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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended June 30, 2004 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________ to _________
Commission file number 1-2299
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-0117420
----------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Applied Plaza, Cleveland, Ohio 44115
----------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 426-4000.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, without par value New York Stock Exchange
Preferred Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter (December 31, 2003): $446,092,883.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 24, 2004
----- ------------------------------
Common Stock, without par value 19,601,724
DOCUMENTS INCORPORATED BY REFERENCE
Listed hereunder are the documents, portions of which are incorporated by
reference, and the Parts of this Form 10-K into which such portions are
incorporated:
(1) Applied Industrial Technologies, Inc. Annual Report to
shareholders for the fiscal year ended June 30, 2004, portions of
which are incorporated by reference into Parts I, II and IV of
this Form 10-K; and,
(2) Applied Industrial Technologies, Inc. Proxy Statement dated
September 9, 2004, portions of which are incorporated by reference
into Parts II, III, and IV of this Form 10-K.
1
TABLE OF CONTENTS
Page
----
CAUTIONARY STATEMENT UNDER PRIVATE SECURITIES 3
LITIGATION REFORM ACT
PART I 4
Item 1. Business 4
Item 2. Properties 10
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
EXECUTIVE OFFICERS OF THE REGISTRANT 11
PART II
Item 5. Market for Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities 13
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis 14
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 15
Item 9A. Controls and Procedures 15
Item 9B. Other Information 15
PART III
Item 10. Directors and Executive Officers of the Registrant 16
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 16
Item 13. Certain Relationships and Related Transactions 17
Item 14. Principal Accountant Fees and Services 17
PART IV
Item 15. Exhibits and Financial Statement Schedules 17
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM 23
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS 24
SIGNATURES 25
EXHIBITS
2
CAUTIONARY STATEMENT
UNDER PRIVATE SECURITIES LITIGATION REFORM ACT
THIS REPORT, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE,
CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING, BASED ON MANAGEMENT'S CURRENT
EXPECTATIONS ABOUT THE FUTURE. FORWARD-LOOKING STATEMENTS ARE OFTEN IDENTIFIED
BY QUALIFIERS SUCH AS "EXPECT," "BELIEVE," "INTEND," "WILL," AND SIMILAR
EXPRESSIONS. APPLIED INTENDS THAT THE FORWARD-LOOKING STATEMENTS BE SUBJECT TO
THE SAFE HARBORS ESTABLISHED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 AND BY THE SECURITIES AND EXCHANGE COMMISSION IN ITS RULES, REGULATIONS,
AND RELEASES.
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON ANY
FORWARD-LOOKING STATEMENTS. ALL FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT
EXPECTATIONS REGARDING IMPORTANT RISK FACTORS, MANY OF WHICH ARE OUTSIDE
APPLIED'S CONTROL. ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
EXPRESSED IN THE FORWARD-LOOKING STATEMENTS, AND THE MAKING OF THOSE STATEMENTS
SHOULD NOT BE REGARDED AS A REPRESENTATION BY APPLIED OR ANY OTHER PERSON THAT
THE RESULTS EXPRESSED IN THE STATEMENTS WILL BE ACHIEVED. IN ADDITION, APPLIED
ASSUMES NO OBLIGATION PUBLICLY TO UPDATE OR REVISE ANY FORWARD-LOOKING
STATEMENTS, WHETHER BECAUSE OF NEW INFORMATION OR EVENTS, OR OTHERWISE.
APPLIED BELIEVES ITS PRIMARY RISK FACTORS INCLUDE, BUT ARE NOT LIMITED
TO, THOSE IDENTIFIED IN "NARRATIVE DESCRIPTION OF BUSINESS," IN PART I, ITEM 1,
SECTION (c), BELOW, AND THE FOLLOWING: CHANGES IN THE ECONOMY OR SPECIFIC
CUSTOMER INDUSTRY SECTORS; REDUCED DEMAND FOR OUR PRODUCTS IN TARGETED MARKETS
DUE TO CONSOLIDATION IN CUSTOMER INDUSTRIES AND THE TRANSFER OF MANUFACTURING
CAPACITY TO FOREIGN COUNTRIES; CHANGES IN INTEREST RATES AND INFLATION; CHANGES
IN CUSTOMER PROCUREMENT POLICIES AND PRACTICES; CHANGES IN PRODUCT MANUFACTURER
SALES POLICIES AND PRACTICES; THE AVAILABILITY OF PRODUCTS AND LABOR; CHANGES IN
OPERATING EXPENSES; PRICE INCREASES OR DECREASES; CHANGES IN RELATIONSHIPS WITH
EXISTING CUSTOMERS AND SUPPLIERS; THE VARIABILITY AND TIMING OF NEW BUSINESS
OPPORTUNITIES INCLUDING ACQUISITIONS, ALLIANCES, CUSTOMER RELATIONSHIPS, AND
SUPPLIER AUTHORIZATIONS; OUR ABILITY TO REALIZE THE ANTICIPATED BENEFITS OF
ACQUISITIONS AND OTHER BUSINESS STRATEGIES; THE INCURRENCE OF DEBT AND
CONTINGENT LIABILITIES IN CONNECTION WITH ACQUISITIONS; CHANGES IN ACCOUNTING
POLICIES AND PRACTICES; ORGANIZATIONAL CHANGES WITHIN THE COMPANY; THE EMERGENCE
OF NEW COMPETITORS, INCLUDING FIRMS WITH GREATER FINANCIAL RESOURCES; RISKS AND
UNCERTAINTIES ASSOCIATED WITH OUR FOREIGN OPERATIONS, INCLUDING INFLATION,
RECESSIONS, AND FOREIGN CURRENCY EXCHANGE RATES; ADVERSE RESULTS IN SIGNIFICANT
LITIGATION MATTERS; ADVERSE REGULATION AND LEGISLATION; AND THE OCCURRENCE OF
EXTRAORDINARY EVENTS (INCLUDING PROLONGED LABOR DISPUTES, NATURAL EVENTS AND
ACTS OF GOD, TERRORIST ACTS, FIRES, FLOODS, AND ACCIDENTS).
3
PART I.
ITEM 1. BUSINESS.
In this Annual Report on Form 10-K, "Applied" refers to Applied
Industrial Technologies, Inc. References to "we," "us," "our," and "the company"
refer to Applied and its subsidiaries.
