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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999.
[ ] 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)
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Independent Auditors' Report 5
Statements of Net Assets Available
for Benefits --
December 31, 1999 and 1998 6
Statement of Changes in Net Assets
Available for Benefits --
Years Ended December 31,
1999, 1998 and 1997 7
Notes to Financial Statements --
Years Ended December 31,
1999, 1998 and 1997 8 - 12
(b) Exhibit(s)
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Independent Auditors' Consent 13
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 R. Whitten
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Signature
John R. Whitten
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Printed Name
Vice President
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Title
Date: March 30, 2000
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APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
Financial Statements
For the Years Ended
December 31, 1999, 1998 and 1997
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:
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999, 1998 and 1997 3
Notes to Financial Statements 4 - 8
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INDEPENDENT AUDITORS' REPORT
Applied Industrial Technologies, Inc. Supplemental Defined Contribution Plan
We have audited the accompanying statements of net assets available for benefits
of the Applied Industrial Technologies, Inc. Supplemental Defined Contribution
Plan (the "Plan") as of December 31, 1999 and 1998, and the related statements
of changes in net assets available for benefits for the years ended December 31,
1999, 1998 and 1997. 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 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1999 and 1998, and the changes in net assets available for benefits for the
years ended December 31, 1999, 1998 and 1997 in conformity with generally
accepted accounting principles.
/s/Deloitte & Touche LLP
March 27, 2000
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APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 and 1998
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1999 1998
ASSETS:
Investments at fair value:
Applied Industrial Technologies, Inc.
common stock $ 452,981 $ 281,415
Mutual funds 2,120,075 1,447,786
Common/collective fixed income funds 19,152 16,754
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Total investments 2,592,208 1,745,955
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NET ASSETS AVAILABLE FOR BENEFITS $2,592,208 $1,745,955
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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, 1999, 1998 and 1997
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<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
ADDITIONS:
Contributions:
Participant $ 399,348 $ 478,687 $ 464,243
Non-participant 27,257
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Total contributions 399,348 478,687 491,500
Investment income:
Common stock 12,295 5,532 2,848
Mutual funds 108,439 95,622 93,329
Common/collective fixed income funds 2 2
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Total investment income 120,736 101,156 96,177
Net appreciation in market value of investments:
Common stock 72,632 37,146
Mutual funds 382,303 116,198 46,291
Common/collective fixed income funds 528 1,515 1,945
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Total net appreciation in market value 455,463 117,713 85,382
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Total additions 975,547 697,556 673,059
DEDUCTIONS:
Distributions to participants 98,701 133,824 24,233
Net depreciation in market value of investments:
Common stock 98,496
Mutual funds 22,594 13,976 3,748
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22,594 112,472 3,748
Administrative expenses 7,999 8,866 6,769
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Total deductions 129,294 255,162 34,750
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INCREASE IN NET ASSETS FOR THE YEAR 846,253 442,394 638,309
NET ASSETS AVAILABLE FOR BENEFITS,
JANUARY 1, 1999 1,745,955 1,303,561 665,252
NET ASSETS AVAILABLE FOR BENEFITS,
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DECEMBER 31, 1999 $2,592,208 $1,745,955 $1,303,561
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</TABLE>
See notes to financial statements.
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APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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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 participant 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 (the "Retirement Savings Plan") are limited.
Eligible participants 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 in the Company Stock Fund.
Non-participant directed investments included in the Company Stock Fund
were $30,430 and $26,571 at December 31, 1999 and 1998, respectively.
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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
contributions in 5% increments in the Plan's Company Stock Fund,
American Fundamental Investors Fund, Income Fund of America, American
EuroPacific Growth Fund, Bond Fund of America, Financial Reserves Fund,
Small Company Stock Fund, Growth Stock Fund, Growth and Income Stock
Fund or the T Rowe Price Fund. Participants may 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 5% 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. 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 nonvested amounts are applied to reduce future
Supplemental Matching Contributions. There were no forfeitures in 1999,
1998 or 1997.
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 made
on their behalf.
2. DESCRIPTION OF THE SEPARATE 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:
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- - 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 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.
- - 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.
- - The Small Company Stock Fund consists of shares of the Franklin Small
Cap Growth Fund, which invests in small companies with the objective of
capital appreciation.
- - The Growth Stock Fund consists of shares of the Growth Fund Portfolio,
which seeks to achieve growth of capital by investing in growth stocks
through three stock mutual funds; the Dreyfus Appreciation Fund, the
Enterprise Growth Fund, and the Harbor Capital Appreciation Fund.
- - The Growth and Income Stock Fund consists of shares of the Victory
Stock Index Fund, which invests with the objective of capital
appreciation and dividend income.
- - The T Rowe Price Fund consists of shares of the T Rowe Price Mid-Cap
Growth Fund, which invests in mid size companies with the objective of
capital appreciation.
The Plan's investment options provide for ten separate investment funds
in 1999, nine funds in 1998 and eight funds in 1997. Effective July
1,1999, the T Rowe Price Fund was added. Effective January 1, 1998, the
Growth and Income Stock Fund was added, the Fidelity Growth Fund (a
fund that consisted of shares of Advisors Institutional Equity Growth
Fund, which invested in stocks with the objective of capital
appreciation) was replaced by the Growth Stock Fund, and the Hancock
Equity Fund (a fund that consisted of shares of John Hancock Special
Equity Fund that invested in stocks of emerging growth companies) was
replaced by the Small Company Stock Fund.
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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 statements 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.
BENEFITS PAYABLE - Distributions to participants are recorded by the
Plan when payments are made.
ADMINISTRATIVE EXPENSES - Administrative expenses of the Plan are paid
by the Plan or the Company, as determined by the Company.
RECLASSIFICATION - The Plan adopted SOP 99-3, Accounting and Reporting
of Certain Defined Contribution Plan Investments and Other Disclosure
Matters. As a result, the prior year financial statements have been
reclassified to eliminate the by-fund disclosures.
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.
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Plan investments exceeding 5% of net assets available for benefits as
of December 31, 1999 and 1998, respectively, were as follows:
Description of 1999 1998
Investment
Applied Industrial Technologies, Inc.
Common Stock $452,981 $281,415
Fundamental Investors, Inc. 305,850 252,755
Income Fund of America 171,888 210,475
EuroPacific Growth Fund 230,039 136,389
Bond Fund of America 87,347 93,298
Franklin Small Cap Growth Fund 360,382 161,571
Growth Fund Portfolio 705,219 470,819
Victory Stock Index Fund 207,824 114,670
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INDEPENDENT AUDITORS' CONSENT
Applied Industrial Technologies, Inc.
We consent to the incorporation by reference in Registration Statement No.
033-60687 of Applied Industrial Technologies, Inc. on Form S-8 of our report
dated March 27, 2000, 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, 1999.
/s/Deloitte & Touche LLP
March 27, 2000
