective interest rates in 2009 versus the comparable period of 2008, and lower average debt outstanding.

The effective tax rate for the three months ended September 26, 2009 was 26.9% versus 36.0% in the prior year period. The decrease in the effective rate is driven primarily by the resolution of certain tax matters and the global distribution of income.

Net income attributable to Regal Beloit Corporation for the three months ended September 26, 2009 was $31.2 million, a decrease of 13.8% versus the $36.1 million reported in the comparable period of 2008. Fully diluted earnings per share was $0.82 as compared to $1.07 per share reported in the third quarter of 2008. (Note: prior year financial results have been restated to reflect the impact of the change in accounting for the Company's convertible senior subordinated notes as required by recent accounting guidance.) The average number of diluted shares was 38,183,014 during the three months ended September 26, 2009 was as compared to 33,715,881 during the comparable period of 2008.

Due to the weighting of both our earnings and the weighted average number of shares outstanding as impacted by our stock offering completed in the second quarter, the sum of the three quarters' earnings per share does not equal the year to date earnings per share.

Cash flow from operations was $110.1 million for the three months ended September 26, 2009, comprised of net income of $31.7 million, non-cash expenses of $18.3 million and a reduction of net assets of $60.1 million. This compares to the cash flow from operations of $42.3 million in the comparable prior year period, which was comprised of the net income of $37.0 million, non-cash expenses of $16.5 million and an increase in net assets of $11.2 million.

The Company ended the third quarter with total debt of $530.6 million as compared to $553.1 million at the end of the second quarter of 2009.