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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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ___

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES X NO ___

Indicate the number of shares outstanding of each of the issuers’ classes of common stock as of the latest practicable date.

25,031,756 Shares, Common Stock, $.01 Par Value

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CAUTIONARY STATEMENT

The following is a cautionary statement made under the Private Securities Litigation Reform Act of 1995: With the exception of historical facts, the statements contained in Item 2. of this Form 10-Q may be forward looking statements. Actual results may differ materially from those contemplated. Forward looking statements involve risks and uncertainties, including but not limited to, the following risks: 1) cyclical downturns affecting the markets for capital goods, 2) substantial increases in interest rates that impact the cost of our outstanding debt, 3) our success in increasing sales and maintaining or improving the operating margins of our businesses, 4) the availability of or material increases in the costs of select raw materials or parts, 5) actions taken by competitors, and 6) our ability to satisfy various covenant requirements under our credit facility. Investors are directed to other documents, such as our Annual Report on Form 10-K and other Form 10-Q's filed with the Securities and Exchange Commission.

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PART I

FINANCIAL INFORMATION

REGAL-BELOIT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands of Dollars)

See accompanying notes.

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REGAL-BELOIT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands of Dollars, Except Per Share Data)

See accompanying notes.

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REGAL-BELOIT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of Dollars)

See accompanying notes.

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REGAL-BELOIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2003

1. BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of REGAL-BELOIT Corporation and its wholly owned subsidiaries and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. All adjustments which management believes are necessary for a fair statement of the results for the interim periods presented have been reflected and are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested these statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K.

2. INVENTORIES

Cost for approximately 83% of the Company’s inventory is determined using the last-in, first-out (LIFO) inventory valuation method. The approximate percentage distribution between major classes of inventories is as follows:

	June 30, 2003	December 31, 2002
Raw Material	11%	11%
Work In Process	20%	19%
Finished Goods	69%	70%

3. COMPREHENSIVE INCOME

The Company's comprehensive income is impacted by the amount of the cumulative translation adjustment recorded to shareholders' equity. For the quarter ended June 30, 2003, the impact was $1,868,000 of income resulting in comprehensive income of $8,351,000 for the quarter. The impact in the second quarter of 2002 was $1,581,000 of income resulting in comprehensive income of $8,618,000. In the first six months of 2003, the impact was $2,525,000 of income resulting in comprehensive income of $15,076,000. For the first six months of 2002, the impact was $1,306,000 of income resulting in comprehensive income of $14,130,000.

4. WARRANTY COSTS

The Company recognizes the cost associated with its standard warranty on its products at the time of sale. The amount recognized is based on historical experience. The following is a reconciliation of the changes in accrued warranty costs for the first six months of 2003:

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5. BUSINESS SEGMENTS

The Company operates two strategic businesses that are reportable segments: the Mechanical Group and the Electrical Group.

As consistent with December 31, 2002, acquired intangibles with definite lives were not material.

6. STOCK-BASED COMPENSATION COST

The Company accounts for its stock option plans under APB Opinion No. 25. Accordingly, no compensation cost has been recognized in the consolidated statements of income. Had compensation cost for these plans been determined consistent with FASB Statement No. 123 “Accounting for Stock-Based Compensation”, the Company’s net income and earnings per share would have been reduced to the following pro-forma amounts:

The fair value of each option grant is estimated using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in the second quarter of 2003 and 2002, respectively: risk-free interest rates of 3.5% and 5.0%; expected dividend yield of 2.5% and expected option lives of 7.0 years for both years; and expected volatility of 34% and 32%.

7. NEW ACCOUNTING PRONOUNCEMENTS

In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (SFAS 150). This Statement prescribes how an issuer classifies and measures certain financial instruments. Financial instruments within the scope of SFAS 150 are required to be classified as liabilities (or assets in some circumstances). Many of those instruments were previously classified as equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective for the Company July 1, 2003. There was no impact to the Company from adopting SFAS 150.

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Item 2. Management's Discussion and Analysis of Financial

Condition and Results of Operations

Unless the context requires otherwise, references in this Item 2 to “we”, “us”, “our” or “the Company” refer collectively to REGAL-BELOIT CORPORATION and its subsidiaries.

OVERVIEW

Our second quarter 2003 earnings per share (“EPS”) of $.26 improved $.02 from our first quarter 2003 EPS of $.24. Net sales of $154.6 million in the second quarter of 2003, however, were only 1% higher from the first quarter of this year. Despite these relatively flat sales, second quarter net income of $6.5 million was 7% higher than net income of $6.1 million in the previous quarter. Increased gross profit margin and operating income margin in the second quarter 2003 accounted for the earnings growth from the first quarter. The higher margins were primarily a result of improvements in productivity and lower fringe benefit costs, particularly in our Mechanical Group. Cash flow from operations increased in the second quarter of 2003 from the prior quarter, enabling us to reduce our debt outstanding by $3.7 million during the quarter to $219.4 million.

