<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
CHECK THE APPROPRIATE BOX:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
BEARINGS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BEARINGS, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
[Table omitted as inapplicable].
------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
[Table omitted as inapplicable].
<PAGE> 2
[BEARINGS, INC. LOGO]
3600 EUCLID AVENUE
CLEVELAND, OHIO 44115
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of the Shareholders of
Bearings, Inc. (the "Corporation") will be held at The Forum Conference and
Education Center, One Cleveland Center, 1375 E. 9th Street, Cleveland, Ohio, on
Tuesday, October 22, 1996, at 1:30 p.m., local time, for the purpose of
considering and acting on the following:
1. Election of three (3) persons to be directors of Class III for a term of
three (3) years.
2. Amendment of the Amended and Restated Articles of Incorporation to
change the name of the Corporation to Applied Industrial Technologies,
Inc.
3. Ratification of the appointment by management of independent auditors of
the Corporation for the fiscal year ending June 30, 1997.
4. Transaction of such other business as may properly come before the
meeting and all adjournments thereof.
The Board of Directors has fixed August 30, 1996 as the record date for the
determination of the shareholders entitled to notice of and to vote at the
meeting. The transfer books of the Corporation will not be closed. A list of the
shareholders as of the record date will be available for examination at the
meeting.
By order of the Board of Directors.
ROBERT C. STINSON
Secretary
September 16, 1996
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE> 3
[BEARINGS, INC. LOGO]
PROXY STATEMENT
------------------
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Bearings, Inc., 3600 Euclid Avenue, Cleveland, Ohio 44115 (the
"Corporation") for use at the Annual Meeting of the Shareholders of the
Corporation to be held at 1:30 p.m., local time, on Tuesday, October 22, 1996,
at The Forum Conference and Education Center, One Cleveland Center, 1375 E. 9th
Street, Cleveland, Ohio.
The Corporation will bear the cost of solicitation of proxies. This
statement and the accompanying proxy will be sent to shareholders by mail on or
about September 16, 1996. The Corporation will also pay the standard charges and
expenses of brokerage houses, or other nominees or fiduciaries, for forwarding
such instruments to and obtaining proxies from securities holders and
beneficiaries for whose account they hold registered title to shares of the
Corporation. In addition to using the mails, directors, officers and other
employees of the Corporation, acting on its behalf, may also solicit proxies,
and Georgeson & Company Inc., New York, New York, has been retained, at an
estimated cost of $6,000 plus expenses, to aid in the solicitation of proxies
from brokers and institutional holders. Proxies may be solicited personally or
by telephone, telegram or facsimile.
Any shareholder giving a proxy has the right to revoke it at any time
before it is voted by giving notice of revocation to the Secretary of the
Corporation in writing or in open meeting. Presence at the meeting does not in
and of itself revoke a proxy.
VOTING AT THE MEETING
Only shareholders of record at the close of business on August 30, 1996
will be entitled to vote at the meeting. As of the record date there were
outstanding shares of Common Stock, without par value, of the
Corporation. Each share is entitled to one vote. Abstentions and broker
non-votes are counted in determining the votes present at a meeting. An
abstention or a broker non-vote has the practical effect of a vote against a
proposal, as each abstention or broker non-vote is one less vote in favor of the
proposal.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. At the Annual
Meeting, directors of Class III are to be elected for a term of three years
expiring in 1999. The properly nominated candidates receiving the greatest
number of votes for the director positions to be filled shall be elected to
those positions. The persons presently serving as directors of Class I for a
term expiring in 1997 and as directors of Class II for a term expiring in 1998
will continue in office.
The nominees for directors of Class III are William E. Butler, Russell R.
Gifford and L. Thomas Hiltz. Each of the nominees presently serves as a director
of the Corporation and was elected to his position at an annual meeting of the
shareholders. The proxies named in the accompanying proxy intend to vote for the
election of the three nominees unless authority is withheld. If any of the
nominees should be unable or unwilling to serve as a director, the proxies
reserve full discretion to vote for such other person or persons as may be
nominated at the meeting and/or to vote to reduce the number of directors to
nine. Management is not aware of any existing circumstances that would cause any
of the nominees to be unwilling or unable to serve as directors.
3
<PAGE> 4
Certain information concerning the nominees and the directors continuing in
office is given below. Unless otherwise stated, the nominees and directors have
held the positions indicated for the last five years.
<TABLE>
<CAPTION>
NAME AND YEAR INFORMATION ABOUT
FIRST ELECTED NOMINEES AND
A DIRECTOR DIRECTORS
- --------------------------------------- -------------------------------------------------------------------
<S> <C>
NOMINEES FOR ELECTION AS DIRECTORS OF CLASS III FOR A TERM EXPIRING IN 1999
William E. Butler(b)(c) Mr. Butler was Chairman, from January 1992 until his retirement in
1987 December 1995, of Eaton Corporation, a global manufacturer of
highly engineered products which serve vehicle, industrial,
construction, commercial, aerospace and marine markets. Principal
products include truck transmissions and axles, engine components,
hydraulic products, electrical power distribution and control
equipment, ion implanters and a wide variety of controls. He was
Chief Executive Officer (from September 1991 to September 1995),
President (from 1989 to January 1992) and Chief Operating Officer
(from 1989 to September 1991), and served as a director of that
company from 1989 until his retirement. He is 65 years of age and
also serves as a director of Ferro Corporation, The Goodyear Tire &
Rubber Co., Pitney Bowes, Inc. and Zurn Industries, Inc.
Russell R. Gifford(d)(e) Mr. Gifford was President of CNG Energy Services Corp., a
1992 subsidiary of Consolidated Natural Gas Company, from September 1994
until his retirement in September 1996. CNG Energy Services Corp.
is an unregulated energy services marketing company. He was also
President and Chief Executive Officer (from 1989 to September 1994)
of The East Ohio Gas Company, the largest distribution subsidiary
of Consolidated Natural Gas Company. Mr. Gifford is 57 years of age
and serves as a trustee of First Union Real Estate Equity and
Mortgage Investments.
