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, 1999
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 333-48815
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
MARATHON ELECTRIC SALARIED EMPLOYEES' 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, WISCONSIN 53511
<PAGE>
REQUIRED INFORMATION
Marathon Electric Salaried Employees 401(k) Savings Plan ("Plan") is
subject to the Employee Retirement Income Security Act of 1974 ("ERISA").
Therefore, in lieu of the requirements of Items 1-3 of Form 11-K,
the financial statements and schedule of the Plan for the two fiscal years
ended December 31, 1998 and 1999, 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
undersigned hereunto duly authorized.
MARATHON ELECTRIC SALARIED EMPLOYEES 401(k) SAVINGS PLAN
By: Marathon Electric Salaried Employees 401(k) Savings Plan Administrative
Committee and Plan Administrator
/S/ Kenneth F. Kaplan June 28, 2000
-----------------------------
Kenneth F. Kaplan
/S/ Henry W. Knueppel June 28, 2000
-----------------------------
Henry W. Knueppel
<PAGE>
APPENDIX I
MARATHON ELECTRIC SALRIED EMPLOYEES 401(k) SAVINGS PLAN
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1998
AND 1999, SUPPLEMENTAL SCHEDULE AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1999 AND INDEPENDENT AUDITOR'S REPORT
<PAGE>
Consent of Independent Public Accountants
-----------------------------------------
To the Plan Administrator of the Marathon Electric
Sarlied 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-K, into
the Company's previously filed Registration Statement, File No. 333-48815.
/S/ ARTHUR ANDERSEN LLP
--------------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
June 26, 2000
<PAGE>
MARATHON ELECTRIC
-----------------
SALARIED EMPLOYEES' 401(k) SAVINGS PLAN
---------------------------------------
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998
-----------------------------------------------------
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------------------
<PAGE>
MARATHON ELECTRIC
-----------------
SALARIED EMPLOYEES' 401(k) SAVINGS PLAN
---------------------------------------
FINANCIAL STATEMENTS
--------------------
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
TABLE OF CONTENTS
-----------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statements of Net Assets Available for Plan Benefits, as of
December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Plan
Benefits, for the Years Ended December 31, 1999 and 1998
NOTES TO FINANCIAL STATEMENTS
SUPPLEMENTAL SCHEDULE SUPPORTING FINANCIAL STATEMENTS:
Schedule I: Schedule of Assets Held for Investment Purposes
as of December 31, 1999
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the Marathon Electric
Salaried Employees' 401(k) Savings Plan:
We have audited the accompanying statements of net assets
available for plan benefits of the Marathon Electric Salaried
Employees' 401(k) Savings Plan as of December 31, 1999 and 1998
and the related statements of changes in net assets available for
plan benefits for the years then ended. 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 and
supplemental schedule 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, 1999
and 1998 and the changes in net assets available for plan
benefits, for the years then ended on the basis of accounting
described in Note 2.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedule, as listed in the accompanying table of
contents, is presented for purpose of additional analysis and is
not a required part of the basic financial statements, but is
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. This
supplemental schedule is the responsibility of the Plan's
management. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/S/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
May 26, 2000
<PAGE>
MARATHON ELECTRIC
Salaried Employees' 401(K) Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
(1) Description of Plan and Funding Policy-
--------------------------------------
The following description of the Marathon Electric Salaried
Employees' 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 employees
of the Marathon Electric (the "Company") who are compensated in whole,
or in part, on a salaried basis, are not in any other defined benefit
plan maintained by the Company, or are not members of a collective
bargaining unit which has a bargaining agreement with the
Company.
On May 28, 1999, the salaried employees of the Lincoln Motors
division ("Lincoln") of Marathon Electric were added to the Plan upon
acquisition of the division. Prior employee service with their previous
employer counted towards eligibility to participate in the Plan, but
not toward vesting. Impact on Plan financial statements was
immaterial.
An employee becomes eligible to participate in the Plan on the
first day of the month subsequent to the employee obtaining
the age of 21 and one year of service, or the date the
employee transfers to salaried status. The Plan is subject to
the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA"), as amended.
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.
Contributions-
-------------
Participants are allowed to contribute up to 15 percent of
their pretax annual income as defined by the Plan. The
Company makes a 50% matching contribution of the employee's
contribution up to 5 percent of pretax annual income. The
Company has the option to annually increase the amount of its
matching contribution at its discretion.
Vesting-
-------
Participants are 100 percent vested in their contributions and
the earnings on those contributions. Company contributions
and the earnings thereon vest after the earlier of three years
of Plan participation or five years of service. There is no
partial vesting.
<PAGE>
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 safety of principal, price
stability, and returns that are generally higher than a
money market rate. Investments in the fixed fund are in
contracts with insurance carriers and banks. The contracts
are reported at contract value, which approximates fair
value. A small portion of the fixed income 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.
