```
**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 ACT OF 1934

            For the fiscal year ended:                                        Commission File Number:
                **December 28, 2002                                                     01-07284****B A L D O R  E L E C T R I C  C O M P A N Y**
                             (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    72901                           (479) 646-4711**
 -------------------------------------------------    -----                           --------------
(Address of principal executive offices)            (Zip Code)                      (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]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as  defined in  Exchange  Act Rule  12b-2).
Yes [X] No [ ]

The aggregate  market value of voting stock held by  non-affiliates  of the registrant based on the closing price on
June 29, 2002, was $723,009,748.

At March 19, 2003, there were 32,670,737 shares of the registrant's common stock outstanding.

                                        DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to  Shareholders  for the fiscal year ended  December 28, 2002 (the "2002 Annual Report to Shareholders"),
are incorporated by reference into Part II.

Portions  of the Proxy  Statement  for the Annual  Meeting of  Shareholders  to be held May 3, 2003 (the "2003 Proxy  Statement"), are
incorporated by reference into Part III.
```

PART I

Item 1.Business

Baldor Electric Company(“Baldor” or the “Company”) was incorporated in Missouri in1920. The Company operates in one industry segment, which includes the design,manufacture, and sale of electric motors, drives, generators and relatedproducts. Baldor has made several small acquisitions; however, the majority ofits growth has come internally through broadening its markets and product lines. 

Products

The AC motor product linepresently ranges in size from 1/50 up to 1500 horsepower. The DC motor productline presently ranges from 1/50 through 800 horsepower. The adjustable speedcontrols product line ranges from 1/50 to 900 horsepower. The Company’sindustrial control products include servo products, DC controls, positioncontrols, and inverter and vector drives. With these products, the Companyprovides its customers the ability to purchase a “drive” from onemanufacturer. Baldor defines a “drive” as an industrial motor and anelectronic control. With the February 2003 acquisition of Energy Dynamics, Inc.,the Company’s power generator line now ranges from 1.3 kilowatt to 2000kilowatts. Sales of industrial electric motors represented approximately 81% ofthe Company’s business in each of the years 2002 and 2001 and 79% in 2000.The bulk of the remaining sales included power generators, drives, speedreducers, industrial grinders, buffers, polishing lathes, stampings, castings,and repair parts. 

Baldor’s industrialmotors and drives are designed, manufactured, and marketed for general purposeuses (“stock products”) and to individual customer requirements andspecifications (“custom products”). Stock products representedapproximately 65% of total product sales in each of the years 2002, 2001 and2000. Most stock product sales are to customers who place their orders forimmediate shipment from current inventory. Custom products generally are shippedwithin two weeks from the date of order. Because of these and other factors, theCompany does not believe that its backlog represents an accurate indication offuture shipments. 

Sales andMarketing

The products of the Companyare marketed throughout the United States and in more than 60 foreign countries.The Company’s field sales organization, comprised of independentmanufacturer’s representatives and Company sales personnel, consists ofmore than 70 locations, including 39 in North America. The remainder of theCompany’s representatives are located in various parts of the worldincluding Europe, Latin America, Australia, and the Far East. 

Custom products and stockproducts are sold to original equipment manufacturers (“OEMs”). Stockproducts are also sold to independent distributors for resale, often asreplacement components in industrial machinery that is being modernized orupgraded for improved performance. 

No single customeraccounted for more than 5% of sales; therefore, the Company does not believethat the loss of any single customer would have a material effect on its totalbusiness. 

Competition

The Company facessubstantial competition in the sale of its products in all markets served. Someof the Company’s competitors are larger in size or are divisions of largediversified companies and have substantially greater financial resources. TheCompany competes by providing its customers better value through product qualityand efficiency and better services including product availability, shorterlead-times, on-time delivery, local support, product literature, and training. 

The Company is not aware ofany industry-wide statistics from which it can precisely determine its relativeposition in the industrial electric motor industry. In the United States certainindustry statistics are available from the U.S. Department of Commerce and theNational Electrical Manufacturers Association. However, these sources do notinclude all competitors or all sizes of motors. The Company believes that it isa significant factor in the markets it serves and that its share of the markethas increased over the past several years. 

Manufacturing

The Company manufacturesmany of the components used in its products, including laminations, stampedsteel parts, and aluminum die castings. Manufacturing many of its own componentspermits the Company to better manage cost, quality, and availability. Inaddition to the manufacturing of components, the Company’s motormanufacturing operations include machining, welding, winding, assembling, andfinishing operations. 

The raw materials necessaryfor the Company’s manufacturing operations are available from severalsources. These materials include steel, copper wire, gray iron castings,aluminum, insulating materials, and diesel engines, and many of these materialsare purchased from more than one supplier. The Company believes that alternativesources are available for such materials. 

Research andEngineering

The Company’s designand development of electric motors, drives, and generators include both thedevelopment of products, which extend the product lines, and the modification ofexisting products to meet new application requirements. Additional developmentwork is done to improve production methods. Costs associated with research, newproduct development, and product and cost improvements are treated as expenseswhen incurred and amounted to $22,484,000 in 2002, $24,415,000 in 2001, and$24,987,000 in 2000. 

Environment

Compliance with lawsrelating to the discharge of materials into the environment, or otherwiserelating to the protection of the environment, has not had a material effect oncapital expenditures, earnings, or the financial position of the Company and isnot expected to have such an effect. 

