Notes
to Consolidated Financial Statements
(dollars
in thousands, except share and per share data)
1.
Organization and Business
RBC
Bearings Incorporated, together with its subsidiaries, is an international manufacturer and marketer of highly engineered precision
bearings and products, which are integral to the manufacture and operation of most machines, aircraft and mechanical systems,
to reduce wear to moving parts, facilitate proper power transmission, reduce damage and energy loss caused by friction and control
pressure and flow. The terms “we”, “us”, “our”, “RBC” and the “Company”
mean RBC Bearings Incorporated and its subsidiaries, unless the context indicates another meaning. While we manufacture products
in all major categories, we focus primarily on highly technical or regulated bearing products and engineered products for specialized
markets that require sophisticated design, testing and manufacturing capabilities. We believe our unique expertise has enabled
us to garner leading positions in many of the product markets in which we primarily compete. Over the past fifteen years, we have
broadened our end markets, products, customer base and geographic reach. We currently have 42 facilities in 7 countries, of which
33 are manufacturing facilities.
The
Company operates in four reportable business segments—roller bearings, plain bearings, ball bearings and engineered products—in
which it manufactures roller bearing components and assembled parts and designs and manufactures high-precision roller and ball
bearings. The Company sells to a wide variety of original equipment manufacturers (“OEMs”) and distributors who are
widely dispersed geographically. No one customer accounted for more than 9% of the Company’s net sales in fiscal 2020, 2019
or 2018. The Company’s segments are further discussed in Part II, Item 8. “Financial Statements and Supplemental Data,”
Note 19 “Reportable Segments.”
2.
Summary of Significant Accounting Policies
General
The consolidated financial
statements include the accounts of RBC Bearings Incorporated, Roller Bearing Company of America, Inc. (“RBCA”)
and its wholly-owned subsidiaries, Industrial Tectonics Bearings Corporation (“ITB”), RBC Nice Bearings, Inc.
(“Nice”), RBC Precision Products - Bremen, Inc. (“Bremen (MBC)”), RBC Precision Products - Plymouth, Inc.
(“Plymouth”), RBC Lubron Bearing Systems, Inc. (“Lubron”), RBC Oklahoma, Inc. (“RBC Oklahoma”),
RBC Aircraft Products, Inc. (“API”), RBC Southwest Products, Inc. (“SWP”), All Power Manufacturing
Co. (“All Power”), RBC Aerostructures LLC (“AeroS”), Western Precision Aero LLC (“WPA”), Climax
Metal Products Company (“CMP”), RBC Turbine Components LLC (“TCI”), Sonic Industries, Inc. (“Sonic”),
Sargent Aerospace and Defense LLC (“Sargent”), Airtomic LLC. (“Airtomic”), Schaublin Holding S.A. and
its wholly-owned subsidiaries Schaublin SA, RBC Bearings Polska sp. Z.o.o., RBC France SAS, Vianel Holding AG, Beck Bühler
Mutschler Capital AG, Bär und Mettler AG, MBM Monstein Bär Mettler Modulare Werkzeugsysteme AG, Swiss Tool Systems AG
- Switzerland and Schaublin GmbH (“Schaublin”), RBC de Mexico S DE RL DE CV (“Mexico”), RBC Bearings U.K.
Limited, Allpower de Mexico S DE RL DE CV (“Tecate”) and RBC Bearings Canada, Inc. Divisions of RBCA include: RBC
Corporate, RBC E-Shop, RBC Aerospace sales office and warehouse, Transport Dynamics (“TDC”), Heim (“Heim Bearings
Company”), Engineered Components (“ECD”), RBC Aerocomponents (“AeroC”), PIC Design (“PIC Design”),
RBC Hartsville, RBC West Trenton, RBC Bishopsville, RBC Eastern Distribution Center, Shanghai Representative office of Roller
Bearing Company of America, Inc. (“RBC Shanghai”) and RBC Grand Prarie TX location. U.S. Bearings (“USB”)
is a division of SWP and Schaublin USA is a division of Nice. All intercompany balances and transactions have been eliminated
in consolidation.
The
Company has a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy,
fiscal years 2020, 2019 and 2018 each contained 52 weeks. The amounts are shown in thousands, unless otherwise indicated.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities,
at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Estimates are used for, but not limited to, the accounting for the allowance for doubtful
accounts, valuation of inventories, accrued expenses, goodwill and intangible assets, depreciation and amortization, income taxes
and tax reserves, pension and postretirement obligations and the valuation of options.
Revenue
Recognition
A
contract with a customer exists when there is commitment and approval from both parties involved, the rights of the parties are
identified, payment terms are defined, the contract has commercial substance and collectability of consideration is probable.
The Company has determined that the contract with the customer is established when the customer purchase order is accepted or
acknowledged. Long-term agreements (LTAs) are used by the Company and certain of its customers to reduce their supply uncertainty
for a period of time, typically multiple years. While these LTAs define commercial terms including pricing, termination rights
and other contractual requirements, they do not represent the contract with the customer for revenue recognition purposes.
When
the Company accepts or acknowledges the customer purchase order, the type of good or service is defined on a line-by-line basis.
Individual performance obligations are established by virtue of the individual line items identified on the sales order acknowledgment
at the time of issuance. The majority of the Company’s revenue relates to the sale of goods and contains a single performance
obligation for each distinct good. The remainder of the Company’s revenue from customers is generated from services performed.
These services include repair and refurbishment work performed on customer-controlled assets as well as design and test work.
The performance obligations for these services are also identified on the sales order acknowledgement at the time of issuance
on a line-by-line basis.
Transaction price reflects the amount of consideration that
the Company expects to be entitled to in exchange for transferred goods or services. A contract’s transaction price is allocated
to each distinct performance obligation and revenue is recognized as the performance obligation is satisfied. For the majority
of our contracts, the Company either provides distinct goods or services. Where both distinct goods and services are provided,
we separate the contract into more than one performance obligation (i.e., a good or service is individually listed in a contract
or sold individually to a customer). The Company generally sells products and services with observable standalone selling prices.
The
performance obligations for the majority of RBC’s product sales are satisfied at the point in time in which the
products are shipped, consistent with the pattern of revenue recognition under the previous accounting standard. The Company
has determined that the customer obtains control upon shipment of the product based on the shipping terms (either when it
ships from RBC’s dock or when the product arrives at the customer’s dock) and recognizes revenue accordingly.
Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits
from, the asset. Approximately 95% and 94% of the Company’s revenue was recognized in this manner based on sales for
the years ended March 28, 2020 and March 30, 2019, respectively.
The
Company has determined performance obligations are satisfied over time for customer contracts where RBC provides services to customers
and also for a limited number of product sales. RBC has determined revenue recognition over time is appropriate for our service
revenue contracts as they create or enhance an asset that the customer controls throughout the duration of the contract. Approximately
5% and 6% of the Company’s revenue was recognized in this manner based on sales for the years ended March 28, 2020 and March
30, 2019, respectively. Revenue recognition over time is appropriate for customer contracts with product sales in which the product
sold has no alternative use to RBC without significant economic loss and an enforceable right to payment exists, including a normal
profit margin from the customer, in the event of contract termination. These types of contracts comprised less than 1% of total
sales for the years ended March 28, 2020 and March 30, 2019, respectively. For both of these types of contracts, revenue is recognized
over time based on the extent of progress towards completion of the performance obligation. The Company utilizes the cost-to-cost
measure of progress for over-time revenue recognition contracts as we believe this measure best depicts the transfer of control
to the customer, which occurs as we incur costs on contracts. Revenues, including profits, are recorded proportionally as costs
are incurred. Costs to fulfill include labor, materials, subcontractors’ costs, and other direct and indirect costs.
Contract
costs are the incremental costs of obtaining and fulfilling a contract (i.e., costs that would not have been incurred if the contract
had not been obtained) to provide goods and services to customers. Contract costs largely consist of design and development costs
for molds, dies and other tools that RBC will own and that will be used in producing the products under the supply arrangements.
These contract costs are amortized to expense on a systematic and rational basis over a period consistent with the transfer to
the customer of the goods or services to which the asset relates. Costs incurred to obtain a contract are primarily related to
sales commissions and are expensed as incurred as they are generally not tied to specific customer contracts. These costs are
included within selling, general and administrative costs on the consolidated statements of operations.
In
certain contracts, the Company facilitates shipping and handling activities after control has transferred to the customer. The
Company has elected to record all shipping and handling activities as costs to fulfill a contract. In situations where the shipping
and handling costs have not been incurred at the time revenue is recognized, the estimated shipping and handling costs are accrued.
Prior
to the adoption of ASC Topic 606, the Company recognized revenue in accordance with ASC Topic 605. Our accounting policy was as
follows:
The
Company recognizes revenue only after the following four basic criteria are met:
|
●
|
Persuasive
evidence of an arrangement exists;
|
|
●
|
Delivery
has occurred or services have been rendered;
|
|
●
|
The
seller’s price to the buyer is fixed or determinable; and
|
|
●
|
Collectability
is reasonably assured.
|
Revenue
is recognized upon the passage of title, which generally is at the time of shipment, except for certain customers for which it
occurs when the products reach their destination. Accounts receivable, net of applicable allowances, is recorded when revenue
is recorded.
We
also on occasion record deferred revenue on our balance sheet as a liability. Deferred revenue represents progress payments received,
primarily from one customer, to cover purchases of raw materials per the terms of multi-year long-term contracts. Revenue associated
with these agreements is recognized in accordance with the criteria discussed above.
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.
The Company maintains its cash accounts primarily with Bank of America, N.A., Credit Suisse Group AG and Wells Fargo & Company.
The domestic balances are insured by the Federal Deposit Insurance Company up to $250. The Company has not experienced any losses
in such accounts.
Accounts
Receivable, Net and Concentration of Credit Risk
Accounts
receivable include amounts billed and currently due from customers. The amounts due are stated at their estimated net realizable
value. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers
to make required payments. The Company reviews the collectability of its receivables on an ongoing basis taking into account a
combination of factors. The Company reviews potential problems, such as past due accounts, a bankruptcy filing or deterioration
in the customer’s financial condition, to ensure the Company is adequately accrued for potential loss. Accounts are considered
past due based on when payment was originally due. If a customer’s situation changes, such as a bankruptcy or creditworthiness,
or there is a change in the current economic climate, the Company may modify its estimate of the allowance for doubtful accounts.
The Company will write-off accounts receivable after reasonable collection efforts have been made and the accounts are deemed
uncollectible.
The
Company sells to a large number of OEMs and distributors who service the aftermarket. The Company’s credit risk associated
with accounts receivable is minimized due to its customer base and wide geographic dispersion. The Company performs ongoing credit
evaluations of its customers’ financial condition and generally does not require collateral or charge interest on outstanding
amounts. The Company had no concentrations of credit risk with any one customer greater than approximately 7% of accounts receivables
at March 28, 2020 and 7% at March 30, 2019.
Inventory
Inventories
are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The Company accounts
for inventory under a full absorption method, and records adjustments to the value of inventory based upon past sales history
and forecasted plans to sell our inventories. The physical condition, including age and quality, of the inventories is also considered
in establishing its valuation. These adjustments are estimates, which could vary significantly, either favorably or unfavorably,
from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from our expectations.
