SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
( ) TRANSACTION REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 333-48795
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
MARATHON ELECTRIC HOURLY 401(k) SAVINGS PLAN
100 EAST RANDOLPH STREET
WAUSAU, WISCONSIN 54401
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
REGAL-BELOIT CORPORATION
200 STATE STREET
BELOIT, WI 53511
<PAGE>
REQUIRED INFORMATION
Marathon Electric Hourly 401(k) Savings Plan ("Plan") is subject to the
Employee Retirment Income Security Act of 1974 ("ERISA"). Therefore, in lieu
of the requirements of Items 1-3 of Form 11-K, the financial statements and
schedules of the Plan for the two fiscal years ended December 31, 1997 and
1998, which have been prepared in accordance with the financial reporting
requirements of ERISA, are attached hereto as Appendix 1 and incorporated
herein by this reference.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities and Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the under-
signed hereunto duly authorized.
MARATHON ELECTRIC HOURLY 401(k) SAVINGS PLAN
By: Marathon Electric Hourly 401(k) Savings Plan Administrative Commitee
and Plan Administrator
Kenneth F. Kaplan June 25, 1999
- ----------------------------------
Kenneth F. Kaplan
David Eisenreich June 25, 1999
- ----------------------------------
David Eisenreich
<PAGE>
APPENDIX I
MARATHON ELECTRIC HOURLY 401(k) SAVINGS PLAN
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31,
1997 AND 1998, SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1998 AND INDEPENDENT AUDITOR'S REPORT
<PAGE>
MARATHON ELECTRIC MANUFACTURING CORPORATION
-------------------------------------------
HOURLY 401(k) SAVINGS PLAN
--------------------------
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997
-----------------------------------------------------
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------------------
<PAGE>
MARATHON ELECTRIC MANUFACTURING CORPORATION
-------------------------------------------
HOURLY 401(k) SAVINGS PLAN
--------------------------
FINANCIAL STATEMENTS
--------------------
AS OF DECEMBER 31, 1998 AND 1997
--------------------------------
TABLE OF CONTENTS
-----------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statement of Net Assets Available for Plan Benefits, with Fund Information,
as of December 31, 1998 and 1997
Statement of Changes in Net Assets Available for Plan Benefits, with Fund
Information, for the Year Ended December 31, 1998
NOTES TO FINANCIAL STATEMENTS
SCHEDULES SUPPORTING FINANCIAL STATEMENTS:
Schedule I: Item 27a--Schedule of Assets Held for Investment Purposes as
of December 31, 1998
Schedule II: Item 27d--Schedule of 5% Reportable Transactions for the Year
Ended December 31, 1998
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
Marathon Electric Manufacturing Corporation
Hourly 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Marathon Electric Manufacturing Corporation Hourly 401(k)
Savings Plan as of December 31, 1998 and 1997 and the related statement of
changes in net assets available for plan benefits for the year ended
December 31, 1998. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As described in Note 2, these financial statements were prepared on the
modified cash basis of accounting, which is a comprehensive basis of
accounting other than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the
Plan as of December 31, 1998 and 1997 and the changes in its net assets
available for plan benefits, for the year ended December 31, 1998 on the
basis of accounting described in Note 2.
<PAGE>
-2-
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules, as listed
in the accompanying table of contents, are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules are the
responsibility of the Plan's management. The fund information in the
statement of net assets available for benefits and the statement of changes
in net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits
and changes in net assets available for plan benefits of each fund. The
supplemental schedules and fund information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
-------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
June 10, 1999.
MARATHON ELECTRIC MANUFACTURING CORPORATION
-------------------------------------------
MARATHON ELECTRIC HOURLY 401(k) SAVINGS PLAN
--------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
(1) Description of Plan and Funding Policy-
--------------------------------------
The following description of the Marathon Electric Manufacturing
Corporation Hourly 401(k) Savings Plan (the "Plan") provides only general
information. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
General-
-------
The Plan is a defined contribution plan covering all hourly employees and
truck drivers of the Marathon Electric Manufacturing Corporation and its
subsidiary, the Marathon Special Products Corporation (referred to
collectively as the "Company").
An employee becomes eligible to participate in the Plan on the first
day of the month subsequent to the latest of the employee obtaining the
age of 21 or completion of the qualifying period. The qualifying period
is defined as the 12 month period commencing after the date of employment
or subsequent to January 1, upon completion of at least 1,000 service
hours. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended.