Employees

As of February 22, 2003,the Company had 3,623 employees. 

ExecutiveOfficers of the Registrant

Information regarding executiveofficers is contained in Part III, Item 10, and incorporated herein byreference. 

InternationalOperations

Sales from internationaloperations (foreign affiliates and exports) were approximately 14% of totalsales in each of the years 2002, 2001, and 2000. See also Note I on page 25 ofthe 2002 Annual Report to Shareholders. 

The Company’s productsare distributed in more than 60 foreign countries, principally in Canada,Mexico, Europe, Australia, the Far East, and Latin America. Baldor’swholly-owned affiliate, UK-based Optimised Control Ltd., has sales offices and adevelopment and manufacturing facility in the UK. Baldor and its affiliates inEurope have sales offices in Germany and Switzerland. The Company owns majorityinterests in Australian Baldor Pty. Limited which has locations in Sydney andMelbourne. The Company wholly owns Baldor Electric (Far East) Pte. Ltd. locatedin Singapore, and has sales offices in Taiwan and the Philippines. The Companyalso wholly owns Baldor de Mexico, S.A. de C.V. located in Leon, Mexico. 

The Company believes thatit is in a position to act on global opportunities as they become available. TheCompany also believes that there are additional risks attendant to internationaloperations, including currency fluctuations and possible restrictions on themovement of funds. However, these risks have not had a significant adverseeffect on the Company’s business. 

Access toFilings on Company Website

The Company makes availableits Forms 10-K, 10-Q, 8-K, and amendments thereto on its corporate website whenfiled with the SEC. These filings, along with the Company’s Annual Reportsto Shareholders and Proxy Statements, may be viewed online free of charge byaccessing the Company’s website at www.baldor.com and going to the InvestorRelations section. 

Item 2.Properties

The Company believes thatits facilities, including equipment and machinery, are in good condition,suitable for current operations, adequately maintained and insured, and capableof sufficient additional production levels. The following table containsinformation with respect to the Company’s properties. 

```

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

Fort Smith, AR                      AC motor production                                            384,969
                                    Distribution and service center                                208,000
                                    Administration and engineering offices                          79,675
                                    Aluminum die casting                                            79,330
                                    Drives production center                                       162,000

St. Louis, MO                       Metal stamping and engineering toolroom                        187,385

Columbus, MS                        AC motor production                                            156,000

Westville, OK                       AC and DC motor production                                     207,250

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

Clarksville, AR                     Subfractional motor, gear motor, DC motor                     *165,735
                                    and worm-gear speed reducer production

Ozark, AR                           AC motor production                                            151,783

Four other                          Metal stamping and motor, drives,
domestic locations                  and generator production                                       225,798

Ten foreign                         Sales and distribution centers
locations                           and electronic controls production                              99,200
                                                                                             -------------
                                                                                                 2,125,125

*This property is leased pursuant to an Industrial Revenue Bond agreement.

The Company also has approximately 350,000 sq. ft. of space available for expansion, currently fully leased to outside firms.
```

Item 3. LegalProceedings

The Company is party to a numberof legal proceedings incidental to its business, none of which is deemed to bematerial to its operations or business. 

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

PART II

Item 5. Marketfor the Registrant’s Common Equity and Related Shareholder Matters

Information under thecaptions “Ticker”, “Dividends paid”, “Common stockprice range”, and “Shareholders”, on page 28 of the 2002 AnnualReport to Shareholders, is incorporated herein by reference. 

During the fourth quarterof 2002, certain District Managers exercised non-qualified stock optionspreviously granted to them under the Baldor Electric Company 1990 Stock OptionPlan for District Managers (the “DM Plan”). The exercise price paid bythe District Managers equaled the fair market value on the date of the grant.The total amount of shares granted under the DM Plan is approximately 1% of theoutstanding shares of Baldor common stock. None of the transactions wereregistered under the Securities Act of 1933, as amended (the “Act”),in reliance upon the exemption from registration afforded by Section 4(2) of theAct. The Company deems this exemption to be appropriate given that there are alimited number of participants in the DM Plan and all parties are knowledgeableabout the Company. 

Item 6.Selected Financial Data 

Information concerning netsales, net earnings, net earnings per share, dividends per share, long-termobligations, and total assets for the years ended 1992 through 2002 is containedunder the caption “Eleven-Year Summary of Financial Data” on page 14of the 2002 Annual Report to Shareholders and is incorporated herein byreference. 

Item 7.Management’s Discussion and Analysis of Financial Condition and Results ofOperations

Information under thecaption “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” on pages 16 and 17 of the 2002 Annual Report toShareholders is incorporated herein by reference. 

Item 7A.Quantitative and Qualitative Disclosure about Market Risk

Information under thesub-caption “Market Risk” of the caption “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”on page 17 of the 2002 Annual Report to Shareholders is incorporated herein byreference. 

Item 8.Financial Statements and Supplementary Data 

The consolidated financialstatements of the Company and related notes on pages 18 through 27, the“Report of Ernst &amp; Young LLP, Independent Auditors” on page 27,and the “Summary of Quarterly Results of Operations (unaudited)” onpage 19 of the 2002 Annual Report to Shareholders are incorporated herein byreference. 

Item 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure

PART III

Item 10.Directors and Executive Officers of the Registrant

Information contained inthe 2003 Proxy Statement under the caption “Proposal 1 - Election ofDirectors” is incorporated herein by reference. The current executiveofficers of the Company, each of whom is elected for a term of one year or untilhis successor is elected and qualified, are: 

```

                                                                                                   Served as
                                                                                                    Officer
         Name                                Age     Position                                        Since

         Roland S. Boreham, Jr.               78     Chairman                                         1961

         John A. McFarland                    51     President and                                    1990
                                                     Chief Executive Officer

         Ronald E. Tucker                     45     Chief Financial Officer and                      1997
                                                     Secretary

         Randall P. Breaux                    40     Vice President - Marketing                       2001

         Roger V. Bullock                     53     Vice President - Drives                          2002

         Randy L. Colip                       44     Vice President - Sales                           1997

         Charles H. Cramer                    58     Vice President - Human Resources                 1984

         Gene J. Hagedorn                     56     Vice President - Materials                       1994

         Jeffrey R. Hubert                    49     Vice President - Sales                           2002

         Terry B. King                        42     Vice President -                                 2003
                                                         Linear Motors & Generators

         Tracy L. Long                        37     Treasurer and                                    2003
                                                     Assistant Secretary

         Randal G. Waltman                    53     Vice President - Operations                      1997
```

Item 11.Executive Compensation

Information contained inthe 2003 Proxy Statement under the caption “Executive Compensation”,except for the information contained in the sub-captions “Report of theBoard of Directors on Executive Compensation” and “PerformanceGraph”, is incorporated herein by reference. Information contained in the2003 Proxy Statement under the caption “Proposal 1 – Election ofDirectors” paragraph headed “Director Compensation” is alsoincorporated herein by reference. 

Item 12.Security Ownership of Certain Beneficial Owners and Management

The security ownership byofficers, directors, and beneficial owners of more than five percent of theCompany’s Common Stock included under the caption “Security Ownershipof Certain Beneficial Owners and Management” of the 2003 Proxy Statement isincorporated herein by reference. 

The following tablecontains information regarding the number of shares of common stock that may beissued pursuant to the Company’s equity compensation plans as of December28, 2002. 

```

--------------------------------------------------------------------------------------------------------------------
                                       Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------------
--------------------------------------- ----------------------- ---------------------- -----------------------------
            Plan Category                        (a)                     (b)                       (c)

                                                                                           Number of securities
                                         Number of securities     Weighted-average       remaining available for
                                          to be issued upon       exercise price of       future issuance under
                                             exercise of             outstanding        equity compensation plans
                                         outstanding options,    options, warrants,       (excluding securities
                                         warrants, and rights        and rights          reflected in column (a))
--------------------------------------- ----------------------- ---------------------- -----------------------------
--------------------------------------- ----------------------- ---------------------- -----------------------------
Equity Compensation plans
approved by security holders                     2,444,740                  $17.15               1,625,190
--------------------------------------- ----------------------- ---------------------- -----------------------------
--------------------------------------- ----------------------- ---------------------- -----------------------------
Equity compensation plans
not approved by security holders
                                                    55,050                  $21.88                 168,191
--------------------------------------- ----------------------- ---------------------- -----------------------------
--------------------------------------- ----------------------- ---------------------- -----------------------------
Total                                            2,499,790                  $17.26               1,793,381
--------------------------------------- ----------------------- ---------------------- -----------------------------
```

Item 13.Certain Relationships and Related Transactions

Richard E. Jaudes, a memberof the Board of Directors of the Company, is also a partner at Thompson CoburnLLP, a law firm that provides legal counsel to the Company. R. L. Qualls, also amember of the Board of Directors of the Company, provided management consultingservices for Baldor during fiscal year 2002 for which he was paid $44,000. Theseconsulting services were provided on as as-needed basis and there was no formalarrangement between Dr. Qualls and Baldor as to the terms of the consultingservices. 

Item 14.Controls and Procedures

The Company’sprincipal executive officer and principal financial officer (the“certifying officers”) have concluded, based on their evaluationwithin 90 days of the filing of this report, that the Company’s disclosurecontrols and procedures are operating effectively. In addition, there have beenno significant changes in the Company’s internal controls or in otherfactors that could significantly affect those controls subsequent to the date oftheir evaluation. 

PART IV

Item 15.Exhibits, Financial Statement Schedules, and Reports on Form 8-K

```

(a)  (1) The following  consolidated  financial  statements of Baldor Electric Company and its affiliates,  included in the 2002 Annual
         Report to Shareholders, are incorporated by reference in Item 8 of this Report:

o        Consolidated Balance Sheets
                  - As of December 28, 2002 and December 29, 2001

o        Consolidated Statements of Earnings
                  - for each of the three years in the period ended December 28, 2002

o        Consolidated Statements of Cash Flows
                  - for each of the three years in the period ended December 28, 2002

o        Consolidated Statements of Shareholders' Equity
                  - for each of the three years in the period ended December 28, 2002

o        Notes to Consolidated Financial Statements

     (2) The following  consolidated  financial  statement  schedule of Baldor Electric  Company and its affiliates is included in Item
         14(d) of this Report:

o        Schedule II  Valuation and Qualifying Accounts

         All other  schedules for which  provision is made in the  applicable  accounting  regulations  of the  Securities and Exchange
         Commission are not required under the related instructions or are inapplicable.

     (3) See Exhibit Index at page 15 of this Report.

(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 15 of this Report.

(d)  Financial Statement Schedules

     The response to this portion of Item 15 is submitted as a separate section of this Report at page 14 hereof.

                                                              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/   John A. McFarland               
                                                    John A. McFarland
                                                                  President and Chief Executive Officer
                                                                  (Principal Executive Officer)

Date:    March 28, 2003
```

