RBC Bearings INC - Quarter Report: 2008 June (Form 10-Q)
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
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FORM
10-Q
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x QUARTERLY
REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended June 28, 2008
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OR
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o TRANSITION
REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ______ to ______
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Commission
File Number: 333-124824
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RBC
Bearings Incorporated
(Exact
name of registrant as specified in its charter)
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Delaware
(State
or other jurisdiction of incorporation or organization)
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95-4372080
(I.R.S.
Employer Identification No.)
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One
Tribology Center
Oxford,
CT
(Address
of principal executive offices)
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06478
(Zip
Code)
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(203)
267-7001
(Registrant’s
telephone number, including area code)
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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
o
Indicate
by check mark whether the registrant is a large accelerated filer,
an
accelerated filer, a non-accelerated filer or a smaller reporting
company.
See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
One):
Large
Accelerated filer x
Accelerated
filer o
Non-accelerated
filer o
Smaller
reporting company o
Indicate
by check mark whether the registrant is a shell company (as defined
in
Rule 12b-2 of the Exchange Act). Yes o
No
x
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As
of July 30, 2008, RBC Bearings Incorporated had 21,783,686 shares
of
Common Stock outstanding.
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3
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3
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|
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12
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17
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18
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18
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19
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19
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19
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20
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20
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20
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20
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RBC
Bearings Incorporated
Consolidated
Balance Sheets
(dollars
in thousands, except share and per share data)
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June
28, 2008
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March
29, 2008
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||||||
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ASSETS
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(Unaudited)
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||||||
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Current
assets:
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|||||||
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Cash
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$
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13,397
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$
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9,859
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|||
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Accounts
receivable, net of allowance for doubtful accounts of $1,100
at June 28, 2008 and $1,018 at March 29, 2008
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64,044
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66,137
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|||||
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Inventory
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129,549
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123,820
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|||||
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Deferred
income taxes
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4,793
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5,567
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|||||
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Prepaid
expenses and other current assets
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6,330
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9,976
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|||||
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Total
current assets
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218,113
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215,359
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|||||
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Property,
plant and equipment, net
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76,729
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73,243
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|||||
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Goodwill
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32,488
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31,821
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|||||
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Intangible
assets, net of accumulated amortization of $3,957 at June 28,
2008 and $3,583 at March 29, 2008
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13,090
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11,404
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|||||
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Other
assets
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4,941
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5,285
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|||||
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Total
assets
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$
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345,361
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$
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337,112
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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|||||||
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Current
liabilities:
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|||||||
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Accounts
payable
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$
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26,308
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$
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24,851
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|||
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Accrued
expenses and other current liabilities
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15,336
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13,489
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|||||
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Current
portion of long-term debt
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750
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750
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|||||
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Total
current liabilities
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42,394
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39,090
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|||||
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Long-term
debt, less current portion
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50,500
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57,000
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|||||
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Deferred
income taxes
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6,367
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6,064
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|||||
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Other
non-current liabilities
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11,554
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11,048
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|||||
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Total
liabilities
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110,815
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113,202
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Stockholders'
equity:
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|||||||
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Preferred
stock, $.01 par value; authorized shares: 10,000,000 at June 28,
2008 and
March 29, 2008; none issued and outstanding
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—
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—
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|||||
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Common
stock, $.01 par value; authorized shares: 60,000,000 at June 28,
2008 and
March 29, 2008; issued and outstanding shares: 21,782,186 shares
at June
28, 2008 and March 29, 2008, respectively
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218
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218
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|||||
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Additional
paid-in capital
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184,837
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184,285
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|||||
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Accumulated
other comprehensive income
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1,058
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1,312
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|||||
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Retained
earnings
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52,371
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41,688
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Treasury
stock, at cost, 123,553 shares at June 28, 2008 and 113,322 shares
at
March 29, 2008
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(3,938
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)
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(3,593
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)
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Total
stockholders' equity
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234,546
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223,910
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|||||
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Total
liabilities and stockholders' equity
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$
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345,361
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$
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337,112
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See
accompanying notes.
RBC
Bearings Incorporated
Consolidated
Statements of Operations
(dollars
in thousands, except share and per share data)
(Unaudited)
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Three
Months Ended
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|||||||
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June
28,
2008
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June
30,
2007
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||||||
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Net
sales
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$
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92,380
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$
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79,823
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|||
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Cost
of sales
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61,825
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52,378
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|||||
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Gross
margin
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30,555
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27,445
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Operating
expenses:
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|||||||
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Selling,
general and administrative
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13,127
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11,302
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|||||
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Other,
net
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382
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362
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|||||
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Total
operating expenses
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13,509
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11,664
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|||||
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Operating
income
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17,046
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15,781
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|||||
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Interest
expense, net
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681
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980
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|||||
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Loss
on early extinguishment of debt
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319
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—
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|||||
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Other
non-operating income
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(83
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)
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(114
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)
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Income
before income taxes
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16,129
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14,915
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|||||
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Provision
for income taxes
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5,446
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5,090
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|||||
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Net
income
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$
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10,683
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$
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9,825
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Net
income per common share:
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|||||||
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Basic
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$
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0.50
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$
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0.46
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Diluted
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$
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0.49
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$
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0.45
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Weighted
average common shares:
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|||||||
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Basic
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21,561,375
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21,377,482
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|||||
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Diluted
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21,782,020
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21,882,470
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|||||
See
accompanying notes.