Regal-Beloit Stock Fund-
-----------------------
This fund allows participants to purchase common stock of
Regal-Beloit Corporation.
Participant Loans-
-----------------
Loan terms range from one year to five years, or ten years for
the purchase of a primary residence. Loans are limited to 50
percent of the participant's account up to $50,000, less a
participant's highest outstanding loan balance under the plan
in the last 12 months. Loans bear interest at the prime rate
for one to five-year loans or the 15-year mortgage rate for
ten-year loans. Interest rates on existing loans range from
7.12% to 10.50%. Principal and interest are paid through
payroll deductions.
Payment of Benefits-
-------------------
On termination of service, the participant receives a lump-sum
amount equal to the value of the participant's account.
<PAGE>
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, 1999 and
1998, were $9,622 and $54,466, 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 the
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.
Payment of Benefits-
-------------------
Benefit payments to participants are recorded upon distribution.
Administrative Expenses-
-----------------------
Substantially all administrative expenses are paid by the
Plan. These expenses include investment management and trustee fees.
New Accounting Standard-
-----------------------
Effective for period ending December 31, 1999, the Plan
adopted Statement of Position 99-3, "Accounting for and
Reporting of Certain Defined Contribution Plan Investments and
Other Disclosure Matters" ("SOP 99-3"). SOP 99-3 eliminates
the requirement for a defined contribution plan to present
participant directed plan investments by general type in the
statement of net assets available for plan benefits. Prior
year financial statements have been restated to conform with
SOP 99-3.
(3) Investments-
-----------
The Plan's investments are commingled with the assets of
several other Company plans in the Marathon Electric Master
Pension Trust (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.
<PAGE>
The assets of each Plan are segregated within the accounts of
the Master Trust. The market value of the assets held in the
Master Trust as of December 31 are as follows:
1999 1998
-------- -----------
Accrued Interest and Dividends $ 112,480 $ 160,791
Marshall Money Market Fund 747,163 1,149,756
M&I Stable Principle Fund 8,392,682 8,219,564
Common Stock 50,574,335 37,898,292
American Century Balanced Fund 5,992,879 5,887,726
Northern Capital Equity Fund 21,033,982 16,117,312
Fidelity Advisor Growth Fund 9,915,333 10,297,156
Templeton Foreign Fund 1,876,244 930,525
Regal Beloit Corporation Master Trust 798,638 753,086
Fixed Income Securities 3,436,740 3,199,464
Participant Loans 575,375 640,510
------------ -----------
Total Assets of the Master Trust $103,455,851 $85,254,182
============ ===========
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:
<TABLE>
<CAPTION>
1999 1998
--------------------- ----------------------
Amount % Amount %
------------ ------ ----------- ------
<S> <C> <C> <C> <C>
Salaried Employees' Pension Plan $ 38,173,087 36.9% $29,448,716 34.5%
Wausau Hourly Pension Plan 16,656,441 16.1% 12,916,088 15.2
Hourly 401(k) Savings Plan 10,237,203 9.9% 8,189,006 9.6
Salaried Employees' 401(k) Savings Plan 38,389,120 37.1% 34,700,372 40.7
------------ ------ ----------- ------
Total Assets of the Master Trust $103,455,851 100.0% $85,254,182 100.0%
</TABLE>
Master Trust income and its allocation to the participating
plans for the years ended December 31 are as follows:
1999 1998
----------- ----------
Interest and Dividend Income $ 779,055 $ 707,399
Realized Gains, Net 7,458,652 6,063,861
Unrealized Appreciation in the Fair
Value of Investments, Net 11,813,826 2,660,354
----------- ----------
Total Master Trust income $20,051,533 $9,431,614
=========== ==========
1999 1998
----------- ----------
Salaried Employees' Pension Plan $ 9,807,212 $2,527,292
Wausau Hourly Pension Plan 4,283,404 1,111,534
Hourly 401(k) Savings Plan 1,263,780 1,026,311
Salaried Employees' 401(k) Savings Plan 4,697,137 4,766,477
----------- ----------
Total Master Trust income $20,051,533 $9,431,614
=========== ==========
<PAGE>
(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. These investment contracts are
valued at amortized cost, which represents fair market value.
The average crediting interest rates for the years ending
December 31, 1999 and 1998 were 6.05% and 5.93%, respectively.
The funds average yields for 1999 and 1998 were 5.99% and
6.20% respectively.
The crediting rates for the contacts are fixed or reset daily.
There are no limitations or guarantees on the contracts.
(5) Plan Participation in the Regal-Beloit Corporation Master Trust-
---------------------------------------------------------------
Effective February 1, 1998, the Company's Board of Directors
established an "Employee Stock Fund" within the Plan to enable
participants to purchase Regal-Beloit Corporation stock.
