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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
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, 2000.
[ ] 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.
Retirement Savings 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
2
Financial Statements and Exhibit(s)
-----------------------------------
Page No.
(a) Financial Statements (in this Report)
-------------------- ----------------
Independent Auditors' Report 5
Statement of Net Assets Available
for Benefits --
December 31, 2000 and 1999 6
Statement of Changes in Net Assets
Available for Benefits --
Years Ended December 31, 2000
and 1999 7
Notes to Financial Statements --
Years Ended December 31,
2000 and 1999 8 - 12
Supplemental Schedules 13 - 14
(b) Exhibit(s)
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Independent Auditors' Consent 15
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. RETIREMENT SAVINGS PLAN
By: Applied Industrial
Technologies, Inc., as Plan
Administrator
By: /s/ John R. Whitten
-----------------------------------
Signature
John R. Whitten
--------------------------------
Printed Name
Vice President
---------------------------------
Title
Date: June 26, 2001
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APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN
Financial Statements
For the Years Ended
December 31, 2000 and 1999,
Supplemental Schedules for the
For the Year Ended
December 31, 2000,
and Independent Auditors' Report
4
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS 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, 2000 and 1999 2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2000 and 1999 3
Notes to Financial Statements 4 - 8
SUPPLEMENTAL SCHEDULES:
Schedule of Assets Held for Investment Purposes
As of December 31, 2000 9
Schedule of Reportable Transactions
For the Year Ended December 31, 2000 10
5
INDEPENDENT AUDITORS' REPORT
Applied Industrial Technologies, Inc. Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Applied Industrial Technologies, Inc. Retirement Savings Plan (the
"Plan") as of December 31, 2000 and 1999, and the related statements of changes
in net assets available for benefits for the years 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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,
2000 and 1999, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, are 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
April 27, 2001
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
2000 1999
ASSETS:
Investments at fair value:
Applied Industrial Technologies, Inc. common stock $ 35,021,791 $ 27,769,885
Mutual funds 121,018,347 147,867,084
Common/collective funds 44,140,317 31,493,679
Loans to participants 7,053,621 6,298,669
------------------- -------------------
Total investments 207,234,076 213,429,317
Other 13,655 2,060
------------------- -------------------
NET ASSETS AVAILABLE FOR BENEFITS $207,247,731 $213,431,377
=================== ===================
See notes to financial statements.
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2000 and 1999
--------------------------------------------------------------------------------
2000 1999
ADDITIONS:
Contributions:
Participant $ 9,650,488 $ 9,405,165
Employer:
Applied Industrial Technologies, Inc. common stock 4,009,897 2,258,161
Cash 2,389,426 1,304,113
Net assets transferred from other plan (Note 1) - 749,659
Investment income(loss):
Dividends
Common Stock 807,381 790,455
Mutual Funds 10,004,824 9,980,263
Common/collective funds 1,319 7,699
------------------- -------------------
Total dividends 10,813,524 10,778,417
Net (depreciation)/appreciation in fair value of investments
Common Stock 6,517,008 4,462,737
Mutual Funds (19,867,875) 22,378,694
Common/collective fixed income funds 90,783 3,133,790
------------------- -------------------
Total net (depreciation)/appreciation in fair value (13,260,084) 29,975,221
Total investment income(loss) (2,446,560) 40,753,638
------------------- -------------------
Total additions 13,603,251 54,470,736
DEDUCTIONS:
Distributions to participants 19,395,194 26,994,654
Administrative expenses 391,703 263,372
------------------- -------------------
Total deductions 19,786,897 27,258,026
(DECREASE)/INCREASE IN NET ASSETS FOR THE YEAR (6,183,646) 27,212,710
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF THE YEAR 213,431,377 186,218,667
------------------- -------------------
NET ASSETS AVAILABLE FOR BENEFITS, END OF THE YEAR $ 207,247,731 $ 213,431,377
=================== ===================
See notes to financial statements.
3
8
APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of 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 Bearings, Inc., later renamed
Applied Industrial Technologies, Inc. and its subsidiaries (the
"Company") for the purpose of encouraging and assisting employees to
provide long-term, tax-deferred savings for retirement. The Plan is
subject to the reporting and disclosure requirements, the minimum
participation and vesting standards, and the fiduciary responsibility
requirements of the Employee Retirement Income Security Act of 1974.
The Plan sponsor merged into the Plan the Associated Bearings Company
401(k) Retirement Plan (the "ABC Plan") during 1999. Pursuant to the
merger, all participants in the ABC Plan became entitled to participate
in the Plan. Net assets totaling $749,659 were transferred to the Plan
in 1999.
ADMINISTRATION - The Plan is administered by the Company. The Company's
powers and duties relate to making participant and employer
contributions to the Trust, 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 the
participant's contributions and allocations of (a) the Company's
contributions and, (b) Plan earnings, and charged with an allocation of
administrative expenses. Allocations are based on participant
contributions, account balances, or can be per capita, 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 - All eligible employees may
participate in the Plan on the first day of the month following their
hire when one hour of service is performed during the first fifteen
days of a calendar month. Each employee who first completes an hour of
service after the first fifteen days of a calendar month shall become
eligible as of the first payroll period in the second month following
the month in which the first hour of service was completed.
Eligible employees may elect to make pretax contributions to the Plan
ranging from 1% to 15% of compensation. For those eligible employees
who do not make a compensation reduction election, their compensation
shall be automatically reduced by two percent and such shall be
contributed on their behalf to the Plan as contributions until
superseded by a subsequent contribution election. The Company may make
additional contributions to the Plan, including, but not limited to,
matching contributions equal to a percentage of participant pretax
contributions not in excess of 6% of the participant's compensation,
and discretionary profit-sharing contributions as determined annually.
Matching employer contributions are determined based upon the Company's
earnings per share for the
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immediately preceding calendar year quarter and the participant's
investment elections. Except in the case of death, disability, or
retirement, a participant must be employed as of the last day of the
quarter to receive the Plan's quarter match. The matching employer
contribution is updated annually based on the Company's June 30 fiscal
year end and is currently determined using the following schedule:
------------------------------------------------------------------
SUBSEQUENT QUARTER MATCHING CONTRIBUTION
------------------------------------------------------------------
$.25 $.35 $.50 $.75 $1.00
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QUARTERLY EPS
----------------------------------------------------------------------------------------------------
Quarter Ended 9/30/00 .33 .35 .37 .39
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Quarter Ended 12/31/00 Minimum .35 .37 .39 .41
----------------------------------------------------------------------------------------------------
Quarter Ended 3/31/01 Match .45 .48 .51 .53
----------------------------------------------------------------------------------------------------
Quarter Ended 6/30/01 .52 .55 .58 .62
----------------------------------------------------------------------------------------------------
The employer match on participant contributions to investment funds
other than the Company Stock fund was $.25, $.50, $1.00, and $.50 for
the four 2000 quarters, and $.25, $.25, $.35, and $.50 for the four
1999 quarters, respectively.
Matching Employer Contributions are made primarily in shares of Applied
Industrial Technologies, Inc. common stock to the Company Stock Fund.
Participants that elect to contribute to the Company Stock Fund receive
an additional $.10 Bonus Match on participant's pretax contributions
not in excess of 6% of the participant's compensation. The Bonus Match
is also made primarily in shares of Applied Industrial Technologies,
Inc common stock to the Company Stock Fund.
The Company may also make a Profit-Sharing Contribution to the Plan
annually. Participants must be employed on June 30 of such Plan year
and have completed at least one year of service, as defined in the Plan
agreement, as of June 30 to be eligible to receive an allocation of the
Profit-Sharing Contribution. Additionally, the Company may contribute a
special Profit Sharing Contribution to individuals who terminate
employment after attaining age 55 and completing ten years of service.
Profit-Sharing Contributions are allocated to each participant's
Profit-Sharing Contribution Account based upon the ratio of each
participant's total compensation to the aggregate compensation of all
participants eligible to receive a Profit-Sharing Contribution. The
Profit-Sharing Contribution for the years ended December 31, 2000 and
1999 is composed of $2,389,348 and $1,304,113 in cash, and $270,653 and
$173,954 in Applied Industrial Technologies, Inc. common stock,
respectively.
Contributions are excluded from participants' taxable income until such
amounts are received by them as a distribution from the Plan.
The Plan provides for Rollover Contributions (amounts previously
distributed to the participants from certain other tax-qualified plans)
and Transfer Contributions (assets transferred from certain other
tax-qualified plans) by or on behalf of an employee in accordance with
procedures established by the Company.
INVESTMENT OF CONTRIBUTIONS - Participants elect investment of
profit-sharing and pretax contributions in 5% increments in the Plan's
Company Stock Fund, American Fundamental Investors Fund, Fixed Income
Fund, Growth Stock Fund, American EuroPacific Growth Fund, Small
Company Stock Fund, Growth and Income Fund, Vanguard Growth Index Fund,
Mid-Cap Growth Fund or the Bond Fund of America. The portion of the
Plan that is invested in the Company Stock Fund is intended to be an
Employee Stock Ownership Plan
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10
(ESOP) under code section 4975 (e)(7) and ERISA section 407 (d)(6).
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
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 their participant contributions and earnings thereon.
Participants vest in Matching Employer Contributions and Profit-Sharing
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 employment, participants may receive lump sum or
installment distributions of their vested account balances as soon as
administratively possible. The Plan permits hardship withdrawals and
in-service distributions upon attainment of age 59-1/2.
Forfeitures of nonvested amounts are applied to reduce future Matching
Employer Contributions. Total forfeitures were $92,907 in 2000 and
$107,300 in 1999.
LOANS - Participants may borrow from their 401(k) Contribution
Accounts, Rollover Contributions and Transferred Contributions a
minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50
percent of the aggregate sum of the participant's accounts. Loan terms
range from 1-5 years or up to ten years, if for the purchase of a
primary residence. Loans that originated from merged plans are also
reflected in the Employee Loan Fund in the Plan's financial statements.
These loans are to be repaid to the Plan in accordance with their
original terms. The loans are secured by the balance in the
participant's accounts and bear interest at rates prevailing at the
time the loans were made. Principal and interest are paid ratably
through bi-weekly payroll deductions.
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 their accounts.
TAX STATUS OF THE PLAN - The Plan obtained its latest determination
letter dated June 27, 1996, in which the Internal Revenue Service
stated that the Plan, as then designed, was in compliance with the
applicable requirements of the Internal Revenue Code. The Plan has been
amended since receiving this determination letter. The Plan
administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
2. 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
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prepared, on the accrual basis of accounting.
USE OF ESTIMATES - The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and charges
therein, and disclosure of contingent assets and liabilities. 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 prices 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 - Administrative expenses of the Plan are paid
by the Plan or the Company, as determined by the Company.
RECLASSIFICATION - Certain reclassifications have been made to the 1999
financial statements to conform with 2000.
3. 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, 2000 and 1999 were as follows:
Description of
Investment 2000 1999
---------------------------
Fundamental Investors Fund $35,258,519 $35,894,330
Applied Industrial Technologies, Inc. Common Stock 35,021,791 27,769,885
EB MaGIC Fund 34,267,939 19,096,028
EuroPacific Growth Fund 17,145,480 23,167,114
Franklin Small Cap Growth Fund 14,478,932 15,318,305
Wilshire Target Fund 10,038,323 -
Vanguard Growth Index Fund 9,479,975 -
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EB Equity Index Fund 9,394,707 11,988,777
Harbor Capital Appreciation Fund 9,269,501 14,767,912
Income Fund of America 53 27,490,841
Enterprise Growth Fund - 12,616,448
Dreyfus Appreciation Fund - 11,754,425
4. NONPARTICIPANT-DIRECTED INVESTMENTS
The Company Stock Fund includes both participant directed transactions
and non-participant directed transactions. Information about the net
assets and the significant components of the changes in net assets
relating to the entire Company Stock Fund is as follows:
2000 1999
-----------------------------
Net Assets:
-----------
Common stock $ 35,021,791 $ 27,769,885
Money market funds 457,155 409,570
------------ ------------
$ 35,478,946 $ 28,179,455
------------ ------------
Change in Net Assets:
---------------------
Contributions $ 5,082,946 $ 3,653,257
