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 333-48795
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
REQUIRED INFORMATION
Marathon Electric Hourly 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 schedules 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 HOURLY 401(k) SAVINGS PLAN
By: Marathon Electric Hourly 401(k) Savings Plan Administrative Committee
and Plan Administrator
/S/ Henry W. Knueppel June 28, 2000
----------------------------------
Henry W. Knueppel
/S/ David Eisenreich June 28, 2000
----------------------------------
David Eisenreich
APPENDIX I
MARATHON ELECTRIC HOURLY 401(k) SAVINGS PLAN
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999,
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999 AND
INDEPENDENT AUDITOR'S REPORT
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
Marathon Electric 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-K, into
the Company's previously filed Registration Statement, File No. 333-48795.
/S/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
June 26, 2000
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To the Plan Administrator of the Marathon Electric
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-K, into
the company's previously filed Registration Statement, File No. 333-48795.
/S/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
June 26, 2000
<PAGE>
MARATHON ELECTRIC
-----------------
HOURLY 401(k) SAVINGS PLAN
--------------------------
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998
-----------------------------------------------------
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------------------
<PAGE>
MARATHON ELECTRIC
-----------------
HOURLY 401(k) SAVINGS PLAN
--------------------------
FINANCIAL STATEMENTS
--------------------
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
<PAGE>
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, 1999 and 1998
Statement of Changes in Net Assets Available for Plan Benefits, for the
Year Ended December 31, 1999 and 1998
NOTES TO FINANCIAL STATEMENTS
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 Hourly 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Marathon Electric Hourly 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
Marathon Electric Hourly 401(k) Savings Plan Plan as of December 31, 1999 and
1998 and the changes in its 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 the 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 HOURLY 401(k) SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
As of
December 31
1999 1998
----------- ----------
<S> <C> <C>
Assets:
Investments, at fair value-
Marathon Electric Master Trust Fund $10,237,203 $8,189,006
----------- ----------
Net Assets Available for Plan Benefits $10,237,203 $8,189,006
=========== ==========
<FN>
The accompanying notes to financial statements are an integral part of these statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
MARATHON ELECTRIC HOURLY 401(k) SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
For the Years Ended
December 31
1999 1998
---------- ----------
<S> <C> <C>
Additions:
Net Investment Income from Marathon Electric
Manufacturing Corporation Master Trust Fund $1,263,782 $1,026,311
Contributions-
Employer 465,510 462,595
Participants 1,017,468 985,807
---------- ----------
Total Contributions 1,482,978 1,448,402
---------- ----------
Total Additions 2,746,760 2,474,713
Deductions
Benefits Paid to Participants 659,618 594,929
Administrative Expenses and Other 23,982 31,822
Transfers to Other Company Plans 14,963 12,224
---------- ----------
Total Deductions 698,563 638,975
---------- ----------
Net Increase 2,048,197 1,835,738
Net Assets Available for Plan Benefits:
Beginning of Year 8,189,006 6,353,268
----------- -----------
End of Year $10,237,203 $8,189,006
=========== ===========
<FN>
The accompanying notes to financial statements are an integral part of these
statements.
</FN>
</TABLE>
<PAGE>
MARATHON ELECTRIC
-----------------------------------------------
MARATHON ELECTRIC HOURLY 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 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 and its subsidiary, the Marathon
Special Products Corporation (referred to collectively as the "Company").
On May 28, 1999, the hourly 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 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 Lincoln employees;
and 10 percent of pretax annual income for employees at the West
<PAGE>
Plains and Lebanon facilities as defined by the Plan. The Company currently
matches 50 percent of the portion of an employee's contribution up 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 Lebanon and Lincoln facilities. 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. Lima employees who were employed on January 1, and who
completed their probationary period by that date received a Company
contribution of $1,000 for the years ending December 31, 1999 and 1998.
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.
<PAGE>
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 invest in the common stock of the Regal-Beloit
Corporation.
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, 1999 and
1998 were $8,465 and $11,238, 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.
<PAGE>
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.
(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.
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:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
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 $103,445,851 $85,254,182
============ ===========
<FN>
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.
</FN>
</TABLE>
<PAGE>
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 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:
<TABLE>
<CAPTION>
<S> <C> <C>
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 4,283,402 1,111,534
Hourly 401(k) Savings Plan 1,263,782 1,026,311
Salaried Employees' 401(k) Savings Plan 4,697,137 4,766,477
----------- ----------
Total Assets of the Master Trust $20,051,533 $9,431,614
=========== ==========
</TABLE>
(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
<PAGE>
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 either quarterly or
annually. There are no limitations or guarantees.
(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 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 the 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:
<TABLE>
<CAPTION>
<S> <C> <C>
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
92,205 -
----------- -----------
Total assets of the RBC Master Trust $13,292,640 $14,602,801
========== ===========
</TABLE>
Allocations of assets of the RBC Master Trust to participating plans as of
December 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------- ----------------------
<S> <C> <C> <C> <C>
Amount Percent Amount Percent
----------- ------- ----------- -------
Regal-Beloit Corporation
Personal Savings Plan $ 6,230,849 46.87% $ 6,805,476 46.60%
Regal-Beloit Corporation
Profit Sharing Plan 5,788,543 43.55 6,568,489 44.98
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%
=========== ======= =========== =======
</TABLE>
<PAGE>
RBC Master Trust income for the years ended December 31, 1999 and 1998 are
as follows:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Investment income-
Interest $ 11,261 $ 23,602
Dividends 309,644 280,725
Net Depreciation 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)
============ ============
<FN>
A pro-rata portion of this loss has been allocated to the Marathon Electric
Master Pension Trust.
</FN>
</TABLE>
(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.
<PAGE>
SCHEDULE I
MARATHON ELECTRIC
-----------------
HOURLY EMPLOYEES 401(k) SAVINGS PLAN
------------------------------------
ITEM 27 SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
--------------------------------------------------------
AS OF DECEMBER 31, 1999
-----------------------
<TABLE>
<CAPTION>
Description of Investment Including
Identity of Issue, 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 $1,410,787 $1,507,704
Templeton Funds, Inc. Templeton Foreign Fund CL-1 299,790 339,774
American Century Investments American Century Balanced 1,460,530 1,412,297
Investors Fund
Northern Capital, Inc. Northern Capital Equity Fund 2,455,650 4,543,873
Regal-Beloit Company Common stock of
Stock Fund* Regal-Beloit Corporation 176,400 149,161
Marshall & Ilsley* M&I Stable Principal Fund 2,283,976 2,283,796
*Party-in-interest
<FN>
The accompanying notes to financial statements are an integral part of this schedule.
</FN>
</TABLE>