Contract
Assets (Unbilled Receivables)
Pursuant
to the over-time revenue recognition model, revenue may be 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 (2) such revenue exceeds the
amount invoiced to the customer. Contract assets are included within prepaid expenses and other current assets or other assets
on the consolidated balance sheets.
Property,
Plant and Equipment
Property,
plant and equipment are recorded at cost. Depreciation and amortization of property, plant and equipment, including equipment
under finance leases (capital leases prior to the adoption of ASC 842), is provided for by the straight-line method over the
estimated useful lives of the respective assets or the lease term, if shorter. Depreciation of assets under capital leases is
reported within depreciation and amortization. The cost of equipment under finance leases is equal to the lower of the net
present value of the minimum lease payments or the fair market value of the leased equipment at the inception of the lease.
Expenditures for normal maintenance and repairs are charged to expense as incurred.
The
estimated useful lives of the Company’s property, plant and equipment follows:
|
Buildings
and improvements
|
20-30 years
|
|
Machinery
and equipment
|
3-15 years
|
|
Leasehold
improvements
|
Shorter of the term of lease or estimated useful life
|
Goodwill
and Indefinite-Lived Intangible Assets
Goodwill (representing the excess of the amount paid to acquire
a company over the estimated fair value of the net assets acquired) and indefinite lived intangible assets are not amortized but
instead are tested for impairment annually, or when events or circumstances indicate that the carrying value of such asset may
not be recoverable. Separate tests are performed for goodwill and indefinite lived intangible assets. We completed a quantitative
test of impairment on the indefinite lived intangible assets with no impairment noted in the current year. The determination of
any goodwill impairment is made at the reporting unit level and consists of two steps. First, the Company determines the fair value
of a reporting unit and compares it to its carrying amount. Second, if the carrying amount of the reporting unit exceeds its fair
value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the goodwill’s
implied fair value. The Company applies the income approach (discounted cash flow method) in testing goodwill for impairment. The
key assumptions used in the discounted cash flow method used to estimate fair value include discount rates, revenue growth rates,
terminal growth rates and cash flow projections. Discount rates, revenue growth rates and cash flow projections are the most sensitive
and susceptible to change as they require significant management judgment. Discount rates are determined by using a weighted average
cost of capital (“WACC”). The WACC considers market and industry data as well as Company-specific risk factors for
each reporting unit in determining the appropriate discount rate to be used. The discount rate utilized for each reporting unit
for our fiscal 2020 test was 10.0% and is indicative of the return an investor would expect to receive for investing in such a
business. Terminal growth rate determination follows common methodology of capturing the present value of perpetual cash flow estimates
beyond the last projected period assuming a constant WACC and long-term growth rates. The terminal growth rate used for our fiscal
2020 test was 2.5%. The Company has determined that, to date, no impairment of goodwill exists and fair value of the reporting
units exceeded the carrying value in total by approximately 140.5%. The fair value of the reporting units exceeds the carrying
value by a minimum of 44.8% at each of the four reporting units. A decrease of 1.0% in our terminal growth rate would not result
in impairment of goodwill for any of our reporting units. An increase of 1.0% in our discount rate would not result in impairment
of goodwill for any of our reporting units. The Company performs the annual impairment testing during the fourth quarter of each
fiscal year. Although no changes are expected, if the actual results of the Company are less favorable than the assumptions the
Company makes regarding estimated cash flows, the Company may be required to record an impairment charge in the future.
Deferred
Financing Costs
Deferred
financing costs are amortized on a straight-line basis over the lives of the related credit agreements.
Contract
Liabilities (Deferred Revenue)
The
Company may receive a customer advance or deposit, or have an unconditional right to receive a customer advance, prior to revenue
being recognized. Since the performance obligations related to such advances may not have been satisfied, a contract liability
is established. Contract liabilities are included within accrued expenses and other current liabilities or other non-current liabilities
on the consolidated balance sheets until the respective revenue is recognized. Advance payments are not considered a significant
financing component as the timing of the transfer of the related goods or services is at the discretion of the customer.
Pension
and Postretirement Health Care and Life Insurance Benefits
The
Company has one consolidated noncontributory defined benefit pension plan covering union employees in its Heim division plant
in Fairfield, Connecticut, its Plymouth subsidiary plant in Plymouth, Indiana and former union employees of the Tyson
subsidiary in Glasgow, Kentucky and the Nice subsidiary in Kulpsville, Pennsylvania. The pension plan is overfunded as of
March 28, 2020 and is included within other assets on the consolidated balance sheets.
The
Company, for the benefit of employees at its Heim, West Trenton, Plymouth and PIC facilities and former union employees of
its Tyson and Nice subsidiaries, sponsors contributory defined benefit health care plans that provide postretirement medical
and life insurance benefits to union employees who have attained certain age and/or service requirements while employed by
the Company. The plans are unfunded and costs are paid as incurred. Postretirement benefit obligations are included in
accrued expenses and other current liabilities and other non-current liabilities on the consolidated balance
sheets.
We calculate our pension costs as required under U.S. GAAP,
and the calculations and assumptions utilized require judgment. U.S. GAAP outlines the methodology used to determine pension expense
or income for financial reporting purposes. Pension expense is split between operating income and non-operating income, where only
the service cost component is included in operating income (within cost of sales and other, net on the consolidated statements
of operations) and the non-service components are included in retirement benefits non-service expense (within other non-operating
expense on the consolidated statements of operations). For purposes of determining retirement benefits non-service expense under
U.S. GAAP, a calculated “market-related value” of our plan assets is used to develop the amount of deferred asset gains
or losses to be amortized. The market-related value of assets is determined using actual asset gains or losses over a three-year
period. Under U.S. GAAP, a “corridor” approach may be elected and applied in the recognition of asset and liability
gains or losses which limits expense recognition to the net outstanding gains and losses in excess of the greater of 10% of the
projected benefit obligation (PBO) or the calculated “market-related value” of assets. We do not use a “corridor”
approach in the calculation of pension expense.
We
recognize the funded status of a postretirement benefit plan (defined benefit pension and other benefits) as an asset or liability
in our consolidated balance sheets. Funded status represents the difference between the PBO of the plan and the market value of
the plan’s assets. Previously unrecognized deferred amounts such as demographic or asset gains or losses and the impact
of historical plan changes are included in accumulated other comprehensive income/loss. Changes in these amounts in future years
will be reflected through accumulated other comprehensive income/loss and amortized in future pension expense generally over the
estimated average remaining employee service period.
Income
Taxes
The
Company accounts for income taxes using the liability method, which requires it to recognize a current tax liability or asset
for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary
differences between the financial statement and tax reporting bases of assets and liabilities to the extent that they are realizable.
Deferred tax expense (benefit) results from the net change in deferred tax assets and liabilities during the year. A valuation
allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company is
exposed to certain tax contingencies in the ordinary course of business and records those tax liabilities in accordance with the
guidance for accounting for uncertain tax positions.
Temporary
differences relate primarily to the timing of deductions for depreciation, stock-based compensation, goodwill amortization relating
to the acquisition of operating divisions, basis differences arising from acquisition accounting, pension and retirement benefits,
and various accrued and prepaid expenses. Deferred tax assets and liabilities are recorded at the rates expected to be in effect
when the temporary differences are expected to reverse.
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 year presented as well as the computation
of basic and diluted net income per common share:
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
126,036
|
|
|
$
|
105,193
|
|
|
$
|
87,141
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic net income per common share—weighted-average shares
|
|
|
24,632,637
|
|
|
|
24,357,684
|
|
|
|
23,948,565
|
|
Effect of dilution due to employee stock options
|
|
|
289,994
|
|
|
|
358,529
|
|
|
|
415,224
|
|
Denominator for diluted net income per common share—adjusted
weighted-average shares
|
|
|
24,922,631
|
|
|
|
24,716,213
|
|
|
|
24,363,789
|
|
Basic net income per common share
|
|
$
|
5.12
|
|
|
$
|
4.32
|
|
|
$
|
3.64
|
|
Diluted net income per common share
|
|
$
|
5.06
|
|
|
$
|
4.26
|
|
|
$
|
3.58
|
|
At
March 28, 2020, 350,540 employee stock options and 1,350 restricted shares have been excluded from the calculation of diluted
earnings per share. At March 30, 2019, 256,990 employee stock options and 1,500 restricted shares have been excluded from the
calculation of diluted earnings per share. At March 31, 2018, 217,280 employee stock options and 53,073 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.
Impairment
of Long-Lived Assets
The
Company assesses the net realizable value of its long-lived assets and evaluates such assets for impairment whenever indicators
of impairment are present. For amortizable long-lived assets to be held and used, if indicators of impairment are present, management
determines whether the sum of the estimated undiscounted future cash flows is less than the carrying amount. The amount of asset
impairment, if any, is based on the excess of the carrying amount over its fair value, which is estimated based on projected discounted
future operating cash flows using a discount rate reflecting the Company’s average cost of funds. To date, no indicators of impairment
exist other than those resulting in the restructuring charges already recorded.
Long-lived
assets to be disposed of by sale or other means are reported at the lower of carrying amount or fair value, less costs to sell.
Foreign
Currency Translation and Transactions
Assets
and liabilities of the Company’s foreign operations are translated into U.S. dollars using the exchange rate in effect at the
balance sheet date. Results of operations are translated using the average exchange rate prevailing throughout the period. The
effects of exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are included in
accumulated other comprehensive income (loss), while gains and losses resulting from foreign currency transactions are included
in other non-operating expense (income). Net income of the Company’s foreign operations for fiscal 2020, 2019 and 2018 amounted
to $3,526, $7,180 and $776, respectively. Total assets of the Company’s foreign operations were $159,039 and $115,789 at March
28, 2020 and March 30, 2019, respectively.
Fair
Value of Measurements
Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (exit price). Inputs used to measure fair value are within a hierarchy consisting of three
levels. Level 1 inputs represent unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs
represent unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical
or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the
asset or liability. Level 3 inputs represent unobservable inputs for the asset or liability. Financial assets and liabilities
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The
carrying amounts reported in the balance sheet for cash and cash equivalents, short-term investments, accounts receivable, prepaids
and other current assets, and accounts payable and accruals, and other current liabilities approximate their fair value due to
their short-term nature.
The
carrying amounts of the Company’s borrowings under the Revolver, Foreign Revolver and Foreign Term Loan approximate fair value,
as these obligations have interest rates which vary in conjunction with current market conditions. The carrying value of the mortgage
on our Schaublin building approximates fair value as the rates since entering into the mortgage in fiscal 2013 have not significantly
changed. All borrowings have been classified as Level 2 in the valuation hierarchy.
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, all of which are presented in the consolidated statements of stockholders’ equity
and comprehensive income (loss).
The
following summarizes the activity within each component of accumulated other comprehensive income (loss), 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
|
|
|
2,719
|
|
|
|
—
|
|
|
|
2,719
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
—
|
|
|
|
(861
|
)
|
|
|
(861
|
)
|
Net current period other comprehensive income
|
|
|
2,719
|
|
|
|
(861
|
)
|
|
|
1,858
|
|
Balance at March 28, 2020
|
|
$
|
(582
|
)
|
|
$
|
(6,316
|
)
|
|
$
|
(6,898
|
)
|
Share-Based
Compensation
The
Company recognizes compensation cost relating to all share-based payment transactions in the financial statements based upon the
grant-date fair value of the instruments issued over the requisite service period. The fair value of each option grant was estimated
on the date of grant using the Black-Scholes pricing model.
