Baldor Electric Co – ‘10-K405’ for 1/3/98

As of:  Friday, 3/27/98   ·   For:  1/3/98   ·   Accession #:  9342-98-4   ·   File #:  1-07284

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Annual Report — [x] Reg. S-K Item 405   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Annual Report -- [x] Reg. S-K Item 405                17     60K 
 2: EX-13       Annual or Quarterly Report to Security Holders        24     92K 
 3: EX-21       Subsidiaries of the Registrant                         1      5K 
 4: EX-23       Consent of Experts or Counsel                          1      8K 
 5: EX-27       Financial Data Schedule (Pre-XBRL)                     1      8K 
 6: EX-27.1     Restatement for Sfas No 128 for 1996 & 1995            1      7K 

10-K405   —   Annual Report — [x] Reg. S-K Item 405
Document Table of Contents

10-K405
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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) 
 OF THE SECURITIES EXCHANGE ACTOF 1934

 For the fiscal year ended:                          Commission File Number:
January 3, 1998                                          1-7284   
---------------                                          ------   

 BALDOR ELECTRIC COMPANY
----------------------------------------------------------
(Exact name of registrant as specified in its charter)

     Missouri                                       43-0168840
     --------                                       ----------
(State or other jurisdiction of                          (I.R.S. Employer   
incorporation or organization)                         Identification No.)

5711 R. S. Boreham, Jr St,                                          
Fort Smith, Arkansas  72908                            (501) 646-4711 
-----------------------------------------                   ---------------     
(Address of principal executive offices)                 (Telephone Number)   

 Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of each exchange on
Title of Each Class                                   which registered
-------------------                                   ----------------
Common Stock, $0.10 Par Value                        New York Stock Exchange
Common Stock Purchase Rights                         New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes[X] No                                                     

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]                                                                  

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
registrant based on the closing price on February 27, 1998, was $689,146,181.   

At February 27, 1998, there were 36,111,501  shares of the  registrant's  common
stock outstanding.                                                              

 DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Shareholders  for the fiscal year ended January
3, 1998 (the "Annual Report to  Shareholders  for 1997"),  are  incorporated  by
reference into Part II.                                                         

Portions of the Proxy  Statement for the Annual  Meeting of  Shareholders  to be
held May 2, 1998 (the "1998 Proxy  Statement"),  are  incorporated  by reference
into Parts I and III.                                                           

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PART I                                                                          

Item 1.    Business                                                             
--------------------------                                                      

Baldor  Electric  Company (  "Baldor"  or the  "Company")  was  incorporated  in
Missouri in 1920.  The Company  operates in one industry  segment which includes
the design, manufacture,  and sale of electric motors and drives. In addition to
electric  motors  and  drives,  products  include  speed  reducers,   industrial
grinders,  buffers,  polishing lathes,  stampings,  castings,  and repair parts.
Baldor has made several small acquisitions;  however, the majority of its growth
has come internally through broadening its markets and product lines.           

Products                                                                        

Sales  of  industrial  electric  motors  represented  approximately  76%  of the
Company's  business in 1997,  76% in 1996 and 78% in 1995.  The AC motor product
line  presently  ranges in size from 1/50 through 800  horsepower.  The DC motor
product line presently ranges from 1/50 through 700 horsepower.                 

The  Company  also  sells  industrial  control  products,  which  include  servo
products,  DC controls,  position controls,  and inverter and vector drives. The
Company's line of adjustable  speed controls ranges from 1/50 to 600 horsepower.
With these products,  the Company provides its customers the ability to purchase
a "Drive" which Baldor defines as an industrial motor and an electronic control,
from one  manufacturer.  Sales of drives  were  approximately  23% of total 1997
sales, 22% of total 1996 sales, and 20% of total 1995 sales.                    