RBC
Bearings Incorporated
Consolidated
Statements of Cash Flows
(dollars
in thousands)
(Unaudited)
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Three
Months Ended
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|||||||
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June
28,
2008
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June
30,
2007
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||||||
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Cash
flows from operating activities:
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|||||||
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Net
income
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$
10,683
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$
9,825
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|||||
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Adjustments
to reconcile net income to net cash provided by operating
activities:
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|||||||
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Depreciation
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2,792
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2,172
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|||||
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Deferred
income taxes
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1,077
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1,786
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|||||
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Amortization
of intangible assets
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374
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241
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|||||
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Amortization
of deferred financing costs
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59
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51
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|||||
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Stock-based
compensation
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552
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350
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|||||
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Loss
on disposition of assets
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30
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10
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|||||
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Loss
on early extinguishment of debt (non-cash portion)
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319
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—
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|||||
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Changes
in operating assets and liabilities, net of acquisitions:
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|||||||
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Accounts
receivable
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3,139
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(3,091
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)
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||||
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Inventory
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(3,981
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)
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(3,798
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)
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Prepaid
expenses and other current assets
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3,666
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(1,122
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)
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Other
non-current assets
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33
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(2
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)
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||||
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Accounts
payable
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1,249
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4,362
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|||||
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Accrued
expenses and other current liabilities
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1,114
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246
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|||||
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Other
non-current liabilities
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607
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2,400
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|||||
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Net
cash provided by operating activities
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21,713
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13,430
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|||||
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Cash
flows from investing activities:
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|||||||
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Purchase
of property, plant and equipment
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(4,569
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)
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(6,623
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)
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Acquisition
of businesses, net of cash acquired
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(6,579
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)
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(4,360
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)
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Proceeds
from sale of assets
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18
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4
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|||||
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Net
cash used in investing activities
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(11,130
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)
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(10,979
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)
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Cash
flows from financing activities:
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|||||||
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Net
increase (decrease) in revolving credit facility
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9,000
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(4,000
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)
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||||
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Exercise
of stock options
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—
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1,043
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|||||
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Repurchase
of common stock
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(345
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)
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—
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||||
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Retirement
of industrial revenue bonds
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(15,500
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)
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—
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||||
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Principal
payments on capital lease obligations
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(48
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)
|
(51
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)
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|||
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Net
cash used in financing activities
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(6,893
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)
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(3,008
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)
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Effect
of exchange rate changes on cash
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(152
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)
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(12
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)
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Cash
and cash equivalents:
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|||||||
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Increase
(decrease) during the period
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3,538
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(569
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)
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||||
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Cash,
at beginning of period
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9,859
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5,184
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|||||
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Cash,
at end of period
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$
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13,397
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$
|
4,615
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|||
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Supplemental
disclosures of cash flow information:
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|||||||
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Cash
paid during the period for:
|
|||||||
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Interest
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$
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630
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$
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935
|
|||
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Income
taxes
|
$
|
1,112
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$
|
510
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|||
See
accompanying notes.
RBC
Bearings Incorporated
Notes
to Unaudited Interim Consolidated Financial Statements
(dollars
in thousands, except share and per share data)
The
consolidated financial statements included herein have been prepared by RBC
Bearings Incorporated, a Delaware corporation (collectively with its
subsidiaries, the “Company”), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The March 29, 2008 fiscal
year end balance sheet data have been derived from the Company’s audited
financial statements, but do not include all disclosures required by generally
accepted accounting principles in the United States. The interim financial
statements included with this report have been prepared on a consistent basis
with the Company’s audited financial statements and notes thereto included in
the Company’s Annual Report on Form 10-K for the fiscal year ended March 29,
2008.
The
consolidated financial statements include the accounts of RBC Bearings
Incorporated and its wholly-owned subsidiary, Roller Bearing Company of
America, Inc. (“RBCA”) and its wholly-owned subsidiaries, Industrial
Tectonics Bearings Corporation (“ITB”), RBC Linear Precision Products, Inc.
(“LPP”), RBC Nice Bearings, Inc. (“Nice”), RBC Precision Products -
Bremen, Inc. (“Bremen (MBC)”), RBC Precision Products - Plymouth, Inc.
(“Plymouth”), Tyson Bearings, Inc. (“Tyson”), Schaublin Holdings S.A. and
its wholly-owned subsidiaries (“Schaublin”), RBC de Mexico S DE RL DE CV
(“Mexico”), RBC Oklahoma, Inc. (“RBC Oklahoma”), RBC Aircraft
Products, Inc. (“API”), Shanghai Representative office of Roller Bearing
Company of America, Inc. (“RBC Shanghai”), RBC Southwest Products, Inc. (“SWP”),
All Power Manufacturing Co. (“All Power”), RBC Bearings U.K. Limited and its
wholly-owned subsidiary Phoenix Bearings Limited (“Phoenix”) and RBC CBS Coastal
Bearing Services LLC (“CBS”), as well as the Transport Dynamics (“TDC”), Heim
(“Heim”), Engineered Components (“ECD”), A.I.D. Company (“AID”), BEMD Company
(“BEMD”) and PIC Design (“PIC Design”) divisions of RBCA. U.S. Bearings (“USB”)
is a division of SWP and Schaublin USA is a division of Nice. All material
intercompany balances and transactions have been eliminated in consolidation.
These
statements reflect all adjustments, accruals and estimates consisting only
of
items of a normal recurring nature, which are, in the opinion of management,
necessary for the fair presentation of the consolidated financial condition
and
consolidated results of operations for the interim periods presented. These
financial statements should be read in conjunction with the Company’s audited
financial statements and notes thereto included in the Annual Report on Form
10-K.
The
Company operates in four reportable business segments—roller bearings, plain
bearings, ball bearings, other and corporate—in which it manufactures roller
bearing components and assembled parts and designs and manufactures
high-precision roller and ball bearings. The Company sells to a wide variety
of
original equipment manufacturers (“OEMs”) and distributors who are widely
dispersed geographically.
The
results of operations for the three month period ended June 28, 2008 are not
necessarily indicative of the operating results for the full year. The three
month periods ended June 28, 2008 and June 30, 2007 each include 13 weeks.
The
amounts shown are in thousands, unless otherwise indicated.
Certain
reclassifications have been made to prior year’s financial statements to conform
with current year presentation.
Adoption
of Recent Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standard (“SFAS”) No. 157 “Fair Value
Measurements” (“SFAS No. 157”) in order to establish a single definition of fair
value and a framework for measuring fair value that is intended to result in
increased consistency and comparability in fair value measurements. In February
2008, the FASB issued Staff Position FAS 157-2, which delayed by one year the
effective date of SFAS No. 157 for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at fair value in
the
financial statements on a
recurring
basis (at least annually). The delay pertains to items including, but not
limited to, non-financial assets and non-financial liabilities initially
measured at fair value in a business combination, reporting units measured
at
fair value in the first step of evaluating goodwill for impairment,
indefinite-lived intangible assets measured at fair value for impairment
assessment, and long-lived assets measured at fair value for impairment
assessment. The adoption of SFAS No. 157 as of the beginning of the 2009 fiscal
year did not have an impact on the measurement of the Company’s financial assets
and liabilities. The Company plans to adopt the remaining provisions of SFAS
No.
157 as of the beginning of its 2010 fiscal year and is currently assessing
the
impact adoption will have on its results of operations and financial position.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Liabilities, Including an amendment of FASB Statement
No.
115,” (“SFAS No. 159”). This Statement permits entities to choose to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value. The Company chose to not adopt
the fair value measurement provisions of SFAS No. 159.
Pending
Accounting Pronouncements
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations,” and
SFAS No. 160, “Accounting and Reporting of Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51.” These new
standards will significantly change the financial accounting and reporting
of
business combination transactions and noncontrolling (or minority) interests
in
consolidated financial statements.
In
comparison to current practice, the most significant changes to business
combination accounting pursuant to SFAS No. 141(R) include requirements
to:
|
·
|
Recognize,
with certain exceptions, 100 percent of the fair values of assets
acquired, liabilities assumed, and noncontrolling interests in
acquisitions of less than a 100 percent controlling interest when
the
acquisition constitutes a change in control of the acquired
entity.
|
|
·
|
Measure
acquirer shares issued in consideration for a business combination
at fair
value on the acquisition date.
|
|
·
|
Recognize
contingent consideration arrangements at their acquisition-date fair
values, with subsequent changes in fair value generally reflected
in
earnings.
|
|
·
|
With
certain exceptions, recognize preacquisition loss and gain contingencies
at their acquisition-date fair
values.
|
|
·
|
Capitalize
in-process research and development (IPR&D) assets
acquired.
|
|
·
|
Expense,
as incurred, acquisition-related transaction
costs.
|
|
·
|
Capitalize
acquisition-related restructuring costs only if the criteria in SFAS
146
are met as of the acquisition date.
|
|
·
|
Recognize
changes that result from a business combination transaction in an
acquirer’s existing income tax valuation allowances and tax uncertainty
accruals as adjustments to income tax
expense.
|
The
premise of SFAS No. 160 is based on the economic entity concept of consolidated
financial statements. Under the economic entity concept, all residual economic
interest holders in an entity have an equity interest in the consolidated
entity, even if the residual interest is relative to only a portion of the
entity (i.e., a residual interest in a subsidiary). Therefore, SFAS No. 160
requires that a noncontrolling interest in a consolidated subsidiary be
displayed in the consolidated statement of financial position as a separate
component of equity because the noncontrolling interests meet the definition
of
equity of the consolidated entity. SFAS No. 141(R) is required to be adopted
concurrently with SFAS No. 160 and is effective for business combination
transactions for which the acquisition date is on or after the beginning of
the
first annual reporting period beginning on or after December 15, 2008, which
for
the Company is fiscal 2010. Early adoption is prohibited. The Company is
currently assessing the impact that SFAS No. 141(R) and SFAS No. 160 will have
on its results of operations and financial position.
In
March
2008, the FASB issued SFAS
No.
161, “Disclosures about Derivative Instruments and Hedging Activities, an
amendment of FASB Statement No. 133.” SFAS No. 161 applies to all derivative
instruments and related hedged items accounted for under SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” SFAS No.161
requires entities to provide greater transparency about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and hedged
items are accounted for under SFAS 133 and its related interpretations, and
(c)
how derivative instruments and related hedged items affect an entity’s financial
position, results of operations, and cash flow. To meet those objectives, SFAS
No. 161 requires (1) qualitative disclosures about objectives for using
derivatives by primary underlying risk exposure (e.g., interest rate, credit
or
foreign exchange rate) and by purpose or strategy (fair value hedge, cash flow
hedge, net investment hedge, and non-hedges), (2) information about the volume
of derivative activity in a flexible format the preparer believes is the most
relevant and practicable, (3) tabular disclosures about balance sheet location
and gross fair value amounts of derivative instruments, income statement and
other comprehensive income (OCI) location and amounts of gains and losses on
derivative instruments by type of contract (e.g., interest rate contracts,
credit contracts or foreign exchange contracts), and (4) disclosures about
credit-risk-related contingent features in derivative agreements. SFAS No.
161
is effective for financial statements issued for fiscal years or interim periods
beginning after November 15, 2008, which for the Company is the fourth quarter
of fiscal 2009. Early application is encouraged, as are comparative disclosures
for earlier periods, but neither are required. The Company is currently
assessing the impact that SFAS No. 161 will have on its results of operations
and financial position.
| 1. |
Acquisition
|
On
June
6, 2008, the Company acquired the assets of Precision Industrial Components
LLC
(“PIC Design”) for $6,579 in cash and the assumption of certain liabilities. As
a result of the acquisition, the Company recorded amortizable intangible assets
of $1,500, fixed assets of $1,579, goodwill of $652, other long-term assets
of
$57, other long-term liabilities of $420 and $3,211 of working capital. PIC
Design, located in Middlebury, Connecticut, is a manufacturer and supplier
of
tight-tolerance, precision mechanical components for use in the motion control
industry. PIC Design is included in the Other segment. Proforma net sales and
net income inclusive of PIC Design are not materially different from those
previously reported.
| 2. |
Net
Income Per Common Share
|
Basic
net
income per common share is computed by dividing net income available to common
stockholders by the weighted-average number of common shares outstanding.
Diluted
net income per common share is computed by dividing net income by the sum of
the
weighted-average number of common shares, dilutive common share equivalents
then
outstanding using the treasury stock method. Common share equivalents consist
of
the incremental common shares issuable upon the exercise of stock
options.
The
table
below reflects the calculation of weighted-average shares outstanding for each
period presented as well as the computation of basic and diluted net income
per
common share:
|
|
Three
Months Ended
|
||||||
|
June
28, 2008
|
June
30, 2007
|
||||||
|
Net
income
|
$
|
10,683
|
$
|
9,825
|
|||
|
Denominator
for basic net income per common share—weighted-average
shares
|
21,561,375
|
21,377,482
|
|||||
|
Effect
of dilution due to employee stock options
|
220,645
|
504,988
|
|||||
|
Denominator
for diluted net income per common share — weighted-average
shares
|
21,782,020
|
21,882,470
|
|||||
|
Basic
net income per common share
|
$
|
0.50
|
$
|
0.46
|
|||
|
Diluted
net income per common share
|
$
|
0.49
|
$
|
0.45
|
|||
| 3. |
Inventory
|
Inventories
are stated at the lower of cost or market, using the first-in, first-out method,
and are summarized below:
|
June
28, 2008
|
March
29, 2008
|
||||||
|
Raw
materials
|
$
|
11,505
|
$
|
11,561
|
|||
|
Work
in process
|
41,206
|
38,488
|
|||||
|
Finished
goods
|
76,838
|
73,771
|
|||||
|
$
|
129,549
|
$
|
123,820
|
||||
| 4. |
Comprehensive
Income
|
Total
comprehensive income is as follows:
|
Three
Months Ended
|
|||||||
|
June
28,
2008
|
June
30,
2007
|
||||||
|
Net
income
|
$
|
10,683
|
$
|
9,825
|
|||
|
Net
prior service cost and actuarial losses, net of tax benefit of
$8
|
(14
|
)
|
—
|
||||
|
Change
in fair value of derivatives, net of taxes of $312
|
504
|
—
|
|||||
|
Foreign
currency translation adjustments
|
(744
|
)
|
(77
|
)
|
|||
|
Total
comprehensive income
|
$
|
10,429
|
$
|
9,748
|
|||
| 5. |
Debt
|
On
January 8, 2008, the Company entered into an interest rate swap agreement with
a
total notional value of $30,000 to hedge a portion of its variable rate debt.