RESULTS OF OPERATIONS

Our net sales were $154.6 million in the second quarter of 2003, slightly below the $154.9 million of net sales in the second quarter of 2002. For the six months ended June 30, 2003, our net sales were $308.0 million, a ..9% increase from comparable 2002. The weakness in demand that the industrial manufacturing sector of the economy has experienced for the past several years continued throughout the second quarter this year. (See note 5 to the accompanying financial statements for our business segment data.)

Gross profit was $37.4 million in 2003’s second quarter, 1.6% below $38.0 million in comparable 2002, and was $73.6 million in the first half of 2003, .9% lower than the first half of 2002. Our gross profit margins of 24.2% of net sales in the second quarter and 23.9% of net sales in the first half of 2003, decreased from 24.5% and 24.3% in the comparable periods of 2002, respectively. These gross margin decreases were due primarily to reduced overhead absorption resulting from lower production levels, increased pricing pressures and higher utilities and unemployment insurance costs in our factories.

Operating expenses of $25.3 million in the second quarter of 2003 were 16.4% of net sales as compared to $24.8 million and 16.0% of net sales in comparable 2002. For the first six months of 2003, our operating expenses were $50.3 million and 16.3% of net sales, above $48.5 million and 15.9% in the first half of 2002. The 2.1% and 3.6% increases in second quarter and first half 2003 operating expenses, respectively, were due primarily to higher employee and insurance costs.

Our income from operations in the second quarter of 2003 was $12.1 million, 8.5% below $13.2 million a year previously. For the first half of 2003, income from operations of $23.3 million was 9.5% lower than $25.8 million in comparable 2002. As a percentage of sales, income from operations decreased to 7.8% and 7.6% in the second quarter and first half of 2003, respectively, from 8.5% and 8.4% in the comparable periods of 2002. Both the dollar and percentage decreases resulted from a combination of our reduced gross profit margin and our higher operating expenses in 2003 versus 2002.

We lowered our interest expense in the second quarter of 2003 by 28.2% to $1.7 million from $2.4 million in 2002’s second quarter. The decrease was due to a combination of our reduced debt outstanding and lower interest rates in the economy. First six months 2003 interest expense was reduced 43.8% to $3.3 million from $5.9 million in comparable 2002. The larger reduction was due to the impact of our $90 million March 2002 public stock offering as well as to our cash flow and lower economic interest rates. Our effective tax rate in 2003 was 37.5% in both the second quarter and first half 2003, up from 35.0% and 35.7% in the comparable periods of 2002, respectively, due primarily to non-recurring tax refunds in 2002.

Our net income was $6.5 million in 2003’s second quarter, down 7.9% from $7.0 million the previous year. For the first six months of 2003, net income was $12.6 million, 2.1% below $12.8 million earned in comparable 2002. Our EPS was $.26 in the second quarter and $.50 in the first half of 2003, as compared to $.28 and $.55 in the comparable periods of 2002, respectively. The first half 2003 EPS percentage reduction from comparable 2002 of 9.1% exceeded the net income percentage reduction from 2002 due to the impact of our March 2002 public stock offering of 4.1 million shares.

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LIQUIDITY AND CAPITAL RESOURCES

Our working capital was $166.5 million at June 30, 2003, 1% higher than at March 31, 2003. Current ratio also increased slightly to 3.1:1 at second quarter’s end from 3.0:1 the previous quarter. Our cash flow from operations was $13.9 million in the second quarter of 2003, below the $22.5 million in 2002’s second quarter, but improved from $6.4 million in the first quarter this year. For the first six months of 2003, our operating cash flow totaled $20.3 million as compared to $32.5 million last year. This difference was due primarily to higher inventory reductions in the first half of 2002. Capital spending reached $5.7 million in the second quarter of 2003 and was just below $10 million for the first half of the year. At June 30, 2003, we had outstanding commitments for $1.4 million of capital expenditures.

Our primary financing source is our $275 million long-term unsecured revolving credit facility (the “Facility”) that expires December 31, 2005. The Facility requires us to maintain specified financial ratios and to satisfy certain financial condition tests, with which we were in compliance as of June 30, 2003. At June 30, 2003, we had $214.5 million of debt outstanding under the Facility and $219.4 million of debt from all sources. Our available borrowing capacity was approximately $16 million at June 30, 2003. We believe we will be able to satisfy the financial ratios and tests specified in the Facility for the foreseeable future. We also believe that the combination of borrowing availability under the Facility and our operating cash flow will provide sufficient cash availability to finance our existing operations for the foreseeable future.

CRITICAL ACCOUNTING POLICIES

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of our financial statements and the amounts of our revenues and expenses during the periods reported. Actual results may differ from these estimates under different assumptions or conditions. We believe the following are our critical accounting policies which could have the most significant effect on our reported results or require management’s most subjective or complex judgments.

Revenue Recognition

Sales and related cost of sales for all products are recognized upon shipment of the products, as shipments are generally FOB shipping point.