Baldor's motors and drives are designed,  manufactured, and marketed for general
purpose uses ("stock  products") and for individual  customer  requirements  and
specifications   ("custom   products").    Stock   product   sales   represented
approximately  62% of the Company's total sales in 1997, 63% in 1996, and 62% in
1995.  Most stock  product  sales are to  customers  who place their  orders for
immediate shipment from current inventory. Custom products generally are shipped
within  four weeks from the date of order.  Because of these and other  factors,
the Company does not believe that its backlog represents an accurate  indication
of future shipments.                                                            

Sales and Marketing                                                             

The products of the Company are  marketed  throughout  the United  States and in
more than 55 foreign countries.  The company's field sales organization consists
of more than 50 groups of independent manufacturer's representatives,  including
28 in the United  States.  The  remainder of the Company's  representatives  are
located in various parts of the world,  including Canada, Europe, Latin America,
Australia, and the Far East.                                                    

Custom products and stock products are sold to original equipment  manufacturers
("OEMs") . Stock products are also sold to independent  distributors for resale,
often  as  replacement   components  in  industrial  machinery  which  is  being
modernized or upgraded for improved performance.                                

The Company  conducts  business  with a large number of  customers  and does not
believe that the loss of any single customer would have a material effect on its
total business.                                                                 

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Competition                                                                     

The Company faces  substantial  competition  in the sales of its products in all
markets  served.  Some of the  Company's  competitors  are larger in size or are
divisions  of  large  diversified   companies  and  have  substantially  greater
financial  resources.  The Company  competes by providing its  customers  better
value through  product  quality and  efficiency and better  services,  including
availability,  shorter lead-times,  on-time delivery,  product  literature,  and
training.                                                                       

The  Company  is not aware of any  industry-wide  statistics  from  which it can
precisely  determine  its relative  position in the  industrial  electric  motor
industry.  In the United States,  certain industry statistics are available from
the  U.S.  Department  of  Commerce  and  the  National  Electric  Manufacturers
Association.  However, these sources do not include all competitors or all sizes
of motors.  The Company believes that it is a significant  factor in the markets
it serves and that its share of the market has  increased  over the past several
years.                                                                          

Manufacturing                                                                   

The Company  manufactures many of the components used in its products  including
laminations,  motor hardware,  and aluminum die castings.  Manufacturing many of
its own  components  permits the Company to better  manage  cost,  quality,  and
availability.  In addition to the manufacture of components, the Company's motor
manufacturing operations include machining,  welding, winding,  assembling,  and
finishing operations.                                                           

The raw  materials  necessary  for the Company's  manufacturing  operations  are
available from several sources. These materials include steel, copper wire, gray
iron castings,  aluminum, and insulating materials,  many of which are purchased
from more than one supplier;  the Company believes that alternative  sources are
available for such materials.                                                   

Research and Engineering                                                        

The Company's design and development of electric motors and drives includes both
the development of products which extend the product lines and the  modification
of  existing   products  to  meet  new  application   requirements.   Additional
development work is done to improve  production  methods.  Costs associated with
research, new product development, and product and cost improvements are treated
as expenses when incurred and amounted to  $22,900,000  in 1997,  $19,900,000 in
1996, and $17,200,000 in 1995.                                                  

Environment                                                                     

Compliance with laws relating to the discharge of materials into the environment
or  otherwise  relating  to the  protection  of the  environment  has  not had a
material effect on capital expenditures,  earnings, or the financial position of
the Company and is not expected to have such an effect.                         

Employees                                                                       

As of January 3, 1998, the Company had 3,843 employees.                         

Executive Officers of the Registrant                                            

Information  regarding executive officers is contained in Part III, Item 10, and
incorporated herein by reference.                                               

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International Operations                                                        

For each of the three fiscal years in the period ended  January 3, 1998,  export
and  international  sales  revenues  have  increased  and  represented  15.1% of
consolidated sales in 1997, 14.5% in 1996, and 14.0% in 1995. See also Note H on
page 24 of the Annual Report to Shareholders for 1997.                          

The  Company's  products  are  distributed  in more than 55  foreign  countries,
principally in Canada, Europe,  Australia,  the Far East, and Latin America. The
Company's  international  operations  include the Baldor ASR group of  companies
which was  acquired  in 1983.  Baldor  ASR has  sales  offices  in  Switzerland,
Germany,  Italy,  and the United  Kingdom.  Baldor ASR also has  development and
manufacturing  operations in Germany.  In April 1997,  the Company  acquired the
UK-based  Optimised  Control Ltd.  Baldor  Optimised  Control has sales offices,
development and  manufacturing  facilities  located in the U.K. The Company also
owns  majority  interests in Baldor  Electric (Far East) Pte.  Ltd.,  located in
Singapore,  and Australian Baldor Pty. Limited which has locations in Sydney and
Melbourne.  The Company wholly owns Baldor de Mexico,  S.A. de C.V.,  located in
Mexico City.                                                                    

The company believes that it is in a position to act on global  opportunities as
they become available. The Company also believes that there are additional risks
attendant  to  international  operations  including  currency  fluctuations  and
possible  restrictions on the movement of funds.  However,  these risks have not
had a significant adverse effect on the Company's business.                     

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Item 2.  Properties                                                             
---------------------------                                                     

The Company believes that its facilities, including equipment and machinery, are
in good condition,  suitable for current operations,  adequately  maintained and
insured, and capable of sufficient  additional  production levels. The following
table sets forth certain information with respect to the Company's properties.  

                                                                    AREA
LOCATION                      PRIMARY USE                             (SQ.FT.)  
--------                      -----------                            ---------- 

Fort Smith, AR             AC motor production                         298,150  
                         Distribution and service center             208,000
                         Administration and engineering offices       70,950
                         Aluminum die casting                         76,400

St. Louis County, MO       Metal stamping and engineering toolroom     133,850  
                         DC and miscellaneous motor production        55,600

Columbus, MS               AC motor production                         191,000  

Westville, OK              AC and DC motor production                  207,900  

Fort Mill, SC              DC motor, AC motor                          108,000  
and tachometer production 

Clarksville, AR            Subfractional motor, gear motor,            167,000  
            and worm-gear speed reducer production

Ozark, AR                  AC motor production                          84,050  

Five other                 Metal stamping and motor, drives,                    
domestic locations         and servomotor production                   141,900  

Ten foreign                Sales and distribution centers                       
locations                  and servodrive production                    84,200  
                                                                    ----------
                                                                   1,827,000

Certain  properties  listed above (486,400 sq. ft. in the aggregate) are leased,
principally pursuant to Industrial Revenue Bond agreements,  and where material,
are accounted for as capitalized  lease  obligations.  Certain lease  agreements
contain  purchase  options at varying prices and/or  renewal  options at reduced
rentals for extended additional periods.                                        

Item 3.  Legal Proceedings                                                      
--------------------------------------                                          

The  Company  is party  to a  number  of  legal  proceedings  incidental  to its
business, none of which is deemed to be material to its operations or business. 

Item 4.  Submission of Matters to a Vote of Security Holders                    
-------------------------------------------------------------                   

Not applicable.                                                                 

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PART II                                                                         

Item 5.  Market for the Registrant's Common Equity and                          
Related Shareholder Matters                                   
-------------------------------------------------------                         

Information under the captions "Dividends paid", "Common stock price range", and
"Shareholders"  on page 29 of the  Annual  Report  to  Shareholders  for 1997 is
incorporated herein by reference.                                               

Item 6.  Selected Financial Data                                                
--------------------------------                                                

Information under the caption  "Eleven-Year  Summary of Financial Data" only for
years 1993 through  1997 for net sales,  net  earnings,  net earnings per share,
dividends per share, long-term  obligations,  and total assets on page 14 of the
Annual Report to Shareholders for 1997 is incorporated herein by reference.     

Item 7. Management's  Discussion and Analysis of Financial Condition            
and Results of Operations                                       
--------------------------------------------------------------------            

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations on pages 16 and 17 of the Annual Report to  Shareholders  for 1997 is
incorporated herein by reference.                                               

Item 8.  Financial Statements and Supplementary Data                            
-----------------------------------------------------                           

The consolidated financial statements of the Company on pages 18 through 26, the
"Report  of  Ernst & Young  LLP,  Independent  Auditors,"  on page  26,  and the
"Summary  of  Quarterly  Results of  Operations  (Unaudited)"  on page 19 of the
Annual Report to Shareholders for 1997 are incorporated herein by reference.    

Item 9.  Changes in and Disagreements with Accountants on                       
Accounting and Financial Disclosure                           
----------------------------------------------------------                      

None.                                                                           

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PART III                                                                        

Item 10.  Directors and Executive Officers of the Registrant                    
--------------------------------------------------------------                  

The current  executive  officers of the  Company,  each of whom is elected for a
term of one year or until his successor is elected and qualified, are:          

                                                       Served as
                                                       Officer
Name                 Age    Position                              Since         
----                 ---    --------                              -----         
R. S. Boreham, Jr.   73   Chairman of the Board                   1961          

R. L. Qualls         64   Vice Chairman                           1986          

John A. McFarland    46   President                               1990          

Robert D. Butler     55   Executive Vice President -              1996          
Operations                  

Ronald E. Tucker     40   Controller                              1997          

Charles H. Cramer    53   Vice President - Personnel              1984          

Lloyd G. Davis       50   Chief Financial Officer,                1992          
     Executive Vice President-Finance,
Secretary, and Treasurer    

Gene J. Hagedorn     50   Vice President - Materials              1994          

James R. Kimzey      59   Executive Vice President -              1984          
Research and Engineering    

Randy L. Colip       38   Vice President - Sales                  1997          

Jerry D. Peerbolte   41   Vice President - Marketing              1990          

Randal G. Waltman    48   Vice President - Engineering            1997          

Each of the  executive  officers,  except  Robert D.  Butler,  has  served as an
officer or in a management capacity with the Company for the last five years.   

Mr. Butler, who joined the Company in 1996,  previously  operated  Manufacturing
Services International which provided manufacturing consulting services to small
and medium sized U.S. based companies for more than the previous five years.    

There are no family relationships among the directors or executive officers. The
information  under  the  caption  "Election  of  Directors"  of the  1998  Proxy
Statement is incorporated herein by reference.                                  

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Item 11.  Executive Compensation                                                
-------------------------------------------------                               

Information contained in the 1998 Proxy Statement under the caption "Information
About  the  Board  of  Directors  and   Committees  of  the  Board  --  Director
Compensation" and information under the caption "Executive Compensation", except
for the information  contained in the sub-captions  "Report of the Executive and
Stock Option  Committees"  and  "Performance  Graph" is  incorporated  herein by
reference.                                                                      

Item 12.  Security Ownership of Certain Beneficial Owners and Management        
---------------------------------------------------------------------------     

The  security  ownership by officers and  directors  included  under the caption
"Security  Ownership of Certain  Beneficial  Owners and  Management" of the 1998
Proxy Statement is incorporated herein by reference.                            

Item 13.  Certain Relationships and Related Transactions                        
--------------------------------------------------------                        

None                                                                            

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PART IV                                                                         

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K      
------------------------------------------------------------------------------- 

(a) (1) and (2) - The  response  to this  portion of Item 14 is  submitted  as a
      separate section of this Report at page 13 hereof.

(3)   Listing of Exhibits                                               

          Exhibit  3(i) - The  Restated  Articles  of  Incorporation  of  Baldor
          Electric  Company,  effective March 14, 1995, filed as Exhibit 3(i) to
Form 10-K for the year ended December 31, 1994.             

