<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 26, 1998
-----------------
( ) 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: 333-33085
---------
ROLLER BEARING COMPANY OF AMERICA, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3426227
- ------------------------------- -----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Indentification Number)
60 ROUND HILL ROAD, FAIRFIELD, CT
----------------------------------------
(Address of principal executive offices)
203-255-1511
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark 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
preceding twelve (12) months (or for shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at February 4, 1999
---------------------------- -------------------------------
Common stock, $.01 par value 100
<PAGE>
ROLLER BEARING COMPANY OF AMERICA, INC.
INDEX
PAGE
Part I Financial Information
Item 1. Consolidated Balance Sheets -
At December 26, 1998 (unaudited) and March 28, 1998 3
Consolidated Statements of Operations - Three and
Nine months ended December 26, 1998 (unaudited) and
December 27, 1997 (unaudited) 4
Consolidated Statements of Cash
Flows - Three and Nine months ended December 26, 1998
(unaudited) and December 27, 1997 (unaudited) 5
Notes to Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
Part II Other Information 13
Signatures 14
Exhibit 27 15
2
<PAGE>
PART I
ITEM 1. FINANCIAL INFORMATION
ROLLER BEARING COMPANY OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 26, MARCH 28,
1998 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,726 $ 10,625
Accounts receivable, net 22,966 26,859
Inventories 46,973 38,563
Prepaid expenses and other current assets 2,068 1,996
------------ ------------
Total current assets 74,733 78,043
------------ ------------
Property, plant and equipment, net of accumulated
depreciation of $32,019 at December, 1998 and
$25,815 at March, 1998 49,429 45,237
Restricted marketable securities 6,012 4,005
Goodwill, net of accumulated amortization of $4,022
at December 1998, and $3,420 at March 1998 27,753 19,334
Deferred financing costs, net of accumulated
amortization of $1,502 at December 1998,
and $766 at March 1998 6,578 7,147
Other assets 3,009 2,639
------------ ------------
Total assets $ 167,514 $ 156,405
============ ============
LIABILITIES AND STOCKHOLDER'S (DEFICIT) EQUITY
Current liabilities:
Accounts payable $ 11,308 $ 12,925
Accrued expenses and other current liabilities 13,319 14,827
Current portion of long-term debt 2,000 1,490
Obligations under capital leases, current portion 1,468 1,585
------------ ------------
Total current liabilities 28,095 30,827
Long term debt 146,825 134,710
Capital lease obligations, less current portion 1,598 2,115
Other noncurrent liabilities 3,675 3,675
------------ ------------
Total liabilities 180,193 171,327
------------ ------------
Stockholder's (deficit) equity:
Common stock - $.01 par value; 1,000 shares authorized;
issued and outstanding: 100 shares at December 1998,
and at March 1998 - -
Additional paid-in capital (759) (759)
Stock Warrants 6,600 6,600
Retained earnings (deficit) (18,520) (20,763)
------------ ------------
Total stockholder's (deficit) equity (12,679) (14,922)
Total liabilities and stockholder's (deficit) equity $ 167,514 $ 156,405
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
ROLLER BEARING COMPANY OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- ---------------------------
DECEMBER 26, DECEMBER 27, DECEMBER 26, DECEMBER 27,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 34,063 $ 34,282 $ 107,544 $ 95,253
Cost of sales 23,804 24,698 75,744 67,839
------------ ------------ ------------ ------------
Gross Margin 10,259 9,584 31,800 27,414
Operating expenses:
Selling, general and administrative 5,714 4,821 16,627 13,482
Other expense, net of other income 177 326 514 1,348
------------ ------------ ------------ ------------
5,891 5,147 17,141 14,830
Operating income 4,368 4,437 14,659 12,584
Interest expense, net 3,663 3,448 10,854 8,342
------------ ------------ ------------ ------------
Income before taxes and extraordinary charge 705 989 3,805 4,242
Income tax expense 289 405 1,560 1,739
------------ ------------ ------------ ------------
Income before extraordinary charge 416 584 2,245 2,503
Extraordinary charge, net - - - 625
------------ ------------ ------------ ------------
Net income $ 416 $ 584 $ 2,245 $ 1,878
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
ROLLER BEARING COMPANY OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 26, DECEMBER 27,
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,245 $ 1,877
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 6,210 5,277
Deferred income taxes (428) 329
Amortization of goodwill 601 433
