10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2013, or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-2299

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Ohio	34-0117420
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1 Applied Plaza, Cleveland, Ohio 44115

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (216) 426-4000.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, without par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. xYes o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer X	Accelerated filer __
Non-accelerated filer __	Smaller reporting company __

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter (December 31, 2012): $1,736,453,000.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

Class	Outstanding at August 15, 2013
Common Stock, without par value	42,207,810

DOCUMENTS INCORPORATED BY REFERENCE

Listed hereunder are the documents, portions of which are incorporated by reference, and the Parts of this Form 10-K into which such portions are incorporated:

(1) Applied Industrial Technologies, Inc. annual report to shareholders for the fiscal year ended June 30, 2013, portions of which are incorporated by reference into Parts I, II and IV of this Form 10-K, and

(2) Applied's proxy statement for the annual meeting of shareholders to be held October 29, 2013, portions of which are incorporated by reference into Parts II, III, and IV of this Form 10-K.

TABLE OF CONTENTS

		Page
CAUTIONARY STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT		3
PART I		4
Item 1.	Business	4
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	11
Item 2.	Properties	11
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosures	13
EXECUTIVE OFFICERS OF THE REGISTRANT		13
PART II		14
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6.	Selected Financial Data	14
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	15
Item 8.	Financial Statements and Supplementary Data	15
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	15
Item 9A.	Controls and Procedures	15
Item 9B.	Other Information	16
PART III		16
Item 10.	Directors, Executive Officers and Corporate Governance	16
Item 11.	Executive Compensation	16
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	17
Item 13.	Certain Relationships and Related Transactions, and Director Independence	17
Item 14.	Principal Accountant Fees and Services	17
PART IV		18
Item 15.	Exhibits and Financial Statement Schedules	18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		22
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS		23
SIGNATURES		24

CAUTIONARY STATEMENT

UNDER PRIVATE SECURITIES LITIGATION REFORM ACT

This report, including the documents incorporated by reference, contains statements that are forward-looking, based on management's current expectations about the future. Forward-looking statements are often identified by qualifiers such as “guidance,” “expect,” “believe,” “plan,” “intend,” “will,” “should,” “could,” “would,” “anticipate,” “estimate,” “forecast,” “may,” and derivative or similar words or expressions. Similarly, descriptions of our objectives, strategies, plans, or goals are also forward-looking statements. These statements may discuss, among other things, expected growth, future sales, future cash flows, future capital expenditures, future performance, and the anticipation and expectations of Applied and its management as to future occurrences and trends. Applied intends that the forward-looking statements be subject to the safe harbors established in the Private Securities Litigation Reform Act of 1995 and by the Securities and Exchange Commission in its rules, regulations, and releases.

Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are based on current expectations regarding important risk factors, many of which are outside Applied's control. Accordingly, actual results may differ materially from those expressed in the forward-looking statements. The making of those statements should not be regarded as a representation by Applied or another person that the results expressed in the statements will be achieved. In addition, Applied assumes no obligation publicly to update or revise forward-looking statements, whether because of new information or events, or otherwise, except as may be required by law.

Applied believes its primary risk factors include, but are not limited to, those identified in “Risk Factors” at Part I, Item 1A, and in “Narrative Description of Business,” at Part I, Item 1, section (c), in this annual report onForm 10-K, as well as in “Management's Discussion and Analysis” in Applied's 2013 annual report to shareholders. PLEASE READ THOSE DISCLOSURES CAREFULLY.

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PART I.

ITEM 1. BUSINESS.

In this annual report on Form 10-K, “Applied” refers to Applied Industrial Technologies, Inc., an Ohio corporation. References to “we,” “us,” “our,” and “the company” refer to Applied and its subsidiaries.

Applied is a leading industrial distributor in North America, Australia, and New Zealand, supplying customers in a wide range of industries with products including bearings, power transmission components, fluid power components and systems, industrial rubber products, linear motion components, tools, safety products, and other industrial and maintenance supplies. We provide engineering, design, and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber, and fluid power shop services. We also offer maintenance training and inventory and storeroom management solutions.

We serve customers for both MRO (maintenance, repair, and operations) and OEM (original equipment manufacturing) product applications. We offer technical application support for our products and provide solutions to help customers minimize their production downtime, improve machine performance, and reduce overall procurement and maintenance costs.

Applied and its predecessor companies have engaged in this business since 1923. Applied reincorporated in Ohio in 1988.

