UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 30, 2017~~

June 29, 2019

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 333-124824

RBC ~~Bearings Incorporated~~
BEARINGS INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware		95-4372080
(State or other jurisdiction of incorporation or organization)	~~95-4372080~~	(I.R.S. Employer Identification No.)

One Tribology Center
~~One Tribology Center~~ Oxford, CT		06478
(Address of principal executive offices)	~~06478~~	(Zip Code)

(203) 267-7001
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

~~(203) 267-7001~~
~~(Registrant’s telephone number, including area code)~~

Common Stock, par value $0.01 per share

ROLL

Nasdaq NMS

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

☒

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate ~~Website,~~Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

☐

No ☒

As of ~~January~~July 26, ~~2018,~~2019, RBC Bearings Incorporated had ~~24,289,481~~24,874,044 shares of Common Stock outstanding.

TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION

Item 1. ~~Consolidated~~

Financial Statements

RBC Bearings Incorporated

Consolidated Balance Sheets

(dollars in thousands, except share and per share data)

December 30,
2017
April 1,
2017

ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 43,822 $ 38,923
Accounts receivable, net of allowance for doubtful accounts of $1,476 at December 30, 2017 and $1,213 at April 1, 2017 109,923 109,700
Inventory 303,013 289,594
Prepaid expenses and other current assets 13,304 9,743
Total current assets 470,062 447,960
Property, plant and equipment, net 190,313 183,625
Goodwill 268,123 268,042
Intangible assets, net of accumulated amortization of $36,606 at December 30, 2017 and $30,191 at April 1, 2017 185,923 196,801
Other assets 14,729 12,419
Total assets $ 1,129,150 $ 1,108,847

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 43,643 $ 34,392
Accrued expenses and other current liabilities 39,521 44,532
Current portion of long-term debt 17,976 14,214
Total current liabilities 101,140 93,138
Deferred income taxes 10,827 12,036
Long-term debt, less current portion 179,977 255,586
Other non-current liabilities 38,662 31,043
Total liabilities 330,606 391,803

Stockholders’ equity:
Preferred stock, $.01 par value; authorized shares: 10,000,000 at December 30, 2017 and April 1, 2017; none issued and outstanding — —
Common stock, $.01 par value; authorized shares: 60,000,000 at December 30, 2017 and April 1, 2017; issued and outstanding shares: 25,000,672 at December 30, 2017 and 24,757,803 at April 1, 2017 250 248
Additional paid-in capital 331,819 312,474
Accumulated other comprehensive loss (4,345 ) (9,823 )
Retained earnings 510,301 448,693
Treasury stock, at cost, 713,201 shares at December 30, 2017 and 667,931 shares at April 1, 2017 (39,481 ) (34,548 )
Total stockholders’ equity 798,544 717,044
Total liabilities and stockholders’ equity $ 1,129,150 $ 1,108,847

	June 29, 2019			March 30, 2019
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	32,713		$	29,884
Accounts receivable, net of allowance for doubtful accounts of $1,556 at June 29, 2019 and $1,430 at March 30, 2019		130,088			130,735
Inventory		342,921			335,001
Prepaid expenses and other current assets		8,719			7,661
Total current assets		514,441			503,281
Property, plant and equipment, net		215,189			207,895
Operating lease assets, net		26,451			—
Goodwill		261,432			261,431
Intangible assets, net of accumulated amortization of $48,385 at June 29, 2019 and $46,101 at March 30, 2019		154,113			155,641
Other assets		20,308			19,119
Total assets	$	1,191,934		$	1,147,367

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	51,635		$	49,592
Accrued expenses and other current liabilities		42,813			40,537
Current operating lease liabilities		5,403			—
Total current liabilities		99,851			90,129
Deferred income taxes		8,014			6,862
Long-term debt, less current portion		26,267			43,179
Long-term operating lease liabilities		21,059			—
Other non-current liabilities		39,394			38,631
Total liabilities		194,585			178,801

Stockholders’ equity:
Preferred stock, $.01 par value; authorized shares: 10,000,000 at June 29, 2019 and March 30, 2019; none issued or outstanding		—			—
Common stock, $.01 par value; authorized shares: 60,000,000 at June 29, 2019 and March 30, 2019, respectively; issued shares: 25,698,042 and 25,607,196 at June 29, 2019 and March 30, 2019, respectively		257			256
Additional paid-in capital		383,732			378,655
Accumulated other comprehensive loss		(6,036	)		(7,467	)
Retained earnings		673,682			641,894
Treasury stock, at cost, 822,790 shares at June 29, 2019 and 752,913 shares at March 30, 2019		(54,286	)		(44,772	)
Total stockholders’ equity		997,349			968,566
Total liabilities and stockholders’ equity	$	1,191,934		$	1,147,367

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Operations

(dollars in thousands, except share and per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

December 30,
2017

December 31,
2016

December 30,
2017

December 31,
2016

Net sales $ 166,858 $ 146,656 $ 495,072 $ 455,178
Cost of sales 102,193 94,271 306,687 288,811
Gross margin 64,665 52,385 188,385 166,367
Operating expenses:
Selling, general and administrative 28,162 25,712 83,535 76,696
Other, net 3,380 6,144 14,649 10,367
Total operating expenses 31,542 31,856 98,184 87,063
Operating income 33,123 20,529 90,201 79,304
Interest expense, net 1,761 2,111 5,704 6,659
Other non-operating expense 26 (216 ) 462 51
Income before income taxes 31,336 18,634 84,035 72,594
Provision for income taxes 7,504 5,864 23,571 23,556
Net income $ 23,832 $ 12,770 $ 60,464 $ 49,038
Net income per common share:
Basic $ 0.99 $ 0.54 $ 2.53 $ 2.09
Diluted $ 0.97 $ 0.54 $ 2.49 $ 2.07
Weighted average common shares:
Basic 23,985,925 23,581,921 23,912,474 23,457,717
Diluted 24,446,115 23,813,780 24,322,165 23,719,121

	Three Months Ended
	June 29, 2019		June 30, 2018
Net sales	$	182,690	$	175,985
Cost of sales		111,996		108,246
Gross margin		70,694		67,739
Operating expenses:
Selling, general and administrative		30,087		29,575
Other, net		2,117		2,166
Total operating expenses		32,204		31,741
Operating income		38,490		35,998
Interest expense, net		547		1,711
Other non-operating expense		169		1,034
Income before income taxes		37,774		33,253
Provision for income taxes		7,275		5,786
Net income	$	30,499	$	27,467
Net income per common share:
Basic	$	1.24	$	1.14
Diluted	$	1.23	$	1.12
Weighted average common shares:
Basic		24,501,707		24,140,778
Diluted		24,807,307		24,543,589

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

December 30,
2017

December 31,
2016

December 30,
2017

December 31,
2016

Net income $ 23,832 $ 12,770 $ 60,464 $ 49,038
Pension and postretirement liability adjustments, net of taxes 196 234 588 701
Foreign currency translation adjustments 470 (3,954 ) 4,890 (5,759 )
Total comprehensive income $ 24,498 $ 9,050 $ 65,942 $ 43,980

	Three Months Ended
	June 29, 2019		June 30, 2018
Net income	$	30,499	$	27,467
Pension and postretirement liability adjustments, net of taxes		178		194
Foreign currency translation adjustments		2,542		(4,061	)
Total comprehensive income	$	33,219	$	23,600

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Stockholders’ Equity

(dollars in thousands)

(Unaudited)

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Retained		Treasury Stock						Total Stockholders’
	Shares		Amount		Capital		Income/(Loss)			Earnings		Shares			Amount			Equity
Balance at March 30, 2019		25,607,196	$	256	$	378,655	$	(7,467	)	$	641,894		(752,913	)	$	(44,772	)	$	968,566
Net income		—		—		—		—			30,499		—			—			30,499
Share-based compensation		—		—		4,802		—			—		—			—			4,802
Repurchase of common stock		—		—		—		—			—		(69,877	)		(9,514	)		(9,514	)
Exercise of equity awards		4,356		1		275		—			—		—			—			276
Change in net prior service cost and actuarial losses, net of taxes of $54		—		—		—		178			—		—			—			178
Issuance of restricted stock		86,490		—		—		—			—		—			—			—
Impact from adoption of ASU 2018-02		—		—		—		(1,289	)		1,289		—			—			—
Currency translation adjustments		—		—		—		2,542			—		—			—			2,542
Balance at June 29, 2019		25,698,042	$	257	$	383,732	$	(6,036	)	$	673,682		(822,790	)	$	(54,286	)	$	997,349

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Stockholders’ Equity (continued)

(dollars in thousands)

(Unaudited)

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Retained			Treasury Stock						Total Stockholders’
	Shares		Amount		Capital		Income/(Loss)			Earnings			Shares			Amount			Equity
Balance at March 31, 2018		25,123,694	$	251	$	339,148	$	(2,285	)	$	536,978			(713,687	)	$	(39,540	)	$	834,552
Net income		—		—		—		—			27,467			—			—			27,467
Share-based compensation		—		—		3,766		—			—			—			—			3,766
Repurchase of common stock		—		—		—		—			—			(11,865	)		(1,491	)		(1,491	)
Exercise of equity awards		100,142		2		6,416		—			—			—			—			6,418
Change in net prior service cost and actuarial losses, net of taxes of $58		—		—		—		194			—			—			—			194
Issuance of restricted stock		87,345		—		—		—			—			—			—			—
Impact from adoption of ASU 2014-09		—		—		—		—			(277	)		—			—			(277	)
Currency translation adjustments		—		—		—		(4,061	)		—			—			—			(4,061	)
Balance at June 30, 2018		25,311,181	$	253	$	349,330	$	(6,152	)	$	564,168			(725,552	)	$	(41,031	)	$	866,568

See accompanying notes.

RBC Bearings Incorporated

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)

Nine Months Ended

December 30,
2017

December 31,
2016

Cash flows from operating activities:
Net income $ 60,464 $ 49,038
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 14,155 13,557
Excess tax benefits from stock-based compensation — (4,870 )
Deferred income taxes (321 ) 3,717
Amortization of intangible assets 7,041 6,921
Amortization of deferred financing costs 1,068 1,068
Stock-based compensation 9,897 8,914
(Gain) loss on disposal of fixed assets (1 ) 2,457
Gain on acquisition — (293 )
Impairment charges 5,577 1,443
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable 701 3,954
Inventory (12,035 ) (7,293 )
Prepaid expenses and other current assets (4,555 ) (5,238 )
Other non-current assets (3,308 ) (2,282 )
Accounts payable 9,040 1,466
Accrued expenses and other current liabilities (3,340 ) 2,123
Other non-current liabilities 8,113 (107 )
Net cash provided by operating activities 92,496 74,575

Cash flows from investing activities:
Purchase of property, plant and equipment (20,542 ) (14,415 )
Proceeds from sale of assets 33 107
Business acquisition — (651 )
Net cash used in investing activities (20,509 ) (14,959 )

Cash flows from financing activities:
Repayments of revolving credit facility (62,750 ) (61,500 )
Repayments of term loans (10,000 ) (7,500 )
Payments of notes payable (359 ) (353 )
Exercise of stock options 9,450 11,567
Excess tax benefits from stock-based compensation — 4,870
Repurchase of common stock (4,933 ) (4,750 )
Net cash used in financing activities (68,592 ) (57,666 )

Effect of exchange rate changes on cash 1,504 (1,686 )

Cash and cash equivalents:
Increase during the period 4,899 264
Cash, at beginning of period 38,923 39,208
Cash, at end of period $ 43,822 $ 39,472

	Three Months Ended
	June 29, 2019			June 30, 2018
Cash flows from operating activities:
Net income	$	30,499		$	27,467
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		5,236			4,950
Deferred income taxes		1,153			2,470
Amortization of intangible assets		2,284			2,363
Amortization of deferred financing costs		99			329
Loss on extinguishment of debt		—			987
Stock-based compensation		4,802			3,766
Other non-cash charges		(11	)		(36	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		815			178
Inventory		(7,423	)		(7,182	)
Prepaid expenses and other current assets		(1,052	)		(114	)
Other non-current assets		(1,041	)		(1,304	)
Accounts payable		1,986			(940	)
Accrued expenses and other current liabilities		2,773			(739	)
Other non-current liabilities		16			1,640
Net cash provided by operating activities		40,136			33,835

Cash flows from investing activities:
Purchase of property, plant and equipment		(12,040	)		(6,993	)
Proceeds from sale of assets		2			1,843
Net cash used in investing activities		(12,038	)		(5,150	)

Cash flows from financing activities:
Proceeds received from revolving credit facility		—			149,250
Repayments of revolving credit facility		(17,000	)		(10,500	)
Repayments of term loans		—			(168,750	)
Repayments of notes payable		(117	)		(117	)
Exercise of stock options		276			6,418
Repurchase of common stock		(9,514	)		(1,491	)
Net cash used in financing activities		(26,355	)		(25,190	)

Effect of exchange rate changes on cash		1,086			(2,002	)

Cash and cash equivalents:
Increase during the period		2,829			1,493
Cash, at beginning of period		29,884			54,163
Cash, at end of period	$	32,713		$	55,656

Supplemental disclosures of cash flow information:
Cash paid for:
Income taxes	$	489		$	843
Interest		408			1,169

See accompanying notes.

RBC Bearings Incorporated

Notes to Unaudited Interim Consolidated Financial Statements

(dollars in thousands, except share and per share data)

1. Basis of Presentation

The interim 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 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 ~~April 1, 2017.~~March 30, 2019. We condensed or omitted certain information and footnote disclosures normally included in our annual audited financial statements, which we prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP). As used in this report, the terms “we”, “us”, “our”, “RBC”, “RBCA” and the “Company”) mean RBC Bearings Incorporated and its subsidiaries, unless the context indicates another meaning.