Under the terms of the agreement, the Company pays interest at a fixed rate
(3.64%) and receives interest at variable rates. The maturity date of the
interest swap is June 24, 2011. The fair value of this swap at June 28, 2008
was
an asset of $64 and was included in other current assets. This instrument is
designated and qualifies as a cash flow hedge. Accordingly, the gain or loss
on
both the hedging instrument and the hedged item attributable to the hedged
risk
are recognized in other comprehensive income.
On
May 1,
2008, the Company voluntarily paid off the Series 1999 Industrial Revenue Bond
(“IRB”), the prinicipal amount of which was $4,800. In addition, on June 2,
2008, the Company voluntarily paid off the Series 1994 A and B IRBs, the
principal amounts of which were $7,700 and $3,000, respectively. The Company
recorded a non-cash pre-tax charge of approximately $319 in the three month
period ended June 28, 2008 to write off deferred financing costs associated
with
the voluntary payoff of the IRBs.
The
balances payable under all borrowing facilities are as follows:
|
June
28, 2008
|
March
29, 2008
|
||||||
|
KeyBank
Credit Agreement
|
|||||||
|
Five-year
senior secured revolving credit facility; amounts outstanding bear
interest at the prime rate or LIBOR, plus a specified margin, depending
on
the type of borrowing being made (prime rate 5.00% and 5.25% at June
28,
2008 and March 29, 2008, respectively, and LIBOR 2.50% and 2.69%
at June
28, 2008 and March 29, 2008, respectively)
|
$
|
50,000
|
$
|
41,000
|
|||
|
Note
Payable, payable
through September 2009
|
1,250
|
1,250
|
|||||
|
Industrial
Development Revenue Bonds
|
|||||||
|
Series
1994 A, bears interest at a variable rate payable monthly through
September 2017
|
—
|
7,700
|
|||||
|
Series
1994 B, bears interest at a variable rate, payable monthly through
December 2017
|
—
|
3,000
|
|||||
|
Series
1999, bearing interest at variable rates, payable monthly through
April
2024
|
—
|
4,800
|
|||||
|
Total
Debt
|
51,250
|
57,750
|
|||||
|
Less:
Current Portion
|
750
|
750
|
|||||
|
Long-Term
Debt
|
$
|
50,500
|
$
|
57,000
|
|||
The
current portion of long-term debt as of June 28, 2008 and March 29, 2008
includes a $750 note payable related to the All Power acquisition.
| 6. |
Income
Taxes
|
The
Company files income tax returns in the U.S. federal jurisdiction, and various
states and foreign jurisdictions. With few exceptions, the Company is no longer
subject to state or foreign income tax examinations by tax authorities for
years
ending before March 31, 2001. The Company is no longer subject to U.S. federal
tax examination by the Internal Revenue Service for years ending before March
31, 2003.
The
Company does not expect any material changes to the unrecognized tax benefits
within the next twelve months. There have been no material changes to the total
amount of urecognized tax benefits during the three months ended June 28,
2008.
The
effective income tax rates for the three month periods ended June 28, 2008
and
June 30, 2007 were 33.8% and 34.1%, respectively. The effective income tax
rates
are below the U.S. statutory rate due to foreign income taxed at lower rates
and
a special manufacturing deduction in the U.S.
| 7. |
Reportable
Segments
|
The
Company operates through operating segments for which separate financial
information is available, and for which operating results are evaluated
regularly by the Company's chief operating decision maker in determining
resource allocation and assessing performance. Those operating segments with
similar economic characteristics and that meet all other required criteria,
including nature of the products and production processes, distribution patterns
and classes of customers, are aggregated as reportable segments. Certain other
operating segments do not exhibit the common attributes mentioned above and
do
not meet the quantitative thresholds for separate disclosure, and their
information is combined and disclosed as “Other.” There is also a segment
reflecting corporate charges.
The
Company has four reportable business segments engaged in the manufacture and
sale of the following:
Roller
Bearings.
Roller
bearings are anti-friction bearings that use rollers instead of balls. The
Company manufactures four basic types of roller bearings: heavy duty needle
roller bearings with inner rings, tapered roller bearings, track rollers and
aircraft roller bearings.
Plain
Bearings.
Plain
bearings are produced with either self-lubricating or metal-to-metal designs
and
consist of several sub-classes, including rod end bearings, spherical plain
bearings and journal bearings. Unlike ball bearings, which are used in
high-speed rotational applications, plain bearings are primarily used to rectify
inevitable misalignments in various mechanical components.
Ball
Bearings.
The
Company manufactures four basic types of ball bearings: high precision
aerospace, airframe control, thin section and commercial ball bearings which
are
used in high-speed rotational applications.
Other.
Other
consists of four minor operating locations that do not fall into the above
segmented categories. The Company produces precision ground ball bearing screws
at its LPP plant that offer repeatable positioning accuracy in machine tools,
transfer lines, robotic handling and semiconductor equipment. The Company's
Schaublin location produces precision machine tool collets that provide
effective part holding and accurate part location during machining operations.
The Company’s BEMD plant provides machining for integrated bearing assemblies
and aircraft components for the commercial and defense aerospace markets. The
Company’s PIC Design division provides tight-tolerance, precision mechanical
components for use in the motion control industry.
Corporate.
Corporate consists of expenses incurred at the corporate office.
Segment
performance is evaluated based on segment net sales and operating income. Items
not allocated to segment operating income include corporate administrative
expenses and certain other amounts.
|
Three
Months Ended
|
|||||||
|
June
28,
2008
|
June
30,
2007
|
||||||
|
Net
External Sales
|
|||||||
|
Roller
|
$
|
24,957
|
$
|
23,643
|
|||
|
Plain
|
43,715
|
37,720
|
|||||
|
Ball
|
15,046
|
13,421
|
|||||
|
Other
|
8,662
|
5,039
|
|||||
|
$
|
92,380
|
$
|
79,823
|
||||
|
Operating
Income
|
|||||||
|
Roller
|
$
|
7,088
|
$
|
7,219
|
|||
|
Plain
|
11,087
|
10,045
|
|||||
|
Ball
|
3,610
|
3,457
|
|||||
|
Other
|
981
|
617
|
|||||
|
Corporate
|
(5,720
|
)
|
(5,557
|
)
|
|||
|
$
|
17,046
|
$
|
15,781
|
||||
|
Geographic
External Sales
|
|||||||
|
Domestic
|
$
|
77,098
|
$
|
68,253
|
|||
|
Foreign
|
15,282
|
11,570
|
|||||
|
$
|
92,380
|
$
|
79,823
|
||||
|
Intersegment
Sales
|
|||||||
|
Roller
|
$
|
2,466
|
$
|
2,156
|
|||
|
Plain
|
651
|
269
|
|||||
|
Ball
|
1,981
|
1,576
|
|||||
|
Other
|
4,683
|
4,370
|
|||||
|
$
|
9,781
|
$
|
8,371
|
||||
All
intersegment sales are eliminated in consolidation.