Dividends 807,381 790,455
Net appreciation in fair value 6,517,008 4,462,737
Benefits paid to participants (2,429,876) (2,265,162)
Transfers (to) / from participant-directed investments (2,677,968) (542,417)
------------ ------------
$ 7,299,491 $ 6,098,870
============ ============
******
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2000
----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
IDENTITY OF ISSUER, BORROWER, DESCRIPTION OF INVESTMENT COST CURRENT
LESSOR OR SIMILAR PARTY VALUE
COMPANY STOCK FUND
------------------
* Applied Industrial Tech., Inc. Common Stock - 1,703,146 shares $ 27,485,504 $ 35,021,791
* Key Trust Company of Ohio, NA EB Money Market - 454,382 units 454,382 454,382
AMERICAN FUNDAMENTAL INVESTORS FUND
-----------------------------------
The American Funds Group Fundamental Investors Fund - 1,131,531 shares 30,158,440 35,258,519
FIXED INCOME FUND
-----------------
* Key Trust Company of Ohio, NA EB MaGIC Fund - 2,378,446 units 31,549,510 34,267,939
GROWTH STOCK FUND
-----------------
Harbor Fund Harbor Capital Appreciation Fund - 260,526 shares 9,016,177 9,269,501
Vanguard Growth Index Fund Vanguard Growth Index Fund - 310,107 shares 11,677,667 9,479,975
Wilshire Target Fund Wilshire Target Fund - 276,462 shares 12,353,693 10,038,323
* Key Trust Company of Ohio, NA EB Money Market - 1,039 units 1,039 1,039
AMERICAN EUROPACIFIC GROWTH FUND
--------------------------------
The American Funds Group American EuroPacific Growth Fund - 546,905 shares 15,636,799 17,145,480
SMALL COMPANY STOCK FUND
------------------------
Franklin Templeton Franklin Small Cap Growth Fund - 368,140 shares 11,029,079 14,478,932
GROWTH AND INCOME FUND
----------------------
* Key Trust Company of Ohio, NA EB Equity Index Fund - 104,992 units 7,712,812 9,394,707
VANGUARD GROWTH INDEX FUND
--------------------------
The Vanguard Group Vanguard Growth Index Fund - 378,036 shares 9,251,120 8,948,111
* Key Trust Company of Ohio, NA EB Money Market - 4,936 units 4,936 4,936
MID-CAP GROWTH FUND
-------------------
T. Rowe Price T Rowe Price Mid-Cap Growth Fund - 211,696 shares 8,722,220 8,423,384
BOND FUND OF AMERICA
--------------------
The American Funds Group Bond Fund of America - 624,971 shares 8,256,787 7,993,383
* EMPLOYEE LOAN FUND Participant Loans (with interest rates 7,053,621 7,053,621
------------------ ranging from 7.00% to 11.50% and
Participant Loans maturity dates ranging from January
2001 to July 2027)
INCOME FUND OF AMERICA
----------------------
The American Funds Group Income Fund of America - 3 shares 53 53
--------------------------------
Total $ 190,363,839 $ 207,234,076
=================================
* Represents a party-in-interest
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APPLIED INDUSTRIAL TECHNOLOGIES RETIREMENT SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
-----------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
IDENTITY OF PURCHASE SELLING LEASE EXPENSE INCURRED COST OF
PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE RENTAL WITH TRANSACTION ASSETS
-----------------------------------------------------------------------------------------------------------------------------
SINGLE TRANSACTIONS:
None
SERIES OF TRANSACTIONS:
Key Trust Company of Ohio, NA EB Money Market Fund $5,452,064 None $5,452,064
Key Trust Company of Ohio, NA EB Money Market Fund $5,405,280 None 5,405,280
-------------------------------------------------------------------------
(a) (h) (i)
IDENTITY OF CURRENT VALUE OF ASSET NET GAIN
PARTY INVOLVED ON TRANSACTION DATE OR (LOSS)
-------------------------------------------------------------------------
SINGLE TRANSACTIONS:
None
SERIES OF TRANSACTIONS:
Key Trust Company of Ohio, NA $5,452,064 N/A
Key Trust Company of Ohio, NA 5,405,280 None
NOTE - Reportable transactions are single transactions or a series of
transactions in the same issue that, when aggregated, are in excess of 5% of the
current value of plan assets at the beginning of the plan year.
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INDEPENDENT AUDITORS' CONSENT
Applied Industrial Technologies, Inc.
We consent to the incorporation by reference in Registration Statement Nos.
033-65513, 33-42623 and 333-83809 of Applied Industrial Technologies, Inc. on
Form S-8 of our report dated April 27, 2001, appearing in this Annual Report on
Form 11-K of the Applied Industrial Technologies, Inc. Retirement Savings Plan
for the year ended December 31, 2000.
/s/Deloitte & Touche LLP
Cleveland, Ohio
June 26, 2001