The company is one of North America's leading distributors of
industrial products and fluid power products and systems. In addition, we
provide fluid power, mechanical, electrical, and rubber shop services. We offer
technical application support for our products and provide creative solutions to
help customers minimize downtime and reduce overall procurement costs. Although
we do not generally manufacture the products we sell, we do assemble and repair
various products and systems. Our customers are primarily North American
industrial companies, who use our products to maintain and to repair their
machinery and equipment. We also sell for original equipment manufacturing uses.
Applied and its predecessor companies have engaged in this business
since 1923. Applied reincorporated in Ohio in 1988.
Applied's Internet address is www.applied.com. The following documents
are available free of charge at the investor relations area of our website:
- Our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and amendments to those
reports, together with Section 16 insider beneficial stock
ownership reports, as soon as reasonably practicable after
they are electronically filed with, or furnished to, the
Securities and Exchange Commission
- Our Code of Business Ethics
- Our Board of Directors Governance Principles and Practices
- Charters for the Audit, Corporate Governance, and Executive
Organization & Compensation Committees of our Board of
Directors
The information contained on our website is not incorporated into this
annual report on Form 10-K. The documents referenced above are also available in
print to any shareholder who sends a written request to our Vice President-Chief
Financial Officer & Treasurer at One Applied Plaza, Cleveland, Ohio 44115-5014.
(a) General Development of Business.
In November 2003, we acquired Rodamientos y Bandas de la Laguna, S.A.
de C.V. ("Rybalsa"), a Mexican distributor of bearings and power transmission
components with annual sales of approximately US $10 million. Its operations
have been integrated with our existing Applied Mexico business.
4
Additional information regarding developments in our business can be
found in our 2004 Annual Report to shareholders under the caption "Management's
Discussion and Analysis" on pages 10 through 17, which is incorporated here by
reference.
(b) Financial Information about Segments.
We have identified only one reportable business segment, service
center-based distribution. This business provides customers with solutions to
their maintenance, repair, and original equipment manufacturing needs by
distributing, through our service center network, bearings and seals, linear
motion products, power transmission products, fluid power products, industrial
rubber products, general maintenance and safety products, and tools. We also
offer technical support and provide creative solutions to help customers
minimize their production downtime and reduce overall procurement costs.
In addition to service center-based distribution, we operate several
specialized fluid power companies that primarily sell products and services
directly to customers rather than through the service centers.
Segment financial information can be found in the 2004 Annual Report to
shareholders in note 12 to the financial statements on pages 32 and 33, and that
information is incorporated here by reference.
(c) Narrative Description of Business.
Overview. Our field operating structure is built on two primary
platforms - industrial products, and fluid power products and systems:
- Industrial Products. Through our service centers, located in
47 states, four Canadian provinces, Puerto Rico, and Mexico,
we distribute industrial products, including bearings and
seals, linear motion products, power transmission products,
fluid power components, industrial rubber products, general
maintenance and safety products, and tools. Customers
primarily purchase our products for scheduled maintenance of
their machinery and equipment and for emergency repairs. In
addition, we operate regional fabricated rubber shops, which
modify and repair conveyor belts and assemble hose apparatuses
in accordance with customer requirements, and rubber service
field crews, which install and repair belts and rubber linings
at customer locations. The industrial products business
accounts for a substantial majority of our field operations
and sales dollars. While the industrial products business
operates in the U.S. using the Applied Industrial Technologies
trade name, we also are known as Bearing & Transmission and
IECO in Canada, Applied Mexico in Mexico, and Rafael Benitez
Carrillo in Puerto Rico.
- Fluid Power. Our specialized fluid power businesses primarily
market their products and services directly to customers, but
also through the service center network. In
5
addition to distributing fluid power components, the
businesses operate shops that assemble fluid power systems and
components, perform equipment repair, and offer technical
advice to customers. Customers include businesses purchasing
for maintenance and repair applications, as well as for
original equipment manufacturing applications. Our fluid power
businesses operate in various geographic areas under the
following names: Air and Hydraulics Engineering (Southeast),
Air Draulics Engineering (Mississippi Valley), Dees Fluid
Power (Mid-Atlantic and Northeast), Elect-Air (West Coast),
Engineered Sales (Midwest), ESI Power Hydraulics (Midwest),
HyPower (Western Canada), and Kent Fluid Power (West Coast).
Products. We are one of North America's leading distributors of
industrial and fluid power products and systems. Industrial products include
bearings and seals, linear motion products, power transmission products,
industrial rubber products, general maintenance and safety products, and tools.
Fluid power products include hydraulic, pneumatic, lubrication, and filtration
components and systems.
These products are generally manufactured by other companies for whom
we serve as a non-exclusive distributor. These suppliers also may provide us
product training, as well as sales and marketing support. We believe that these
relationships are generally good. The loss of certain suppliers could adversely
affect our business. Authorizations to represent particular suppliers and
product lines may vary by geographic region.
Our product suppliers generally confine their direct sales activities
to large-volume transactions, mainly with original equipment manufacturers. Our
suppliers generally do not sell maintenance and repair products directly to the
customer but instead refer the customer to us or another distributor. Of course,
there is no assurance that this practice will continue, however, and its
discontinuance could adversely affect our business.
Net sales by product category for the past three fiscal years can be
found in the 2004 Annual Report to shareholders in note 12 to the financial
statements on page 33, and that information is incorporated here by reference.
Services. Our service center associates advise and assist customers
with respect to product selection and application, and industrial product
inventory management. We consider this advice and assistance to be an integral
part of our sales efforts. Beyond traditional parts distribution services, we
offer product and process solutions involving multiple technologies, helping to
reduce production downtime, as well as overall procurement and maintenance costs
for customers. By providing high levels of service, product and industry
expertise, and technical support, while at the same time offering competitive
pricing, we believe we develop closer, longer-lasting, and more profitable
customer relationships.
Our sales associates include customer sales and service representatives
and account managers, as well as product and industry specialists. Customer
sales and service representatives receive, process, and expedite customer
orders, provide product and pricing information, and assist
6
account managers in serving customers. Account managers make on-site calls to
current and potential customers to provide product and price information,
identify customer requirements, provide recommendations, and assist in
implementing equipment maintenance and storeroom management programs, including
our automated storeroom replenishment system, AppliedSTORE Plus(SM). Account
managers also measure and document for customers the value of cost savings and
increased productivity generated by our services and recommendations. Product
and industry specialists assist with applications in their areas of technical
expertise.
We maintain inventory levels at each service center tailored to the
local market. These inventories consist of standard items as well as other items
specific to local customers' immediate needs. Eight distribution centers
replenish service center inventories and also may ship products direct to
customers. The inventory maintained at our facilities allows us to satisfy our
customers' just-in-time product needs.