Amortization of deferred financing costs 736 548
Extraordinary charge - 625
Changes in working capital, net of acquisition:
(Increase) decrease in accounts receivable 4,835 (644)
(Increase) decrease in inventories (7,146) (3,550)
(Increase) decrease in prepaid expenses & other
current assets (69) (604)
(Increase) decrease in other non current assets (188) -
Increase (decrease) in accounts payable (2,243) (199)
Increase (decrease) in accrued expenses & other
current liabilities (3,177) 1,377
Increase (decrease) in other non-current liabilities (159) -
------------ ------------
Net cash provided (used) by operating activities 1,217 5,469
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of subsidiaries (11,088) (3,846)
Purchase of property, plant & equipment, net (7,806) (5,009)
Sale of restricted marketable securities (3,000) -
Purchase of restricted marketable securities 993 (93)
------------ ------------
Net cash used in investing activities (20,901) (8,948)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in revolving credit facility 10,500 (24,627)
Issuance of Industrial Revenue Bonds 3,000 -
Payments of bank term loan (875) (250)
Principal payments on capital lease obligations (840) (986)
Proceeds from long-term debt - 126,000
Payments of long-term debt - (27,488)
Dividend paid to parent company - (56,219)
Financing fees paid in connection with the Recapitalization - (8,164)
------------ ------------
Net cash provided by financing activities 11,785 8,266
Net increase (decrease) in cash (7,899) 4,787
Cash, at beginning of year 10,625 859
------------ ------------
Cash, at end of period $ 2,726 $ 5,646
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 12,691 $ 7,445
============ ============
Income taxes $ 1,211 $ 1,011
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
ROLLER BEARING COMPANY OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The consolidated financial statements included herein have been prepared by
Roller Bearing Company of America, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. The fiscal year end balance sheet data was derived from the
Company's audited financial statements, but does not include all disclosures
required by generally accepted accounting principles. The interim financial
statements furnished with this report have been prepared on a consistent
basis with the Company's audited financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year
ended March 28, 1998 (the "Form 10-K"). These statements reflect all
adjustments, consisting only of items of a normal recurring nature, which
are, in the opinion of management, necessary for the fair statement 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 Form 10-K.
The results of operations for the three and nine month periods ended December
26, 1998 are not necessarily indicative of the operating results for the full
year.
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, Industrial Tectonics Bearings Corporation
("ITB"), RBC Linear Precision Products ("LPP"), RBC Nice Bearings, Inc.
("Nice"), Bremen Bearings, Inc. ("Bremen"), Miller Bearings, Inc. ("Miller")
and Roller Bearing Company FSC, Inc. ("FSC"). All material intercompany
balances and transactions have been eliminated.
All references to "Holdings" refer to Roller Bearing Holding Company, Inc., a
Delaware corporation, and the parent and sole stockholder of the Company.
1. ACQUISITION OF WHOLLY OWNED SUBSIDIARIES
On August 8, 1997, Bremen completed the acquisition of the assets of Bremen
Bearings Division of SKF USA, Inc., a manufacturer of needle bearings with
facilities in Bremen, Indiana. The aggregate purchase price for the
acquisition, which was effective as of July 1, 1997, was approximately $3,640
and was accounted for under the purchase method of accounting. A deferred
payment of $546, which was paid in December 1997 for the installation of
certain equipment, has been classified as the purchase of property, plant and
equipment. Additionally, a deferred payment of $749 was made in August 1998
for inventory acquired at closing. The purchase price has been allocated to
the assets acquired and liabilities assumed based upon their respective
estimated fair values.
On June 3, 1998, Miller completed the acquisition of the assets of Miller
Bearing Company, Inc. ("MBC"), a manufacturer of pins, rollers and screw
machine products with facilities in Bremen, Indiana. The aggregate purchase
price for the acquisition, which was effective as of March 1, 1998, was
approximately $11,088. The acquisition was accounted for under the purchase
method of accounting, resulting in approximately $2,138 allocable to tangible
assets and $8,949 of excess of purchase price over net assets acquired
allocable to goodwill.