Recent
Accounting Pronouncements
Recent
Accounting Standards Adopted
In
February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases
(Topic 842). The core principle of this ASU 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 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 a finance or operating lease.
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 that 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 accounting standard had no impact on the Company’s consolidated statements of operations,
debt compliance or the captions on the consolidated statements 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 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.
In February 2018, the FASB issued ASU No. 2018-02, Income
Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive
Income, which allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”) from accumulated
other comprehensive income to retained earnings. These stranded tax effects refer to the tax amounts included in 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 the new 21% U.S. corporate statutory federal tax rate in the period of the TCJA’s enactment.
The new standard is effective for fiscal years beginning after December 15, 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 adoption of this accounting standard had no impact on the Company’s
consolidated statements of operations, debt compliance or the captions on the consolidated statements of cash flows.
Recent
Accounting Standards Yet to Be Adopted
In September 2016, the FASB issued ASU No. 2016-13, Financial
Instruments – Credit Losses (Topic 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 a new expected credit loss impairment model.
The new 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 leases, loan commitments and standby letters of
credit. Upon initial recognition of the exposure, the expected credit loss model will require entities to estimate the credit losses
expected over the life of an exposure (or pool of 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 estimate, so its application will require significant judgment. This ASU is effective for public
companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption
of this standard update is not expected to have a material impact on the Company’s consolidated financial statements.
In
January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test
for Goodwill 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
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.
The objective of this standard update is to simplify the accounting for income taxes by removing certain exceptions to the general
principles in Topic 740. This ASU also attempts to improve consistent application of and simplify GAAP for other areas of Topic
740 by clarifying and amending existing guidance. This standard update is effective for fiscal years beginning after December
15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the effect that the adoption
of this ASU will have on the Company’s consolidated financial statements.
Other
new pronouncements issued but not effective until after March 28, 2020 are not expected to have a material impact on our financial
position, results of operations or liquidity.
3.
Revenue from Contracts with Customers
Disaggregation
of Revenue
The
Company operates in four business segments with similar economic characteristics, including nature of 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 years
ended March 28, 2020, March 30, 2019 and March 31, 2018 and are as follows:
Principal
End Markets:
|
|
For the Fiscal Year Ended
|
|
|
|
March 28, 2020
|
|
|
|
Aerospace
|
|
|
Industrial
|
|
|
Total
|
|
Plain
|
|
$
|
277,601
|
|
|
$
|
80,690
|
|
|
$
|
358,291
|
|
Roller
|
|
|
71,386
|
|
|
|
61,256
|
|
|
|
132,642
|
|
Ball
|
|
|
23,453
|
|
|
|
50,778
|
|
|
|
74,231
|
|
Engineered Products
|
|
|
96,806
|
|
|
|
65,491
|
|
|
|
162,297
|
|
|
|
$
|
469,246
|
|
|
$
|
258,215
|
|
|
$
|
727,461
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
March 30, 2019
|
|
|
|
Aerospace
|
|
|
Industrial
|
|
|
Total
|
|
Plain
|
|
$
|
238,259
|
|
|
$
|
84,992
|
|
|
$
|
323,251
|
|
Roller
|
|
|
70,682
|
|
|
|
73,150
|
|
|
|
143,832
|
|
Ball
|
|
|
21,621
|
|
|
|
50,686
|
|
|
|
72,307
|
|
Engineered Products
|
|
|
100,571
|
|
|
|
62,555
|
|
|
|
163,126
|
|
|
|
$
|
431,133
|
|
|
$
|
271,383
|
|
|
$
|
702,516
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
March 31, 2018
|
|
|
|
Aerospace
|
|
|
Industrial
|
|
|
Total
|
|
Plain
|
|
$
|
220,649
|
|
|
$
|
76,059
|
|
|
$
|
296,708
|
|
Roller
|
|
|
65,496
|
|
|
|
66,525
|
|
|
|
132,021
|
|
Ball
|
|
|
18,076
|
|
|
|
49,730
|
|
|
|
67,806
|
|
Engineered Products
|
|
|
114,490
|
|
|
|
63,924
|
|
|
|
178,414
|
|
|
|
$
|
418,711
|
|
|
$
|
256,238
|
|
|
$
|
674,949
|
|
In
addition to disaggregating revenue by segment and principal end markets, the Company believes information about the timing of
transfer of goods or services, type of customer and distinguishing service revenue from product sales is also relevant. Refer
to Note 2 – “Summary of Significant Accounting Policies” for further details.
Remaining
Performance Obligations
Remaining
performance obligations represent the transaction price of orders meeting the definition of a contract in the new revenue standard
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 Topic 606, is less than one year. The Company has elected to apply the practical
expedient, which allows companies to exclude remaining performance obligations with 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 $261,172 at March 28, 2020.
The Company expects to recognize revenue on approximately 72% and 95% of the remaining performance obligations over the next 12
and 24 months, respectively, with the remainder recognized thereafter.
Contract
Balances
The
timing of revenue recognition, invoicing and 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 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 (2) such revenue exceeds the amount invoiced to the customer.
Contract
Liabilities (Deferred Revenue) - The Company may receive a customer advance or deposit, or have an unconditional right to
receive a customer advance, prior to revenue being recognized. Since the 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 transfer of the related goods or services is at the discretion of the customer.
These assets and liabilities are reported on the consolidated
balance sheets on an individual contract basis at the end of each reporting period. As of March 28, 2020 and March 30, 2019, accounts
receivable with customers, net, were $128,995 and $130,735, respectively. The tables below represent a roll-forward of contract
assets and contract liabilities for the twelve-month period ended March 28, 2020:
Contract Assets - Current (1)
|
|
|
|
|
|
|
|
Balance at March 30, 2019
|
|
$
|
1,895
|
|
Additional revenue recognized in excess of billings
|
|
|
4,638
|
|
Less: amounts billed to customers
|
|
|
(3,929
|
)
|
Balance at March 28, 2020
|
|
$
|
2,604
|
|
|
(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
|
|
|
21,031
|
|
Revenue recognized (2)
|
|
|
(18,624
|
)
|
Reclassification (to)/from noncurrent
|
|
|
(1,412
|
)
|
Balance at March 28, 2020
|
|
$
|
11,116
|
|
|
(2)
|
Included
within accrued expenses and other current liabilities on the consolidated balance sheets. During fiscal 2020, the Company
recognized revenues of $7,849 that were included in the contract liability balance at March 30, 2019.
|
Contract Liabilities – Noncurrent (3)
|
|
|
|
|
|
|
|
Balance at March 30, 2019
|
|
$
|
587
|
|
Payments received prior to revenue being recognized
|
|
|
454
|
|
Revenue recognized
|
|
|
(26
|
)
|
Reclassification (to)/from current
|
|
|
1,412
|
|
Balance at March 28, 2020
|
|
$
|
2,427
|
|
|
(3)
|
Included
within other non-current liabilities on the consolidated balance sheets.
|
As
of March 28, 2020, the Company does not have any contract assets classified as noncurrent on the consolidated balance sheets.
4.
Allowance for Doubtful Accounts
The
activity in the allowance for doubtful accounts consists of the following:
Fiscal Year Ended
|
|
Balance at
Beginning of
Year
|
|
|
Additions
|
|
|
Other*
|
|
|
Write-offs
|
|
|
Balance at
End of Year
|
|
March 28, 2020
|
|
$
|
1,430
|
|
|
$
|
263
|
|
|
$
|
13
|
|
|
$
|
(79
|
)
|
|
$
|
1,627
|
|
March 30, 2019
|
|
|
1,326
|
|
|
|
203
|
|
|
|
(85
|
)
|
|
|
(14
|
)
|
|
|
1,430
|
|
March 31, 2018
|
|
|
1,213
|
|
|
|
125
|
|
|
|
73
|
|
|
|
(85
|
)
|
|
|
1,326
|
|
|
*
|
Foreign
currency, disposition and acquisition transactions.
|
5.
Inventory
Inventories
are summarized below:
|
|
|
|
|
|
|
Raw materials
|
|
$
|
51,362
|
|
|
$
|
48,690
|
|
Work in process
|
|
|
97,286
|
|
|
|
90,820
|
|
Finished goods
|
|
|
218,846
|
|
|
|
195,491
|
|
|
|
$
|
367,494
|
|
|
$
|
335,001
|
|
6.
Property, Plant and Equipment
Property,
plant and equipment consist of the following:
|
|
|
|
|
|
|
Land
|
|
$
|
17,621
|
|
|
$
|
18,735
|
|
Buildings and improvements
|
|
|
90,834
|
|
|
|
86,477
|
|
Machinery and equipment
|
|
|
321,580
|
|
|
|
289,467
|
|
|
|
|
430,035
|
|
|
|
394,679
|
|
Less: accumulated depreciation and amortization
|
|
|
(210,189
|
)
|
|
|
(186,784
|
)
|
|
|
$
|
219,846
|
|
|
$
|
207,895
|
|
7.
Leases
The
Company enters into operating leases for manufacturing facilities, warehouses, sales offices, information technology equipment,
plant equipment, vehicles and certain other equipment with varying end dates from April 2020 to February 2038, including renewal
options.
The
following table represents the impact of leasing on the consolidated balance sheets:
|
|
|
|
Operating Leases:
|
|
|
|
|
Lease assets:
|
|
|
|
|
Operating lease assets, net
|
|
$
|
28,953
|
|
|
|
|
|
|
Lease liabilities:
|
|
|
|
|
Current operating lease liabilities
|
|
|
5,708
|
|
Long-term operating lease liabilities
|
|
|
23,396
|
|
Total operating lease liabilities
|
|
$
|
29,104
|
|
The
Company did not have any finance leases as of March 28, 2020. Cash paid included in the measurement of lease liabilities was $5,771
for the twelve-month period ended March 28, 2020. Lease assets obtained in exchange for new operating lease liabilities were $5,586
for the twelve-month period ended March 28, 2020.
Operating
lease expense was $7,079, $7,172 and $7,161 for the twelve-month periods ended March 28, 2020, March 30, 2019 and March 31, 2018,
respectively. Short-term and variable lease expense were immaterial.
Future
undiscounted lease payments for the remaining lease terms as of March 28, 2020, including renewal options reasonably certain of
being exercised, are as follows:
|
|
Operating Leases
|
|
Within one year
|
|
$
|
6,254
|
|
One to two years
|
|
|
4,538
|
|
Two to three years
|
|
|
3,977
|
|
Three to four years
|
|
|
2,740
|
|
Four to five years
|
|
|
2,529
|
|
Thereafter
|
|
|
16,588
|
|
Total future undiscounted lease payments
|
|
|
36,626
|
|
Less: imputed interest
|
|
|
(7,522
|
)
|
Total operating lease liabilities
|
|
$
|
29,104
|
|
The
weighted-average remaining lease term on March 28, 2020 for our operating leases is 10.9 years. The weighted-average discount
rate on March 28, 2020 for our operating leases is 4.8%.