Our Internet address is www.applied.com. The following documents are available free of charge via hyperlink from the investor relations area of our website:

• Applied's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, together with Section 16 insider beneficial stock ownership reports -- these documents are posted as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission

• Applied's Code of Business Ethics

• Applied's Board of Directors Governance Principles and Practices

• Applied's Director Independence Standards

• Charters for the Audit, Corporate Governance, and Executive Organization & Compensation Committees of Applied's Board of Directors

The information available via hyperlink from our website is not incorporated into this annual report on Form 10-K.

(a)General Development of Business.

Information regarding developments in our business can be found in Applied's 2013 annual report to shareholders under the caption “Management's Discussion and Analysis.” This information is incorporated here by reference.

(b)Financial Information about Segments.

We have identified two reportable segments, service center-based distribution and fluid power businesses.

The service center-based distribution segment provides customers with a wide range of industrial products through a network of service centers. The fluid power businesses segment consists of specialized regional companies that distribute fluid power components and operate shops to assemble fluid power systems and perform equipment repair. The fluid power businesses primarily sell products and services directly to customers rather than through the service centers.

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Segment financial information can be found in the 2013 annual report to shareholders in note 12 to the consolidated financial statements. That information is incorporated here by reference.

(c)Narrative Description of Business.

Overview. Our field operating structure is built on two platforms - service center-based distribution and fluid power businesses:

• Service Center-Based Distribution. We distribute a wide range of industrial products through service centers across North America, Australia, and New Zealand. Customers primarily purchase our products for scheduled maintenance of their machinery and equipment and for emergency repairs.

In addition to the service center network, this segment includes:

• Our Maintenance Supplies & Solutions service offering, which distributes industrial and maintenance supplies,

• Regional fabricated rubber shops, which modify and repair conveyor belts and make hose assemblies in accordance with customer requirements, and

• Rubber service field crews, which install and repair belts and rubber linings at customer locations.

The service center-based distribution business accounts for a substantial majority of our field operations and 81% of our 2013 sales dollars. The business operates in the United States, Canada, Australia, and New Zealand using the Applied Industrial Technologies trade name. We are known as Applied México in Mexico and Rafael Benitez Carrillo in Puerto Rico.

• Fluid Power Businesses. Our specialized fluid power businesses primarily market products and services to customers within the businesses' geographic regions. In the United States, the businesses also market products and services through our service center network. In addition to distributing fluid power components, the businesses assemble fluid power systems and components, perform equipment repair, and offer technical advice to customers. Customers include firms purchasing for maintenance, repair, and operational needs, as well as for original equipment manufacturing applications. Our fluid power businesses include the following:

United States		International
Air Draulics Engineering	Engineered Sales	Atelier P.V. Hydraulique (Canada)
Air-Hydraulic Systems	FluidTech	HyPower (Canada)
Applied Engineered Systems	HydroAir	Pro-Hydraulique (Canada)
Bay Advanced Technologies	HyQuip	Vycmex (Mexico)
Carolina Fluid Components	Kent Fluid Power
DTS Fluid Power	Power Systems
ESI Power Hydraulics	Spencer Fluid Power
Elect-Air

Products. We are a leading distributor of products including bearings, power transmission components, fluid power components and systems, industrial rubber products, linear motion components, tools, safety products, and other industrial and maintenance supplies. Fluid power products include hydraulic, pneumatic, lubrication, and filtration components and systems.

These products are generally supplied to us by manufacturers whom we serve as a non-exclusive distributor. The suppliers also may provide us product training, as well as sales and marketing support. Authorizations to represent particular suppliers and product lines may vary by geographic region, particularly for our fluid power businesses.

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We believe our supplier relationships are generally good, and many have existed for decades. The disruption of relationships with certain suppliers, or the disruption of their operations, could adversely affect our business.

Our product suppliers typically confine their direct sales activities to large-volume transactions, mainly with large original equipment manufacturers. The suppliers generally do not sell maintenance and repair products directly to the customer, but instead refer the customer to us or another distributor.

Net sales by product category for the most recent three fiscal years is detailed in the 2013 annual report to shareholders in note 12 to the consolidated financial statements. That information is incorporated here by reference.

Services. Our associates advise and assist customers in selecting and applying products, and in managing inventory. We consider this advice and assistance to be an integral part of our sales efforts. Beyond logistical distribution services, we offer product and process solutions involving multiple technologies. These solutions help customers minimize production downtime, improve machine performance, and reduce overall procurement and maintenance costs. By providing high levels of service, product and industry expertise, and technical support, while at the same time offering product breadth and competitive pricing, we believe we develop stronger, longer-lasting, and more profitable customer relationships.

