The financial and business analysis below provides information which we believe
is relevant to an assessment and understanding of our consolidated financial
position, results of operations and cash flows. This financial and business
analysis should be read in conjunction with the consolidated financial
statements and related notes. All references to "Notes" in this Item 7 refer to
the "Notes to Consolidated Financial Statements" included in Item 8 of this
Annual Report on Form 10-K.



The following discussion contains statements reflecting our views about our future performance that constitute "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. See the information provided in Part I, Item 1A. "Risk Factors" of this Annual Report on Form 10-K under the heading "Cautionary Statement as to Forward-Looking Information."





                                       22





Overview



We are a well-known international manufacturer of highly engineered precision
bearings, components and essential systems for the industrial, defense and
aerospace industries. Our precision solutions are integral to the manufacture
and operation of most machines and mechanical systems, reduce wear to moving
parts, facilitate proper power transmission, and reduce damage and energy loss
caused by friction. While we manufacture products in all major bearing
categories, we focus primarily on the higher end of the bearing market where we
believe our value-added manufacturing and engineering capabilities enable us to
differentiate ourselves from our competitors and enhance profitability. We
believe our unique expertise has enabled us to garner leading positions in many
of the product markets in which we primarily compete. With 56 facilities in 10
countries, of which 37 are manufacturing facilities, we have been able to
significantly broaden our end markets, products, customer base and geographic
reach. We have a fiscal year consisting of 52 or 53 weeks, ending on the
Saturday closest to March 31. Based on this policy, fiscal year 2022 had 52
weeks and fiscal year 2021 had 53 weeks. We currently operate under two
reportable business segments - Aerospace/Defense and Industrial:



? Aerospace/Defense. This segment represents the end markets for the Company's

highly engineered bearings and precision components used in commercial

aerospace, defense aerospace, and marine and ground defense applications.

? Industrial. This segment represents the end markets for the Company's highly

engineered bearings, gearings and precision components used in various

industrial applications including: power transmission; construction, mining,


   energy and specialized equipment manufacturing; semiconductor production
   equipment manufacturing; agricultural machinery, commercial truck and
   automotive manufacturing; and tool holding.




The markets for our products are cyclical, and we have endeavored to mitigate
this cyclicality by entering into single and sole-source relationships and
long-term purchase agreements, through diversification across multiple market
segments within the Aerospace/Defense and Industrial segments, by increasing
sales to the aftermarket, and by focusing on developing highly customized
solutions.



Currently, our strategy is built around maintaining our role as a leading manufacturer of highly-engineered bearings and precision components through the following efforts:

? Developing innovative 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.

? Expanding customer base and penetrating end markets. We continually seek

opportunities to access new customers, geographic locations and bearing

platforms with existing products or profitable new product opportunities.

? Increasing aftermarket sales. We believe that increasing our aftermarket sales

of replacement parts will further enhance the continuity and predictability of

our revenues and enhance our profitability. Such sales include sales to third

party distributors, and sales to OEMs for replacement products and aftermarket

services. The acquisition of Dodge has had a profound impact on our sales

volumes to distributors and other aftermarket customers. We will further

increase the percentage of our revenues derived from the replacement market by

continuing to implement several initiatives.

? Pursuing 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 that there will continue to be consolidation


   within the industry that may present us with acquisition opportunities.




We have demonstrated expertise in acquiring and integrating bearing and
precision engineered component manufacturers that have complementary products or
distribution channels and have provided significant 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 1992 we have completed 27
acquisitions, which have broadened our end markets, products, customer base

and
geographic reach.



                                       23





Recent Significant Events



The Restatement



The Company is restating its consolidated financial statements for the Affected
Periods, as discussed under "Explanatory Note" above, and this Management's
Discussion and Analysis of Financial Conditions and Results of Operations is
being restated to conform to the restated financial statements.



Acquisition of Dodge



On November 1, 2021, the Company purchased 100% of the capital stock of Dodge
Mechanical Power Transmission Company Inc. (now known as Dodge Industrial,
Inc.), and certain other assets relating to ABB Asea Brown Boveri Ltd's
mechanical power transmission business. Collectively, this acquired business is
referred to as "Dodge." The purchase price was approximately $2,908.2 million,
net of cash acquired and subject to certain adjustments. The purchase price was
paid with a mix of financing and cash on hand. Financing for the Dodge
acquisition is discussed further within the "Liquidity and Capital Resources"
section below.



With offices in Greenville, South Carolina, Dodge is a leading manufacturer of
mounted bearings, gearings, motion control products and mechanical products with
market-leading brand recognition. Dodge manufactures a complete line of mounted
bearings, enclosed gearing and power transmission components across a diverse
set of industrial end markets. Dodge primarily operates across the construction
and mining aftermarket, and the food & beverage, warehousing and general
machinery verticals, with sales predominately in the Americas.



Outlook



Our net sales increased 54.8% year over year due to an increase of 163.9% in
Industrial sales partially offset by a 3.7% decrease in aerospace and defense
sales. Approximately $291.9 million of the Industrial sales were from the Dodge
business. Excluding those sales, Industrial sales increased 26.7% year over
year, reflecting sustained growth across many different areas. Highlights
included our mining business, which increased more than 50% year over year, oil
and gas, semiconductor, and general industrial markets.



Aerospace and defense decreased 3.7% year over year. Commercial aerospace
decreased 1.5%, despite demonstrating early signs of recovery during the second
half of the year. Defense sales, which represent approximately 39.0% of segment
sales during the year, were down more than 7% for the year, driven by marine and
aerospace markets. The recovery in the commercial aerospace industry has proven
slower than anticipated, but the order rate in recent months signals a positive
sign as we look toward fiscal 2023.



For the twelve months ended April 2, 2022, approximately 60% of our net sales
were attributable to the Industrial segment while the aerospace/defense segment
contributed approximately 40% of our net sales. For the fourth quarter of fiscal
2022, approximately 71.0% of our net sales were attributable to the Industrial
segment compared to approximately 29.0% for the aerospace/defense segment. This
shift in mix is primarily due to $181.9 million of sales attributable to the
Dodge business in the fourth quarter. Approximately 66.0% of Industrial sales in
the fourth quarter were to distribution and aftermarket while approximately
34.0% were made directly to OEM's. Approximately 36.0% of our aerospace/defense
sales were to the defense market. The Company expects net sales to be
approximately $355.0 million to $365.0 million in the first quarter of fiscal
2023, compared to $156.2 million in the prior year, which represents a growth
rate of 127.3% to 133.7%.



We ended fiscal 2022 with a backlog of $603.1 million compared to $394.8 million
for the same period last year, representing a 53% increase year over year. This
increase reflects the benefits of the acquisition of the Dodge business, as well
as an increase in aerospace orders during the period.