Contributions-
-------------
Participants are allowed to contribute up to 15 percent of pretax annual
income up to a maximum of $10,000 or such higher amount permitted by IRS
Code Section 402(a) for employees represented by Local 1791, IBEW, and
Teamsters Local 446; and 10 percent of pretax annual income for employees
at the West Plains and Lebanon facilities as defined by the Plan. The
Company currently matches 50 percent of the portion of an employee's
contribution equal to five percent of pretax income for employees
represented by local 1791, IBEW, four percent for employees represented
by Teamsters Local 446; three percent for employees at the West Plains
and Lebanon facilities. Beginning June 1, 1997, the Company matches
25 percent of an employee's contribution equal to two percent of pretax
income for employees represented by Local 1076, IBEW. The Company has
the option to annually increase the matching contribution for these
locations at its discretion. There is no Company matching contribution
for Lima participants. Employees at Lima who were employed on January 1,
1998 and who completed their probationary period by that date received a
Company contribution of $1,000.
Overall responsibility for administering the Plan rests with the Plan's
administrative committee which is appointed by the board of directors of
the Company. The Plan's trustee, Marshall & Ilsley Trust Company (the
"Trustee"), is responsible for the management and control of the Plan's
assets and has certain discretionary authority and control over such
assets.
Vesting-
-------
Participants are 100 percent vested in their contributions and the
earnings on those contributions. Company contributions and the earnings
thereon vest after five years of eligible service. One year of eligible
service is defined as a year of employment with the Company. Partial
years may be vested as defined in the Plan document.
Investment options-
------------------
Participants may direct their contributions and any related earnings
thereon into six investment options, in 10% increments. Participants
may change their investment elections every thirty days. A description
of each investment option is provided below:
Northern Capital Equity Fund-
----------------------------
The primary investment objective of this fund is growth of capital
consistent with moderate level of risk. The fund invests in stocks and
cash equivalents.
American Century Balanced Fund-
------------------------------
The primary investment objective of this fund is to provide growth
opportunities and income. The fund invests in common stocks and fixed
income securities.
M&I Stable Principal Fund-
-------------------------
This fund is designed to offer preservation of principal, price
stability, and returns that are generally higher than money market rates.
Investments in the fund are in contracts with insurance carriers and
banks. The contracts are reported at contract value, which approximates
fair value. A small part of the fund is also invested in a broadly
diversified money market fund.
Fidelity Advisor Growth Fund-
----------------------------
The primary investment objective of this fund is to provide capital
growth by investing primarily in common stocks. The fund typically will
invest at least 65% of its total assets in securities of companies that
have long-term growth potential.
Templeton Foreign Fund-
----------------------
This fund seeks long-term capital growth through a flexible policy of
investing in stocks and debt obligations of companies and governments
outside the United States.
<PAGE>
Regal-Beloit Stock Fund-
-----------------------
This fund allows participants to invest in the common stock of the
Regal-Beloit Corporation (or its successors).
Administrative expenses-
-----------------------
Substantially all administrative expenses are paid by the Plan. These
expenses include investment management and trustee fees.
Payment of benefits-
-------------------
On termination of service, the participant receives a lump-sum amount
equal to the value of the participant's account.
Forfeitures-
-----------
Plan forfeitures arise as a result of participants who terminate service
with the Company before becoming vested in the Company's contribution.
The amount of forfeitures allocable to remaining participants at
December 31, 1998 and 1997 were $11,238 and $2,598, respectively.
Plan termination-
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to provisions of ERISA. In the event of plan
termination, participants will become fully vested in their account
balances.
(2) Summary of Accounting Policies-
------------------------------
Basis of accounting-
-------------------
The accompanying financial statements are presented on the modified cash
basis of accounting, which is a comprehensive basis of accounting other
than generally accepted accounting principles. Contributions are
recognized at the time such amounts are received rather than when
contributed.
Use of estimates-
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of plan assets at the date
of the financial statements and the reported amounts of investment income
and expenses during the reporting period. Actual results could differ
from those estimates.
<PAGE>
Payment of benefits-
-------------------
Benefit payments to participants are recorded upon distribution.
(3) Investments-
-----------
The Plan's investments are commingled with the assets of several other
Company plans in the Marathon Electric Manufacturing Corporation Master
Trust Fund (the "Master Trust"). Investments of the Master Trust are
carried at current market value as determined by the Trustee through
reference to published data. Earnings, unrealized gains/losses, fees
and expenses relating to investment transactions of the Master Trust
are allocated by the Trustee to the participating plans based on each
plan's proportionate share of trust assets.