Our service center sales associates include customer sales and service representatives and account managers, as well as product and industry specialists. Customer sales and service representatives receive, process, and expedite customer orders, provide product information, and assist account managers in serving customers. Account managers make on-site calls to customers to provide product information, identify customer requirements, make recommendations, and assist in implementing equipment maintenance and storeroom management programs, as well as automated supplies dispensing systems. Account managers also measure and document the value of the cost savings and increased productivity we help generate. Product and industry specialists assist with applications in their areas of expertise.

We maintain product inventory levels at each service center tailored to the local market. These inventories consist of standard items as well as other items specific to local customer demand. Distribution centers replenish service center inventories and also may ship products directly to customers. Having product in stock helps us satisfy customers' immediate needs.

Timely delivery of products is an integral part of our service, particularly when customers require products for emergency repairs. Service centers and distribution centers use the most effective method of transportation available to meet customer needs. These methods include our own delivery vehicles, dedicated third-party transportation providers, as well as surface and air common carrier and courier services. Customers can also pick up items at our service centers.

Our information systems enhance our customer service. Customers turn to our website at www.applied.com to search for products in a comprehensive electronic catalog, research product attributes, view prices, check inventory levels, place orders, and track order status. We also transact with customers through electronic data interchange (EDI) and interface with customers' technology platforms and plant maintenance systems.

In addition to our electronic capabilities, we serve customers with our paper catalog, a comprehensive purchasing tool and resource guide for industrial and maintenance products.

We supplement the service center product offering with our MaintenancePro^® fee-based technical training seminars. These courses provide customer personnel with information on maintenance, troubleshooting, component application, and failure analysis in the areas of hydraulics and pneumatics, lubrication, bearings, and power transmission.

The Maintenance Supplies & Solutions service offering provides inventory management services, at customer sites, for industrial and maintenance supplies, including fasteners, cutting tools, paints and chemicals, fluid flow, safety, and janitorial products.

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In addition to distributing products, we offer shop services in select geographic areas. Our fabricated rubber shops modify and repair conveyor belts and provide hose assemblies (also available at select service centers and distribution centers) in accordance with customer requirements. Field crews install and repair belts and rubber lining, primarily at customer locations. Among the other services we offer, either performed by us directly or by third party providers, are the rebuilding or assembly of speed reducers, pumps, valves, cylinders, and electric and hydraulic motors, and custom machining.

Our specialized fluid power businesses generally operate independently of the service centers, but as product distributors, share the same focus on customer service. Product and application recommendations, inventory availability, and delivery speed are all important to the businesses' success.

The fluid power businesses distinguish themselves from most component distributors by offering engineering, design, system fabrication, installation, and repair services. Our capabilities extend to the following specialties: fluid power system integration; manifold design, machining, and assembly; and the integration of hydraulics with electronics for complete machine design. These services can represent a significant portion of the overall value provided to customers.

Each business has account managers with technical knowledge, who handle sophisticated projects, including original equipment manufacturing applications. The businesses also provide technical support to our service centers and their customers.

Markets. We purchase from thousands of product manufacturers and resell the products to thousands of customers in a wide variety of industries, including agriculture and food processing, automotive, chemicals and petrochemicals, fabricated metals, forest products, industrial machinery and equipment, mining, primary metals, transportation, and utilities, as well as to government entities. Customers range from very large businesses, with which we may have multiple-location relationships, to very small ones. We are not significantly dependent on a single customer or group of customers, the loss of which would have a material adverse effect on our business as a whole, and no single customer accounts for more than 3% of our net sales.

Competition. We consider our business to be highly competitive. In addition, our markets present few economic or technological barriers to entry, contributing to a high fragmentation of market share. Longstanding supplier and customer relationships, geographic coverage, name recognition, and our associates' knowledge and experience do, however, support our competitive position. Competition is based generally on breadth and quality of product and service offerings, product availability, price, ease of product selection and ordering, online capability, catalogs, and having a local presence. In the fluid power businesses, product manufacturer authorizations are often more selective and can be a more significant competitive factor, along with market reputation and product application knowledge.

Our principal competitors are other bearing, power transmission, industrial rubber, fluid power, linear motion, tools, and safety product distributors, and, to a lesser extent, distributors of other industrial and maintenance supplies and catalog companies. These competitors include local, regional, national, and multinational operations. We also compete with original equipment manufacturers and their distributors in the sale of maintenance and replacement components. Some competitors have greater financial resources than we do. The identity and number of our competitors vary throughout the geographic and product markets we serve.

Although we are one of the leading distributors in North America, Australia, and New Zealand for the primary categories of products we provide in those areas, our market share for those products in a given geographic area may be relatively small compared to the portion of the market served by original equipment manufacturers and other distributors.