Cautionary
Statement As To Forward-Looking Information
The
information in this discussion contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 which are subject to the “safe harbor” created
by those sections. All statements other than statements of historical facts,
included in this quarterly report on Form 10-Q regarding our strategy, future
operations, future financial position, future revenues, projected costs,
prospects and plans and objectives of management are “forward-looking
statements” as the term is defined in the Private Securities Litigation Reform
Act of 1995.
The
words
“anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,”
“projects,” “will,” “would” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
these identifying words. We may not actually achieve the plans, intentions
or
expectations disclosed in our forward-looking statements and you should not
place undue reliance on our forward-looking statements. Actual results or events
could differ materially from the plans, intentions and expectations disclosed
in
the forward-looking statements that we make. These forward-looking statements
involve risks and uncertainties that could cause our actual results to differ
materially from those in the forward-looking statements, including, without
limitation: (a) the bearing industry is highly competitive, and this competition
could reduce our profitability or limit our ability to grow; (b) the loss of
a
major customer could result in a material reduction in our revenues and
profitability; (c) weakness in any of the industries in which our customers
operate, as well as the cyclical nature of our customers’ businesses generally,
could materially reduce our revenues and profitability; (d) future reductions
or
changes in U.S. government spending could negatively affect our business; (e)
fluctuating supply and costs of raw materials and energy resources could
materially reduce our revenues, cash flow from operations and profitability;
(f)
our products are subject to certain approvals, and the loss of such approvals
could materially reduce our revenues and profitability; (g) restrictions in
our
indebtedness agreements could limit our growth and our ability to respond to
changing conditions; (h) work stoppages and other labor problems could
materially reduce our ability to operate our business; (i) our business is
capital intensive and may consume cash in excess of cash flow from our
operations; (j) unexpected equipment failures, catastrophic events or capacity
constraints may increase our costs and reduce our sales due to production
curtailments or shutdowns; (k) we may not be able to continue to make the
acquisitions necessary for us to realize our growth strategy; (l) the costs
and
difficulties of integrating acquired businesses could impede our future growth;
(m) we depend heavily on our senior management and other key personnel, the
loss
of whom could materially affect our financial performance and prospects; (n)
our
international operations are subject to risks inherent in such activities;
(o)
currency translation risks may have a material impact on our results of
operations; (p) we may be required to make significant future contributions
to
our pension plan; (q) we may incur material losses for product liability and
recall related claims; (r) environmental regulations impose substantial costs
and limitations on our operations, and environmental compliance may be more
costly than we expect; (s) our intellectual property and other proprietary
rights are valuable, and any inability to protect them could adversely affect
our business and results of operations; in addition, we may be subject to
infringement claims by third parties; (t) cancellation of orders in our backlog
of orders could negatively impact our revenues; (u) if we fail to maintain
an
effective system of internal controls, we may not be able to accurately report
our financial results or prevent fraud; and (v) provisions in our charter
documents may prevent or hinder efforts to acquire a controlling interest in
us.
Additional information regarding these and other risks and uncertainties is
contained in our periodic filings with the SEC, including, without limitation,
the risks identified under the heading “Risk Factors” set forth in the Annual
Report on Form 10-K for the year ended March 29, 2008. Our forward-looking
statements do not reflect the potential impact of any future acquisitions,
mergers, dispositions, joint ventures or investments we may make. We do not
intend, and undertake no obligation, to update or alter any forward-looking
statement. The following section is qualified in its entirety by the more
detailed information, including our financial statements and the notes thereto,
which appears elsewhere in this Quarterly Report.
Overview
We
are an
international manufacturer and marketer of highly engineered precision plain,
roller and ball bearings. Bearings, which are integral to the manufacture and
operation of most machines and mechanical systems, reduce wear to moving parts,
facilitate proper power transmission and reduce damage and energy loss caused
by
friction. While we manufacture products in all major bearing categories, we
focus primarily on highly technical or regulated bearing products for
specialized markets that require sophisticated design, testing and manufacturing
capabilities. We believe our unique expertise has enabled us to garner leading
positions in many of the product markets in which we primarily compete. We
have
been providing bearing solutions to our customers since 1919. Over the past
ten
years, we have significantly broadened our end markets, products, customer
base
and geographic reach. We currently have 26 facilities of which 23 are
manufacturing facilities in four countries.
Demand
for bearings generally follows the market for products in which bearings are
incorporated and the economy as a whole. Purchasers of bearings include
industrial equipment and machinery manufacturers, producers of commercial and
military aerospace equipment such as missiles and radar systems, agricultural
machinery manufacturers, construction and specialized equipment manufacturers
and automotive and commercial truck manufacturers. The markets for our products
are cyclical, and general market conditions could negatively impact our
operating results. We have endeavored to mitigate the cyclicality of our product
markets by entering into sole-source relationships and long-term purchase
orders, through diversification across multiple market segments within the
aerospace and defense and diversified industrial segments, by increasing sales
to the aftermarket and by focusing on developing highly customized
solutions.
Outlook
Backlog,
as of June 28, 2008, was $239.9 million versus $185.0 million as of June 30,
2007. We continue to see positive momentum from the diversified industrial,
aerospace and defense markets. Management believes that operating cash flows
and
available credit under the credit facility will provide adequate resources
to
fund internal and external growth initiatives for the foreseeable
future.
Results
of Operations
The
following table sets forth the various components of our consolidated statements
of operations, expressed as a percentage of net sales, for the periods indicated
that are used in connection with the discussion herein.
|
Three
Months Ended
|
|||||||
|
June
28,
2008
|
June
30,
2007
|
||||||
|
Statement
of Operations Data:
|
|||||||
|
Net
sales
|
100.0
|
%
|
100.0
|
%
|
|||
|
Gross
margin
|
33.1
|
34.4
|
|||||
|
Selling,
general and administrative
|
14.2
|
14.2
|
|||||
|
Other,
net
|
0.4
|
0.4
|
|||||
|
Operating
income
|
18.5
|
19.8
|
|||||
|
Interest
expense, net
|
0.7
|
1.2
|
|||||
|
Loss
on early extinguishment of debt
|
0.3
|
—
|
|||||
|
Other
non-operating income
|
—
|
(0.1
|
)
|
||||
|
Income
before income taxes
|
17.5
|
18.7
|
|||||
|
Provision
for income taxes
|
5.9
|
6.4
|
|||||
|
Net
income
|
11.6
|
%
|
12.3
|
%
|
|||
Three
Month Period Ended June 28, 2008 Compared to Three Month Period Ended June
30,
2007
Net
Sales.