L. Thomas Hiltz(a)(b)(c)(e) Mr. Hiltz is an attorney in Covington, Kentucky and is one of five
1981 trustees of the H.C.S. Foundation, a charitable trust which has
sole voting and dispositive power with respect to 553,500 shares of
Common Stock of the Corporation. He is 50 years of age.
PERSONS SERVING AS DIRECTORS OF CLASS I FOR A TERM EXPIRING IN 1997
John C. Dannemiller(a)(b) Mr. Dannemiller is Chairman & Chief Executive Officer of the Corpo-
1985 ration (since January 1992). He was President (from 1990 to Janu-
ary 1992) and Chief Operating Officer (from 1988 to January 1992).
He is 58 years of age and also serves as a director of The Lamson &
Sessions Co. and Star Banc Corporation.
John C. Robinson(a) Mr. Robinson is President & Chief Operating Officer of the Corpora-
1991 tion (since January 1992). He was Vice President of the Corporation
(from 1989 to January 1992) and Executive Vice President and
General Manager of the Corporation's wholly-owned subsidiary, King
Bearing, Inc. (from 1990 to October 1991). He is 54 years of age.
Dr. Jerry Sue Thornton(d)(e) Dr. Thornton is President (since January 1992) of Cuyahoga Commu-
1994 nity College, the largest community college in Ohio. From 1985 to
December 1991, Dr. Thornton was President of Lakewood Community
College in White Bear Lake, Minnesota. She is 49 years of age.
PERSONS SERVING AS DIRECTORS OF CLASS II FOR A TERM EXPIRING IN 1998
William G. Bares(b)(c)(e) Mr. Bares is Chairman (since April 1996), President (since 1982)
1986 and Chief Executive Officer (since January 1996) of The Lubrizol
Corporation, a specialty chemical company. Lubrizol specializes in
products created through the application of advanced chemical,
mechanical and biological technologies for use in specialty
additive systems for gasoline and diesel engine oils, automatic
transmission fluids, gear oils, marine and tractor lubricants, and
specialty products for industrial fluids, fuel additives and
process chemicals. He was Chief Operating Officer (from 1987 to
December 1995) and has served as a director of that company since
1981. He is 55 years of age and also serves as a director of
Oglebay Norton Company and KeyCorp.
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
NAME AND YEAR INFORMATION ABOUT
FIRST ELECTED NOMINEES AND
A DIRECTOR DIRECTORS
- --------------------------------------- -------------------------------------------------------------------
<S> <C>
Dr. Roger D. Blackwell Dr. Blackwell is a Professor of Marketing at the Ohio State
1996 University College of Business and President of Blackwell
Associates, Inc., a consulting firm in Columbus, Ohio. He is 56
years of age and also serves as a director of Checkpoint Systems,
Inc., Cheryl & Co., Inc., Intimate Brands, Inc., Max & Erma's
Restaurants, Inc., and Worthington Foods, Inc., and as a trustee of
The Flex-funds.
Russel B. Every(c)(d) Mr. Every has been a business consultant since his retirement as
1986 Chairman of The Lamson & Sessions Co. in 1989. In furtherance of
his consulting business, he was hired as President and Chief
Executive Officer in October 1991 by the Board of Directors of
Sudbury, Inc., a diversified manufacturer of industrial products,
for the purpose of restructuring that company. When Sudbury, Inc.
filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code
in January 1992, Mr. Every was elected Chairman and director to
continue the restructuring of that company and to find a new Chief
Executive Officer. A plan of reorganization was confirmed and a new
Chief Executive Officer selected; therefore, Mr. Every's assignment
with Sudbury, Inc. concluded in August 1992. He served as a
director of The Lamson & Sessions Co. from 1979 to April 1995. The
Lamson & Sessions Co. is a supplier of a variety of fabricated and
machined metal components and parts for use by original equipment
manufacturers principally in the transportation equipment industry.
Its Carlon Division is a leading domestic producer of thermoplastic
conduit, ducts, fittings, enclosures and accessories used
principally in electrical applications. He is 71 years of age.
John J. Kahl(b)(d) Mr. Kahl is Chairman and Chief Executive Officer of Manco, Inc., a
1992 manufacturer of pressure sensitive tapes for household and automo-
tive repair, including Duck(R) Brand Tapes, mailing and shipping
supplies for both home and office under the CareMail(R) brand,
weatherstripping and related home energy products for the "do-it-
yourselfer" and labels for both home and office. He is 55 years of
age and also serves as a director of Royal Appliance Mfg. Co.
</TABLE>
- ---------------
(a) Member of the Executive Committee.
(b) Member of the Director Nominating Committee.
(c) Member of the Executive Organization & Compensation Committee.
(d) Member of the Audit Committee.
(e) Member of the Corporate Governance Committee.
5
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists the shareholders known to be beneficial owners of
more than five percent (5%) of the Common Stock of the Corporation as of June
30, 1996.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- ---------------------------------------------- ----------------------- --------
<S> <C> <C>
The Capital Group Companies, Inc. 709,950(2) 5.7%
333 South Hope Street
Los Angeles, California 90071
Putnam Investments, Inc. 690,300(3) 5.6%
One Post Office Square
Boston, Massachusetts 02109
The Prudential Insurance Company 620,425(4) 5.0%
of America
Three Gateway Center
Newark, New Jersey 07102-4077
<FN>
- ---------------
(1) Determined in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934. Beneficial ownership may be disclaimed for other purposes.
(2) The Capital Group Companies, Inc. filed a Schedule 13G dated February 9,
1996 indicating it has sole voting power for 300,000 shares and sole
dispositive power for 709,950 shares.
(3) By letter dated August 7, 1996, Putnam Investments, Inc. confirmed that at
June 30, 1996 it had shared voting power for 318,050 shares and shared
dispositive power for 690,300 shares.
(4) By letter dated July 31, 1996, The Prudential Insurance Company of America
confirmed that at June 30, 1996 it had sole voting and dispositive power for
271,900 shares, and shared voting and dispositive power for 348,525 shares.
