|
RBC
Bearings Incorporated
|
|
|
One
Tribology Center
|
|
|
Oxford,
Connecticut 06478
|
|
|
Telephone:
(203) 267-5043
|
|
|
Fax:
(203) 267-5001
|
VIA
EDGAR
January
14, 2009
Terence
O’Brien
Accounting
Branch Chief
Division
of Corporation Finance
United
States Securities and Exchange Commission
Washington,
D.C. 20549-7010
|
RE:
|
RBC
Bearings Incorporated
|
|
|
Form
10-K for the Fiscal Year Ended March 29, 2008
|
||
|
Filed
May 28, 2008
|
||
|
Forms
10-Q for the Fiscal Quarters Ended June 28, 2008 and
|
||
|
September
27, 2008
|
||
|
Schedule
14A Filed July 25, 2008
|
||
|
File
No. 0-51486
|
Dear Mr.
O’Brien:
We are
responding to your letter, dated December 29, 2008, to Dr. Michael J. Hartnett,
Chief Executive Officer of RBC Bearings Incorporated (the “Company”), regarding
the Company’s above-referenced Form10-K, Forms 10-Q and Definitive Proxy
Statement on Schedule 14A. For ease of reference, we have repeated
the comments contained in your letter preceding our responses.
Form 10-K for the Fiscal
Year Ended March 29, 2008
Item 1. Business, page
1
General
|
|
1.
|
In
accordance with item 101(c)(1)(ix) of Regulation S-K, in future filings
please include disclosure about any material portion of your business that
may be subject to renegotiation of profits or termination of contract or
subcontracts at the election of the government, or include a cross
reference if the discussion is covered elsewhere in the
filing. We note your “Future reductions or changes in U.S.
government spending could negatively affect our business” risk factor
disclosure on page 8, and the disclosure in paragraph six of Note 17 on
page 63.
|
Response:
In future
filings, we will include a discussion in accordance with item 101(c)(1)(ix)
substantially as follows:
In fiscal
2008, 6.1% of our net sales were made directly, and we estimate that
approximately an additional 15.4% of our net sales were made indirectly, to the
U.S. government. These contracts or sub-contracts may be subject to
renegotiation of profit or termination of contracts at the election of the
government. We believe that no material renegotiations or refunds
will be required. See “Item 1A. – Risk Factors - Future reductions in U.S.
government spending could negatively affect our business.”
General
|
|
2.
|
Given
the nature of your business (we note your “Inventory Management”
discussion on page 3), in future filings please explain your industry
practices related to the working capital items. See Item
101(c)(1)(vi) of Regulation S-K. To the extent applicable,
please discuss if you provide your customers with extended payment
terms.
|
Response:
In future
filings, we will include a discussion in accordance with item 101(c)(1)(vi)
under Item 1, section “Manufacturing and Operations”, sub-section “Inventory
Management” substantially as follows (note that the Company offers standard
industry payment terms and does not offer extended payment terms):
Inventory
Management. Our increasing emphasis on the
distributor/aftermarket sector has required us to maintain greater inventories
of a broader range of products than the OEM market historically demanded. This
requires a greater investment in working capital to maintain these
levels. We operate an inventory management program designed to
balance customer delivery requirements with economically optimal inventory
levels. In this program, each product is categorized based on characteristics
including order frequency, number of customers and sales volume. Using this
classification system, we seek to maintain a sufficient supply of standard items
while minimizing warehousing costs. In addition, production cost savings are
achieved by optimizing plant scheduling around inventory levels and customer
delivery requirements. This leads to more efficient utilization of manufacturing
facilities and minimizes plant production changes while maintaining sufficient
inventories to service customer needs.
Item 9A. Controls and
Procedures, page 66
|
|
3.
|
In
future filings, please clarify whether or not your disclosure controls and
procedures are effective.
|
Response:
Management
believes that our disclosure controls and procedures were effective as of March
29, 2008. In future filings, we will clarify whether or not our
disclosure controls and procedures are effective.
Schedule 14A Definitive
Proxy Statement filed on July 25, 2008
Compensation Discussion and
Analysis, page 14
General
4. We
note that your disclosure about base salaries on page 16 does not address the
salaries of the other named executive officers other than the CEO and also note
that your disclosure related to payments in connection with a change in control
or a termination event (pages 18 and 26, respectively) does not discuss the
other named officers. In future filings please ensure that your compensation
discussion and analysis encompasses disclosure about all of the named executive
officers for each component.
Response:
With
regard to base salaries, we believe that the disclosure about base salaries on
page 16 does address the salaries of the other named executive officers. The
first sentence of such paragraph addresses the CEO while the remainder of the
paragraph addresses the named executive officers other than the
CEO.
