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FORM 10-K
SECUTITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For The Fiscal Year Ended June 30, 1994
Commission File No. 1-2299
BEARINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
OHIO 34-0117420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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3600 Euclid Avenue, Cleveland, Ohio 44115
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 881-8900.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
------------------- ------------------------------------
Common Stock without New York Stock Exchange
par value
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. [ ]
The aggregate market value of the voting stock held by
non-affiliates of the registrant, computed by reference to the
price at which the stock was sold as of the close of business
on September 1, 1994: $229,558,403.
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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 September 1, 1994
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Common Stock without par value 7,595,947
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) Bearings, Inc. 1994 Annual Report
to shareholders for the
fiscal year ended June 30,
1994, portions of which are
incorporated by reference
into Parts I, II and IV of
this Form 10-K; and,
(2) Bearings, Inc. Proxy Statement
dated September 16, 1994,
portions of which are
incorporated by reference
into Parts III and IV of this
Form 10-K.
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PART I.
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ITEM 1. BUSINESS.
---------
BEARINGS, INC., an Ohio corporation, and its
wholly-owned operating subsidiaries, BRUENING BEARINGS, INC.,
a Kentucky corporation, DIXIE BEARINGS, INCORPORATED, a
Tennessee corporation, KING BEARING, INC., a California
corporation, and MAINLINE INDUSTRIAL DISTRIBUTORS, INC., a
Wisconsin corporation, are in the business of selling and
distributing bearings, mechanical and electrical drive
systems, industrial rubber products, fluid power transmission
components and specialty maintenance and repair products
manufactured by others. Bearings, Inc. and its wholly-owned
operating subsidiaries are hereafter referred to in this
Report as the "Company", unless the context indicates
otherwise. The Company's executive offices are located at
3600 Euclid Avenue, Cleveland, Ohio. The Company and
predecessor companies have been engaged in this business since
1923. Bearings, Inc. was incorporated under the laws of
Delaware in 1928 and reincorporated from Delaware to Ohio in
1988.
(a) GENERAL DEVELOPMENT OF BUSINESS.
--------------------------------
During fiscal 1994, the Company established a
physical presence in strategic geographic markets in the Upper
Midwest. In the summer of 1993, the Company opened two
branches in the Chicago area, the largest industrial market in
the nation. In March 1994, the Company acquired Mainline
Industrial Distributors, Inc. of Appleton, Wisconsin in
exchange for 196,000 shares of Company Common Stock. The
Mainline acquisition added nine branches to the Company's
network, including seven in Wisconsin, one in Minneapolis and
one in Chicago. All continue to operate under the Mainline
name. Four additional Chicago-area branches were acquired by
the Company for cash in May 1994.
Also in fiscal 1994, the Company's implementation
of Total Quality Management ("TQM") continued on course. TQM
is aimed at maximizing customer satisfaction and improving all
aspects of the Company's business, while increasing the
understanding, involvement and overall teamwork of the
Company's employees at all levels. Virtually all Company
branches have undergone quality audits by Company management.
Since its adoption of TQM, the Company has been honored with
quality-supplier awards from dozens of its customers.
In July 1993, John R. Cunin, a Director and former
Chairman & Chief Executive Officer of the Company, died after
45 years of service to the Company. Dr. Jerry Sue Thornton,
president of Cuyahoga Community College, was elected in
January 1994 to fill the vacancy on the Board of Directors.
Also in July 1993, Richard C. Shaw, previously Director of
Corporate Communications, was appointed to serve as Vice
President-Communications & Public Relations.
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Further information regarding
developments in the Company's business can be found in the
Bearings, Inc. 1994 Annual Report to shareholders under the
caption "Management's Discussion and Analysis" on pages 10 and
11, which is incorporated herein by reference.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
----------------------------------------------
The Company considers its business to involve only
one industry segment.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
----------------------------------
PRODUCTS. The Company engages in the distribution
and sale of ball, roller, thrust and linear type bearings,
mechanical, electrical and fluid power transmission
components, industrial rubber products and specialty items
used in connection with the foregoing such as seals,
lubricants, locking devices, sealing compounds, adhesives and
tools for use therewith. Although the Company does not
generally manufacture the products that it sells, it does
assemble filter carts, fluid power units, speed reducers and
electrical panels.
The Company is a non-exclusive distributor for
numerous manufacturers of the products which it sells. The
principal bearing lines distributed by the Company are:
American, Barden, Cooper, FAG, INA, Kaydon, MB Bearings,
McGill, Rexnord/PTC, Sealmaster, MRC, SKF, Thomson, Timken and
Torrington/Fafnir. The principal power transmission
components distributed by the Company are: Aeroquip, ARO,
Baldor, Browning, Dana, Eaton, Falk, FMC, Gates, Goodyear,
Jeffrey, Kop-Flex, Lincoln Electric, Lovejoy, Martin, Morse,
Reliance/Dodge, Rexnord/PTC, Schrader Bellows, and U.S.
Electrical Motors. Specialty and other items, including
bronze, babbit, nylon, rubber, seals, sealants, "O" rings,
retaining rings, adhesives, lubricants, maintenance equipment
and tools, are purchased from various manufacturers. The
principal suppliers of specialty and other items are: CR
Industries, Dow Corning, Garlock, Loctite, J.M. Clipper,
National/Federal Mogul, OTC, Parker Hannifin, Rotoclip and
Symmco. The Company believes that its relationships with its
suppliers are generally good and that the Company can continue
to represent these suppliers. The loss of certain of these
suppliers could have an adverse effect on the Company's
business.
Based upon the Company's analysis of product dollar
sales volume for the fiscal year ended June 30, 1994, bearings
(including mounted bearings, which in some contexts are
categorized as power transmission components) represented 50%,
power transmission components (including certain rubber and
fluid power products) represented 38%, and specialty and other
items represented 12% of sales. For the year ended June 30,
1993, bearings represented 52%,
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power transmission components represented 32%, and specialty
and other items represented 16% of sales. For the year ended
June 30, 1992, bearings represented 53%, power transmission
components 32%, and specialty and other items 15% of sales.
The Company rebuilds precision machine spindles and
live centers at its Spindle Lab in Cleveland, Ohio.
Mechanical shops located in Cleveland, Ohio; Corona,
California; Longview, Washington; Modesto, California; Fort
Worth, Texas; Carlisle, Pennsylvania; Butte, Montana; and
Florence, Kentucky rebuild and assemble speed reducers,
provide custom machining and assemble fluid power systems to
customer specifications. Fluid power centers located in Kent,
Washington, Corona, California and Worcester, Massachusetts,
provide customers with technical expertise. The Company also
operates rubber shops in Arlington, Texas; Longview,
Washington; Corona, California; Modesto, California; Tucson,
Arizona; Atlanta, Georgia; Dayton, New Jersey; and Crestwood,
Illinois to modify conveyor belts and provide hose assemblies
in accordance with customer requirements.
SERVICES. The Company's sales personnel advise and
assist customers with respect to the selection and application
of various bearings, related accessories and power
transmission components. The Company considers this advice
and assistance to be an integral part of its overall sales
efforts. Company sales personnel consist of inside customer
service and field account representatives assigned to each
branch, in addition to representatives assigned as industry
and product specialists. Inside customer service
representatives receive, process and expedite customer orders,
provide pricing and product information, and provide
assistance to field account representatives in servicing
customers. Field account representatives make on-site calls
to customers and potential customers to provide product and
pricing information, make surveys of customer requirements and
recommendations, and assist in the implementation of
maintenance programs. The Company maintains inventory levels
in each branch that are tailored to meet the immediate needs
of its customers and maintains back-up inventory in its
distribution centers, thereby enabling customers to minimize
their own inventories. Such inventories consist of certain
standard items stocked at most branches as well as other items
related to the specific needs of customers in the particular
locale. Due to its high percentage of sales in the
maintenance and replacement market, the Company believes that
service is more important than price in its sales effort,
although price is a competitive factor. As a result, the
business of each branch is concentrated largely in the
geographic area in which it is located. Special products or
products for export may be sold from a number of locations.
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Timely delivery of products to customers is an
integral part of the service that the Company provides.
Branches and distribution centers utilize the most effective
method of transportation available to meet customer needs
including both surface and air common carrier and courier
services. The Company also maintains a fleet of delivery
vehicles to provide for delivery to customers. These
transportation services and delivery vehicles are also
utilized for movement of products between suppliers,
distribution centers and branches to assure availability of
merchandise for customer needs.
The Company's ability to service its customers is
enhanced by its computerized inventory and sales information
systems. The Company's point-of-sale OMNEX(TM) 2.0 computer
system gives all Company locations on-line access to
inventory, sales analysis and data. Inventory and sales
information is updated as transactions are entered. The
OMNEX(TM) 2.0 system permits direct access for order entry,
pricing and price-auditing, order expediting and back order
review. The Company's computer system also permits Electronic
Data Interchange (EDI) with participating customers. Nine
network-integrated computer sites serve all branches,
distribution centers and service facilities. Three additional
network-integrated computer systems in Cleveland are tied into
a mainframe computer for sales analysis, management
information and accounting applications.
The Company's operations contrast sharply with
those of manufacturers whose products it sells in that the
manufacturers generally confine their direct sales activities
to large-volume transactions with original equipment
manufacturers who incorporate the components purchased into
the products they make. The manufacturers generally do not
sell replacement components directly to the customer but refer
the customer to the Company or another nearby distributor,
although there is no assurance that this practice will
continue.
Patents, trademarks and licenses do not have a
significant effect on the Company's business.
MARKETS AND METHODS OF DISTRIBUTION. The Company
estimates that approximately 85% of its sales are in the
maintenance and replacement market, the balance being sales
for original equipment. The Company purchases from over 100
major suppliers of bearings, power transmission components and
related items and resells to a wide range of customers, which
include industrial plants of all kinds, machine shops, mines,
paper mills, public utilities, all modes of transportation,
defense establishments and other government agencies, garages,
textile mills, food processing plants, schools and
universities, hospitals, high technology businesses,
contractors, agricultural concerns and other enterprises using
any form of machine, vehicle or implement that
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contains bearings, power transmission components or related
maintenance items. Its customers range from the largest
industrial concerns in the country to the smallest. The
Company's business is not significantly dependent upon a
single customer or group of customers, the loss of which would
have a material adverse effect upon the Company's business as
a whole, and no single customer of the Company accounts for
more than 2% of the Company's total sales.
During fiscal 1994, 5 branches were closed or
consolidated with other branches and 21 branches were newly
opened or acquired. On June 30, 1994, the Company had 339
branches in 40 states. The Company has no operations outside
the continental United States.
The Company's export business during the fiscal
year ended June 30, 1994 and prior fiscal years was less than
2% of net sales, and is not concentrated in any one geographic
area.
COMPETITION. The Company considers its overall
business to be highly competitive. The Company's principal
competitors are other specialized bearing and power
transmission distributors and industrial parts distributors,
and, to a lesser extent, mine and mill supply houses. These
competitors include single and multiple branch operations,
some of which are divisions or subsidiaries of larger
organizations that may have greater financial resources than
the Company. There is a trend in the industry toward larger
multiple branch operations. The Company also competes with
the manufacturers of original equipment and their distributors
in the sale of maintenance and replacement bearings, power
transmission components and related items. Some of these
manufacturers may have greater financial resources than the
Company. The competitors and the number of competitors vary
throughout the geographic areas in which the Company does
business. As a distributor, the Company's market continues to
be influenced by competitive products of European and Asian
manufacturers, which are sold in the United States. The
Company continues to develop and implement marketing
strategies to maintain a competitive position.
The Company is one of the leading distributors of
replacement bearings, power transmission components and
related items in the United States, but the Company's share of
the market for those products is relatively small compared to
the portion of that market serviced by original equipment
manufacturers and other distributors, including dealers in
distressed and surplus merchandise. The Company may not be
the largest distributor in each of the geographic areas in
which a branch is located.
BACKLOG AND SEASONALITY. The Company does not have
a substantial backlog of orders and backlog is not significant
in the business of the Company since prompt delivery of the
majority of the Company's products is essential to the
Company's business. The Company does not consider its
business to be seasonal.
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RAW MATERIALS AND GENERAL BUSINESS CONDITIONS. The
Company's operations are dependent upon general industrial
activities and economic conditions and would be adversely
affected by the unavailability of raw materials to its
suppliers or by any prolonged recession or depression that has
an adverse effect on American industrial activity generally.
NUMBER OF EMPLOYEES. On June 30, 1994, the Company
had 4056 employees (not including the Company's executive
officers). None of the Company's employees are covered by
collective bargaining. The Company considers its relationship
with its employees to be generally favorable.
WORKING CAPITAL. The Company's working capital
position is disclosed in the financial statements referred to
at Item 8 on page 12 of this Report and is discussed in
"Management's Discussion and Analysis" set forth in the
Bearings, Inc. 1994 Annual Report to shareholders on pages 10
and 11.
The Company requires substantial working capital
related to accounts receivable and inventories. Significant
amounts of inventory are required to be carried to meet rapid
delivery requirements of customers. The Company generally
requires all payments for sales on account within 30 days and
generally customers have no right to return merchandise.
Returns are not considered to have a material effect on the
Company's working capital requirements. The Company believes
that such practices are consistent with prevailing industry
practices in these areas.
ENVIRONMENTAL LAWS. The Company believes that
compliance with federal, state and local provisions regulating
the discharge of materials into the environment or otherwise
relating to the protection of the environment will not have a
material adverse effect upon capital expenditures, earnings or
competitive position of the Company.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND
---------------------------------------
DOMESTIC OPERATIONS AND EXPORT SALES.
-------------------------------------
The Company has no operations outside the
continental United States. The Company's export business
during the fiscal year ended June 30, 1994, and prior fiscal
years, was less than 2% of net sales, and is not concentrated
in any one geographic area.
ITEM 2. PROPERTIES.
-----------
The Company owns or leases the properties in which
its offices, branches, distribution centers, shops and
corporate facilities are located. As of June 30, 1994, the
real properties at 187 locations were owned by the Company,
while 164 locations were leased by the Company. Certain
property locations may contain multiple operations, such as a
branch and a distribution center.
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The principal real properties owned by the Company
(each of which has more than 20,000 square feet of floor
space) are: the corporate office building in Cleveland, Ohio;
the corporate finance and information services office building
in Cleveland, Ohio; the Cleveland East branch in Cleveland,
Ohio; the Prospect mechanical shop in Cleveland, Ohio; the
Midwest Distribution Center in Florence, Kentucky; the John R.
Cunin Distribution Center in Carlisle, Pennsylvania; and the
Portland branch and Portland Distribution Center in Portland,
Oregon. The principal real properties leased by the Company
(each of which has more than 20,000 square feet of floor
space) are: the Corona offices and Corona Distribution Center
in Corona, California; the Fulton Industrial branch and J. L.
Lammers Distribution Center in Atlanta, Georgia; the Fort
Worth Distribution Center in Fort Worth, Texas; the Long Beach
branch in Long Beach, California; the San Jose branch in San
Jose, California; the Worcester branch and fluid power center
in Worcester, Massachusetts; the Longview branch and Longview
Distribution Center in Longview, Washington; the Appleton
offices and branch in Appleton, Wisconsin; and the Milwaukee
branch in Milwaukee, Wisconsin.
The Company considers the properties owned or
leased to be generally sufficient to meet its requirements for
office space and inventory stocking. The size of the
buildings in which the Company's branches are located is
primarily influenced by the amount of inventory required to be
carried to meet the needs of the customers of the branch. All
of the real properties owned or leased by the Company are
being utilized by the Company in its business except for
certain properties, which in the aggregate are not material
and are either for sale or lease to third parties due to
relocation or closing of a facility. Unused portions of
buildings may be leased or subleased to others.
Generally, when opening a new branch, the Company
will lease space for a term not exceeding five years. Then,
as the business develops, suitable property may be purchased
or leased for relocation of the branch. A new general purpose
office-storeroom building may be constructed. However, the
Company has no fixed policy in this regard, and in each
instance the final decision is made on the basis of
availability and cost of suitable property in the local real
estate market, whether purchased or leased. The Company does
not consider any one of its properties to be material, because
it believes that if it becomes necessary or desirable to
relocate any of its branches and distribution centers, other
suitable properties could be found.
During the fiscal year ended June 30, 1994, the
Company opened or acquired 21 new branches and closed or
consolidated 5 branches.
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ITEM 3. PENDING LEGAL PROCEEDINGS.
-------------------------
In 1989, Bearings, Inc. was served with a Second
Amended Complaint in a case captioned SAMMIE ADKINS, ET AL. V.
A. P. GREEN INDUSTRIES, INC., ET AL., Summit County Court of
Common Pleas Case No. ACV 88- 7-2398, naming it as an
additional defendant, along with over 200 other defendants.
Subsequently, 17 additional cases were filed in the same court
naming Bearings, Inc. as a defendant and setting forth
virtually the same allegations against many of the same
defendants on behalf of different plaintiffs. These cases are
known generally as the Akron Tireworker Asbestos Cases and
allege that the plaintiffs (including spouses in some cases)
were injured due to exposure to asbestos while working for
various tire and rubber companies in the greater Akron, Ohio
area. In each case the employee plaintiff has sued for
$500,000 compensatory and $500,000 punitive damages. About
40% of the plaintiffs in the cases are spouses of the
employees, and the spouse plaintiffs have each sued for
$50,000 compensatory and $50,000 punitive damages.
Preliminary information made available to the
Company indicates that Bearings, Inc. has been named a
defendant in these cases only as a supplier of certain
products manufactured by others, which products allegedly
contained asbestos. Due to the court's case management order,
the proceedings as they relate to Bearings, Inc. are in the
preliminary stages; the Company believes, however, based upon
circumstances presently known that such cases are not material
to its business or its financial condition. The Company
intends to defend these cases vigorously. Even if liability
were assessed, the Company would seek indemnification from its
suppliers and its insurance carriers.
In 1992, a jury in a case captioned KING BEARING,
INC., ET AL. V. CARYL EDMUND ORANGES, ET AL., Superior Court
of the State of California, County of Orange, Case No.
53-42-31, awarded a $32.4 million judgment against King
Bearing, Inc., a wholly-owned subsidiary of Bearings, Inc.;
however, as explained below, the Company believes that this
judgment will have no material adverse effect on its business
or financial condition. The verdict was based on contractual
and other claims asserted by various cross- complainants
against King Bearing in a breach of contract and unfair
competition case initially filed by King Bearing in 1987. The
suit, which involved a former owner of King Bearing, was
pending at the time Bearings, Inc. acquired King Bearing in
June 1990. All events relative to the judgment occurred prior
to the Company's purchase of King Bearing. Although Bearings,
Inc. was subsequently named as a party to the lawsuit in 1991,
the jury found no liability on the part of Bearings, Inc.
Under the 1990 Stock Purchase Agreement relative to the
acquisition of King Bearing, both Bearings, Inc. and King
Bearing were specifically indemnified by the ultimate parent
of the former owner of King Bearing (whose stockholders'
equity exceeded $3 billion at June 30,
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1994) for any damages or loss related to the judgment. The
judgment is being strongly contested by counsel retained by
the indemnitor on behalf of King Bearing, and in September
1992, the trial court granted the motion of King Bearing for a
new trial as to all but $219,000 in damages returned by the
jury. A notice of appeal was filed by the cross-complainants,
and the case is now pending in the California Court of Appeal,
Fourth Appellate District.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
No matters were submitted to a vote of security
holders of Bearings, Inc. during the last quarter of the
fiscal year ended June 30, 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT.
-------------------------------------
The Executive Officers are elected for a term of
one year, or until their successors are chosen and qualified,
at the organizational meeting of the Board of Directors held
immediately following the annual meeting of shareholders. The
following is a listing of the Executive Officers of Bearings,
Inc. and a description of their business experience during the
past five years. Except as otherwise stated, the positions
and offices indicated are with Bearings, Inc. and the persons
were elected to their present positions on October 19, 1993:
JOHN C. DANNEMILLER. Mr. Dannemiller
is Chairman (since January 1992), Chief
Executive Officer (since January 1992) and a
Director (since 1985). He was President (from
January 1990 to January 1992), Chief Operating
Officer (from October 1988 to January 1992) and
Executive Vice President (from 1988 to January
1990). He is 56 years of age.
JOHN C. ROBINSON. Mr. Robinson is
President (since January 1992), Chief Operating
Officer (since January 1992), and a Director
(since 1991). He was Vice President (from October
1989 to January 1992) and Executive Vice President
& General Manager of the Corporation's
wholly-owned subsidiary, King Bearing, Inc. (from
June 1990 to October 1991). He was Director of
Development & Strategic Planning from 1987 to
October 1989. He is 52 years of age.
MARK O. EISELE. Mr. Eisele is
Controller (since October 1992). He was
Manager of Internal Audit (from June 1991 to
October 1992). Prior to that, Mr. Eisele was a
Senior Manager with Deloitte & Touche. He is 37
years of age.
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FRANCIS A. MARTINS. Mr. Martins is
Vice President-Marketing (since May 1992). He was
Vice President, Industrial Aftermarket Operations
for SKF USA Inc., a manufacturer of bearings and
related products (from 1985 to May 1992). He is
51 years of age.
FREDERICK L. MOHR. Mr. Mohr is Vice
President-Sales & Marketing (since 1983). He is
64 years of age.
RICHARD C. SHAW. Mr. Shaw is Vice
President-Communications & Public Relations
(since July 1993). He was Director of Corporate
Communications from 1989 to July 1993. He is 45
years of age.
ROBERT C. STINSON. Mr. Stinson is Vice
President-General Counsel (since 1989) and
Secretary (since October 1990). He was Assistant
Secretary (from 1978 to October 1990). He is 48
years of age.
JOHN R. WHITTEN. Mr. Whitten is Vice
President-Finance & Treasurer (since October
1992). He was Vice President (since 1985) and
Controller (from 1981 to October 1992). He is 48
years of age.
PART II.
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
-------------------------------------------------
STOCKHOLDER MATTERS.
--------------------
The Company's Common Stock, without par value, is
listed for trading on the New York Stock Exchange. The
information concerning the principal market for the Company's
Common Stock, the quarterly stock prices and dividends for the
fiscal years ended June 30, 1994 and 1993 and the number of
shareholders of record as of September 1, 1994 is set forth in
the Bearings, Inc. 1994 Annual Report to shareholders on page
25, under the caption "Quarterly Operating Results and Market
Data", and such information is incorporated here by reference.
ITEM 6. SELECTED FINANCIAL DATA.
------------------------
The summary of selected financial data for each of
the last five years is set forth in the Bearings, Inc. 1994
Annual Report to shareholders in the table on pages 26 and 27
under the caption "10 Year Summary" and is incorporated here by
reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS.
------------------------------------
The "Management's Discussion and Analysis" is set
forth in the Bearings, Inc. 1994 Annual Report to shareholders
on pages 10 and 11 and is incorporated here by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------
The following consolidated financial statements and
supplementary data of Bearings, Inc. and subsidiaries for the
1994, 1993 and 1992 fiscal years and the independent auditors'
report listed below, which are included in the Bearings, Inc.
1994 Annual Report to shareholders at the pages indicated, are
incorporated here by reference and filed herewith:
<TABLE>
<CAPTION>
CAPTION PAGE NO.
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Financial Statements:
Statements of Consolidated
Income for the Years Ended
June 30, 1994, 1993 and 1992 12
Consolidated Balance Sheets
June 30, 1994 and 1993 13
Statements of Consolidated
Cash Flows for the Years Ended
June 30, 1994, 1993 and 1992 14
Statements of Consolidated
Shareholders' Equity for the
Years Ended June 30, 1994,
1993 and 1992 15
Notes to Consolidated
Financial Statements for the
Years Ended June 30, 1994, 1993
and 1992 16 - 22
Independent Auditors' Report 23
Supplementary Data:
Quarterly Operating Results and
Market Data 25
</TABLE>
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE.
------------------------------------
Not applicable.
PART III.
---------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
---------------------------------------------------
The information required by this Item as to the
Directors is set forth in the Bearings, Inc. Proxy Statement
dated September 16, 1994 on pages 3 through 5 under the
caption "Election of Directors" and is incorporated here by
reference. The information required by this Item as to the
Executive Officers has been furnished in this Report on pages
10 and 11 in Part I, after Item 4, under the caption
"Executive Officers of the Registrant". The information
required by this Item as to Forms 3, 4 and 5 reporting
delinquencies is set forth in the Bearings, Inc. Proxy
Statement dated September 16, 1994 on page 18 under the
caption "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" and is incorporated here by reference.
ITEM 11. EXECUTIVE COMPENSATION.
-----------------------
The information required by this Item is set forth in
the Bearings, Inc. Proxy Statement dated September 16, 1994,
under the captions "Summary Compensation" on pages 8 and 9,
"Aggregate Option/SAR Exercises and Fiscal Year-End Option
Value Table" on page 9, "Estimated Retirement Benefits Under
Supplemental Executive Retirement Benefits Plan" on page 10,
"Compensation of Directors" on page 14, "Deferred Compensation
Plan for Non-employee Directors" on page 15, "G. L. LaMore
Consulting Agreement" on page 16, "Deferred Compensation Plan"
on page 16, and "Severance Payment Agreements" on pages 16 and
17, and is incorporated here by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
-----------------------------
BENEFICIAL OWNERS AND MANAGEMENT.
---------------------------------
(a) Information concerning the security ownership of
certain beneficial owners is set forth under the caption
"Security Ownership of Certain Beneficial Owners" on page 6 of
the Bearings, Inc. Proxy Statement dated September 16, 1994,
and is incorporated here by reference.
(b) Information concerning security ownership of
management is set forth under the caption "Security Ownership
of Management" on page 7 of the Bearings, Inc. Proxy
Statement dated September 16, 1994, and is incorporated here
by reference.
13
<PAGE> 15
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
----------------------------------------------
Not applicable.
PART IV.
--------
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL
-----------------------------------------
STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
--------------------------------------------
(a)1. FINANCIAL STATEMENTS.
---------------------
The following consolidated financial statements of
the Company, notes thereto, the independent auditors' report
and supplemental data are included in the Bearings, Inc. 1994
Annual Report to shareholders on pages 12 through 23 and page
25, and are incorporated by reference in Item 8 of this
Report.
Caption
-------
Statements of Consolidated Income for the
Years Ended June 30, 1994, 1993 and 1992
Consolidated Balance Sheets
June 30, 1994 and 1993
Statements of Consolidated Cash Flows for
the Years Ended June 30, 1994, 1993 and 1992
Statements of Consolidated Shareholders'
Equity for the Years Ended June 30, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
for the Years Ended June 30, 1994, 1993
and 1992
Independent Auditors' Report
Supplementary Data:
Quarterly Operating Results and Market Data
(a)2. FINANCIAL STATEMENT SCHEDULES.
------------------------------
The following Report and Schedules are included in
this Part IV, and are found in this Report at the pages
indicated:
<TABLE>
<CAPTION>
Caption Page No.
------- --------
<S> <C>
Independent Auditors' Report 20
14
<PAGE> 16
Schedule V - Property, Plant
and Equipment 21
Schedule VI - Accumulated
Depreciation and Depletion of
Property, Plant and Equipment 22
Schedule VIII - Valuation and
Qualifying Accounts 23
Schedule IX - Short Term
Borrowings 24
</TABLE>
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 financial
statements and notes thereto.
(a)3. EXHIBITS.
---------
* Asterisk indicates an executive compensation
plan or arrangement.
<TABLE>
<CAPTION>
Exhibit
No. Description
<S> <C>
------- -----------
3(a) Amended and Restated
Articles of Incorporation of
Bearings, Inc., an Ohio
corporation, filed with the
Ohio Secretary of State on
October 18, 1988 (filed as
Exhibit 4(a) to the Bearings,
Inc. Form 8-K dated October
21, 1988, SEC File No.
1-2299, and incorporated here
by reference).
3(b) Code of Regulations of
Bearings, Inc., an Ohio
corporation, adopted
September 6, 1988 (filed as
Exhibit 4(b) to the Bearings,
Inc. Form 8-K dated October
21, 1988, SEC File No.
1-2299, and incorporated here
by reference).
3(c) Certificate of Amendment of
Amended and Restated Articles
of Incorporation of Bearings,
Inc., an Ohio corporation,
filed with the Ohio
Secretary of State on
October 27, 1988 (filed as
Exhibit 4(c) to the Bearings,
Inc. Form 10-Q for the
quarter ended September 30,
1988, SEC File No. 1-2299,
and incorporated here by
reference).
</TABLE>
15
<PAGE> 17
3(d) Certificate of Amendment of
Amended and Restated Articles
of Incorporation of Bearings,
Inc. filed with the Ohio
Secretary of State on October
17, 1990 (filed as Exhibit
4(e) to the Bearings, Inc.
Form 10-Q for the quarter
ended September 30, 1990, 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
(filed as Exhibit 4 to the
Bearings, Inc. Annual Report
on Form 10-K for the fiscal
year ended June 30, 1989, SEC
File No. 1-2299, and
incorporated here by
reference).
4(b) $80,000,000 Maximum
Aggregate Principal Amount
Note Purchase and Private
Shelf Facility dated October
31, 1992 between Bearings,
Inc. and The Prudential
Insurance Company of America
(filed as Exhibit 4(f) to the
Bearings, Inc. Form 10-Q for
the quarter ended September
30, 1992, SEC File No.
1-2299, and incorporated here
by reference).
*10(a) Form of Executive Severance
Agreement between the Company and 7
executive officers (filed as Exhibit
10(b) to the Bearings, Inc. Annual
Report on Form 10-K for the fiscal
year ended June 30, 1989, SEC File
No. 1-2299, and incorporated here by
reference), together with schedule
pursuant to Instruction 2 of Item
601(a) of Regulation S-K identifying
the officers and setting forth the
material details in which the
agreements differ from the form of
agreement that is filed.
*10(b) Form of amendment dated January 17,
1991 amending the Executive
Severance Agreements filed as
Exhibit 10(b) to the Bearings, Inc.
Annual Report on Form 10-K for the
fiscal year ended June 30, 1989
(filed as Exhibit 19(a) to the
Bearings, Inc. Form 10-Q for the
quarter ended December 31, 1990, SEC
File No. 1-2299, and incorporated
here by reference). The amendment
is applicable to all executive
officers named in the schedule filed
as part of Exhibit 10(a) of this
Report and that schedule is
incorporated here by reference.
16
<PAGE> 18
*10(c) A written description of the
Directors' compensation program is
found in the Bearings, Inc. Proxy
Statement dated September 16, 1994,
SEC File No. 1-2299, on pages 14 and
15 under the caption "Compensation
of Directors", and is incorporated
here by reference.
*10(d) Deferred Compensation Plan for
Non-employee Directors (filed as
Exhibit 19 to the Bearings, Inc.
Form 10-Q for the quarter ended
December 31, 1991, SEC File No. 1-
2299, and incorporated here by
reference).
*10(e) First Amendment to Deferred
Compensation Plan for Non-Employee
Directors effective July 1, 1993,
providing participants with
additional flexibility in electing
to defer receipt of compensation,
and in amending and terminating such
elections (filed as Exhibit 10(e) to
the Bearings, Inc. Form 10-K for the
fiscal year ended June 30, 1993, SEC
File No. 1-2299, and incorporated
here by reference).
*10(f) A written description of the Company's
Non-Contributory Life and Accidental
Death and Dismemberment Insurance
for executive officers.
*10(g) A written description of the
Company's Long-Term Disability
Insurance for executive officers.
*10(h) Form of Director and Officer
Indemnification Agreement entered
into between the Company and its
directors and its executive officers
(filed as Appendix A to the
Bearings, Inc. Proxy Statement dated
September 17, 1992, SEC File No.
1-2299, and incorporated here by
reference), together with a schedule
pursuant to Instruction 2 of Item
601(a) of Regulation S-K identifying
the directors and executive officers
executing such Agreements.
*10(i) Bearings, Inc. Supplemental
Executive Retirement Benefits Plan
(July 1, 1993 Restatement) presently
covering 7 executive officers of
Bearings, Inc. (as well as certain
retired executive officers) (filed
as Exhibit 10(j) to the Bearings,
Inc. Form 10-K for the fiscal year
ended June 30, 1993, SEC File No.
1-2299, and incorporated here by reference).
17
<PAGE> 19
*10(j) First Amendment to Bearings, Inc.
Supplemental Executive Retirement
Benefits Plan (July 1, 1993
Restatement) (filed as Exhibit 10(a)
to the Bearings, Inc. Form 10-Q for
the quarter ended December 31, 1993,
SEC File No. 1-2299, and
incorporated here by reference).
*10(k) Bearings, Inc. Deferred Compensation
Plan (filed as Exhibit A to the
Bearings, Inc. Proxy Statement
dated September 16, 1993, SEC File
No. 1-2299, and incorporated here by
reference).
10(l) Stock Purchase Agreement between
Bearings, Inc. and MLS Industries,
Inc. dated June 12, 1990 (filed as
Exhibit 2 to the Bearings, Inc. Form
8-K dated July 12, 1990, SEC File
No. 1-2299, and incorporated here by
reference).
10(m) Amendment to Stock Purchase
Agreement and Related Guarantee and
Agreement among Bearings, Inc., MLS
Industries, Inc. and Emerson
Electric Co., dated as of June 29,
1990 (filed as Exhibit 2(a) to the
Bearings, Inc. Form 8-K dated July
12, 1990, SEC File No. 1-2299, and
incorporated here by reference).
*10(n) Bearings, Inc. 1990 Long-Term
Performance Plan adopted by
Shareholders on October 16, 1990
(filed as Exhibit 10(t) to the
Bearings, Inc. Form 10-K for the
fiscal year ended June 30, 1991, SEC
File No. 1-2299, and incorporated
here by reference).
*10(o) A written description of the
Company's Management Incentive Plan
applicable to key executives,
including the five most highly
compensated executive officers, is
found in the Bearings, Inc. Proxy
Statement dated September 16, 1994,
SEC File No. 1-2299, on pages 11 and
12, in the Report of the Executive
Organization & Compensation
Committee of the Board of Directors
on Executive Compensation, under the
subcaption "Management Incentive
Plan", and is incorporated here by
reference.
*10(p) Consulting Agreement effective
January 2, 1992 between the Company
and George L. LaMore, Director and
former Chairman & Chief Executive
18
<PAGE> 20
Officer of the Company (filed
as Exhibit 28 to the Bearings,
Inc. Form 10-Q for the quarter
ended December 31, 1991, SEC
File No. 1-2299, and incorporated
here by reference).
11 Computation of Net Income
Per Share.
13 Bearings, Inc. 1994 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 Subsidiaries of Bearings,
Inc. -- This information is
set forth at "Item 1.
Business" on page 2 of this
Report and is incorporated
here by reference.
23 Independent Auditors' Consent.
27 Financial Data Schedule.
The Company will furnish a copy of any
exhibit described above and not contained
herein upon payment of a specified reasonable
fee which fee shall be limited to the
Company's reasonable expenses in furnishing
such exhibit.
(b) REPORTS ON FORM 8-K.
-------------------
None during the quarter ended June 30, 1994.
19
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Bearings, Inc.
We have audited the consolidated balance sheets of
Bearings, Inc. and its subsidiaries (the "Company") as of June
30, 1994 and 1993 and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the
years in the three year period ended June 30, 1994 and have
issued our report thereon dated August 5, 1994; such
consolidated financial statements and report are included in
your 1994 Annual Report to shareholders and are incorporated
herein by reference. Our audits also included the
consolidated financial statement schedules of the Company,
listed in Item 14(a)2. These consolidated financial statement
schedules are 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
schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
August 5, 1994
20
<PAGE> 22
<TABLE>
BEARINGS, INC. & SUBSIDIARIES
-----------------------------
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED JUNE 30, 1994, 1993 AND 1992
(IN THOUSANDS)
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- ------- --------
BALANCE AT OTHER BALANCE
BEGINNING ADDITIONS CHANGES AT END
OF PERIOD AT COST RETIREMENTS ADD (DEDUCT) OF PERIOD
--------- ----------- ----------- ----------- ---------
YEAR ENDED JUNE 30, 1994:
<S> <C> <C> <C> <C> <C>
Land $ 11,265 $ 760 ($ 383) $ 11,642
Buildings 52,001 3,628 ( 1,407) $ 667 (A) 54,889
Equipment 66,479 12,197 ( 13,623) 1,853 (A) 66,906
-------- ------- ------- ------ --------
Total $129,745 $16,585 ($15,413) $2,520 $133,437
======== ======= ======= ====== ========
YEAR ENDED JUNE 30, 1993:
Land $ 11,477 $ 73 ($ 285) 11,265
Buildings 49,522 4,231 ( 1,752) 52,001
Equipment 76,080 9,296 ( 18,897) 66,479
-------- ------- ------- --------
Total $137,079 $13,600 ($20,934) $129,745
======== ======= ======= ========
YEAR ENDED JUNE 30, 1992:
Land $ 10,476 $ 1,037 ($ 36) $ 11,477
Buildings 48,884 2,314 ( 1,708) $ 32 49,522
Equipment 69,813 17,093 (10,794) ( 32) 76,080
-------- ------- ------- ------ --------
Total $129,173 $20,444 ($12,538) $0 $137,079
======== ======= ======= == ========
<FN>
NOTE: For financial reporting purposes, depreciation is primarily computed on the straight-line method over the estimated useful
lives of the assets, not exceeding 30 years.
(A) Other changes for the year ended June 30, 1994 relate to the pooling of interests with Mainline Industrial Distributors,
Inc. and the adoption of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes".
- - ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE V
</TABLE>
21
<PAGE> 23
<TABLE>
BEARINGS, INC. & SUBSIDIARIES
-----------------------------
ACCUMULATED DEPRECIATION AND DEPLETION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED JUNE 30, 1994, 1993 AND 1992
(IN THOUSANDS)
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
ADDITIONS
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING COSTS AND CHARGES AT END
AT PERIOD EXPENSES RETIREMENTS ADD (DEDUCT) OF PERIOD
---------- ----------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1994:
Buildings $16,345 $ 2,456 ($ 636) $ 154 (A) $18,319
Equipment 33,350 11,130 ( 10,651) 1,170 (A) 34,999
------- ------- -------- ------ -------
Total $49,695 $13,586 ($11,287) $1,324 $53,318
======= ======= ======== ====== =======
YEAR ENDED JUNE 30, 1993:
Buildings $14,719 $ 2,260 ($ 634) $16,345
Equipment 39,759 10,506 (16,915) 33,350
------- ------- -------- -------
Total $54,478 $12,766 ($17,549) $49,695
======= ======= ======== =======
YEAR ENDED JUNE 30, 1992:
Buildings $13,442 $ 2,165 ($ 843) ($45) $14,719
Equipment 37,619 10,421 ( 8,326) 45 39,759
------- ------- -------- ----- -------
Total $51,061 $12,586 ($9,169) $0 $54,478
======= ======= ======== == =======
<FN>
(A) Other changes for the year ended June 30, 1994 relate to the pooling of interests with Mainline Industrial Distributors, Inc.
- - ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE VI
</TABLE>
22
<PAGE> 24
<TABLE>
BEARINGS, INC. & SUBSIDIARIES
-----------------------------
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JUNE 30, 1994, 1993 AND 1992
(IN THOUSANDS)
- - -------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS BALANCE OF
BEGINNING COSTS AND FROM END OF
DESCRIPTION OF PERIOD EXPENSES RESERVE PERIOD
----------- --------- -------- --------- ----------
<S> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1994:
Reserve deducted from asset to
which it applies - allowance for
doubtful accounts $2,000 $1,418 $1,518 (A) $1,900
YEAR ENDED JUNE 30, 1993:
Reserve deducted from asset to
which it applies - allowance for
doubtful accounts $3,000 $2,190 $3,190 (A) $2,000
YEAR ENDED JUNE 30, 1992:
Reserve deducted from asset to
which it applies - allowance for
doubtful accounts $2,100 $2,496 $1,596 (A) $3,000
<FN>
(A) Amounts represent uncollectible accounts charged off.
- - -------------------------------------------------------------------------------------------------------------
SCHEDULE VIII
</TABLE>
23
<PAGE> 25
<TABLE>
BEARINGS, INC. & SUBSIDIARIES
-----------------------------
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED JUNE 30, 1994, 1993 AND 1992
(IN THOUSANDS)
- - ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM AT END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (A)
----------- ---------- --------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1994:
Notes payable
to banks $ 19,805 5.28% $ 38,415 $ 23,004 3.98%
YEAR ENDED JUNE 30, 1993:
Notes payable
to banks $ 22,678 3.90% $115,395 $ 62,794 3.98%
YEAR ENDED JUNE 30, 1992:
Notes payable
to banks $110,000 4.50% $132,037 $117,612 5.60%
<FN>
NOTE: Notes payable to banks represent unsecured borrowings under line of credit arrangements, which the Company
renews annually. The notes bear interest at various interest rate options not in excess of the banks' prime
rate at interest determination dates.
(A) Average amounts outstanding and weighted average interest rates during the periods were computed based upon daily
balances outstanding.
- - ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE IX
</TABLE>
24
<PAGE> 26
<TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities and Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
BEARINGS, INC.
<S> <C>
/s/ John C. Dannemiller /s/ John C. Robinson
------------------------------ --------------------------------
John C. Dannemiller, Chairman John C. Robinson, President
& Chief Executive Officer & Chief Operating Officer
/s/ John R. Whitten /s/ Mark O. Eisele
------------------------------ --------------------------------
John R. Whitten Mark O. Eisele
Vice President-Finance Controller
& Treasurer (Principal Accounting
(Principal Financial Officer) Officer)
Date: September 26, 1994
Pursuant to the requirements of the Security 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.
/s/ William G. Bares /s/ William E. Butler
------------------------------ --------------------------------
William G. Bares, Director William E. Butler, Director
/s/ John C. Dannemiller /s/ Russel B. Every
------------------------------ --------------------------------
John C. Dannemiller Russel B. Every, Director
Chairman, Chief Executive
Officer and Director
/s/ Russell R. Gifford /s/ L. Thomas Hiltz
------------------------------ -------------------------------
Russell R. Gifford, Director L. Thomas Hiltz, Director
/s/ John J. Kahl /s/ George L. LaMore
------------------------------ -------------------------------
John J. Kahl, Director George L. LaMore, Director
/s/ John C. Robinson /s/ Dr. Jerry Sue Thornton
------------------------------ -------------------------------
John C. Robinson, President, Dr. Jerry Sue Thornton, Director
Chief Operating Officer and
Director
______________________________
William G. Bares, as attorney
in fact for persons indicated by "*"
Date: September 26, 1994
</TABLE>
<PAGE> 27
BEARINGS, INC.
EXHIBIT INDEX
TO FORM 10-K FOR THE YEAR ENDED JUNE 30, 1994
Exhibit
No. Description Reference
- - -------- ----------- ---------
3(a) Amended and Restated Articles of
Incorporation of Bearings, Inc., an
Ohio corporation, filed with the Ohio
Secretary of State on October 18, 1988. Note (a)
3(b) Code of Regulations of Bearings, Inc.,
an Ohio corporation, adopted
September 6, 1988. Note (a)
3(c) Certificate of Amendment of Amended and
Restated Articles of Incorporation of
Bearings, Inc., an Ohio corporation,
filed with the Ohio Secretary of State
on October 27, 1988. Note (b)
3(d) Certificate of Amendment of Amended and
Restated Articles of Incorporation of
Bearings, Inc., filed with the Ohio
Secretary of State on October 17, 1990. Note (c)
4(a) Certificate of Merger of Bearings, Inc.
(Ohio) and Bearings, Inc. (Delaware)
filed with the Ohio Secretary of State
on October 18, 1988. Note (d)
4(b) $80,000,000 Maximum Aggregate Principal
Amount Note Purchase and Private Shelf
Facility dated October 31, 1992 between
Bearings, Inc. and The Prudential
Insurance Company of America. Note (e)
10(a) Form of Executive Severance Agreement
between the Company and 7 executive
officers. Note (d)
Schedule pursuant to Instruction 2 of
Item 601(a) of Regulation S-K identifying
the officers and setting forth material
details in which the agreements differ
from the form of agreement filed. Attached
10(b) Form of amendment amending the Executive
Severance Agreements referenced in
Exhibit 10(a) hereto. Note (f)
<PAGE> 28
10(c) A written description of the Directors'
compensation program. Note (g)
10(d) Deferred Compensation Plan for Non-
employee Directors. Note (h)
10(e) First Amendment to Deferred Compensation
Plan for Non-employee Directors effective
July 1, 1993. Note (i)
10(f) A written description of the Company's
Non-Contributory Life and Accidental
Death and Dismemberment Insurance for
executive officers. Attached
10(g) A written description of the Company's
Long-Term Disability Insurance for
executive officers. Attached
10(h) Form of Director and Officer Indemnifi-
cation Agreement entered into between
the Company and its directors and
executive officers. Note (j)
Schedule pursuant to Instruction 2 of
Item 601(a) of Regulation S-K identifying
the directors and executive officers
executing such agreements. Attached
10(i) Bearings, Inc. Supplemental Executive
Retirement Benefits Plan (July 1, 1993
Restatement) presently covering 7
executive officers of Bearings, Inc. Note (i)
10(j) First Amendment to Bearings, Inc.
Supplemental Executive Retirement
Benefits Plan (July 1, 1993 Restatement). Note (k)
10(k) Bearings, Inc. Deferred Compensation
Plan. Note (l)
10(l) Stock Purchase Agreement between Bearings,
Inc. and MLS Industries, Inc. dated
June 12, 1990. Note (m)
10(m) Amendment to Stock Purchase Agreement
and Related Guarantee and Agreement among
Bearings, Inc., MLS Industries, Inc. and
Emerson Electric Co., dated as of June 29,
1990. Note (m)
10(n) Bearings, Inc. 1990 Long-Term Performance
Plan adopted by Shareholders on
October 16, 1990. Note (n)
<PAGE> 29
10(o) A written description of the Company's
Management Incentive Plan applicable to
key executives of the Company, including
the five most highly compensated executive
officers. Note (o)
10(p) Consulting Agreement effective January 2,
1992 between the Company and George L.
LaMore, Director and former Chairman &
Chief Executive Officer of the Company. Note (h)
11 Computation of Net Income Per Share. Attached
13 Bearings, Inc. 1994 Annual Report to
shareholders. Attached
21 Subsidiaries of Bearings, Inc.--This
information is set forth at "Item 1.
Business" on page 2 of this Report.
23 Independent Auditors' Consent. Attached
27 Financial Data Schedule. Attached
Notes: (a) Incorporated by reference from the Company's Report on Form 8-K
dated October 21, 1988, SEC File No. 1-2299.
(b) Incorporated by reference from the Company's Report on Form 10-Q
for the quarter ended September 30, 1988, SEC File No. 1-2299.
(c) Incorporated by reference from the Company's Report on Form 10-Q
for the quarter ended September 30, 1990, SEC File No. 1-2299.
(d) Incorporated by reference from the Company's Report on Form 10-K
for the fiscal year ended June 30, 1989, SEC File No. 1-2299.
(e) Incorporated by reference from the Company's Report on Form 10-Q
for the quarter ended September 30, 1992, SEC File No. 1-2299.
(f) Incorporated by reference from the Company's Report on Form 10-Q
for the quarter ended December 31, 1990, SEC File No. 1-2299.
<PAGE> 30
(g) Incorporated by reference from the Company's Proxy Statement dated
September 16, 1994, SEC File No. 1-2299, on pages 14 and 15 under
the caption "Compensation of Directors".
(h) Incorporated by reference from the Company's Report on Form 10-Q for
the quarter ended December 31, 1991, SEC File No. 1-2299.
(i) Incorporated by reference from the Company's Report on Form 10-K for
the fiscal year ended June 30, 1993, SEC File No. 1-2299.
(j) Incorporated by reference from the Company's Proxy Statement dated
September 17, 1992, SEC File No. 1-2299, at Appendix A.
(k) Incorporated by reference from the Company's Report on Form 10-Q for
the quarter ended December 31, 1993, SEC File No. 1-2299.
(l) Incorporated by reference from the Company's Proxy Statement dated
September 16, 1993, SEC File No. 1-2299, at Exhibit A.
(m) Incorporated by reference from the Company's Report on Form 8-K dated
July 12, 1990, SEC File No. 1-2299.
(n) Incorporated by reference from the Company's Report on Form 10-K for
the fiscal year ended June 30, 1991, SEC File No. 1-2299.
(o) Incorporated by reference from the Company's Proxy Statement dated
September 16, 1994, SEC File No. 1-2299, on pages 11 and 12 in the
Report of the Executive Organization & Compensation Committee of the
Board of Directors on Executive Compensation, under the subcaption
"Management Incentive Plan".
<PAGE> 1
EXHIBIT 10(a)
BEARINGS, INC. FORM 10-K FOR FISCAL
YEAR ENDED JUNE 30, 1994
SCHEDULE
The Executive Severance Agreements ("Agreements") presently in effect for
seven (7) executive officers are substantially identical in all material
respects. This revised schedule is included pursuant to Instruction 2 of Item
601(a) of Regulation S-K for the purpose of setting forth the material details
in which the specific Agreements differ from the form of Agreement filed as
Exhibit 10(b) to the Bearings, Inc. Form 10-K for the fiscal year ended June
30, 1989:
<TABLE>
<CAPTION>
"Base Compensation"
Multiple Pursuant
Name Title to Paragraph 3(b)
- - ---- ----- -------------------
<S> <C> <C>
J. C. Dannemiller Chairman & Chief Three (3)
Executive Officer
J. C. Robinson President & Chief Three (3)
Operating Officer
F. A. Martins Vice President- Two (2)
Marketing
F. L. Mohr Vice President- Two (2)
Sales & Marketing
R. C. Shaw Vice President- One and one-half
Communications & (1.5)
Public Relations
R. C. Stinson Vice President- One and one-half
General Counsel (1.5)
& Secretary
J. R. Whitten Vice President- One and one-half
Finance & Treasurer (1.5)
</TABLE>
The continuation of employee benefit plans, programs and arrangements set
forth in Paragraph 4 is three (3) years for Messrs. Dannemiller and Robinson,
and two (2) years for all other executive officers.
<PAGE> 1
EXHIBIT 10(f)
BEARINGS, INC.
FORM 10-K FOR FISCAL YEAR ENDED JUNE 30, 1994
NON-CONTRIBUTORY LIFE & ACCIDENTAL
DEATH & DISMEMBERMENT INSURANCE
The Company maintains ongoing Non-Contributory Life & Accidental Death &
Dismemberment Insurance for its executive officers, which provides benefits
equal to two and one-half (2-1/2) times annual compensation, but in no event
more than $250,000. The Company also provides its executive officers with
travel and accident insurance in the amount of $500,000. All such insurance
has certain reductions after age 65.
<PAGE> 1
EXHIBIT 10(g)
BEARINGS, INC. FORM 10-K for
FISCAL YEAR ENDED JUNE 30, 1994
LONG-TERM DISABILITY INSURANCE
The Company's long-term disability insurance plan provides for long-term
disability coverage to all employees of the Company who become eligible after a
one-year waiting period based on plan requirements. Under the plan, eligible
employees who become totally disabled as defined in the plan would receive 60%
of monthly earnings, subject to a maximum schedule amount of $5,000 per month
without evidence of insurability. The Corporation's executive officers,
including its five most highly compensated officers, are covered under the
plan, subject to a maximum schedule amount of $18,000 per month, with evidence
of insurability required for amounts in excess of $15,000 per month.
<PAGE> 1
EXHIBIT 10(h)
BEARINGS, INC. FORM 10-K FOR
FISCAL YEAR ENDED JUNE 30, 1994
SCHEDULE
PURSUANT TO INSTRUCTION 2
ITEM 601(a) OF REGULATION S-K
The Director and Officer Indemnification Agreements presently in effect for the
Company's directors and executive officers are identical in all material
respects. The Directors having executed such form of Agreement are:
W. G. Bares
W. E. Butler
J. C. Dannemiller
R. B. Every
R. R. Gifford
L. T. Hiltz
J. J. Kahl
G. L. LaMore
J. C. Robinson
J. S. Thornton
The Officers having executed such form of Agreement are (in addition to Messrs.
Dannemiller and Robinson):
<TABLE>
<S> <C>
F. A. Martins - Vice President-Marketing
F. L. Mohr - Vice President-Sales & Marketing
R. C. Shaw - Vice President-Communications &
Public Relations
R. C. Stinson - Vice President-General Counsel &
Secretary
J. R. Whitten - Vice President-Finance & Treasurer
M. O. Eisele - Controller
</TABLE>
<PAGE> 1
<TABLE>
EXHIBIT 11
BEARINGS, INC. AND SUBSIDIARIES
Computation of Net Income (Loss) Per Share
(in thousands)
<CAPTION>
Year Ended June 30,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Average Shares Outstanding
--------------------------
1. Average common shares outstanding 7,546 7,238 7,081
2. Net additional shares outstanding
assuming stock options exercised and
proceeds used to purchase treasury
stock 154 60 68
------- ------ ------
3. Adjusted average common shares
outstanding for fully diluted
computation 7,700 7,298 7,149
======= ====== ======
Net Income (Loss)
-----------------
4. Net income (loss) as reported in
statements of consolidated income $12,687 $8,927 ($1,666)
======= ====== ======
Net Income (Loss) Per Share
---------------------------
5. Net income (loss) per average common
share outstanding (4/1) $ 1.68 $ 1.23 ($0.24)
======= ====== ======
6. Net income (loss) per common share on a
fully dilutive basis (4/3) $ 1.65 (A) $ 1.22 (A) ($0.23) (B)
======= ====== ======
<FN>
(A) Amount is not presented in the statements as the dilutive effect is less than 3%.
(B) Amount is not presented in the statements as the effect is antidilutive.
</TABLE>
<PAGE> 1
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Bearings, Inc. and Subsidiaries
YEAR ENDED JUNE 30, 1994 VS 1993
Sales in 1994 increased 13% to a record $936.3 million from 1993 sales of
$831.4 million. The increase in sales was principally due to volume increases
and the acquisition of Mainline Industrial Distributors, Inc. (Mainline).
Further, net income for the fiscal year ended June 30, 1994 improved 42% over
the prior year.
Gross margin (net sales less cost of sales) as a percent of sales was
26.9% in 1994 and 26.2% in 1993. The gross margin percentage improved in
fiscal 1994 due to more focused purchasing strategies and favorable LIFO cost
adjustments. During 1994, the Company liquidated LIFO inventory quantities
carried at lower costs prevailing in prior years. The effect of the liquidation
included the effect of a change in the application of the LIFO method of
calculating inventory. This new method determines the Company's LIFO inventory
pools by class of product rather than the operating company. (See Note 3 to the
Consolidated Financial Statements).
Selling, distribution and administrative expenses as a percent of sales
were 23.9% in 1994 and 23.8% in 1993. During fiscal 1994, the Company incurred
increased expenses due to a new sales commission program for account
representatives and a new incentive program for sales management, increased
advertising costs due to additional marketing programs, costs associated with
the acquisition of Mainline and the accelerated vesting of performance
accelerated restricted stock (PARS) based upon the price performance of the
Company's common stock during the year.
The number of associates rose to 4,066 at June 30, 1994 from 3,986 at
June 30, 1993.
Interest expense for 1994 increased by 15% as a result of the issuance
of $80 million of long-term debt in December of 1992 and repayment of
previously existing short-term debt. As long-term interest rates are higher
than short-term interest rates, interest expense has increased. The increased
expense was partially offset by net interest earned under interest rate swap
agreements and lower average borrowings during the year.
Income tax expense as a percentage of income before income taxes was
41.4% in 1994. The effective tax rate was greater than the federal statutory
rate primarily due to state and local income taxes and non-deductible expenses.
YEAR ENDED JUNE 30, 1993 VS 1992
Results for the fiscal year ended June 30, 1993 were significantly improved
over the prior year. The Company returned to profitability after reporting a
loss in the previous year which included a restructuring charge of $7.8
million. (See Note 9 to the Consolidated Financial Statements).
Sales in 1993 of $831.4 million increased 1.7% from 1992 levels
primarily due to price increases. Gross margin (net sales less cost of sales)
as a percent of sales was 26.2% in 1993 and 25.7% in 1992. The gross margin
percentage in fiscal 1993 was higher due to favorable LIFO cost adjustments
resulting from lower inventory levels and a strengthening of selling prices
coupled with minimal increases in costs. (See Note 3 to the Consolidated
Financial Statements).
Selling, distribution and administrative expenses as a percent of sales
were 23.8% in 1993 and 24.2% in 1992. During fiscal 1993, the Company incurred
increased expenses for incentive programs due to improved performance and for
associate training. Salaries and other compensation expense decreased as a
result of a reduction in the number of associates to 3,986 at June 30, 1993
from 4,050 at June 30, 1992. Also, during 1993 consulting fees decreased due
to completion of data processing enhancements and health care expenses declined
due to lower claims and implementation of new managed health care programs.
Interest expense for 1993 decreased by 21% due to lower short-term
interest rates, lower average indebtedness, and favorable interest rate swap
agreements. These were offset in part by higher fixed interest costs incurred
- - --------------------------------------10---------------------------------------
<PAGE> 2
Bearings, Inc. and Subsidiaries
from borrowings under Senior Unsecured Term Notes.
Incomes tax expense as a percentage of income before income taxes was
41.9% in 1993. The effective tax rate was greater than the federal statutory
rate primarily due to state and local income taxes and non-deductible expenses.
LIQUIDITY AND WORKING CAPITAL
The Company continued to provide significant amounts of cash by generating
$30.5 million and $18.9 million from operating activities in 1994 and 1993,
respectively.
Cash flow from operations depends primarily upon generating operating
income and controlling the investment in inventory and receivables. The
Company's growth in accounts receivable and inventory in 1994 was necessary to
service the increased sales volume. Further, in 1994 the Company had a
substantial increase in net income.
Investments in property totaled $16.6 million and $13.6 million in 1994
and 1993, respectively. These capital expenditures were primarily made for
upgrading branch facilities, acquisition of data processing equipment, vehicles
and real estate.
Working capital at June 30, 1994, was $144.6 million compared to $130.9
million at June 30, 1993. The current ratio was 2.4 at June 30, 1994 and 1993.
CAPITAL RESOURCES
Capital resources are obtained from income retained in the business,
indebtedness under the Company's lines of credit and long-term debt and, to a
lesser extent, from operating lease arrangements. Average combined short-term
and long-term borrowing was $103.0 million in 1994 and $107.7 million in 1993.
Effective interest rates on short-term borrowings were 4.0% in both 1994 and
1993. The Company has short-term lines of credit totaling $95 million. The
Company had $19.8 million of borrowings under these short-term lines of credit
at June 30, 1994.
The Company is obligated for rental payments for operating leases on
165 of its 352 branch, distribution center and other operating locations. See
Note 8 to the Consolidated Financial Statements for annual rental commmitments.
As of June 30, 1994, the Company has Board authorization to acquire up
to 263,000 shares of its common stock in open market or negotiated transactions
depending on market conditions.
Management expects that capital resources provided from operations,
available lines of credit, and long-term debt will be sufficient to finance
normal working capital needs, capital expenditure programs, and the purchase of
additional Bearings, Inc. common stock. Management also believes that
additional long-term debt and line of credit financing could be obtained if
desired.
OTHER MATTERS
The 1990 agreement for the acquisition of King Bearing included specific
indemnification of Bearings, Inc. and King for any financial damages or losses
related to a lawsuit pending against King in the Superior Court of Orange
County, California. The indemnification was also guaranteed by the ultimate
parent of King's former owner, a Fortune 100 company with stockholders' equity
exceeding three billion dollars at June 30, 1994. A $32.4 million judgement
relating to this lawsuit was rendered against King in June 1992. As further
explained in Note 10 to the Consolidated Financial Statements, management
believes that the outcome of this matter will not have a material adverse
effect on the consolidated financial position or results of operations of the
Company due to the indemnification and guarantee.
- - -------------------------------------11----------------------------------------
<PAGE> 3
<TABLE>
STATEMENTS OF
CONSOLIDATED INCOME
(Thousands, except per share amounts) Bearings, Inc and Subsidiaries
<CAPTION>
Year Ended June 30
----------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
NET SALES $936,254 $831,432 $817,813
-------- -------- --------
COST AND EXPENSES
Cost of Sales 684,213 613,246 607,443
Selling, Distribution and administrative 224,224 197,665 197,835
Restructuring charge 7,832
-------- -------- --------
908,437 810,911 813,110
-------- -------- --------
OPERATING INCOME 27,817 20,521 4,703
-------- -------- --------
INTEREST EXPENSE 6,385 5,546 6,985
INTEREST INCOME (225) (382) (407)
-------- -------- --------
6,160 5,164 6,578
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 21,657 15,357 (1,875)
-------- -------- --------
INCOME TAX EXPENSE (BENEFIT)
Federal 7,172 5,365 (178)
State and Local 1,798 1,065 (31)
-------- -------- --------
8,970 6,430 (209)
-------- -------- --------
NET INCOME (LOSS) $ 12,687 $ 8,927 $ (1,666)
======== ======== ========
NET INCOME (LOSS) PER SHARE $ 1.68 $ 1.23 $ (.24)
======== ======== ========
See notes to consolidated Financial Statements.
</TABLE>
12
<PAGE> 4
<TABLE>
CONSOLIDATED
BALANCE SHEETS
<CAPTION>
(Amounts in thousands) Bearings, Inc. and Subsidiaries
June 30
---------------------------------------------------
1994 1993
------------ -------------
<S> <C> <C>
ASSETS
Current assets
Cash and temporary investments $ 10,935 $ 4,634
Accounts receivable, less allowance of
$1,900 and $2,000 129,798 112,971
Inventories 106,233 95,015
Other current assets 2,278 8,613
---------- ------------
Total current assets 249,244 221,233
---------- ------------
Property - at cost
Land 11,642 11,265
Buildings 54,889 52,001
Equipment 66,906 66,479
---------- ------------
133,437 129,745
Less accumulated depreciation 53,318 49,695
---------- ------------
Property - net 80,119 80,050
---------- ------------
Other assets 14,156 14,652
---------- -------------
TOTAL ASSETS $ 343,519 $ 315,935
=========== =============
LIABILITIES
Current Liabilities
Notes payable $ 19,805 $ 22,678
Accounts payable 50,937 37,678
Compensation and related benefits 21,508 18,770
Other accrued liabilities 12,389 11,247
----------- -------------
Total current liabilities 104,639 90,373
Long-term debt 80,000 80,000
Deferred income taxes 3,370 5,706
Other liabilities 5,019 4,916
------------ --------------
TOTAL LIABILITES 193,028 180,995
------------ --------------
SHAREHOLDERS' EQUITY
Preferred stock - no par value; 2,500
shares authorized; none issued or
outstanding
Common stock - no par value; 30,000 shares
authorized; 9,303 shares issued 10,000 10,000
Additional paid-in capital 6,962 6,710
Income retained for use
in the business 165,807 155,908
Less 1,757 and 1,984 treasury shares -
at cost (32,278) (35,489)
Less unearned restricted common stock
compensation (2,189)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 150,491 134,940
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 343,519 $ 315,935
============ ============
</TABLE>
See notes to consolidated financial statements.
13
<PAGE> 5
<TABLE>
STATEMENTS OF CONSOLIDATED
CASH FLOWS
<CAPTION>
(Amounts in thousands) Bearings, Inc. and Subsidiaries
Year Ended June 30
-------------------------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 12,687 $ 8,927 $ (1,666)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 13,586 12,766 12,586
Deferred income taxes 2,448 3,507 (1,504)
Provision for losses on accounts receivable 1,418 2,190 2,496
(Gain)/loss on sale of property (775) 225 688
Amortization of restricted common stock
compensation and goodwill 2,779 580 267
Treasury shares contributed to employee benefit plans 1,510 856 733
Changes in current assets and liabilities:
Accounts receivable (14,344) (5,207) (8,270)
Inventories (2,042) 6,676 9,488
Other current assets 885 1,049 609
Accounts payable and accrued expenses 9,810 (14,273) 15,573
Other-net 2,547 1,611 269
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 30,509 18,907 31,269
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property purchases (16,585) (13,600) (20,444)
Proceeds from property sales 4,901 3,160 2,680
Other (519) (1,170) (3,998)
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (12,203) (11,610) (21,762)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (repayments) under:
Line-of-credit agreements:
Maturities three months or less-net (5,321) (87,322) 22,884
Maturities greater than three months:
Borrowings 60,000 125,000
Repayments (60,000) (152,000)
Long-term debt 80,000
Dividends paid (4,739) (4,640) (4,533)
Purchase of treasury shares (1,945)
-------- -------- --------
NET CASH USED IN FINANCING ACTIVITIES (12,005) (11,962) (8,649)
-------- -------- --------
Increase (decrease) in cash and temporary investments 6,301 (4,665) 858
Cash and temporary investments at beginning of year 4,634 9,299 8,441
-------- -------- --------
CASH AND TEMPORARY INVESTMENTS AT END OF YEAR $ 10,935 $ 4,634 $ 9,299
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 3,697 $ 2,288 $ 539
Interest $ 5,928 $ 4,935 $ 6,988
<FN>
See notes to consolidated financial statements.
</TABLE>
14
<PAGE> 6
<TABLE>
STATEMENTS OF CONSOLIDATED
SHAREHOLDERS' EQUITY
<CAPTION>
For the Years Ended June 30, 1994, 1993, and 1992
(Amounts in thousands)
Shares of Income Unearned
Common Additional Retained Treasury Restricted Total
Stock Common Paid-in for Use in Shares- Common Stock Shareholders'
Outstanding Stock Capital the Business at Cost Compensation Equity
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 1991 7,057 $10,000 $6,483 $157,906 $(40,186) $134,203
Net Loss (1,666) (1,666)
Cash dividends-
$.64 per share (4,533) (4,533)
Treasury shares issued for:
401(k) Savings Plan
contribution 34 124 609 733
Exercise of stock options 13 29 241 270
Other (177) (177)
- - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1992 7,104 10,000 6,636 151,530 (39,336) 128,830
Net income 8,927 8,927
Cash dividends-
$.64 per share (4,640) (4,640)
Treasury shares issued for:
401(k) Savings Plan
contribution 44 86 770 856
Exercise of stock options 30 (19) 543 524
Restricted common stock
awards 140 (2) 2,505 $(2,503)
Other 1 9 29 38
Amortization of restricted
common stock compensation 314 314
Other 91 91
- - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1993
As previously reported 7,319 10,000 6,710 155,908 (35,489) (2,189) 134,940
Pooling of interests with
Mainline Industrial
Distributors 196 (1,353) 1,876 3,542 4,065
- - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AS RESTATED 7,515 10,000 5,357 157,784 (31,947) (2,189) 139,005
Net income 12,687 12,687
Cash dividends-
$.64 per share (4,739) (4,739)
Purchase of common
stock for treasury (59) (1,945) (1,945)
Treasury shares issued for:
401(k) Savings Plan
contribution 56 503 1,007 1,510
Exercise of stock options 13 74 237 311
Restricted common stock
awards 13 53 233 (286)
Other 8 64 137 201
Amortization of restricted
common stock compensation 911 2,475 3,386
Other 75 75
- - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1994 7,546 $10,000 $6,962 $165,807 $(32,278) $ 0 $150,491
====================================================================================================================================
See notes to consolidated financial statements.
</TABLE>
15
<PAGE> 7
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Years Ended June 30, 1994, 1993, and 1992
(Dollar amounts in thousands,
except per share amounts) Bearings, Inc. and Subsidiaries
1. BUSINESS AND ACCOUNTING POLICIES
BUSINESS. The Company's principal business is the sale and distribution of
bearings, mechanical and electrical drive systems, industrial rubber products,
fluid power transmission components, and specialty maintenance and repair
products. The Company does not manufacture the products it sells.
CASH EQUIVALENTS. The Company considers all temporary investments with
maturities of three months or less to be cash equivalents for purposes of the
statements of consolidated cash flows.
CONSOLIDATION. The consolidated financial statements include the accounts of
Bearings, Inc. and its wholly-owned subsidiaries Bruening Bearings, Inc., Dixie
Bearings, Incorporated, King Bearing, Inc. and for the year ended June 30,
1994, Mainline Industrial Distributors, Inc. All significant intercompany
transactions and balances have been eliminated in consolidation.
GOODWILL is recorded for the purchase price of acquired operations in excess of
the fair value of identifiable net assets. Goodwill, net of accumulated
amortization, of $4,752 and $4,524 at June 30, 1994 and 1993, respectively, is
included in other assets in the accompanying consolidated balance sheets and is
being amortized on a straight-line basis over periods ranging from 15 to 20
years.
INVENTORIES are valued at the lower of cost or market, using the last-in,
first-out (LIFO) method.
DEPRECIATION of buildings and equipment is computed using the straight-line
method over the estimated useful lives of the assets.
NET INCOME PER SHARE is computed using the weighted average number of common
shares outstanding for the period. Net income per share has not been adjusted
for the effect of stock options as the dilutive effect would be less than 3%
for each year.
CONSOLIDATED CASH FLOWS PRESENTATION. The statement of consolidated cash flows
for the year ended June 30, 1994 is presented using the indirect method of
reporting cash flows from operating activities. The presentation of the
statements of consolidated cash flows for fiscal years 1993 and 1992 have been
changed to the indirect method to be consistent with fiscal 1994.
ACCOUNTING CHANGES. For the year ended June 30, 1994, the Company changed its
method of accounting for income taxes to conform with Statement of Financial
Accounting Standards (SFAS) No. 109 (see Note 5) and its application of the
LIFO method used to determine inventory amounts for financial reporting
purposes (see Note 3).
2. BUSINESS COMBINATION
On March 10, 1994, the Company exchanged 196,000 shares of Bearings, Inc.
common stock for Mainline Industrial Distributors, Inc., a high quality applied
technology distributor of drive systems, rubber products and bearings. The
business combination was accounted for as a pooling of interests. The Company's
1994 consolidated financial statements include Mainline's results of operations
for the entire fiscal year. The prior years' consolidated financial statements
have not been restated because the effects are not material.
16
<PAGE> 8
<TABLE>
Net sales and net income for the separate companies prior to the acquisition
are as follows:
<CAPTION>
Nine Months Ended
March 31, 1994
(Unaudited)
--------------------------
Bearings Mainline
-------- --------
<S> <C> <C>
Net Sales $663,841 $24,899
Net Income 7,369 229
</TABLE>
Acquisition costs of $700 were charged to expense in 1994 and included legal
and accounting fees, consulting fees and benefit-related costs.
3. INVENTORIES
For the year ended June 30, 1994, the Company changed its application of the
last-in, first-out (LIFO) method used to determine inventory amounts for
financial reporting purposes. This change revised the Company's LIFO pools to
establish Company-wide inventory pools for each of the major classes of
products. Previously, the LIFO inventory pools were established by legal
entity, rather than by class of product. Management believes that using
inventory pools grouped by product is more consistent with how the Company
currently manages its operations and will more accurately measure the effects
of changes in inventory levels and costs.
The cumulative effect on previous years from this change in LIFO
pools is not determinable. This change in LIFO pools reduced cost of sales and
increased net income and net income per share by $3,344, $1,894, and $.25,
respectively, for the year ended June 30, 1994. These effects are incorporated
in the LIFO liquidation effects discussed below.
CURRENT COST. At the end of the last two fiscal years, the current cost
of inventories exceeded the LIFO cost as follows:
<TABLE>
<CAPTION>
June 30,
------------------------------
1994 1993
---- ----
<S> <C> <C>
LIFO cost $106,233 $ 95,015
Excess of current cost over
LIFO cost 86,429 96,718
-------- --------
Current cost $192,662 $191,733
======== ========
</TABLE>
LIFO LIQUIDATION. During the years ended June 30, 1994 and 1993, the Company
liquidated LIFO inventory quantities carried at lower costs prevailing in prior
years. The effect of these liquidations, including the effect of the accounting
change discussed above, reduced cost of sales and increased net income and net
income per share by $6,784, $3,841, and $.51 per share, respectively, during
1994 and $4,714, $2,749 and $.38 per share, respectively, during 1993. The
effects of LIFO liquidations during 1992 were not material.
4. NOTES PAYABLE AND LONG-TERM DEBT
NOTES PAYABLE. The Company has $95,000 of short-term lines of credit which
provide for payment of interest at various interest rate options, none of which
are in excess of the banks' prime rate at interest determination dates.
Borrowings under these lines of credit totaled $19,805 at June 30, 1994. The
remaining unused lines available for short-term borrowings at June 30, 1994
were $75,195.
17
<PAGE> 9
LONG-TERM DEBT. The Company has $80,000 of long-term Senior Unsecured Term
Notes at a fixed interest rate of 7.82%. Interst is payable quarterly. The
principal amount is to be paid in fourteen equal semi-annual installments
beginning in June 1996. These notes contain certain restrictive covenants
regarding liquidity, tangible net worth, financial ratios and other covenants.
At June 30, 1994, the most restrictive of these covenants required that the
Company maintain a minimum tangible net worth of $104,646. Based upon current
market rates for debt of similar maturities, the Company estimates that the
fair value of its long-term debt is less than its carrying value at June 30,
1994 by $1,100.
During 1994, the Company received net proceeds from termination of
its three year interest rate swap agreements previously held. The Company also
entered into a new two year interest rate swap agreement with a major bank that
effectively converts $40,000 of its fixed rate borrowings into variable rate
obligations. Under this agreement the Company makes payments at variable rates
based on LIBOR, as determined at quarterly intervals, and receives payments at
fixed interest rates. Net interest earned under these agreements reduced
interest expense. The interest rate swap agreement has no carrying value. The
Company's estimated cost to terminate the agreement as of June 30, 1994 was
$300.
5. INCOME TAXES
For the year ended June 30, 1994, the Company changed its method of accounting
for income taxes from the deferred method used in prior years to the liability
method, as required by SFAS No. 109, "Accounting for Income Taxes." As
permitted by SFAS No. 109, the Company has elected not to restate the financial
statements of any prior year. There was no significant cumulative effect on the
Statements of Consolidated Income for adopting SFAS No. 109.
<TABLE>
PROVISION. The provision (benefit) for income taxes consists of:
<CAPTION>
LIABILITY METHOD Deferred Method Deferred Method
Year ended June 30 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Current $6,522 $2,923 $ 1,295
Deferred 2,448 3,507 (1,504)
------ ------ ------
Total $8,970 $6,430 $ (209)
====== ====== ======
</TABLE>
<TABLE>
Prior to the change in accounting methods, the net tax effects giving rise to
deferred amounts were:
<CAPTION>
Year Ended June 30,
1993 1992
-----------------------------------
<S> <C> <C>
Accrued restructuring charge $1,238 $(1,159)
Accrued vacation (146) 44
Inventory obsolescence 1,448 (859)
Depreciation 144 222
Allowance for doubtful accounts 343 (304)
Other 480 552
------ -------
Total $3,507 $(1,504)
====== =======
</TABLE>
18
<PAGE> 10
EFFECTIVE TAX RATES. A reconciliation between the federal statutory income tax
rate (benefit) and the Company's effective tax rate is:
<TABLE>
<CAPTION>
LIABILITY METHOD Deferred Method Deferred Method
Years ended June 30 1994 1993 1992
------------------------------------------------------
<S> <C> <C> <C>
Statutory tax rate 35.0% 34.0% (34.0)%
Effects of:
State and local income taxes 5.4 4.6 (1.1)
Non-deductible expenses 1.8 2.1 18.2
Alternative minimum tax 0.4 5.6
Other, net (0.8) 0.8 0.2
----- ----- -----
Effective tax rate 41.4% 41.9% (11.1)%
===== ===== =====
</TABLE>
BALANCE SHEET. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The
significant components of the Company's deferred tax assets (liabilities) as of
June 30, 1994 are as follows:
<TABLE>
<CAPTION>
June 30, 1994
-------------
<S> <C>
Depreciation and differences in property bases $(5,443)
Inventory (8,394)
Compensation liabilities not currently deductible 3,791
Reserves not currently deductible 1,968
Goodwill 1,389
Tax loss/credit carryforwards 393
Other 686
Valuation allowance (211)
-------
Net deferred tax liability $(5,821)
=======
</TABLE>
Net deferred tax liabilities associated with current items of $2,451 at
June 30, 1994 are included in other accrued liabilities in the Consolidated
Balance Sheets.
The valuation allowance was established due to the Company's estimation that
certain state income tax loss carryforwards may expire unused.
6. STOCK INCENTIVE PLANS
The Company may grant stock options under the 1990 Long-Term Performance Plan
(the "1990 Plan"). Outstanding options issued under the Company's 1982 Stock
Option Plan continue to be exercisable until expiration. Options become
exercisable at times determined by the Executive Organization and Compensation
Committee of the Board of Directors (the "Committee") at the date of grant.
Options may include stock appreciation rights that entitle the holder to
receive shares of stock or cash, at the discretion of the Committee, equal to
the difference between the value of the shares covered by the option on the
date of exercise less the option price for such shares. The 1990 Plan also
provides for granting of stock awards, cash awards, and such
19
<PAGE> 11
other awards or combination thereof as the Committee may determine. The number
of shares of Common Stock which may be awarded in each fiscal year under the
1990 Plan is two percent (2%) of the total number of shares of Common Stock
outstanding on the first day of each year for which the plan is in effect.
Common Stock available for distribution under the 1990 Plan, but not
distributed, may be carried over to the following year.
During fiscal 1994 accelerated vesting occurred for all 153,000 shares of
Performance Accelerated Restricted Stock (PARS) awarded to officers and other
key associates during fiscal 1994 and 1993 under the 1990 Plan. Pursuant to
the PARS agreements, recipients were entitled to receive dividends and have
voting rights on their respective shares prior to vesting. The PARS vested
either after a period of six years or earlier upon achievement of certain
return on asset objectives or minimum stock price levels. The aggregate fair
market value of the restricted stock was considered unearned compensation at
the time of grant. Unearned common stock compensation reduced consolidated
shareholders' equity and was amortized over the vesting period or upon
acceleration of vesting. With the accelerated vesting of all outstanding PARS
during 1994, all remaining unearned compensation was recorded as an expense.
The expense recorded in 1994 exceeded by $2,010 the annual expense which would
have been recorded on the basis of six-year amortization.
The following is a summary of transactions with respect to the stock
incentive plans:
<TABLE>
<CAPTION>
Number of Shares
-------------------------------------------------
Available for
Option Price Per Share Outstanding Exercisable Future Grants
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at July 1, 1991 482,662 189,082 189,305
Additional available from 1990 Plan 141,132
Became exercisable 112,332
Canceled upon exercise $14.19-$16.89 (75,946) (75,946)
Granted $20.56 141,700 (141,700)
- - -------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1992 548,416 225,468 188,737
Additional available from 1990 Plan 142,082
Became exercisable 130,030
Canceled upon exercise $14.19-$20.56 (40,828) (40,828)
Expired/canceled $20.56-$30.00 (25,634) (24,250) (188,645)
PARS common stock awards (140,000)
- - -------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1993 481,954 290,420 2,174
Additional available from 1990 Plan 146,382
Became exercisable 115,050
Cancelled upon exercise $14.19-$30.00 (98,795) (98,795)
Expired/canceled $14.19-$30.00 (20,325) (16,475)
Granted $21.94-$32.31 119,450 (119,450)
PARS common stock awards (13,000)
- - -------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1994 482,284 290,200 16,106
======= ======= ======
</TABLE>
At June 30, 1994 option prices related to the balance outstanding ranged from
$14.19 to $32.31 per share.
20
<PAGE> 12
7. BENEFIT PLANS
QUALIFIED RETIREMENT PLANS. Substantially all associates of the Company are
covered by the following defined contribution retirement plans. The Company
makes a discretionary contribution to the Employees' Profit-Sharing Trust
generally based upon a percentage of the Company's income before income taxes
and before the amount of the contribution. The 401(k) Savings Plan allows
participants to contribute up to ten percent of their compensation.
The Company partially matches the participants' contributions. The matching
contribution is made with the Company's Common Stock and is determined
quarterly using rates based on the Company achieving certain quarterly net
income amounts.
The Company's expense for contributions to the above plans was $2,602,
$1,496 and $678 for the years ended June 30, 1994, 1993, and 1992,
respectively.
RETIREE MEDICAL BENEFITS. The Company provides health care benefits to
eligible retired associates who elect to pay the Company a specified monthly
premium. Premium payments are based upon current insurance rates for the type
of coverage provided and are adjusted annually. Certain monthly health care
premium payments are partially subsidized by the Company.
In fiscal 1993, the Company adopted the provisions of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," which
requires accrual of such post-retirement benefits over the years the associate
provides services and becomes eligible to receive benefits upon retirement. In
1993 the Company accrued an expense of $588 (which, net of income taxes,
reduced net income by $352, or $.05 per share) for the accumulated
post-retirement benefit obligation. At June 30, 1994 the accumulated
post-retirement benefit obligation was $630. The costs recognized for
post-retirement benefits under SFAS No. 106 for fiscal 1994 and 1993, and
under the previous pay-as-you-go accounting method during 1992, were not
material.
SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFIT PLAN (SERP). The Company has a
non-qualified pension plan to provide supplemental retirement benefits to
certain officers. Benefits are payable at retirement based upon a percentage
of the participant's compensation. The plan specifies minimum annual
retirement benefits for certain participants.
<TABLE>
The funded status of the SERP plan is:
<CAPTION>
June 30
-----------------------------
1994 1993
--------- ---------
<S> <C> <C>
Projected benefit obligation $ 4,446 $ 4,376
Unrecognized net transition obligation (536) (980)
Unrecognized net loss (801) (893)
Unrecognized prior service cost
minimum liability 886 1,520
-------- ---------
Accrued pension liability, included in
other liabilities on the Consolidated
Balance Sheets $ 3,727 $ 3,641
======== =========
Accumulated benefit obligation, fully vested $ 3,727 $ 3,641
======== =========
</TABLE>
21
<PAGE> 13
<TABLE>
Periodic pension cost for the SERP consists of:
<CAPTION>
Year ended June 30
---------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned $ 91 $ 64 $ 24
Interest cost on projected benefit obligation 347 334 406
Net amortization and deferral 483 388 370
---- ---- ----
Total $ 921 $ 786 $ 800
===== ===== =====
</TABLE>
Pension cost and benefit obligations shown above were determined using a
discount rate of 8.0% and a rate of increase in compensation levels of 5.5%. At
June 30, 1994 there were no assets under the plan. The Company funds the
benefits when payments are made to participants.
8. LEASE COMMITMENTS AND RENT EXPENSE
The Company leases certain branch and distribution center facilities and
computer equipment under non-cancelable lease agreements. The minimum annual
rental commitment under operating leases is $7,517 in 1995; $6,056 in 1996;
$4,576 in 1997; $3,832 in 1998; $2,071 in 1999, and $2,950 after 2000.
Rental cost, principally from leases for real property, vehicles and
computer equipment was $10,013 in 1994, $8,527 in 1993, and $11,596 in 1992.
9. RESTRUCTURING CHARGES
During the fourth quarter of fiscal 1992, the Company adopted a restructuring
plan which critically evaluated the performance of all facilities and
administrative functions to enhance the Company's long-term profitability. The
actions related to this plan, which were substantially completed in fiscal 1993,
included the reorganization and consolidation of certain branch, distribution
center, shop facilities and administrative functions. A restructuring charge of
$7,832 was recorded in 1992 for the costs of these actions, including lease
termination costs, write-off of property and other assets associated with
reorganization or consolidation of facilities, relocation costs and separation
costs of terminated associates.
10. LITIGATION
The 1990 agreement for the acquisition of King Bearing included specific
indemnification of Bearings, Inc. and King for any financial damages or losses
related to a lawsuit pending against King in the Superior Court of Orange
County, California. The indemnification was also guaranteed by the ultimate
parent of King's former owner, a Fortune 100 company with stockholders' equity
exceeding three billion dollars at June 30, 1994. A $32,400 judgment relating
to this lawsuit was rendered against King in June 1992. The judgment is being
strongly contested by counsel retained by the indemnitor on behalf of King, and
in September 1992 the trial court granted the motion of King for a new trial as
to all but $219 in damages returned by the jury. A notice of appeal was filed
by the cross-complainants, and the case is now pending in the California Court
of Appeal, Fourth Appellate District. All alleged events relevant to the
judgment occurred prior to the Company's purchase of King and the jury found no
liability on the part of Bearings, Inc. Due to the indemnification and
guarantee, management believes that the outcome of this matter will not have a
material adverse effect on the consolidated financial position or results of
operations of the Company.
22
<PAGE> 14
INDEPENDENT
AUDITORS' REPORT
Bearings, Inc. and Subsidiaries
[ DELOITTE & TOUCHE LLP - LOGO ]
Shareholders and Board of Directors
Bearings, Inc.
We have audited the accompanying consolidated balance sheets of Bearings, Inc.
and its subsidiaries (the "Company") as of June 30, 1994 and 1993 and the
related statements of consolidated income, shareholders' equity, and cash flows
for each of the three years in the period ended June 30, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company at June 30,
1994 and 1993 and the results of its operations and its cash flows for each of
the three years in the period ended June 30, 1994 in conformity with generally
accepted accounting principles.
As discussed in Notes 5 and 3 to the consolidated financial statements,
in the year ended June 30, 1994, the Company changed its method of accounting
for income taxes to conform with Statement of Financial Accounting Standards
No. 109 and its application of the last-in, first-out (LIFO) method for valuing
inventories.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
August 5, 1994
23
<PAGE> 15
<TABLE>
QUARTERLY OPERATING RESULTS
AND MARKET DATA
Bearings, Inc. and Subsidiaries
<CAPTION>
(UNAUDITED)
(Dollar amounts in thousands, except per share amounts)
Per Common Share
-----------------------------------------------
Net Net
Net Gross Income Income Cash Price Range
Sales Profit (Loss) (Loss) Dividend High Low
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994
FIRST QUARTER(C) $222,712 $ 56,672 $ 2,398 $ .32 $.16 $25.25 $21.13
SECOND QUARTER(C) 226,285 61,528 2,314 .31 .16 31.13 25.38
THIRD QUARTER 239,743 65,498 2,886 .38 .16 37.50 27.75
FOURTH QUARTER 247,514 68,343 5,089 .68 .16 34.00 30.00
-------- -------- ------- ----- ----
$936,254 $252,041 $12,687 $1.68 $.64
======== ======== ======= ===== ====
1993
First Quarter $204,175 $ 50,603 $ 1,505 $ .21 $.16 $18.75 $16.75
Second Quarter 198,535 51,587 1,755 .24 .16 23.25 16.88
Third Quarter 210,789 54,673 2,378 .33 .16 23.50 20.50
Fourth Quarter 217,933 61,323 3,289 .45 .16 24.75 21.38
-------- -------- ------- ----- ----
$831,432 $218,186 $ 8,927 $1.23 $.64
======== ======== ======= ===== ====
1992
First Quarter $202,038 $ 51,621 $ 1,037 $ .15 $.16 $23.63 $19.88
Second Quarter 198,639 52,132 381 .05 .16 21.13 18.00
Third Quarter 208,144 52,081 392 .06 .16 23.25 19.38
Fourth Quarter(B) 208,992 54,536 (3,476) (.49) .16 22.63 17.63
-------- -------- ------- ----- ----
$817,813 $210,370 $(1,666) $(.24) $.64
======== ======== ======= ===== ====
<FN>
(A) Cost of sales for interim financial statements are computed using
estimated gross profit percentages which are adjusted throughout the year
based upon avalilable information. Adjustments to actual cost are made based
upon the annual physical inventory and the effect of year-end inventory
quantities on LIFO costs. The physical inventory adjustments in 1994 and
1993 were not material. The physical inventory adjustment in 1992 increased
gross profit, net income and net income per share by $1,806; $1,084; and
$.15, respectively. Reductions in inventories during the fiscal years ended
June 30, 1994 and 1993 resulted in liquidations of LIFO inventory quantities
carried at lower costs prevailing in prior years. The effect of these
liquidations for the years ended June 30, 1994 and 1993 increased annual
gross profit by $6,784 and $4,714; annual net income by $3,841 and $2,749
and net income per share by $.51 and $.38, respectively. The effects of LIFO
liquidations during 1992 were not material. (See Note 3 of Notes to
Consolidated Financial Statements).
(B) Includes a restructuring charge of $7,832 for costs of reorganization
and consolidation of certain branch, distribution center and other
facilities and administrative functions. Net of applicable income
taxes, this charge decreased net income by $4,700 or $.66 per share. (See
Note 9 of Notes to Consolidated Financial Statements.)
(C) The first two quarters of 1994 have been restated to relect the acquisition
of Mainline. (See Note 2 of Notes to Consolidated Financial Statements.)
(D) On September 1, 1994 there were 1,469 shareholders of record. Additionally
at June 30, 1994 there were 2,994 participants in the Bearings, Inc. 401(k)
Savings Plan. The Company's common stock is listed on the New York Stock
Exchange. The closing price on September 1, 1994 was $32.25 per share.
</TABLE>
25
<PAGE> 16
<TABLE>
10 YEAR
SUMMARY
<CAPTION>
(Thousands, except per share data and statistics)
1994 1993 1992 1991
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS-
YEAR ENDED JUNE 30
Net sales $ 936,254 $ 831,432 $ 817,813 $ 814,000
Operating income 27,817 20,521 4,703 17,115
Net income (loss) 12,687 8,927 (1,666) 4,282
Per share data
Net income (loss) 1.68 1.23 (.24) 61
Cash dividend .64 .64 .64 .64
YEAR-END POSITION - JUNE 30
Working capital $ 144,605 $ 130,860 $ 41,967 $ 54,695
Long-term debt 80,000 80,000
Total assets 343,519 315,935 330,619 327,939
Shareholders' equity 150,491 134,940 128,830 134,203
YEAR-END STATISTICS - JUNE 30
Current ratio 2.4 2.4 1.2 1.3
Branches 339 323 333 341
Shareholders of record 1,484(A) 1,543 1,617 1,679
<FN>
(A) In addition there were 2,994 employee participants in the Bearings, Inc. 401(k) Savings Plan.
</TABLE>
26
<PAGE> 17
<TABLE>
<CAPTION>
Bearings, Inc. and Subsidiaries
1990 1989 1988 1987 1986 1985
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 651,271 $ 630,281 $ 542,883 $ 490,995 $ 490,249 $ 495,529
25,281 33,463 25,000 13,964 7,591 24,934
12,201 18,313 14,948 6,247 2,244 11,011
1.70 2.45 1.89 .71 .25 1.22
.64 .56 .489 .445 .445 .445
$ 64,091 $ 75,134 $ 77,606 $ 121,068 $ 129,288 $ 131,690
44,750 44,750 44,750
380,224 251,376 222,957 223,202 231,894 225,082
135,338 134,848 128,919 125,419 133,912 135,126
1.3 1.7 1.9 3.5 3.7 4.2
363 267 266 269 274 275
1,694 1,358 1,318 1,361 1,476 1,613
</TABLE>
27
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
- - -----------------------------
Bearings, Inc.
We consent to the incorporation by reference in Registration Statements
Nos. 2-81660, 33-42623,33-43506, 33-53345, 33-53401 and 33-53405 of Bearings,
Inc. on Forms S-3 and S-8 of our reports dated August 5, 1994 appearing in and
incorporated by reference in the Annual Report on Form 10-K of Bearings, Inc.
for the year ended June 30, 1994.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
September 26, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> JUN-30-1994
<CASH> 10,935
<SECURITIES> 0
<RECEIVABLES> 131,698
<ALLOWANCES> 1,900
<INVENTORY> 106,233
<CURRENT-ASSETS> 249,244
<PP&E> 133,437
<DEPRECIATION> 53,318
<TOTAL-ASSETS> 343,519
<CURRENT-LIABILITIES> 104,639
<BONDS> 80,000
<COMMON> 10,000
0
0
<OTHER-SE> 140,491
<TOTAL-LIABILITY-AND-EQUITY> 343,519
<SALES> 936,254
<TOTAL-REVENUES> 936,254
<CGS> 684,213
<TOTAL-COSTS> 684,213
<OTHER-EXPENSES> 222,806
<LOSS-PROVISION> 1,418
<INTEREST-EXPENSE> 6,160
<INCOME-PRETAX> 21,657
<INCOME-TAX> 8,970
<INCOME-CONTINUING> 12,687
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,687
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.65
</TABLE>