        Exhibit 3(ii) - Bylaws of Baldor Electric Company (as amended) dated
          February  6, 1995,  filed as  Exhibit  3(ii) to Form 10-K for the year
ended December 31, 1994.                                    

          Exhibit 4(i)(a) - Rights  Agreement dated May 6, 1988,  between Baldor
          Electric Company and Wachovia Bank of North Carolina,  N.A.  (formerly
          Wachovia Bank & Trust Company, N.A.), as Rights Agent originally filed
          as Exhibit 1 to Registrant's  Form 8-K Current  Report,  dated May 13,
          1988,  and  refiled as  Exhibit  4(i) to Form 10- K for the year ended
December 31, 1994.                                          

          Exhibit  4(i)(b)  -  Amendment  Number 1 to the  Shareholders'  Rights
          Agreement  dated  February 5, 1996 filed as Exhibit 2 to  Registrant's
Form 8-A/A dated March 21, 1996.                            

          Exhibit  4(iii) - The  Registrant  agrees to furnish to the Securities
          and Exchange  Commission upon request pursuant to Item  601(b)(4)(iii)
          of  Regulation  S-K copies of  instruments  defining the rights of the
          holders  of  long-term  debt of the  Registrant  and its  consolidated
affiliates.                                                 

          Exhibit  (10) -  Exhibits  10(iii)(A)(1)  through  10(iii)(A)(6)  were
          previously  submitted  as  exhibits  and are  incorporated  herein  by
reference:                                                  

            * 10(iii)(A)(1)  1982 Incentive Stock Option Plan (originally  filed
         as  Exhibit  10.8 to Form 10-K for year  ended  December  31,
         1981,  refiled as Exhibit 10.1 to For 10-K for the year ended
December 28, 1991).                                 

            * 10(iii)(A)(2)  Officers  Compensation  Plan  (originally  filed as
           Exhibit  10.6 to Form 10-K for year ended  December  31,  1988,
           and  refiled as Exhibit 10(iii)(A)(2) to Form 10-K for the year
ended December 31, 1994).                           

           * 10(iii)(A)(3) 1987  Incentive  Stock  Plan  (originally filed  as
             Appendix A to  Registrant's  Proxy Statement dated April 3, 1987,
          and refiled as Exhibit 10(iii)(A)(3) to Form 10-K for the year
ended December 31, 1994.                            

            * 10(iii)(A)(4)  1989 Stock Option Plan for  Non-Employee  Directors
(filed as Exhibit 10 to Form 10-Q for quarter ended 
September 29, 1990).                                

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           * 10(iii)(A)(5)(a)  1994  Incentive  Stock  Option  Plan  (filed as
           Exhibit A to Registrant's Proxy Statement dated April 4, 1994).

           * 10(iii)(A)(5)(b)  Amendment #1 to the 1994 Incentive Stock Option
             Plan filed as Exhibit  10(iii)(A)(5)(b) to Form 10-K for the year
ended December 28, 1996.                            

            * 10(iii)(A)(6)  1996 Stock Option Plan for  Non-Employee  Directors
     (filed as Exhibit A to Registrant's Proxy Statement dated
March 28, 1996).                                    

For a listing of all management contracts and compensatory plans or arrangements
required  to be filed as  exhibits to this Form 10-K,  see the  exhibits  listed
above under Exhibit 10.                                                         

         Exhibit (11) - Incorporated by reference in Note J of the Annual Report
to Shareholders for 1997 filed as Exhibit (13).               

        Exhibit (13) - Portions of the Annual Report to Shareholders for 1997.
        The Annual Report is being filed as an exhibit  solely for the purpose
        of incorporating certain provisions thereof by reference.  Portions of
        the Annual Report not specifically incorporated are not deemed "filed"
      for the purposes of the Securities Exchange Act of 1934, as amended.

Exhibit (21) - Affiliates of the Registrant filed herewith.   

Exhibit (23) - Consent of Independent Auditors filed herewith.