Timely delivery of products is an integral part of our service,
particularly when customers require products for emergency repairs to their
machinery or equipment. Service centers and distribution centers use the most
effective method of transportation available to meet customer needs, including
our own delivery vehicles, dedicated third-party transportation providers, as
well as both surface and air common carrier and courier services.
Our information systems enhance our ability to serve customers. While
we have long transacted with customers through electronic data interchange
(EDI), customers increasingly turn to our electronic commerce website to search
for products in a comprehensive electronic database, research product
attributes, view prices, check inventory levels, place orders, and track order
status. We are continuing to enhance the functionality of the site. Sales
through the website still represent a small portion of our overall sales, but
are growing. We also interface with customers' technology platforms and plant
maintenance systems.
Along with our electronic capabilities, we support our service center
network with paper catalogs. The Maintenance America(R) product catalog
facilitates the purchase of general maintenance and safety products, and tools.
And our Fluid Power Connection(R) catalog of hydraulic and pneumatic components
facilitates buying these products from our service centers. Products from both
specialty catalogs are also available online at www.applied.com.
We now supplement the service center product offering with our
MaintenancePro(SM) fee-based technical training seminars. These courses provide
customer personnel with information on maintenance, troubleshooting, component
application, and failure analysis in the product areas of hydraulics and
pneumatics, lubrication, bearings, and power transmission.
In addition to distributing products, we offer shop services in select
geographic areas. Our fabricated rubber shops modify and repair conveyor belts
and provide hose assemblies (also available at select service centers and
distribution centers) in accordance with customer requirements. We also provide
field crews that perform services, including the installation and repair of
belts and rubber lining, primarily at customer locations. Among the other
services we
7
offer, either performed by us directly or by third party providers, are the
rebuilding and assembly of speed reducers, pumps, valves, cylinders, and
electric and hydraulic motors, and custom machining.
Our fluid power businesses generally operate independently of the
service centers, but as product distributors, share the same focus on customer
service. Product and application recommendations, inventory availability, and
delivery speed are all key to the businesses' success. The fluid power
businesses distinguish themselves, though, from most component distributors by
also offering engineering, design, system fabrication, installation, and repair
services. Each business has account managers with extensive technical knowledge,
who handle sophisticated projects for customers primarily within the business'
geographic region. The businesses also provide additional technical support to
our service centers.
Markets. We purchase from several thousand product manufacturers and
resell the products to many thousands of customers in a wide variety of
industries, including agriculture and food processing, automotive, chemical
processing, forest products, industrial machinery and equipment, mining, primary
metals, transportation, and utilities. Customers range from the largest
industrial concerns in North America, with whom we may have multiple-location
relationships, to the smallest. We are not significantly dependent on a single
customer or group of customers, the loss of which would have a material adverse
effect on our business as a whole, and no single customer accounts for more than
4% of our net sales.
Competition. We consider our business to be highly competitive. In
addition, our markets present few economic or technological barriers to entry,
contributing to a high fragmentation of market share in our industry.
Longstanding supplier and customer relationships, geographic coverage, name
recognition, and our associates' experience do, however, support our competitive
position. Competition is based generally on breadth and quality of product and
service offerings, product availability, price, catalogs and online capability,
and having a local presence.
Our principal competitors are other bearing, power transmission,
industrial rubber, fluid power, linear motion, and general maintenance and
safety product distributors, and, to a lesser extent, mill supply and catalog
companies. These competitors include local, regional, national, and
international operations. We also compete with original equipment manufacturers
and their distributors in the sale of maintenance and replacement components.
Some competitors have greater financial resources than we do. The identity and
number of our competitors vary throughout the geographic and product markets in
which we operate.
Although we are one of the leading distributors in North America for
the major product categories we carry, our market share for those products in
any given geographic area may be relatively small compared to the portion of the
market served by original equipment manufacturers and other distributors.
Backlog Orders and Seasonality. Because of our product resources and
distribution network, we do not have a substantial backlog of orders, nor are
backlog orders significant at any given time. Our business has exhibited minor
seasonality - in particular, sales per day during the
8
first half of our fiscal year have tended to be slightly lower compared with the
second half due, in part, to the impact of customer plant shutdowns and
holidays.
Patents, Trademarks, and Licenses. Customer recognition of our service
marks and trade names, including Applied Industrial Technologies(R), Applied(R),
and AIT(R), is an important contributing factor to our sales. Patents and
licenses are not of material importance to our business.
Raw Materials and General Business Conditions. Our operations are
dependent on general industrial and economic conditions and would be adversely
affected by the unavailability of raw materials to our suppliers, prolonged
labor disputes experienced by suppliers or customers, or by any recession or
depression that has an adverse effect on industrial activity generally or on key
customer industries served by us.
Number of Employees. On August 30, 2004, we had 4,312 employees.
Working Capital. Our working capital position is discussed in
"Management's Discussion and Analysis" in the 2004 Annual Report to shareholders
on pages 12 through 14.
We require substantial working capital related to accounts receivable
and inventories. Significant amounts of inventory are carried to meet rapid
delivery requirements of customers. We generally require payments for sales on
account within 30 days. Returns are not considered to have a material effect on
our working capital requirements. We believe these practices are generally
consistent among companies in our industry.
Environmental Laws. We believe that compliance with laws regulating the
discharge of materials into the environment or otherwise relating to
environmental protection will not have a material adverse effect on our capital
expenditures, earnings, or competitive position.
(d) Financial Information about Geographic Areas.
Net sales by our Canadian and Mexican operations represented 8.6% of
our total net sales in fiscal 2004, 6.8% in 2003, and 5.5% in 2002. The Canadian
operations' sales (in U.S. dollars) were $119.4 million in 2004, $94.1 million
in 2003, and $74.3 million in 2002. Long-lived assets located outside the United
States are not and have not been material.
Our U.S. operations' export sales during the fiscal year ended June 30,
2004, and prior fiscal years, were less than 2% of net sales, and were not
concentrated in a specific geographic area.
Additional information regarding our foreign operations is included in
the 2004 Annual Report to shareholders in note 12 to the financial statements on
page 33, and in "Quantitative and Qualitative Disclosures About Market Risk" on
page 17, and that information is incorporated here by reference.
9
ITEM 2. PROPERTIES.
We believe that having a local presence is important to serving our
customers, so we maintain service centers and other operations in local markets
in 47 states, four Canadian provinces, Puerto Rico, and Mexico. At June 30,
2004, we owned real properties at 152 locations and leased 258 locations.