Backlog Orders and Seasonality. Because of our product resources and distribution network, backlog orders are not material to our business as a whole, although they are a more important factor for our fluid power businesses. Our business has exhibited minor seasonality -- in particular, sales per day during the first half of our fiscal year

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have tended in the past to be slightly lower compared with the second half due, in part, to the impact of customer plant shutdowns and holidays.

Patents, Trademarks, Trade Names, and Licenses. Customer recognition of our service marks and trade names, including Applied Industrial Technologies^®, Applied^®, and AIT^®, is an important contributing factor to our sales. Patents and licenses are not of material importance to our business.

Raw Materials and General Business Conditions. Our operations are dependent on general industrial and economic conditions. We would be adversely affected by the unavailability of raw materials to our suppliers, prolonged labor disputes experienced by suppliers or customers, or by a recession or depression that has an adverse effect on industrial activity generally in the markets we serve or on key customer industries.

Number of Employees. At June 30, 2013, we had 5,109 employees.

Working Capital. Our working capital position is discussed in “Management's Discussion and Analysis” in the 2013 annual report to shareholders.

We require substantial working capital related to accounts receivable and inventories. Significant amounts of inventory are carried to meet customers' delivery requirements. We generally require payments for sales on account within 30 days. Returns are not considered to have a material effect on our working capital requirements. We believe these practices are generally consistent among companies in our industry.

Environmental Laws. We believe that compliance with laws regulating the discharge of materials into the environment or otherwise relating to environmental protection will not have a material adverse effect on our capital expenditures, earnings, or competitive position.

(d) Financial Information about Geographic Areas.

Information regarding our foreign operations, including information about revenues and long-lived assets, is included in the 2013 annual report to shareholders in note 12 to the consolidated financial statements and in “Quantitative and Qualitative Disclosures about Market Risk.” That information is incorporated here by reference.

ITEM 1A. RISK FACTORS.

In addition to other information set forth in this report, you should carefully consider the following factors that could materially affect our business, financial condition, or results of operations. The risks described below are not the only risks facing our company. Certain risks are identified in “Management's Discussion and Analysis” in Applied's 2013 annual report to shareholders and that information is incorporated here by reference. Additional risks not currently known to us, risks that could apply broadly to issuers, or risks that we currently deem immaterial, may also impact our business and operations.

Our business depends heavily on the operating levels of our customers and the economic factors that affect them. Many of the primary markets for the products and services we sell are subject to cyclical fluctuations that affect demand for goods and materials that our customers produce. Consequently, demand for our products and services has been and will continue to be influenced by most of the same economic factors that affect demand for and production of customers' goods and materials.

When customers or prospective customers reduce production levels because of lower demand or tight credit conditions, their need for our products and services diminishes. Selling prices and terms of sale come under pressure, adversely affecting the profitability and the durability of customer relationships, and credit losses increase too. Volatile economic and credit conditions also make it more difficult for distributors, as well as customers and suppliers, to forecast and plan future business activities.

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In addition, our industry confronts a longer-term secular trend of manufacturing customers moving production to lower-cost countries to reduce costs. Our ability to continue to serve such customers may be impaired and the size of our overall opportunity in the markets we serve could be adversely affected.

Consolidation in our customers' and suppliers' industries could adversely affect our business and financial results. In recent years, we have witnessed consolidation among our product suppliers and customers. As customer industries consolidate, a greater proportion of our sales could be derived from higher volume contracts, which could adversely impact the amount and volatility of our earnings. Consolidation among customers can trigger changes in their purchasing strategies, potentially moving large blocks of business among competing industrial distributors and contributing to volatility in our sales and pressure on prices. Similarly, continued consolidation among our suppliers could reduce our ability to negotiate favorable pricing and other commercial terms for our inventory purchases.

Loss of key supplier authorizations, lack of product availability, or changes in supplier distribution programs could adversely affect our sales and earnings. Our business depends on maintaining an immediately available supply of various products to meet customer demand. Many of our relationships with key product suppliers are longstanding, but are terminable by either party. The loss of key supplier authorizations, or a substantial decrease in the availability of their products, could put us at a competitive disadvantage and have a material adverse effect on our business. Supply interruptions could arise from raw materials shortages, inadequate manufacturing capacity or utilization to meet demand, financial problems, labor disputes or weather conditions affecting suppliers' production, transportation disruptions, or other reasons beyond our control.

In addition, as a distributor, we face the risk of key product suppliers changing their relationships with distributors generally, or Applied in particular, in a manner that adversely impacts us. For example, key suppliers could change the following: the prices we must pay for their products relative to other distributors or relative to competing products; the geographic or product line breadth of distributor authorizations; supplier purchasing incentive or other support programs; or product purchase or stocking expectations.