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 results of operations for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29, 2019 are not necessarily indicative of the operating results for the entire fiscal year ending March ~~31, 2018.~~28, 2020. The ~~three month~~three-month periods ended ~~December~~June 29, 2019 and June 30, ~~2017 and December 31, 2016~~2018 each include 13 weeks. The amounts shown are in thousands, unless otherwise indicated.

~~Critical~~

2. Significant Accounting Policies

~~Revenue Recognition.~~~~In accordance with SEC Staff~~

The Company’s significant accounting policies are detailed in “Note 2 - Summary of Significant Accounting ~~Bulletin 101 “Revenue Recognition in Financial Statements~~Policies” of our Annual Report on Form 10-K for the year ended March 30, 2019. Significant changes to our accounting policies as ~~amended by Staff Accounting Bulletin 104,” we recognize revenues principally from the sale~~a result of ~~products at the point of passage of title, which is at the time of shipment, except for certain customers for which it occurs when the products reach their destination.~~

We also recognize revenue on a Ship-In-Place basis for three customers who have required that we hold the product after final production is complete. In this case, a written agreement has been executed (at the customer’s request) whereby the customer accepts the risk of loss for product that is invoiced under the Ship-In-Place arrangement. For each transaction for which revenue is recognized under a Ship-In-Place arrangement, all final manufacturing inspections have been completed and customer acceptance has been obtained. In the three months ended December 30, 2017, 1.8% of the Company’s total net sales were recognized under Ship-In-Place transactions.

adopting new accounting standards are discussed below.

Recent Accounting ~~Pronouncements~~

Standards Adopted

In ~~May 2017,~~February 2016, the Financial Accounting Standards Board ~~(“FASB”)~~(FASB) issued Accounting Standards Update ~~(“ASU”)~~(ASU) No. ~~2017-09, “Compensation – Stock Compensation~~2016-02,

Leases (Topic ~~718): Scope~~842)

. The core principle of ~~Modification Accounting”, in~~this ASU is that an ~~effort~~entity should recognize on its balance sheet assets and liabilities arising from a lease. In accordance with that principle, ASU 2016-02 requires that a lessee recognize a liability to ~~reduce diversity in practice~~make lease payments (the lease liability) and a lease asset (right-of-use asset) representing its right to use the underlying leased asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on the lease classification as ~~it relates to applying modification~~a finance or operating lease. This new accounting ~~for changes to the terms and conditions of share-based payment awards. This ASU~~guidance is effective for public companies for ~~the financial statements issued for annual periods~~fiscal years beginning after December 15, ~~2017, including interim periods within those annual periods. Early~~2018 and early adoption is permitted.

The Company adopted this accounting standard on March 31, 2019 and has elected the modified retrospective transition method which permits the application of the new lease standard at the adoption date and recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company has elected not to apply the recognition requirements to short-term leases, and will recognize the lease payments in the income statement on a straight-line basis over the lease term and variable payments in the period in which the obligation for those payments is incurred. The Company has elected the following practical expedients (which must be elected as a package and applied consistently to all leases): an entity need not reassess whether any expired or existing contracts are or contain leases; an entity need not reassess the lease classification for any expired or existing leases; and an entity need not reassess initial direct costs for any existing leases. The Company has also elected the practical expedient which permits the inclusion of lease and nonlease components as a single component and account for it as a lease. This election has been made for all asset classes. We also elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases which resulted in the extension of lease terms for certain existing leases.

The cumulative-effect of the changes made to the balance sheet on the first day of adoption resulted in the recognition of lease assets and lease liabilities for operating lease commitments of $27,378. The adoption of this ~~ASU is not expected to have a material~~accounting standard had no impact on the Company’s consolidated statement of operations, debt compliance or the captions on the consolidated statement of cash flows.

The Company determines if an arrangement is a lease at contract inception. For leases where the Company is the lessee, it recognizes lease assets and related lease liabilities at the lease commencement date based on the present value of lease payments over the lease term. The lease term is the noncancellable period for which a lessee has the right to use an underlying asset, including periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. For renewal options, the Company performs an assessment at commencement if it is reasonably likely to exercise the option. The assessment is based on the Company’s intentions, past practices, estimates and factors that create an economic incentive for the Company. Generally, the Company is not reasonably certain to exercise the renewal option in a lease contract, with the exception of some of our leased manufacturing facilities. While some of the Company’s leases include options allowing early termination of the lease, the Company historically has not terminated its lease agreements early unless there is an economic, financial ~~statements.~~

or business reason to do so; therefore, the Company does not typically consider the termination option in its lease term at commencement.

Most of the Company’s leases do not provide an implicit interest rate. As a result, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. The Company has elected not to apply the recognition requirements to short-term leases, and will recognize the lease payments in profit or loss on a straight-line basis over the lease term and variable payments in the period in which the obligation for those payments is incurred.

In ~~March 2017,~~February 2018, the FASB issued ASU No. ~~2017-07, “Compensation~~2018-02,

Income Statement – ~~Retirement Benefits~~Reporting Comprehensive Income (Topic ~~715)~~220)

: ~~Improving~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income which allows companies to reclassify stranded tax effects resulting from the ~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”,~~TCJA from accumulated other comprehensive income to retained earnings. These stranded tax effects refer to the tax amounts included in ~~an effort~~accumulated other comprehensive income at the previous 35% U.S. corporate statutory federal tax rate, for which the related deferred tax asset or liability was remeasured to ~~improve~~ the ~~presentation of these costs within~~new 21% U.S. corporate statutory federal tax rate in the income statement. Under current GAAP, all components of both net periodic pension cost and net periodic postretirement cost are included within selling, general and administrative costs on the income statement. This ASU would require entities to include only the service cost component within selling, general and administrative costs whereas all other components would be included within other non-operating expense. In addition, only the service cost component would be eligible for capitalization when applicable (for example, as a cost of internally manufactured inventory or a self-constructed asset). The amendments in this Update should be applied retrospectively for the presentationperiod of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. This ASUTCJA’s enactment. The new standard is effective for ~~public companies for the financial statements issued for annual periods~~fiscal years beginning after December 15, ~~2017, including interim periods within those annual periods.~~2018, with early adoption permitted, and can be applied either in the period of adoption or retrospectively to each period impacted by the TCJA. As a result of the Company’s adoption on March 31, 2019, the Company reclassified $1,289 from accumulated other comprehensive income to retained earnings, both of which are components of total stockholders’ equity. The ~~Company has not determined the effect that the~~ adoption of this accounting standard had no impact on the ~~pronouncement may have~~Company’s consolidated statement of operations, debt compliance or the captions on ~~its financial position and/or results~~the consolidated statement of ~~operations.~~

cash flows.

Recent Accounting Standards Yet to Be Adopted

In January 2017, the FASB issued ASU No. 2017-04, ~~“Intangibles—~~

Intangibles—Goodwill and Other (Topic 350)

: Simplifying the Test for Goodwill ~~Impairment”.~~Impairment. The objective of this standard update is to simplify the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test. Under this ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit. The standard update is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In ~~October~~September 2016, the FASB issued ASU No. ~~2016-16, “Income Taxes~~2016-13, Financial Instruments –

Credit Losses (Topic ~~740)”~~326)

, Measurement of Credit Losses on Financial Instruments, which changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The new guidance will replace the current incurred loss approach with an expected loss model. The new expected credit loss impairment model will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt instruments, net investments in ~~an effort to improve the accounting for the income tax consequences~~leases, loan commitments and standby letters of ~~intra-equity transfers of assets other than inventory. Current GAAP prohibits the~~credit. Upon initial recognition of ~~current and deferred income taxes for an intra-entity asset transfer until~~ the ~~asset has been sold~~exposure, the expected credit loss model requires entities to ~~an outside party. This ASU establishes~~estimate the ~~requirement that an entity recognize~~credit losses expected over the ~~income tax consequences~~life of an ~~intra-entity transfer~~exposure (or pool of ~~an asset other than inventory~~exposures). The estimate of expected credit losses should consider historical information, current information and reasonable and supportable forecasts, including estimates of prepayments. Financial instruments with similar risk characteristics should be grouped together when estimating expected credit losses. ASU 2016-13 does not prescribe a specific method to make the ~~transfer occurs.~~estimate, so its application will require significant judgment. This ASU is effective for public companies ~~for the financial statements issued for annual periods~~in fiscal years beginning after December 15, ~~2017 and~~2019, including interim periods within those ~~annual periods. Earlier application is permitted as of the beginning of an interim or annual reporting period, with any adjustments reflected as of the beginning of the~~ fiscal ~~year of adoption.~~years. The Company ~~has not determined~~is currently evaluating the effect that the adoption of ~~the pronouncement may have on its financial position and/or results of operations.~~

~~In August 2016, the FASB issued~~this ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for public companies for the financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual reporting period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company has not determined the effect that the adoption of the pronouncement may have on its statements of cash flows.

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting” which amends ASC Topic 718, Compensation - Stock Compensation. This ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The Company adopted this standard on April 2, 2017. As a result of the adoption, the Company began recording the tax effects associated with stock-based compensation through the income statement on a prospective basis which resulted in a tax benefit of $3.9 million for the first nine months of fiscal 2018. Prior to adoption, these amounts would have been recorded as an increase to additional paid-in capital. This change may create volatility in the Company’s effective tax rate. The adoption of this standard also resulted in a cumulative effect change to opening retained earnings of $1.1 million for previously unrecognized excess tax benefits.

In addition, the Company will prospectively classify all tax-related cash flows resulting from share-based payments, including the excess tax benefits related to the settlement of stock-based awards, as cash flows from operating activities in the statement of cash flows. Prior to the adoption of this standard, these were shown as cash inflows from financing activities and cash outflows from operating activities.

The adoption of the ASU also resulted in the Company removing the excess tax benefits from the assumed proceeds available to repurchase shares when calculating diluted earnings per share on a prospective basis. The revised calculation increased the diluted weighted average common shares outstanding by approximately 0.1 million shares in the period of adoption. The Company also made an accounting policy election to continue to estimate forfeitures as it did prior to adoption.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The core principal of ASU 2016-02 is that an entity should recognize on its balance sheet assets and liabilities arising from a lease. In accordance with that principle, ASU 2016-02 requires that a lessee recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on the lease classification as a finance or operating lease. This new accounting guidance is effective for public companies for fiscal years beginning after December 15, 2018 under a modified retrospective approach and early adoption is permitted. The Company is currently evaluating the impact this adoption will have on ~~its~~the Company’s consolidated financial statements.

~~In July 2015, the FASB~~

Other new pronouncements issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” This update requires the company to measure inventory using the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU applies to companies measuring inventory using methods other than the last-in, first-out (LIFO) and retail inventory methods, including but not ~~limited~~effective until after March 28, 2020 are not expected to ~~the first-in, first-out (FIFO) or average costing methods. The Company adopted this ASU on a prospective basis on April 2, 2017 and it did not~~ have a material impact on ~~the Company’s consolidated~~our financial ~~statements.~~

~~In May 2014, the FASB issued ASU No. 2014-09, “Revenue~~position, results of operations or liquidity.

3. Revenue from Contracts with Customers ~~(Topic 606)”.~~

Disaggregation of Revenue

The ~~objective~~Company operates in four business segments with similar economic characteristics, including nature of ~~this~~the products and production processes, distribution patterns and classes of customers. Revenue is disaggregated within these business segments by our two principal end markets: aerospace and industrial. Comparative information of the Company’s overall revenues for the three months ended June 29, 2019 and June 30, 2018 are as follows:

Principal End Markets:

	Three Months Ended
	June 29, 2019						June 30, 2018
	Aerospace		Industrial		Total		Aerospace		Industrial		Total
Plain	$	67,306	$	20,183	$	87,489	$	56,384	$	22,141	$	78,525
Roller		19,313		17,546		36,859		16,887		18,983		35,870
Ball		5,430		12,280		17,710		4,004		14,070		18,074
Engineered Products		24,270		16,362		40,632		27,216		16,300		43,516
	$	116,319	$	66,371	$	182,690	$	104,491	$	71,494	$	175,985

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of orders meeting the definition of a contract in the new revenue standard ~~update~~for which work has not been performed or has been partially performed and excludes unexercised contract options. The duration of the majority of our contracts, as defined by ASC 606, is less than one year. The Company has elected to ~~remove inconsistent practices~~apply the practical expedient which allows companies to exclude remaining performance obligations with ~~regards~~an original expected duration of one year or less. Performance obligations having a duration of more than one year are concentrated in contracts for certain products and services provided to the U.S. government or its contractors. The aggregate amount of the transaction price allocated to remaining performance obligations for such contracts with a duration of more than one year was approximately $242,309 at June 29, 2019. The Company expects to recognize revenue ~~recognition between U.S. GAAP~~on approximately 68% and ~~IFRS.~~ 92% of the remaining performance obligations over the next 12 and 24 months, respectively, with the remainder recognized thereafter.

Contract Balances

The ~~standard intends to improve comparability~~timing of revenue recognition, ~~practices across entities, industries, jurisdictions~~invoicing and ~~capital markets. The provisions of ASU No. 2014-09 will~~cash collections affect accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities) on the consolidated balance sheets.

Contract Assets (Unbilled Receivables)

- Pursuant to the over-time revenue recognition model, revenue may be ~~effective for interim~~recognized prior to the customer being invoiced. An unbilled receivable is recorded to reflect revenue that is recognized when (1) the cost-to-cost method is applied and ~~annual periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016.~~

~~The guidance permits use of either a retrospective or cumulative effect transition method. Based upon~~(2) such revenue exceeds the ~~FASB’s decision~~amount invoiced to ~~approve a one-year delay in implementation,~~ the ~~new standard is now effective for the Company in fiscal 2019, with early adoption permitted, but not earlier than fiscal 2018.~~customer.