We experienced solid operating cash flow generation during fiscal 2022 (as
discussed in the section "Liquidity and Capital Resources" below). With the
addition of Dodge, we expect this trend to continue during fiscal 2023 as
customer demand continues to be significant. We believe that operating cash
flows and available credit under the Revolving Credit Facility and Foreign
Revolver will provide adequate resources to fund internal growth initiatives for
the foreseeable future, including at least the next 12 months. For further
discussion regarding the funding of the Dodge acquisition, refer to Part II,
Item 8 - Notes 8, 11 and 15. As of April 2, 2022, we had cash and cash
equivalents of $182.9 million, of which, approximately $34.9 million was cash
held by our foreign operations.



Sources of Revenue



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.



                                       24





Approximately 97% and 96% of the Company's revenue was generated from the sale
of products to customers in the industrial and aerospace/defense markets for
each of the years ended April 2, 2022 and April 3, 2021, respectively. During
fiscal 2022, approximately 3% of the Company's revenue was derived from services
performed for customers, which included repair and refurbishment work performed
on customer-controlled assets as well as design and test work, compared to
approximately 4% for fiscal 2021.



Refer to Note 2 - "Summary of Significant Accounting Policies" for further discussion regarding the Company's revenue policy.





Cost of Sales


Cost of sales includes employee compensation and benefits, raw materials, outside processing, depreciation of manufacturing machinery and equipment, supplies and manufacturing overhead.





Less than half of our factory costs, depending on product mix, are attributable
to raw materials, purchased components and outside processing. When we
experience raw material inflation, we attempt to offset these cost increases by
changing our buying patterns, expanding our vendor network and passing through
price increases when possible. Although we experienced cost inflation on raw
material for this fiscal year, we were able to mitigate it through pricing

and
strategic sourcing efforts.



We monitor gross margin performance through a process of monthly operation
reviews with all our divisions. We develop new products to target certain
markets allied to our strategies by first understanding volume levels and
product pricing and then constructing manufacturing strategies to achieve
defined margin objectives. We only pursue product lines where we believe that
the developed manufacturing process will yield the targeted margins. Management
monitors gross margins of all product lines on a monthly basis to determine
which manufacturing processes or prices should be adjusted.



Fiscal 2022 Compared to Fiscal 2021





Results of Operations



                                                  FY22                    FY21
                                            (As Restated) (1)       (As Restated) (1)       $ Change       % Change
Net sales                                  $             942.9     $             609.0     $    333.9           54.8 %
Net income available to common
stockholders                               $              42.7     $              90.1     $    (47.4 )        (52.6 )%
Net income per common share available to
common stockholders: Diluted               $              1.56     $       

3.58


Weighted average common shares available
to common stockholders: Diluted                     27,311,029             

25,149,405



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


    discussion regarding the impacts of the Restatement.




Net sales for the twelve months ended April 2, 2022 increased $333.9 million, or
54.8%, for fiscal 2022 compared to fiscal 2021. This increase in net sales was
the result of a 163.9% increase in our Industrial segment, while sales in our
Aerospace/Defense segment declined 3.7% year over year. Included in the increase
in our Industrial segment was the impact of the Dodge acquisition, which
contributed $291.9 million of sales during the year. Excluding the impact of
Dodge, total net sales increased 6.9%, and Industrial sales increased 26.7% year
over year. The increase in industrial sales reflects a pattern of sustained
growth during the year, led by results in semiconductor, mining, energy, and
general industrial markets. Within Aerospace/Defense, total commercial aerospace
decreased 1.5% and defense decreased 7.1% year over year. The decrease was
mitigated during the second half of the year as conditions began to improve in
the commercial aerospace business, driving increased sales.



Net income available to common stockholders decreased by $47.4 million to $42.7
million(1) for fiscal 2022 compared to fiscal 2021. The net income available to
common stockholders of $42.7 million(1) in fiscal 2022 was impacted by $13.8
million of inventory purchase accounting adjustments associated with the Dodge
acquisition, $30.6 million of other costs associated with the Dodge acquisition,
$41.5 million of interest expense, $12.0 million of preferred stock dividends
and $24.0(1) million of tax expense. The net income available to common
stockholders of $90.1(1) million in fiscal 2021 was impacted by $7.3 million of
pre-tax costs associated with restructuring, $1.5 million of costs associated
with the cyber event, $0.2 million of losses on foreign exchange, and $23.1(1)
million of tax expense.


(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.




                                       25





Gross Margin



                  FY22        FY21        $ Change       % Change
Gross Margin     $ 357.1     $ 234.1     $    123.0           52.5 %
Gross Margin %      37.9 %      38.4 %




Gross margin was 37.9% of sales for fiscal 2022 compared to 38.4% for the same
period last year. Gross margin during fiscal 2022 included the unfavorable
impact of $13.8 million of purchase accounting adjustments associated with the
Dodge acquisition and $0.9 million of other inventory rationalization costs
associated with consolidation efforts at one of our facilities. Gross margins in
fiscal 2021 were impacted by $3.1 million of inventory rationalization costs
associated with the consolidation of certain manufacturing facilities and $0.8
million of capacity inefficiencies driven by the decrease in volume.



Selling, General and Administrative





                        FY22                    FY21
                  (As Restated) (1)       (As Restated) (1)       $ Change       % Change
SG&A             $             167.6     $             102.8     $     64.8           63.1 %
% of net sales                  17.8 %                  16.9 %




SG&A expenses increased by $64.8 million to $167.6 million(1) for fiscal 2022
compared to fiscal 2021. Included in the fiscal 2022 result is $34.6 million of
costs from the Dodge business. The remainder of the increase is primarily
associated with an increase in personnel costs year over year.



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.




Other, Net



                  FY22       FY21       $ Change       % Change
Other, net       $ 68.4     $ 16.7     $     51.7          310.7 %
% of net sales      7.3 %      2.7 %




Other operating expenses for fiscal 2022 totaled $68.4 million compared to $16.7
million for fiscal 2021. For fiscal 2022, other operating expenses were
comprised of $30.6 million of costs associated with the Dodge acquisition, $34.7
million of amortization expense, $1.1 million of plant consolidation and
restructuring costs, $0.5 million of bad debt expense, $0.3 million of losses on
disposal of assets, and $1.2 million of other items. For fiscal 2021, other
operating expenses were comprised of $10.2 million of amortization of intangible
assets, $2.9 million of restructuring and consolidation costs, $1.5 million of
forensic specialist and remediation costs related to a cyber event, $1.3 million
loss on disposal of assets, $0.5 million of bad debt expense, and $0.3 million
of other items.



Interest Expense, Net



                    FY22      FY21       $ Change      % Change
Interest expense   $ 41.5     $ 1.4     $     40.1       2,802.8 %
% of net sales        4.4 %     0.2 %




Interest expense, net, generally consists of interest charged on our debt and
amortization of debt issuance costs offset by interest income (see "Liquidity
and Capital Resources - Liquidity" below). Interest expense, net was $41.5
million for fiscal 2022 compared to $1.4 million for fiscal 2021. This included
amortization of debt issuance costs of $18.9 million for fiscal 2022 and $0.5
million for fiscal 2021. Included in the debt issuance cost amortization in
fiscal 2022 was $16.6 million associated with the fees for a $2,800.0 million
bridge commitment obtained in connection with the Dodge acquisition. The
increase in interest expense is primarily attributable to the debt taken on by
the Company to finance the acquisition of Dodge.



                                       26





Other Non-Operating Expense



                              FY22       FY21       $ Change       % Change
Other non-operating expense   $ 0.8     $ (0.0 )    $     0.8       (2,790.3 )%
% of net sales                  0.1 %     (0.0 )%



Other non-operating expense for fiscal 2022 totaled $0.8 million, consisting primarily of costs associated with post-retirement benefit plans.





Income Taxes



                                                                      FY22                    FY21
                                                                (As Restated) (1)       (As Restated) (1)

Income tax expense                                             $              24.0     $              23.1
Effective tax rate with discrete items                                        30.5 %                  20.4 %
Effective tax rate without discrete items                                  

  32.4 %                  22.4 %




Income tax expense for fiscal 2022 was $24.0 million(1) compared to $23.1
million(1) for fiscal 2021. Our effective income tax rate for fiscal 2022 was
30.5%(1) compared to 20.4%(1) for fiscal 2021. The effective income tax rates
are different from the U.S. statutory rate due to the U.S. credits for
increasing research activities and foreign-derived intangible income provision
which decrease the rate and differences in foreign and state income taxes which
increase the rate. Further, in fiscal 2022, the effective tax rate was
negatively impacted by tax impacts associated with acquisition costs and
increases in tax reserves associated with Section 162(m) of the Internal Revenue
Code. The effective income tax rate for fiscal 2022 of 30.5%(1) included
discrete items of $1.5 million benefit which are comprised substantially of a
benefit associated with share-based compensation and unrecognized tax benefits
associated with the expiration of statutes of limitations partially offset by
tax expense arising from an increase in the valuation allowance on a capital
loss carryforward. The effective income tax rate for fiscal 2022 without these
discrete items would have been 32.4%(1). The effective income tax rate for
fiscal 2021 of 20.4%(1) includes discrete items of $2.2 million benefit which
are comprised substantially of a benefit associated with share-based
compensation and unrecognized tax benefits associated with the expiration of
statutes of limitations. The effective income tax rate for fiscal 2021 without
these discrete items would have been 22.4%(1).



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


    discussion regarding the impacts of the Restatement.




Segment Information



We previously reported our financial results under four operating segments
(Plain Bearings, Roller Bearings, Ball Bearings, and Engineered Products), but
the Dodge acquisition has resulted in a change in the internal organization of
the Company and how our chief operating decision maker makes operating
decisions, assesses the performance of the business, and allocates resources.
Accordingly, we now report our financial results under two operating segments:
Aerospace/Defense and Industrial. Financial information for fiscal 2021 has been
recast to conform to the new segment presentation. We use gross margin as the
primary measurement to assess the financial performance of each reportable
segment.



Aerospace/Defense Segment:



                          FY22        FY21        $ Change       % Change
Net sales                $ 381.5     $ 396.2     $    (14.7 )         (3.7 )%

Gross margin             $ 155.1     $ 161.2     $     (6.1 )         (3.8 )%
Gross margin %              40.7 %      40.7 %

SG&A                     $  29.0     $  29.1     $     (0.1 )         (0.5 )%
% of segment net sales       7.6 %       7.4 %




Net sales decreased $14.7 million, or 3.7%, for fiscal 2022 compared to fiscal
2021. Commercial aerospace decreased during the period 1.5% year over year. The
commercial aerospace OEM component was flat while commercial distribution and
aftermarket decreased approximately 6% year over year. The decrease was
primarily experienced during the first half of fiscal 2022, with orders and
shipments in the second half, demonstrating early signs of a recovery in the OEM
markets. This was further evidenced by continuing expansion of our backlog
during the period. Our defense markets, which represented about 39.0% of sales,
decreased by approximately 7.1% during the period. Overall distribution and
aftermarket sales, which represent a little less than 20.0% of segment sales,
were down 13.5% year over year.



                                       27





Gross margin was $155.1 million, or 40.7% of sales, in fiscal 2022 compared to
$161.2 million, or 40.7% of sales, for the same period in fiscal 2021. Gross
margin for fiscal 2022 was impacted by approximately $0.9 million of inventory
rationalization costs associated with consolidation efforts at one of our
facilities.



Industrial Segment:



                          FY22        FY21        $ Change       % Change
Net sales                $ 561.4     $ 212.8     $    348.6          163.9 %

Gross margin             $ 202.0     $  72.9     $    129.1          177.0 %
Gross margin %              36.0 %      34.3 %

SG&A                     $  58.6     $  18.0     $     40.6          225.9 %
% of segment net sales      10.4 %       8.5 %




Net sales increased $348.6 million, or 163.9%, during fiscal 2022 compared to
the same period last year. The increase was primarily due to the inclusion of
five months of Dodge sales in fiscal 2022, as well as sustained strong
performance across the majority of our legacy industrial markets. Excluding
Dodge sales of $291.9 million, net sales increased $56.7 million, or 26.7%,
period over period. This increase was driven by performance in semiconductor,
energy, mining, and the general industrial markets. Sales to distribution and
the aftermarket reflected more than 57.0% of our industrial sales during the
year, which is expected to increase as we move into fiscal 2023. These
distribution and aftermarket sales increased 309.4% compared to the same period
in the prior year, and 26.1% on an organic basis.



Gross margin was $202.0 million, or 36.0% of sales, in fiscal 2022 compared to
$72.9 million, or 34.3% of sales, for the same period in fiscal 2021. The gross
margin for the fiscal 2022 included the unfavorable impact of $13.8 million of
inventory purchase accounting adjustments associated with the Dodge acquisition.
Gross margin for the fiscal 2021 was impacted by approximately $3.1 million of
inventory rationalization costs associated with the consolidation of certain
manufacturing facilities.



Corporate:



                                                  FY22                    FY21
                                            (As Restated) (1)       (As Restated) (1)       $ Change       % Change
SG&A                                       $              80.0     $              55.7     $     24.3           43.6 %
% of total net sales                                       8.5 %                   9.1 %




Corporate SG&A increased $24.3 million(1) or 43.6% for fiscal 2022 compared to
fiscal 2021. This was due to increases in personnel-related costs, professional
fees, and share based compensation expense during the period.



