RBC Bearings is a well known international manufacturer and marketer of highly engineered precision plain, roller and ball bearings. While we manufacture products in all major bearing categories, our focus is primarily on highly technical or regulated bearing products for specialized markets that require sophisticated design, testing and manufacturing capabilities. Our unique expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete.

RBC Bearings has been providing bearing solutions to our customers since 1919. Over the past ten years, under the leadership of our current management team, RBC Bearings has significantly broadened our end markets, products, customer base and geographic reach. We currently have 26 facilities, of which 23 are manufacturing facilities, in four countries. Our selling efforts are supported by a global network of sales engineers, distributors and authorized agents.

The Bearing Industry

Bearings are integral to the manufacture and operation of most machines and mechanical systems. They reduce wear to moving parts, facilitate proper power transmission and reduce damage and energy loss caused by friction. The bearing industry is a highly fragmented multi-billion dollar market. Purchasers of bearings include producers of commercial and military aerospace equipment, automotive and commercial truck manufacturers, industrial equipment and machinery manufacturers, agricultural machinery manufacturers and construction, mining and specialized equipment manufacturers.

Our Competitive Strengths

Leading Market Positions - RBC Bearings competes in specialized markets where we are often the only supplier with the manufacturing expertise, business plan and engineering resources to provide the required bearing solution. Approximately two-thirds of our net sales during fiscal 2010 and fiscal 2009 were generated by products for which we hold the number one or two market position. Most of our products undergo lengthy and rigorous customer certification processes and/or approvals, while our aerospace and defense products generally require additional FAA and military certification, respectively. We often participate in our customers' product design and/or certification process which can take up to six years to complete.

Diversified Revenue Base - RBC Bearings sells a wide array of bearing products to customers across diverse end markets, each of which is influenced by different fundamental economic factors. Our products are sold to OEMs, aftermarket distributors and service providers. Our top ten customers generated 31% of our net sales and no single customer represented more than 8% of our net sales during fiscal 2010.

Large Installed Product Base with Recurring Aftermarket Revenue Stream - Our product base has over 32,800 applications, many of which are part of aerospace, defense and industrial platforms. These products can be in service for as long as several decades, thereby requiring continuing aftermarket support. Aftermarket sales of replacement parts for existing equipment platforms represented approximately 55% of our net sales for fiscal 2010. We are well positioned to continue to capture recurring revenue from these product lines due to high customer switching costs and our unparalleled service levels.

Proprietary Design and Manufacturing Capabilities - Our bearing engineering and manufacturing expertise, including our dedicated team of engineers and proprietary manufacturing capabilities, position us to provide high quality, innovative solutions to our targeted markets in a timely way. These design and manufacturing capabilities allow us to maintain a leadership position as our customers continue to rely on us to develop new, cost-effective bearing solutions.

Disciplined Acquisition Program with History of Successful Integration - RBC Bearings has demonstrated expertise in acquiring and integrating bearing and precision-engineered component manufacturers that: 1) have complementary products or distribution channels; and 2) provide significant potential for margin enhancement. We have consistently increased the profitability of acquired businesses through a process of methods and systems improvement coupled with the introduction of complementary and proprietary new products. Since October 1992, RBC Bearings has completed 20 acquisitions which have significantly broadened our end markets, products, customer base and geographic reach.

Experienced Management Team - Our management team possesses extensive managerial experience in the bearing industry, with our top operating executives averaging over 20 years of bearing industry experience. We retain and attract experienced professionals by leveraging our reputation as a premier provider of precision bearing solutions.

Our Growth Strategy

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

Expand Customer Base and Penetrate End Markets
We continually seek opportunities to penetrate new customers, geographic locations and bearing platforms with existing products or profitable new product opportunities.

Increase Aftermarket Sales
Aftermarket sales accounted for approximately 55% of our net sales for fiscal 2010. Such sales included sales to third party distributors and sales to OEMs for replacement bearings. We will increase the percentage of our revenues derived from the replacement market by continuing to implement several initiatives. We believe that increasing our aftermarket sales of replacement parts will further enhance the continuity and predictability of our revenues and enhance our profitability.

Pursue Selective Acquisitions
The acquisition of businesses that complement or expand our operations has been and continues to be an important element of our business strategy. We believe there will continue to be consolidation within the bearing industry that may present us with acquisition opportunities, particularly within the industrial and aerospace markets. This consolidation is being driven by an ongoing trend among OEMs to utilize fewer suppliers in order to simplify procurement, increase manufacturing efficiency and reduce costs.

Customers and Markets

RBC Bearings serves a broad range of end markets where we can add value with our specialty, precision bearing products and applications. We classify our customers into two principal categories: (i) diversified industrial, and (ii) aerospace and defense. Demand for bearings generally follows the market for products in which bearings are incorporated and the economy as a whole. We have endeavored to mitigate the cyclicality of our product markets by entering into sole-source relationships and long-term purchase orders, through diversification across multiple market segments within the aerospace and defense and diversified industrial segments, by increasing sales to the aftermarket and by focusing on developing highly customized solutions.

During the first nine months of fiscal 2010, the world economy continued to contract, and we experienced unfavorable conditions across our two major markets. Our net sales for diversified industrial decreased  23% year over year, and our net sales for aerospace and defense also decreased 23% year over year.  In our fiscal fourth quarter, we started to experience stronger demand for our diversified industrial products driven by an overall recovery in most worldwide industrial markets.  We are cautiously optimistic that these conditions will continue through our fiscal 2011.

Diversified Industrial Market (42% of net sales in fiscal 2010)
Diversification of our sales among a wide range of industrial markets reduces our exposure to downturns in any individual market. Opportunities exist for growth and margin improvement in this area as a result of the introduction of new products and the expansion of aftermarket sales. Our largest diversified industrial customers include AxleTech International, Caterpillar, ITT Corporation, Komatsu America, National Oilwell Varco and various aftermarket distributors including Applied Industrial Technologies, Kaman Corporation and Motion Industries.

Aerospace and Defense Market (58% of net sales in fiscal 2010)
Aerospace Applications: RBC supplies bearings for use in commercial and private aircraft. In addition, RBC provides bearings to military contractors for airplanes, helicopters and missile systems. Commercial aerospace customers generally require precision products, often of special materials, made to unique designs and specifications. Many of our aerospace bearing products are designed and certified during the original development of the aircraft being served, which often makes us the primary bearing supplier for the life of the aircraft. Our largest aerospace customers include Airbus, BAE Systems, Boeing, Embraer, General Electric, Lockheed Martin, Raytheon, Snecma Group, United Technologies and various aftermarket channels

Defense Applications: RBC's bearing products are also used in fighter jets, troop transports, naval vessels, helicopters, gas turbine engines, armored vehicles, guided weaponry and satellites. Our bearing products are manufactured to conform to U.S. military specifications and are typically custom-designed during the original product design phase. This often makes us the sole or primary bearing supplier for the life of the product. In addition to products that meet military specifications, these customers often require precision products made of specialized materials for custom designs and specifications. Product approval for use on military equipment is often a lengthy process ranging from six months to six years. Our largest defense customers include the U.S. Department of Defense and all branches of the U.S. military.