8.
Acquisitions
On August 15, 2019, the
Company, through its Schaublin SA subsidiary, acquired all of the outstanding shares of Vianel Holding AG (“Swiss Tool”)
for a purchase price of approximately $33,842 (CHF 33,000), subject to a working capital adjustment. Swiss Tool, which is based
in Bürglen, Switzerland, owns Swiss Tool Systems AG and other subsidiaries which collectively develop and manufacture high
precision boring and turning solutions for metal cutting machines under the Swiss Tool Systems name. The preliminary purchase
price allocation is as follows: accounts receivable ($1,325), inventory ($5,963), other current assets ($586), fixed assets ($3,487),
intangible assets ($13,236), operating lease assets ($2,851), other non-current assets ($154), accounts payable ($562), other
current liabilities ($894), operating lease liabilities ($2,851), deferred tax liabilities ($3,411) and noncurrent liabilities
($2,085). Goodwill of $15,955, which resulted from the purchase price allocation, is not deductible for tax purposes and is subject
to change pending a final valuation of the assets and liabilities, including intangible assets and deferred income taxes. Swiss
Tool is included in the Engineered Products reporting segment.
9.
Goodwill and Intangible Assets
Goodwill
Goodwill
balances, by segment, consist of the following:
|
|
Roller
|
|
|
Plain
|
|
|
Ball
|
|
|
Engineered Products
|
|
|
Total
|
|
March 30, 2019
|
|
$
|
16,007
|
|
|
$
|
79,597
|
|
|
$
|
5,623
|
|
|
$
|
160,204
|
|
|
$
|
261,431
|
|
Acquisition (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,955
|
|
|
|
15,955
|
|
Translation adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
390
|
|
|
|
390
|
|
March 28, 2020
|
|
$
|
16,007
|
|
|
$
|
79,597
|
|
|
$
|
5,623
|
|
|
$
|
176,549
|
|
|
$
|
277,776
|
|
|
(1)
|
Includes
the assets acquired as part of the Company’s acquisition of Vianel Holding AG (“Swiss Tool”) on August 15, 2019,
which is discussed further in Note 8.
|
Intangible
Assets
|
|
|
|
|
March 28, 2020
|
|
|
March 30, 2019
|
|
|
|
Weighted Average Useful Lives
|
|
|
Gross Carrying Amount
|
|
|
|
|
|
Gross Carrying Amount
|
|
|
|
|
Product approvals
|
|
|
24
|
|
|
$
|
50,878
|
|
|
$
|
12,597
|
|
|
$
|
50,878
|
|
|
$
|
10,481
|
|
Customer relationships and lists
|
|
|
23
|
|
|
|
109,645
|
|
|
|
23,557
|
|
|
|
96,458
|
|
|
|
19,149
|
|
Trade names
|
|
|
10
|
|
|
|
16,330
|
|
|
|
8,906
|
|
|
|
15,959
|
|
|
|
7,447
|
|
Distributor agreements
|
|
|
5
|
|
|
|
722
|
|
|
|
722
|
|
|
|
722
|
|
|
|
722
|
|
Patents and trademarks
|
|
|
16
|
|
|
|
11,553
|
|
|
|
6,045
|
|
|
|
10,534
|
|
|
|
5,540
|
|
Domain names
|
|
|
10
|
|
|
|
437
|
|
|
|
437
|
|
|
|
437
|
|
|
|
437
|
|
Other
|
|
|
2
|
|
|
|
4,633
|
|
|
|
3,468
|
|
|
|
2,473
|
|
|
|
2,325
|
|
|
|
|
|
|
|
|
194,198
|
|
|
|
55,732
|
|
|
|
177,461
|
|
|
|
46,101
|
|
Non-amortizable repair station certifications
|
|
|
n/a
|
|
|
|
24,281
|
|
|
|
—
|
|
|
|
24,281
|
|
|
|
—
|
|
Total
|
|
|
21
|
|
|
$
|
218,479
|
|
|
$
|
55,732
|
|
|
$
|
201,742
|
|
|
$
|
46,101
|
|
Amortization
expense for definite-lived intangible assets during fiscal years 2020, 2019 and 2018 was $9,612, $9,666 and $9,344, respectively.
Estimated amortization expense for the five succeeding fiscal years and thereafter is as follows:
2021
|
|
$
|
9,654
|
|
2022
|
|
|
9,536
|
|
2023
|
|
|
9,451
|
|
2024
|
|
|
9,323
|
|
2025
|
|
|
7,939
|
|
2026 and thereafter
|
|
|
92,563
|
|
10.
Accrued Expenses and Other Current Liabilities
The
significant components of accrued expenses and other current liabilities are as follows:
|
|
|
|
|
|
|
Employee compensation and related benefits
|
|
$
|
16,275
|
|
|
$
|
14,485
|
|
Taxes
|
|
|
2,751
|
|
|
|
4,789
|
|
Deferred revenue
|
|
|
11,116
|
|
|
|
10,121
|
|
Workers compensation and insurance
|
|
|
3,500
|
|
|
|
2,685
|
|
Legal
|
|
|
250
|
|
|
|
1,184
|
|
Other
|
|
|
6,688
|
|
|
|
6,806
|
|
|
|
$
|
40,580
|
|
|
$
|
40,070
|
|
11.
Debt
Domestic
Credit Facility
On
January 31, 2019, the Company amended the 2015 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 “2015 Credit
Agreement”). The 2015 Credit Agreement as so amended (the “Amended Credit Agreement”) now provides the Company
with a $250,000 revolving credit facility (the “Revolver”) in place of the revolver provided in the 2015 Credit Agreement.
The Revolver expires on 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 2015 Credit Agreement.
Amounts
outstanding under the 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
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 at each measurement date. Currently, the Company’s margin is 0.00% for base rate
loans and 0.75% for LIBOR loans.
The
Amended Credit Agreement requires the Company to comply with various covenants, including among other things, a financial covenant
to maintain a ratio of consolidated net debt to adjusted EBITDA not greater than 3.50 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 Amended Credit Agreement.
As of March 28, 2020, 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 by a
pledge of substantially all of the domestic assets of the Company and its domestic subsidiaries.
Approximately
$3,850 of the Revolver is being utilized to provide letters of credit to secure the Company’s obligations relating to certain
insurance programs. As of March 28, 2020, $1,517 in unamortized debt issuance costs remain. The Company has the ability to borrow
up to an additional $246,150 under the Revolver as of March 28, 2020.
Foreign
Term Loan and Revolving Credit Facility
On
August 15, 2019, one of our foreign divisions, Schaublin SA (“Schaublin”), entered into two separate credit agreements
(the “Schaublin Credit Agreements”) with Credit Suisse (Switzerland) Ltd. to (i) finance the acquisition of Swiss
Tool, which is discussed in further detail in Note 8, and (ii) provide future working capital. The Schaublin Credit Agreements
provided Schaublin with a CHF 15,000 (approximately $15,383) term loan (the “Foreign Term Loan”), which expires on
July 31, 2024 and a CHF 15,000 (approximately $15,383) revolving credit facility (the “Foreign Revolver”), which continues
in effect until terminated by either Schaublin or Credit Suisse. Debt issuance costs associated with the Schaublin Credit Agreements
totaled CHF 270 (approximately $277) and will be amortized throughout the life of the credit agreements.
Amounts
outstanding under the Foreign Term Loan and the Foreign Revolver generally bear interest at LIBOR plus a specified margin. The
applicable margin is based on Schaublin’s ratio of total net debt to consolidated EBITDA at each measurement date. Currently,
Schaublin’s margin is 2.00%.
The
Foreign Credit Agreements require Schaublin to comply with various covenants, which are tested annually on March 31. These covenants
include, among other things, a financial covenant to maintain a ratio of consolidated net debt to adjusted EBITDA not greater
than 3.00 to 1 as of March 31, 2020 and not greater than 2.50 to 1 as of March 31, 2021 and thereafter. Schaublin is also required
to maintain an economic equity of CHF 20,000 at all times. The Foreign Credit Agreements allow Schaublin to, among other things,
incur other debt or liens and acquire or dispose of assets provided that Schaublin complies with certain requirements and limitations
of the Foreign Credit Agreements. As of March 28, 2020, Schaublin was in compliance with all such covenants.
Schaublin’s
parent company, Schaublin Holding, has guaranteed Schaublin’s obligations under the Foreign Credit Agreements. Schaublin
Holding’s guaranty and the Foreign Credit Agreements are secured by a pledge of the capital stock of Schaublin. In addition,
the Foreign Term Loan is secured with pledges of the capital stock of the top company and the three operating companies in the
Swiss Tool System group of companies.
As
of March 28, 2020, there was approximately $2,836 outstanding under the Foreign Revolver and approximately $15,757 outstanding
under the Foreign Term Loan. As of March 28, 2020, approximately $170 in unamortized debt issuance costs remain. Schaublin has
the ability to borrow up to an additional $12,921 under the Foreign Revolver as of March 28, 2020.
Schaublin’s required future annual principal payments
for the next five years and thereafter are approximately $5,941 for fiscal 2021, approximately $3,151 for each year from fiscal
2022 through fiscal 2024 and approximately $3,199 for fiscal 2025.
Other
Notes Payable
On
October 1, 2012, Schaublin purchased the land and building that it occupied and had been leasing for approximately $14,910. Schaublin
obtained a 20-year fixed-rate mortgage of approximately $9,857 at an interest rate of 2.9%. The balance of the purchase price
of approximately $5,053 was paid from cash on hand. The balance on this mortgage as of March 28, 2020 was approximately $6,106.
The Company’s required future annual principal payments
for the next five years are $488 for each year from fiscal 2021 through fiscal 2025 and $3,666 thereafter.
The
balances payable under all borrowing facilities are as follows:
|
|
|
|
|
|
|
Revolver and term loan facilities
|
|
$
|
18,593
|
|
|
$
|
39,250
|
|
Debt issuance cost
|
|
|
(1,687
|
)
|
|
|
(1,912
|
)
|
Other
|
|
|
6,106
|
|
|
|
6,308
|
|
Total debt
|
|
|
23,012
|
|
|
|
43,646
|
|
Less: current portion
|
|
|
6,429
|
|
|
|
467
|
|
Long-term debt
|
|
$
|
16,583
|
|
|
$
|
43,179
|
|
The current portion of long-term debt as of March 28, 2020 includes
the current portion of the foreign term loan, foreign revolving credit facility and the Schaublin mortgage. The current portion
of long-term debt as of March 30, 2019 includes the current portion of the Schaublin mortgage.
12.
Other Non-Current Liabilities
The
significant components of other non-current liabilities consist of:
|
|
|
|
|
|
|
Other
postretirement benefits
|
|
$
|
2,485
|
|
|
$
|
2,358
|
|
Non-current
income tax liability
|
|
|
19,936
|
|
|
|
19,854
|
|
Deferred
compensation
|
|
|
18,275
|
|
|
|
15,425
|
|
Contract
liabilities
|
|
|
2,427
|
|
|
|
587
|
|
Other
|
|
|
496
|
|
|
|
407
|
|
|
|
$
|
43,619
|
|
|
$
|
38,631
|
|
13.