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.




                                       28




Fiscal 2021 Compared to Fiscal 2020





Results of Operations



                                                  FY21                    FY20
                                            (As Restated) (1)       (As Restated) (1)       $ Change       % Change
Net sales                                  $             609.0     $             727.5     $   (118.5 )        (16.3 )%
Net income                                 $              90.1     $             120.4     $    (30.3 )        (25.1 )%

Net income per common share: Diluted       $              3.58     $       

4.81


Weighted average common shares: Diluted             25,149,405             

25,025,615



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.




Net sales for the twelve months ended April 3, 2021 decreased $118.5 million, or
16.3%, for fiscal 2021 compared to fiscal 2020. This was mainly the result of a
24.8% decrease in net sales to the aerospace markets and a decrease of 0.9% in
the industrial markets. The decrease in aerospace sales during the year was
primarily driven by reduced air travel and changes to production rates within
the industry. This reduction in commercial aerospace was partially offset by
increases in our defense OEM and aftermarket business. The decrease in sales
year over year was due primarily to mining and energy markets, which was
partially offset by increases in semiconductor and wind markets. Further, our
industrial sales evidenced growth during the fourth quarter of fiscal 2021,
which provides a positive indication of recovery in the market.



Net income decreased by $30.3 million(1) to $90.1 million(1) for fiscal 2021
compared to fiscal 2020. The year-over-year decrease was primarily driven by
decreased sales volume during fiscal 2021. The net income of $90.1 million(1) in
fiscal 2021 was impacted by $5.8 million of after-tax costs associated with
restructuring, $1.3 million of after-tax costs associated with the cyber event,
and $0.2 million of losses on foreign exchange, partially offset by $3.1 million
of tax benefits associated with share-based compensation. The net income of
$120.4 million(1) in fiscal 2020 was impacted by $1.1 million of after-tax gain
on the sale of our Houston facility, and $5.9 million of discrete tax benefits
including share-based compensation, partially offset by $1.1 million of
after-tax costs associated with the acquisition of Swiss Tool, $0.8 million of
restructuring and integration costs, and $0.7 million of loss on foreign
exchange.



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.




Gross Margin



                  FY21        FY20        $ Change       % Change
Gross Margin     $ 234.1     $ 289.1     $    (55.0 )        (19.0 )%
Gross Margin %      38.4 %      39.7 %




Gross margin decreased $55.0 million, or 19.0%, for fiscal 2021 compared to the
same period last fiscal year. The decrease in gross margin was mainly driven by
decreased volume, partially offset by cost efficiencies achieved during the
current period related to restructuring and consolidation efforts. Gross margins
in fiscal 2021 were impacted by $3.1 million of inventory rationalization costs
associated with the consolidation of certain manufacturing facilities and $0.8
million of capacity inefficiencies driven by the decrease in volume. Gross
margins in fiscal 2020 were impacted by $0.4 million of purchase accounting
adjustments associated with the acquisition of Swiss Tool.



                                       29




Selling, General and Administrative





                        FY21                    FY20
                  (As Restated) (1)       (As Restated) (1)       $ Change       % Change
SG&A             $             102.8     $             130.0     $    (27.2 )        (20.9 )%
% of net sales                  16.9 %                  17.9 %




SG&A expenses decreased by $27.2 million to $102.8 million(1) for fiscal 2021
compared to fiscal 2020. This decrease was primarily due to $27.1 million(1) of
reduced personnel-related costs and $0.1 million of other items.



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.






Other, Net



                  FY21      FY20      $ Change       % Change
Other, net       $ 16.7     $ 9.8     $     6.9           70.7 %
% of net sales      2.7 %     1.3 %




Other operating expenses for fiscal 2021 totaled $16.7 million compared to $9.8
million for fiscal 2020. For fiscal 2021, other operating expenses were
comprised of $10.2 million of amortization of intangible assets, $2.9 million of
restructuring and consolidation costs, $1.5 million of forensic specialist and
remediation costs related to a cyber event, $1.3 million loss on disposal of
assets, $0.5 million of bad debt expense, and $0.3 million of other items. For
fiscal 2020, other operating expenses were comprised of $9.6 million of
amortization of intangible assets, $0.9 million of acquisition costs, and $1.0
million of restructuring costs, partially offset by $1.2 million of gain on
disposal of assets and $0.5 million of other income.



Interest Expense, Net



                   FY21      FY20       $ Change       % Change

Interest expense $ 1.4 $ 1.9 $ (0.5 ) (24.1 )% % of net sales 0.2 % 0.3 %






Interest expense, net, generally consists of interest charged on our debt and
amortization of debt issuance costs offset by interest income (see "Liquidity
and Capital Resources - Liquidity" below). Interest expense, net was $1.4
million for fiscal 2021 compared to $1.9 million for fiscal 2020. This included
amortization of debt issuance costs of $0.5 million for fiscal 2021 and $0.5
million for fiscal 2020. The decrease in interest expense is a result of the
Company having substantially less outstanding debt throughout fiscal 2021
compared to 2020.



Other Non-Operating Expense





                               FY21       FY20       $ Change      % Change

Other non-operating expense $ (0.0 ) $ 0.8 $ (0.8 ) (104.1 )% % of net sales

                  (0.0 )%     0.1 %




Other non-operating expense for fiscal 2020 totaled $0.8 million, consisting
primarily of $1.0 million associated with loss on foreign exchange partially
offset by $0.2 million of other non-operating income.



                                       30





Income Taxes



                                                                      FY21                    FY20
                                                                (As Restated) (1)       (As Restated) (1)

Income tax expense                                             $              23.1     $              26.4
Effective tax rate with discrete items                                        20.4 %                  18.0 %
Effective tax rate without discrete items                                  

  22.4 %                  22.0 %




Income tax expense for fiscal 2021 was $23.1 million(1) compared to $26.4
million(1) for fiscal 2020. Our effective income tax rate for fiscal 2021 was
20.4%(1) compared to 18.0%(1) for fiscal 2020. The effective income tax rates
are different from the U.S. statutory rate due to the U.S. credits for
increasing research activities and foreign-derived intangible income provision
which decrease the rate and differences in foreign and state income taxes which
increase the rate. The effective income tax rate for fiscal 2021 of 20.4%(1)
included discrete items of $2.2 million benefit which are comprised
substantially of a benefit associated with share-based compensation and
unrecognized tax benefits associated with the expiration of statutes of
limitations. The effective income tax rate for fiscal 2021 without these
discrete items would have been 22.4%(1). The effective income tax rate for
fiscal 2020 of 18.0%(1) includes discrete items of $5.9 million benefit which
are comprised substantially of a benefit associated with share-based
compensation, tax benefit of other permanent adjustments from filing the
Company's tax returns and unrecognized tax benefits associated with the
expiration of statutes of limitations. The effective income tax rate for fiscal
2020 without these discrete items would have been 22.0%(1).