The assets of the Plan are commingled and are not segregated in the
accounts of the Master Trust. The market value of the assets held in
the Master Trust as of December 31 are as follows:
1998 1997
----------- -----------
Accrued interest and dividends $ 160,791 $ 114,274
Marshall Money Market Fund 1,149,755 695,495
M&I Stable Principle Fund 8,219,564 6,872,623
Common Stock 37,898,292 35,559,445
American Century Balanced Fund 5,887,726 4,245,014
Northern Capital Equity Fund 16,117,312 14,597,195
Fidelity Advisor Growth Fund 10,297,156 7,861,944
Templeton Foreign Fund 930,525 2,114,522
Regal-Beloit Corporation Master Trust 753,086 -
Fixed Income Securities 3,199,464 3,781,489
Participant loans 640,510 702,326
----------- -----------
Total assets of the Master Trust $85,254,182 $76,544,327
=========== ===========
The Marshall Funds are controlled by Marshall & Ilsley Corporation, the
parent company of the Trustee. The M&I Stable Principle Fund is a
collective investment fund operated by the Trustee.
Allocations of assets of the Master Trust to participating plans as of
December 31 are as follows:
1998 1997
------------------ ------------------
Amount % Amount %
----------- ------ ----------- ------
Salaried Employees' Pension Plan $29,448,716 34.5% $27,791,984 36.3%
Wausau Hourly Pension Plan 12,916,088 15.2 12,312,494 16.1
Hourly 401(k) Savings Plan 8,189,006 9.6 6,353,268 8.3
Salaried 401(k) Savings Plan 34,700,372 40.7 30,056,581 39.3
----------- ----- ----------- ------
Total assets of the Master Trust $85,254,182 100.0% $76,544,327 100.0%
=========== ====== =========== ======
Master Trust income and its allocation to the participating plans for
the years ended December 31 are as follows:
1998 1997
----------- -----------
Interest and dividend income $ 707,399 $ 1,152,932
Realized gains, net 6,063,861 5,305,833
Unrealized appreciation in the
fair value of investments, net 2,660,354 4,778,351
---------- -----------
Total Master Trust income $9,431,614 $11,237,116
========== ===========
1998 1997
---------- -----------
Salaried Employees' Pension Plan $2,527,292 $ 4,096,306
Wausau Hourly Pension Plan 1,111,534 1,827,301
Hourly 401(k) Savings Plan 1,026,311 824,106
Salaried 401(k) Savings Plan 4,766,477 4,489,403
---------- -----------
Total Master Trust income $9,431,614 $11,237,116
========== ===========
(4) Guaranteed Investment Contracts-
-------------------------------
The M&I Stable Principal Fund consists of guaranteed investment contracts
("GIC's") and Synthetic guaranteed investment contracts ("SYN's"). All
investment contracts are fully benefit responsive. The average crediting
interest rates for the years ending December 31, 1998 and 1997 were 5.93%
and 6.29%, respectively. The funds average yields for 1998 and 1997 were
6.20% and 6.20%, respectively.
The crediting rates for the contacts are fixed or reset either quarterly
or annually. All contracts have a guaranteed rate of 0% or higher.
The Fund had no valuation reserves at year-end with the fair value of
the investment contracts reported at contract value.
(5) Regal-Beloit Corporation Master Trust-
-------------------------------------
Effective November 1, 1997, the Plan's investment in Company stock was
commingled with the investment in Company stock of another Company plan
into the Regal-Beloit Corporation Master Trust (the "RBC Master Trust").
Effective April 1, 1998, the investment in Company stock of three other
company plans were commingled into the RBC Master Trust. Investments of
the RBC Master Trust are carried at current market value as determined
by the Trustee through reference to published data. Earnings, market
adjustments, fees and expenses relating to investment transactions are
allocated by the Trustee to the participating plans based on each plan's
share of Trust assets.
