Baldor Announces 1st Quarter 2001 Earnings Expectations

    FORT SMITH, Ark., March 20 The following was issued today
by Baldor Electric Company :

    Baldor Electric Company markets, designs, and manufactures electric motors
and drives and is based in Fort Smith, Arkansas.  Baldor today announced that
sales and earnings for the first quarter 2001 will be less than planned and
less than the first quarter of 2000.  Earnings are expected to be in the range
of $0.21 to $0.25 per share compared to a record $0.35 per share in the first
quarter of 2000.

    "While we serve a large number of markets, many of the markets we serve
have shown a decline during the first quarter of 2001," commented John A.
McFarland, President & CEO.  "We expect sales to decline in the quarter in a
range of 4 to 6%."

    "As sales have slowed, a number of actions have been taken to improve
performance during the balance of the year.  While our near-term expectations
are guarded, we are optimistic over the long-term.  We are confident in our
ability to improve our performance during the remainder of the year," said
McFarland.

    The following questions and answers should help you better understand our
current situation and our outlook for the balance of the year.

    Q  ...  Is it a broad based decline in orders, or are a few specific
industries affecting the incoming order rate?
    The decline in orders has been broad based.  We're fortunate to serve a
large number of end markets, which normally provides us with stability.
However, we've seen a slow-down in many of the end markets we serve.

    Q  ...  Have you completed your previously announced plant consolidations
in Europe and when do you believe these will begin to show some benefit?
    We will complete our plant consolidation in Europe during this month.
While sales have also slowed some in Europe, we believe we will begin to see
improving profitability there during the second quarter.  In the long-term,
this consolidation will allow us to take much better care of our customers and
be more profitable in Europe.

    Q  ...  Is your finished goods inventory in balance?
    Yes.  We have been adjusting our finished goods inventories downward
because of our reduction in lead times to two weeks.  Our finished goods
inventory will decline slightly in the first quarter of 2001 and is in good
balance.

    Q  ...  Are you making progress toward your goal of doubling your margins
in the drives business?
    Yes, we are making progress toward this goal.  A number of cost reductions
will be implemented and some current projects will be completed during the
balance of this year.  We feel these actions, along with the consolidation in
Europe and the addition of some new products, will help us improve our
profitability in this important part of our business.  Drives are about 20% of
our total sales.

    Q  ...  Have you completed the expansion of your plant in Ozark, Arkansas,
and do you need this additional capacity with the reduction in orders you have
experienced?
    We are completing the expansion of the plant in Ozark, Arkansas, and the
transition of products to that plant from our plant in Columbus, Mississippi,
during March.  This allows us to improve the performance of both plants while
also increasing capacity at both plants.  This increased capacity is needed,
especially for large motors that are selling above the rates of last year.

    Q  ...  In December you announced a price increase.  Have you been able to
implement it?
    Yes, we implemented our price increase on March 12th.  This modest price
increase is our first in 5 years.  This increase will offset increases we have
seen in material cost.

    Q  ...  Do you still have a focus on developing new products and are you
making progress in this area?
    Yes, we continue to focus on expanding our product line both for new and
existing customers and for new markets.  During March we introduced a new
price sheet that contained approximately 500 new products.  Some of these new
products, like our commercial motor, are beginning to generate new business.
We have also expanded our capability in larger motors, which we feel will add
measurably to our sales later in the year.

    Q  ...  How is the acquisition of Pow'R Gard Generator Corporation going?
    We are satisfied with our acquisition of Pow'R Gard Generator Corporation,
announced in the 4th quarter of 2000.  These products give us an entry into
the fast growing standby generator market.  We are finding many opportunities
to expand the distribution of Pow'R Gard products through the Baldor sales
organization.  We expect Pow'R Gard sales to grow faster this year than our
overall sales growth the past several years.

    Q  ...  Why is your outlook for profits during this quarter down so much
more than sales?
    Plant productivity has suffered due to the lower sales volume and a
reduction we're making in finished goods inventory due to our lower lead
times.  We are adjusting to these lower volumes, but we are not adjusting in
ways that would limit our flexibility to take care of increased volumes, as
our customers require them later in the year.  We could quickly adjust by
laying off people, as other companies in our industry have done.  However, we
believe this would be a bad, long-term approach.  We plan to adjust to these
lower sales volumes without losing our good, experienced people.

    Q  ...  What does your balance sheet look like?
    During the first quarter our cash flow has funded our needed capital
investments, modest share repurchases, and debt reduction of over $6 million.
We will experience improved cash flow during the quarter due to inventory
reductions and quicker collection of our receivables.  Our balance sheet is in
excellent condition.

    Q  ...  What are your expectations for sales during the balance of the
year?
    Near-term we see continued difficulty, but we see improving sales in the
last half of the year.

    Q  ...  Are you losing market share to someone else?
    No.  We do not believe we are losing market share to anyone else.  In
fact, we believe we may be gaining some market share in larger motors -- one
of our key strategies.

    Q  ...  Do you expect stronger sales as a result of the increasing cost of
electricity and the uncertainty of electricity in some parts of our nation?
    We continue to be optimistic about the opportunities we have as a result
of higher electricity costs and the uncertainty of supply in some areas.  With
over 60% of the electricity generated in the United States being used to run
electric motors, we are in a position to help industrial electricity consumers
lower their costs through the use of Baldor high efficiency motors and drives.
In some applications, electric motor users can save as much as half of the
electricity consumed by using Baldor Super-E motors and variable speed drives.
Many believe electricity will increase greatly in cost and some areas will be
in short supply.  We believe Baldor is well positioned to help solve many of
these problems.

    Q  ...  When will you update us again?
    We will provide up to date information at the Baldor Shareholders' Meeting
being held in Fort Smith on April 28, 2001.