Pension Plan
At March 28, 2020, the
Company has one consolidated noncontributory defined benefit pension plan covering union employees in its Heim division plant
in Fairfield, Connecticut, its Plymouth subsidiary plant in Plymouth, Indiana and former union employees of the Tyson subsidiary
in Glasgow, Kentucky and the Nice subsidiary in Kulpsville, Pennsylvania.
Plan
assets are comprised primarily of equity and fixed income investments, as follows:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
15,752
|
|
|
$
|
925
|
|
U.S. equity mutual funds
|
|
|
3,447
|
|
|
|
20,310
|
|
International equity mutual funds
|
|
|
—
|
|
|
|
1,876
|
|
Fixed income mutual funds
|
|
|
7,182
|
|
|
|
3,052
|
|
|
|
$
|
26,381
|
|
|
$
|
26,163
|
|
The
fair value of the above investments is determined using quoted market prices of identical instruments. Therefore, the valuation
inputs within the fair value hierarchy established by ASC 820 are classified as Level 1 of the valuation hierarchy.
The
following tables set forth the funded status of the Company’s defined benefit pension plan and the amount recognized in the balance
sheet at March 28, 2020 and March 30, 2019:
|
|
|
|
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
24,507
|
|
|
$
|
24,570
|
|
Service cost
|
|
|
248
|
|
|
|
258
|
|
Interest cost
|
|
|
832
|
|
|
|
885
|
|
Actuarial gain
|
|
|
1,317
|
|
|
|
389
|
|
Benefits paid
|
|
|
(1,644
|
)
|
|
|
(1,595
|
)
|
Benefit obligation at end of year
|
|
$
|
25,260
|
|
|
$
|
24,507
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
26,163
|
|
|
$
|
24,909
|
|
Actual return on plan assets
|
|
|
1,112
|
|
|
|
1,349
|
|
Employer contributions
|
|
|
750
|
|
|
|
1,500
|
|
Benefits paid
|
|
|
(1,644
|
)
|
|
|
(1,595
|
)
|
Fair value of plan assets at end of year
|
|
$
|
26,381
|
|
|
$
|
26,163
|
|
|
|
|
|
|
|
|
|
|
Overfunded status at end of year
|
|
$
|
1,121
|
|
|
$
|
1,656
|
|
Amounts recognized in the consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
$
|
1,121
|
|
|
$
|
1,656
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
$
|
2
|
|
|
$
|
37
|
|
Net actuarial loss
|
|
|
8,352
|
|
|
|
7,307
|
|
Accumulated other comprehensive loss
|
|
$
|
8,354
|
|
|
$
|
7,344
|
|
Amounts included in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost in 2021:
Prior service cost
|
|
$
|
2
|
|
Net actuarial loss
|
|
|
1,082
|
|
Total
|
|
$
|
1,084
|
|
Benefits
under the union plans are not a function of employees’ salaries; thus, the accumulated benefit obligation equals the projected
benefit obligation.
The
following table sets forth net periodic benefit cost of the Company’s plan for the three fiscal years in the period ended March
28, 2020:
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
248
|
|
|
$
|
258
|
|
|
$
|
232
|
|
Interest cost
|
|
|
832
|
|
|
|
885
|
|
|
|
904
|
|
Expected return on plan assets
|
|
|
(1,753
|
)
|
|
|
(1,667
|
)
|
|
|
(1,610
|
)
|
Amortization of prior service cost
|
|
|
35
|
|
|
|
35
|
|
|
|
35
|
|
Amortization of losses
|
|
|
914
|
|
|
|
995
|
|
|
|
1,207
|
|
Net periodic benefit cost
|
|
$
|
276
|
|
|
$
|
506
|
|
|
$
|
768
|
|
The
assumptions used in determining the net periodic benefit cost information are as follows:
|
|
FY 2020
|
|
|
FY 2019
|
|
|
FY 2018
|
|
Discount rate
|
|
|
3.50
|
%
|
|
|
3.70
|
%
|
|
|
3.70
|
%
|
Expected long-term rate of return on plan assets
|
|
|
6.75
|
%
|
|
|
6.75
|
%
|
|
|
7.00
|
%
|
The
discount rates used in determining the funded status as of March 28, 2020 and March 30, 2019 were 2.80% and 3.50%, respectively.
To determine the net periodic benefit costs in fiscal 2020,
the Pri-2012 Private Retirement Plans Blue Collar Amount-Weighted Mortality Table, projected to the measurement date with Scale
MP-2019, was used. To determine the net periodic benefit costs in fiscal 2019, the RP-2014 Adjusted to 2006 Blue Collar Mortality
Table, projected to the measurement date with Scale MP-2018, was used. To determine the net periodic benefit costs in fiscal 2018,
the RP-2014 Adjusted to 2006 Blue Collar Mortality Table, projected to the measurement date with Scale MP-2017, was used.
In
developing the overall expected long-term return on plan assets assumption, a building block approach was used in which rates
of return in excess of inflation were considered separately for equity securities and debt securities. The excess returns were
weighted by the representative target allocation and added along with an appropriate rate of inflation to develop the overall
expected long-term return on plan assets assumption. The Company’s long-term target allocation of plan assets is 70% equity
and 30% fixed income investments.
The
Company’s investment program objective is to achieve a rate of return on plan assets which will fund the plan liabilities and
provide for required benefits while avoiding undue exposure to risk to the plan and increases in funding requirements.
The
following benefit payments, which reflect future service as appropriate, are expected to be paid. The benefit payments are based
on the same assumptions used to measure the Company’s benefit obligation at the end of fiscal 2020:
2021
|
|
$
|
1,722
|
|
2022
|
|
|
1,736
|
|
2023
|
|
|
1,742
|
|
2024
|
|
|
1,741
|
|
2025
|
|
|
1,705
|
|
2026-2030
|
|
|
7,954
|
|
Although
no contributions are required for fiscal 2021, the Company expects to make cash contributions in the $750 to $1,500 range.
Two of the Company’s foreign operations, Schaublin and Swiss Tool, sponsor pension plans for
their approximately 149 and 46 employees, respectively, in conformance with Swiss pension law. The Schaublin plan is funded with
an independent semi-autonomous collective provident foundation whereas the Swiss Tool plan is funded with a reputable Swiss insurer.
Through the insurance contracts, Schaublin and Swiss Tool have effectively transferred all investment and mortality risk to the
collective provident foundation and Swiss insurance company, respectively, which guarantees the federally mandated rate of return
and the conversion rate at retirement for the BVG mandatory portion. Accordingly, the plans have no unfunded liability; the interest
cost is exactly offset by the actual return. Thus, the net periodic pension cost is equal to the amount of annual premium paid
by Schaublin and Swiss Tool, respectively. For fiscal years 2020, 2019 and 2018, Schaublin made contribution and premium payments
equal to $872, $887 and $889, respectively. Swiss Tool made contribution and premium payments equal to $229 since being acquired
in August 2019.
The
Company also has defined contribution plans under Section 401(k) of the Internal Revenue Code for all of its employees not
covered by a collective bargaining agreement. Employer contributions under this plan, ranging from 10%-100% of eligible amounts
contributed by employees, amounted to $2,212, $1,889 and $1,714 in fiscal 2020, 2019 and 2018, respectively.
Effective September 1,
1996, the Company adopted a non-qualified Supplemental Executive Retirement Plan (“SERP”) for a select group of senior
management employees. The SERP allowed eligible employees to elect to defer, until termination of their employment, the receipt
of up to 25% of their salary. In August 2008, the plan was modified, allowing eligible employees to elect to defer up to 75% of
their current salary and up to 100% of bonus compensation. Employer contributions under this plan equal the lesser of 25% of the
deferrals, or 1.75% of the employee’s annual salary, which vest in full after one year of service following the effective
date of the SERP. Employer contributions under this plan amounted to $289, $312 and $271 in fiscal 2020, 2019 and 2018, respectively.
14.
Postretirement Health Care and Life Insurance Benefits
The Company, for the benefit
of employees at its Heim, West Trenton, Plymouth and PIC facilities and former union employees of its Tyson and Nice subsidiaries,
sponsors contributory defined benefit health care plans that provide postretirement medical and life insurance benefits to union
employees who have attained certain age and/or service requirements while employed by the Company. The plans are unfunded and
costs are paid as incurred. Postretirement benefit obligations are included in accrued expenses and other current liabilities
and other non-current liabilities in the consolidated balance sheets.
The
following table set forth the funded status of the Company’s postretirement benefit plans, the amount recognized in the
balance sheet at March 28, 2020 and March 30, 2019:
|
|
|
|
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
2,547
|
|
|
$
|
2,671
|
|
Service cost
|
|
|
63
|
|
|
|
47
|
|
Interest cost
|
|
|
84
|
|
|
|
91
|
|
Actuarial gain
|
|
|
94
|
|
|
|
(131
|
)
|
Benefits paid
|
|
|
(127
|
)
|
|
|
(131
|
)
|
Benefit obligation at end of year
|
|
$
|
2,661
|
|
|
$
|
2,547
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
—
|
|
|
$
|
—
|
|
Company contributions
|
|
|
127
|
|
|
|
131
|
|
Benefits paid
|
|
|
(127
|
)
|
|
|
(131
|
)
|
Fair value of plan assets at end of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Underfunded status at end of year
|
|
$
|
(2,661
|
)
|
|
$
|
(2,547
|
)
|
Amounts recognized in the consolidated balance sheets:
|
|
|
|
|
|
|
|
|
Current liability
|
|
$
|
(176
|
)
|
|
$
|
(189
|
)
|
Non-current liability
|
|
|
(2,485
|
)
|
|
|
(2,358
|
)
|
Net liability recognized
|
|
$
|
(2,661
|
)
|
|
$
|
(2,547
|
)
|
Amounts recognized in accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
$
|
9
|
|
|
$
|
12
|
|
Net actuarial loss
|
|
|
(74
|
)
|
|
|
(191
|
)
|
Accumulated other comprehensive loss
|
|
$
|
(65
|
)
|
|
$
|
(179
|
)
|
Amounts included in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost in 2021:
Prior service cost
|
|
$
|
3
|
|
Net actuarial loss
|
|
|
(1
|
)
|
Total
|
|
$
|
2
|
|
|
|
Fiscal Year Ended
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
63
|
|
|
$
|
47
|
|
|
$
|
33
|
|
Interest cost
|
|
|
84
|
|
|
|
91
|
|
|
|
98
|
|
Prior service cost amortization
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
Amount of loss recognized
|
|
|
(23
|
)
|
|
|
(25
|
)
|
|
|
(4
|
)
|
Net periodic benefit cost
|
|
$
|
127
|
|
|
$
|
116
|
|
|
$
|
130
|
|
The
Company measures its plans as of the last day of the fiscal year.