Contract Liabilities (Deferred Revenue)

- The Company ~~has concluded it will utilize~~may receive a customer advance or deposit, or have an unconditional right to receive a customer advance, prior to revenue being recognized. Since the ~~modified retrospective method upon adopting this standard.~~

~~The Company has substantially completed their assessment~~performance obligations related to such advances may not have been satisfied, a contract liability is established. Advance payments are not considered a significant financing component as the timing of the ~~impact~~transfer of the ~~new standard on its business which has identified potential differences that would result from applying~~related goods or services is at the ~~requirements~~discretion of the ~~new standard to its revenue contracts. Upon adoption,~~customer.

These assets and liabilities are reported on the ~~Company expects certain revenue streams currently accounted for using a point-in-time model will utilize~~consolidated balance sheets on an over-time model due to the continuous transfer of control to customers. The Company is in the process of drafting updated accounting policies and disclosures under the new guidance. The Company has not finalized the impact of reported revenues and earnings of adopting the new standard but expects to do so byindividual contract basis at the end of each reporting period. As of June 29, 2019 and March 30, 2019, accounts receivable with customers, net, were $130,088 and $130,735 , respectively. The tables below represent a roll-forward of contract assets and contract liabilities for the ~~fourth quarter~~three-month period ended June 29, 2019:

Contract Assets - Current ⁽¹⁾

Balance at March 30, 2019	$	1,895
Additional revenue recognized in excess of billings		1,028
Less: amounts billed to customers		(611	)
Balance at June 29, 2019	$	2,312

(1)

Included within prepaid expenses and other current assets on the consolidated balance sheets.

Contract Liabilities – Current ⁽²⁾

Balance at March 30, 2019	$	10,121
Payments received prior to revenue being recognized		2,977
Revenue recognized		(5,989	)
Reclassification to/from noncurrent		214
Balance at June 29, 2019	$	7,323

(2)

Included within accrued expenses and other current liabilities on the consolidated balance sheets.

Contract Liabilities – Noncurrent ⁽³⁾

Balance at March 30, 2019	$	587
Reclassification to/from current		(214	)
Balance at June 29, 2019	$	373

(3)

Included within other non-current liabilities on the consolidated balance sheets.

As of ~~fiscal 2018.~~

1.June 29, 2019, the Company does not have any contract assets classified as noncurrent on the consolidated balance sheets.

4. Accumulated Other Comprehensive Income (Loss)

The components of comprehensive income (loss) that relate to the Company are net income, foreign currency translation adjustments and pension plan and postretirement benefits.

The following summarizes the activity within each component of accumulated other comprehensive income (loss):

Currency
Translation

Pension and
Postretirement
Liability
Total
Balance at April 1, 2017 $ (3,942 ) $ (5,881 ) $ (9,823 )
Other comprehensive income before reclassifications 4,890 — 4,890
Amounts reclassified from accumulated other comprehensive income — 588 588
Net current period other comprehensive income 4,890 588 5,478
Balance at December 30, 2017 $ 948 $ (5,293 ) $ (4,345 )

2., net of taxes:

	Currency Translation			Pension and Postretirement Liability			Total
Balance at March 30, 2019	$	(3,301	)	$	(4,166	)	$	(7,467	)
Impact from adoption of ASU 2018-02		—			(1,289	)		(1,289	)
Other comprehensive income before reclassifications		2,542			—			2,542
Amounts reclassified from accumulated other comprehensive income		—			178			178
Net current period other comprehensive income		2,542			178			2,720
Balance at June 29, 2019	$	(759	)	$	(5,277	)	$	(6,036	)

5. 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 and 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 Nine Months Ended

December 30,
2017

December 31,
2016

December 30,
2017

December 31,
2016

Net income $ 23,832 $ 12,770 $ 60,464 $ 49,038

Denominator for basic net income per common share—weighted-average shares outstanding 23,985,925 23,581,921 23,912,474 23,457,717
Effect of dilution due to employee stock awards 460,190 231,859 409,691 261,404
Denominator for diluted net income per common share—weighted-average shares outstanding 24,446,115 23,813,780 24,322,165 23,719,121

Basic net income per common share $ 0.99 $ 0.54 $ 2.53 $ 2.09

Diluted net income per common share $ 0.97 $ 0.54 $ 2.49 $ 2.07

	Three Months Ended
	June 29, 2019		June 30, 2018

Net income	$	30,499	$	27,467

Denominator for basic net income per common share—weighted-average shares outstanding		24,501,707		24,140,778
Effect of dilution due to employee stock awards		305,600		402,811
Denominator for diluted net income per common share — weighted-average shares outstanding		24,807,307		24,543,589

Basic net income per common share	$	1.24	$	1.14

Diluted net income per common share	$	1.23	$	1.12

At ~~December 30, 2017, no~~June 29, 2019, 373,840 employee stock options and 86,040 restricted shares have been excluded from the calculation of diluted earnings per share. At ~~December 31, 2016, 449,500~~June 30, 2018, 87,540 employee stock options and 204,175 restricted shares have been excluded from the calculation of diluted earnings per share. The inclusion of these employee stock options and restricted shares would be anti-dilutive.

6. Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Short-term investments, if any, are comprised of equity securities and are measured at fair value by using quoted prices in active markets and are classified as Level 1 of the valuation hierarchy.

7. Inventory

Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out method, and are summarized below:

December 30,
2017

April 1,
2017

Raw materials $ 38,324 $ 35,364
Work in process 79,921 79,048
Finished goods 184,768 175,182
$ 303,013 $ 289,594

	June 29, 2019		March 30, 2019
Raw materials	$	51,167	$	48,690
Work in process		93,364		90,820
Finished goods		198,390		195,491
	$	342,921	$	335,001

8. Goodwill and Intangible Assets

Goodwill

Roller Plain Ball Engineered Products Total
April 1, 2017 $ 16,007 $ 79,597 $ 5,623 $ 166,815 $ 268,042
Translation adjustments — — — 81 81
December 30, 2017 $ 16,007 $ 79,597 $ 5,623 $ 166,896 $ 268,123

Roller Plain Ball Engineered Products Total
June 29, 2019 $ 16,007 $ 79,597 $ 5,623 $ 160,205 $ 261,432
12

Intangible Assets

December 30, 2017 April 1, 2017
Weighted Average Useful Lives Gross Carrying Amount
Accumulated Amortization
Gross Carrying Amount
Accumulated Amortization

Product approvals 24 $ 50,878 $ 7,823 $ 53,869 $ 6,465
Customer relationships and lists 24 106,583 15,426 107,864 12,308
Trade names 10 18,734 6,300 19,923 5,137
Distributor agreements 5 722 722 722 722
Patents and trademarks 16 9,610 4,661 8,803 4,130
Domain names 10 437 419 437 386
Other 6 1,365 1,255 1,174 1,043
188,329 36,606 192,792 30,191
Non-amortizable repair station certifications n/a 34,200 — 34,200 —
Total $ 222,529 $ 36,606 $ 226,992 $ 30,191

		June 29, 2019				March 30, 2019
	Weighted Average Useful Lives	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Product approvals	24	$	50,878	$	11,010	$	50,878	$	10,481
Customer relationships and lists	24		96,459		20,110		96,458		19,149
Trade names	10		15,959		7,799		15,959		7,447
Distributor agreements	5		722		722		722		722
Patents and trademarks	16		10,665		5,726		10,534		5,540
Domain names	10		437		437		437		437
Other	2		3,097		2,581		2,473		2,325
			178,217		48,385		177,461		46,101
Non-amortizable repair station certifications	n/a		24,281		—		24,281		—
Total	22	$	202,498	$	48,385	$	201,742	$	46,101

Amortization expense for definite-lived intangible assets for the ~~nine month periods~~three months ended ~~December~~June 29, 2019 and June 30, ~~2017~~2018 was $2,284 and ~~December 31, 2016 was $7,041 and $6,921,~~$2,363 , respectively. Estimated amortization expense for the remaining ~~three~~nine months of fiscal ~~2018,~~2020, the five succeeding fiscal years and thereafter is as follows:

2018 $ 2,435
2019 8,855
2020 8,747
2021 8,696
2022 8,579
2023 8,496
2024 and thereafter 105,915

2020	$	5,958
2021		7,902
2022		7,783
2023		7,698
2024		7,570
2025		7,570
2026 and thereafter		85,351

9. Leases

The Company enters into operating leases for manufacturing facilities, warehouses, sales offices, information technology equipment, plant equipment, vehicles and certain other equipment at varying dates from April 2019 to February 2038, including renewal options.

The following table represents the impact of leasing on the consolidated balance sheet:

Operating Leases:	June 29, 2019
Lease assets:
Operating lease assets, net	$	26,451

Lease liabilities:
Current operating lease liabilities		5,403
Long-term operating lease liabilities		21,059
Total operating lease liabilities	$	26,462

The Company did not have any finance leases as of June 29, 2019. Cash paid included in the measurement of lease liabilities was $1,363. Lease assets obtained in exchange for new operating lease liabilities during the period were immaterial.

Operating lease expense for the three-month period ended June 29, 2019 was $1,837. Short-term and variable lease expense were immaterial.

Future undiscounted lease payments for the remaining lease terms, including renewal options reasonably certain of being exercised, are as follows:

	Operating Leases
Within one year	$	5,744
One to two years		5,023
Two to three years		3,371
Three to four years		2,777
Four to five years		1,633
Thereafter		14,639
Total future undiscounted lease payments		33,187
Less: imputed interest		(6,725	)
Total operating lease liabilities	$	26,462

The weighted-average remaining lease term on June 29, 2019 for our operating leases is 11.3 years. The weighted-average discount rate on June 29, 2019 for our operating leases is 4.4%.

10. Debt

The balances payable under all borrowing facilities are as follows:

December 30,
2017

April 1,
2017

Revolver and term loan facilities $ 194,250 $ 267,000
Debt issuance costs (3,324 ) (4,392 )
Other 7,027 7,192
Total debt 197,953 269,800
Less: current portion 17,976 14,214
Long-term debt $ 179,977 $ 255,586

	June 29, 2019			March 30, 2019
Revolver facility	$	22,250		$	39,250
Debt issuance costs		(1,813	)		(1,912	)
Other		6,306			6,308
Total debt		26,743			43,646
Less: current portion		476			467
Long-term debt	$	26,267		$	43,179

The current portion of long-term debt as of ~~both December~~June 29, 2019 and March 30, ~~2017 and April 1, 2017~~2019, respectively, includes the current portion of the Schaublin ~~mortgage and the current portion of the Term Loan Facilities.~~

mortgage.

Credit Facility

~~In connection with the Sargent Aerospace & Defense (“Sargent”) acquisition on~~

On April 24, 2015, the Company entered into a ~~new~~ credit agreement (the “Credit Agreement”) and related Guarantee, Pledge Agreement and Security Agreement with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer, and the other lenders party thereto and terminated the Company’s prior credit agreement with JP ~~Morgan Credit Agreement.~~Morgan. The Credit Agreement ~~provides RBCA, as Borrower,~~provided the Company with ~~(a)~~ a $200,000 term loan (the “Term Loan”) and a $350,000 revolving credit facility and was to expire on April 24, 2020.

On May 31, 2018, the Company paid off the remaining balance of the Term Loan and ~~(b) a $350,000 Revolver and together~~wrote off $987 in unamortized debt issuance costs associated with the Term Loan which were recorded within other non-operating expense on the consolidated statements of operations.

On January 31, 2019, the Company amended the Credit Agreement with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer, and the other lenders party thereto. The Credit Agreement as so amended (the ~~“Facilities”~~“Amended Credit Agreement”) now provides the Company with a $250,000 revolving credit facility (the “Revolver”). The ~~Facilities expire~~Revolver expires on ~~April 24, 2020.~~

January 31, 2024. Debt issuance costs associated with the Amended Credit Agreement totaled $852 and will be amortized through January 31, 2024 along with the unamortized debt issuance costs remaining from the Credit Agreement.

Amounts outstanding under the ~~Facilities~~Revolver generally bear interest at (a) a base rate determined by reference to the higher of (1) Wells Fargo’s prime lending rate, (2) the federal funds effective rate plus 1/2 of 1% and (3) the one-month LIBOR rate plus 1%, or (b) LIBOR ~~rate~~ plus a specified margin, depending on the type of borrowing being made. The applicable margin is based on the Company’s consolidated ratio of total net debt to consolidated EBITDA ~~from time to time.~~at each measurement date. Currently, the Company’s margin is 0.00% for base rate loans and ~~1.00%~~0.75% for LIBOR ~~rate~~ loans. ~~As of December 30, 2017, there was $21,750 outstanding under the Revolver and $172,500 outstanding under the Term Loan, offset by $3,324 in debt issuance costs (original amount was $7,122).~~

The Amended Credit Agreement requires the Company to comply with various covenants, including among other things, a financial ~~covenants~~covenant to maintain ~~the following: (1)~~ a ratio of consolidated net debt to adjusted EBITDA not ~~to exceed~~greater than 3.50 to ~~1; and (2) a consolidated interest coverage ratio not to be less than 2.75 to 1.~~1 .. The Amended Credit Agreement allows the Company to, among other things, make distributions to shareholders, repurchase its stock, incur other debt or liens, or acquire or dispose of assets provided that the Company complies with certain requirements and limitations of the ~~agreement.~~Amended Credit Agreement. As of ~~December 30, 2017,~~June 29, 2019, the Company was in compliance with all such covenants.

The Company’s domestic subsidiaries have guaranteed the Company’s obligations under the Amended Credit Agreement. The Company’s obligations under the Amended Credit Agreement and the domestic subsidiaries’ guarantee are secured ~~as well as providing for~~by a pledge of substantially all of the ~~Company’s and RBCA’s assets. The~~domestic assets of the Company and ~~certain of~~ its ~~subsidiaries have also entered into a Guarantee to guarantee RBCA’s obligations under the Credit Agreement.~~

domestic subsidiaries.

Approximately ~~$3,990~~$3,850 of the Revolver is being utilized to provide letters of credit to secure ~~RBCA’s~~the Company’s obligations relating to certain insurance programs. As of ~~December 30, 2017, RBCA~~June 29, 2019, $1,813 in unamortized debt issuance costs remain. The Company has the ability to borrow up to an additional ~~$324,260~~$223,900 under the ~~Revolver.~~

Revolver as of June 29, 2019.

Other Notes Payable

On October 1, 2012, one of our foreign divisions, Schaublin, purchased the land and building, ~~which~~that it occupied and had been leasing for CHF 14,067 ~~CHF~~ (approximately $14,910). Schaublin obtained a ~~20 year fixed rate~~20-year fixed-rate mortgage of CHF 9,300 ~~CHF~~ (approximately $9,857) at an interest rate of 2.9%. The balance of the purchase price of CHF 4,767 ~~CHF~~ (approximately $5,053) was paid from cash on hand. The balance on this mortgage as of ~~December 30, 2017~~June 29, 2019 was ~~6,859~~ CHF 6,161, or ~~$7,027.~~

7.$6,306 ..

11. 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 April 2, 2005. The Company is no longer subject to U.S. federal tax examination by the Internal Revenue Service for years ending before ~~March 29, 2014. A U.S. federal tax examination by the Internal Revenue Service for the year ended March 30, 2013 was effectively settled in fiscal~~April 2, 2016.

The effective income tax rates for the ~~three month~~three-month periods ended ~~December~~June 29, 2019 and June 30, ~~2017~~2018, were 19.3% and December 31, 2016 were 23.9% and 31.5%, respectively. During the third quarter, Congress passed and the President signed the Tax Cuts and Jobs Act (“TCJA”) of 2017 into law. The new law includes a number of changes in existing tax law impacting businesses including a permanent reduction in the corporate income tax rate from 35.0% to 21.0%17.4%. As a result, the blended statutory rate applied for the current fiscal year is 31.5%. As of December 30, 2017, we have not completed our accounting for the tax effects associated with the TCJA. The impacts recorded, as detailed below, represent our estimate of the impact during the current fiscal year. In addition to discrete items, the effective income tax rates for these periods are different from the U.S. statutory rates due to ~~a special U.S. manufacturing deduction,~~ the foreign-derived intangible income provision and U.S. credit for increasing research activities ~~and foreign income taxed at lower rates~~ which decrease the rate and state income taxes which increase the rate.

The effective income tax rate for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29, 2019 of ~~23.9% was impacted by one-time adjustments associated with the enactment~~19.3% includes $510 of ~~the TCJA. Included in these adjustments was an estimated charge of $9,491 associated with the repatriation transition~~ tax and an estimated benefit of $8,708 associated with the revaluation of our deferred tax liabilities. The TCJA also impacted the third quarter provision with a benefit from the lower blended statutory tax rate of 31.5%. The third quarter provision was also impacted by approximately $1,238 of benefit associated with ~~the adoption of ASU 2016-09~~~~Compensation - Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting~~~~and $45~~share-based compensation, along with $241 tax benefit of other ~~discrete expense related to federal and state~~permanent adjustments from filing the Company’s fiscal 2018 foreign tax ~~filing positions.~~returns. The effective income tax rate without discrete items for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29, 2019 would have been ~~25.3%~~21.2%. The effective income tax rate for the ~~three month~~three-month period ended ~~December 31, 2016~~June 30, 2018 of ~~31.5%~~17.4% includes ~~immaterial~~ discrete items of ~~$56.~~$1,330 tax benefit associated with shared based compensation and $74 tax benefit for the release of unrecognized tax positions associated with statute of limitations expiration. The effective income tax rate without discrete items for the ~~three month~~three-month period ended ~~December 31, 2016~~June 30, 2018 would have been ~~31.8%~~21.6%. The Company believes it is reasonably possible that some of its unrecognized tax positions may be effectively settled within the next twelve months due to the closing of audits and the statute of limitations expiring in varying jurisdictions. The decrease in the Company’s unrecognized tax positions, pertaining primarily to federal and state credits and state tax, is estimated to be approximately ~~$531.~~

$1,246 ..

12. 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~~are aggregated as reportable segment as they have 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.~~

customers.

The Company has four reportable business ~~segments;~~segments, Plain Bearings, Roller Bearings, Ball Bearings and Engineered Products, which are described below.

Plain Bearings.

Plain bearings are produced with either self-lubricating or metal-to-metal designs and ~~consist~~consists 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.

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~~heavy-duty needle roller bearings with inner rings, tapered roller bearings, track rollers and aircraft roller bearings.

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.

Engineered Products.

Engineered Products consists of highly engineered hydraulics, fasteners, collets and precision components used in aerospace, marine and industrial applications.

Segment performance is evaluated based on segment net sales and ~~gross margin.~~operating income. Items not allocated to segment operating income include corporate administrative expenses and certain other amounts.

Three Months Ended Nine Months Ended

December 30,
2017

December 31,
2016

December 30,
2017

December 31,
2016

Net External Sales
Plain $ 69,764 $ 65,822 $ 214,809 $ 205,107
Roller 32,485 26,157 96,215 80,786
Ball 16,496 13,700 48,756 41,979
Engineered Products 48,113 40,977 135,292 127,306
$ 166,858 $ 146,656 $ 495,072 $ 455,178
Gross Margin
Plain $ 26,615 $ 26,814 $ 82,719 $ 79,971
Roller 14,425 6,397 40,077 30,182
Ball 7,021 5,336 19,936 15,823
Engineered Products 16,604 13,838 45,653 40,391
$ 64,665 �� $ 52,385 $ 188,385 $ 166,367
Selling, General & Administrative Expenses
Plain $ 6,371 $ 6,192 $ 19,143 $ 18,007
Roller 1,553 1,517 4,765 4,484
Ball 1,707 1,384 5,002 4,163
Engineered Products 5,338 4,534 15,737 13,840
Corporate 13,193 12,085 38,888 36,202
$ 28,162 $ 25,712 $ 83,535 $ 76,696
Operating Income
Plain $ 19,134 $ 18,065 $ 60,957 $ 57,695
Roller 12,872 2,761 35,291 23,955
Ball 5,237 3,814 14,752 11,252
Engineered Products 8,817 7,831 17,839 22,564
Corporate (12,937 ) (11,942 ) (38,638 ) (36,162 )
$ 33,123 $ 20,529 $ 90,201 $ 79,304
Geographic External Sales
Domestic $ 145,565 $ 129,212 $ 433,588 $ 399,629
Foreign 21,293 17,444 61,484 55,549
$ 166,858 $ 146,656 $ 495,072 $ 455,178
Intersegment Sales
Plain $ 1,240 $ 1,146 $ 3,793 $ 3,248
Roller 3,438 3,264 9,731 11,512
Ball 606 370 1,758 1,211
Engineered Products 7,785 6,767 23,806 21,183
$ 13,069 $ 11,547 $ 39,088 $ 37,154

	Three Months Ended
	June 29, 2019			June 30, 2018
Net External Sales
Plain	$	87,489		$	78,525
Roller		36,859			35,870
Ball		17,710			18,074
Engineered Products		40,632			43,516
	$	182,690		$	175,985
Gross Margin
Plain	$	34,114		$	30,616
Roller		14,524			14,957
Ball		7,799			7,279
Engineered Products		14,257			14,887
	$	70,694		$	67,739
Selling, General & Administrative Expenses
Plain	$	6,514		$	6,362
Roller		1,614			1,624
Ball		1,633			1,602
Engineered Products		4,303			5,360
Corporate		16,023			14,627
	$	30,087		$	29,575
Operating Income
Plain	$	26,825		$	23,444
Roller		12,570			13,332
Ball		6,137			5,618
Engineered Products		9,002			8,877
Corporate		(16,044	)		(15,273	)
	$	38,490		$	35,998
Intersegment Sales
Plain	$	1,847		$	1,597
Roller		3,201			4,095
Ball		669			800
Engineered Products		10,822			9,138
	$	16,539		$	15,630

All intersegment sales are eliminated in consolidation.

~~9. Integration and Restructuring of Operations~~

In the second quarter of fiscal 2018, the Company reached a decision to restructure its manufacturing operation in Montreal, Canada. After completing its obligations, the Company expects to close its RBC Canada location and consolidate certain residual assets into other locations by the end of this fiscal year. As a result, the Company recorded an after-tax charge of $5,577 associated with the restructuring in the second quarter of fiscal 2018 attributable to the Engineered Products segment. The $5,577 charge includes a $1,337 impairment of fixed assets and a $5,157 impairment of intangible assets offset by a $917 tax benefit. The impairment charges were recognized within the “Other, net” line item within the consolidated statement of operations. The Company determined that the market approach was the most appropriate method to estimate the fair value of the fixed assets using comparable sales data and actual quotes from potential buyers in the market place. The fixed assets are comprised of land, a building, machinery and equipment. The Company assessed the fair value of the intangible assets in accordance with ASC 360-10, which are comprised of customer relationships, product approvals, tradenames and trademarks. In the third quarter of fiscal 2018, the Company incurred restructuring charges of $1,091 comprised primarily of employee termination costs. These costs were recorded within the “Other, net” line item within the consolidated statement of operations and are all attributable to the Engineered Products segment. The cumulative restructuring charges as of the end of the third quarter of fiscal 2018, net of taxes, were $6,668. The total impact of this restructuring is expected to be between $7,000 and $7,500 in after-tax charges, all attributable to the Engineered Products segment, and is expected to conclude in the third quarter of fiscal 2019.

In the third quarter of fiscal 2017, the Company reached a decision to integrate and restructure its industrial manufacturing operation in South Carolina. The Company exited a few smaller product offerings and consolidated two manufacturing facilities into one. These restructuring efforts will better align our manufacturing capacity and market focus. As a result, the Company recorded a charge of $7,060 associated with the restructuring in the third quarter of fiscal 2017 attributable to the Roller Bearings segment. The $7,060 charge includes $3,215 of inventory rationalization costs, $261 in impairment of intangibles, $2,402 loss on fixed assets disposals, and $1,182 exit obligation associated with a building operating lease. The inventory rationalization costs were recorded in Cost of Sales in the income statement. All other costs were recorded under operating expenses in the “Other, net” category of the income statement. The pre-tax charge of $7,060 was offset with a tax benefit of approximately $2,222. The Company determined that the market approach was the most appropriate method to estimate the fair value for the inventory, intangible assets, equipment and building operating lease using comparable sales data and actual quotes from potential buyers in the market place.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 and engineered products industries are 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~~fluctuation or interruption toof supply, and availability of raw materials, components and energy resources could materially increase our costs or 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~~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~~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; (v) provisions in our charter documents may prevent or hinder efforts to acquire a controlling interest in us; (w) health care reform could adversely affect our operating results; (x) we may not pay cash dividends in the foreseeable future; (y) retirement of commercial aircraft could reduce our ~~revenues,~~revenues; and (z) we may not achieve satisfactory operating results in the integration of acquired companies. 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 ~~April 1, 2017.~~March 30, 2019. 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 a well-known international manufacturer and maker of highly engineered precision bearings and components. Our precision solutions 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 bearings categories, we focus primarily on the higher end of the bearing and engineered component markets where we believe our value added manufacturing and engineering capabilities enable us to differentiate ourselves from our competitors and enhance profitability. We believe our unique expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete. With 4542 facilities, of which 3633 are manufacturing facilities in ~~six~~five countries, we have been able to significantly broaden our end markets, products, customer base and geographic reach. We currently operate under four reportable business segments: Plain Bearings; Roller Bearings; Ball Bearings; and Engineered Products. The following further describes these reportable segments:

Plain Bearings.

Roller Bearings.

Roller bearings are anti-friction bearings that use rollers instead of balls. We manufacture four basic types of roller bearings: ~~heavy duty~~heavy-duty needle roller bearings with inner rings, tapered roller bearings, track rollers and aircraft roller bearings.

Ball Bearings

. We manufacture 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.

Engineered Products.

Engineered Products consists of highly engineered hydraulics, fasteners, collets and precision components used in aerospace, marine and industrial applications.

Purchasers of bearings and engineered products include industrial equipment and machinery manufacturers, producers of commercial and military aerospace equipment such as missiles and radar systems, agricultural machinery manufacturers, construction, energy, mining, marine and specialized equipment manufacturers, marine products, automotive and commercial truck manufacturers. The markets for our products are cyclical, and we have endeavored to mitigate this cyclicality by entering into sole-source relationships and long-term purchase agreements, 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.

Currently, our strategy is built around maintaining our role as a leading manufacturer of precision engineered bearings and components through the following efforts:

●

Developing innovative solutions
.

By leveraging our design and manufacturing expertise and our extensive customer relationships, we continue to develop new products for markets in which there are substantial growth opportunities.

●

Expanding customer base and penetrating end markets
.

We continually seek opportunities to access new customers, geographic locations and bearing platforms with existing products or profitable new product opportunities.

●

Increasing aftermarket sales.

We believe that increasing our aftermarket sales of replacement parts will further enhance the continuity and predictability of our revenues and enhance our profitability. Such sales ~~include~~included sales to third party distributors and sales to OEMs for replacement products and aftermarket services. We will increase the percentage of our revenues derived from the replacement market by continuing to implement several initiatives.

●

Pursuing selective acquisitions.

The acquisition of businesses that complement or expand our operations has been and continues to be an important element of our business strategy. We believe that there will continue to be consolidation within the industry that may present us with acquisition opportunities.

Outlook

Our net sales for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29, 2019 increased ~~13.8%~~3.8% compared to the same period last fiscal year. ~~Our industrial markets increased 23.1% while the~~The increase in net sales was a result of a 11.3% increase in our aerospace markets partially offset by a 7.2% decrease in the industrial markets. The increase in aerospace sales was primarily due to commercial and defense business, both OEM and aftermarket. The decrease in industrial sales was driven by decreases in the mining, semiconductor, energy, and general industrial markets. Excluding $4.5 million of sales associated with the Miami division sold in fiscal 2019, overall net sales increased ~~8.9%.~~6.5% year over year, driven by an increase of 16.3% in aerospace sales partially offset by a decrease of 7.2% in industrial sales. Our backlog, as of ~~December 30, 2017,~~June 29, 2019, was ~~$392.5~~$459.4 million compared to ~~$349.1~~$419.2 million as of ~~December 31, 2016.~~

June 30, 2018.

Management believes that operating cash flows and available credit under the ~~credit facilities~~Revolver will provide adequate resources to fund internal and external growth initiatives for the foreseeable future. As of ~~December 30, 2017,~~June 29, 2019, we had cash and cash equivalents of ~~$43.8~~$32.7 million of which approximately ~~$40.5~~$26.0 million was cash held by our foreign operations. We expect that our undistributed foreign earnings will be re-invested indefinitely for working capital, internal growth and acquisitions for and by our foreign entities.

Results of Operations

(dollars in millions)

Three Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Total net sales $ 166.9 $ 146.7 $ 20.2 13.8 %

Net income $ 23.8 $ 12.8 $ 11.0 86.6 %

Net income per common share: diluted $ 0.97 $ 0.54
Weighted average common shares: diluted 24,446,115 23,813,780

	Three Months Ended
	June 29, 2019		June 30, 2018		$ Change		% Change
Total net sales	$	182.7	$	176.0	$	6.7		3.8	%

Net income	$	30.5	$	27.5	$	3.0		11.0	%

Net income per common share: diluted	$	1.23	$	1.12
Weighted average common shares: diluted		24,807,307		24,543,589

Our net sales for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29, 2019 increased ~~13.8%~~3.8% compared to the same period last fiscal year. The ~~overall~~ increase in net sales was a result of a ~~23.1% increase in our industrial markets and an 8.9%~~11.3% increase in our aerospace ~~markets. The increase~~markets partially offset by a 7.2% decrease in the industrial ~~was a result of strong performance in marine, mining, semicon, energy, and general industrial activity.~~markets. The increase in aerospace sales was primarily due to commercial and defense business, both OEM and aftermarket. The decrease in industrial sales was driven ~~mainly~~ by ~~commercial OEM.~~

decreases in the mining, semiconductor, energy, and general industrial markets. Excluding $4.5 million of sales associated with the Miami division sold in fiscal 2019, overall net sales increased 6.5% year over year, driven by an increase of 16.3% in aerospace sales partially offset by a decrease of 7.2% in industrial sales.

Net income for the ~~third~~first quarter of fiscal ~~2018~~2020 was ~~$23.8~~$30.5 million compared to ~~$12.8~~$27.5 million for the same period last year. Net income ~~of $23.8 million in~~for the ~~third~~first quarter of fiscal 2018 was affected by restructuring costs of $1.1 million offset by a $1.2 million tax benefit related to the adoption of ASU 2016-09 and the impact of the new tax legislation signed during the third quarter. Net income for the third quarter of fiscal 2017 was affected by restructuring costs of $4.9 million offset by $0.3 million of discrete tax benefit and foreign currency gains.

Nine Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Total net sales $ 495.1 $ 455.2 $ 39.9 8.8 %

Net income $ 60.5 $ 49.0 $ 11.5 23.3 %

Net income per common share: diluted $ 2.49 $ 2.07
Weighted average common shares: diluted 24,322,165 23,719,121

Net sales increased $39.9 million or 8.8% for the nine month period ended December 30, 2017 over the same period last year. The increase in net sales was mainly the result of a 19.2% increase in industrial sales and an increase of 3.4% in aerospace sales. The increase in industrial sales was mostly attributable to an increase in marine, mining, semicon, energy, and general industrial activity. The increase in aerospace was primarily driven by aerospace OEM, both defense and commercial.

Net income for the nine months ended December 30, 2017 was $60.5 million compared to $49.0 million for the same period last year. The net income of $60.5 million in fiscal 2018 was affected by restructuring and integration costs of $6.7 million, a $3.9 million tax benefit related to the adoption of ASU 2016-09, the impact of the new tax legislation signed during the third quarter and $0.2 million of discrete tax benefits. Net income for the first nine months of fiscal 20172020 was affected by $0.3 million inof after tax costs associated with ~~the Sargent acquisition and $4.9 million in costs related to restructuring~~losses on foreign exchange offset by $0.2 million of discrete tax ~~benefit and~~benefit. Net income for the first quarter of fiscal 2019 was affected by $0.8 million of after tax cost associated with the loss on the extinguishment of debt offset by $0.2 million of after tax benefit associated with foreign exchange ~~gain.~~

and discrete taxes.

Gross Margin

Three Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Gross Margin $ 64.7 $ 52.4 $ 12.3 23.4 %
Gross Margin % 38.8 % 35.7 %

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change		% Change

Gross Margin	$	70.7		$	67.7		$	3.0		4.4	%
Gross Margin %		38.7	%		38.5	%

Gross margin increased ~~$12.3~~$3.0 million, or ~~23.4%~~4.4%, in the ~~third~~first quarter of fiscal ~~2018~~2020 compared to the ~~third~~first quarter of fiscal ~~2017. The three months ended December 31, 2016~~2019. This increase was ~~affected by a restructuring charge of $3.2 million. The increase in gross margin was mainly~~primarily driven by higher sales and cost efficiencies achieved during the ~~current~~ period.

Nine Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Gross Margin $ 188.4 $ 166.4 $ 22.0 13.2 %
Gross Margin % 38.1 % 36.5 %

~~Gross margin increased $22.0 million or 13.2%~~

Selling, General and Administrative

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change		% Change

SG&A	$	30.1		$	29.6		$	0.5		1.7	%
% of net sales		16.5	%		16.8	%

SG&A for the first nine months of fiscal 2018 compared to the same period last year. Gross margin for the first nine months of fiscal 2017 was affected by the unfavorable impact of $3.2 million of restructuring charges and $0.4 million of inventory purchase accounting associated with the Sargent acquisition. The increase in gross margin year over year is primarily a result of higher sales and cost efficiencies achieved.

~~Selling, General and Administrative~~

Three Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

SG&A $ 28.2 $ 25.7 $ 2.5 9.5 %
% of net sales 16.9 % 17.5 %

~~SG&A expenses increased by $2.5 million to $28.2 million for the third~~ quarter of fiscal ~~2018~~2020 was $30.1 million, or 16.5% of sales as compared to ~~$25.7~~$29.6 million, ~~for the third quarter~~or 16.8% of fiscal 2017. This increase was mainly driven by $1.7 million of personnel related expenses, $0.3 million of additional stock compensation expense, $0.2 million of professional fees and $0.3 million of other costs. As a percentage of sales ~~SG&A was 16.9% for the third quarter of fiscal 2018 compared to 17.5%~~ for the same period ~~last year.~~

Nine Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

SG&A $ 83.5 $ 76.7 $ 6.8 8.9 %
% of net sales 16.9 % 16.8 %

~~SG&A expenses increased by $6.8 million to $83.5 million for the first nine months~~ of fiscal ~~2018 compared to $76.7 million for the same period last year. This~~2019. The increase iswas primarily due to ~~$5.0 million of personnel related expenses, $1.0 million of~~ additional stock compensation costs of $1.0 million and ~~$0.8~~other items of $0.1 million partially offset by $0.6 million of ~~other costs.~~

lower professional fees.

Other, Net

Three Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Other, net $ 3.4 $ 6.1 $ (2.7 ) (45.0 )%
% of net sales 2.0 % 4.2 %

Other operating expenses for the third quarter of fiscal 2018 totaled $3.4 million compared to $6.1 million for the same period last year. For the third quarter of fiscal 2018, other operating expenses were comprised mainly of $1.1 million of restructuring costs and $2.3 million of amortization of intangible assets. For the third quarter of fiscal 2017, other operating expenses were comprised of $3.8 million of restructuring costs and $2.3 million of amortization of intangible assets.

Nine Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Other, net $ 14.7 $ 10.4 $ 4.3 41.3 %
% of net sales 3.0 % 2.3 %

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change			% Change

Other, net	$	2.1		$	2.2		$	(0.1	)		(2.3	)%
% of net sales		1.2	%		1.2	%

Other operating expenses for the first ~~nine months~~quarter of fiscal ~~2018~~2020 totaled ~~$14.7~~$2.1 million compared to ~~$10.4~~$2.2 million for the same period last year. For the first ~~nine months~~quarter of fiscal ~~2018,~~2020, other operating expenses were comprised mainly of $7.6 million of restructuring costs, $7.0 million of amortization of intangible assets and $0.1 million of other costs. For the first nine months of fiscal 2017, other operating expenses were comprised mostly of $4.0 million of restructuring costs and $6.9$2.3 million of amortization of intangible assets offset by ~~$0.5~~$0.2 million of other ~~revenue.~~

income. Other operating expenses last year were comprised of $2.4 million of amortization of intangible assets offset by $0.2 million of other income.

Interest Expense, Net

Three Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Interest expense, net $ 1.8 $ 2.1 $ (0.3 ) (16.6 )%
% of net sales 1.1 % 1.4 %

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change			% Change

Interest expense, net	$	0.5		$	1.7		$	(1.2	)		(68.0	)%
% of net sales		0.3	%		1.0	%

Interest expense, net, generally consists of interest charged on ~~our credit facilities~~the Revolver and amortization of deferred financing fees, offset by interest income (see “Liquidity and Capital Resources – Liquidity”, below). Interest expense, net, was ~~$1.8~~$0.5 million for the ~~third~~first quarter of fiscal ~~2018~~2020 compared to ~~$2.1~~$1.7 million for the same period last year. ~~The Company had total debt of $198.0 million at December 30, 2017 compared to $294.9 million at December 31, 2016.~~

Nine Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Interest expense, net $ 5.7 $ 6.7 $ (1.0 ) (14.3 )%
% of net sales 1.2 % 1.5 %

Interest expense, net, generally consists of interest charged on our credit facilities and amortization of deferred financing fees, offset by interest income (see “Liquidity and Capital Resources – Liquidity”, below). Interest expense, net, was $5.7

Other Non-Operating Expense

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change			% Change

Other non-operating expense	$	0.2		$	1.0		$	(0.8	)		(83.7	)%
% of net sales		0.1	%		0.6	%

Other non-operating expenses were $0.2 million for the first ~~nine months~~quarter of fiscal ~~2018~~2020 compared to ~~$6.7~~$1.0 million for the same period in the prior year. For the first ~~nine months~~quarter of fiscal ~~2017.~~

2020, other non-operating expenses were primarily comprised of $0.4 million of foreign exchange loss partially offset by $0.2 million of other items. Other non-operating expenses for the same period in the prior year were comprised primarily of $1.0 million in loss on early extinguishment of debt.

Income Taxes

Three Months Ended

December 30,
2017

December 31,
2016

Income tax expense $ 7.5 $ 5.9
Effective tax rate 23.9 % 31.5 %

	Three Months Ended
	June 29, 2019			June 30, 2018

Income tax expense	$	7.3		$	5.8
Effective tax rate		19.3	%		17.4	%

Income tax expense for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29, 2019 was ~~$7.5~~$7.3 million compared to ~~$5.9~~$5.8 million for the ~~three month~~three-month period ended ~~December 31, 2016.~~June 30, 2018. Our effective income tax rate for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29 2019 was ~~23.9%~~19.3% compared to ~~31.5%~~17.4% for the ~~three month~~three-month period ended ~~December 31, 2016.~~June 30, 2018. The effective income tax rate for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29, 2019 of ~~23.9% was impacted by adjustments made in relation to the recently enacted Tax Cuts and Jobs Act (TCJA). These were mainly comprised~~19.3% includes $0.5 million of ~~a charge of $9.5 million for the repatriation transition~~ tax and a benefit of $8.7 million associated with the revaluation of our deferred tax liabilities. The third quarter provision also benefited from a lower blended statutory tax rate of 31.5% as a result of the enactment of TCJA and a $1.2 million benefit associated with ~~ASU 2016-09~~~~Compensation - Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting~~.share-based

compensation

along with $0.2 million of tax benefit associated with other permanent adjustments from filing the Company’s fiscal 2018 foreign tax returns. The effective income tax rate without ~~discrete~~these benefits and other items for the ~~three month~~three-month period ended ~~December 30, 2017~~June 29, 2019 would have been ~~25.3%~~21.2%. The effective income tax rate for the ~~three month~~three-month period ended ~~December 31, 2016 was 31.5%, which~~June 30, 2018 of 17.4% included ~~approximately~~$1.3 million of tax benefit associated with share-based

compensation

and $0.1 million ~~of immaterial discrete expense items. The effective income~~ tax ~~rate without discrete items for the three month period ended December 31, 2016 would have been 31.8%.~~

Nine Months Ended

December 30,
2017

December 31,
2016

Income tax expense $ 23.6 $ 23.6
Effective tax rate 28.0 % 32.5 %

Income tax expense for the nine month period ended December 30, 2017 was $23.6 million compared to $23.6 million for the nine month period ended December 31, 2016. Our effective income tax rate for the nine month period ended December 30, 2017 was 28.0% compared to 32.5% for the nine month period ended December 31, 2016. The effective income tax rate for the nine month period ended December 30, 2017 of 28.0% was impacted by adjustments made in relation to the recently enacted Tax Cuts and Jobs Act (TCJA). These were mainly comprised of a charge of $9.5 million for the repatriation transition tax and a benefit ~~of $8.7 million~~ associated with the ~~revaluation~~release of ~~our deferred~~unrecognized tax ~~liabilities. The effective tax rate also benefited from a lower blended statutory rate of 31.5% as a result of the enactment of TCJA, $3.9 million of benefit associated with ASU 2016-09~~~~Compensation - Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting~~, $0.9 million of benefit associated with restructuring and integration activities, and $0.2 million of other discrete benefits. The effective income tax rate without discrete items for the nine month period ended December 30, 2017 would have been 33.0%. The effective income tax rate for the nine month period ended December 31, 2016 was 32.5%, which included immaterial discrete benefit of $0.2 million. The effective income tax rate without discrete items for the nine month period ended December 31, 2016 would have been 32.8%. Based on our initial reviews and subject to further regulatory guidance issued in connection with TCJA, we estimate the fourth quarter of fiscal 2018 effective tax rate will be approximately 25.0% to 27.0% and we estimate the full year fiscal 2019 effective tax rate will be approximately 20.0% to 22.0%.