Exhibit (24) - Powers of Attorney. Included on signature      
pages 11 and 12.                

(b)  Reports on Form 8-K                                                        
         No reports on Form 8-K have been filed  during the last  quarter of the
period covered by this Report.                                

(c)  Exhibits                                                                   
See Exhibit Index at page 16 of this Report.                  

(d)  Financial Statement Schedules                                              
          The  response to this  portion of Item 14 is  submitted  as a separate
section of this Report at page 14                           
hereof.                                                     

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SIGNATURES      

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.                           

                             BALDOR ELECTRIC COMPANY
                          (Registrant)

                                 By   /s/ R. S. Boreham, Jr.
                                    ----------------------------------------
                    Chairman
                                       (Principal Executive Officer)

Date:  March 27, 1998                                                           

 POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears below
constitutes  and  appoints  R. S.  Boreham,  Jr.,  R.  L.  Qualls,  and  John A.
McFarland,  and each of them, his true and lawful  attorneys-in-fact and agents,
with full power of  substitution  and  resubstitution,  for him and in his name,
place and stead, in any and all capacities,  to sign this Report and any and all
amendments to this Report, and to file the same, with all exhibits thereto,  and
other  documents  in  connection  therewith,  with the  Securities  and Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents  full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the  premises,  as fully to all intents and  purposes as
they might or could do in person,  hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.                                        

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.                                   

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Signature                           Title                             Date      
---------                           -----                             ----      

/s/ R. S. Boreham, Jr.         Chairman and Director          )                 
------------------------------ (Principal Executive Officer)  )                 
R. S. Boreham, Jr.                                            )                 
                                             )
/s/ R. L. Qualls               Vice Chairman and Director     )                 
------------------------------                                )                 
R. L. Qualls                                                  )                 
                                             )
                                             )
/s/ John A. McFarland          President and Director         )                 
------------------------------                                )                 
John A. McFarland                                             )                 
                                             )
                                             )
/s/ Lloyd G. Davis             Chief Financial Officer,       )                 
------------------------------ Executive Vice President -     )                 
Lloyd G. Davis                 Finance, Secretary, and        )                 
              Treasurer (Principal Financial )
              and Accounting Officer)        )
                                             )
/s/ Jefferson W. Asher, Jr.    Director                       )  March 27, 1998 
------------------------------                                )                 
Jefferson W. Asher, Jr.                                       )                 
                                             )
/s/ Fred C. Ballman            Director                       )                 
------------------------------                                )                 
Fred C. Ballman)                                              )                 
                                             )
/s/ O. A. Baumann              Director                       )                 
------------------------------                                )                 
O. A. Baumann                                                 )                 
                                             )
                                             )
/s/ Robert J. Messey           Director                       )                 
------------------------------                                )                 
Robert J. Messey                                              )                 
                                             )
                                             )
/s/ Robert L. Proost           Director                       )                 
------------------------------                                )                 
Robert L. Proost                                              )                 
                                             )
/s/ Willis J. Wheat            Director                       )                 
------------------------------                                )                 
Willis J. Wheat                                               )                 

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ANNUAL REPORT ON FORM 10-K

ITEM 14(a)(1) and (2), (c) and (d)

LIST OF FINANCIAL STATEMENTS

FINANCIAL STATEMENT SCHEDULE

CERTAIN EXHIBITS

YEAR ENDED JANUARY 3, 1998

 BALDOR ELECTRIC COMPANY

FORT SMITH, ARKANSAS

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FORM 10-K, ITEM 14(a)(1) and (2)
 LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
BALDOR ELECTRIC COMPANY AND AFFILIATES

The following  consolidated  financial statements of Baldor Electric Company and
Affiliates,  included  in the  Annual  Report  to  Shareholders  for  1997,  are
incorporated by reference in Item 8:                                            

*   Consolidated Balance Sheets                                 
- January 3, 1998 and December 28, 1996     

*   Consolidated Statements of Earnings                         
             - for the three years in the period ended January 3, 1998

*   Consolidated Statements of Cash Flows                       
             - for the three years in the period ended January 3, 1998

*   Consolidated Statements of Shareholders' Equity             
             - for the three years in the period ended January 3, 1998

*   Notes to Consolidated Financial Statements                  

The  following  consolidated  financial  statement  schedule of Baldor  Electric
Company and Affiliates is included in Item 14(d):                               

*   Schedule II               Valuation and Qualifying Accounts           

All other  schedules for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.      