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.




Segment Information



Aerospace/Defense Segment:



                          FY21        FY20       $ Change       % Change
Net sales                $ 396.2     $ 507.4     $  (111.2 )        (21.9 )%

Gross margin             $ 161.2     $ 210.4     $   (49.2 )        (23.4 )%
Gross margin %              40.7 %      41.5 %

SG&A                     $  29.1     $  36.6     $    (7.5 )        (20.5 )%
% of segment net sales       7.4 %       7.2 %




Net sales decreased $111.2 million, or 21.9%, for fiscal 2021 compared to fiscal
2020. The COVID-19 health crisis, which was declared a pandemic in March 2020,
has led to governments around the world implementing measures to reduce the
spread. These measures include quarantines, "shelter in place" orders, travel
restrictions, and other measures and have resulted in a slowdown of worldwide
economic activity. Our production and sales in the commercial aerospace market
have been negatively affected by the economic implications of the pandemic.

Gross margin was $161.2 million, or 40.7% of sales, in fiscal 2021 compared to $210.4 million, or 41.5% of sales, for the same period in fiscal 2020. The decrease in gross margin is attributable to product mix and less volume.





Industrial Segment:



                          FY21        FY20        $ Change       % Change
Net sales                $ 212.8     $ 220.0     $     (7.2 )         (3.3 )%

Gross margin             $  72.9     $  78.7     $     (5.8 )         (7.3 )%
Gross margin %              34.3 %      35.8 %

SG&A                     $  18.0     $  20.2     $     (2.2 )        (10.9 )%
% of segment net sales       8.5 %       9.2 %




Net sales decreased $7.2 million, or 3.3%, during fiscal 2021 compared to the
same period last year. The decrease in sales year over year was due primarily to
mining and energy markets, which was partially offset by increases in
semiconductor and wind markets.



Gross margin was $72.9 million, or 34.3% of sales, in fiscal 2021 compared to
$78.7 million, or 35.8% of sales, for the same period in fiscal 2020. Gross
margin for the fiscal 2021 was impacted by approximately $3.1 million of
inventory rationalization costs associated with the consolidation of certain
manufacturing facilities.



                                       31





Corporate:



                                                  FY21                    FY20
                                            (As Restated) (1)       (As Restated) (1)       $ Change       % Change
SG&A                                       $              55.7     $              73.2     $    (17.5 )        (23.9 )%
% of total net sales                                       9.1 %                  10.1 %



Corporate SG&A decreased $17.5 million or 23.9% for fiscal 2021 compared to fiscal 2020. This was primarily due to reductions in personnel-related costs.

(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.



Liquidity and Capital Resources





Our business is capital-intensive. Our capital requirements include
manufacturing equipment and materials. In addition, we have historically fueled
our growth, in part, through acquisitions, including the Dodge acquisition
completed on November 1, 2021. We have historically met our working capital,
capital expenditure requirements and acquisition funding needs through our net
cash flows provided by operations, various debt arrangements and sale of equity
to investors. We believe that operating cash flows and available credit under
the Revolving Credit Facility and Foreign Revolver will provide adequate
resources to fund internal growth initiatives for the foreseeable future. For
further discussion regarding the funding of the Dodge acquisition, refer to Part
II, Item 8 - Notes 8, 11 and 15.



Our ability to meet future working capital, capital expenditures and debt
service requirements will depend on our future financial performance, which will
be affected by a range of economic, competitive and business factors,
particularly interest rates, cyclical changes in our end markets and prices for
steel and our ability to pass through price increases on a timely basis, many of
which are outside of our control. In addition, future acquisitions could have a
significant impact on our liquidity position and our need for additional funds.



From time to time, we evaluate our existing facilities and operations and their
strategic importance to us. If we determine that a given facility or operation
does not have future strategic importance, we may sell, relocate, consolidate or
otherwise dispose of those operations. Although we believe our operations would
not be materially impaired by such dispositions, relocations or consolidations,
we could incur significant cash or non-cash charges in connection with them.



Liquidity



As of April 2, 2022, we had cash and cash equivalents of $182.9 million, of
which, approximately $34.9 million was cash held by our foreign operations. We
expect that our undistributed foreign earnings will be re-invested indefinitely
for working capital, internal growth and acquisitions for and by our foreign
subsidiaries. As discussed further below, we also have the ability to borrow up
to approximately $512.7 million from our existing credit agreements.



                                       32





Domestic Credit Facility



On November 1, 2021 RBC Bearings Incorporated, our top holding company, and our
Roller Bearing Company of America, Inc. subsidiary ("RBCA") entered into a
Credit Agreement (the "New Credit Agreement") with Wells Fargo Bank, National
Association ("Wells Fargo"), as Administrative Agent, Collateral Agent,
Swingline Lender and Letter of Credit Issuer and the other lenders party
thereto, and terminated the Company's prior Credit Agreement, which was entered
into with Wells Fargo in 2015 (the "2015 Credit Agreement"). The New Credit
Agreement provides the Company with (a) a $1,300.0 million term loan facility
(the "Term Loan Facility"), which was used to fund a portion of the cash
purchase price for the acquisition of Dodge and to pay related fees and
expenses, and (b) a $500.0 million revolving credit facility (the "Revolving
Credit Facility" and together with the Term Loan Facility, the "Facilities").
Debt issuance costs associated with the New Credit Agreement totaled $14.9
million and will be amortized over the life of the New Credit Agreement. When
the 2015 Credit Agreement was terminated the Company wrote off $0.9 million of
previously unamortized debt issuance costs.



Amounts outstanding under the Facilities generally bear interest at either, at
the Company's option, (a) a base rate determined by reference to the higher of
(i) Wells Fargo's prime lending rate, (ii) the federal funds effective rate plus
1/2 of 1.00% and (iii) the one-month LIBOR rate plus 1.00% or (b) the LIBOR rate
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 from time to time. Currently, the Company's margin is
0.75% for base rate loans and 1.75% for LIBOR rate loans. The Facilities are
subject to a "LIBOR" floor of 0.00% and contain "hard-wired" LIBOR replacement
provisions as set forth in the New Credit Agreement. As of April 2, 2022, the
Company's commitment fee rate is 0.25% and the letter of credit fee rate is
1.75%.