~~Integration and Restructuring of Operations~~

In the second quarter of fiscal 2018, the Company reached a decision to restructure its manufacturing operation in Montreal, Canada. After completing its obligations, the Company expects to close its RBC Canada location and consolidate certain residual assets into other locations by the end of this fiscal year. As a result, the Company recorded an after-tax charge of $5.6 millionpositions associated with the ~~restructuring in the second quarter~~statute of fiscal 2018 attributable to the Engineered Products segment. The $5.6 million charge includes a $1.3 million impairment of fixed assets and a $5.2 million impairment of intangible assets offset by a $0.9 million tax benefit. The impairment charges were recognized within the “Other, net” line item within the consolidated statement of operations. The Company determined that the market approach was the most appropriate method to estimate the fair value of the fixed assets using comparable sales data and actual quotes from potential buyers in the market place. The fixed assets are comprised of land, a building, machinery and equipment. The Company assessed the fair value of the intangible assets in accordance with ASC 360-10, which are comprised of customer relationships, product approvals, tradenames and trademarks. In the third quarter of fiscal 2018, the Company incurred restructuring charges of $1.1 million comprised primarily of employee termination costs. These costs were recorded within the “Other, net” line item within the consolidated statement of operations and are all attributable to the Engineered Products segment. The cumulative restructuring charges as of the end of the third quarter of fiscal 2018, net of taxes, were $6.7 million. The total impact of this restructuring is expected to be between $7.0 million and $7.5 million in after-tax charges, all attributable to the Engineered Products segment, and is expected to conclude in the third quarter of fiscal 2019. The Company anticipates a positive cash flow result of approximately $5.2 million from this transaction.

limitations expiration.

Segment Information

We have four reportable product segments: Plain Bearings, Roller Bearings, Ball Bearings and Engineered Products. We use gross margin as the primary measurement to assess the financial performance of each reportable segment.

Plain Bearing Segment:

Three Months Ended

December 30,
2017

December 31,
2016

$
Change

%
Change

Total net sales $ 69.8 $ 65.8 $ 4.0 6.0 %

Gross margin $ 26.6 $ 26.8 $ (0.2 ) (0.7 )%
Gross margin % 38.2 % 40.7 %

SG&A $ 6.4 $ 6.2 $ 0.2 2.9 %
% of segment net sales 9.1 % 9.4 %

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change		% Change

Total net sales	$	87.5		$	78.5		$	9.0		11.4	%

Gross margin	$	34.1		$	30.6		$	3.5		11.4	%
Gross margin %		39.0	%		39.0	%

SG&A	$	6.5		$	6.4		$	0.1		2.4	%
% of segment net sales		7.4	%		8.1	%

Net sales increased ~~$4.0~~$9.0 million, or ~~6.0%~~11.4%, for the three months ended ~~December 30, 2017~~June 29, 2019 compared to the same period last year. The ~~6.0%~~11.4% increase was primarily driven by an increase of ~~23.4% in our industrial markets and a 0.9% increase~~19.4% in our aerospace ~~markets. The increase in industrial sales was mostly driven~~markets offset by ~~general industrial OEM while the increase in aerospace sales was due to the commercial aerospace OEM.~~

~~Gross margin as~~ a ~~percentage of sales decreased to 38.2% for the third quarter of fiscal 2018 compared to 40.7% for the same period last year. The~~8.8% decrease ~~was primarily due to product mix.~~

Nine Months Ended

December 30,
2017

December 31,
2016

$
Change

%
Change

Total net sales $ 214.8 $ 205.1 $ 9.7 4.7 %

Gross margin $ 82.7 $ 80.0 $ 2.7 3.4 %
Gross margin % 38.5 % 39.0 %

SG&A $ 19.1 $ 18.0 $ 1.1 6.3 %
% of segment net sales 8.9 % 8.8 %

~~Net sales increased $9.7 million, or 4.7%, for the nine months ended December 30, 2017 compared to the same period last year. The 4.7% increase was primarily driven by an increase of 10.0%~~ in the industrial ~~markets and 3.1% in the aerospace~~ markets. ~~The increase in industrial sales was mostly driven by general industrial OEM.~~ The increase in aerospace sales was mainly due to commercial and defense aerospace OEM. The decrease in industrial sales was mostly driven by the ~~commercial aerospace OEM~~mining and ~~aftermarket.~~

distribution markets.

Gross margin as a percentage of sales ~~decreased to 38.5%~~was 39.0% for the first ~~nine months~~quarter of fiscal ~~2018~~2020 compared to 39.0% for the same period last year. ~~The decrease was primarily due to product mix.~~

Roller Bearing Segment:

Three Months Ended

December 30,
2017

December 31,
2016

$
Change

%
Change

Total net sales $ 32.5 $ 26.2 $ 6.3 24.2 %

Gross margin $ 14.4 $ 6.4 $ 8.0 125.5 %
Gross margin % 44.4 % 24.5 %

SG&A $ 1.5 $ 1.5 $ 0.0 2.4 %
% of segment net sales 4.8 % 5.8 %

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change			% Change

Total net sales	$	36.9		$	35.9		$	1.0			2.8	%

Gross margin	$	14.5		$	15.0		$	(0.5	)		(2.9	)%
Gross margin %		39.4	%		41.7	%

SG&A	$	1.6		$	1.6		$	0.0			(0.6	)%
% of segment net sales		4.4	%		4.5	%

Net sales increased ~~$6.3~~$1.0 million, or ~~24.2%~~2.8%, for the three months ended ~~December 30, 2017~~June 29, 2019 compared to the same period last year. Our aerospace markets increased 14.4% while our industrial markets decreased by 7.6%. The increase in aerospace was driven by the commercial OEM and distribution markets. The decrease in industrial sales was due to mining and energy markets.

Gross margin for the three months ended June 29, 2019 was $14.5 million, or 39.4% of sales, compared to $15.0 million, or 41.7%, in the comparable period in fiscal 2019. This decrease in the gross margin was primarily due to product mix during the period.

Ball Bearing Segment:

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change			% Change

Total net sales	$	17.7		$	18.1		$	(0.4	)		(2.0	)%

Gross margin	$	7.8		$	7.3		$	0.5			7.1	%
Gross margin %		44.0	%		40.3	%

SG&A	$	1.6		$	1.6		$	0.0			1.9	%
% of segment net sales		9.2	%		8.9	%

Net sales decreased by $0.4 million for the first quarter of fiscal 2020 compared to the same period last year. Our industrial markets ~~increased 37.8%~~decreased 12.7% while our aerospace markets increased ~~13.8%~~35.6%. The ~~increase~~decrease in industrial ~~sales~~ was primarily due to ~~energy, mining and general industrial markets while~~ the ~~increases in aerospace were due to increases in defense and commercial OEM.~~

Gross margin for the three months ended December 30, 2017 was $14.4 million, or 44.4% of sales, compared to $6.4 million, or 24.5% of sales, in the comparable period in fiscal 2017. The gross margin for the three months ended December 31, 2016 was affected by $3.2 million of restructuring costs. The increase in gross margin was primarily due to higher sales and cost efficiencies achieved during the period.

Nine Months Ended

December 30,
2017

December 31,
2016

$
Change

%
Change

Total net sales $ 96.2 $ 80.8 $ 15.4 19.1 %

Gross margin $ 40.1 $ 30.2 $ 9.9 32.8 %
Gross margin % 41.7 % 37.4 %

SG&A $ 4.8 $ 4.5 $ 0.3 6.3 %
% of segment net sales 5.0 % 5.6 %

Net sales increased $15.4 million, or 19.1%, for the nine months ended December 30, 2017 compared to the same period last year. Our industrial markets increased 36.4% while our aerospace markets increased by 5.6%. The increase in industrial sales was primarily due to energy, mining and general industrial activity while the increase in aerospace was driven by defense OEM sales partially offset by the commercial OEM market.

Gross margin for the nine months ended December 30, 2017 was $40.1 million, or 41.7% of sales, compared to $30.2 million, or 37.4%, in the comparable period in fiscal 2017. The gross margin for the nine months ended December 31, 2016 was affected by $3.2 million of restructuring costs.

~~Ball Bearing Segment:~~

Three Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Total net sales $ 16.5 $ 13.7 $ 2.8 20.4 %

Gross margin $ 7.0 $ 5.3 $ 1.7 31.6 %
Gross margin % 42.6 % 38.9 %

SG&A $ 1.7 $ 1.4 $ 0.3 23.3 %
% of segment net sales 10.3 % 10.1 %

Net sales increased $2.8 million, or 20.4%, for the third quarter of fiscal 2018 compared to the same period last year. Our industrial markets increased 13.8% while our aerospace markets increased 38.8% during the period. The increase in industrial sales was a result of semiconductor, energy, and general industrial markets. The increase in aerospace sales was primarily driven by ~~aerospace~~the defense OEM ~~market activity.~~

market.

Gross margin as a percentage of sales ~~increased to 42.6%~~was 44.0% of sales for the ~~third~~first quarter of fiscal ~~2018~~2020 as compared to ~~38.9%~~40.3% for the same period last year. The increase ~~was primarily due to higher sales and product mix.~~

Nine Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Total net sales $ 48.8 $ 42.0 $ 6.8 16.1 %

Gross margin $ 19.9 $ 15.8 $ 4.1 26.0 %
Gross margin % 40.9 % 37.7 %

SG&A $ 5.0 $ 4.2 $ 0.8 20.2 %
% of segment net sales 10.3 % 9.9 %

Net sales increased $6.8 million, or 16.1%, for the nine months ended December 30, 2017 compared to the same period last year. Our industrial markets increased 24.0% while our aerospace markets decreased 1.9% during the period. The increase in ~~industrial sales~~margin percentage was a result of ~~semiconductor, energy, and general industrial markets. The decrease in aerospace sales was driven by the aerospace OEM market.~~

~~Gross margin as a percentage of sales increased to 40.9% for the nine months ended December 30, 2017 compared to 37.7% for the same period last year. The increase was primarily due to higher sales and~~ cost efficiencies achieved and product mix during the period.

Engineered Products Segment:

Three Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Total net sales $ 48.1 $ 41.0 $ 7.1 17.4 %

Gross margin $ 16.6 $ 13.8 $ 2.8 20.0 %
Gross margin % 34.5 % 33.8 %

SG&A $ 5.3 $ 4.5 $ 0.8 17.7 %
% of segment net sales 11.1 % 11.1 %

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change			% Change

Total net sales	$	40.6		$	43.5		$	(2.9	)		(6.6	)%

Gross margin	$	14.3		$	14.9		$	(0.6	)		(4.2	)%
Gross margin %		35.1	%		34.2	%

SG&A	$	4.3		$	5.4		$	(1.1	)		(19.7	)%
% of segment net sales		10.6	%		12.3	%

Net sales ~~increased $7.1~~decreased $2.9 million, or ~~17.4%~~6.6%, for the ~~third quarter~~first three months of fiscal ~~2018~~2020 compared to the same period last year. Our aerospace markets ~~increased 17.3%~~decreased 10.8% while our industrial markets increased ~~17.6%~~0.4%. Excluding $4.5 million of sales associated with our Miami division sold during fiscal 2019, net sales increased 4.1% for the first three months of fiscal 2020 compared to the same period last year, with a 6.9% increase in aerospace sales and a 0.4% increase in industrial sales. The increase in aerospace sales was ~~mainly due to our commercial and defense aerospace OEM markets. The increase in industrial sales was~~primarily driven by ~~marine~~the commercial OEM and ~~our European markets.~~

aftermarket.

Gross margin as a percentage of sales increased to ~~34.5%~~35.1% for the ~~third~~first quarter of fiscal ~~2018~~2020 compared to ~~33.8%~~34.2% for the same period last year. This increase iswas primarily ~~due~~attributable to product mix ~~and cost efficiencies achieved~~ during the period.

Nine Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

Total net sales $ 135.3 $ 127.3 $ 8.0 6.3 %

Gross margin $ 45.7 $ 40.4 $ 5.3 13.0 %
Gross margin % 33.7 % 31.7 %

SG&A $ 15.7 $ 13.8 $ 1.9 13.7 %
% of segment net sales 11.6 % 10.9 %

~~Net sales~~

Corporate:

	Three Months Ended
	June 29, 2019			June 30, 2018			$ Change		% Change

SG&A	$	16.0		$	14.6		$	1.4		9.5	%
% of total net sales		8.8	%		8.3	%

Corporate SG&A increased ~~$8.0~~$1.4 million, or ~~6.3%,~~9.5% for the ~~nine months ended December 30, 2017~~first quarter of fiscal 2020 compared to the same period last year. Our industrial markets increased 12.1% while our aerospace markets increased 3.5%. The increase in industrial sales was driven by marine and European collets activity. The increase in aerospace sales was mainly due to the commercial and defense OEM markets.

Gross margin as a percentage of sales increased to 33.7% for the nine months ended December 30, 2017 compared to 31.7% for the same period last year. Gross margin for the first nine months of fiscal 2017 was affected by $0.3 million of acquisition related costs. This year over year increase was primarily attributable to volume, product mix and cost efficiencies achieved during the period.