The results of operations of Bremen and Miller subsequent to the respective
effective dates of acquisition are included in the results of operations of
the Company. Therefore, the results of the Company for the
6
<PAGE>
nine months ended December 26, 1998 include Bremen and Miller results for the
entire nine-month period. Pro forma consolidated results of operations of the
Company, based upon pre-acquisition unaudited historical information provided
by the sellers of Bremen and Miller, for the nine months ended December 27,
1997, as if the acquisition took place at the beginning of this period, are
as follows:
NINE MONTHS ENDED DECEMBER 27, 1997
-----------------------------------------
AS REPORTED BREMEN & MILLER PRO FORMA
----------- --------------- ---------
Net Sales $ 95,253 $ 10,572 $105,825
Income before Extraordinary Charge $ 2,503 $ 1,183 $ 3,686
Net Income $ 1,878 $ 1,183 $ 3,061
2. DEBT
On June 23, 1997, pursuant to a Redemption and Warrant Purchase Agreement
dated May 20, 1997, Holdings effected a recapitalization of its outstanding
capital stock (including the financing and other transactions consummated by
Holdings, the Company and its subsidiaries in connection therewith, the
"Recapitalization"). In connection with the financing of the
Recapitalization, the Company issued $110,000 aggregate principal amount of 9
5/8% Senior Subordinated Notes due 2007 (the "Notes"). The Notes pay interest
semiannually and mature on June 15, 2007, but may be redeemed at the
Company's option beginning on June 15, 2002, or earlier under certain
conditions specified in the indenture pursuant to which the Notes were issued
(the "Indenture"). The Notes are unsecured and subordinated to all existing
and future Senior Indebtedness (as defined in the Indenture) of the Company.
The Notes are fully and unconditionally and irrevocably guaranteed, jointly
and severally, on a senior subordinated basis by each of the wholly owned
subsidiaries of the Company.
The separate financial statements of the subsidiary guarantors have not been
presented because management has determined that they would not be material
to investors. However the summarized combined financial information of the
subsidiary guarantors are as follows:
AS OF
-----------------------------
DECEMBER 26, MARCH 28,
1998 1998
------------ ------------
Balance Sheet Data:
Current assets $ 26,067 $ 22,985
Noncurrent assets 32,420 21,061
------------ ------------
Total assets $ 58,487 $ 44,046
------------ ------------
Current liabilities $ 46,005 $ 36,647
Noncurrent liabilities 1,238 694
------------ ------------
Total liabilities $ 47,312 $ 37,341
------------ ------------
Stockholder's equity $ 11,244 $ 6,705
NINE MONTHS ENDED
-----------------------------
DECEMBER 26, DECEMBER 27,
1997 1998
------------ ------------
Operating Results
Net sales $ 45,814 $ 23,889
Gross margin $ 10,405 $ 5,991
Net income $ 3,477 $ 2,161
7
<PAGE>
Total current liabilities include intercompany liabilities of $34,122 and
$25, 936 as of December 26, 1998 and March 28, 1998, respectively. Net income
includes a charge for corporate overhead allocated from the Company of $780
in both fiscal years 1999 and 1998, and a provision for income taxes of
$2,416 and $2,366 in fiscal years 1999 and 1998, respectively.
In addition, in connection with the Recapitalization, the Company entered
into bank credit facilities (the "Senior Credit Facilities") with a group of
lenders providing for $16,000 of term loans (the "Term Loans") and up to
$54,000 of revolving credit loans and letters of credit (the "Revolving
Credit Facility"). Approximately $13,900 of the Revolving Credit Facility is
being utilized to provide letters of credit to secure the Company's
obligations relating to certain Industrial Development Revenue Bonds. As of
December 26, 1998 the Company had the ability to borrow up to an additional
$29,600 under the Revolving Credit Facility.