KNOW ALL MEN BY THESEPRESENTS, that each person whose signature appears below constitutes andappoints R. S. Boreham, Jr. and John A. McFarland, and each of them, his trueand lawful attorneys-in-fact and agents, with full power of substitution andresubstitution, for him and in his name, place and stead, in any and allcapacities, to sign this Report and any and all amendments to this Report, andto file the same, with all exhibits thereto, and other documents in connectiontherewith, with the Securities and Exchange Commission, granting unto saidattorneys-in-fact and agents full power and authority to do and perform each andevery act and thing requisite and necessary to be done in and about thepremises, as fully to all intents and purposes as they might or could do inperson, hereby ratifying and confirming all that said attorneys-in-fact andagents, or any of them, or their substitutes, may lawfully do or cause to bedone by virtue hereof. 

```

                                                            CERTIFICATIONS

I, John A. McFarland, certify that:

     (1)  I have reviewed this annual report on Form 10-K of Baldor Electric Company;

     (2)  Based on my  knowledge,  this  annual  report does not contain  any untrue  statement  of a material  fact or omit to state a
          material fact  necessary in order 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 quarterly report;

     (3)  Based on my knowledge,  the financial  statements,  and other financial  information  included in this annual 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 annual report;

     (4)  The registrant's  other certifying  officers 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 we have:

          (a)   designed  such  disclosure  controls and  procedures 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 for which this quarterly report is being prepared;

          (b)   evaluated the  effectiveness of the registrant's  disclosure  controls and procedures as of a date within 90 days prior
                to the filing date of this annual report (the "Evaluation Date"); and

          (c)   presented in this annual report our  conclusions  about the  effectiveness  of the  disclosure  controls and procedures
                based on our evaluation as of the Effective Date;

     (5)  The registrant's other certifying  officers and I have disclosed,  based on our most recent  evaluation,  to the registrant's
          auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

          (a)   all  significant  deficiencies  in the design or  operation  of  internal  controls  which could  adversely  affect the
                registrant's ability to record, process,  summarize, and report financial data and have identified for the registrant's
                auditors any material weaknesses in internal controls; 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; and

     (6)  The registrant's  other certifying  officers and I have indicated in this annual report whether or not there were significant
          changes in internal controls or in other factors that could  significantly  affect internal  controls  subsequent to the date
          of our most recent  evaluation,  including  any  corrective  actions  with regard to  significant  deficiencies  and material
          weaknesses.

March 28, 2003                                                  /s/ John A. McFarland            
                                                                President and Chief Executive Officer

I, Ronald E. Tucker, certify that:

     (1)  I have reviewed this annual report on Form 10-K of Baldor Electric Company;

     (2)  Based on my  knowledge,  this  annual  report does not contain  any untrue  statement  of a material  fact or omit to state a
          material fact  necessary in order 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 annual report;

     (3)  Based on my knowledge,  the financial  statements,  and other financial  information  included in this annual 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 annual report;

     (4)  The registrant's  other certifying  officers 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 we have:

          (a)   designed  such  disclosure  controls and  procedures 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 for which this annual report is being prepared;

          (b)   evaluated the  effectiveness of the registrant's  disclosure  controls and procedures as of a date within 90 days prior
                to the filing date of this annual report (the "Evaluation Date"); and

          (c)   presented in this annual report our  conclusions  about the  effectiveness  of the  disclosure  controls and procedures
                based on our evaluation as of the Effective Date;

     (5)  The registrant's other certifying  officers and I have disclosed,  based on our most recent  evaluation,  to the registrant's
          auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

          (a)   all  significant  deficiencies  in the design or  operation  of  internal  controls  which could  adversely  affect the
                registrant's ability to record, process,  summarize, and report financial data and have identified for the registrant's
                auditors any material weaknesses in internal controls; 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; and

     (6)  The registrant's  other certifying  officers and I have indicated in this annual report whether or not there were significant
          changes in internal controls or in other factors that could  significantly  affect internal  controls  subsequent to the date
          of our most recent  evaluation,  including  any  corrective  actions  with regard to  significant  deficiencies  and material
          weaknesses.

March 28, 2003                                              /s/Ronald E. Tucker               
                                                            Chief Financial Officer and Secretary

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.

                                    SIGNATURE PAGE FOR FORM 10-K FOR YEAR ENDED DECEMBER 28, 2002.

Signature                                        Title                                    Date

/s/    R. S. Boreham, Jr.                        Chairman and                             March 28, 2003
       R. S. Boreham, Jr.                        Director

/s/    John A. McFarland                         President,                               March 28, 2003
       John A. McFarland                         Chief Executive Officer, and
                                                 Director
                                                 (Principal Executive Officer)

/s/    Ronald E. Tucker                          Chief Financial Officer and              March 28, 2003
       Ronald E. Tucker                          Secretary
                                                 (Principal Financial Officer)
                                                 (Principal Accounting Officer)

/s/    Jefferson W. Asher, Jr.                   Director                                 March 28, 2003
       Jefferson W. Asher, Jr.

/s/    Merlin J. Augustine, Jr.                  Director                                 March 28, 2003
       Merlin J. Augustine, Jr.

/s/    Richard E. Jaudes                         Director                                 March 28, 2003
       Richard E. Jaudes

/s/    Robert J. Messey                          Director                                 March 28, 2003
       Robert J. Messey

/s/    Robert L. Proost                          Director                                 March 28, 2003
       Robert L. Proost