The Term Loan Facility and the Revolving Credit Facility will mature on November
2, 2026. The Company can elect to prepay some or all of the outstanding balance
from time to time without penalty. Commencing one full fiscal quarter after the
execution of the New Credit Agreement, the Term Loan Facility will amortize in
quarterly installments as set forth in Part II, Item 8 - Note 11, with the
balance payable on the Maturity Date unless otherwise extended in accordance
with the terms of the Term Loan Facility.



The New Credit Agreement requires the Company to comply with various covenants,
including the following financial covenants beginning with the test period
ending December 31, 2021: (a) a maximum Total Net Leverage Ratio of 5.50:1.00,
which maximum Total Net Leverage Ratio shall decrease during certain subsequent
test periods as set forth in the New Credit Agreement (provided that, no more
than once during the term of the Facilities, such maximum ratio applicable at
such time may be increased by the Borrower by 0.50:1.00 for a period of twelve
(12) months after the consummation of a material acquisition), and (b) a minimum
Interest Coverage Ratio of 2.00:1.00.



The New 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 New Credit Agreement.



The Company's domestic subsidiaries have guaranteed the Company's obligations
under the New Credit Agreement, and the Company's obligations and the domestic
subsidiaries' guaranty are secured by a pledge of substantially all of the
domestic assets of the Company and its domestic subsidiaries.



As of April 2, 2022, $1,200.0 million was outstanding under the Term Loan
Facility and approximately $3.5 million of the Revolving Credit Facility was
being utilized to provide letters of credit to secure the Company's obligations
relating to certain insurance programs, and the Company had the ability to
borrow up to an additional $496.5 million under the Revolving Credit Facility.



                                       33





Senior Notes



On October 7, 2021, RBCA issued $500.0 million aggregate principal amount of
4.375% Senior Notes due 2029 (the "Senior Notes"). The net proceeds from the
issuance of the Senior Notes were approximately $492.0 million after deducting
initial purchasers' discounts and commissions and offering expenses. On November
1, 2021, the Company used the proceeds to fund a portion of the cash purchase
price for the acquisition of Dodge.



The Senior Notes were issued pursuant to an indenture with Wilmington Trust,
National Association, as trustee (the "Indenture"). The Indenture contains
covenants limiting the ability of the Company to (i) incur additional
indebtedness or guarantee indebtedness, (ii) declare or pay dividends, redeem
stock or make other distributions to stockholders, (iii) make investments, (iv)
create liens or use assets as security in other transactions, (v) merge or
consolidate, or sell, transfer, lease or dispose of substantially all of its
assets, (vi) enter into transactions with affiliates, and (vii) sell or transfer
certain assets. These covenants contain various exceptions, limitations and
qualifications. At any time that the Senior Notes are rated investment grade,
certain of these covenants will be suspended.



The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by RBC Bearings and certain of RBCA's existing and future wholly-owned domestic subsidiaries that also guarantee the New Credit Agreement.

Interest on the Senior Notes accrues at a rate of 4.375% and will be payable semi-annually in cash in arrears on April 15 and October 15 of each year, commencing April 15, 2022.





The Senior Notes will mature on October 15, 2029. The Company may redeem some or
all of the Senior Notes at any time on or after October 15, 2024 at the
redemption prices set forth in the Indenture, plus accrued and unpaid interest,
if any, to, but excluding, the redemption date. The Company may also redeem up
to 40% of the Senior Notes using the proceeds of certain equity offerings
completed before October 15, 2024, at a redemption price equal to 104.375% of
the principal amount thereof, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date. In addition, at any time prior to October 15,
2024, the Company may redeem some or all of the Senior Notes at a price equal to
100% of the principal amount, plus a "make-whole" premium, plus accrued and
unpaid interest, if any, to, but excluding, the redemption date. If the Company
sells certain of its assets or experiences specific kinds of changes in control,
the Company must offer to purchase the Senior Notes.



Foreign Term Loan and Revolving Credit Facility





On August 15, 2019, one of our foreign subsidiaries, Schaublin SA ("Schaublin"),
entered into two separate credit agreements (the "Foreign Credit Agreements")
with Credit Suisse (Switzerland) Ltd. to (i) finance the acquisition of Swiss
Tool, and (ii) provide future working capital. The Foreign Credit Agreements
provided Schaublin with a CHF 15.0 million (approximately $15.4 million) term
loan (the "Foreign Term Loan"), which was extinguished in February 2022 and a
CHF 15.0 million (approximately $15.4 million) revolving credit facility (the
"Foreign Revolver"), which continues in effect until terminated by either
Schaublin or Credit Suisse. Debt issuance costs associated with the Foreign
Credit Agreements totaled CHF 0.3 million (approximately $0.3 million). When the
Foreign Term Loan was extinguished, Schaublin wrote off $0.1 million of
previously unamortized debt issuance costs.



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 1.00%.



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 2.50 to 1 as of March 31, 2021 and
thereafter. Schaublin is also required to maintain an economic equity of CHF
20.0 million 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 April 2, 2022, 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 April 2, 2022, the Foreign Term Loan has been paid, with no balance outstanding. There were no amounts outstanding under the Foreign Revolver. Schaublin has the ability to borrow up to an additional $16.2 million under the Foreign Revolver as of April 2, 2022.





                                       34





Cash Flows


Fiscal 2022 Compared to Fiscal 2021

The following table summarizes our cash flow activities:





                                             FY22          FY21        $ 

Change


Net cash provided by (used in):
Operating activities                      $    180.3     $  152.4     $     27.9
Investing activities                        (2,847.5 )     (101.5 )     (2,746.0 )
Financing activities                         2,698.5         (3.4 )      2,701.9

Effect of exchange rate changes on cash 0.5 0.3

0.2

Increase in cash and cash equivalents $ 31.8 $ 47.8 $ (16.0 )






During fiscal 2022 we generated cash of $180.3 million from operating activities
compared to $152.4 million for fiscal 2021. The increase of $27.9 million for
fiscal 2022 was mainly the result of a $62.0 million(1) increase in non-cash
activity and a net favorable change in operating assets and liabilities of $1.4
million, partially offset by a $35.5 million(1) decrease in net income. The
favorable change in operating assets and liabilities is detailed in the table
below. The change in non-cash activity was primarily driven by $32.8 million
more depreciation and amortization, $18.5 million more amortization of deferred
financing costs and debt discount, $14.8 million(1) more share-based
compensation, and $1.0 million in debt extinguishment costs, partially offset by
a $4.0 million(1) decrease in deferred taxes, $1.0 million decrease in net loss
on asset disposals, and $0.1 million decrease in consolidation and restructuring
charges.


(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.



The following chart summarizes the favorable change in operating assets and liabilities of $1.4 million for fiscal 2022 versus fiscal 2021 and $31.1 million for fiscal 2021 versus fiscal 2020.