With
regard to payments in the event of a change-in-control or termination of
employment, we indicate under Employment Agreements on page 18 that no executive
officer other than the CEO has an employment agreement with the Company. We also
indicate under Change-in-Control Compensation Agreement, last paragraph on page
18 as well as Potential Payments Upon Change-In-Control or Termination on page
26 that except for the CEO, no other named executive officer has entered into a
compensation agreement with the Company providing for payments in the event of a
change-in-control or termination of employment.
The other
named executive officers have received grants of restricted stock as part of
their overall compensation.
The
restricted stock grants do contain change of control provisions, but are similar
in terms to those restricted stock grants that are generally available to
salaried employees and do not discriminate in scope, terms or operation in favor
of the named executive officers.
Although
we believe that disclosure of the impact of a change of control with respect to
the restricted stock grants to the named executive officers other than the CEO
is not required pursuant to Item 5 of the Instructions to Item 402(j) of
Regulation S-K, in future filings we will quantify the impact of a change of
control with respect to the restricted stock grants to the named executive
officers.
Compensation Objectives and
Philosophy, page 15
5. In
future filings please quantify by how much the annual long term incentive awards
exceed the industry averages.
Response:
In future
filings, we will quantify the annual long term incentive award targets as
compared to the industry averages for the named executive officers and executive
officers as a group.
Annual Incentive
Compensation Plan, page 16
6. In
future filings please disclose that the annual incentive payments are made under
the company’s incentive compensation plan, as noted in the summary compensation
table on page 19.
Response:
In future
filings, we will disclose the annual incentive payments made under the company’s
incentive compensation plan under section “Annual Incentive Compensation
Plan”.
We expect
to include language similar to the following in future filings in the first
paragraph under Annual Incentive Compensation Plan:
Under the
Company’s annual incentive compensation plan, the Company pays performance-based
annual incentive awards focused on matching rewards with results.
7. We
note that EBITDA, sales, revenues, and profit targets are material for purposes
of determining the amount of bonus paid to a named executive officer. In future
filings please quantify the corporate performance target goals and disclose how
the actual bonus amounts earned by, or paid to, a named executive officer was
calculated.
Response:
While
this information is described in detail in Annual Incentive Compensation Plan on
page 16, as well as in the various footnotes of the Grants of Plan-Based Awards
contained on page 20, in future filings, we will disclose actual specific
information related to each named executive officer.
8. If in
the past the CEO has adjusted the bonus amounts discretionarily, in future
filings please disclose these occurrences, as well as how the CEO exercised his
discretion.
Response:
In future
filings, we will disclose the specific details regarding discretionary changes
to bonus amounts made by the CEO, if any.
Long Term Equity Incentive
Program, page 17
9. In
future filings please disclose more detail regarding the factors taken in
consideration by the compensation committee in determining the number of shares of
stock options and/or restricted shares granted to each named executive officer.
Your discussion should provided a comprehensive analysis of the substance of the
compensation committee’s decision, such as how the compensation committee
determined the mix between option awards and restricted shares awards to grant
to a named executive officer.
Response:
The
Company does not have an established formula to determine the number of shares
of stock options and/or restricted shares granted to each named executive
officer. The grants are based on the Compensation Committee’s understanding and
assessments of each individual named executive officer and a comparison to the
competitive market for executive compensation.
In future
filings, we will disclose the specific factors taken into consideration by the
Compensation Committee with respect to grants to named executive officers of
shares of stock options and/or restricted shares including, without limitation,
the named executive’s responsibilities, experience level, retention
risk, tenure, performance in the position and achievement
of short term and long term goals.
10.
Further, please disclose the frequency of these grants and how the determination
is made as to when the equity awards are granted, all in accordance with Item
402(b)(2)(iv) of Regulation S-K.
Response:
In future
filings, we will disclose the following in accordance with Item 402(b)(2)(iv) of
Regulation S-K related to the frequency of grants and how the determination is
made as to when the equity awards are granted:
The
Compensation Committee typically reviews approval of equity grants on an annual
fiscal year basis. The timing of the meeting is scheduled to allow the
Compensation Committee to review prior year performance and assemble all
necessary information. Grants are generally scheduled to follow release of
earnings for the applicable quarter. The date is not selected or changed to
increase the value of stock option awards for executives or
directors.
* * *
*
As
requested, the Company acknowledges that:
|
·
|
the
Company is responsible for the adequacy and accuracy of the disclosure in
the filing;
|
|
·
|
staff comments
or changes to disclosure in response to
staff comments do
not foreclose the Commission from
taking any action with respect to the filing;
and
|
|
·
|
the
Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
|
Should
you have questions regarding any of the items addressed in this letter, please
feel free to contact me directly at 203-267-5043.
|
RBC
Bearings Incorporated
|
|
|
Thomas
J. Williams
|
|
|
General
Counsel and Secretary
|