/s/    R. L. Qualls                              Director                                 March 28, 2003
       R. L. Qualls

/s/    Barry K. Rogstad                          Director                                 March 28, 2003
       Barry K. Rogstad

                                      BALDOR ELECTRIC COMPANY AND AFFILIATES

                                                   SCHEDULE II

                                        VALUATION AND QUALIFYING ACCOUNTS

                                                            (In thousands)

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
-----------           ---------         --------          --------           --------             ------

Deducted from current assets:
    Allowance for doubtful accounts

     2002             $ 4,600            $ 1,386                             $ 1,955(A)          $ 4,031
     2001             $ 4,600            $ 1,043                             $ 1,043(A)          $ 4,600
     2000             $ 4,350            $   520                             $   270(A)          $ 4,600

(A)     Uncollectible accounts written off (net of recoveries) during year.

                                                BALDOR ELECTRIC COMPANY AND AFFILIATES

                                                           INDEX OF EXHIBITS

Exhibit No.       Description
-----------       -----------

3(i)       *      Articles of  Incorporation  (as restated and amended) of Baldor  Electric  Company,  effective May 2, 1998,  filed as
                  Exhibit 3(i) to the Registrant's Current Report on Form 10-Q for the quarter ended July 4, 1998.

3(ii)      *      Bylaws of Baldor  Electric  Company (as restated and  amended),  dated August 2, 1999,  filed as Exhibit 3(ii) to the
                  Registrant's Quarterly Report on Form 10-Q for the quarter ended October 2, 1999.

4(i)       *      Rights  Agreement,  dated May 6, 1998,  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 the Registrant's
                  Current Report on Form 8-K dated May 13,  1988, and refiled as Exhibit 4(i) to the Registrant's Annual Report on Form
                  10-K for the year ended December 31, 1994.

4(ii)      *      Amendment  Number 1 to the  Rights  Agreement,  dated  February 5,  1996,  filed  as  Exhibit  2 to the  Registrant's
                  Registration Statement on Form 8-A/A dated March 21, 1996.

4(iii)     *      Amendment  Number 2 to the  Rights  Agreement,  dated  June 1, 1999,  filed as  Exhibit  4(i)(c) to the  Registrant's
                  Quarterly Report on Form 10-Q for the quarter ended July 3, 1999.

10(ii)     * +    Officers  Compensation Plan, originally filed as Exhibit 10.6 to the Registrant's Annual Report on Form 10-K for year
                  ended December 31, 1988, and refiled as Exhibit  10(iii)(A)(2) to the Registrant's Annual Report on Form 10-K for the
                  year ended December 31, 1994.

10(iii)    * +    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 the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.

                                                       (continued on next page)

                                                BALDOR ELECTRIC COMPANY AND AFFILIATES

                                                           INDEX OF EXHIBITS

                                                    (continued from previous page)

Exhibit No.       Description
-----------       -----------

10(iv)     * +    1989 Stock Option Plan for  Non-Employee  Directors,  as restated  and amended at the Board of  Directors  Meeting on
                  August 10,  1998, filed as Exhibit 10(iii)A.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
                  July 4, 1998.

10(v)      * +    1994 Incentive Stock Option Plan, as restated and amended at the Company's  Annual Meeting on May 2,  1998,  filed as
                  Exhibit 10(iii)A.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended July 4, 1998.

10(vi)     * +    1996 Stock Option Plan for  Non-Employee  Directors,  as restated  and amended at the Board of  Directors  Meeting on
                  August 10,  1998, filed as Exhibit 10(iii)A.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
                  July 4, 1998.

10(vii)    * +    Stock Option Plan for  Non-Employee  Directors,  as approved by the Company's Board of Directors on February 5, 2001,
                  filed as Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 29, 2001.

10(viii)     +    Employment Transition and Resignation Agreement between Baldor Electric Company and Lloyd Davis.

11                Computation  of Earnings Per Share,  incorporated  by reference in Note J of the 2002 Annual  Report to  Shareholders
                  filed as Exhibit 13.

13                Portions of the 2002 Annual Report to  Shareholders.  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.

21                Affiliates of the Registrant.

23                Consent of Independent Auditors.

24                Powers of Attorney (set forth on signature page hereto).

99                Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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.

*          Previously filed.

+          Management contract or compensatory plan or arrangement.
```

```

ELEVEN YEAR SUMMARY OF FINANCIAL DATA

(In thousands, except percentages and per-share data)

                                                            PER SHARE DATA          
                                                                                          PERCENT
                              COST                   DILUTED       BASIC                RETURN ON
                NET          GOODS           NET         NET         NET                  AVERAGE    SHAREHOLDERS'
              SALES   SOLDEARNINGSEARNINGSEARNINGSDIVIDENDS EQUITY       EQUITY

   2002     549,507        396,815        23,895        0.69        0.70        0.52         8.9%          274,598
   2001     557,459        401,471        22,385        0.65        0.66        0.52         8.6%          262,485
   2000     621,243        423,861        46,263        1.34        1.36        0.50        17.6%          260,845
   1999     585,551        399,833        43,723        1.19        1.21        0.45        16.5%          266,109
   1998     596,660        410,748        44,610        1.17        1.21        0.40        17.6%          264,292
   1997     564,756        389,711        40,365        1.09        1.13        0.36        18.2%          243,434
   1996     508,526        353,345        35,173        0.97        1.00        0.30        17.1%          200,325
   1995     478,315        334,306        32,305        0.84        0.88        0.26        16.3%          211,377
   1994     422,714        297,212        26,359        0.69        0.73        0.21        15.3%          184,262
   1993     360,195        255,557        19,426        0.52        0.54        0.17        12.7%          160,539
   1992     322,038        229,686        15,264        0.42        0.43        0.14        10.9%          145,226

                              LONG
              TOTAL           TERM       WORKING
             ASSETSOBLIGATIONSCAPITAL

   2002     472,761        105,285       199,023
   2001     457,527         98,673       173,638
   2000     464,978         99,832       174,803
   1999     423,941         56,305       183,956
   1998     411,926         57,015       176,126
   1997     355,889         27,929       141,268
   1996     325,486         45,027       146,975
   1995     313,462         25,255       145,069
   1994     283,155         26,303       118,550
   1993     237,950         22,474       108,601
   1992     211,941         23,209        97,343
```

Management’sDiscussion and Analysis of Financial Condition and Results of Operations

Results ofOperationsSummary

Continued difficulteconomic conditions and corresponding declines in customer orders resulted indecreased sales in 2002. However, improved operating efficiencies and costcontainment initiatives resulted in improved operating and net margins. For theyear, sales declined 1.4% from 2001. Gross and operating margins were 27.8% and8.2%, respectively compared to 28.0% and 8.0% a year ago. Diluted earnings pershare increased to $.69 from $.65 in 2001. Total dividends paid in 2002 remainedat $.52 per share. 

Net Sales

Baldor’s 2002 saleswere $549.5 million, falling 1.4% from 2001 sales of $557.5 million. Sales in2000 were $621.2 million. For the years 2002, 2001, and 2000, sales todistributors and Original Equipment Manufacturer (OEM) customers remained atapproximately 50% each. Baldor serves many industries and geographic regions byselling to a broad base of distributors and OEMs both domestically and in morethan 60 countries around the world. No single customer accounted for more than5% of sales in any year covered by this report. 

Net Earnings

Net earnings in 2002amounted to $23.9 million, advancing 6.7% from earnings of $22.4 million in2001. Net earnings in 2000 were a record $46.3 million. 

Gross margin dippedslightly to 27.8% in 2002 compared to 28.0% in 2001 and 31.8% in 2000. Althoughthe Company’s continued focus on improved efficiencies generated savings,the decline in sales resulted in a decreased gross margin. Operating margin,however, improved to 8.2% from 8.0% in 2001. The Company realized recordoperating margin of approximately 13.8% in 2000. Reductions in freight andwarranty costs combined with the Company’s overall fixed cost reductioninitiatives contributed to improvement in the operating margin. Pre-tax marginwas 6.9% for 2002 compared to 6.4% in 2001 and 11.9% in 2000. Decreases ininterest rates on outstanding debt helped to move the pre-tax margin in apositive direction. The Company’s effective tax rate amounted to 37.0% for2002 and 2001and 37.5% in 2000. 

InternationalOperations

Sales from internationaloperations (foreign affiliates and exports) amounted to $74.8 million in 2002,$78.1 million in 2001 and $85.6 million in 2000. Although the Companyexperienced sales declines of 4.2% in the international markets in 2002, salesfor the fourth quarter of 2002 increased over the same period of 2001 in Europe,Australia, Mexico and the Far East. 

EnvironmentalRemediation

Management believes, basedon their internal reviews and other factors, that the future costs relating toenvironmental remediation and compliance will not have a material effect on thecapital expenditures, earnings, or competitive position of the Company. 

FinancialPositionSummary

Baldor’s financialposition remained strong through 2002. The Company maintained its financialstrength while continuing research and development for new and existingproducts, making capital investments in our manufacturing facilities, andcontinuing to invest in both our employees’ and customers’ educationand training. 

Investments

Baldor believes theinvestment in our employees through training and education is a key to continuedsuccess and improved shareholder value. The Company continues to be a leader notonly in employee education, but also in customer training. 

Investments in property,plant and equipment were $10.6 million in 2002, $19.4 million in 2001 and $22.6million in 2000. These investments were made to centralize operations, increasecapacity, and improve quality and productivity. 

The Company’scommitment to research and development continues to help it maintain aleadership position in the marketplace and to satisfy customers’ needs.Investments in research and development amounted to $22.5 million in 2002, $24.4million in 2001, and $25.0 million in 2000. The Company continues to makeinvestments in existing products for improved performance, increased energyefficiency, and manufacturability. 

CurrentLiquidity

Baldor’s liquidityposition remained strong in 2002 with solid working capital and a current ratioof 3.7 to 1. Working capital was $199.0 million at year-end 2002 compared to$173.6 million at the end of 2001. Liquidity was supported by cash flows fromoperations of $53.6 million in 2002, $38.3 million in 2001 and $46.4 million in2000. The Company utilized a portion of its cash flows from operations to fundproperty, plant and equipment additions of $10.6 million and pay dividends toshareholders of $17.9 million. 

The Company expects thatits foreseeable cash needs for operations and capital expenditures will continueto be met through cash flows from operating activities and existing creditfacilities. 