Effective April 1, 1998, the Plan's investment in Regal-Beloit
Corporation stock was commingled into the Regal-Beloit
Corporation Master Trust (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
participating plans based on each plan's share of RBC Master
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 RBC Master Trust as of December 31,
1999 and 1998 is as follows:
1999 1998
----------- -----------
Regal-Beloit Corporation Stock $13,009,033 $14,374,579
Marshall Money Market Fund 115,702 154,077
Accrued Income 75,700 74,145
Pending Trades 92,205 -
----------- -----------
Total assets of the RBC Master Trust $13,292,640 $14,602,801
=========== ===========
Allocations of assets of the RBC Master Trust to participating
plans as of December 31, 1999 and 1998 are as follows:
1999 1998
-------------------- --------------------
Amount Percent Amount Percent
----------- ------- ----------- -------
Regal-Beloit Corporation
Personal Savings Plan $ 6,230,849 46.87% $ 6,805,476 46.60%
Regal-Beloit Corporation 5,788,543 43.55 6,568,489 44.98
Profit Sharing Plan
Regal-Beloit Corporation
Savings and Protection Plan 474,609 3.57 475,749 3.26
Marathon Electric Salaried
Employees' 401(k) Savings Plan 649,478 4.89 635,779 4.36
Marathon Electric Hourly
401(k) Savings Plan 149,161 1.12 117,308 0.80
----------- ------ ----------- ------
Total assets of the
RBC Master Trust $13,292,640 100.00% $14,602,801 100.00%
=========== ======= =========== =======
<PAGE>
RBC Master Trust loss for the years ended December 31, 1999
and 1998 is as follows:
1999 1998
----------- -----------
Investment income-
Interest $ 11,261 $ 23,602
Dividends 309,644 280,725
Net (Depreciation) Appreciation in Fair
Market Value of Regal-Beloit Corporation
Common Stock (1,358,911) (3,979,555)
------------ ------------
Total RBC Master Trust Loss $(1,038,006) $(3,675,228)
============ ============
A pro rata portion of this loss has been allocated to the
Marathon Electric Master Pension Trust.
(6) Tax Exemption Status of the Plan-
---------------------------------
The Internal Revenue Service has determined and informed the
Company by a letter dated January 5, 1996, 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 selected 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.
<PAGE>
MARATHON ELECTRIC
-----------------
SALARIED EMPLOYEES' 401(k) SAVINGS PLAN
---------------------------------------
Plan's EIN #39-0449780 Plan #008
Schedule I--Schedule of Assets Held for Investment Purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Identity of Issue, Description of Investment Including
Borrower Maturity Date, Rate of Interest, Current
Lessor, or Similar Party Collateral, Par, or Maturity Value Cost Value
---------------------------- -------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Fidelity Funds Advisor Series II, Growth Opportunities Fund $7,202,198 $8,407,629
Templeton Funds, Inc. Templeton Foreign Fund CL-1 1,354,503 1,536,470
American Century American Century Balanced Investors Fund 4,725,666 4,580,582
Investments
Northern Capital, Inc. Northern Capital Equity Fund 8,475,815 16,490,109
Marshall & Ilsley* M&I Stable Principal Fund 6,094,280 6,094,280
Loans to participants Loans 575,375 575,375
Regal-Beloit Stock Fund* Regal-Beloit Stock $ 732,445 $ 649,478
*Party-in-interest
<FN>
The accompanying notes to financial statements are an integral part of this
schedule.
</FN>
</TABLE>
<PAGE>
MARATHON ELECTRIC SALARIED EMPLOYEE'S 401(k) SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
As of
December 31,
1999 1998
---- ----
Assets:
Investments, at Fair Value-
Marathon Electric Master Trust Fund $38,389,120 $34,700,372
----------- -----------
Net Assets Available for Plan Benefits $38,389,120 $34,700,372
=========== ===========
The accompanying notes to financial statements are an integral
part of these statements.
<PAGE>
MARATHON ELECTRIC SALARIED EMPLOYEES' 401(k) SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
For the Years
Ended
December 31,
-----------------------
1999 1998
Additions: ----------- -----------
Net Investment Income from Marathon
Electric Master Trust Fund $ 4,697,137 $ 4,766,477
Contributions-
Employer 858,093 1,079,720
Participants 1,479,428 1,428,142
----------- -----------
Total Contributions 2,337,521 2,507,862
----------- -----------
Total Additions 7,034,658 7,274,339
Deductions:
Benefits Paid to Participants 3,242,101 2,553,969
Administrative and Other Expenses 118,555 118,560
----------- -----------
Total Deductions 3,360,656 2,672,529
----------- -----------
Net Additions 3,674,002 4,601,810
Transfers in from Other Company Plans 14,746 11,981
----------- -----------
Net Increase 3,688,748 4,613,791
Net Assets Available for Plan Benefits:
Beginning of Year 34,700,372 30,086,581
----------- -----------
End of Year $38,389,120 $34,700,372
=========== ===========
The accompanying notes to financial statements are an integral
part of these statements.