</TABLE>
6
<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of the Common Stock of
the Corporation, as of June 30, 1996, by all then-current directors, the
executive officers named in the Summary Compensation Table on page 8 and all
current directors and executive officers as a group.
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY OWNED
ON PERCENT OF
NAME OF INDIVIDUAL JUNE 30, 1996(1) CLASS(2)
- ------------------------------------------------- ------------------ ----------
<S> <C> <C>
William G. Bares................................. 12,634(3)
William E. Butler................................ 1,350
John C. Dannemiller.............................. 198,439(4) 1.6%
Russel B. Every.................................. 12,774
Russell R. Gifford............................... 3,276
L. Thomas Hiltz.................................. 569,688(5) 4.6%
John J. Kahl..................................... 13,399
Francis A. Martins............................... 25,555(6)
John C. Robinson................................. 102,029(4)
Robert C. Stinson................................ 50,211(4)
Dr. Jerry Sue Thornton........................... 0
John R. Whitten.................................. 49,970(4)
All current directors and executive officers
as a group (16 individuals).................... 1,071,637(7) 8.5%
<FN>
- ---------------
(1) Determined in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934. Individuals may disclaim beneficial ownership for other purposes.
Except as otherwise indicated, the director or executive officer has sole
voting and dispositive power over the number of shares indicated.
(2) Percent of class is not indicated if less than 1%.
(3) Includes 1,500 shares owned by Mr. Bares' spouse, who has sole voting and
dispositive power.
(4) Includes shares that could be acquired within 60 days after June 30, 1996,
pursuant to the exercise of stock options as follows: Mr.
Dannemiller -- 82,050; Mr. Robinson -- 41,589; Mr. Stinson -- 23,576; and
Mr. Whitten -- 23,276.
(5) Includes 553,500 shares held by the H.C.S. Foundation, a charitable trust of
which L. Thomas Hiltz is one of five trustees, with sole voting and
dispositive power. Pursuant to a Schedule 13D filed by the H.C.S. Foundation
dated December 20, 1989, the trustees, including Mr. Hiltz, disclaimed
beneficial ownership of those shares.
(6) Includes 375 shares owned by Mr. Martins' son, who has sole voting and
dispositive power.
(7) Includes 171,241 shares that could be acquired within 60 days after June 30,
1996, pursuant to the exercise of stock options. In determining the
percentage of share ownership, the 171,241 stock option shares are added to
both the denominator and the numerator, pursuant to Instruction 1 to Item
403 of Regulation S-K and Rule 13d-3(d)(1) under the Securities Exchange Act
of 1934.
</TABLE>
7
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table summarizes compensation earned during the fiscal years
ended June 30, 1996, 1995 and 1994, by those persons who were, during the fiscal
year ended June 30, 1996, the Chief Executive Officer and the four other most
highly compensated executive officers of the Corporation.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
AWARDS
ANNUAL COMPENSATION --------------------------
--------------------- RESTRICTED NUMBER ALL OTHER
NAME AND BONUS STOCK AWARD(S) OF COMPENSATION
PRINCIPAL POSITION YEAR SALARY (1) (2) OPTIONS (3)
- ---------------------------- ----- -------- -------- -------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
John C. Dannemiller 1996 $439,167 $435,960 $ 0 0 $ 41,994
Chairman & Chief 1995 411,117 451,153 952,500 0 42,168
Executive Officer 1994 374,567 379,771 0 0 36,394
John C. Robinson 1996 303,533 241,444 0 0 27,245
President & Chief 1995 283,333 241,027 476,250 0 21,651
Operating Officer 1994 258,333 224,602 0 0 26,163
John R. Whitten 1996 186,830 131,680 0 0 16,457
Vice President -- 1995 175,667 117,429 238,125 0 11,379
Finance & Treasurer 1994 165,000 124,932 0 0 7,486
Robert C. Stinson 1996 179,067 131,572 0 0 16,726
Vice President -- 1995 165,000 132,874 238,125 0 12,189
Administration, 1994 151,333 82,802 0 0 11,691
Human Resources,
General Counsel &
Secretary
Francis A. Martins 1996 170,640 126,903 0 0 9,874
Vice President -- 1995 158,000 114,704 238,125 0 14,111
Sales & Field Operations 1994 146,667 96,439 0 0 12,185
<FN>
- ---------------
(1) Amounts reported in this column are earnings pursuant to the annual
Management Incentive Plan, described in the Execution Organization &
Compensation Committee Report on pages 10 and 11. Pursuant to the Deferred
Compensation Plan, described on page 15 hereof, the following named
executive officers deferred, and had invested in Corporation Common Stock in
August 1996, the corresponding percentages of their earnings under the 1996
Management Incentive Plan: Mr. Dannemiller, 80%; Mr. Robinson, 64%; Mr.
Whitten, 50%; Mr. Stinson, 50%; and Mr. Martins, 20%.
(2) Amounts reported in this column represent Performance-Accelerated Restricted
Stock awards ("PARS") under the 1990 Long-Term Performance Plan described in
the Executive Organization & Compensation Committee Report on pages 11 and
12, valued at the closing market price of the Common Stock of the
Corporation on the dates of grant. Dividends are paid on PARS at the same
rate paid to all shareholders. One-half of the PARS granted in fiscal 1995
vested during fiscal 1996, except certain of those held by Mr. Dannemiller,
for the reason described on page 12. At June 30, 1996, the persons listed
above held the following number of unvested PARS, valued at the closing
market price of Common Stock on that date: Mr. Dannemiller, 27,961 shares,
$754,947; Mr. Robinson, 11,250 shares, $303,750; Mr. Whitten, 5,625 shares,
$151,875; Mr. Stinson, 5,625 shares, $151,875; and Mr. Martins, 5,625
shares, $151,875.
(3) Amounts reported in this column for fiscal 1996 include the following:
(a) The contributions made by the Corporation and credited to the
individual accounts of the named executive officers under the
Corporation's Retirement Savings Plan, as follows: Mr. Dannemiller,
$7,117; Mr. Robinson, $11,853; Mr. Whitten, $9,873; Mr. Stinson,
$10,147; and Mr. Martins, $9,874. These totals are estimated and
subject to year-end adjustment.
(b) Pursuant to the Deferred Compensation Plan, the accounts of certain
participants were credited with additional Corporation Common Stock
equal to 10% of the amount of earnings deferred into Corporation Common
Stock. The values of the additional shares credited to the accounts of
the named executive officers are as follows: Mr. Dannemiller, $34,877;
Mr. Robinson, $15,392; Mr. Whitten, $6,584; Mr. Stinson, $6,579; and
Mr. Martins, $0.
</TABLE>
8
<PAGE> 9
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning stock option
exercises by the Chief Executive Officer and the four other most highly
compensated executive officers of the Corporation in the fiscal year ended June
30, 1996, and the values of in-the-money options held by those individuals on
June 30, 1996.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
SECURITIES UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT FISCAL
UNDERLYING OPTIONS AT FISCAL YEAR END YEAR END
OPTIONS ----------------------------- -----------------------------
NAME EXERCISED VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Dannemiller.... 0 $ 0 82,050 0 $1,240,894 $ 0
John C. Robinson....... 0 0 41,589 0 601,971 0
John R. Whitten........ 0 0 23,276 0 359,174 0
Robert C. Stinson...... 0 0 23,576 0 363,161 0
Francis A. Martins..... 0 0 0 0 0 0
</TABLE>
ESTIMATED RETIREMENT BENEFITS
UNDER SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFITS PLAN(1)
The following table shows estimated annual benefits payable at retirement
to certain selected executive officers under the Corporation's Supplemental
Executive Retirement Benefits Plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE(2)(3)
----------------------------------------------
REMUNERATION(4) 5 10 15 20
- --------------- ------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 125,000 $14,063 $ 28,125 $ 42,188 $ 56,250
150,000 16,875 33,750 50,625 67,500
175,000 19,688 39,375 59,063 78,750
200,000 22,500 45,000 67,500 90,000
225,000 25,313 50,625 75,938 101,250
250,000 28,125 56,250 84,375 112,500
275,000 30,938 61,875 92,813 123,750
300,000 33,750 67,500 101,250 135,000
350,000 39,375 78,750 118,125 157,500
400,000 45,000 90,000 135,000 180,000
450,000 50,625 101,250 151,875 202,500
500,000 56,250 112,500 168,750 225,000
550,000 61,876 123,750 185,626 247,500
<FN>
- ---------------
(1) Amounts shown in the table are computed on the basis of a straight life
annuity and are not subject to deduction of Social Security or other offset
amounts.
(2) Mr. Robinson has in excess of 20 years of service with the Corporation and
is, therefore, entitled to a full retirement benefit under the plan. Messrs.
Dannemiller and Stinson have in excess of five years of service with the
Corporation and Mr. Whitten has in excess of ten years of service. Mr.
Martins joined the Corporation in May 1992.
(3) Regardless of years of service and highest average salary, the plan provides
minimum annual benefits at age 65 to persons listed in the Summary
Compensation Table as follows: Mr. Dannemiller -- $70,000; Mr. Robinson --
$35,000; Mr. Whitten -- $25,000; and Mr. Stinson -- $25,000.
(4) Amounts in this column represent, and benefits are based on, highest average
salary for three consecutive years. The salaries for the Chief Executive
Officer and the four other most highly compensated executive officers for
the past three fiscal years are found in the Summary Compensation Table.
</TABLE>
9
<PAGE> 10
REPORT OF THE EXECUTIVE ORGANIZATION & COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
OVERVIEW
The Executive Organization & Compensation Committee (the "Committee") is
comprised entirely of independent outside directors. The Committee is
responsible for setting the Corporation's executive officer compensation
policies. The purpose of the executive officer compensation program is to
attract and retain qualified executives and to provide appropriate incentives,
both monetary and stock-based, to achieve the Corporation's business strategies
and ultimately enhance shareholder value over the long term.
The major components of the Corporation's executive officer compensation
program applicable to the Chief Executive Officer and the other executive
officers, including those named in the Summary Compensation Table appearing on
page 8 hereof, are:
(a) Annual base salary; and,
(b) The 1990 Long-Term Performance Plan.
ELEMENTS OF COMPENSATION PROGRAM
(a) ANNUAL BASE SALARY
The Committee utilizes an annual competitive pay analysis compiled by an
independent nationally recognized compensation and benefits consulting firm (the
"Independent Consultant") which provides data on similar positions. The analysis
provides the Committee with the market base salary at the 25th, 50th and 75th
percentiles for each executive officer position, together with the market total
cash compensation (discussed later in this report). The competitive pay analysis
is based on survey data primarily from the distribution industry and is more
industry-specific to the Corporation than the published industry index shown in
the stock performance graph appearing on page 13 hereof. In addition to the
competitive pay analysis, the Committee generally considers time and level of
experience in the position in setting the annual base salary. As a general rule,
annual base salaries have been set by the Committee below the 50th percentile;
however, the Committee would consider setting annual base salaries at higher
levels coincident with sustained corporate earnings improvement. The Committee's
overall executive compensation philosophy is to place greater weight on the
performance-driven portions of the compensation package -- namely the awards
under the Corporation's 1990 Long-Term Performance Plan.
(b) LONG-TERM PERFORMANCE PLAN
(1) MANAGEMENT INCENTIVE PLAN
The annual Management Incentive Plan, adopted under the Long-Term
Performance Plan, is the Corporation's program for compensating executive
officers for the achievement of goals set for a particular fiscal year. Under
the Management Incentive Plan, each executive officer, including the Chief
Executive Officer and the other executive officers named in the Summary
Compensation Table, presents the Committee with individual goals for the fiscal
year. Corporate goals for the fiscal year are also presented to the Committee.
The Committee reviews and discusses the goals with the executive officers and
then sets the goals for the year. Both the individual and the corporate goals
are expressed in terms of threshold, target (midpoint) and maximum levels of
required performance.
In fiscal 1996, Messrs. Dannemiller and Robinson had the corporate goals as
their individual goals. The corporate goals for fiscal 1996 included objectives
based on the Corporation's pre-tax return on assets, pre-tax income, and sales,
distribution and administrative expenses as a percentage of net sales. These
goals were weighted 40%, 40% and 20%, respectively. The other executive
officers, including Messrs. Whitten, Stinson and Martins, had individual goals
(in
10
<PAGE> 11
addition to the corporate goals) relating specifically to their job
responsibilities. These goals may vary in relative weight. The size of the
Management Incentive Plan payment for any of the executive officers depends on
the amount of performance achieved on both the individual and the corporate
goals. Although all or some of the individual goals under the Plan were met in
fiscal 1990, 1991 and 1992, corporate goals were not met and, for that reason,
no payments were made under the Plan in those years. Because the corporate goals
were met in fiscal 1993, 1994, 1995 and 1996, payments were made pursuant to the
Management Incentive Plans in those years.
Assuming that corporate and individual goals are met, the amount of the
individual award is based on a formula, the components of which are the 50th
percentile market base salary and a responsibility percentage assigned to the
executive officer. The responsibility percentages are set by the Committee.
Thus, the Chief Executive Officer target incentive payment set by the Committee
in fiscal 1996 was $301,000, being 70% (the responsibility percentage)
multiplied by the market base salary. The annual base salary set by the
Committee, plus the target incentive payment, has generally been less than the
50th percentile market total cash compensation. For Mr. Dannemiller, the market
total cash compensation at the 50th percentile was $810,000 effective for the
twelve-month period commencing November 1, 1995, the date on which executive
compensation changes are made each year. Mr. Dannemiller's actual annual base
salary for fiscal 1996 was $439,167, his target incentive was $301,000, and
total cash compensation assuming target performance under the Management
Incentive Plan was $740,167. If, however, performance for corporate and
individual goals exceeds the target level set by the Committee, the executive
officers, including the Chief Executive Officer and the named executive
officers, can earn above the 50th percentile for total cash compensation. Thus,
because 94% of maximum performance was achieved on his goals in fiscal 1996, Mr.
Dannemiller received total cash compensation of $875,127 ($439,167 base salary,
plus $435,960 under the Management Incentive Plan), as compared with the 50th
percentile market total cash compensation of $810,000. A similar philosophy
applies to the other executive officers. Responsibility percentages for the
other executive officers during fiscal 1996, including those named in the
Summary Compensation Table, ranged from 36% to 50%.
The Deferred Compensation Plan, approved by the shareholders in October
1993, was adopted in part to encourage increased investment in Corporation
Common Stock by the Corporation's executive officers. All but one of the
participants in the 1996 Management Incentive Plan elected under the Deferred
Compensation Plan to defer a portion of their Management Incentive Plan awards,
with deferral percentages ranging from 20% to 85%. All but one of those persons
elected to have their deferred awards invested solely in the Corporation's
Common Stock, with the remaining participant electing to invest more than
one-half of his total award in Common Stock.
(2) STOCK-BASED AWARDS
Until fiscal 1993, the only types of awards under the Corporation's 1990
Long-Term Performance Plan were stock options. In order to align more closely
the executive officers with the interests of the Corporation's shareholders and
to compensate the executive officers based on performance measures that directly
enhance shareholder value, the Committee chose in October 1992 to make awards of
Performance-Accelerated Restricted Stock ("PARS") under the Plan. The awards
were intended to replace ongoing stock option grants to executive officers, but
would not affect past stock option grants. The PARS were awards of restricted
shares of Corporation Common Stock, which shares would vest six years from the
date of grant; however, the PARS could vest automatically at an earlier date if
certain performance hurdles based on stock price and pre-tax return on assets
were met. No new stock option or PARS awards could be made to the executive
officers until 100% of the PARS had vested, either by meeting the performance
hurdles or by passage of the six-year term, and in no event could a new award be
made during the two-year period immediately following the date of grant of the
previous
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<PAGE> 12
awards. The initial PARS awards vested in fiscal 1994 as a result of the
achievement of stock price performance hurdles.
In October 1994 new PARS awards were made to the executive officers. At the
time the awards were made, the stock price was $21.17 (adjusted for the December
1995 3-for-2 stock split). Once again, the shares would automatically vest six
years from the date of grant, although they could vest at an earlier date if
certain performance hurdles were met; provided further, with respect to the
awards made to Messrs. Dannemiller and Robinson, such awards would not vest
early to the extent vesting would result in the non-deductibility of the
resulting compensation under Section 162(m) of the Internal Revenue Code. In
April 1996, 50% of the PARS awards vested on reaching a stock price of $30.67
per share for ten consecutive trading days. The remaining 50% can vest early on
reaching either a pre-tax return on assets of 12%, or a stock price of $36.00
per share for ten consecutive days. According to an independent survey of other
companies utilizing stock-based long-term performance awards, which survey was
prepared at the time the grants were made, if all of the PARS had vested within
the first two years, the awards would have represented the 85th percentile of
competitive compensation. If, however, the performance hurdles were not met and
the PARS vested only after the full six years, the compensation on a competitive
basis would have been in the 20th percentile.
No new stock option or PARS awards can be made to the executive officers
until 100% of the PARS vest, either by meeting the performance hurdles or by
passage of the six-year term, and in no event can a new award be made during the
two-year period immediately following the date of grant of the previous awards.
An exception with respect to the two-year limitation was made in October 1994
for two executive officers. These individuals were granted PARS awards within
the previous two years upon assuming their current positions of responsibility.
The two-year limitation on the grant of additional awards was waived to permit
the grant of new PARS awards to these individuals in October 1994 and to put all
of the executive officers on the same award cycle.
The total amount of all stock-based awards is limited by the annual
limitation set forth in the Long-Term Performance Plan of 2% of shares
outstanding on the first day of the fiscal year in which the awards are made.
(c) BENEFITS
Benefits provided to the executive officers are those generally provided to
the Corporation's other associates with variations consistent with executive
benefits in the competitive marketplace.
FEDERAL INCOME TAX DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code limits the amount of
compensation a publicly-held corporation may deduct as a business expense for
federal income tax purposes. That limit, which applies to the Chief Executive
Officer and the four other most highly compensated executive officers, is $1
million per individual per year, subject to certain exceptions. One of the
exceptions is for compensation that is performance-based.
The Committee has taken steps to ensure that the awards made to the
executive officers under the Management Incentive Plan qualify as
performance-based under Internal Revenue Service regulations. In the future, the
Committee will continue to seek ways to preserve the full deductibility of
compensation paid to the Corporation's executive officers without compromising
the Committee's flexibility in designing an effective compensation program.
EXECUTIVE ORGANIZATION &
COMPENSATION COMMITTEE
William E. Butler
William G. Bares
Russel B. Every
L. Thomas Hiltz
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<PAGE> 13
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
OF BEARINGS, INC., S&P 500 INDEX AND PEER INDUSTRY GROUP
The graph set forth below compares the five-year cumulative total return
from investing $100 on June 30, 1991 in each of the Corporation's Common Stock,
the Standard and Poor's 500 Index and the Value Line Machinery Industry Index,
assuming dividend reinvestment.
<TABLE>
<CAPTION>
Measurement Period Bearings, Machinery
(Fiscal Year Covered) Inc. S&P 500 Industry
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 79.05 113.33 110.56
1993 99.46 129.13 134.87
1994 150.22 131.20 151.88
1995 148.29 165.47 176.67
1996 200.23 207.40 195.30
</TABLE>
Source: Value Line Institutional Services
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<PAGE> 14
COMPENSATION OF DIRECTORS
Corporate officers do not receive any additional compensation for service
as a director. Non-employee directors receive a quarterly retainer of $4,500, a
fee of $1,500 for the first directors' meeting or committee meeting attended on
a given day, and $500 for each additional meeting attended on the same day, up
to a maximum of $2,500 per day. The directors may be similarly compensated if
they attend other meetings or conferences at the request of the Chairman or
President. In addition, the directors receive $500 for any action taken by
unanimous written consent or via telephone conference of less than 30 minutes in
duration, and directors who serve as chairmen of committees receive an
additional quarterly retainer of $400. All non-employee directors are eligible
to participate in the Deferred Compensation Plan for Non-employee Directors
described below. Participants in the plan may elect to receive their director
compensation in the form of Common Stock of the Corporation, in which case they
receive an additional amount equal to 25% of the compensation so deferred. The
amount of compensation received by non-employee directors is reviewed from time
to time by the Corporation's management. If management believes that a change in
the amount of non-employee director compensation is required to make the level
of such compensation competitive relative to the size and nature of the
Corporation's business, management recommends the change to the Board of
Directors and approval of any such change requires the affirmative vote of a
majority of the directors then serving in office. The directors participate in
the Corporation's travel accident plan and may also elect to participate in the
Corporation's contributory health insurance plan.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
The purposes of the Bearings, Inc. Deferred Compensation Plan for
Non-employee Directors (the "Plan") are to allow non-employee directors to defer
receipt of compensation payable for services as a director and to promote
loyalty to the Corporation through increased investment in the Corporation's
Common Stock.
Pursuant to the Plan, a non-employee director may elect, prior to any
calendar quarter, to defer payment of his or her compensation for future
services as a director. Once an election is made, it is irrevocable with respect
to compensation earned. Directors may change their election to receive or defer
receipt of compensation for future services commencing with the calendar quarter
following the election. Amendments that serve only to change a director's
beneficiary are permitted at any time and as often as necessary.
As directors' compensation would otherwise become due and payable, the
Corporation transfers an amount equal to the compensation deferred pursuant to
the Plan to a trust maintained by Key Trust Company of Ohio, N.A., as Trustee.
Deferred fees are invested by the Trustee, at a director's option, in a money
market fund and/or Common Stock of the Corporation. If a director elects to have
his compensation invested in Common Stock, then the Corporation contributes to
the trust an additional amount equal to 25% of the amount so deferred.
The Plan is administered by a committee consisting of not less than three
members, not necessarily members of the Board of Directors, which is authorized
to interpret and administer the Plan, but has no discretion with respect to Plan
contributions, investment direction or distributions.
Distribution of a director's account commences as designated by the
director in his or her election on a date that is not more than thirty days
after (i) the director's termination as a director due to resignation,
retirement, death or otherwise, or (ii) the director's attainment of the age
(not younger than age 55) specified in his or her deferral election form; or
upon a change of control (as defined in the Plan) of the Corporation.
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<PAGE> 15
There are presently eight non-employee directors of the Corporation. Of
those non-employee directors, Messrs. Bares, Every, Hiltz and Kahl and Drs.
Blackwell and Thornton presently defer all of their retainer and meeting fees
and invest those fees in Common Stock of the Corporation.
DEFERRED COMPENSATION PLAN
The Bearings, Inc. Deferred Compensation Plan permits participants in an
annual Management Incentive Plan to defer a portion or all of the awards payable
under the Management Incentive Plan. The Plan's purpose is to promote increased
efforts on behalf of the Corporation through increased investment in the
Corporation's Common Stock.
The Plan gives each participant in a Management Incentive Plan the
opportunity to elect to defer payment of his or her cash award from the
Management Incentive Plan. Any participant who elects to make such a deferral
may have such amounts invested in the Corporation's Common Stock and/or in a
money market fund. In the event a participant elects to have an amount equal to
at least 50% of a Management Incentive Plan award invested in the Corporation's
Common Stock, an additional ten percent of that amount will be credited to that
participant under the Plan. Such deferral and investment opportunities and such
incentive for investment in the Corporation's Common Stock are similar to the
opportunities and incentives available to non-employee directors under the
Bearings, Inc. Deferred Compensation Plan for Non-employee Directors and are
part of an overall effort to align management with the interests of the
Corporation's shareholders.
The Plan is administered by the Executive Organization & Compensation
Committee of the Board of Directors, which is authorized to interpret and
administer the Plan, but has no discretion with respect to participant-elected
deferrals or investments under the Plan.
Distribution of a participant's deferrals under the Plan will be made in a
lump sum or in installments over a period not in excess of ten years, as
specified in the participant's deferral election form. Other than dates
specified in the deferral election forms, a withdrawal is permitted while
employed only due to a severe financial and unexpected hardship.
All but one of the eligible executive officers elected to participate in
the Plan in 1996.
SEVERANCE PAYMENT AGREEMENTS
The Corporation has severance payment agreements (the "Agreements") with
each of its executive officers. The Agreements obligate the Corporation to
provide certain severance benefits, described below, to any of those officers
whose employment is terminated for any reason other than death if such
termination of employment occurs within two years (three years for Messrs.
Dannemiller and Robinson) after a change in control, as defined in the
Agreements. The principal benefits to be provided to the named officers under
the Agreements are (a) a lump sum severance payment equal to three times annual
base salary (at the highest rate in effect since the change in control) for
Messrs. Dannemiller and Robinson, and two times for the other executive
officers, reduced proportionately if the officer would reach age 65 within the
respective three and two year periods after the termination; (b) a cash payment,
in lieu of exercising any stock options held by the officer on the date of
termination, equal to the difference between the exercise price thereunder, and
the higher of the mean of the high and low trading prices on the New York Stock
Exchange on the date of termination, or the highest price paid for the
Corporation's Common Stock in connection with the change in control; and (c)
continued participation in the Corporation's employee benefit plans, programs
and arrangements, or equivalent benefits for two years (three years for Messrs.
Dannemiller and Robinson) after the termination at the levels in effect
immediately prior to termination. Under the terms of the Agreements, escrow
funds have been established with Key Trust Company of Ohio, N.A., to secure
payment of the benefits. The Corporation has deposited in the escrow funds a
percentage of the amounts that would be payable to each of the officers under
the Agreements. Additional
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<PAGE> 16
deposits may be made in future years. No officer has any right to make a claim
on the escrow funds unless the Corporation is in default of its obligations
under the Agreements. All earnings on the escrow funds are payable to the
Corporation. The Agreements also provide that in the event any covered executive
is required to pay the excise tax imposed by Section 4999 of the Internal
Revenue Code, the Corporation shall make an additional payment to such executive
in an amount sufficient (after payment of any taxes on the additional payment)
to pay the excise tax.
The Agreements are intended to reinforce and encourage the continued
attention and dedication of these officers to their assigned duties without
distraction in the face of the potentially disturbing circumstances arising from
the possibility of a change in control of the Corporation. The Agreements may
make it more expensive to accomplish a change in control and could under certain
circumstances adversely affect the ability of shareholders of the Corporation to
benefit from a change in control. The Board of Directors approved the
Agreements, however, because it believes that the continued attention and
dedication of the officers to their duties under adverse circumstances are
ultimately in the best interests of the Corporation and its shareholders, and
can under some circumstances result in a higher price being paid to the
shareholders in connection with a change in control.
In addition to the benefits provided by the Agreements, the 1990 Long-Term
Performance Plan provides the following benefits to executive officers in the
event of a change in control, except as otherwise provided by the Board: (a) all
stock options outstanding will become fully exercisable as of the date of the
change in control, whether or not otherwise exercisable; (b) all restrictions
and conditions of stock awards will be deemed satisfied as of the date of the
change in control; and (c) all cash awards (including payments made under a
Management Incentive Plan) will be deemed to have been fully earned as of the
date of the change in control. Also, pursuant to the Supplemental Executive
Retirement Benefits Plan ("SERP"), if a participant is terminated for any
reason, other than death, within three years after a change in control or a
participant is receiving or is eligible to receive a retirement benefit payable
under the SERP at the time of the change in control, then the participant shall
receive the actuarial equivalent of the retirement benefit (or remaining portion
thereof) in a lump sum.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1996, the Board of Directors had six
meetings, four of which were regularly scheduled quarterly meetings. Each of the
directors attended at least 75% of the aggregate number of meetings of the Board
of Directors and all committees of the Board on which he or she served, except
for William E. Butler and John J. Kahl.
The Board of Directors has established an Audit Committee, an Executive
Organization & Compensation Committee and a Director Nominating Committee.
The Audit Committee recommends the appointment of independent auditors,
reviews with the independent auditors the scope of the examination to be made,
reviews the scope of non-audit services performed by the independent auditors
and considers the effect of such non-audit services upon the independence of the
independent auditors, reviews with management and the independent auditors the
results of the audit after the audit has been completed, reviews with management
the adequacy of the Corporation's internal accounting controls and reviews with
management and the independent auditors the auditors' letter report on internal
accounting control and other recommendations. Russel B. Every, Russell R.
Gifford, John J. Kahl and Dr. Jerry Sue Thornton serve as members of the
committee. The Audit Committee met three times during the fiscal year ended June
30, 1996.
The Executive Organization & Compensation Committee reviews and makes
recommendations to the Board of Directors regarding both compensation of
executives and planning for executive organization and succession. The committee
also administers the 1990 Long-Term
16
<PAGE> 17
Performance Plan, including the Management Incentive Plan. William E. Butler,
William G. Bares, Russel B. Every and L. Thomas Hiltz, all being non-employee
directors of the Corporation, serve as members of the committee. The Executive
Organization & Compensation Committee met three times during the fiscal year
ended June 30, 1996.
The Director Nominating Committee considers and reviews possible nominees
for the Board to fill vacancies which arise from time to time and makes
appropriate recommendations to the Board. L. Thomas Hiltz, William G. Bares,
William E. Butler, John C. Dannemiller and John J. Kahl serve as members of the
committee. There are no procedures established for submissions by shareholders;
the committee would, however, consider a qualified nominee submitted by
shareholders. The Director Nominating Committee met once during the fiscal year
ended June 30, 1996.
ADOPTION OF NEW NAME
In recent years, the Board of Directors and management have come to believe
that the Corporation's name no longer accurately reflects its evolving business.
Sales of bearing products, which were once a mainstay of the Corporation's
business, now constitute less than 45% of its total revenues. While bearings
remain a core strength, the Corporation has developed specialized expertise in
higher-growth technologies such as mechanical and electrical drive products,
industrial rubber products, fluid power products, specialty maintenance items
and shop services. Further, the services offered by the Corporation continue to
extend beyond those provided by a mere distributor. Customers increasingly rely
on the Corporation as a source of expertise about the application of the
products and services it sells. Equipped with knowledge of products and customer
production processes, the Corporation offers innovative total systems solutions
that minimize downtime and reduce overall procurement costs for customers.
Accordingly, the Board of Directors voted in July to recommend that the
shareholders change the name of the Corporation to Applied Industrial
Technologies, Inc., which was chosen through a contest among the Corporation's
employees. The new name is expected to enhance the Corporation's ability to
market its widening range of products and services. An amendment to the
Corporation's Amended and Restated Articles of Incorporation must be adopted to
effect the change, requiring the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock. The amended articles would be filed
with the Ohio Secretary of State effective as of January 1, 1997.
The Board of Directors has directed that the following resolution be
submitted to the shareholders for adoption:
RESOLVED, that the First Article of the Corporation's Amended
and Restated Articles of Incorporation be amended to read as
follows:
FIRST: The name of the Corporation shall be Applied
Industrial Technologies, Inc.
The Board of Directors unanimously recommends that the shareholders vote
FOR the amendment.
RATIFICATION OF AUDITORS
The firm of Deloitte & Touche LLP, certified public accountants, has been
the independent auditor of the Corporation since 1966 and has been appointed by
management, subject to ratification by the shareholders, to serve the
Corporation as independent auditor for the fiscal year ending June 30, 1997. The
Corporation has been advised by Deloitte & Touche LLP that no partner of the
firm has had any direct financial interest or any material indirect financial
interest in the Corporation or its subsidiaries or any connection during the
past three years with
17
<PAGE> 18
the Corporation or any of its subsidiaries in the capacity of promoter,
underwriter, voting trustee, director, officer or employee.
Unless otherwise indicated, the accompanying proxy will be voted in favor
of the ratification of the appointment of Deloitte & Touche LLP. The affirmative
vote of a majority of the shares represented at the meeting is sufficient to
constitute ratification. In the event that Deloitte & Touche LLP should withdraw
or otherwise become unavailable for reasons not presently known, the persons
named as proxies will vote for such other independent auditors as they may deem
appropriate.
A representative of Deloitte & Touche LLP is expected to be present at the
meeting. He will be given the opportunity to make a statement if he so desires,
and will be available to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers and directors, and persons who beneficially own
more than ten percent of the Corporation's Common Stock, to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Executive officers,
directors and greater than ten percent beneficial owners are required by SEC
regulations to furnish the Corporation with copies of all Section 16(a) forms
they file.
Based solely on a review of the copies of such forms furnished to the
Corporation and written representations from the Corporation's executive
officers and directors, the Corporation believes that during fiscal 1996 all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten percent beneficial owners were complied with.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals by shareholders for inclusion in the 1997 Annual Meeting Proxy
Statement must be received by the Corporation's Secretary at its executive
offices, 3600 Euclid Avenue, Cleveland, Ohio 44115, no later than May 19, 1997.
All such proposals are subject to the applicable rules and requirements of the
Securities and Exchange Commission.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
meeting other than those set forth in Items 1, 2 and 3 of the attached Notice of
Annual Meeting of Shareholders, but should any other matters requiring a vote of
shareholders arise, including the question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Corporation.
By order of the Board of Directors.
ROBERT C. STINSON
Secretary
Dated: September 16, 1996
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<PAGE> 19
BEARINGS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned hereby appoints J. C. Dannemiller, J. R. Whitten
and R. C. Stinson and each of them, as Proxies, with full power of
R substitution, to attend the Annual Meeting of Shareholders of
Bearings, Inc., an Ohio corporation (the "Corporation"), on October
O 22, 1996, and any adjournments, and to represent and vote the
shares which the undersigned is entitled to vote thereat on the
X following matters as directed on the reverse side:
Y (The Board of Directors recommends a vote FOR Items 1, 2 and 3.)
<TABLE>
<S> <C>
1. Election of Directors of Class III (for a term of 3 years) (change of address)
The nominees are: __________________________________
William E. Butler, Russell R. Gifford and L. Thomas Hiltz __________________________________
2. Amendment of the Amended and Restated Articles of __________________________________
Incorporation to change the name of the Corporation to __________________________________
Applied Industrial Technologies, Inc. (If you have written in the above
3. Ratification of the appointment of Deloitte & Touche LLP as space, please mark the corresponding
independent auditors for the current fiscal year. box on the reverse side of this
4. In their discretion, the Proxies are authorized to vote on card.)
such other business as may properly come before the
meeting.
</TABLE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE OF THIS CARD; IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ITEMS 1, 2 AND 3.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
DETACH CARD
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
WITHHOLD
FOR VOTE FOR
ALL ALL
NOMINEES NOMINEES FOR AGAINST ABSTAIN
1. Election of / / / / 2. Amendment of / / / / / /
Directors Amended and Re-
of Class III stated Articles of
(see reverse) Incorporation to
change name of
Corporation to
For, except vote withheld from the following nominee(s): Applied Industrial
_________________________________________________________ Technologies, Inc.
FOR AGAINST ABSTAIN PLEASE SIGN, DATE AND RETURN
/ / / / / / THIS PROXY CARD PROMPTLY USING THE
3. Ratification of the ENCLOSED ENVELOPE.
appointment of
Deloitte & Touche
LLP as independent Change
auditors for the of / /
current fiscal year. Address
SIGNATURE(S) _____________________________________________________________ DATE _____________________, 1996
SIGNATURE(S) _____________________________________________________________ DATE _____________________, 1996
NOTE: Please sign exactly as your name appears above. If the signature is by a representative such as an attorney,
executor, administrator, trustee, corporate officer, partner or joint owner, that person should also sign
indicating the title or other capacity in which the person is signing.
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
</TABLE>