Our principal owned real properties (each of which has more than 20,000
square feet of floor space) at June 30, 2004 were:
- the distribution center in Atlanta, Georgia
- the distribution center in Florence, Kentucky
- the service center in West Monroe, Louisiana
- the service center and rubber shop in Omaha, Nebraska
- the distribution center in Carlisle, Pennsylvania
- the distribution center and rubber shop in Fort Worth, Texas
Our principal leased real properties (each of which has more than
20,000 square feet of floor space) at June 30, 2004 were:
- the corporate headquarters facility in Cleveland, Ohio
- the distribution center, rubber shop, and service center in
Fontana, California
- the service center in Long Beach, California
- the service center in San Jose, California
- the rubber shop and fluid power shop in Tracy, California
- the distribution center and service center in Denver, Colorado
- the fluid power sales office and warehouse in Joppa, Maryland
- the service center in Grand Rapids, Michigan
- the service center and fluid power shop in Iron Mountain,
Michigan
- the service center and offices in Romulus, Michigan
- the service center in Kansas City, Missouri
- the inventory return center in Elyria, Ohio
- the distribution center in Portland, Oregon
- the service center in Longview, Washington
- the rubber shop in Longview, Washington
- the offices, service center, and rubber shop in Appleton,
Wisconsin
- the service center in Delta, British Columbia
- the service center and distribution center in Winnipeg,
Manitoba
- the offices and fluid power shop in Saskatoon, Saskatchewan
- the service center in Monterrey, Mexico
10
Except for the Joppa facility, all of the properties listed above are
used in our service center-based distribution segment. The Tracy, Longview,
Delta, Saskatoon, and Winnipeg facilities are used in operations both inside and
outside the service center-based distribution segment.
We consider our properties generally sufficient to meet our
requirements for office space and inventory stocking. A service center's size is
primarily influenced by the amount of inventory the service center requires to
meet customers' needs. We use all of our owned and leased properties except for
certain properties which in the aggregate are not material and are either for
sale, lease, or sublease to third parties due to a relocation or closing. We
also may lease or sublease to others unused portions of buildings.
In recent years, when opening new locations, we have tended to lease
rather than own real property. We do not consider any of our service center,
distribution center, or shop properties to be material, because we believe that,
if it becomes necessary or desirable to relocate an operation, other suitable
property could be found.
Additional information regarding our properties is included in the 2004
Annual Report to shareholders in note 11 to the financial statements on page 32,
and that information is incorporated here by reference.
ITEM 3. LEGAL PROCEEDINGS.
Applied and/or one of its subsidiaries is a party to various judicial
and administrative proceedings. Based on circumstances currently known, we do
not believe that any liabilities that may result from these proceedings are
reasonably likely to have a material adverse effect on our consolidated
financial position, results of operations, or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of Applied's security holders
during the last quarter of fiscal 2004.
EXECUTIVE OFFICERS OF THE REGISTRANT.
Applied's executive officers are elected by the Board of Directors for
a term of one year, or until their successors are chosen and qualified, at the
Board's organizational meeting held following the annual meeting of
shareholders. The following is a list of the executive officers and a
description of their business experience during the past five years. Except as
otherwise stated, the positions and offices indicated are with Applied, and the
persons were elected to their current positions on October 21, 2003:
11
David L. Pugh. Mr. Pugh is Chairman & Chief Executive Officer
(since October 2000) and has served as a member of the Board of
Directors since January 2000. He was President & Chief Executive
Officer (from January 2000 to October 2000), and prior to that was
President & Chief Operating Officer (from 1999 to January 2000). He is
55 years of age.
Bill L. Purser. Mr. Purser is President & Chief Operating
Officer (since October 2000). Prior to that he was Vice President-Chief
Marketing Officer (from 1999 to October 2000). He is 61 years of age.
Todd A. Barlett. Mr. Barlett is Vice President-Acquisitions
and Global Business Development (since July 2004). He had served as
Vice President-Global Business Development (from October 2000 to July
2004), Vice President-Alliance Systems (from January 2000 to October
2000) and Vice President-National Accounts & Alliance Systems (from
1998 to January 2000). He is 49 years of age.
Fred D. Bauer. Mr. Bauer is Vice President-General Counsel
(since April 2002) and Secretary (since October 2001). He had served as
Vice President-Legal Services (from May 2000 to April 2002) and
Assistant Secretary (from 1994 to October 2001), and had also been
Assistant General Counsel (from 1994 to May 2000). He is 38 years of
age.
Michael L. Coticchia. Mr. Coticchia is Vice President-Human
Resources and Administration (since April 2002). Prior to that, he
served as Vice President-Human Resources and Risk Management (from 1998
to April 2002) and Assistant Secretary (from 1990 to January 2002). He
is 41 years of age.
Mark O. Eisele. Mr. Eisele is Vice President-Chief Financial
Officer & Treasurer (since January 2004). Prior to that, he had been
Vice President & Controller (from 1997 to December 2003). He is 47
years of age.
James T. Hopper. Mr. Hopper is Vice President-Chief
Information Officer (since January 2000). He had served as Vice
President-Information Systems (from 1995 to January 2000). He is 61
years of age.
Jeffrey A. Ramras. Mr. Ramras is Vice President-Marketing and
Supply Chain Management (since September 2002). He had served as Vice
President-Supply Chain Management (from January 2000 to September 2002)
and as Vice President-Logistics (from 1995 to January 2000). He is 49
years of age.
Richard C. Shaw. Mr. Shaw is Vice President-Communications and
Learning (since January 2000). He had served as Vice
President-Communications, Organizational Learning & Quality Standards
(from 1996 to January 2000). He is 55 years of age.
12
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Applied's common stock, without par value, is listed for trading on the
New York Stock Exchange under the ticker symbol AIT. Information concerning the
principal market for Applied's common stock, the quarterly stock prices and
dividends for the fiscal years ended June 30, 2004, 2003, and 2002 and the
number of shareholders of record as of August 16, 2004 is set forth in the 2004
Annual Report to shareholders on page 37, under the caption "Quarterly Operating
Results and Market Data," and that information is incorporated here by
reference.
Information concerning securities authorized for issuance under
Applied's equity compensation plans is set forth in Applied's proxy statement
dated September 9, 2004 under the caption, "Equity Compensation Plan
Information" on page 15, and that information is incorporated here by reference.