The balances payable under all borrowing facilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 26, MARCH 28,
1998 1998
------------ ------------
<S> <C> <C>
SENIOR SUBORDINATED NOTES PAYABLE $ 110,000 $ 110,000
CREDIT FACILITY
Term Loan, payable in quarterly installments of $250, commencing December 30,
1997, increasing annually thereafter to $1,375 from December 20, 2001 with final
payment due June 30, 2002; bears interest at variable rates, Payable monthly and
quarterly for prime and LIBOR-based elections, respectively 14,625 15,500
Revolving Credit Facility borrowings outstanding 10,500 -
INDUSTRIAL DEVELOPMENT REVENUE BONDS
Series 1994 A due in annual installments of $180 beginning December 1, 2006,
graduating to $815 on December 1, 2014 with final payment due on December 1,
2017; bears interest at a variable rate, payable monthly through December 2017 7,700 7,700
Series 1994 B bears interest at a variable rate, payable monthly through
December 2017 3,000 3,000
Series 1998 tax-exempt industrial development bonds; bears interest at variable
rates, payable monthly through December 2021 3,000 -
------------ ------------
Total debt 148,825 136,200
Less: current portion 2,000 1,490
------------ ------------
Long term debt $ 146,625 $ 134,710
============ ============
</TABLE>
The debt agreements require that the Company meet certain financial
covenants, principally limiting the incurrence of additional indebtedness,
the payment of dividends, and certain other transactions.
8
<PAGE>
3. EXTRAORDINARY CHARGE
The extraordinary charge for the nine months ended December 27, 1997 resulted
from the write off of unamortized deferred financing costs due to the
Company's early extinguishment of debt in connection with the
Recapitalization described above. The extraordinary charge was $1,059 and is
reflected net of the related tax benefit of $434.
4. RECENTLY ISSUED PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, which is
required to be adopted in years beginning after June 15, 1999. Because of the
Company's minimal exposure to derivatives, management does not anticipate
that the adoption of the new statement will have a significant effect on
earnings or the financial position of the Company.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
Except for the historical information and current statements contained in
this Quarterly Report on Form 10-Q, certain matters discussed herein,
including, without limitation, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" are forward looking statements
that involve risks and uncertainties, including, without limitation, the
effect of economic and market conditions and competition, the cyclical nature
of the Company's target markets, particularly, the aerospace industry, the
cost of raw materials and the Company's ability to pass cost increases to its
customers, the ability of the Company to expand into new markets, the ability
of the Company to integrate acquisitions and other factors discussed from
time to time in the reports filed by the Company with the Securities and
Exchange Commission, which could cause actual results to differ materially.
The following discussion addresses the financial condition of the Company as
of December 26, 1998 and the results of its operations for the three and nine
month periods ended December 26, 1998, compared to the comparable periods
last year. The discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations for
the fiscal year ended March 28, 1998 included in the Form 10-K.
THREE MONTHS ENDED DECEMBER 26, 1998 COMPARED TO THREE MONTHS ENDED
DECEMBER 27, 1997
Net sales for the three months ended December 26, 1998 were $34,063, a
decrease of $219 or 0.6% over the three months ended December 27, 1997. Net
sales included sales totaling $1,987 from Miller, acquired effective March
1998. Net sales decreased $2,206 or 6.4% without Miller sales. The decrease
in net sales is primarily attributed to a major customer falling behind on
contractually committed orders, the elimination of certain unprofitable
product lines and delays in component shipment from suppliers.
Gross margin increased by $675 or 5.7% to $10,259 for the three months ended
December 26, 1998, as compared to the comparable period last year. Gross
margin as a percentage of net sales increased 2.1%, from 28.0% for the third
quarter of fiscal 1998, to 30.1% in the third quarter of fiscal 1999. These
increases are primarily a result of strategic pricing, better operational
performance through Kaizen management techniques, profitable new products,
and machine tool capital enhancements.
Selling, general and administrative (SG&A) expenses increased by $893 or
18.5% to $5,714 for the three month period ended December 26, 1998 as
compared to the comparable period last year. The increase was primarily due
to increased fixed infrastructure costs necessary to support the expanded
business as well as the additional expenses related to Miller. SG&A as a
percentage of net sales increased from 14.1% for the third quarter of fiscal
1998 to 16.8% for the third quarter of fiscal 1999. The increase of 2.7% is
primarily due to the above and the lower sales base. Other operating expenses
decreased by $149.