Long-Term Debtand Shareholders’ Equity

Long-term debt as a percentof total capital was 27.7% at year-end 2002 and 27.3% at year-end 2001. Baldorrepurchased 121,300 shares of common stock during 2001. Of the 6.0 millionshares authorized for repurchase since September 1998, 4.3 million had beenrepurchased as of December 28, 2002. An additional 1.5 million shares wererepurchased on February 14, 2003 for cash of $26.7 million. Shareholders’equity was $274.6 million at year-end 2002 compared to $262.5 million at the endof 2001. Return on average shareholders’ equity was 8.9% in 2002 and 8.6%in 2001. 

Dividend Policy

Annual dividends perdiluted share amounted to $.52 in 2002 and 2001, and $.50 in 2000. There havebeen three dividend increases in the last five years and 11 increases in thelast 10 years. These increases were in line with Baldor’s policy of makingincreases periodically, as earnings and financial strength warrant, andreinvesting to finance growth opportunities. The objective is for shareholdersto obtain dividend increases over time while also participating in the growth ofthe Company. 

Market Risk

Market risks relating tothe Company’s operations result primarily from changes in commodity prices,interest rates and foreign exchange rates. To maintain stable pricing for itscustomers, the Company enters into various hedging transactions as describedbelow. 

The Company is a purchaserof certain commodities, primarily copper, aluminum and steel, and periodicallyutilizes commodity futures and options for hedging purposes to reduce theeffects of changing commodity prices. Generally, contract terms of a hedgeinstrument closely mirror those of the hedged item providing a high degree ofrisk reduction and correlation. Contracts that are highly effective at meetingthis risk reduction and correlation criteria are recorded using hedgeaccounting. 

The Company’s interestrate risk is related to its available-for-sale securities and long-term debt.Due to the short-term nature of the Company’s securities portfolio,anticipated interest rate risk is not considered material. The Company’sdebt obligations include certain notes payable to banks bearing interest at aquarterly variable rate. The Company does not currently utilize derivatives formanaging interest rate risk, but continues to monitor changes in market interestrates. 

Foreign affiliates compriseless than 5% of total assets. The Company does not anticipate the use ofderivatives for managing foreign currency risk, but continues to monitor theeffects of foreign currency exchange rates. 

RecentlyIssued Accounting Standards

In June 2001, the FinancialAccounting Standards Board (FASB) issued Statement of Financial AccountingStandards (SFAS) No. 141, “Business Combinations”, and No. 142,“Goodwill and Other Intangible Assets”, effective for fiscal yearsbeginning after December 15, 2001. The new rules on accounting for goodwill andother intangible assets became effective for the Company beginning in the firstquarter of 2002. The Company assessed its goodwill for impairment upon adoptionand will test for impairment at least annually hereafter. The Company’stransitional impairment test did not indicate any impairment losses. TheCompany’s first annual test for impairment was completed during the fourthquarter of 2002 and did not indicate any impairment losses. Had the provisionsof SFAS No. 142 been in effect during the years ended December 29, 2001 andDecember 30, 2000, an increase in net income of $1.1 million or $.03 per dilutedshare and $619,000 or $.02 per diluted share, respectively, would have beenrecorded. 

In October 2001, the FASBissued SFAS No. 144, “Accounting for the Impairment or Disposal ofLong-Lived Assets,” which became effective for the Company beginningDecember 30, 2001. The Company’s adoption of SFAS No. 144 had no effect onits consolidated financial position, results of operations or cash flows as ofthe year ended December 28, 2002. 

In July 2002, the FASBissued SFAS No. 146, “Accounting for Costs Associated with Exit or DisposalActivities.” The Company is required to adopt SFAS No. 146 for all exit anddisposal activities initiated after December 31, 2002. 

In November 2002, the FASBissued Interpretation No. 45, “Guarantor’s Accounting and DisclosureRequirements for Guarantees, Including Indirect Guarantees of Indebtedness ofOthers.” The disclosure provisions of this Statement became effective forthe Company as of the fourth quarter of 2002. 

In December 2002, the FASBissued SFAS No. 148, “Accounting for Stock-Based Compensation-Transitionand Disclosure” The Company was required to adopt the expanded disclosurerequirements of SFAS No. 148 for the year ended December 28, 2002. 

During 2002, the FASBissued SFAS No. 143, “Accounting for Asset Retirement Obligations,”and SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64,Amendment of FASB Statement No. 13, and Technical Corrections,” whichbecome effective for the Company December 29, 2002. 