Applied did not make any repurchases of its common stock in the quarter
ended June 30, 2004 except as referenced in note (1) to the table below:
(c) Total Number of (d) Maximum Number of
Shares Purchased as Shares that May Yet
(a) Total (b) Average Part of Publicly Be Purchased Under
Number of Price Paid per Announced Plans or the Plans or
Period Shares (1) Share Programs Programs (2)
- ----------------------------------------------------------------------------------------------------
April 1, 2004 to 0 -- 0 841,375
April 30, 2004
- ----------------------------------------------------------------------------------------------------
May 1, 2004 to 0 -- 0 841,375
May 31, 2004
- ----------------------------------------------------------------------------------------------------
June 1, 2004 to 0 -- 0 841,375
June 30, 2004
- ----------------------------------------------------------------------------------------------------
Total 0 -- 0 841,375
- ----------------------------------------------------------------------------------------------------
(1) During the quarter ended June 30, 2004, Applied did purchase 3,007
shares in connection with the exercise of stock options and other
employee benefit programs. These purchases are not counted within the
Board of Directors authorization described in footnote (2).
(2) On July 16, 2003, Applied announced that the Board of Directors had
authorized the purchase of up to 1,000,000 shares of common stock. The
purchases may be made in the open market or in privately negotiated
transactions. This authorization is in effect until all shares are
purchased or the authorization is revoked or amended by the Board.
13
ITEM 6. SELECTED FINANCIAL DATA.
The summary of selected financial data for the last five years is set
forth in the 2004 Annual Report to shareholders in the table on pages 38 and 39
under the caption "10 Year Summary" and is incorporated here by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
"Management's Discussion and Analysis" is set forth in the 2004 Annual
Report to shareholders on pages 10 through 17 and is incorporated here by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
The disclosures about market risk required by this item are set forth
in Applied's 2004 Annual Report to shareholders on page 17, which information is
incorporated here by reference. For further information relating to borrowing
and interest rates, see the Liquidity and Capital Resources section of
"Management's Discussion and Analysis" and Notes 6 and 7 to the Consolidated
Financial Statements in Applied's 2004 Annual Report to shareholders on pages
12-14, 26 and 27, respectively, which information is incorporated here by
reference. In addition, please see "Cautionary Statement under Private
Securities Litigation Reform Act" at page 3, above, for additional risk factors
relating to our business.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following consolidated financial statements and supplementary data
of Applied and its subsidiaries and the independent auditors' report listed
below, which are included in the 2004 Annual Report to shareholders at the pages
indicated, are incorporated here by reference and filed with this Report:
Caption Page No.
------- --------
Financial Statements:
Statements of Consolidated Income
for the Years Ended
June 30, 2004, 2003, and 2002 18
Consolidated Balance Sheets
June 30, 2004 and 2003 19
14
Statements of Consolidated Cash Flows
for the Years Ended
June 30, 2004, 2003, and 2002 20
Statements of Consolidated Shareholders'
Equity for the Years Ended
June 30, 2004, 2003, and 2002 21
Notes to Consolidated Financial Statements
for the Years Ended
June 30, 2004, 2003, and 2002 22 - 34
Report of Independent Registered Public Accounting Firm 35
Supplementary Data:
Quarterly Operating Results and Market Data 37
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES.
Management, under the supervision and with the participation of the
chief executive officer and the chief financial officer, has evaluated Applied's
disclosure controls and procedures as of the end of the period covered by this
report. Based on that evaluation, the chief executive officer and chief
financial officer have concluded that the disclosure controls and procedures are
effective in timely alerting them to material information about Applied required
to be included in our Exchange Act reports.
Management has not identified any change in internal control over
financial reporting occurring during the fourth quarter that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
ITEM 9B. OTHER INFORMATION.
Not applicable.
15
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item as to Applied's directors is set
forth in Applied's Proxy Statement dated September 9, 2004 on pages 4 through 7
under the caption "Election of Directors" and is incorporated here by reference.
The information required by this Item as to Applied's executive officers has
been furnished in this Report on pages 11 and 12 in Part I, after Item 4, under
the caption "Executive Officers of the Registrant."
The information required by this Item as to compliance with Section
16(a) of the Securities Exchange Act of 1934 is set forth in Applied's Proxy
Statement on page 22 under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" and is incorporated here by reference.
Applied has a code of ethics, entitled the Code of Business Ethics,
that applies to our employees, including our chief executive officer, chief
financial officer, and controller. The Code of Business Ethics is posted at the
investor relations area of our www.applied.com website.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is set forth in Applied's Proxy
Statement dated September 9, 2004, under the captions "Compensation of
Directors" on page 10, "Deferred Compensation Plan for Non-Employee Directors"
on page 11, "Summary Compensation" on page 13, "Option Grants in Last Fiscal
Year" and "Aggregated Option Exercises and Fiscal Year-End Option Values" on
page 14, "Long-Term Incentive Plans - Awards in Last Fiscal Year" on page 15,
"Estimated Retirement Benefits Under Supplemental Executive Retirement Benefits
Plan" and "Deferred Compensation Plan" on page 16, and "Change in Control
Agreements and Other Related Arrangements" on page 17, and is incorporated here
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Information concerning the security ownership of certain beneficial
owners and management and related stockholder matters is set forth in Applied's
proxy statement dated September 9, 2004, under the captions "Beneficial
Ownership of Certain Applied Shareholders and Management" on page 12 and "Equity
Compensation Plan Information" on page 15, and is incorporated here by
reference.
16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this Item is set forth in Applied's Proxy
Statement dated September 9, 2004 on page 7 under the caption "Item 2 -
Ratification of Auditors" and is incorporated here by reference.
PART IV.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)1. Financial Statements.
The following consolidated financial statements, notes thereto, the
report of independent registered public accounting firm, and supplemental data
are included in the 2004 Annual Report to shareholders on pages 18 through 35
and page 37, and are incorporated by reference in Item 8 of this Report.
Caption
Statements of Consolidated Income for the
Years Ended June 30, 2004, 2003, and 2002
Consolidated Balance Sheets at
June 30, 2004 and 2003
Statements of Consolidated Cash Flows for
the Years Ended June 30, 2004, 2003, and 2002
Statements of Consolidated Shareholders'
Equity for the Years Ended June 30, 2004,
2003, and 2002
Notes to Consolidated Financial Statements
for the Years Ended June 30, 2004, 2003, and 2002
Report of Independent Registered Public Accounting Firm
17
Supplementary Data:
Quarterly Operating Results and Market Data
(a)2. Financial Statement Schedule.
The following report and schedule are included in this Part IV, and are
found in this Report at the pages indicated:
Caption Page No.