The plans contractually
limit the benefit to be provided for certain groups of current and future retirees. As a result, there is no health care trend
associated with these groups. The discount rate used in determining the accumulated postretirement benefit obligation was 2.80%
at March 28, 2020 and 3.50% at March 30, 2019. The discount rate used in determining the net periodic benefit cost was 3.50% for
fiscal 2020, 3.70% for fiscal 2019, and 3.70% for fiscal 2018. To determine the postretirement net periodic benefit costs in fiscal
2020, the Pri-2012 Private Retirement Plans Blue Collar Amount Weighted Mortality Table, projected to the measurement date with
Scale MP-2019, was used. To determine the postretirement net periodic benefit costs in fiscal 2019, the RP-2014 Adjusted to 2006
Blue Collar Mortality Table, projected to the measurement date with Scale MP-2018, was used. To determine the postretirement net
periodic benefit costs in fiscal 2018, the RP-2014 Adjusted to 2006 Blue Collar Mortality Table, projected to the measurement date
with Scale MP-2017, was used.
The
following benefit payments, which reflect future service as appropriate, are expected to be paid. The benefit payments are based
on the same assumptions used to measure the Company’s benefit obligation at the end of fiscal 2020:
2021
|
|
$
|
176
|
|
2022
|
|
|
174
|
|
2023
|
|
|
187
|
|
2024
|
|
|
179
|
|
2025
|
|
|
179
|
|
2026-2030
|
|
|
959
|
|
15.
Income Taxes
Income
before income taxes for the Company’s domestic and foreign operations is as follows:
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
148,154
|
|
|
$
|
115,747
|
|
|
$
|
116,513
|
|
Foreign
|
|
|
5,985
|
|
|
|
10,343
|
|
|
|
3,338
|
|
Total income before income taxes
|
|
$
|
154,139
|
|
|
$
|
126,090
|
|
|
$
|
119,851
|
|
The
provision for income taxes consists of the following:
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Current tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
16,370
|
|
|
$
|
18,200
|
|
|
$
|
28,555
|
|
State
|
|
|
2,578
|
|
|
|
2,908
|
|
|
|
1,313
|
|
Foreign
|
|
|
2,653
|
|
|
|
4,693
|
|
|
|
3,544
|
|
|
|
|
21,601
|
|
|
|
25,801
|
|
|
|
33,412
|
|
Deferred tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
6,210
|
|
|
|
(4,111
|
)
|
|
|
(273
|
)
|
State
|
|
|
1,076
|
|
|
|
(756
|
)
|
|
|
457
|
|
Foreign
|
|
|
(784
|
)
|
|
|
(37
|
)
|
|
|
(886
|
)
|
|
|
|
6,502
|
|
|
|
(4,904
|
)
|
|
|
(702
|
)
|
Total income taxes
|
|
$
|
28,103
|
|
|
$
|
20,897
|
|
|
$
|
32,710
|
|
On
December 22, 2017, the United States enacted significant changes to the U.S. tax law following the passage and signing of the
Tax Cuts and Jobs Act (the “TCJA” or the “Act”). The legislation significantly changes U.S. tax law by,
among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a one-time repatriation
tax on undistributed foreign earnings. The Act permanently reduces the U.S. corporate income tax rate from 35% to 21% effective
for tax years beginning after December 31, 2017. The primary impacts of the TCJA reflected in the consolidated financial statements
relate to the remeasurement of deferred tax assets and liabilities resulting from the change in the corporate rate and a one-time
mandatory transition tax on accumulated earnings of foreign subsidiaries. The SEC provided guidance that allows the Company to
record provisional amounts if the accounting assessment is incomplete for impacts of the Act, with the requirement that the accounting
be finalized in a period not to exceed one year from the date of enactment. As of December 22, 2018, the Company has completed
the accounting for the tax effects of the Act and there have been no material changes to previously recorded amounts.
No
additional income tax provision has been made on any remaining undistributed foreign earnings not subject to the one-time net
charge related to the taxation of unremitted foreign earnings or any additional outside basis difference as these amounts continue
to be indefinitely reinvested in foreign operations.
One
of the international tax law changes provided for with TCJA relates to the taxation of a corporation’s global intangible
low-taxed income (“GILTI”) for tax years beginning after December 31, 2017. The Company has evaluated this provision
of TCJA and the application of ASC 740, and does not believe that GILTI will have a significant impact.
An additional tax law
change provided under TCJA introduced new rules for the treatment of certain foreign income, including foreign derived intangible
income (FDII) for tax years beginning after December 31, 2017. The Company has evaluated this provision of TCJA and believes that
FDII results in a favorable impact on the application of ASC 740.
In
addition to the impact of a full fiscal year with a lower U.S. federal statutory rate, the Company recorded a net tax benefit
of $1,651 in fiscal 2019 resulting from the Act.
An
analysis of the difference between the provision for income taxes and the amount computed by applying the U.S. statutory income
tax rate to pre-tax income follows:
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes using U.S. federal statutory rate
|
|
$
|
32,369
|
|
|
$
|
26,479
|
|
|
$
|
37,825
|
|
State income taxes, net of federal benefit
|
|
|
2,851
|
|
|
|
1,714
|
|
|
|
1,221
|
|
Domestic production activities deduction
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,374
|
)
|
Revaluation of deferred tax liabilities due to federal rate change
|
|
|
—
|
|
|
|
282
|
|
|
|
(9,318
|
)
|
Stock-based compensation
|
|
|
(3,834
|
)
|
|
|
(5,155
|
)
|
|
|
(4,905
|
)
|
Foreign rate differential
|
|
|
613
|
|
|
|
2,484
|
|
|
|
1,604
|
|
Transition tax
|
|
|
135
|
|
|
|
(161
|
)
|
|
|
9,166
|
|
Research and development credits
|
|
|
(1,737
|
)
|
|
|
(1,765
|
)
|
|
|
(1,293
|
)
|
Foreign derived intangible income (FDII)
|
|
|
(1,569
|
)
|
|
|
(1,772
|
)
|
|
|
—
|
|
U.S. unrecognized tax positions
|
|
|
(146
|
)
|
|
|
(951
|
)
|
|
|
452
|
|
Other - net
|
|
|
(579
|
)
|
|
|
(258
|
)
|
|
|
(668
|
)
|
|
|
$
|
28,103
|
|
|
$
|
20,897
|
|
|
$
|
32,710
|
|
Net
deferred tax assets (liabilities) are comprised of the following:
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Postretirement benefits
|
|
$
|
591
|
|
|
$
|
560
|
|
Employee compensation accruals
|
|
|
4,886
|
|
|
|
4,034
|
|
Inventory
|
|
|
9,479
|
|
|
|
9,298
|
|
Operating lease liabilities
|
|
|
7,252
|
|
|
|
—
|
|
Stock compensation
|
|
|
5,289
|
|
|
|
4,734
|
|
Tax loss and credit carryforwards
|
|
|
9,726
|
|
|
|
9,863
|
|
State tax
|
|
|
1,460
|
|
|
|
1,270
|
|
Other
|
|
|
—
|
|
|
|
187
|
|
Total gross deferred tax assets
|
|
|
38,683
|
|
|
|
29,946
|
|
Valuation allowance
|
|
|
(4,250
|
)
|
|
|
(3,643
|
)
|
Total deferred tax assets
|
|
$
|
34,433
|
|
|
$
|
26,303
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
(21,029
|
)
|
|
$
|
(16,312
|
)
|
Pension
|
|
|
(262
|
)
|
|
|
(388
|
)
|
Operating lease assets
|
|
|
(7,218
|
)
|
|
|
—
|
|
Other
|
|
|
(603
|
)
|
|
|
—
|
|
Intangible assets
|
|
|
(21,881
|
)
|
|
|
(16,465
|
)
|
Total deferred tax liabilities
|
|
$
|
(50,993
|
)
|
|
$
|
(33,165
|
)
|
|
|
|
|
|
|
|
|
|
Total net deferred liabilities
|
|
$
|
(16,560
|
)
|
|
$
|
(6,862
|
)
|
The
Company evaluates deferred tax assets to ensure that the estimated future taxable income will be sufficient in character
(i.e. capital versus ordinary income treatment), amount and timing to result in their recovery. After considering the
positive and negative evidence, a valuation allowance has been recorded on foreign tax credits and on certain state credits
and state net operating losses as it is more likely than not (i.e. greater than a 50% likelihood) that these items will not
be utilized. For the Company’s fiscal year ended March 28, 2020 the valuation allowance increased by $607 which
pertained to an increase of U.S. federal and state credits. For the Company’s fiscal year ended March 30, 2019 the
valuation allowance increased by $1,325 which pertained to an increase of U.S. federal and state credits. These valuation
allowances are required because management has determined, based on financial projections and available tax strategies, that
it is unlikely the net operating losses and credits will be utilized before they expire. If events or circumstances change,
valuation allowances are adjusted at that time resulting in an income tax benefit or charge.
At
March 28, 2020, the Company has state net operating losses in different jurisdictions at varying amounts up to $7,332, which expire
at various dates through 2036. At March 28, 2020, the Company has U.S. federal and state credits in different jurisdictions at
varying amounts up to $6,414 which will expire at various dates through 2035. At March 28, 2020, the Company has foreign credits
in different jurisdictions at varying amounts up to $936 which will expire at various dates through 2037.
The
TCJA required a mandatory deemed repatriation of certain undistributed earnings of the Company’s foreign subsidiaries as
of December 31, 2017. If the earnings were distributed in the form of cash dividends, the Company would not be subject to additional
U.S. income taxes but could be subject to foreign income and withholding taxes. Under accounting standards (ASC 740) a deferred
tax liability is not recorded for the excess of the tax basis over the financial reporting (book) basis of an investment in a
foreign subsidiary if the indefinite reinvestment criteria is met. A provision has not been made for additional U.S. and foreign
taxes at March 28, 2020 on approximately $19,408 of undistributed earnings of foreign subsidiaries because the Company intends
to reinvest these funds indefinitely to support foreign growth opportunities. It is not practicable to estimate the unrecognized
deferred tax liability on these undistributed earnings. These earnings could become subject to additional tax under certain circumstances
including, but not limited to, loans to the Company, or upon sale or pledging of the subsidiary’s stock.
Uncertain
Tax Positions
Unrecognized
income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the consolidated financial
statements. If recognized, substantially all of the unrecognized tax benefits for the Company’s fiscal years ended March
28, 2020 and March 30, 2019 would affect the effective income tax rate.
A
reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
|
March 28,
2020
|
|
|
March 30,
2019
|
|
|
March 31,
2018
|
|
Balance, beginning of year
|
|
$
|
13,479
|
|
|
$
|
11,935
|
|
|
$
|
13,775
|
|
Gross increases (decreases) – tax positions taken during a prior period
|
|
|
123
|
|
|
|
624
|
|
|
|
(2,475
|
)
|
Gross increases – tax positions taken during the current period
|
|
|
1,702
|
|
|
|
2,697
|
|
|
|
1,146
|
|
Reductions due to lapse of the applicable statute of limitations
|
|
|
(1,092
|
)
|
|
|
(1,777
|
)
|
|
|
(511
|
)
|
Balance, end of year
|
|
$
|
14,212
|
|
|
$
|
13,479
|
|
|
$
|
11,935
|
|
The
Company recognizes the interest and penalties accrued related to unrecognized tax benefits in income tax expense. The Company
recognized expense of $213, $45 and $284 of interest and penalties on its statement of operations for the fiscal years ended March
28, 2020, March 30, 2019 and March 31, 2018 respectively. The Company has approximately $1,406 and $1,193 of accrued interest
and penalties at March 28, 2020 and March 30, 2019, respectively.