Operating income decreased by $69 or 1.6% to $4,368 for the three months
ended December 26, 1998 as compared to $4,437 for the corresponding period in
the prior year. The decrease primarily resulted from higher operating
expenses more than offsetting the higher gross margin.
Income before taxes and extraordinary charges decreased for the three month
period ended December 26, 1998 to $705 from $989 for the same period last
year, as a result of lower operating income, somewhat higher interest expense
resulting from a higher debt level compared to the same period last year.
10
<PAGE>
Net income for the current quarter reflects a tax provision of $289 compared
to $405 for the third quarter of fiscal 1998, reflecting an effective
combined Federal and state tax rate of 41% in both periods. Net income
decreased by $168 to $416 from $584 for the corresponding period last year.
NINE MONTHS ENDED DECEMBER 26, 1998 COMPARED TO NINE MONTHS ENDED
DECEMBER 27, 1997
Net sales for the nine months ended December 26, 1998 were $107,544 an
increase of $12,219 or 12.9% over the nine months ended December 27, 1997.
The increase includes sales totaling $16,464 in fiscal 1999 from Bremen and
Miller, acquired effective July 1997 and March 1998 respectively. Net sales
increased $3,184 or 3.3% without Bremen and Miller sales. The nine-month
period ended December 26, 1998 sales includes $7,429 in Bremen sales. The
primary reason for this increase was due to the introduction of profitable
new products and strong performance in the construction and defense parts of
our business.
Gross margin increased by $4,386 or 16.0% to $31,800 for the nine months
ended December 26, 1998 as compared to the comparable period last year, as a
result of strategic pricing, better operational performance through Kaizen
management techniques, and machine tool capital enhancements. Gross margin as
a percentage of net sales increased from 28.8% for the first nine months of
fiscal 1998 to 29.6% for the first nine months of fiscal 1999.
Selling, general and administrative (SG&A) expenses increased by $3,145 or
23.3% to $16,627 for the nine month period ended December 26, 1998 compared
to the comparable period last year. The increase is primarily due to
increased fixed infrastructure costs necessary to support the expanded
business as well as the additional expenses related to the two acquired
companies. SG&A as a percentage of net sales increased from 14.2% for the
first nine months of fiscal 1998, to 15.5% for the first nine months of
fiscal 1999. The 1.3% increase is primarily due to the factors described
above. Other operating expenses decreased by $834 primarily due to charges
relating to the Recapitalization ($563) and other charges net of other income
($271) in fiscal 1998.
Operating income increased by $2,075 or 16.5% to $14,659 for the nine months
ended December 26, 1998 as compared to $12,584 for the corresponding period
in the prior year. The increase primarily resulted from higher gross margin
from higher sales volume, partially offset by higher SG&A and other operating
expenses.
Income before taxes and extraordinary charges decreased for the nine month
period ended December 26, 1998 to $3,805 from $4,242 for the comparable
period last year, as a result of higher operating income less higher interest
expense resulting from the debt incurred in connection with acquisition
financing and the Recapitalization.
Net income for the nine months ended December 26, 1998 reflects a tax
provision of $1,560 compared to $1,739 for the first nine months of fiscal
1998, reflecting an effective combined Federal and state tax rate of 41% in
both periods. Income before extraordinary charges decreased by $258 to $2,245
from $2,503 for the corresponding period last year. However, net income
increased to $2,245 from $1,878 in fiscal 1999, due to an extraordinary charge
relating to the early extinguishment of debt of $1,059 less related tax
benefit of $434 ($625 net) relating to fiscal year 1998. The early
extinguishment of debt related to the Recapitalization.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 26, 1998 was $46,710 compared to $47,216 at March
28, 1998, a decrease of $506. For the nine months ended December 26, 1998,
the Company provided cash of $1,217 from operating activities compared to
$5,469 for the comparable period last year. The decrease is primarily
11
<PAGE>
related to inventory build necessary to support fourth quarter shipments and
the inventory impact of a major customer falling behind on contractually
committed orders, and a drop in liabilities primarily related to interest
payments made in the third quarter of Fiscal 1999.