                                                    FY22        FY21
Cash provided by (used in):
Accounts receivable                                $ (72.5 )   $  15.7
Inventory                                            (17.1 )      26.3
Prepaid expenses and other current assets             (1.4 )       3.5
Other noncurrent assets                                8.5        (7.0 )
Accounts payable                                      67.2       (15.7 )

Accrued expenses and other current liabilities 19.5 2.6 Other noncurrent liabilities

                          (2.8 )       5.7

Total change in operating assets and liabilities $ 1.4 $ 31.1






During fiscal 2022, we used $2,847.5 million for investing activities as
compared to $101.5 million for fiscal 2021. This increase in cash used was
attributable to $2,908.5 million used for the acquisition of Dodge during fiscal
2022 and $18.0 million increase in capital expenditures. This was partially
offset by a $110.4 million increase in proceeds received from the sale of
marketable securities in the current year and $70.1 million less cash used in
the purchase of marketable securities in the current year.



During fiscal 2022, we generated cash of $2,698.5 million from financing
activities compared to $3.4 million cash used in fiscal 2021. This increase in
cash generated was primarily attributable to fiscal 2022 proceeds received from
term loans net of financing costs $1,285.8 million, fiscal 2022 proceeds
received from issuance of common stock $605.5 million, fiscal 2022 proceeds
received from senior notes net of financing costs $494.2 million, fiscal 2022
proceeds received from issuance of preferred stock $445.3 million, $6.7 million
more exercises of stock options and warrants, and $3.0 million less payments
made on revolving credit facilities. These cash generating activities were
primarily offset by $108.7 million more payments made on term loans, $19.5
million more financing fees paid in connection with credit facilities, $7.1
million cash dividends paid to preferred shareholders in fiscal 2022, $1.7
million more treasury stock purchases, and $1.6 million in principal repayments
on finance lease obligations during fiscal 2022.



                                       35




Fiscal 2021 Compared to Fiscal 2020

The following table summarizes our cash flow activities:






                                            FY21        FY20        $ Change
Net cash provided by (used in):
Operating activities                      $  152.4     $ 155.6     $     (3.2 )
Investing activities                        (101.5 )     (62.8 )        (38.7 )
Financing activities                          (3.4 )     (20.3 )         16.9

Effect of exchange rate changes on cash 0.3 0.9 (0.6 ) Increase in cash and cash equivalents $ 47.8 $ 73.4 $ (25.6 )






During fiscal 2021 we generated cash of $152.4 million from operating activities
compared to $155.6 million for fiscal 2020. The decrease of $3.2 million for
fiscal 2021 was mainly the result of a $30.3 million(1) decrease in net income
partially offset by a net change in operating assets and liabilities of $31.1
million and $4.2 million(1) fewer non-cash charges. The favorable change in
operating assets and liabilities is detailed in the table below. The change in
non-cash charges were primarily driven by a $2.5 million favorable change
related to the disposal of assets, $2.2 million favorable change in
consolidation and restructuring charges, $0.7 million more depreciation and $0.6
million more amortization of intangible assets. This was partially offset by a
$9.6 million(1) decrease in share-based compensation and a $0.6 million(1)
decrease in deferred taxes.



(1) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.



The following chart summarizes the favorable change in operating assets and liabilities of $31.1 million for fiscal 2021 versus fiscal 2020 and $29.1 million for fiscal 2020 versus fiscal 2019.





                                                    FY21        FY20
Cash provided by (used in):
Accounts receivable                                $  15.7     $ 20.6
Inventory                                             26.3       12.5
Prepaid expenses and other current assets              3.5       (3.4 )
Other noncurrent assets                               (7.0 )      2.4
Accounts payable                                     (15.7 )     (5.0 )

Accrued expenses and other current liabilities 2.6 2.5 Other noncurrent liabilities

                           5.7       (0.5 )

Total change in operating assets and liabilities $ 31.1 $ 29.1






During fiscal 2021, we used $101.5 million for investing activities as compared
to $62.8 million for fiscal 2020. This increase in cash used was attributable to
the purchase of $100.1 million of highly liquid marketable securities during the
current period and $8.2 million fewer proceeds from the sale of assets compared
to the prior year when we sold a building in Houston, Texas. This was partially
offset by a $25.5 million decrease in capital expenditures, $10.0 million in
proceeds received from the sale of marketable securities in the current year,
the use of $33.8 million in the prior year for the acquisition of Swiss Tool and
a purchase price adjustment in the current year related to the Swiss Tool
acquisition of $0.3 million.



During fiscal 2021, we used $3.4 million for financing activities compared to
$20.3 million in fiscal 2020. This decrease in cash used was primarily
attributable to $38.3 million less payments made on outstanding debt, $0.3
million less financing fees paid in connection with credit facilities, and $5.3
million less treasury stock purchases, partially offset by proceeds received
from borrowings of $24.8 million for the acquisition of Swiss Tool in the prior
year and $2.2 million less exercises of share-based awards.



                                       36





Capital Expenditures



Our capital expenditures in fiscal 2022 were $29.8 million compared to $11.8
million in fiscal 2021. We expect to make capital expenditures of approximately
2.5% to 3.0% of net sales during fiscal 2023 in connection with our existing
business. We funded our fiscal 2022 capital expenditures, and expect to fund
fiscal 2023 capital expenditures, principally through existing cash and
internally generated funds. We may also make substantial additional capital
expenditures in connection with acquisitions.



Quarterly Results of Operations




                                                                                                    Quarter Ended (3)
                                   Apr. 2,             Jan. 1,             Oct. 2,             Jul. 3,             Apr. 3,            Dec. 26,            Sep. 26,            Jun. 27,
                                    2022                2022                2021                2021                2021                2020                2020                2020
                                     (As                 (As                 (As                 (As                 (As                 (As                 (As                 (As
                                Restated) (4)       Restated) (4)       Restated) (4)       Restated) (4)       Restated) (4)       Restated) (4)       Restated) (4)       Restated) (4)
                                                                                                       (Unaudited)
                                                                                          (in thousands, except per share data)
Net sales                      $       358,879     $       266,953     $       160,900     $       156,205     $       160,295     $       145,861     $       146,335     $       156,493
Gross margin                           137,486              93,345              62,464              63,773              62,469              55,588              56,596              59,453
Operating income                        59,342              15,865              16,574              29,313              32,188              28,579              23,635              30,273
Net income/(loss) available
to common stockholders         $        25,728     $        (5,205 )   $        (1,862 )   $        24,038     $        26,256     $        22,690     $        17,932     $        23,265
Net income/(loss) per common
share available to common
stockholders:
Basic(1)(2)                    $          0.91     $         (0.18 )   $         (0.07 )   $          0.96     $          1.06     $          0.92     $          0.78     $          0.95
Diluted(1)(2)                  $          0.90     $         (0.18 )   $         (0.07 )   $          0.95     $          1.04     $          0.91     $          0.77     $          0.94



 (1) See Note 2.