The
Company believes it is reasonably possible that some of its unrecognized tax positions may be effectively settled by the end of
the Company’s fiscal year ending April 3, 2021 due to the closing of audits and the statute of limitations expiring in varying
jurisdictions. The decrease, pertaining primarily to federal and state credits and state tax, is estimated to be $1,463.
The
Company files income tax returns in numerous U.S. and foreign jurisdictions, with returns subject to examination for varying periods,
but generally back to and including the year ending April 2, 2005. The Company is no longer subject to U.S. federal tax examination
by the Internal Revenue Service for years ending before April 1, 2017.
16.
Stockholders’ Equity
Long-Term
Equity Incentive Plans
2005
Long-Term Incentive Plan
The
2005 Long-Term Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock and performance
awards. Directors, officers and other employees and persons who engage in services for the Company are eligible for grants under
the Plan. The purpose of the Plan is to provide these individuals with incentives to maximize stockholder value and otherwise
contribute to the Company’s success and to enable the Company to attract, retain and reward the best available persons for
positions of responsibility.
1,139,170
shares of common stock were authorized for issuance under the Plan, subject to adjustment in the event of a reorganization, stock
split, merger or similar change in the Company’s corporate structure or in the outstanding shares of common stock. An amendment
to increase the number of shares available for issuance under the 2005 Long-Term Incentive Plan from 1,139,170 to 1,639,170 was
approved by shareholder vote in September 2006. A further amendment to increase the number of shares available for issuance under
the 2005 Long-Term Incentive Plan from 1,639,170 to 2,239,170 was approved by shareholder vote in September 2007. A further amendment
to increase the number of shares available for issuance under the 2005 Long-Term Incentive Plan from 2,239,170 to 2,939,170 was
approved by shareholder vote in September, 2010. The 2005 Stock Option Plan has been terminated and no additional stock options
or restricted stock will be granted pursuant to the Plan. The Company’s Board also has the authority to administer the Plan
and to take all actions that the Compensation Committee is otherwise authorized to take under the Plan. The terms and conditions
of each award made under the Plan, including vesting requirements, is set forth consistent with the Plan in a written agreement
with the grantee.
2013
Long-Term Incentive Plan
The
2013 Long-Term Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock and performance
awards. The purpose of the Plan is to provide our directors, officers and other employees and persons who engage in services for
us with incentives to maximize stockholder value and otherwise contribute to our success and to enable us to attract, retain and
reward the best available persons for positions of responsibility.
1,500,000
shares of common stock were authorized for issuance under the Plan, subject to adjustment in the event of a reorganization, stock
split, merger or similar change in the Company’s corporate structure or in the outstanding shares of common stock. The Company
may grant shares of restricted stock to its employees and directors in the future under the Plan. The Company’s Compensation
Committee will administer the Plan. The Company’s Board also has the authority to administer the Plan and to take all actions
that the Compensation Committee is otherwise authorized to take under the Plan. The terms and conditions of each award made under
the Plan, including vesting requirements, is set forth consistent with the Plan in a written agreement with the grantee.
2017
Long-Term Incentive Plan
The
2017 Long-Term Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock and performance
awards. Directors, officers and other employees and persons who engage in services for the Company are eligible for grants under
the Plan. The purpose of the Plan is to provide these individuals with incentives to maximize stockholder value and otherwise
contribute to the Company’s success and to enable the Company to attract, retain and reward the best available persons for
positions of responsibility.
1,500,000
shares of common stock were authorized for issuance under the Plan, subject to adjustment in the event of a reorganization, stock
split, merger or similar change in the Company’s corporate structure or in the outstanding shares of common stock. The Company
may grant shares of restricted stock to its employees and directors in the future under the Plan. The Company’s Compensation
Committee will administer the Plan. The Company’s Board also has the authority to administer the Plan and to take all actions
that the Compensation Committee is otherwise authorized to take under the Plan. The terms and conditions of each award made under
the Plan, including vesting requirements, is set forth consistent with the Plan in a written agreement with the grantee.
Stock
Options. Under the 2013 and 2017 Long-Term Incentive Plans, the Compensation Committee or the Board may approve the award
of grants of incentive stock options and other non-qualified stock options. The Compensation Committee also has the authority
to approve the grant of options that will become fully vested and exercisable automatically upon a change in control. The Compensation
Committee may not, however, approve an award to any one person in any calendar year for options to purchase common stock equal
to more than 10% of the total number of shares authorized under the Plan, and it may not approve an award of incentive options
first exercisable in any calendar year whose underlying shares have a fair market value greater than $100 determined at the time
of grant. The Compensation Committee will approve the exercise price and term of any option in its discretion; however, the exercise
price may not be less than 100% of the fair market value of a share of common stock on the date of grant. Under the 2005 Long-Term
Incentive Plan, any incentive stock option must be exercised within 10 years of the date of grant. Under the 2013 Long-Term
Incentive Plan, any incentive stock option must be exercised within 7 years of the date of grant. Under the 2017 Long-Term Incentive
Plan, any incentive stock option must be exercised within 7 years of the date of grant. Under all three Plans, the exercise price
of an incentive option awarded to a person who owns stock constituting more than 10% of the Company’s voting power may not
be less than 110% of such fair market value on such date and the option must be exercised within five years of the date of grant.
As of March 28, 2020, there were outstanding options to purchase 4,200 shares of common stock granted under the 2005 Long-Term
Incentive Plan, all of which were exercisable. There were 365,828 outstanding options to purchase shares of common stock granted
under the 2013 Long-Term Incentive Plan, 117,452 of which were exercisable. There were 343,883 outstanding options to purchase
shares of common stock granted under the 2017 Long-Term Incentive Plan, 32,391 of which were exercisable.
Restricted
Stock. Under the 2013 and 2017 Long-Term Incentive Plans, the Compensation Committee may approve the award of restricted stock
subject to the conditions and restrictions, and for the duration that it determines in its discretion. Under the 2017 Long-Term
Incentive Plan, the number of shares that may be used for restricted stock or restricted unit grants under the Plan may not exceed
fifty percent (50%) of the total authorized number of Shares pursuant to the Plan. As of March 28, 2020, there were 155,298 and
133,412 shares of restricted stock outstanding under the 2013 and 2017 Long-Term Incentive Plans, respectively. There were no
shares of restricted stock outstanding under the 2005 Long-Term Incentive Plan as of March 28, 2020.
Stock
Appreciation Rights. The Compensation Committee may approve the grant of stock appreciation rights, or SARs, subject to the
terms and conditions contained in the Plan. Under the 2013 and 2017 Long-Term Incentive Plans, the exercise price of a SAR must
equal the fair market value of a share of the Company’s common stock on the date the SAR was granted. Upon exercise of a
SAR, the grantee will receive an amount in shares of our common stock equal to the difference between the fair market value of
a share of common stock on the date of exercise and the exercise price of the SAR, multiplied by the number of shares as to which
the SAR is exercised. There were no SARs issued or outstanding under the 2005, 2013 or 2017 Long-Term Incentive Plans as of March
28, 2020.
Performance
Awards. The Compensation Committee may approve the grant of performance awards contingent upon achievement by the grantee
or by the Company, of set goals and objectives regarding specified performance criteria, over a specified performance cycle. Awards
may include specific dollar-value target awards, performance units, the value of which is established at the time of grant, and/or
performance shares, the value of which is equal to the fair market value of a share of common stock on the date of grant. The
value of a performance award may be fixed or fluctuate on the basis of specified performance criteria. A performance award may
be paid out in cash and/or shares of common stock or other securities. There were no performance awards issued or outstanding
under the 2005, 2013 or 2017 Long-Term Incentive Plans as of March 28, 2020.
Amendment
and Termination of the Plan. The Board may amend or terminate the 2013 and 2017 Long-Term Incentive Plans at its discretion,
except that no amendment will become effective without prior approval of the Company’s stockholders if such approval is
necessary for continued compliance with the performance-based compensation exception of Section 162(m) of the Internal Revenue
Code or any stock exchange listing requirements. The 2005 Long-Term Incentive Plan terminated on the tenth anniversary of its
adoption. Subject to the provisions of an Award Agreement, which may be more restrictive, no termination of the Plan shall materially
and adversely affect any of the rights or obligations of any person, without his or her written consent, under any grant of options
or other incentives theretofore granted under the Plan.
A
summary of the status of the Company’s stock options outstanding as of March 28, 2020 and changes during the year then ended is
presented below. All cashless exercises of options and warrants are handled through an independent broker.
|
|
Number Of
Common Stock
Options
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted
Average
Contractual Life (Years)
|
|
|
Intrinsic
Value
|
|
Outstanding, March 30, 2019
|
|
|
743,140
|
|
|
$
|
95.82
|
|
|
|
5.3
|
|
|
$
|
23,301
|
|
Awarded
|
|
|
154,200
|
|
|
|
144.52
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(179,897
|
)
|
|
|
75.59
|
|
|
|
|
|
|
|
|
|
Forfeitures
|
|
|
(3,532
|
)
|
|
|
99.79
|
|
|
|
|
|
|
|
|
|
Outstanding, March 28, 2020
|
|
|
713,911
|
|
|
$
|
111.41
|
|
|
|
4.5
|
|
|
$
|
9,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, March 28, 2020
|
|
|
154,043
|
|
|
$
|
90.87
|
|
|
|
3.4
|
|
|
$
|
3,880
|
|
The
fair value for the Company’s options was estimated at the date of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions, which are updated to reflect current expectations of the dividend yield, expected life,
risk-free interest rate and using historical volatility to project expected volatility:
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Expected weighted-average life (yrs.)
|
|
|
5.0
|
|
|
|
5.0
|
|
|
|
5.0
|
|
Risk-free interest rate
|
|
|
1.82
|
%
|
|
|
2.77
|
%
|
|
|
2.02
|
%
|
Expected volatility
|
|
|
26.93
|
%
|
|
|
25.16
|
%
|
|
|
24.17
|
%
|
The weighted average
fair value per share of options granted was $39.34 in fiscal 2020, $37.02 in fiscal 2019 and $26.73 in fiscal 2018.
The Company recorded
$4,146 (net of taxes of $1,263) in compensation in fiscal 2020 related to option awards. As of March 28, 2020, there was $14,160
of unrecognized compensation costs related to options which is expected to be recognized over a weighted average period of 3.3
years. The total intrinsic value of options exercised in fiscal 2020, 2019 and 2018 was $15,273, $26,060 and $16,002, respectively.
Of
the total awards outstanding at March 28, 2020, 704,048 are either fully vested or are expected to vest. These shares have a weighted
average exercise price of $111.20, an intrinsic value of $9,222 and a weighted average contractual term of 4.5 years.
A
summary of the status of the Company’s restricted stock outstanding as of March 28, 2020 and the changes during the year
then ended is presented below.
|
|
Number Of
Restricted Stock
Shares
|
|
|
Weighted-Average
Grant Date Fair Value
|
|
Non-vested, March 30, 2019
|
|
|
317,881
|
|
|
$
|
110.03
|
|
Granted
|
|
|
97,640
|
|
|
|
145.72
|
|
Vested
|
|
|
(123,493
|
)
|
|
|
101.83
|
|
Forfeitures
|
|
|
(3,318
|
)
|
|
|
116.34
|
|
Non-vested, March 28, 2020
|
|
|
288,710
|
|
|
$
|
125.54
|
|
The Company recorded
$11,299 (net of taxes of $3,442) in compensation in fiscal 2020 related to restricted stock awards. These awards were valued at
the fair market value of the Company’s common stock on the date of issuance and are being amortized as expense over the applicable
vesting period. The total fair value of restricted stock awards that vested during fiscal 2020, 2019, and 2018 was $19,916, $15,819,
and $13,713, respectively. Unrecognized expense for restricted stock was $26,754 at March 28, 2020. This cost is expected to be
recognized over a weighted average period of approximately 2.4 years.
17.
Commitments and Contingencies
As
of March 28, 2020, approximately 7.5% of the Company’s hourly employees in the U.S. and abroad were represented by labor unions.
The
Company enters into government contracts and subcontracts that are subject to audit by the government. In the opinion of the Company’s
management, the results of such audits, if any, are not expected to have a material impact on the cash flows, financial condition
or results of operations of the Company.
For
fiscal 2020, 2019 and 2018, there were no audits by the government, the results of which, in the opinion of the Company’s
management, had a material impact on the cash flows, financial condition or results of operations of the Company.
The
Company is subject to federal, state and local environmental laws and regulations, including those governing discharges of pollutants
into the air and water, the storage, handling and disposal of wastes and the health and safety of employees. The Company also
may be liable under the Comprehensive Environmental Response, Compensation, and Liability Act or similar state laws for the costs
of investigation and cleanup of contamination at facilities currently or formerly owned or operated by the Company, or at other
facilities at which the Company may have disposed of hazardous substances. In connection with such contamination, the Company
may also be liable for natural resource damages, government penalties and claims by third parties for personal injury and property
damage. Agencies responsible for enforcing these laws have authority to impose significant civil or criminal penalties for non-compliance.
The Company believes it is currently in material compliance with all applicable requirements of environmental laws. The Company
does not anticipate material capital expenditures for environmental compliance in fiscal years 2021 or 2022.
Investigation
and remediation of contamination is ongoing at some of the Company’s sites. In particular, state agencies have been overseeing
groundwater monitoring activities at the Company’s facility in Hartsville, South Carolina and a corrective action plan at the
Company’s property in Clayton, Georgia. At Hartsville, the Company is monitoring low levels of contaminants in the groundwater
caused by former operations. Plans are currently underway to conclude remediation and monitoring activities. In connection with
the purchase of the Fairfield, Connecticut facility in 1996, the Company agreed to assume responsibility for completing clean-up
efforts previously initiated by the prior owner. The Company submitted data to the state that the Company believes demonstrates
that no further remedial action is necessary, although the state may require additional clean-up or monitoring. In connection
with the purchase of the Company’s Clayton, Georgia property, the Company agreed to take assignment of the hazardous waste
permit covering such facility and to assume certain responsibilities to implement a corrective action plan concerning the remediation
of certain soil and groundwater contamination present at that facility. The corrective action plan is ongoing. Although there
can be no assurance, the Company does not expect the costs associated with the above sites to be material.
From
time to time, we are involved in litigation and administrative proceedings which arise in the ordinary course of our business.
We do not believe that any litigation or proceeding in which we are currently involved, either individually or in the aggregate,
is likely to have a material adverse effect on our business, financial condition, operating results, cash flow or prospects.
The
Company has lease arrangements which expire at various dates. Refer to Note 7, “Leases”, for further details regarding
these lease arrangements.
18.
Other, Net
Other,
net is comprised of the following:
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Plant consolidation and restructuring costs
|
|
$
|
1,087
|
|
|
$
|
16,906
|
|
|
$
|
7,685
|
|
Acquisition costs
|
|
|
901
|
|
|
|
—
|
|
|
|
—
|
|
Provision for doubtful accounts
|
|
|
263
|
|
|
|
203
|
|
|
|
125
|
|
Amortization of intangibles
|
|
|
9,612
|
|
|
|
9,666
|
|
|
|
9,344
|
|
(Gain) loss on disposal of assets
|
|
|
(1,227
|
)
|
|
|
853
|
|
|
|
241
|
|
Other income, net
|
|
|
(883
|
)
|
|
|
(514
|
)
|
|
|
(756
|
)
|
|
|
$
|
9,753
|
|
|
$
|
27,114
|
|
|
$
|
16,639
|
|
19.
Reportable Segments
The
Company operates through operating segments for which separate financial information is available, and for which operating results
are evaluated regularly by the Company’s chief operating decision maker in determining resource allocation and assessing performance.
Those operating segments with similar economic characteristics and that meet all other required criteria, including nature of
the products and production processes, distribution patterns and classes of customers, are aggregated as reportable segments.
The
Company has four reportable business 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 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 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 consist of highly engineered hydraulics, fasteners, collets, tool holders and precision
components used in aerospace, marine and industrial applications.
The
accounting policies of the reportable segments are the same as those described in Part II, Item 8. “Financial Statements
and Supplementary Data,” Note 2 “Summary of Significant Accounting Policies.” Segment performance is evaluated
based on segment net sales and gross margin. Items not allocated to segment operating income include corporate administrative
expenses and certain other amounts. Identifiable assets by reportable segment consist of those directly identified with the segment’s
operations.
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Net External Sales
|
|
|
|
|
|
|
|
|
|
Plain
|
|
$
|
358,291
|
|
|
$
|
323,251
|
|
|
$
|
296,708
|
|
Roller
|
|
|
132,642
|
|
|
|
143,832
|
|
|
|
132,021
|
|
Ball
|
|
|
74,231
|
|
|
|
72,307
|
|
|
|
67,806
|
|
Engineered Products
|
|
|
162,297
|
|
|
|
163,126
|
|
|
|
178,414
|
|
|
|
$
|
727,461
|
|
|
$
|
702,516
|
|
|
$
|
674,949
|
|
Gross Margin
|
|
|
|
|
|
|
|
|
|
Plain
|
|
$
|
144,958
|
|
|
$
|
129,297
|
|
|
$
|
115,886
|
|
Roller
|
|
|
55,519
|
|
|
|
61,559
|
|
|
|
55,160
|
|
Ball
|
|
|
33,041
|
|
|
|
29,846
|
|
|
|
27,965
|
|
Engineered Products
|
|
|
55,585
|
|
|
|
55,951
|
|
|
|
59,526
|
|
|
|
$
|
289,103
|
|
|
$
|
276,653
|
|
|
$
|
258,537
|
|
Selling, General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Plain
|
|
$
|
26,256
|
|
|
$
|
25,617
|
|
|
$
|
25,991
|
|
Roller
|
|
|
6,359
|
|
|
|
6,266
|
|
|
|
6,307
|
|
Ball
|
|
|
6,481
|
|
|
|
6,428
|
|
|
|
6,773
|
|
Engineered Products
|
|
|
17,739
|
|
|
|
19,664
|
|
|
|
21,071
|
|
Corporate
|
|
|
65,730
|
|
|
|
59,529
|
|
|
|
52,982
|
|
|
|
$
|
122,565
|
|
|
$
|
117,504
|
|
|
$
|
113,124
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Plain
|
|
$
|
115,028
|
|
|
$
|
100,048
|
|
|
$
|
86,628
|
|
Roller
|
|
|
48,615
|
|
|
|
55,148
|
|
|
|
48,831
|
|
Ball
|
|
|
26,454
|
|
|
|
23,222
|
|
|
|
20,919
|
|
Engineered Products
|
|
|
32,266
|
|
|
|
16,183
|
|
|
|
25,081
|
|
Corporate
|
|
|
(65,578
|
)
|
|
|
(62,566
|
)
|
|
|
(52,685
|
)
|
|
|
$
|
156,785
|
|
|
$
|
132,035
|
|
|
$
|
128,774
|
|
Total Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Plain
|
|
$
|
423,925
|
|
|
$
|
393,014
|
|
|
$
|
401,248
|
|
Roller
|
|
|
179,711
|
|
|
|
166,733
|
|
|
|
157,012
|
|
Ball
|
|
|
70,138
|
|
|
|
66,443
|
|
|
|
60,000
|
|
Engineered Products
|
|
|
504,649
|
|
|
|
458,058
|
|
|
|
465,479
|
|
Corporate
|
|
|
143,489
|
|
|
|
63,119
|
|
|
|
59,012
|
|
|
|
$
|
1,321,912
|
|
|
$
|
1,147,367
|
|
|
$
|
1,142,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
Plain
|
|
$
|
13,695
|
|
|
$
|
13,185
|
|
|
$
|
11,468
|
|
Roller
|
|
|
6,362
|
|
|
|
5,328
|
|
|
|
4,245
|
|
Ball
|
|
|
2,420
|
|
|
|
3,276
|
|
|
|
2,407
|
|
Engineered Products
|
|
|
14,645
|
|
|
|
18,715
|
|
|
|
7,209
|
|
Corporate
|
|
|
175
|
|
|
|
842
|
|
|
|
2,647
|
|
|
|
$
|
37,297
|
|
|
$
|
41,346
|
|
|
$
|
27,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
Plain
|
|
$
|
10,230
|
|
|
$
|
9,849
|
|
|
$
|
9,296
|
|
Roller
|
|
|
4,339
|
|
|
|
4,029
|
|
|
|
4,109
|
|
Ball
|
|
|
2,199
|
|
|
|
1,971
|
|
|
|
1,752
|
|
Engineered Products
|
|
|
11,442
|
|
|
|
10,412
|
|
|
|
10,777
|
|
Corporate
|
|
|
3,210
|
|
|
|
3,397
|
|
|
|
2,426
|
|
|
|
$
|
31,420
|
|
|
$
|
29,658
|
|
|
$
|
28,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic External Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
651,381
|
|
|
$
|
633,381
|
|
|
$
|
592,818
|
|
Foreign
|
|
|
76,080
|
|
|
|
69,135
|
|
|
|
82,131
|
|
|
|
$
|
727,461
|
|
|
$
|
702,516
|
|
|
$
|
674,949
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
Geographic Long-Lived Assets
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
190,215
|
|
|
$
|
165,533
|
|
|
$
|
150,716
|
|
Foreign
|
|
|
58,584
|
|
|
|
42,362
|
|
|
|
41,797
|
|
|
|
$
|
248,799
|
|
|
$
|
207,895
|
|
|
$
|
192,513
|
|
Intersegment Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Plain
|
|
$
|
6,687
|
|
|
$
|
6,292
|
|
|
$
|
5,209
|
|
Roller
|
|
|
15,579
|
|
|
|
14,650
|
|
|
|
13,262
|
|
Ball
|
|
|
2,947
|
|
|
|
3,363
|
|
|
|
2,408
|
|
Engineered Products
|
|
|
44,964
|
|
|
|
38,948
|
|
|
|
31,857
|
|
|
|
$
|
70,177
|
|
|
$
|
63,253
|
|
|
$
|
52,736
|
|
The net loss of $16,544 related to the sale of the Miami division
during fiscal 2019 was included within the Engineered Products segment and was recognized within other, net on the consolidated
statements of operations. All intersegment sales are eliminated in consolidation.