The assets of the Plan are commingled and are not segregated in the
accounts of the RBC Master Trust. The market value of the assets held
in the Trust as of December 31, 1998 and 1997 is as follows:
1998 1997
----------- -----------
Regal-Beloit Corporation Stock $14,374,579 $16,240,894
Marshall Money Market Fund 154,077 -
Accrued Income 74,145 -
----------- -----------
Total assets of the RBC Master Trust $14,602,801 $16,240,894
Allocations of assets of the RBC Master Trust to particpating plans as of
December 31, 1998 and 1997 is as follows:
1998 1997
--------------------- --------------------
Amount Percent Amount Percent
----------- ------- ---------- -------
Regal-Beloit Corporation
Personal Savings Plan 6,805,476 46.60% $8,235,387 50.71%
Regal-Beloit Corporation
Profit Sharing Plan 6,568,489 44.98 8,005,507 49.29
Regal-Beloit Corporation
Savings and Protection Plan 475,749 3.26 - -
Marathon Electric Salaried
401(k) Savings Plan 635,779 4.36 - -
Marathon Electric Hourly
401(k) Savings Plan 117,308 0.80 - -
Total assets of the
RBC Master Trust $14,602,801 100.00% $16,240,894 100.00%
RBC Master Trust income for the years ended December 31, 1998 and 1997 are
as follows:
INCOME 1998 1997
------ ----------- ----------
Investment income-
Interest $ 23,602 $ 2,047
Dividends 280,725 64,237
Net (depreciation) appreciation in fair
market value of Regal-Beloit Corporation (3,979,555) 1,437,570
------------ ----------
Common Stock $(3,675,228) $1,503,854
============ ==========
(6) Tax Exempt Status of the Plan-
-----------------------------
The Internal Revenue Service has determined and informed the Company by
a letter dated December 26, 1995, that the Plan is qualified and the trust
established under the Plan is tax-exempt, under the appropriate sections of
the Internal Revenue Code ("IRC"). The Plan has been amended since
receiving the determination letter. However, the Plan administrator
and the Plan's legal counsel believe the Plan is currently designed
and being operated in compliance with applicable requirements of the
IRC. Therefore, they believe the Plan is qualified and the related
trust remains tax-exempt as of the financial statement date.
(7) Related Party Transactions-
--------------------------
Master Trust assets are invested in mutual funds managed by the Trustee.
The investment in the Regal-Beloit Stock Fund is an investment in the
Plan Sponsor. These are not considered prohibited transactions by
statutory exemption under ERISA regulations.
(8) Subsequent Events-
Employees employed at the Lima, Ohio location who will be employed on
January 1, 2002, will receive a Company contribution of $1,000 if 12 full
months of service during the preceding year have been completed. If an
employee does not complete 12 full months of service during the preceding
year, such employee shall receive a reduced contribution as defined in the
Plan.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To the Plan Administrator of the
Marathon Electric Manufacturing Corporation
Hourly Employees' 401(k) Savings Plan:
As independent public accountants, we hereby consent to the incorporation of
our reports, included and incorporated by reference in this Form 11-JK, into
the Company's previously filed Registration Statement, File No. 333-48795.
ARTHUR ANDERSEN LLP
-------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
June 29, 1999.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
MARATHON ELECTRIC MANUFACTURING CORPORATION
-------------------------------------------
HOURLY EMPLOYEES 401(k) SAVINGS PLAN
-------------------------------------
ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
--------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
<S> <C> <C> <C>
Idenity of Issue, Borrower Description of Investment Including Maturity Date, Current
Lessor, or Similar Party Rate of Interest, Collateral, Par, or Maturity Value Cost Value
- -------------------------- ---------------------------------------------------- ---------- ----------
Fidelity Funds Advisor Series II, Growth Opportunities Fund $ 985,585 $1,229,083
Templeton Funds, Inc. Templeton Foreign Fund CL-1 215,397 183,341
American Century Investments American Century Balanced Investors Fund 1,167,515 1,210,757
Northern Capital, Inc. Northern Capital Equity Fund 2,046,734 3,433,823
Regal-Beloit Company Stock Fund* Common stock of Regal-Beloit Corporation 147,954 117,308
Marshall & Ilsley M&I Stable Principal Fund 2,004,434 2,004,434
*Party-in-interest
<FN>
The accompanying notes to financial statements are an integral part of this schedule.
</FN
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
MARATHON ELECTRIC MANUFACTURING CORPORATION HOURLY EMPLOYEES' 401(k) SAVINGS PLAN
- ---------------------------------------------------------------------------------
ITEM 27d SCHEDULE OF 5% REPORTABLE TRANSACTIONS
-----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expense Current Value of
Identity of Description Purchase Selling Lease Incurred with Cost of Asset on
Party Involved of Asset Price Price Rental Transaction Asset Transaction Date Net Gain
- -------------- -------------- -------- -------- ------ ------------- --------- ----------------- --------
Fidelity Funds Advisors
Series II,
Growth
Opportunities
Fund $599,869 $305,889 N/A N/A $ 861,514 $ 905,758 $ 44,244
American
Century
Investments Balanced
Investors Fund 493,224 244,919 N/A N/A 716,160 738,143 21,983
Marshall &
Ilsley* M&I Stable
Principal Fund 891,258 459,221 N/A N/A 1,350,479 1,350,479 -
Northern
Capital, Inc. Equity Fund 613,793 616,215 N/A N/A 1,017,781 1,203,008 212,227
<FN>
*Party-in-interest
The accompanying notes to financial statements are an integral part of this schedule.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MARATHON ELECTRIC MANUFACTURING CORPORATION
-------------------------------------------
HOURLY EMPLOYEES 401(k) SAVINGS PLAN
-------------------------------------
STATEMENT OF CHANGE IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
-------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Northern American M & I Fidelity Regal-
Capital Century Stable Advisor Templeton Beloit
Equity Balanced Principal Growth Foreign Stock
Fund Fund Fund Fund Fund Fund Total
---------- ---------- ---------- ---------- ---------- ---------- ----------
ADDITIONS:
Net Investment income (loss)
from Marathon Electric Manu-
facturing Corporation Master
Trust Fund $ 590,653 $ 160,916 $ 104,072 $ 226,911 $ (10,325) $ (45,916) $1,026,311
Contributions-
Employer 143,172 67,768 115,496 100,445 30,715 4,999 462,595
Participants 356,163 136,259 239,235 176,793 53,430 23,927 985,807
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total contributions 499,335 204,027 354,731 277,238 84,145 28,926 1,448,402
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Additions 1,089,988 364,943 458,803 504,149 73,820 (16,990) 2,474,713
---------- ---------- ---------- ---------- ---------- ---------- ----------
DEDUCTIONS:
Benefits paid to participants 179,193 109,769 236,302 54,779 14,046 840 594,929
Administrative expenses
and other 15,360 2,862 10,028 2,603 542 427 31,822
Transfers to other Company plans 2,417 3,130 2,938 2,597 636 486 12,224
---------- ---------- ---------- ---------- --------- --------- ----------
Total deductions 196,970 115,761 249,268 59,979 15,244 1,753 638,975
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ADDITIONS (DEDUCTIONS) 893,018 249,182 209,535 444,170 58,576 (18,743) 1,835,738
TRANSFERS BETWEEN FUNDS (307,649) 10,523 221,804 23,197 (83,926) 136,051 -
----------- ---------- ---------- ---------- ---------- ---------- ----------
Net Increase (decrease) 585,369 259,705 431,339 467,367 (25,350) 117,308 1,835,738
NET ASSETS AVAILABLE FOR
PLAN BENEFITS:
Beginning of year 2,848,454 951,052 1,583,355 761,716 208,691 - 6,353,268
---------- ---------- ---------- ---------- ---------- ---------- ----------
End of year $3,433,823 $1,210,757 $2,014,694 $1,229,083 $183,341 $117,308 $8,189,006
========== ========== ========== ========== ========== ========== ==========
<FN>
The accompanying notes to financial statements are in integral part of this statement.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MARATHON ELECTRIC MANUFACTURING CORPORATION
-------------------------------------------
HOURLY EMPLOYEES' 401(k) SAVINGS PLAN
-------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
AS OF DECEMBER 31, 1998
-----------------------
<C> <C> <C> <C> <C> <C> <C>
Northern American M&I Fidelity Regal-
Capital Century Stable Advisor Templeton Beloit
Equity Balanced Principal Growth Foreign Stock
Fund Fund Fund Fund Fund Fund Total
---------- ---------- ---------- ---------- --------- -------- ----------
ASSETS
Investments at fair
value- Marathon Electric
Manufacturing Corporation
Master Trust Fund $3,433,823 $1,210,757 $2,014,694 $1,229,083 $183,341 $117,308 $8,189,006
---------- ---------- ---------- ---------- -------- -------- ----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $3,433,823 $1,210,757 $2,014,694 $1,229,083 $183,341 $117,308 $8,189,006
========== ========== ========== ========== ======== ======== ==========
<FN>
The accompanying notes to financial statements are an integral part of this statement.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MARATHON ELECTRIC MANUFACTURING CORPORATION
-------------------------------------------
HOURLY EMPLOYEES' 401(k) SAVINGS PLAN
-------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
AS OF DECEMBER 31, 1997
-----------------------
<S> <C> <C> <C> <C> <C> <C>
Northern American M&I Fidelity
Capital Century Stable Advisor Templeton
Equity Balanced Principal Growth Foreign
Fund Fund Fund Fund Fund Total
---------- -------- ---------- -------- --------- ----------
ASSETS
Investments at fair
value- Marathon Electric
Manufacturing Corporation
Master Trust Fund $2,848,454 $951,052 $1,583,355 $761,716 $208,691 $6,353,268
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $2,848,454 $951,052 $1,583,355 $761,716 $208,691 $6,353,268
========== ======== ========== ======== ======== ==========
<FN>
The accompanying notes to financial statements are an integral part of this statement.
</FN>
</TABLE>