~~Corporate:~~

Three Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

SG&A $ 13.2 $ 12.1 $ 1.1 9.2 %
% of total net sales 7.9 % 8.2 %

Nine Months Ended

December 30,
2017

December 31,
2016
$
Change
%
Change

SG&A $ 38.9 $ 36.2 $ 2.7 7.4 %
% of total net sales 7.9 % 8.0 %

~~Corporate SG&A increased for both the third quarter and first nine months of fiscal 2018 compared to the same periods~~ last year. This was primarily due to an increase of $1.0 million in stock compensation expenses and $1.0 million in personnel related ~~costs.~~

expenses partially offset by $0.6 million of professional fees.

Liquidity and Capital Resources

Our business is ~~capital intensive.~~capital-intensive. Our capital requirements include manufacturing equipment and materials. In addition, we have historically fueled our growth in part through acquisitions. We have historically met our working capital, capital expenditure requirements and acquisition funding needs through our net cash flows provided by operations, various debt arrangements and sale of equity to investors. We believe that operating cash flows and available credit under the ~~Facilities~~Revolver will provide adequate resources to fund internal and external growth initiatives for the foreseeable future.

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.

Liquidity

As of ~~December 30, 2017,~~June 29, 2019, we had cash and cash equivalents of ~~$43.8~~$32.7 million of which approximately ~~$40.5~~$26.0 million was cash held by our foreign operations. We expect that our undistributed foreign earnings will be re-invested indefinitely for working capital, internal growth and acquisitions for and by our foreign entities.

Credit Facility

~~In connection with the Sargent Aerospace & Defense (“Sargent”) acquisition on~~

On April 24, 2015, the Company entered into a ~~new~~ credit agreement (the “Credit Agreement”) and related Guarantee, Pledge Agreement and Security Agreement with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer, and the other lenders party thereto and terminated the Company’s prior credit agreement with JP ~~Morgan Credit Agreement.~~Morgan. The Credit Agreement ~~provides RBCA, as Borrower,~~provided the Company with ~~(a)~~ a $200.0 million term loan (the “Term Loan”) and a $350.0 million revolving credit facility and was to expire on April 24, 2020.

On May 31, 2018, the Company paid off the remaining balance of the Term Loan and ~~(b) a $350.0~~wrote off $1.0 million ~~Revolver and together~~in unamortized debt issuance costs associated with the Term Loan which were recorded within other non-operating expense on the consolidated statements of operations.

On January 31, 2019, the Company amended the Credit Agreement with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer, and the other lenders party thereto. The Credit Agreement as so amended (the ~~“Facilities”~~“Amended Credit Agreement”) now provides the Company with a $250.0 million revolving credit facility (the “Revolver”). The ~~Facilities expire~~Revolver expires on ~~April 24, 2020.~~

January 31, 2024. Debt issuance costs associated with the Amended Credit Agreement totaled $0.9 million and will be amortized through January 31, 2024 along with the unamortized debt issuance costs remaining from the Credit Agreement.

Amounts outstanding under the ~~Facilities~~Revolver generally bear interest at (a) a base rate determined by reference to the higher of (1) Wells Fargo’s prime lending rate, (2) the federal funds effective rate plus 1/2 of 1% and (3) the one-month LIBOR rate plus 1%, or (b) LIBOR ~~rate~~ plus a specified margin, depending on the type of borrowing being made. The applicable margin is based on the ~~Company’s~~Company's consolidated ratio of total net debt to consolidated EBITDA ~~from time to time.~~at each measurement date. Currently, the ~~Company’s~~Company's margin is 0.00% for base rate loans and ~~1.00%~~0.75% for LIBOR ~~rate~~ loans. As of December 30, 2017, there was $21.8 million outstanding under the Revolver and $172.5 million outstanding under the Term Loan, offset by $3.3 million in debt issuance costs (original amount was $7.1 million).

The Amended Credit Agreement requires the Company to comply with various covenants, including among other things, a financial ~~covenants~~covenant to maintain ~~the following: (1)~~ a ratio of consolidated net debt to adjusted EBITDA not ~~to exceed~~greater than 3.50 to ~~1; and (2) a consolidated interest coverage ratio not to be less than 2.75 to~~ 1. The Amended Credit Agreement allows the Company to, among other things, make distributions to shareholders, repurchase its stock, incur other debt or liens, or acquire or dispose of assets provided that the Company complies with certain requirements and limitations of the ~~agreement.~~Amended Credit Agreement. As of ~~December 30, 2017,~~June 29, 2019, the Company was in compliance with all such covenants.

domestic subsidiaries.

Approximately $3.9 million of the Revolver is being utilized to provide letters of credit to secure ~~RBCA’s~~the Company’s obligations relating to certain insurance programs. As of ~~December 30, 2017, RBCA~~June 29, 2019, $1.8 million in unamortized debt issuance costs remain. The Company has the ability to borrow up to an additional ~~$324.3~~$223.9 million under the ~~Revolver.~~

Revolver as of June 29, 2019.

Other Notes Payable

On October 1, 2012, one of our foreign divisions, Schaublin, purchased the land and building, ~~which~~that it occupied and had been leasing for CHF 14.1 million ~~CHF~~ (approximately $14.9 million). Schaublin obtained a ~~20 year fixed rate~~20-year fixed-rate mortgage of CHF 9.3 million ~~CHF~~ (approximately $9.9 million) at an interest rate of 2.9%. The balance of the purchase price of CHF 4.8 million ~~CHF~~ (approximately $5.1 million) was paid from cash on hand. The balance on this mortgage as of ~~December 30, 2017~~June 29, 2019 was ~~6.9~~CHF 6.2 million, ~~CHF,~~ or ~~$7.0~~$6.3 million.

Cash Flows

~~Nine month period~~

Three-Month Period Ended ~~December 30, 2017~~June 29, 2019 Compared to the ~~Nine month period~~Three-Month Period Ended ~~December 31, 2016~~

June 30, 2018

The following table summarizes our cash flow activities:

FY18 FY17 $ Change
Net cash provided by (used in):
Operating activities $ 92.5 $ 74.6 $ 17.9
Investing activities (20.5 ) (14.9 ) (5.6 )
Financing activities (68.6 ) (57.7 ) (10.9 )
Effect of exchange rate changes on cash 1.5 (1.7 ) 3.2
Increase (decrease) in cash and cash equivalents $ 4.9 $ 0.3 $ 4.6

	FY20			FY19			$ Change
Net cash provided by (used in):
Operating activities	$	40.1		$	33.8		$	6.3
Investing activities		(12.0	)		(5.1	)		(6.9	)
Financing activities		(26.4	)		(25.2	)		(1.2	)
Effect of exchange rate changes on cash		1.1			(2.0	)		3.1
Increase in cash and cash equivalents	$	2.8		$	1.5		$	1.3

During fiscal ~~2018,~~2020, we generated cash of ~~$92.5~~$40.1 million from operating activities compared to generating cash of ~~$74.6~~$33.8 million for fiscal ~~2017.~~2019. The increase of ~~$17.9~~$6.3 million for fiscal ~~2018~~2020 was mainly a result of the favorable impact of ~~an increase in net income of $11.5 million, non-cash charges of $4.4 million, and~~ the net change in operating assets and liabilities of ~~$2.0~~$4.6 million and an increase in net income of $3.0 million offset by non-cash charges of $1.3 million. The favorable change in operating assets and liabilities was primarily the result of ~~a decrease~~an increase in the amount of cash being ~~used for~~provided by working capital items as detailed in the table below, while the reduction of non-cash charges ~~were primarily driven by $4.1~~resulted from a decrease of $1.3 million in deferred taxes, $0.2 million of ~~increased impairment charges, $4.9~~amortization of deferred financing costs, $1.0 million from ~~the adoption~~extinguishment of ~~ASU 2016-09, which no longer requires the reclassification~~debt, and $0.1 million of ~~the excess tax impact from stock-based compensation from operating to financing activities,~~amortization of intangible assets offset by an increase in ~~stock compensation of $0.9 million, increased~~ depreciation of ~~$0.6 million, increased amortization of intangibles of $0.1~~$0.3 million and ~~$0.3~~$1.0 million of acquisition expenses present in fiscal 2017 offset by a $4.0 million decrease in deferred taxes driven by the new tax legislation signed during the quarter and a $2.5 million loss on the disposal of fixed assets included in fiscal 2017.

stock-based compensation charges.

The following chart summarizes the favorable change in operating assets and liabilities of ~~$2.0~~$4.6 million for fiscal ~~2018~~2020 versus fiscal ~~2017~~2019 and ~~favorable $2.7~~the unfavorable change of $13.8 million for fiscal ~~2017~~2019 versus fiscal ~~2016.~~

FY18 FY17
Cash provided by (used in):
Accounts receivable $ (3.3 ) $ (6.9 )
Inventory (4.7 ) 14.0
Prepaid expenses and other current assets 0.7 (2.2 )
Other non-current assets (1.0 ) (1.0 )
Accounts payable 7.6 5.0
Accrued expenses and other current liabilities (5.5 ) 1.6
Other non-current liabilities 8.2 (7.8 )
Total change in operating assets and liabilities: $ 2.0 $ 2.7
2018.

	FY20			FY19
Cash provided by (used in):
Accounts receivable	$	0.6		$	2.5
Inventory		(0.2	)		(5.7	)
Prepaid expenses and other current assets		(0.9	)		(1.3	)
Other non-current assets		0.3			(0.9	)
Accounts payable		2.9			(3.9	)
Accrued expenses and other current liabilities		3.5			(6.5	)
Other non-current liabilities		(1.6	)		2.0
Total change in operating assets and liabilities:	$	4.6		$	(13.8	)

During ~~the first nine months of~~ fiscal ~~2018,~~2020, we used ~~$20.5~~$12.0 million for investing activities as compared to ~~$14.9~~$5.1 million for fiscal ~~2017. The~~2019. This increase in cash used was attributable to an increase of ~~$6.1~~$5.0 million in capital expenditures as compared to the first quarter of fiscal 2019 and ~~$0.1~~a reduction of $1.9 million in proceeds received in fiscal 2020 from the sale of ~~assets offset by $0.6 million cash used for an acquisition in~~assets.

During fiscal ~~2017.~~

~~During the first nine months of fiscal 2018,~~2020, we used ~~$68.6~~$26.4 million ~~for~~from financing activities compared to using ~~$57.7~~$25.2 million for fiscal ~~2017.~~2019. This increase in cash used was primarily attributable to $8.0 million of additional treasury stock purchases and $6.2 million fewer proceeds from the ~~payment~~exercise of ~~$62.8~~stock options offset by $13.0 million less payments made on the ~~revolving credit facility~~Term Loan and ~~$10.0 million on the term loan during the first nine months of fiscal 2018 as~~Revolver compared to ~~$61.5 million and $7.5 million respectively during~~ the ~~same period of fiscal 2017.~~

prior year.

Capital Expenditures

Our capital expenditures were ~~$20.5~~$12.0 million for the ~~nine month~~three-month period ended ~~December 30, 2017.~~June 29, 2019. In addition, we expect to make additional capital expenditures of ~~$5.0~~$20.0 to ~~$10.0~~$25.0 million during ~~the remainder of~~ fiscal ~~2018~~2020 in connection with our existing business. We expect to fund fiscal ~~2018~~2020 capital expenditures principally through existing cash and internally generated ~~funds and debt.~~funds. We may also make substantial additional capital expenditures in connection with acquisitions.

~~Obligations and Commitments~~

The contractual obligations presented in the table below represent our estimates of future payments under fixed contractual obligations and commitments. Changes in our business needs, cancellation provisions and interest rates, as well as actions by third parties and other factors, may cause these estimates to change. Because these estimates are necessarily subjective, our actual payments in future periods are likely to vary from those presented in the table. The following table summarizes certain of our contractual obligations and principal and interest payments under our debt instruments and leases as of December 30, 2017:

Payments Due By Period
Contractual Obligations⁽¹⁾
Total Less than
1 Year 1 to
3 Years 3 to
5 Years More than
5 Years
(in thousands)
Total debt $ 201,277 $ 17,976 $ 177,703 $ 953 $ 4,645
Operating leases 22,982 6,251 7,928 4,788 4,015
Interest on debt⁽²⁾ 12,644 5,037 6,635 300 672
Pension and postretirement benefits 18,944 1,829 3,818 3,869 9,428
Transition tax on unremitted foreign E&P⁽³⁾ 9,491 759 2,278 2,183 4,271
Total contractual cash obligations $ 265,338 $ 31,852 $ 198,362 $ 12,093 $ 23,031

~~(1)~~

We cannot make a reasonably reliable estimate of when the unrecognized tax liability of $12.2 million, which includes interest and penalties, and is offset by deferred tax assets, will be paid to the respective taxing authorities. These obligations are therefore excluded from the above table.

~~(2)~~

~~These amounts represent expected cash payments of interest on our variable rate long-term debt under our Facilities at the prevailing interest rates at December 30, 2017.~~

~~(3)~~

As discussed further in Note 7 to the consolidated financial statements, the Tax Cuts and Jobs Acts (“TCJA”), which was enacted in December 2017, includes a transition tax on unremitted foreign earnings and profits (“E&P”). We will elect to pay the estimated amount above over an eight year period.

Other Matters

Critical Accounting Policies and Estimates

~~Revenue Recognition.~~~~See page 7 in Notes to Unaudited Interim Consolidated Financial Statements.~~

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We believe the most complex and sensitive judgments, because of their significance to the Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Notes to the Consolidated Financial Statements in our fiscal ~~2017~~2019 Annual Report, incorporated by reference in our fiscal ~~2017~~2019 Form 10-K, describe the significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. There have been no significant changes in our critical accounting estimates during the first ~~nine~~three months of fiscal ~~2018.~~

2020 other than those described within Note 2 of the unaudited interim consolidated financial statements.