------- --------
Report of Independent Registered Public
Accounting Firm 23
Schedule II - Valuation and
Qualifying Accounts 24
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission have been
omitted because they are not required under the related instructions, are not
applicable, or the required information is included in the consolidated
financial statements and notes thereto.
(a)3. Exhibits.
* Asterisk indicates an executive compensation plan or arrangement.
Exhibit
No. Description
--- -----------
3(a) Amended and Restated Articles of Incorporation of Applied
Industrial Technologies, Inc., as amended on October 8, 1998
(filed as Exhibit 3(a) to Applied's Form 10-Q for the quarter
ended September 30, 1998, SEC File No. 1-2299, and incorporated
here by reference).
3(b) Code of Regulations of Applied Industrial Technologies, Inc., as
amended on October 19, 1999 (filed as Exhibit 3(b) to Applied's
Form 10-Q for the quarter ended September 30, 1999, SEC File No.
1-2299, and incorporated here by reference).
4(a) Certificate of Merger of Bearings, Inc. (Ohio) and Bearings,
Inc. (Delaware) filed with the Ohio Secretary of State on
October 18, 1988, including an Agreement and Plan of
Reorganization dated September 6, 1988 (filed as Exhibit 4(a) to
Applied's Registration
18
Statement on Form S-4 filed May 23, 1997, Registration No.
333-27801, and incorporated here by reference).
4(b) Private Shelf Agreement dated as of November 27, 1996, as
amended on January 30, 1998, between Applied and The Prudential
Insurance Company of America (filed as Exhibit 4(f) to Applied's
Form 10-Q for the quarter ended March 31, 1998, SEC File No.
1-2299, and incorporated here by reference).
4(c) Amendment dated October 24, 2000 to November 27, 1996 Private
Shelf Agreement between Applied and The Prudential Insurance
Company of America (filed as Exhibit 4(e) to Applied's Form 10-Q
for the quarter ended September 30, 2000, SEC File No. 1-2299,
and incorporated here by reference).
4(d) Amendment dated November 14, 2003 to 1996 Private Shelf
Agreement between Applied and The Prudential Insurance Company
of America (filed as Exhibit 4(d) to Applied's Form 10-Q for the
quarter ended December 31, 2003, SEC File No. 1-2299, and
incorporated here by reference).
4(e) Amendment dated February 25, 2004 to 1996 Private Shelf
Agreement between Applied and The Prudential Insurance Company
of America (filed as Exhibit 4(e) to Applied's Form 10-Q for the
quarter ended March 31, 2004, SEC File No. 1-2299, and
incorporated here by reference).
4(f) $100,000,000 Credit Agreement dated as of October 31, 2003 among
Applied, KeyBank National Association as Agent, and various
financial institutions (filed as Exhibit 4(e) to Applied's Form
10-Q for the quarter ended December 31, 2003, SEC File No.
1-2299, and incorporated here by reference).
4(g) Rights Agreement, dated as of February 2, 1998, between Applied
and Computershare Investor Services LLP (successor to Harris
Trust and Savings Bank), as Rights Agent, which includes as
Exhibit B thereto the Form of Rights Certificate (filed as
Exhibit No. 1 to Applied's Registration Statement on Form 8-A
filed July 20, 1998, SEC File No. 1-2299, and incorporated here
by reference).
*10(a) Form of Change in Control Agreement (amended and restated as of
August 8, 2001) between Applied and each of its executive
officers (filed as Exhibit 10 to Applied's Form 10-Q for the
quarter ended
19
December 31, 2001, SEC File No. 1-2299, and incorporated here
by reference).
*10(b) A written description of Applied's director compensation program
is found in Applied's Proxy Statement dated September 9, 2004,
SEC File No. 1-2299, on page 10, under the caption "Compensation
of Directors," and is incorporated here by reference.
*10(c) Applied Deferred Compensation Plan for Non-Employee Directors
(September 1, 2003 Restatement) (filed as Exhibit 10(c) to
Applied's Form 10-K for the year ended June 30, 2003, SEC File
No. 1-2299, and incorporated here by reference).
*10(d) A written description of Applied's Life and Accidental Death and
Dismemberment Insurance for executive officers (filed as Exhibit
10(b) to Applied's Form 10-Q for the quarter ended December 31,
1997, SEC File No. 1-2299, and incorporated here by reference).
*10(e) A written description of Applied's Long-Term Disability
Insurance for executive officers (filed as Exhibit 10(c) to
Applied's Form 10-Q for the quarter ended December 31, 1997, SEC
File No. 1-2299, and incorporated here by reference).
*10(f) Form of Director and Officer Indemnification Agreement entered
into between Applied and each of its directors and executive
officers (filed as Exhibit 10(g) to Applied's Registration
Statement on Form S-4 filed May 23, 1997, Registration No.
333-27801, and incorporated here by reference).
*10(g) Applied Supplemental Executive Retirement Benefits Plan
(January 1, 2002 Restatement) in which current and certain
former executive officers participate (filed as Exhibit 10 to
Applied's Form 10-Q for the quarter ended March 31, 2002, SEC
File No. 1-2299, and incorporated here by reference).
*10(h) Applied Deferred Compensation Plan (September 1, 2003
Restatement) (filed as Exhibit 10(h) to Applied's Form 10-K for
the year ended June 30, 2003, SEC File No. 1-2299, and
incorporated here by reference).
*10(i) First Amendment to the Company's Deferred Compensation Plan
(September 1, 2003 Restatement) (filed as Exhibit 10 to
Applied's Form 10-Q for the quarter ended December 31, 2003, SEC
File No. 1-2299, and incorporated here by reference).
20
*10(j) 1997 Long-Term Performance Plan re-adopted by Shareholders on
October 22, 2002 (filed as Exhibit 10(a) to Applied's Form 10-Q
for the quarter ended December 31, 1997, SEC File No. 1-2299,
and incorporated here by reference).
*10(k) Amendment No. 1 to 1997 Long-Term Performance Plan, effective as
of August 8, 2003 (filed as Exhibit 10(j) to Applied's Form 10-K
for the year ended June 30, 2003, SEC File No. 1-2299, and
incorporated here by reference).
*10(l) Applied Supplemental Defined Contribution Plan (January 1, 1997
Restatement) (filed as Exhibit 10(m) to Applied's Registration
Statement on Form S-4 filed May 23, 1997, Registration No.
333-27801, and incorporated here by reference).
*10(m) First Amendment to Applied Supplemental Defined Contribution
Plan effective as of October 1, 2000 (filed as Exhibit 10(a) to
Applied's Form 10-Q for the quarter ended September 30, 2000,
SEC File No. 1-2299, and incorporated here by reference).
*10(n) Second Amendment to Applied Supplemental Defined Contribution
Plan effective as of January 16, 2001 (filed as Exhibit 10(a) to
Applied's Form 10-Q for the quarter ended March 31, 2001, SEC
File No. 1-2299, and incorporated here by reference).
*10(o) Retention Program for James T. Hopper, Vice President-Chief
Information Officer, dated March 30, 2000 (filed as Exhibit
10(o) to Applied's Form 10-K for the year ended June 30, 2000,
SEC File No. 1-2299, and incorporated here by reference).
10(p) Lease dated as of March 1, 1996 between Applied and the
Cleveland-Cuyahoga County Port Authority (filed as Exhibit 10(n)
to Applied's Registration Statement on Form S-4 filed May 23,
1997, Registration No. 333-27801, and incorporated here by
reference).
*10(q) Non-qualified Deferred Compensation Agreement between Applied
and J. Michael Moore effective as of December 31, 1997 (filed as
Exhibit 10(a) to Applied's Form 10-Q for the quarter ended March
31, 1998, SEC File No. 1-2299, and incorporated here by
reference).
21
13 Applied 2004 Annual Report to shareholders (not deemed "filed" as part
of this Form 10-K except for those portions that are expressly
incorporated by reference).
21 Applied's subsidiaries at June 30, 2004.
23 Consent of Independent Registered Public Accounting Firm.
24 Powers of attorney.
31 Rule 13a-14(a)/15d-14(a) certifications.
32 Section 1350 certifications.
Applied will furnish a copy of any exhibit described above and not
contained herein upon payment of a specified reasonable fee which shall be
limited to Applied's reasonable expenses in furnishing the exhibit.
Certain instruments with respect to long-term debt have not been filed
as exhibits because the total amount of securities authorized under any one of
the instruments does not exceed 10 percent of the total assets of Applied and
its subsidiaries on a consolidated basis. Applied agrees to furnish to the
Securities and Exchange Commission, upon request, a copy of each such
instrument.
22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Applied Industrial Technologies, Inc.
We have audited the consolidated financial statements of Applied
Industrial Technologies, Inc. and its subsidiaries (the "Company") as of June
30, 2004 and 2003, and for each of the three years in the period ended June 30,
2004, and have issued our report thereon dated August 6, 2004 (which report
expresses an unqualified opinion and includes explanatory paragraphs concerning
the adoption of new accounting principles in fiscal 2004 and 2002); such
consolidated financial statements and report are included in your 2004 Annual
Report to Shareholders and are incorporated herein by reference. Our audits also
included the consolidated financial statement schedule of the Company, listed in
Item 15(a)2. This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
/s/ Deloitte & Touche, LLP
Cleveland, Ohio
August 6, 2004
23
APPLIED INDUSTRIAL TECHNOLOGIES, INC. & SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JUNE 30, 2004, 2003 AND 2002
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------------------------- -------- --------
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND OTHER FROM AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RESERVE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30 2004:
Reserve deducted from assets to
which it applies - accounts receivable
allowances $6,100 $2,525 $ 60 (B) $ 2,285 (A) $6,400
YEAR ENDED JUNE 30 2003:
Reserve deducted from assets to
which it applies - accounts receivable
allowances $5,600 $2,510 $500 (B) $ 2,510 (A) $6,100
YEAR ENDED JUNE 30 2002:
Reserve deducted from assets to
which it applies - accounts receivable
allowances $5,400 $4,488 $ 3,888 (A) $5,600
400 (B)
(A) Amounts represent uncollectible accounts charged off.
(B) Amounts represent reserves for the return of merchandise by customers.
SCHEDULE II
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
/s/ David L. Pugh /s/ Bill L. Purser
- ----------------------------------------- -----------------------------------
David L. Pugh, Chairman & Bill L. Purser, President &
Chief Executive Officer Chief Operating Officer
/s/ Mark O. Eisele /s/ Daniel T. Brezovec
- ----------------------------------------- ----------------------------------
Mark O. Eisele Daniel T. Brezovec
Vice President-Chief Financial Officer Corporate Controller
& Treasurer (Principal Accounting Officer)
Date: September 9, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
* *
_______________________________________ ____________________________________
William G. Bares, Director Dr. Roger D. Blackwell, Director
* *
_______________________________________ ____________________________________
William E. Butler, Director Thomas A. Commes, Director
* *
_______________________________________ ____________________________________
Peter A. Dorsman, Director Russell R. Gifford, Director
* *
_______________________________________ ____________________________________
L. Thomas Hiltz, Director Edith Kelly-Green, Director
* /s/ David L. Pugh
_______________________________________ ------------------------------------
J. Michael Moore, Director David L. Pugh, Chairman & Chief
Executive Officer and Director
* *
_______________________________________ ____________________________________
Dr. Jerry Sue Thornton, Director Stephen E. Yates, Director
/s/ Fred D. Bauer
- ---------------------------------------
Fred D. Bauer, as attorney in fact
for persons indicated by "*"
Date: September 9, 2004
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
EXHIBIT INDEX
TO FORM 10-K FOR THE YEAR ENDED JUNE 30, 2004
Exhibit
No. Description
--- -----------
3(a) Amended and Restated Articles of Incorporation of Applied Industrial
Technologies, Inc., as amended on October 8, 1998 (filed as Exhibit
3(a) to Applied's Form 10-Q for the quarter ended September 30, 1998,
SEC File No. 1-2299, and incorporated here by reference).
3(b) Code of Regulations of Applied Industrial Technologies, Inc., as
amended on October 19, 1999 (filed as Exhibit 3(b) to Applied's Form
10-Q for the quarter ended September 30, 1999, SEC File No. 1-2299, and
incorporated here by reference).
4(a) Certificate of Merger of Bearings, Inc. (Ohio) and Bearings, Inc.
(Delaware) filed with the Ohio Secretary of State on October 18, 1988,
including an Agreement and Plan of Reorganization dated September 6,
1988 (filed as Exhibit 4(a) to Applied's Registration Statement on Form
S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated
here by reference).
4(b) Private Shelf Agreement dated as of November 27, 1996, as amended on
January 30, 1998, between Applied and The Prudential Insurance Company
of America (filed as Exhibit 4(f) to Applied's Form 10-Q for the
quarter ended March 31, 1998, SEC File No. 1-2299, and incorporated
here by reference).
4(c) Amendment dated October 24, 2000 to November 27, 1996 Private Shelf
Agreement between Applied and The Prudential Insurance Company of
America (filed as Exhibit 4(e) to Applied's Form 10-Q for the quarter
ended September 30, 2000, SEC File No. 1-2299, and incorporated here by
reference).
4(d) Amendment dated November 14, 2003 to 1996 Private Shelf Agreement
between Applied and The Prudential Insurance Company of America (filed
as Exhibit 4(d) to Applied's Form 10-Q for the quarter ended December
31, 2003, SEC File No. 1-2299, and incorporated here by reference).
4(e) Amendment dated February 25, 2004 to 1996 Private Shelf
Agreement between Applied and the Prudential Insurance Company
of America (filed as Exhibit 4(e) to Applied's Form 10-Q for the
quarter ended March 31, 2004, SEC File No. 1-2299, and
incorporated here by reference).
4(f) $100,000,000 Credit Agreement dated as of October 31, 2003 among
Applied, KeyBank National Association as Agent, and various
financial institutions (filed as Exhibit 4(e) to Applied's Form
10-Q for the quarter ended December 31, 2003, SEC File No.
1-2299, and incorporated here by reference).
4(g) Rights Agreement, dated as of February 2, 1998, between Applied
and Computershare Investor Services LLP (successor to Harris
Trust and Savings Bank), as Rights Agent, which includes as
Exhibit B thereto the Form of Rights Certificate (filed as
Exhibit No. 1 to Applied's Registration Statement on Form 8-A
filed July 20, 1998, SEC File No. 1-2299, and incorporated here
by reference).
*10(a) Form of Change in Control Agreement (amended and restated as of
August 8, 2001) between Applied and each of its executive
officers (filed as Exhibit 10 to Applied's Form 10-Q for the
quarter ended December 31, 2001, SEC File No. 1-2299, and
incorporated here by reference).
*10(b) A written description of Applied's director compensation program
is found in Applied's Proxy Statement dated September 9, 2004,
SEC File No. 1-2299, on page 10, under the caption "Compensation
of Directors," and is incorporated here by reference.
*10(c) Applied Deferred Compensation Plan for Non-Employee Directors
(September 1, 2003 Restatement) (filed as Exhibit 10(c) to
Applied's Form 10-K for the year ended June 30, 2003, SEC File
No. 1-2299, and incorporated here by reference).
*10(d) A written description of Applied's Life and Accidental Death and
Dismemberment Insurance for executive officers (filed as Exhibit
10(b) to Applied's Form 10-Q for the quarter ended December 31,
1997, SEC File No. 1-2299, and incorporated here by reference).
*10(e) A written description of Applied's Long-Term Disability
Insurance for executive officers (filed as Exhibit 10(c) to
Applied's Form 10-Q for the quarter ended December 31, 1997, SEC
File No. 1-2299, and incorporated here by reference).
*10(f) Form of Director and Officer Indemnification Agreement entered
into between Applied and each of its directors and executive
officers (filed as Exhibit 10(g) to Applied's Registration
Statement on Form S-4 filed May 23, 1997, Registration No.
333-27801, and incorporated here by reference).
*10(g) Applied Supplemental Executive Retirement Benefits Plan (January
1, 2002 Restatement) in which current and certain former
executive officers participate (filed as Exhibit 10 to Applied's
Form 10-Q for the quarter ended March 31, 2002, SEC File No.
1-2299, and incorporated here by reference).
*10(h) Applied Deferred Compensation Plan (September 1, 2003
Restatement) (filed as Exhibit 10(h) to Applied's Form 10-K for
the year ended June 30, 2003, SEC File No. 1-2299, and
incorporated here by reference).
*10(i) First Amendment to the Company's Deferred Compensation Plan
(September 1, 2003 Restatement) (filed as Exhibit 10 to
Applied's Form 10-Q for the quarter ended December 31, 2003, SEC
File No. 1-2299, and incorporated here by reference).
*10(j) 1997 Long-Term Performance Plan re-adopted by Shareholders on
October 22, 2002 (filed as Exhibit 10(a) to Applied's Form 10-Q
for the quarter ended December 31, 1997, SEC File No. 1-2299,
and incorporated here by reference).
*10(k) Amendment No. 1 to 1997 Long-Term Performance Plan, effective as
of August 8, 2003. (filed as Exhibit 10(j) to Applied's Form
10-K for the year ended June 30, 2003, SEC File No. 1-2299, and
incorporated here by reference).
*10(l) Applied Supplemental Defined Contribution Plan (January 1, 1997
Restatement) (filed as Exhibit 10(m) to Applied's Registration
Statement on Form S-4 filed May 23, 1997, Registration No.
333-27801, and incorporated here by reference).
*10(m) First Amendment to Applied Supplemental Defined Contribution
Plan effective as of October 1, 2000 (filed as Exhibit 10(a) to
Applied's Form 10-Q for the quarter ended September 30, 2000,
SEC File No. 1-2299, and incorporated here by reference).
*10(n) Second Amendment to Applied Supplemental Defined Contribution
Plan effective as of January 16, 2001 (filed as Exhibit 10(a) to
Applied's Form 10-Q for the quarter ended March 31, 2001, SEC
File No. 1-2299, and incorporated here by reference).
*10(o) Retention Program for James T. Hopper, Vice President-Chief
Information Officer, dated March 30, 2000 (filed as Exhibit
10(o) to Applied's Form 10-K for the year ended June 30, 2000,
SEC File No. 1-2299, and incorporated here by reference).
10(p) Lease dated as of March 1, 1996 between Applied and the
Cleveland-Cuyahoga County Port Authority (filed as Exhibit 10(n)
to Applied's Registration Statement on Form S-4 filed May 23,
1997, Registration No. 333-27801, and incorporated here by
reference).
*10(q) Non-qualified Deferred Compensation Agreement between Applied
and J. Michael Moore effective as of December 31, 1997 (filed as
Exhibit 10(a) to Applied's Form 10-Q for the quarter ended March
31, 1998, SEC File No. 1-2299, and incorporated here by
reference).
13 Applied 2004 Annual Report to shareholders (not deemed "filed"
as part of this Form 10-K except for those portions that are
expressly incorporated by reference). Attached
21 Applied's subsidiaries at June 30, 2004. Attached
23 Consent of Independent Registered Public Accounting Firm. Attached
24 Powers of attorney. Attached
31 Rule 13a-14(a)/15d-14(a) certifications. Attached
32 Section 1350 certifications. Attached