Net
sales for the three month period ended June 28, 2008 were $92.4, an increase
of
$12.6 million, or 15.7%, compared to $79.8 million for the same period
in the prior year. During the three month period ended June 28, 2008, we
experienced net sales growth in all four of our business segments, driven by
demand across our end markets as well as our continued efforts to supply new
products to existing and new customers. Net sales to aerospace and defense
customers grew 18.9% in the first quarter of fiscal 2009 compared to the same
period last year, driven mainly by commercial and military aerospace
aftermarket, OEM demand and the $2.9 million contribution of newly-acquired
divisions AID and BEMD. Our net sales to our diversified industrial customers
increased 12.2% in the first quarter of fiscal 2009 compared to the same period
last year. Our core markets of construction, mining, semiconductor capital
equipment and general industrial distribution grew 12.2%. The inclusion of
our
CBS and PIC Design acquisitions contributed $1.5 million towards this increase.
The
Plain
Bearings segment achieved net sales of $43.7 million for the three month
period ended June 28, 2008, an increase of $6.0 million, or 15.9%, compared
to
$37.7 million for the same period in the prior year. The commercial and
military aerospace market grew $4.3 million due to an increase in airframe
and
aerospace bearing shipments to aircraft manufacturers, continued demand for
aftermarket product and $1.4 million from the inclusion of AID. This was
complemented by a $0.3 million increase in net sales to our diversified
industrial customers.
The
Roller Bearings segment achieved net sales of $25.0 million for the three
month period ended June 28, 2008, an increase of $1.3 million, or 5.6%,
compared to $23.6 million for the same period in the prior year. This net
sales growth was primarily attributable to strong general industrial demand
which contributed $0.8 million and the inclusion of Phoenix, which accounted
for
$0.5 million of the increase compared to the same period last fiscal
year.
The
Ball
Bearings segment achieved net sales of $15.0 million for the three month period
ended June 28, 2008, an increase of $1.6 million, or 12.1%, compared to
$13.4 million for the same period in the prior year. Sales to the
industrial sector increased $1.1 million, including $0.9 million due to the
addition of CBS. Increased aerospace and defense demand contributed $0.5 million
of the increase compared to the same period last fiscal year.
The
Other
segment, which is focused mainly on the sale of precision ball screws, machine
tool collets and precision mechanical components, achieved net sales of
$8.7 million for the three month period ended June 28, 2008, an increase of
$3.6 million, or 71.9%, compared to $5.0 million for the same period last
year. This increase was due to increased sales of machine tool collets in Europe
combined with $2.2 million from the inclusion of BEMD and PIC Design.
Gross
Margin.
Gross
margin was $30.6 million, or 33.1% of net sales, for the three month period
ended June 28, 2008, versus $27.4 million, or 34.4% of net sales, for the
comparable period in fiscal 2008. The decrease in our gross margin as a
percentage of net sales was primarily the result of start-up costs for our
large
bearing product lines and the inclusion of five recent acquisitions which are
operating at lower gross margin levels.
Selling,
General and Administrative.
SG&A
expenses increased by $1.8 million, or 16.1%, to $13.1 million for the
three month period ended June 28, 2008 compared to $11.3 million for the
same period in fiscal 2008. As a percentage of net sales, SG&A remained flat
at 14.2% for the three month periods ended June 28, 2008 and June 30, 2007,
respectively. The increase of $1.8 million was primarily due to additional
personnel necessary to support our increased volume,
$0.4
million from the inclusion of CBS, AID, BEMD and PIC Design and $0.2 million
of
incremental stock compensation expense.
Other,
net.
Other,
net for the three month period ended June 28, 2008 of $0.4 million was flat
with the comparable period in fiscal 2008. For the three month period ended
June
28, 2008, other, net consisted of $0.4 million of amortization of intangibles
and $0.1 million of facility moving costs offset by other
miscellaneous
income
of
$0.1 million. For the three month period ended June 30, 2007, other, net
consisted of $0.2 million of amortization of intangibles and $0.2 million
of other expenses.
Operating
Income.
The
increase in operating income in three of our four segments was driven primarily
by a shift in mix toward higher margin products and increased manufacturing
efficiency. Our operating income as a percentage of net sales declined in all
four of our business segments as a result of start-up costs for our large
bearing product lines and the inclusion of five recent acquisitions which are
operating at lower gross margin levels.
Operating
income was $17.0 million, or 18.5% of net sales, for the three month period
ended June 28, 2008 compared to $15.8 million, or 19.8% of net sales, for
the three month period ended June 30, 2007. Operating income for the Plain
Bearings segment was $11.1 million for the three month period ended June 28,
2008, or 25.4% of net sales, compared to $10.0 million for the same period
last year, or 26.6% of net sales. Our Roller Bearings segment achieved an
operating income for the three month period ended June 28, 2008 of
$7.1 million, or 28.4% of net sales, compared to $7.2 million, or
30.5% of net sales, for the three month period ended June 30, 2007. Our Ball
Bearings segment achieved an operating income of $3.6 million, or 24.0% of
net sales, for the three month period ended June 28, 2008, compared to
$3.5 million, or 25.8% of net sales, for the same period in fiscal 2008.
Our Other segment achieved an operating income of $1.0 million, or 11.3% of
net sales, for the three month period ended June 28, 2008, compared to
$0.6 million, or 12.2% of net sales, for the same period in fiscal 2008.
Interest
Expense, net.
Interest
expense, net decreased by $0.3 million, or 30.5%, to $0.7 million in the three
month period ended June 28, 2008, compared to $1.0 million in the same period
last fiscal year, mainly driven by debt reduction.
Loss
on Early Extinguishment of Debt.
For the
three month period ended June 28, 2008, loss on extinguishment of debt was
$0.3
million for the non-cash write-off of deferred financing fees associated with
the paydown of $15.5 million of industrial revenue bonds.
Income
Before Income Taxes.
Income
before taxes increased by $1.2 million, to $16.1 million for the three
month period ended June 28, 2008 compared to $14.9 million for the three
month period ended June 30, 2007.
Income
Taxes.
Income
tax expense for the three month period ended June 28, 2008 was $5.4 million
compared to $5.1 million for the three month period ended June 30, 2007.
Our effective income tax rate for the three month period ended June 28, 2008
was
33.8% compared to 34.1% for the three month period ended June 30, 2007. The
effective income tax rates are below the U.S. statutory rate due to foreign
income taxed at lower rates and a special manufacturing deduction in the
U.S.
Net
Income.
Net
income increased by $0.9 million to $10.7 million for the three month
period ended June 28, 2008 compared to $9.8 million for the three month
period ended June 30, 2007.
Liquidity
and Capital Resources
Liquidity
Our
credit agreement (the “KeyBank Credit Agreement”) provides the Company with a
$150.0 million five-year senior secured revolving credit facility which can
be
increased by up to $75.0 million, in increments of $25.0 million, under
certain circumstances and subject to certain conditions (including the receipt
from one or more lenders of the additional commitment).