Cash used for investing activities for the nine months ended December 26,
1998 was $20,901 which included $11,088 for the acquisition of Miller, with
the remainder relating to capital expenditures of $7,806. Proceeds of $3,000
from the issuance of industrial revenue bonds are being held in a trust
account, and $993 from such trust account was remitted to the Company in
connection with qualifying equipment purchases.
The Company had net cash inflows from financing activities of $11,785
partially resulting from a draw down on its revolving credit facility of
$10,500. Additionally, in December 1998, the Company issued $3,000 in secured
industrial revenue bonds which are due in 2021, and which will be used for
construction or purchase of building improvements, fixtures, machinery and
equipment in connection with a manufacturing facility of the Company. During
the nine month period ended December 26, 1998, the Company used $840 of funds
for capital lease obligations and made payments of $875 on its Term Loans.
Principal and interest payments under the Senior Credit Facilities, interest
payments on the Notes, and the funding of acquisitions represent significant
liquidity requirements for the Company. With respect to the Term Loans, the
Company is required to make scheduled principal payments which commenced in
December 1997. The Term Loans bear interest at a floating rate based upon the
interest rate option elected by the Company. As a result of the indebtedness
incurred in connection with the Recapitalization, the Company's
post-Recapitalization interest expense will be higher and will have a greater
proportionate impact on net income in comparison to pre-Recapitalization
periods.
The Company believes that cash flows from operations and amounts available
under the Revolving Credit Facility will provide adequate funds for ongoing
operations, planned capital expenditures (including acquisitions) and debt
service payments for at least the next twelve months. The Company's ability
to borrow is limited by the terms of the Senior Credit Facilities and the
Indenture under which the Notes were issued.
YEAR 2000
The Company has made a comprehensive assessment of its computer operations,
including trading partner compliance and embedded chips, to identify systems
that could be affected by the change in the millennium. The Company has
developed a detailed Year 2000 compliance plan, which was substantially
completed by December, 1998, and is utilizing both internal and external
resources to ensure Year 2000 compliance. The Company expects its Year 2000
conversion to be fully completed by March, 1999, but has also formulated
contingency plans, which, in the event the Company's plans are delayed, may be
implemented to minimize the risks of interruptions of the Company's business.
Costs related to this conversion to date are approximately $175, and are not
expected to exceed $250 in total. However, there can be no assurance that the
systems of other companies on which the Company's system relies will also be
converted on a timely basis. A failure to convert by another company could
have an adverse effect on the Company's systems.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are various claims and legal proceedings against the Company relating
to its operations in the normal course of business, none of which the Company
believes is material. The Company currently maintains insurance coverage for
product liability claims. There can be no assurance that indemnification from
its customers and coverage under insurance policies will be adequate to cover
any future product liability claims against the Company.
ITEMS 2, 3, 4, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT 27
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the
undersigned thereunto duly authorized.
ROLLER BEARING COMPANY OF AMERICA, INC.
February 4, 1999 /s/ Michael J. Hartnett
------------------------------------------
By: Michael J. Hartnett
President & Chief Executive Officer
Principal Executive Officer
February 4, 1999 /s/ Anthony S. Cavalieri
------------------------------------------
By: Anthony S. Cavalieri
Vice President & Chief Financial Officer
Principal Accounting Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-03-1999
<PERIOD-START> MAR-29-1998
<PERIOD-END> DEC-26-1998
<CASH> 2,726
<SECURITIES> 0
<RECEIVABLES> 23,141
<ALLOWANCES> 175
<INVENTORY> 46,973
<CURRENT-ASSETS> 74,733
<PP&E> 81,448
<DEPRECIATION> 32,019
<TOTAL-ASSETS> 167,514
<CURRENT-LIABILITIES> 28,095
<BONDS> 148,825
0
0
<COMMON> 0
<OTHER-SE> (12,679)
<TOTAL-LIABILITY-AND-EQUITY> 167,514
<SALES> 107,544
<TOTAL-REVENUES> 107,544
<CGS> 75,744
<TOTAL-COSTS> 16,627
<OTHER-EXPENSES> 514
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,854
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