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BALDOR ELECTRIC COMPANY AND AFFILIATES

 SCHEDULE II
 VALUATION AND QUALIFYING ACCOUNTS

Column A       Column B               Column C              Column D    Column E
--------       --------               --------              --------    --------
Additions                                         
     ---------------------------
      Charged to      Charged to
              Balance at       Costs           Other                   Balance
               Beginning        and            Accounts    Deductions  at End of
Description    of Period      Expenses         Describe     Describe     Period 
-----------    ---------      --------         --------     --------     ------ 
(In thousands)

Deducted from current assets:                                                 

Allowance for doubtful accounts                                     

   1997         $3,200       $  509          $  184(A)                  $3,525
   1996          2,800          695             295(A)                   3,200
   1995          2,250          886             336(A)                   2,800

Included in current liabilities:                                              

Anticipated warranty costs                                          

   1997         $4,500       $  700(B)                                  $5,200
   1996          4,100          400(B)                                   4,500
   1995          3,700          400(B)                                   4,100

(A) Net uncollectible accounts written off during year.                         
(B) Additions  to reserve  for  anticipated  warranty  costs,  net of  expenses 
incurred.                                                               

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BALDOR ELECTRIC COMPANY AND AFFILIATES

 INDEX OF EXHIBITS

EXHIBIT                                                           
NUMBER                     DESCRIPTION                            
-------------             ---------------------                         

11           Computation  of Earnings  Per Common  Share-     
              Incorporated  by reference in Note J of the Annual
             Report to  Shareholders  for 1997 in Exhibit (13)

13           Portions of the Annual Report to Shareholders for
1997- filed herewith                

21           Affiliates of the Registrant - filed herewith    

23           Consent of Independent Auditors - filed herewith 

24           Powers of Attorney - Included on signature       
pages 11 and 12                     

27           Financial Data Schedules - filed herewith        

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SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.                           

                       BALDOR ELECTRIC COMPANY
                      (Registrant)

                   By     /s/ R. S. Boreham, Jr.
                                     -------------------------------------
                      R. S. Boreham, Jr.
                                      Chairman and Principal Executive Officer

Date:  March 27, 1998                                                           

 POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears below
constitutes  and  appoints  R. S.  Boreham,  Jr.,  R.  L.  Qualls,  and  John A.
McFarland,  and each of them, his true and lawful  attorneys-in-fact and agents,
with full power of  substitution  and  resubstitution,  for him and in his name,
place and stead, in any and all capacities,  to sign this Report and any and all
amendments to this Report, and to file the same, with all exhibits thereto,  and
other  documents  in  connection  therewith,  with the  Securities  and Exchange
Commission,  granting  unto said  attorneys-in-fact  and  agents  full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the  premises,  as fully to all intents and  purposes as
they might or could do in person,  hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.                                        

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.                                   

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K405’ Filing		Date		First		Last			Other Filings
		5/2/98		1
Filed on:		3/27/98		11		17
		2/27/98		1
For Period End:		1/3/98		1		14			DEF 14A,  PRE 14A
		12/28/96		10		14			10-K,  DEF 14A
		3/28/96		10					10-K,  DEF 14A
		3/21/96		9					8-B12B/A
		2/5/96		9
		3/14/95		9
		2/6/95		9
		12/31/94		9					10-K,  DEF 14A
		4/4/94		10
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