Amounts
outstanding under the KeyBank Credit Agreement generally bear interest at the
prime rate, or LIBOR plus a specified margin, depending on the type of borrowing
being made. The applicable margin is based on our consolidated ratio of net
debt
to adjusted EBITDA from time to time. Currently, our margin is 0.0%
for
prime
rate loans and 0.625% for LIBOR rate loans. Amounts outstanding under the
KeyBank Credit Agreement are due and payable on its expiration date
(June 24, 2011). We may elect to prepay some or all of the outstanding
balance from time to time without penalty.
The
KeyBank Credit Agreement allows us to, among other things, make distributions
to
shareholders, repurchase our stock, incur other debt or liens, or acquire or
dispose of assets provided that we comply with certain requirements and
limitations of the credit agreement. Our obligations under the KeyBank Credit
Agreement are secured by a pledge of substantially all of our and RBCA’s assets
and a guaranty by us of RBCA’s obligations.
Capital
expenditures (excluding acquisitions) in any fiscal year, previously limited
to
an amount not to exceed $20,000, was amended to increase the limit to an amount
not to exceed $30,000. As
of
June 28, 2008, $50.0 million was outstanding under the KeyBank Credit
Agreement.
Approximately $5.4 million of the KeyBank Credit Agreement is being utilized
to
provide letters of credit to secure our obligations relating to certain
insurance programs. As of June 28, 2008, we had the ability to borrow up to
an
additional $94.6 million under the KeyBank Credit Agreement.
Schaublin’s
bank credit facility (the “Swiss Credit Facility”) with Credit Suisse provides
for 10.0 million Swiss francs, or approximately $9.8 million, of term loan
(the
“Swiss Term Loan”) and up to 4.0 million Swiss francs, or approximately $3.9
million, of revolving credit loans and letters of credit (the “Swiss Revolving
Credit Facility”). Borrowings under the Swiss Credit Facility bear interest at a
floating rate of LIBOR plus 2.25%. As of June 28, 2008, there were no borrowings
outstanding under the Swiss Credit Facility.
On
June
15, 2007, our board of directors authorized us to repurchase up to $10.0 million
of our common stock from time to time on the open market, through block trades,
or in privately negotiated transactions depending on market conditions,
alternative uses of capital and other factors. Purchases may be commenced,
suspended or discontinued at any time without prior notice. The new program,
which does not have an expiration date, replaces a $7.5 million program that
expired on March 31, 2007. As of June 28, 2008, 86,197 shares have been
repurchased under this plan for an aggregate cost of $2.9 million.
On
May 1,
2008, the Company voluntarily paid off the Series 1999 Industrial Revenue Bond
(“IRB”), the prinicipal amount of which was $4.8 million. In addition, on June
2, 2008, the Company voluntarily paid off the Series 1994 A and B IRBs, the
principal amounts of which were $7.7 million and $3.0 million, respectively.
The
Company recorded a non-cash pre-tax charge of approximately $0.3 million in
the
three month period ended June 28, 2008 to write off deferred financing costs
associated with the voluntary payoff of the IRBs.
Our
ability to meet future working capital, capital expenditures and debt service
requirements will depend on our future financial performance, which will be
affected by a range of economic, competitive and business factors, particularly
interest rates, cyclical changes in our end markets and prices for steel and
our
ability to pass through price increases on a timely basis, many of which are
outside of our control. In addition, future acquisitions could have a
significant impact on our liquidity position and our need for additional
funds.
From
time
to time we evaluate our existing facilities and operations and their strategic
importance to us. If we determine that a given facility or operation does not
have future strategic importance, we may sell, partially or completely, relocate
production lines, consolidate or otherwise dispose of those operations. Although
we believe our operations would not be materially impaired by such dispositions,
relocations or consolidations, we could incur significant cash or non-cash
charges in connection with them.
Cash
Flows
Three
Month Period Ended June 28, 2008 Compared to the Three Month Period Ended June
30, 2007
In
the
three month period ended June 28, 2008, we generated cash of $21.7 million
from operating activities compared to $13.4 million for the three month
period ended June 30, 2007. The increase of $8.3 million was mainly a
result of an increase in net income of $0.9 million, a change in operating
assets and liabilities of $6.8 million and the net of non-cash charges of
$0.6 million.
Cash
used
for investing activities for the three month period ended June 28, 2008 included
$4.6 million related to capital expenditures compared to $6.6 million for the
three month period ended June 30, 2007. Investing activities in the three month
period ended June 28, 2008 also included $6.6 million related to the acquisition
of PIC Design.
Financing
activities used $6.9 million in the three month period ended June 28, 2008.
We used $15.5 million for the payoff of industrial revenue bonds, $0.3 million
for the repurchase of common stock and $0.1 million for the payment of capital
lease obligations offset by a net increase in our revolving credit facility
of
$9.0 million.
Capital
Expenditures
Our
capital expenditures were $4.6 million for the three month period ended June
28,
2008. We expect to make capital expenditures of approximately $15.0 to
$20.0 million during fiscal 2009 in connection with our existing business and
the expansion into the large bearing market segment. We intend to fund our
fiscal 2009 capital expenditures principally through existing cash, internally
generated funds and borrowings under our KeyBank Credit Agreement. We may also
make substantial additional expenditures in connection with acquisitions.
Obligations
and Commitments
As
of
June 28, 2008, there was no material change in debt and interest, capital lease,
operating lease or pension and postretirement obligations as compared to such
obligations and liabilities as of March 29, 2008.
Quantitative
and Qualitative Disclosure About Market Risk
We
are
exposed to market risks, which arise during the normal course of business from
changes in interest rates and foreign currency exchange rates.
Interest
Rates.
We are
exposed to market risk from changes in the interest rates on a significant
portion of our outstanding indebtedness. Outstanding balances under our KeyBank
Credit Agreement generally bear interest at the prime rate or LIBOR (the London
inter-bank offered rate for deposits in U.S. dollars for the applicable LIBOR
period) plus a specified margin, depending on the type of borrowing being made.
The applicable margin is based on our consolidated ratio of net debt to adjusted
EBITDA from time to time. As of June 28, 2008, our margin is 0.0% for prime
rate
loans (prime rate at June 28, 2008 was 5.00%) and 0.625% for LIBOR rate loans
(one month LIBOR rate at June 28, 2008 was 2.50%).
Our
interest rate risk management objective is to limit the impact of interest
rate
changes on our net income and cash flow. To achieve our objective, we regularly
evaluate the amount of our variable rate debt as a percentage of our aggregate
debt. As of June 28, 2008, our average outstanding variable rate debt, after
taking into account the average outstanding notional amount of our interest
rate
swap agreement, was 39% of our average outstanding debt. We manage a significant
portion of our exposure to interest rate fluctuations in our variable rate
debt
through an interest rate swap agreement. This agreement effectively converts
interest rate exposure from variable rates to fixed rates of interest.