Allowance for Doubtful Accounts

We record allowances for doubtful accounts after customer-specific analysis and general analysis of past due balances, economic conditions and historical experience. Allowance levels change as customer-specific circumstances and the general analysis areas above change.

Excess and Obsolete Inventory Reserves

Our systems track the frequency of usage of inventory by part number and reports are generated monthly. Based on these analyses of historical usage and management’s evaluation of estimated future demand, market conditions and alternative uses for possible excess or obsolete parts, reserves are recorded and changed. Excess and obsolete inventory is periodically disposed through sale to third parties, scrapping or other means, and the reserves are appropriately reduced.

Impairment of Long-Lived Assets

We review long-lived assets, which include property, plant and equipment, and other intangible assets with definitive lives such as patents and trademarks, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset in our accounting records may not be fully recoverable. Additionally, we evaluate the recoverability of goodwill and other intangible assets with indefinite lives at least annually during our fourth quarter, independent of specific events. We assess these assets for impairment based on estimated future cash flows from these assets, which estimates require us to make assumptions about future demand for the Company’s products and services, future market conditions, future growth rates and the discount rate, among others. Changes to these assumptions could result in an impairment charge in future periods.

Product Warranty Reserves

We maintain reserves for product warranty to cover the stated warranty periods for our products. We establish or change such reserves based on our evaluation of historical warranty experience and specific significant warranty matters when they become known and can reasonably be estimated.

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Retirement Plans

Slightly over half of our employees are covered by defined benefit pension plans with the remaining employees covered by defined contribution plans. Our obligations under the defined benefit plans are determined with the assistance of actuarial firms. The actuaries make certain assumptions regarding such factors as withdrawal rates and mortality rates. The actuaries also provide us with information and recommendations from which management makes further assumptions on such factors as the long-term expected rate of return on plan assets, the discount rate on benefit obligations and where applicable, the rate of annual compensation increases. Based upon the assumptions made, the investments made by the plans, overall conditions and movement in financial markets, particularly the stock market, and how actual withdrawal rates, life-spans of benefit recipients and other factors differ from assumptions, annual expenses and recorded assets or liabilities of these defined benefit plans may change significantly from year to year.

Self-Insurance Liabilities

Our insurance programs include health care, workers’ compensation and product liability. We self-insure from the first dollar of loss up to various specified retention levels per occurrence. Eligible losses in excess of self-insurance retention levels and up to stated liability limits are covered by policies we purchase from insurance companies, as are eligible losses when and if we purchase aggregate stop-loss policies. We estimate the annual costs and liabilities of our self-insurance programs using our Company’s claims experience and risk exposure levels for the periods being valued. Differences in actual costs of claims from estimated costs will likely result in adjustments to expenses and liabilities.

Litigation and Claims

We record expenses and liabilities when we believe that an obligation of the Company on a specific matter is probable and we have a basis to reasonably estimate the value of the obligation. This methodology is used for environmental matters and legal claims that are filed against the Company from time to time. The uncertainty that is associated with such matters frequently requires adjustments to the liabilities previously recorded.

New Accounting Pronouncements

In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (SFAS 150). This Statement prescribes how an issuer classifies and measures certain financial instruments. Financial instruments within the scope of SFAS 150 are required to be classified as liabilities (or assets in some circumstances). Many of those instruments were previously classified as equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective for the Company July 1, 2003. There was no impact to the Company from adopting SFAS 150.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Information with respect to the Company’s exposure to interest rate risk and foreign currency risk is contained on Page 15 in Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. Management believes that at June 30, 2003, there has been no material change to this information.

Item 4. Controls and Procedures

An evaluation was carried out by the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934), as of June 30, 2003. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective. No changes were made in the Company’s internal control over financial reporting during the quarter ended June 30, 2003 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control and financial reporting.

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PART II

OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

SIGNATURE

Pursuant to the requirements 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.

REGAL-BELOIT CORPORATION

(Registrant)

/S/ Kenneth F. Kaplan

Kenneth F. Kaplan

Vice President - Chief Financial Officer and Secretary

(Principal Accounting and Financial Officer)

DATE: August 13, 2003

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Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the

Sarbanes-Oxley Act and Rule 13a-14(A) or 15d-14(A)

Under the Securities and Exchange Act of 1934

I, James L. Packard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of REGAL-BELOIT Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

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Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the

Sarbanes-Oxley Act and Rule 13a-14(A) or 15d-14(A)

Under the Securities and Exchange Act of 1934

I, Kenneth F. Kaplan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of REGAL-BELOIT Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

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Exhibit 32.1

Written Statement of the Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350

Solely for the purposes of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial Officer of REGAL-BELOIT Corporation (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2003 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ James L. Packard

James L. Packard

Chairman and Chief Executive Officer

/S/ Kenneth F. Kaplan

Kenneth F. Kaplan

Vice President, Chief Financial Officer and Secretary

Date: August 13, 2003

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