Baldor Electric 8-K Other Events

Analyst Meeting

December 15, 2008 -

New York

December 16, 2008 -

Boston

Exhibit 99

*     *         *

Forward-Looking Statements

This document contains statements that are forward-looking, i.e. not historical facts.  The

forward-looking statements contained in this document (“optimistic”, “will”, “continue”,

“expect”, “believe”, “should”, “forecast”) are based on the Company's current expectations

and 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 the Company's most recent annual

report (Form 10-K) and other reports filed with the Securities and Exchange Commission. 

These reports contain discussions of the Company's business and of various factors that

may affect it.

Baldor’s Mission Statement

is to be the best (as

determined by our customers) marketers,

designers and manufacturers of industrial

electric motors, mechanical power

transmission products, drives and generators. 

Baldor’s Strategy

To produce the highest-quality, energy-efficient products

available in the marketplace and sell them to value-minded

customers.

Vp = perceived Value

Qp = perceived Quality

Sp = perceived Service

C   = Cost           

T   = Time

•

Q4 2008 expectations and 2009 outlook

•

2009 sales initiatives

•

2009 cost reductions and cash flow discussion

•

Summary

Agenda

•

Mid single digit sales growth (year over year)

•

Earnings in-line with current consensus

•

Debt repayment of $10-15 million

Q4 2008 Expectations

•

Expecting a much tougher environment

•

Single digit decline in recent incoming orders

•

We are implementing new sales initiatives

•

We are implementing cost reductions

2009 Outlook

2009 Sales Initiatives

•

The cost of electricity to run an

electric motor represents 97% of

motor’s lifetime cost

•

Baldor Super-E®

motors have

grown at more than 25%

per year

for the past 3 years

Leader in Energy Efficiency

•

2007 Energy Bill mandates new efficiency levels in Dec. 2010

Effect of 2007 Energy Bill on Baldor

•

New customers -

Bounty Hunt Program

–

We are targeting over 800 customers

–

Double commission paid during 2009 for sales to these

customers

–

Bonus incentive for introducing an existing motor

customer to Dodge

–

Similar program in 2002 earned 450 new customers

Bounty Hunt Program

•

Up to 15,000 hp

•

YTD 2008 growth rate of 14%

•

Lead times of 12 –

20 weeks

(depending on motor size)