(2) Net income per common share is computed independently for each of the

quarters presented. Therefore, the sum of the quarterly earnings per share

may not necessarily equal the total for the year.

(3) Dodge was acquired on November 1, 2021 and is included within the quarters

ended April 2, 2022 and January 1, 2022 within the table above.

(4) See Note 2, Summary of Significant Accounting Policies - Restatement, for


     discussion regarding the impacts of the Restatement.



Critical Accounting Policies and Estimates





Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with U.S. generally accepted accounting principles. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and related disclosure of contingent assets and liabilities. We
evaluate our estimates on an on-going basis. Estimates are used for, but not
limited to, the accounting for the allowance for doubtful accounts, valuation of
inventories, goodwill and intangible assets, depreciation and amortization,
income taxes and tax reserves, the valuation of options and the valuation of
business combinations. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. We believe our judgments related to these accounting estimates
are appropriate. Actual results may differ from these estimates under different
assumptions or conditions.



Revenue Recognition.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 97% of the Company's revenue was recognized in
this manner based on sales for the year ended April 2, 2022 compared to
approximately 96% for the year ended April 3, 2021.



                                       37





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 3% of the Company's revenue was recognized in this manner based on
sales for the year ended April 2, 2022 compared to approximately 4% for the year
ended April 3, 2021. 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 year ended April 2, 2022 and the year ended April 3, 2021. 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.



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.



Accounts Receivable.We are required to estimate the collectability of our
accounts receivable, which requires a considerable amount of judgment in
assessing the ultimate realization of these receivables, including the current
credit-worthiness of each customer. Changes in required reserves may occur in
the future as conditions in the marketplace change.



Inventory. Inventories are stated at the lower of cost or net realizable value.
Cost is determined by the first-in, first-out method. We account for inventory
under a full absorption method. We record 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.



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.
In addition, we also completed a quantitative test of impairment on goodwill as
of November 1, 2021 in connection with the allocation of existing goodwill
amongst our newly defined business reporting segments. No impairment was noted
as a result of that interim impairment test. The determination of any goodwill
impairment is made at the reporting unit level. The Company determines the fair
value of a reporting unit and compares it to its carrying amount. If the
carrying amount of the reporting unit exceeds its fair value, an impairment loss
is recognized for any amount by which the carrying amount exceeds the reporting
unit's fair value up to the value of goodwill. 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 2022 test was 9.5% 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 2022 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 53.9%. The
fair value of the reporting units exceeds the carrying value by a minimum of
24.9% at each of the two 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.



                                       38





Valuation of Business Combinations. We allocate the amounts we pay for each
acquisition to the assets we acquire and liabilities we assume based on their
fair values at the date of acquisition, including identifiable intangible
assets, which either arise from a contractual or legal right or are separable
from goodwill. We base the fair value of identifiable intangible assets acquired
in a business combination on detailed valuations which are prepared with the
assistance of a specialist and consider our best estimates of inputs and
assumptions that a market participant would use. We utilize a specialist for
these valuations due to the complexity and estimation uncertainty involved in
determining the fair value given the significant assumptions involved.
Significant assumptions utilized in the valuation models include discount rates,
revenue growth rates and cash flow projections. We allocate to goodwill any
excess purchase price over the fair value of the net tangible and identifiable
intangible assets acquired. Transaction costs associated with these acquisitions
are expensed as incurred through other, net on the consolidated statements

of
operations.



Income Taxes. As part of the process of preparing the consolidated financial
statements, we are required to estimate the income taxes in each jurisdiction in
which we operate. This process involves estimating the actual current tax
liabilities together with assessing temporary differences resulting from the
differing treatment of items for tax and financial reporting purposes. These
differences result in deferred tax assets and liabilities, which are included in
the consolidated balance sheets. We must then assess the likelihood that the
deferred tax assets will be recovered, and to the extent that we believe that
recovery is not more than likely, we are required to establish a valuation
allowance. If a valuation allowance is established or increased during any
period, we are required to include this amount as an expense within the tax
provision in the consolidated statements of operations. Significant judgment is
required in determining our provision for income taxes, deferred tax assets and
liabilities, accrual for uncertain tax positions and any valuation allowance
recognized against net deferred tax assets.



Stock-Based Compensation. We recognize 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 for our options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions:



                                                    Fiscal Year Ended
                                         April 2,       April 3,       March 28,
                                           2022           2021           2020
Dividend yield                                0.00 %         0.00 %          0.00 %

Expected weighted-average life (yrs.)          5.0            5.0          

  5.0
Risk-free interest rate                       0.95 %         0.35 %          1.82 %
Expected volatility                          43.43 %        41.35 %         26.93 %




The Black-Scholes option pricing model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
our options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can materially
affect the fair value estimate, the existing models do not necessarily provide a
reliable single measure of the fair value of our options.



Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2 - "Summary of Significant Accounting Policies - Recent Accounting Pronouncements."

Impact of Inflation, Changes in Prices of Raw Materials and Interest Rate Fluctuations





In fiscal 2022, the economy experienced inflation. We purchase steel at market
prices, which fluctuate as a result of supply and demand in the marketplace. To
date, we have managed price increases by changing our buying patterns, expanding
our vendor network, and passing increases on to our customers through price
increases on our products, the assessment of steel surcharges on our customers,
or entry into long-term agreements with our customers containing escalator
provisions tied to our invoiced price of steel. However, even if we are able to
pass these steel surcharges or price increases to our customers, there may be a
time lag of several months between the time a price increase goes into effect
and our ability to implement surcharges or price increases, particularly for
orders already in our backlog. As a result, our gross margin percentage may
decline.



Competitive pressures and the terms of certain of our long-term contracts may
require us to absorb at least part of these cost increases, particularly during
periods of high inflation. Our principal raw materials are stainless and 52100
wire and rod steel (types of high alloy steel), which have historically been
readily available. We have never experienced a work stoppage due to a supply
shortage. We maintain multiple sources for raw materials including steel and
have various supplier agreements. Through sole-source arrangements, supplier
agreements and pricing, we have been able to minimize our exposure to
fluctuations in raw material prices.



                                       39





Our suppliers and sources of raw materials are based in the U.S., Europe and
Asia. We believe that our sources are adequate for our needs in the foreseeable
future, that there exist alternative suppliers for our raw materials and that in
most cases readily available alternative materials can be used for most of

our
raw materials.


Off-Balance Sheet Arrangements





As of April 2, 2022, we had no significant off-balance sheet arrangements other
than $3.5 million of outstanding standby letters of credit, all of which were
under the Revolver.

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