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VIA FACSIMILE
July 7, 2005
Dr. Michael J. Hartnett
Chief Executive Officer
RBC Bearings, Inc.
One Tribology Center
Oxford, CT 06478
Re: RBC Bearings, Inc.
Form S-1
File Nos. 333-124824
Filed June 28, 2005
Dear Dr. Hartnett:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Risk Factors, page 9
If interest rates, increase, interest expense will increase...,
page
13
1. Please indicate how much your interest expense will increase
for a
1% increase in interest in rates.
Industry and Market Data, page 25
2. Please tell us supplementally whether the market research
report
from The Freedonia Group, Inc. was prepared for you or for use in
this prospectus, or whether it is widely and publicly available.
Tell us whether The Freedonia Group, Inc. consented to your use of
its information in this prospectus. We may have additional
comments
upon review of your response.
Business, page 56
3. We note your response to comment 32 of our June 7, 2005 letter.
However, please specify the products for which you are the sole
source provider.
4. We note your revised disclosure on page 60. Tell us why you
have
not filed your supply agreements as exhibits pursuant to Item
601(b)(10) of Regulation S-K.
Underwriting, page 97
5. We note your response to comment 44 of our June 7, 2005 letter.
However, please describe in the prospectus the electronic
distribution procedures of I-Deal and IPO Center.
Unaudited Pro Forma Condensed Consolidated Financial Statements,
page
30
6. Expand footnote 3 to address your adjustment which eliminates
the
preferred stock dividends and participation rights of preferred
stock
in undistributed earnings.
7. Please revise footnote 9 to include sufficient information to
allow an investor to recalculate each adjustment amount.
Specifically, it appears that your adjustment to additional paid-
in
capital is a combination of several items. Each item should be
separately listed and discussed in sufficient detail to allow an
investor to recalculate your adjustment amount.
8. Please revise footnote 10 to provide a more detailed
explanation
as to how you arrived at the amount of $1,500,000 and how you
determined that this adjustment is factually supportable.
9. Please revise footnote 12 to clearly demonstrate to investors
how
you arrived at the total adjustment amount to interest expense.
Please also either revise to include the interest expense to be
incurred on the additional $40 million under your Term Loan as
part
of the Refinancing Transaction, or tell us why you do not believe
such adjustment is required. Finally, if the actual interest
rates
can vary from those depicted, also disclose the effect on income
of a
1/8 percent variance in interest rates.
Obligations and Commitments, page 48
10. We note your response and revised disclosure in response to
comment 28 in our letter dated June 7, 2005. Since interest on
your
long-term debt has had and is expected to continue to have a
material
impact on your consolidated financial statements, please revise
footnote 3 to your actual and pro forma contractual obligations
tables to estimate the interest payments to be made on your
outstanding debt, including the significant assumptions used to
estimate such payments. Refer to Item 303(a)(5) of Regulation S-K
and Release No. 33-8182 for guidance.
Critical Accounting Policies, page 50
11. We note your revised disclosures in response to comment 29 in
our
letter dated June 7, 2005. We assume you estimate the fair value
of
your reporting units that have goodwill assigned to them. Please
revise your disclosure for goodwill and intangible assets on page
51
as it is not clear from your current disclosure whether you
estimate
the fair value of your company as a whole or at the reporting unit
level as required by paragraph 19 of SFAS 142.
12. Please revise your pension plans and post-retirement health
care
critical accounting policy to provide sensitivity analyses for the
impact of changes in the discount rate and expected long-term rate
of
return on plan assets.
13. We note that you have significantly revised your stock based
compensation disclosures on page 52 through 54 as well as your
estimated fair value of your common stock in response to comment
29
in our letter dated June 7, 2005. In this regard, we note that
you
originally employed the market approach to estimate your
enterprise
value and that the calculations used in determining the fair value
of
the Company`s common stock were prepared contemporaneously. You
indicate that the current calculations have been applied
retroactively to April 4, 2004 based on the midpoint of the range
set
forth on the cover page to the prospectus. It is unclear from
your
disclosure how you have determined that the midpoint of your IPO
range is an appropriate fair value for common stock underlying you
options granted during various dates throughout fiscal year 2005.
Provide a more comprehensive analysis of the underlying
assumptions
you used in your contemporaneous analysis using the market
approach
which resulted in the $8.00 estimated fair value and the
retrospective analysis using the midpoint of your IPO range.
Specifically disclose each grant date, the number of options
granted
and address how using the midpoint of your IPO range is an
appropriate method for determining fair value of your common stock
as
of each grant date.
RBC Bearings Incorporated Financial Statements for the Fiscal Year
Ended April 2, 2005
2. Summary of Significant Accounting Policies, page F-7
Net Income (Loss) Per Common Share, page F-9
14. We note your response to and revised disclosures for comment
49
in our letter dated June 7, 2005. We believe that basic and
diluted
earnings per share are required for each class of common stock in
accordance with paragraph 61.d. of SFAS 128. If basic and fully
diluted earnings per share for Class A and Class B are the same,
you
should provide transparent disclosure to that effect on the face
on
your Consolidated Statements of Operations. Note, however, that
the
disclosure requirements of paragraph 40 must be separately
presented
for both Class A common stock and Class B common stock within your
footnote disclosure on page F-9 - F-11. Please also note that
even
though your Class A and Class B common stock may reflect the same
basic earnings per share, a material number of dilutive securities
(common stock equivalents) in either one of the respective classes
of
common stock, may result in a different diluted earnings per share
for your Class A common stock and Class B common stock.
10. Debt
15. We note your response to comment 51 in our letter dated June
7,
2005. However, it does not appear that you provided all of the
information from our comment in your disclosure. Please revise
your
footnote to include the weighted average interest rates for each
of
your debt instruments for each period presented.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter that is filed on EDGAR with your amendment that keys
your responses to our comments and provides any requested
supplemental information. Detailed cover letters greatly
facilitate
our review. Please understand that we may have additional
comments
after reviewing your amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Tracey Houser, Staff Accountant, at (202)
551-
3736 or in her absence Jeanne Baker at (202) 551-3691, who
supervised
the accounting review, if you have questions regarding comments on
the financial statements and related matters. Please contact
Craig
Slivka, Staff Attorney, at (202) 551-3729 or, in his absence, me
at
(202) 551-3767 with any other questions.
Sincerely,
Jennifer Hardy
Branch Chief
cc: Joshua N. Korff, Esq.
(212)446-4900
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE