Baldor Electric Company Announces Second
Quarter 2010 Sales Increase of 14%, Earnings Increase of 192% and
Record Operating Margin

FORT SMITH, Ark., class="xn-chron">July 29 /PRNewswire-FirstCall/ -- Baldor
Electric Company (NYSE: href='http://studio-5.financialcontent.com/prnews?Page=Quote&Ticker=BEZ'
title='BEZ'>BEZ) markets, designs and manufactures industrial
electric motors, mechanical power transmission products, drives and
generators.  Today, Baldor announced unaudited results for
second quarter 2010.

(Photo:   href='http://photos.prnewswire.com/prnh/20100729/DA43062'
title='http://photos.prnewswire.com/prnh/20100729/DA43062'>http://photos.prnewswire.com/prnh/20100729/DA43062)

(Photo:   href='http://www.newscom.com/cgi-bin/prnh/20100729/DA43062'
title='http://www.newscom.com/cgi-bin/prnh/20100729/DA43062'>http://www.newscom.com/cgi-bin/prnh/20100729/DA43062)

John McFarland, Chairman and CEO,
commented on the Company's results. "Sales for second quarter 2010
were $439.5 million, a 14% increase
from second quarter 2009 sales of $384.7
million.  Compared to second quarter 2009, net income
increased 192% to $22.8 million from
$7.8 million and diluted earnings per
share increased to $0.48 from class="xn-money">$0.17."

"We are pleased to report a record operating margin of 14.6%
this quarter compared to 11.5% one year ago.  This exceeds our
previous peak quarterly margin of 14.2%.  This improvement in
operating profit is the result of efforts by all of our employees
to reduce costs and implement productivity improvements."

McFarland added, "Compared to the same quarter last year,
incoming orders increased by a double-digit amount each month of
the quarter, with May having the strongest increase.  July's
incoming orders have continued to grow at a double-digit rate.
 We currently have a backlog of approximately class="xn-money">$200 million, up from class="xn-money">$135 million at year end.  As a
result, we expect sales growth in third quarter 2010 of 16-18%
compared to third quarter 2009."

Q… What can you tell us about your sales during the
quarter?

Sales growth was broadly spread across our end markets and
products.  Compared to second quarter 2009 electronic drives
sales showed the strongest increase during the quarter with sales
growth of 32%.  Sales of all products to domestic OEMS were up
16% for the quarter, and sales to domestic distributors were up
30%.  Customer inventories remain low, and we haven't seen
much willingness by our distributors to restock.

We saw positive sales growth in Latin
America and Canada, while
Asia Pacific and class="xn-location">Europe had slight sales declines.
 While international sales were down 6% overall, incoming
orders were up 14%.

Sales of Super-E motors were up 25% for the quarter compared to
an overall growth rate in motors of 12%.  Some of this growth
is due to early adoption of high efficiency motor standards
included in the upcoming Energy Independence and Security Act
(EISA).

Q… Are you prepared for the class="xn-chron">December 19, 2010 implementation of the new
energy standards?

Yes.  This legislation mandates that on class="xn-chron">December 19, 2010, most 1 to 500 horsepower
motors sold in the United States
will be required to meet higher efficiency standards.  We have
completed all of our engineering work, and these products are
available from Baldor today.  Some customers have already
converted to the more efficient motors.  As a result of this
early adoption of the new standards, we expect total motor sales to
grow faster over the balance of the year.

Q… How much did you reduce your debt balance during
the quarter?

We reduced our debt balance by $28.5
million during the quarter, bringing our year-to-date
reduction to more than $42 million.
 We believe we are on track to meet our goal of a minimum
$75 million in debt reduction this
year.

Q… How are you managing your accounts receivable and
inventories?

As sales have increased, so has our accounts receivable balance.
 However, the time it takes to collect those receivables has
decreased from first quarter this year and from second quarter last
year.

We have done many things to improve our inventory turns, and we
were able to support an 11% sales increase from first quarter 2010
with only a 3% increase in inventories

Q… Are you experiencing any shortages or price
increases with raw materials?

During the quarter, we experienced some difficulty obtaining
certain key components required for making our motors and
mechanical power transmission products.  While we don't
believe these shortages had a direct impact on sales, they did
cause us to produce fewer products than planned during June.
 We have been working closely with our suppliers, and they are
adjusting their production levels to meet our needs over the next
few months.

Along with these shortages have come price increases for many
materials.  This will result in our costs being higher during
the second half of the year than they were during the first half of
the year.  As a result, we implemented a price increase in
early June.  This increase will cover the cost increases we
are experiencing.  

Q…  What is your outlook for the third
quarter?

Based on current order rates, we believe third quarter 2010
sales will be in the range of $440 - $450
million, a 16-18% increase over third quarter 2009.

Q…  When is your next public update?

A conference call will be held Friday,
July 30, 2010, at 10:00 a.m.
CT (11:00 a.m. ET).
 Participants may listen to the discussion through the
Company's website at href="http://www.baldor.com/">www.baldor.com or by calling
800-763-5654.  A replay will be available through class="xn-chron">Friday, August 6, 2010 and can be accessed
by calling 800-633-8284 (reservation 21476142).

During third quarter, Baldor will make presentations at the
following conferences:

• Canaccord Genuity Growth Conference on class="xn-chron">August 10, 2010 in class="xn-location">Boston.  The presentation will be
  held at 10:00 a.m. ET, and the
  webcast will be accessible on our website at target="_blank"
  href="http://www.baldor.com/">www.baldor.com
• Jefferies Global Industrial Conference on class="xn-chron">August 11, 2010 in class="xn-location">New York
• Longbow Research Industrial Manufacturing and Technology
  Conference on September 16, 2010 in
  New York

(1) Non-GAAP Financial Measures.  These measures
exclude the gain on debt modification recorded in first quarter
2009 and the gain on property sale recorded in third quarter 2009.
 Baldor reports its financial results in accordance with U.S.
generally accepted accounting principles ("GAAP").  However,
management believes that certain non-GAAP performance measures
provide financial statement users meaningful comparisons between
current and prior period results, as well as important information
regarding performance trends.  Certain items discussed in this
press release are considered non-GAAP measures.  Non-GAAP
financial measures should be viewed in addition to, and not as an
alternative for, the Company's reported results.

Forward Looking Statement

This document contains statements that are forward-looking, i.e.
not historical facts.  The forward-looking statements
contained in this document (including "estimate", "believe",
"think", "will", "intend", "expect", "may", "could", "plan",
"anticipate", "would", "depend", "predict", "can", 'if", "assume",
"continue", "ongoing" or any grammatical forms of these words or
other similar words) are based on the Company's current
expectations and some of them are subject to risks and
uncertainties.  Accordingly, you are cautioned that any such
forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking
statements as a result of various factors.  The factors that
might cause such differences include, among others, the following:
 (i) changes in economic conditions, (ii) developments or new
initiatives by our competitors in the markets in which we compete,
(iii) fluctuations in the costs of select raw materials, (iv) the
success in increasing sales and maintaining or improving the
operating margins of the Company, and (v) other factors including
those identified in the Company's filings made from time-to-time
with the Securities and Exchange Commission.  These statements
should be read in conjunction with Baldor's most recent annual
report (as well as the Company's Form 10-K and other reports filed
with the Securities and Exchange Commission) containing a
discussion of the Company's business and of various factors that
may affect it.

href="http://www.prnewswire.com/news-releases/baldor-electric-company-announces-second-quarter-2010-sales-increase-of-14-earnings-increase-of-192-and-record-operating-margin-99571384.html"
target="_blank">SOURCE