Based
on
the aggregate amount of our variable rate indebtedness of $20.0 million, a
100
basis point change in interest rates would have changed our interest expense
by
approximately $0.2 million per year, after taking into account the $30.0
million notional amount of our interest rate swap agreement at June 28,
2008.
Foreign
Currency Exchange Rates.
As a
result of increased sales in Europe, our exposure to risk associated with
fluctuating currency exchange rates between the U.S. dollar, the Euro, the
Swiss
Franc and the British Pound Sterling has increased. Our Swiss operations utilize
the Swiss Franc as the functional currency, our French operations utilize the
Euro as the functional currency and our English operations utilize the British
Pound Sterling as the functional currency. Foreign currency transaction gains
and losses are included in earnings. Approximately 17% of our net sales were
denominated in foreign currencies in the the first quarter of fiscal 2009
compared to 14% in the comparable period last fiscal year. We expect that this
proportion is likely to increase as we seek to increase our penetration of
foreign markets, particularly within the aerospace and defense markets. Foreign
currency transaction exposure arises primarily from the transfer of foreign
currency from one subsidiary to another within the group, and to foreign
currency denominated trade receivables. Unrealized currency translation gains
and losses are recognized upon translation of the foreign subsidiaries’ balance
sheets to U.S. dollars. Because our financial statements are denominated in
U.S.
dollars, changes in currency exchange rates between the U.S. dollar and other
currencies have had, and will continue to have, an impact on our earnings.
We
currently do not have exchange rate hedges in place to reduce the risk of an
adverse currency exchange movement. Although currency fluctuations have not
had
a material impact on our financial performance in the past, such fluctuations
may materially affect our financial performance in the future. The impact of
future exchange rate fluctuations on our results of operations cannot be
accurately predicted.
Off-Balance
Sheet Arrangements
We
have
no off-balance sheet arrangements.
Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the “Exchange Act”)) as of June 28, 2008. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of June 28, 2008, our disclosure controls and procedures
were
(1) designed to ensure that information relating to our Company required to
be
disclosed by us in the reports that we file or submit under the Exchange Act
is
recorded, processed, summarized and reported to our Chief Executive Officer
and
Chief Financial Officer within the time periods specified in the rules and
forms
of the U.S. Securities and Exchange Commission, and (2) effective, in that
they
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.
No
change
in our internal control over financial reporting occurred during the three
month
period ended June 28, 2008 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
From
time
to time, we are involved in litigation and administrative proceedings which
arise in the ordinary course of our business. We do not believe that any
litigation or proceeding in which we are currently involved, either individually
or in the aggregate, is likely to have a material adverse effect on our
business, financial condition, operating results, cash flow or
prospects.
There
have been no material changes to our risk factors and uncertainties during
the
three month period ended June 28, 2008. For a discussion of the Risk Factors,
refer to Part I, Item 1A, “Risk Factors,” contained in the Company’s Annual
Report on Form 10-K for the period ended March 29, 2008.
Unregistered
Sales of Equity Securities
None.
Use
of Proceeds
Not
applicable.
Issuer
Purchases of Equity Securities
On
June
15, 2007, our board of directors authorized us to repurchase up to $10.0 million
of our common stock from time to time on the open market, through block trades,
or in privately negotiated transactions depending on market conditions,
alternative uses of capital and other factors. Purchases may be commenced,
suspended or discontinued at any time without prior notice. The new program,
which does not have an expiration date, replaces a $7.5 million program that
expired on March 31, 2007.
Total
share repurchases for the three months ended June 28, 2008 are as follows:
|
Period
|
Total
number
of
shares
Purchased
|
Average
price
paid
per
share
|
Number
of
shares
purchased
as
part of the
publicly
announced
program
|
Approximate
dollar
value
of
shares still
available
to be
purchased
under
the
program
(000’s)
|
|||||||||
|
03/30/2008-04/26/2008
|
—
|
—
|
—
|
$
|
7,458
|
||||||||
|
04/27/2008-05/24/2008
|
231
|
$
|
37.42
|
231
|
7,450
|
||||||||
|
05/25/2008-06/28/2008
|
10,000
|
33.64
|
10,000
|
$
|
7,113
|
||||||||
|
Total
|
10,231
|
$
|
33.75
|
10,231
|
|
|
|||||||
Not
applicable.
Not
applicable.
Not
applicable.
|
|
|
|
|
Exhibit
Number
|
Exhibit Description
|
|
|
|
Certification
of Chief Executive Officer Pursuant to Securities Exchange Act
Rule 13a-14(a).
|
|
|
|
Certification
of Chief Financial Officer Pursuant to Securities Exchange Act
Rule 13a-14(a).
|
|
|
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and
Securities Exchange Act Rule 13a-14(b).*
|
|
|
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and
Securities Exchange Act Rule 13a-14(b).*
|
|
| * |
This
certification accompanies this Quarterly Report on Form 10-Q, is not
deemed filed with the SEC and is not to be incorporated by reference
into
any filing of the Company under the Securities Act of 1933, as amended,
or
the Securities Exchange Act of 1934, as amended (whether made before
or
after the date of this Quarterly Report on Form 10-Q), irrespective
of any general incorporation language contained in such
filing.
|
SIGNATURES
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.
|
RBC
Bearings Incorporated
|
|||||
|
(Registrant)
|
|||||
|
By:
|
/s/
Dr. Michael J. Hartnett
|
|
|||
|
Name:
|
Dr.
Michael J. Hartnett
|
||||
|
Title:
|
Chief
Executive Officer
|
||||
|
Date:
|
August
7, 2008
|
||||
|
By:
|
/s/
Daniel A. Bergeron
|
|
|||
|
Name:
|
Daniel
A. Bergeron
|
||||
|
Title:
|
Chief
Financial Officer
|
||||
|
Date:
|
August
7, 2008
|
||||
EXHIBIT
INDEX
|
|
|
|
|
Exhibit
Number
|
Exhibit Description
|
|
|
|
Certification
of Chief Executive Officer Pursuant to Securities Exchange Act
Rule 13a-14(a).
|
|
|
|
Certification
of Chief Financial Officer Pursuant to Securities Exchange Act
Rule 13a-14(a).
|
|
|
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and
Securities Exchange Act Rule 13a-14(b).*
|
|
|
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and
Securities Exchange Act Rule 13a-14(b).*
|
|
| * |
This
certification accompanies this Quarterly Report on Form 10-Q, is not
deemed filed with the SEC and is not to be incorporated by reference
into
any filing of the Company under the Securities Act of 1933, as amended,
or
the Securities Exchange Act of 1934, as amended (whether made before
or
after the date of this Quarterly Report on Form 10-Q), irrespective
of any general incorporation language contained in such
filing.
|
-
22
-