–

Working to implement

Lean Flex Flow to further

shorten lead time

•

Large motors can sell for as

much as $1 million each

Large Motors

•

One of only 3 companies with motors approved globally

for use on underground mining machinery

•

Customers tell us their business is solid for 2009

Specialty Motors -

Mining

•

Steady replacement cycle

•

We are the only company who

builds and supplies our own

qualified motors up to 200 hp

•

We are one of only 3 suppliers

worldwide with qualified

motors above 200 hp

•

Large potential if new facilities

are approved

Specialty Motors -

Nuclear

•

Cooling tower motors and drives have an innovative

technology which increases output and reduces energy

consumption by as much as 10%

•

New and retrofit opportunities

Specialty Motors –

Cooling Tower

•

Bounty Hunt Program

–

68 new OEM customers earned recently

–

Targeting more than 25 market maker distributors

throughout U.S. and Canada 

Dodge

•

New products and markets

–

MagnaGear™

-

mining, forest, power generation

•

Quoting $2 million / month

Dodge

•

New products and markets

–

Quantis

®

Gold -

energy conservation

–

Stainless Tigear™

-

food and beverage

–

Maska sheaves and couplings

Dodge

Dodge –

Infrastructure Stimulus

Mounted

Bearing

Drum pulley

Gearbox

Motor

•

40% of Dodge business is related to asphalt, cement,

aggregate, material handling, forest products

•

Infrastructure stimulus bill would be a benefit

2009

Cost Reductions

and

Cash Flow Initiatives

•

Most of the cost reduction plans occur regardless of

amount of sales decline

•

The cost reduction plans occur without additional

investment

•

Sales initiatives occur regardless of amount of sales

decline

•

Expectations for working capital are based on declining

sales

2009 Overview of Initiatives

•

Overtime

–

Spent more than $38 million in past 12 months

–

2009 estimated savings -

$30 million

•

Headcount Reduction

–

8,300 employees at June 2008

–

Down 475 by December 2008

–

Down another 425 by June 2009

–

2009 estimated savings -

$30 million

2009 Cost Reduction Initiatives

•

Discretionary spending

–

Medical plan administrative costs

$  3.0 million

–

Travel

$  3.0 million

–

Tradeshows, marketing

$  1.5 million

–

Supplies and perishable tooling

$  0.7 million

–

Other discretionary spending

$  2.0 million +

–

2009 estimated savings -

$10-20 million

•

Interest expense

–

Benefit from debt reduction and lower LIBOR rates

–

2009 estimated savings -

$10 million

2009 Cost Reduction Initiatives

•

Material costs

–

In 2008, our biggest challenge was material inflation

•

We paid $100 million more than we did in the previous

year for roughly the same amount of material

–

In 2009, we believe material costs could be a

tailwind after the first quarter

2009 Cost Reductions

2009 Cost Reduction Action Plans

2009 Cash Flows Initiatives

•

Cash flows discussions are based on a worst case

scenario of a 15% sales decline

•

Inventories ($350 million current balance)

–

Finished goods and production schedules are reviewed

weekly

–

Short cycle times allow us to adjust production levels and

number of days worked within two weeks

–

Reduction of Maska inventories

•

$17 million inventories supporting $33 million in sales

–

Lean projects could reduce WIP by $4.0 million

–

More consigned or JIT raw inventory

–

Estimated source of $52 million

2009 Cash Flows Initiatives

•

Accounts Receivable ($300 million current balance)

–

We have internal goals to reduce DSO

•

One day reduction is approximately $5.5 million

–

However, our modeling today assumes no change in

current DSO

–

Estimated source of $45 million

•

Copper Prepayment ($27 million current balance)

–

Payments made in 2008 for 2009 copper purchases

–

Estimated source of $27 million

•

Accounts Payable ($130 million current balance)

–

Estimated use of $19 million

2009 Cash Flows Initiatives

•

Capital Investments ($s in millions)

–

Decreasing sales reduces

need for capital investments

–

Increasing number of Lean

Flex Flow projects

–

Maintenance investment of

approx $15 million

2009 Cash Flow & Debt Reduction

Debt –

Major Components (approx)

Debt Covenants and Balances

Actual 09/08

Per Credit Agreement

12/31/08

Per Credit Agreement

12/31/09

Total Leverage Ratio

3.81

4.25

3.75

Senior Secured

Leverage Ratio

2.24

2.75

2.25

Fixed Charges Ratio

1.82

1.25

1.25

$s in millions

Actual Balance

09/27/08

Estimated Balance

12/31/08

Estimated Balance

12/31/09

Senior Notes

$ 550

$ 550

$ 550

Term/Revolver & Other

$ 783

$ 768 –

773

$ 568 –

623

Total Debt Balance

$ 1,333

$ 1,318 -1,323

$ 1,118 -

1,173

A Different Company Today

A Different Company Today

$ in thousands (approx)

2000

2008

Sales

$    621,000

$  2,000,000

Industrial Motor Sales

$    517,000

$  1,200,000

Mechanical Power Transmission Sales

$           -

$     500,000

International Sales

$      86,000

$     350,000

Backlog

$          -

$     260,000

Operating Margin

12.2%

13.3%

Debt

$    100,000

$  1,300,000

With Different Competitors

North American Industrial Motor Manufacturers

2000

2008

Baldor

Baldor

/ Reliance

Regal Beloit / Marathon

Regal Beloit / Marathon / Lincoln / Leeson

Reliance

GE

GE

Emerson

Emerson

Leeson

Lincoln

Siemens

Siemens

And A Broader Product Offering

Positioned for Long-Term Growth

•

Dodge

–

Infrastructure stimulus

would be a benefit

*

*

*

*

•

Net Earnings (trailing four quarters)

–

Plus Income Tax Expense

–

Plus Net Interest Expense

–

Plus D & A (approx $72 million in 2009)

–

Plus non-cash charges (share based compensation approx  $8M / year)

–

Plus non-recurring cash charges

Appendix

“EBITDA”

as defined by the Credit Agreement