Forward-lookingStatements

This annual report andother written reports and oral statements made from time to time by the Companyand its representatives may contain forward-looking statements. Theforward-looking statements (generally identified by words or phrases indicatinga projection or future expectation such as “outlook”,“optimistic”, “trends”, “expect(s)&quot;,“assuming”, “expectations”, “forecasted”,“estimates”, “expected”) are based on the Company’scurrent expectations and some of them are subject to risks and uncertainties.Accordingly, you are cautioned that any such forward-looking statements are notguarantees of future performance and involve risks and uncertainties, and thatactual results may differ materially from those projected in the forward-lookingstatements as a result of various factors. The factors that might cause suchdifferences include, but are not limited to, the following: (i) changes ineconomic conditions, (ii) developments or new initiatives by our competitors inthe markets in which we compete, (iii) fluctuations in the costs of select rawmaterials, (iv) the success in increasing sales and maintaining or improving theoperating margins of the Company, and (v) other factors including thoseidentified in the Company’s filings made from time to time with theSecurities and Exchange Commission. 

```
**Consolidated Balance Sheets
Baldor Electric Company and Affiliates**

                                                                                      December 28        December 29
ASSETS (In thousands, except share data)                                                     2002       2001
CURRENT ASSETS:        Cash and cash equivalents                                         $ 24,515            $ 5,564
                       Marketable securities                                               27,155             11,052
                       Receivables, less allowances for doubtful accounts
                       of $4,031 in 2002 and $4,600 in 2001.                               83,630             83,182
                       Inventories:
                               Finished products                                           78,044             83,919
                               Work in process                                              9,927             10,155
                               Raw materials                                               50,237    56,751
                                                                                          138,208            150,825
                       LIFO valuation adjustment                                          (25,068)           (24,604)
                                                                                          113,140            126,221
                       Other current assets and deferred income taxes                      24,264    25,262
                       TOTAL CURRENT ASSETS                                               272,704            251,281

OTHER ASSETS:          Goodwill                                                            57,158             57,158
                       Other                                                                6,232              6,973
PROPERTY, PLANT        Land and improvements                                                6,282              6,267
AND EQUIPMENT:         Buildings and improvements                                          56,350             54,372
                       Machinery and equipment                                            274,314            266,627
                       Allowances for depreciation and amortization                      (200,279)          (185,151)
                       NET PROPERTY, PLANT AND EQUIPMENT                                  136,667   142,115 $ 472,761 $ 457,527

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT                Accounts payable                                                  $ 25,289           $ 28,830
LIABILITIES:           Employee compensation                                                7,526              5,997
                       Profit sharing                                                       5,279              5,102
                       Accrued warranty costs                                               6,625              6,625
                       Accrued insurance obligations                                       13,794             15,694
                       Other accrued expenses                                              12,274             14,670
                       Income taxes payable (receivable)                                    1,004             (1,046)
                       Current maturities of long-term obligations                          1,890     1,771
                       TOTAL CURRENT LIABILITIES                                           73,681             77,643
LONG-TERM OBLIGATIONS                                                                     105,285             98,673
DEFERRED INCOME TAXES                                                                      19,197             18,726
SHAREHOLDERS' EQUITY:  Preferred stock, $.10 par value
                         Authorized shares:  5,000,000
                         Issued and outstanding shares:  None
                       Common Stock, $.10 par value
                         Authorized shares:  150,000,000
                         Issued shares:  2002 - 39,693,091;
                         2001 - 39,411,473                                                  3,969              3,941
                       Additional capital                                                  48,657             44,224
                       Retained earnings                                                  331,373            325,642
                       Accumulated other comprehensive income (loss)                       (4,880)            (8,164)
                       Treasury stock (5,553,633 shares in 2002
                       and 5,493,053 shares in 2001)                                     (104,521)          (103,158)
                       TOTAL SHAREHOLDERS' EQUITY                                         274,598  262,485 $ 472,761$ 457,527

See notes to consolidated financial statements.
```

```
**Consolidated Statements of Earnings
Baldor Electric Company and Affiliates**

                                                                         Year Ended
                                                      December 28    December 29      December 30
(In thousands, except share data)                            2002       2001       2000
Net sales                                               $ 549,507      $ 557,459        $ 621,242
Other income, net                                           1,383        839      1,838
                                                          550,890        558,298          623,080
Cost and expenses: Cost of goods sold                     396,815        401,471          423,861
                   Selling and administrative             107,407        111,253          111,611
                   Profit sharing                           5,285          5,136            9,747
                   Interest                                 3,454     4,906      3,840    512,961   522,766    549,059
Earnings before income taxes                               37,929         35,532           74,021
Income taxes                                               14,034    13,147     27,758
                          NET EARNINGS                   $ 23,895  $ 22,385   $ 46,263
Net earnings per share-basic                               $ 0.70         $ 0.66           $ 1.36
Net earnings per share-diluted                             $ 0.69         $ 0.65           $ 1.34
Weighted average shares outstanding-basic              34,060,853     33,896,164       33,980,529
Weighted average shares outstanding-diluted            34,622,136     34,505,550       34,570,328

See notes to consolidated financial statements.
```

```
**Summary of Quarterly Results of Operations (unaudited)
Baldor Electric Company and Affiliates**

                                                               Quarter
(In thousands, except share data)           First    Second    Third   Fourth    Total
2002:   Net sales                       $ 133,510  $ 145,176  $ 134,890  $ 135,931  $ 549,507
        Gross profit                       37,156     41,370     36,132     38,034    152,692
        Net earnings                        5,428      7,195      5,172      6,100     23,895
        Net earnings per share-basic         0.16       0.21       0.15       0.18       0.70
      * Net earnings per share-diluted       0.16       0.21       0.15       0.18       0.69
2001:   Net sales                       $ 150,155  $ 146,668  $ 138,125  $ 122,511  $ 557,459
        Gross profit                       42,610     41,793     39,048     32,537    155,988
        Net earnings                        7,167      6,449      5,423      3,346     22,385
        Net earnings per share-basic         0.21       0.19       0.16       0.10       0.66
      * Net earnings per share-diluted       0.21       0.19       0.16       0.10       0.65

*The sum of the quarter amounts does not agree to the total due to rounding.
```

ConsolidatedStatements of Cash Flow