Statements of Changes in Net Assets Available for Plan Benefits for the Years Ended December 31, 2000 and 1999
 

General-

The Plan is a defined contribution plan and covers substantially all bargaining unit employees of the Foote-Jones/Illinois Gear and Velvet Drive Transmission Divisions of the Regal-Beloit Corporation (the "Company") who complete at least 500 hours of service in a year. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 as amended ("ERISA").

Plan Administration-

Marshall & Ilsley Trust Company (the "Trustee") is trustee and custodian of the Plan. The Plan is administered by the administrative committee which is appointed by the Board of Directors of the Company.

Contributions-

Company contributions were $450 and $440 for 2000 and 1999, respectively, for each Foote-Jones/Illinois Gear union participant who had completed a full year of credited service as of July 31st of each year. A contribution of $220 for 1999, was made for each Foote-Jones/Illinois Gear union employee who completed at least one-half year of credited service but less than one full year of credited service. There were no eligible employees in 2000 who had completed at least one-half year of credited service but less than one full year of credited service. Participants must be employed as of the date of the contribution to receive the amount into their account balance.

The Company's annual contribution is fixed by the collective bargaining agreement between Local 1199, International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, AFL-CIO and the Company. The contribution is recorded as an increase in participants' equity on an accrual basis based on service performed during the Plan year. Annual amounts are contributed to the Plan on or about August 1.

The Company contributed $400 and $350 on or about February 1 for each Velvet Drive Transmission employee provided they had been an employee of the Company for the past 12 months as of December 31, 2000 and 1999, respectively. Participants must be employed as of the date of the contribution to receive the amount into their account balance.

The Plan allows participants to make voluntary contributions via pretax payroll deductions ranging from 1% to 15% of total compensation.

Participant Accounts-

Individual participant accounts are maintained to receive Company and participant contributions. The Plan earnings, net of Trustee expenses, are allocated to each participant on each business day based on the proportion of the individual participant's account to the total of all participants' accounts.
 

Vesting-

Participants at all times have a fully vested interest in their individual accounts. Distribution of participants' accounts can be made upon normal retirement from the Company and following termination of service with the Company for any reason. Benefits paid consist of the participants' account balance plus any voluntary contributions together with all earnings.

Investment Options-

Participants were able to direct their contributions in 10% increments into any of the following investment options during the periods shown.

M&I Stable Principal Fund-

Amounts allocated to this fund are invested in the M&I Stable Principal Fund, a mutual fund whose objective is to maintain safety of principal while generating a level of current income generally exceeding that of a money market fund. The fund primarily invests in traditional and synthetic investment contracts issued by insurance companies or banks.

Amounts allocated to this fund are invested in the Marshall Large-Cap Growth and Income Fund, a mutual fund with the goal of providing capital appreciation and income. The fund invests in a diversified portfolio of common stocks of large-sized companies whose market capitalizations exceed $10 billion and have a history of stable earnings and/or growing dividends.

Amounts allocated to the Regal-Beloit Company Stock Fund are invested in the Regal-Beloit Corporation Master Trust, which invests solely in Regal-Beloit Corporation common stock. Investments in, sales of, and reinvestment in Company stock are made on the open market from the Company or its affiliates or in negotiated transactions with independent parties pursuant to the direction of the Plan administrator.

Amounts allocated to this fund are invested in the Marshall Intermediate Bond Fund, a mutual fund with the goal of maximizing total return consistent with current income. The fund invests in intermediate-term investment grade bonds and notes including corporate, asset-backed, mortgage-backed and U.S. Government securities.

Amounts allocated to this fund are invested in the Fidelity Balanced Fund, a mutual fund whose objective is to generate high income with preservation of capital. The fund invests in a broadly diversified portfolio of high yielding securities, including common and preferred stocks, and bonds. At least 25% of its assets will always be invested in fixed income securities.

Amounts allocated to this fund are invested in the Strong Opportunity Fund, a mutual fund which seeks to provide capital growth. At least 70% of the fund's assets will always be invested in the common stocks of growth companies, generally described as small to medium-sized.
 

Participant Loans-

The Plan permits a participant to borrow up to 50% of his or her account balance up to a maximum of $50,000. These loans bear interest at the prevailing market rate (ranging from 7.25% to 10.5% as of December 31, 2000) and generally must be repaid within five years.

Plan Termination-

The Plan is defined by the collective bargaining agreement between Local Union 1199, International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, AFL-CIO and the Company dated December 1, 1989, and may not be materially modified or terminated by the Company without negotiation with the Union. Distribution upon termination or complete discontinuance of contributions will be made in a manner selected by the Trustee. Presently, the Company has no intention to terminate the Plan.

The following presents investments that represent five percent or more of the Plan's net assets. All investments are participant directed.

The assets of the Plan are commingled and are segregated in the accounts of the Master Trust. The market value of the assets held in the Master Trust as of December 31, 2000 and 1999 is as follows: