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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE
STOCK PURCHASE, SAVINGS AND SIMILAR
PLANS PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to ______.
Commission file number 1-2299
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Applied Industrial Technologies, Inc.
Supplemental Defined Contribution Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Applied Industrial Technologies, Inc.
One Applied Plaza
Cleveland, Ohio 44115-5056
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Financial Statements and Exhibit(s)
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Page No.
(a) Financial Statements (in this Report)
--------------------- -----------------
Independent Auditors' Report 5
Statement of Net Assets Available 6
for Benefits --
December 31, 1996
Statement of Changes in Net Assets 7
Available for Benefits --
Year Ended December 31, 1996
Notes to Financial Statements -- 8
Year Ended December 31, 1996
(b) Exhibit(s)
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Independent Auditors' Consent 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Plan has duly caused this annual report to be signed on its behalf by
the undersigned, hereunto duly authorized.
APPLIED INDUSTRIAL TECHNOLOGIES,
INC. SUPPLEMENTAL DEFINED
CONTRIBUTION PLAN
By: Applied Industrial
Technologies, Inc., as Plan
Administrator
By: /s/ John C. Dannemiller
---------------------------------------
Signature
John C. Dannemiller
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Printed Name
Chairman, Chief Executive Officer
& President
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Title
Date: June 27, 1997
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APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
Financial Statements
For the Year Ended
December 31, 1996
And Independent Auditors' Report
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APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996
AND FOR THE YEAR THEN ENDED:
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
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[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Applied Industrial Technologies, Inc. Supplemental Defined Contribution Plan
We have audited the accompanying statement of net assets available for benefits
of the Applied Industrial Technologies, Inc. Supplemental Defined Contribution
Plan (the "Plan") as of December 31, 1996, and the related statement of changes
in net assets available for benefits for the year then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1996, and the changes in net assets available for benefits for the year then
ended in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information by fund is
presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding the net assets available
for benefits and changes in net assets available for benefits of the individual
funds, and is not a required part of the basic financial statements. This
supplemental information is the responsibility of the Plan's management. Such
supplemental information by fund has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Cleveland, Ohio
June 20, 1997
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
---------------------------SUPPLEMENTAL INFORMATION BY FUND-------------------------------
COMPANY AMERICAN INCOME HANCOCK AMERICAN BOND FINANCIAL
STOCK FIDELITY FUNDAMENTAL FUND OF EQUITY EUROPACIFIC FUND OF RESERVES
FUND GROWTH INVESTORS AMERICA FUND GROWTH AMERICA FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at fair value:
Applied Industrial Technologies, Inc.
common stock $70,747 $ 70,747
Investment funds 5,763 $170,744 $119,758 $90,321 $80,763 $72,287 $34,692 $28,821 603,149
-------- --------- --------- -------- -------- -------- -------- -------- ---------
Total investments 76,510 170,744 119,758 90,321 80,763 72,287 34,692 28,821 673,896
Receivables - Other 17 1,393 303 1,713
-------- --------- --------- -------- -------- -------- -------- -------- ---------
Total assets 76,527 172,137 119,758 90,321 80,763 72,287 34,995 28,821 675,609
LIABILITIES:
Accrued administrative expenses 3,229 2,920 1,100 855 733 672 608 240 10,357
-------- --------- --------- -------- -------- -------- -------- -------- ---------
NET ASSETS AVAILABLE FOR BENEFITS $73,298 $169,217 $118,658 $89,466 $80,030 $71,615 $34,387 $28,581 $665,252
======== ========= ========= ======== ======== ======== ======== ======== =========
</TABLE>
See notes to financial statements.
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
-------------------------------SUPPLEMENTAL INFORMATION BY FUND--------------------
COMPANY AMERICAN INCOME HANCOCK AMERICAN BOND FINANCIAL
STOCK FIDELITY FUNDAMENTAL FUND OF EQUITY EUROPACIFIC FUND OF RESERVES
FUND GROWTH INVESTORS AMERICA FUND GROWTH AMERICA FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employees $141,710 $ 83,512 $71,542 $82,706 $62,551 $28,814 $ 16,566 $487,401
Employer:
Cash $ 1,937 1,937
Applied Industrial Technologies, Inc.
common stock 72,246 72,246
Transfer from the King Bearings, Inc. SERP Plan 3,826 23,632 26,045 18,555 5,466 5,466 3,826 86,816
Investment income 1,234 1,386 912 2,615 (262) 978 1,350 8,213
Net appreciation in market value of investments 9,073 10,560 4,332 759 5,143 351 448 30,666
-------- -------- -------- ------- ------- ------- ------- -------- --------
Total additions 79,243 175,801 121,029 97,044 88,669 74,138 34,341 17,014 687,279
DEDUCTIONS:
Distributions to participants 214 1,224 3,696 4,999 657 504 965 12,259
Net depreciation in market value of investments 3,230 3,230
Administrative expenses 711 1,640 1,180 918 791 724 334 240 6,538
-------- -------- -------- ------- ------- ------- ------- -------- --------
Total deductions 4,155 2,864 4,876 5,917 1,448 1,228 1,299 240 22,027
INTERFUND TRANSFERS (1,790) (3,720) 2,505 (1,661) (7,191) (1,295) 1,345 11,807
-------- -------- -------- ------- ------- ------- ------- -------- --------
INCREASE (DECREASE) IN NET ASSETS
FOR THE YEAR 73,298 169,217 118,658 89,466 80,030 71,615 34,387 28,581 665,252
NET ASSETS AVAILABLE FOR BENEFITS,
JANUARY 1, 1996
-------- -------- -------- ------- ------- ------- ------- -------- --------
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1996 $ 73,298 $169,217 $118,658 $89,466 $80,030 $71,615 $34,387 $ 28,581 $665,252
======== ======== ======== ======= ======= ======= ======= ======== ========
</TABLE>
See notes to financial statements.
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
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1. DESCRIPTION OF THE PLAN
The following description of the Applied Industrial Technologies, Inc.
Supplemental Defined Contribution Plan (the "Plan") is provided for
general information purposes only. Participants and users of the
financial statements should refer to the Plan document for more
complete information.
GENERAL - The Plan was established by Applied Industrial Technologies,
Inc. and its Subsidiaries (the "Company") effective January 1, 1996,
for the benefit of a select group of management or highly compensated
employees. This is a non-qualified Plan and is subject to the claims of
creditors in the case of bankruptcy of Applied Industrial Technologies,
Inc.
ADMINISTRATION - The Plan is administered by the Company. The Company's
powers and duties relate to making employee and employer contributions
to the Trustee, establishing investment objectives, authorizing
disbursements from the Trust, and resolving any questions of Plan
interpretation.
The assets of the Plan are maintained and administered by Key Trust Co.
of Ohio, N.A. acting as Trustee. The Trustee is responsible for the
custody of assets.
PARTICIPANT ACCOUNTS - Each participant's account is credited with that
participant's contribution and allocations of (a) the Company's
contribution and, (b) Plan earnings, and charged with an allocation of
administrative expenses. Allocations are based on participant earnings
or account balances, as defined. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's
vested account.
PARTICIPATION AND CONTRIBUTIONS - Participation in the Plan is limited
to select management or highly compensated employees of the Company and
whose contributions under the Applied Industrial Technologies, Inc.
Retirement Savings Plan are limited.
Eligible employees elect to make contributions to the Plan. There are
no limits to the amount they can contribute. Participants may elect to
transfer excess contributions from the Retirement Savings Plan.
Supplemental Matching Contributions are equal to the amount that
matching Contributions under the Retirement Savings Plan are limited
each year due to the requirements of the provisions of Sections 401(k)
and 401(m) of the Internal Revenue Code.
Supplemental Matching Contributions are made primarily in shares of
Applied Industrial Technologies, Inc. common stock.
Contributions are excluded from participant's taxable income until such
amounts are received by them as a distribution from the Plan.
INVESTMENT OF CONTRIBUTIONS - Participants elect investment of their
Supplemental 401(K) Contributions in 10% increments in the Plan's
Financial Reserves Fund, American Fundamental Investors Fund, Fidelity
Growth Fund, American EuroPacific Growth Fund, Income Fund of America,
Bond Fund of America, Hancock Equity Fund, or the Company Stock Fund.
All Supplemental Matching Contributions are invested in the Company
Stock
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Fund. Participants may elect to change their investment elections as to
future contributions and may also elect to reallocate a portion or all
of their account balances among the investment funds in increments of
10% of the total amount to be reallocated. All such elections are filed
with the Trustee and become effective daily.
The value of the funds and the interest of individual participants
under each fund, are calculated daily (daily valuation).
VESTING AND DISTRIBUTIONS - Each participant is immediately and fully
vested in all Supplemental Salary Savings Contributions and earnings
thereon. However, all assets in the Plan are subject to the claims of
creditors in the case of bankruptcy of Applied Industrial Technologies,
Inc. Participants vest in Supplemental Matching Contributions at a rate
of 25% for each year of eligible service, becoming completely vested
after four years, or at death, termination of employment due to
permanent and total disability, or normal or early retirement as
defined in the Plan.
Upon termination of service, participants may receive lump sum
distributions of their vested account balances no later than 60 days
after the end of the Plan year in which they terminate employment with
the Company. Distributions upon retirement may be received as a lump
sum or as installments in accordance with the participant's election.
Participants may also apply for hardship withdrawals from their
Supplemental Salary Savings Contributions, subject to adherence to
Internal Revenue Service regulations and approval by the Company.
Forfeitures of non-vested amounts are applied to reduce future
Supplemental Matching Contributions. There were no forfeitures in 1996.
PLAN TERMINATION - The Plan was adopted with the expectation that it
will continue indefinitely. The Company may, however, terminate the
Plan at any time and may amend the Plan from time to time. In the event
of termination of the Plan, all participants will immediately become
fully vested in the value of all Matching Employer Contributions and
Profit Sharing Contributions made on their behalf.
2. DESCRIPTION OF THE SEPARATE FUNDS
The Plan's investment options provide for eight separate investment
funds. The Trustee maintains separate accounts for each Plan
participant and invests such participant's contributions, as directed
by the participant, in one or more of the following funds:
- The Company Stock Fund consists of investments in the common stock of
Applied Industrial Technologies, Inc. and temporary investments in the
Trustee's EB Money Market Fund.
- The Fidelity Growth Fund consists of shares of Advisors Institutional
Equity Growth Fund, which invests in stocks with the objective of
capital appreciation.
- The American Fundamental Investors Fund consists of shares of
Fundamental Investors, Inc. common stock, which invest in mature stocks
designed with the objective of growth from price appreciation and
income from dividends.
- The Income Fund of America Fund consists of shares of Income Fund of
America, which invests in stocks and bonds with the objective of
maximizing current income from dividends and interest.
- Hancock Equity Fund consists of shares of John Hancock Special Equity
Fund which invests in stocks of emerging growth companies.
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- The American EuroPacific Growth Fund consists of shares of the
EuroPacific Growth Fund, which invests in stocks from companies located
outside the U. S. with the objective of capital appreciation.
- The Bond Fund of America Fund consists of shares of the Bond Fund of
America, which invests in government and corporate bonds.
- The Financial Reserves Fund consists of units of the Trustee's PRISM
Victory Reserve Fund, which invests in high quality U.S. dollar
denominated money market instruments with the objective of maintaining
a stable share price
Company Supplemental Matching Contributions are invested in the Company
Stock Fund which consists of investments in the common stock of Applied
Industrial Technologies, Inc., limited to a maximum of one million
shares, and temporary investments in the Trustee's EB Money Market
Fund.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - Each fund of the Trust is accounted for
separately. The accounts of these funds are maintained, and the
accompanying financial statements have been prepared, on the accrual
basis of accounting.
USE OF ESTIMATES - In preparing the financial statement in conformity
with generally accepted accounting principles, the Plan's administrator
is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
VALUATION OF INVESTMENTS - Investments are accounted for at cost on the
trade-date and are reported in the statement of net assets available
for benefits at fair value. The investment in Applied Industrial
Technologies, Inc. common stock is valued using the year-end closing
price listed by the New York Stock Exchange. Investment funds are
stated at values using year-end closing price for each of the funds or
quoted market prices.
BENEFIT PAYMENTS - Distributions to participants are recorded by the
Plan when payments are made.
ADMINISTRATIVE EXPENSES - Certain administrative expenses of the Plan
are paid by the Plan including trustee fees paid to the Plan Trustee.
The Company pays other administrative costs of the Plan, including the
salaries, benefits and other costs of Company employees involved in
administering the Plan and income taxes on investment earnings.
6
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4. INVESTMENTS
The Plan provides that, in accordance with the investment objectives
established by the Company, the Trustee of the Plan shall hold, invest,
reinvest, manage and administer all assets of the Plan as a trust fund
for the exclusive benefit of participants and their beneficiaries.
Plan investments exceeding 5% of net assets available for benefits as
of December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Description of
Investment 1996
------------
<S> <C>
Applied Industrial Technologies, Inc.
Common Stock $ 70,747
Advisors Institutional Equity Growth Fund $ 170,744
American Fundamental Investors, Inc. $ 119,758
Income Fund of America $ 90,321
John Hancock Special Equity Fund $ 80,763
American EuroPacific Growth Fund $ 72,287
Bond Fund of America $ 34,692
</TABLE>
5. TRANSFER FROM KING BEARING, INC. SERP PLAN
In October 1996, the King Bearing, Inc. SERP Plan was merged into the
Plan. Net assets totaling $86,816 were transferred to the Plan in 1996.
******
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INDEPENDENT AUDITORS' CONSENT
Applied Industrial Technologies, Inc.
We consent to the incorporation by reference in Registration Statement No.
033-60687of Applied Industrial Technologies, Inc. on Form S-8 of our report
dated June 20, 1997, appearing in this Annual Report on Form 11-K of the Applied
Industrial Technologies, Inc. Supplemental Defined Contribution Plan for the
year ended December 31, 1996.
/S/ DELOITTE & TOUCHE LLP
Cleveland, Ohio
June 27, 1997