Off-Balance Sheet Arrangements

~~We have~~

As of June 29, 2019, we had no significant off-balance sheet ~~arrangements.~~

arrangements other than $3.9 million of outstanding standby letters of credit, all of which were under the Revolver.

ITEM 3. Quantitative and Qualitative Disclosures 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 currently have variable rate debt outstanding under the credit agreement. We regularly evaluate the impact of interest rate changes on our net income and cash flow and take action to limit our exposure when appropriate.

Foreign Currency Exchange Rates.

Our Swiss operations utilize the Swiss franc as the functional currency, our French and German operations utilize the euro as the functional currency and our Polish operations utilize the Polish zloty as the functional currency. As a result, ~~of our operations in Europe,~~ we are exposed to risk associated with fluctuating currency exchange rates between the U.S. dollar ~~the Euro, the Swiss Franc, the Polish Zloty~~ and the Canadian Dollar. Our Swiss operations utilize the Swiss Franc as the functional currency, our French and German operations utilize the Euro as the functional currency, our Polish operations utilize the Polish Zloty as the functional currency and our Canadian operations utilize the Canadian Dollar as the functional currency.these currencies. Foreign currency transaction gains and losses are included in earnings. Approximately ~~11%~~8% of our net sales were impacted by foreign currency fluctuations infor the first ~~nine~~three months of ~~both~~ fiscal ~~2018~~2020 compared to approximately ~~10%~~9% of our net sales for the same period in fiscal ~~2017.~~2019. 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’~~operations’ 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 periodically enter into derivative financial instruments in the form of forward exchange contracts to reduce the effect of fluctuations in exchange rates on certain third-party sales transactions denominated in non-functional currencies. Based on the accounting guidance related to derivatives and hedging activities, we record derivative financial instruments at fair value. For derivative financial instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income, ~~(“AOCI”),~~ and is reclassified into earnings when the hedged transaction affects earnings. As of ~~December 30, 2017,~~June 29, 2019, we had no derivatives.

ITEM 4. Controls and Procedures

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 ~~December 30, 2017.~~June 29, 2019. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~December 30, 2017,~~June 29, 2019, 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.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the ~~nine month~~three-month period ended ~~December 30, 2017~~June 29, 2019 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).

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

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, including those discussed below, 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.

ITEM 1A. Risk Factors

There have been no material changes to our risk factors and uncertainties during the ~~three month~~three-month period ended ~~December 30, 2017.~~June 29, 2019. For a discussion of the Risk Factors, refer to Part I, Item 2, “Cautionary Statement As To Forward-Looking Information,” contained in this report and Part I, Item 1A, “Risk Factors,” contained in the Company’s Annual Report on Form 10-K for the period ended ~~April 1, 2017.~~

March 30, 2019.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds

Not applicable.

Issuer Purchases of Equity Securities

On ~~February 7, 2013, our board of directors~~May 21, 2019, the Board authorized us to repurchase up to ~~$50.0~~$100.0 million of our common stock from time to time on the open market, in block trade transactions, and through privately negotiated transactions, in compliance with ~~Securities and Exchange Commission~~SEC Rule 10b-18 depending on market conditions, alternative uses of capital, and other relevant factors. Purchases may be commenced, suspended, or discontinued at any time without prior notice.

This repurchase authorization terminates and replaces the $50.0 million stock repurchase program authorized by the Board in 2013.

Total share repurchases under the 2019 plan for the three months ended ~~December 30, 2017~~June 29, 2019 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)

10/1/2017 – 10/28/2017 3,385 $ 125.69 3,385 $ 22,053
10/29/2017 – 11/25/2017 — — — 22,053
11/26/2017 – 12/30/2017 8,748 131.60 8,748 $ 20,901
Total 12,133 $ 129.95 12,133

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)
03/31/2019 – 04/27/2019		—	$	—		—	$	100,000
04/28/2019 – 05/25/2019		—		—		—		100,000
05/26/2019 – 06/29/2019		18,649		154.45		18,649	$	97,120
Total		18,649	$	154.45		18,649

Total share repurchases under the 2013 plan prior to its termination on May 21, 2019 for the three months ended June 29, 2019 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)
03/31/2019 – 04/27/2019		50,421	$	129.28		50,421	$	9,092
04/28/2019 – 05/25/2019		807		142.11		807		—
05/26/2019 – 06/29/2019		—		—		—	$	—
Total		51,228	$	129.48		51,228

~~ITEM 3.~~

~~Defaults Upon Senior Securities~~

ITEM 3. Defaults Upon Senior Securities

Not applicable.

~~ITEM 4.~~

~~Mine Safety Disclosures~~

ITEM 4. Mine Safety Disclosures

Not applicable.

~~ITEM 5.~~

~~Other Information~~

ITEM 5. Other Information

Not applicable.

ITEM 6. Exhibits

~~ITEM 6.~~

~~Exhibits~~

Exhibit Number		Exhibit Description
10.01		Amendment No. 1 dated as of January 31, 2019 among Roller Bearing Company of America, Inc. as Borrower, RBC Bearings Incorporated and the other parties and lenders thereto amending the Credit Agreement dated as of April 24, 2015.
31.01		Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
31.02		Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
32.01		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
32.02		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension ~~Schema~~Calculation Linkbase Document.
~~101.CAL~~101.DEF		XBRL Taxonomy Extension ~~Calculation~~Definition Linkbase Document.
~~101.DEF~~101.LAB		XBRL Taxonomy Extension ~~Definition~~Label Linkbase Document.
~~101.LAB~~101.PRE		XBRL Taxonomy Extension ~~Label~~Presentation Linkbase Document.

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document.~~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.

* 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/ Michael J. Hartnett
	Name:	Michael J. Hartnett
	Title:	Chief Executive Officer
	Date:	August 1, 2019

By:	~~/s/ Michael J. Hartnett~~
	~~Name:~~	~~Michael J. Hartnett~~
	~~Title:~~	~~Chief Executive Officer~~
	~~Date:~~	~~February 6, 2018~~

~~By:~~	/s/ Daniel A. Bergeron
	Name:	Daniel A. Bergeron
	Title:	Chief Financial Officer and Chief ~~Operations~~Operating Officer
	Date:	~~February 6, 2018~~August 1, 2019

EXHIBIT INDEX

Exhibit Number		Exhibit Description
~~31.01~~10.01		Amendment No. 1 dated as of January 31, 2019 among Roller Bearing Company of America, Inc. as Borrower, RBC Bearings Incorporated and the other parties and lenders thereto amending the Credit Agreement dated as of April 24, 2015.
31.01		Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
31.02		Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
32.01		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
32.02		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension ~~Schema~~Calculation Linkbase Document.
~~101.CAL~~101.DEF		XBRL Taxonomy Extension ~~Calculation~~Definition Linkbase Document.
~~101.DEF~~101.LAB		XBRL Taxonomy Extension ~~Definition~~Label Linkbase Document.
~~101.LAB~~101.PRE		XBRL Taxonomy Extension ~~Label~~Presentation Linkbase Document.

~~101.PRE~~

Part I -	FINANCIAL INFORMATION	31

ITEM 1.	Consolidated Financial Statements	31
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1618
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3128
ITEM 4.	Controls and Procedures	3228
	Changes in Internal Control over Financial Reporting	3228

Part II -	OTHER INFORMATION	3229

ITEM 1.	Legal Proceedings	3229
ITEM 1A.	Risk Factors	3229
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3229
ITEM 3.	Defaults Upon Senior Securities	3330
ITEM 4.	Mine Safety Disclosures	3330
ITEM 5.	Other Information	3330
ITEM 6.	Exhibits	3431

	December 30, 2017		April 1, 2017

ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	43,822	$	38,923
Accounts receivable, net of allowance for doubtful accounts of $1,476 at December 30, 2017 and $1,213 at April 1, 2017		109,923		109,700
Inventory		303,013		289,594
Prepaid expenses and other current assets		13,304		9,743
Total current assets		470,062		447,960
Property, plant and equipment, net		190,313		183,625
Goodwill		268,123		268,042
Intangible assets, net of accumulated amortization of $36,606 at December 30, 2017 and $30,191 at April 1, 2017		185,923		196,801
Other assets		14,729		12,419
Total assets	$	1,129,150	$	1,108,847

	Three Months Ended					Nine Months Ended
	December 30, 2017		December 31, 2016			December 30, 2017		December 31, 2016
Net sales	$	166,858	$	146,656		$	495,072	$	455,178
Cost of sales		102,193		94,271			306,687		288,811
Gross margin		64,665		52,385			188,385		166,367
Operating expenses:
Selling, general and administrative		28,162		25,712			83,535		76,696
Other, net		3,380		6,144			14,649		10,367
Total operating expenses		31,542		31,856			98,184		87,063
Operating income		33,123		20,529			90,201		79,304
Interest expense, net		1,761		2,111			5,704		6,659
Other non-operating expense		26		(216	)		462		51
Income before income taxes		31,336		18,634			84,035		72,594
Provision for income taxes		7,504		5,864			23,571		23,556
Net income	$	23,832	$	12,770		$	60,464	$	49,038
Net income per common share:
Basic	$	0.99	$	0.54		$	2.53	$	2.09
Diluted	$	0.97	$	0.54		$	2.49	$	2.07
Weighted average common shares:
Basic		23,985,925		23,581,921			23,912,474		23,457,717
Diluted		24,446,115		23,813,780			24,322,165		23,719,121

	Three Months Ended					Nine Months Ended
	December 30, 2017		December 31, 2016			December 30, 2017		December 31, 2016
Net income	$	23,832	$	12,770		$	60,464	$	49,038
Pension and postretirement liability adjustments, net of taxes		196		234			588		701
Foreign currency translation adjustments		470		(3,954	)		4,890		(5,759	)
Total comprehensive income	$	24,498	$	9,050		$	65,942	$	43,980

	Nine Months Ended
	December 30, 2017			December 31, 2016
Cash flows from operating activities:
Net income	$	60,464		$	49,038
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		14,155			13,557
Excess tax benefits from stock-based compensation		—			(4,870	)
Deferred income taxes		(321	)		3,717
Amortization of intangible assets		7,041			6,921
Amortization of deferred financing costs		1,068			1,068
Stock-based compensation		9,897			8,914
(Gain) loss on disposal of fixed assets		(1	)		2,457
Gain on acquisition		—			(293	)
Impairment charges		5,577			1,443
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		701			3,954
Inventory		(12,035	)		(7,293	)
Prepaid expenses and other current assets		(4,555	)		(5,238	)
Other non-current assets		(3,308	)		(2,282	)
Accounts payable		9,040			1,466
Accrued expenses and other current liabilities		(3,340	)		2,123
Other non-current liabilities		8,113			(107	)
Net cash provided by operating activities		92,496			74,575

Cash flows from investing activities:
Purchase of property, plant and equipment		(20,542	)		(14,415	)
Proceeds from sale of assets		33			107
Business acquisition		—			(651	)
Net cash used in investing activities		(20,509	)		(14,959	)

Cash flows from financing activities:
Repayments of revolving credit facility		(62,750	)		(61,500	)
Repayments of term loans		(10,000	)		(7,500	)
Payments of notes payable		(359	)		(353	)
Exercise of stock options		9,450			11,567
Excess tax benefits from stock-based compensation		—			4,870
Repurchase of common stock		(4,933	)		(4,750	)
Net cash used in financing activities		(68,592	)		(57,666	)

Effect of exchange rate changes on cash		1,504			(1,686	)

Cash and cash equivalents:
Increase during the period		4,899			264
Cash, at beginning of period		38,923			39,208
Cash, at end of period	$	43,822		$	39,472

			December 30, 2017				April 1, 2017
	Weighted Average Useful Lives		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Product approvals		24	$	50,878	$	7,823	$	53,869	$	6,465
Customer relationships and lists		24		106,583		15,426		107,864		12,308
Trade names		10		18,734		6,300		19,923		5,137
Distributor agreements		5		722		722		722		722
Patents and trademarks		16		9,610		4,661		8,803		4,130
Domain names		10		437		419		437		386
Other		6		1,365		1,255		1,174		1,043
				188,329		36,606		192,792		30,191
Non-amortizable repair station certifications		n/a		34,200		—		34,200		—
Total			$	222,529	$	36,606	$	226,992	$	30,191

2018	$	2,435
2019		8,855
2020		8,747
2021		8,696
2022		8,579
2023		8,496
2024 and thereafter		105,915

	December 30, 2017			April 1, 2017
Revolver and term loan facilities	$	194,250		$	267,000
Debt issuance costs		(3,324	)		(4,392	)
Other		7,027			7,192
Total debt		197,953			269,800
Less: current portion		17,976			14,214
Long-term debt	$	179,977		$	255,586

	FY18			FY17			$ Change
Net cash provided by (used in):
Operating activities	$	92.5		$	74.6		$	17.9
Investing activities		(20.5	)		(14.9	)		(5.6	)
Financing activities		(68.6	)		(57.7	)		(10.9	)
Effect of exchange rate changes on cash		1.5			(1.7	)		3.2
Increase (decrease) in cash and cash equivalents	$	4.9		$	0.3		$	4.6

	Payments Due By Period
Contractual Obligations⁽¹⁾	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
	(in thousands)
Total debt	$	201,277	$	17,976	$	177,703	$	953	$	4,645
Operating leases		22,982		6,251		7,928		4,788		4,015
Interest on debt⁽²⁾		12,644		5,037		6,635		300		672
Pension and postretirement benefits		18,944		1,829		3,818		3,869		9,428
Transition tax on unremitted foreign E&P⁽³⁾		9,491		759		2,278		2,183		4,271
Total contractual cash obligations	$	265,338	$	31,852	$	198,362	$	12,093	$	23,031