An increase in competition could decrease sales or earnings. We operate in a highly competitive industry. Our competitors include local, regional, national, and multinational distributors of industrial machinery parts, equipment, and supplies. Competition is largely focused in the local service area and is generally based on product line breadth, product availability, service capabilities, and price. Some existing competitors have, and potential market entrants may have, greater financial or other resources than we do, or broader product or service offerings. If existing or future competitors seek to gain or to retain market share by reducing prices, we may need to lower our prices for products or services, thereby adversely affecting financial results.

The purchasing incentives we earn from product suppliers can be impacted if we reduce our purchases in response to declining customer demand. Certain of our product suppliers have historically offered to their distributors, including us, incentives for purchasing their products. In addition to market or customer account-specific incentives, certain suppliers pay incentives to the distributor for attaining specific purchase volumes during the program period. In some cases, in order to earn incentives, we must achieve year-over-year growth in purchases with the supplier. When demand for our products declines, we may be less willing to add inventory to take advantage of certain incentive programs, thereby potentially adversely impacting our profitability.

Our ability to transact business is highly reliant on our information systems. We face additional risks in this regard as we implement a new integrated information technology platform for our business. We depend on information systems to process customer orders, manage inventory and accounts receivable collections, purchase products, manage accounts payable processes, ship products to customers on a timely basis, maintain cost-effective operations, provide superior service to customers, and accumulate financial results. A serious, prolonged disruption of our information systems or breach in security could materially impair fundamental business processes and increase expenses, decrease sales, or otherwise reduce earnings.

We are in the process of replacing multiple legacy applications with an SAP software platform, to enhance our business information and transaction systems to support future growth. The implementation is occurring over several years in planned phases, primarily based on geographic region; as of June 30, 2013, portions of our

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operations in the U.S. and Canada were on SAP. The process is technically intensive, requiring design, testing, modifications, training, and project coordination. Despite extensive planning, we could experience disruptions in our business operations related to the implementation because of the project's complexity. The potential material adverse consequences could include delays, loss of information, diminished management reporting capabilities, damage to our ability to process transactions, harm to our control environment (including during the transition period of operating on two systems), diminished employee productivity, and unanticipated increases in costs. Further, our ability to achieve anticipated operational benefits from the new platform is not assured.

Volatility in product and energy costs can affect our profitability. In the last decade, cost increases in commodity resources, such as steel and energy, led product manufacturers to increase the prices of products we distribute. In addition, a portion of our own distribution costs is comprised of fuel for our sales and delivery vehicles, freight, and utility expenses for our facilities. These costs have fluctuated significantly in recent years. Our ability to pass along to customers the increases in our costs depends on market conditions. Raising our prices could result in decreased sales volume, which could significantly reduce our profitability. When costs fall, market prices can fall too, again potentially affecting profitability.

Future acquisitions are a key component of our anticipated growth. We may not be able to identify or to complete future acquisitions, to integrate them effectively into our operations, or to realize their anticipated benefits. Many industries we serve are mature. As a result, acquisitions of other businesses have been important to our growth in recent years. While we wish to continue to acquire businesses, we may not be able to identify and to negotiate suitable acquisitions, to obtain financing for them on satisfactory terms, or otherwise to complete acquisitions. In addition, existing or future competitors may increasingly seek to compete with us for acquisitions, which could have the effect of increasing the price and reducing the number of suitable opportunities.

We seek acquisition opportunities that complement and expand our operations. However, substantial costs, delays, or other difficulties related to integrating acquisitions into our operations could adversely affect our business or financial results. We could face significant challenges in consolidating functions and integrating procedures, information systems, personnel, and operations in a timely and efficient manner.

Further, even if we successfully integrate the acquisitions with our operations, we may not be able to realize the cost savings, sales, profit levels, or other benefits that we anticipate from these acquisitions, either as to amount or in the time frame we expect. Our ability to realize anticipated benefits may be affected by a number of factors, including the following: our ability to achieve planned operating results, to reduce duplicative expenses and inventory effectively, and to consolidate facilities; the incurrence of significant integration costs or charges in order to achieve those benefits; and our ability to retain key product supplier authorizations, customer relationships, and employees. In addition, future acquisitions could place significant demand on administrative, operational, and financial resources.

Tight credit markets could impact our ability to obtain financing on reasonable terms or increase the cost of future financing. Although the credit market turmoil of several years ago did not have a significant adverse impact on our liquidity or borrowing costs, the availability of funds tightened and credit spreads on corporate debt increased. If credit market volatility were to return, then obtaining additional or replacement financing could be more difficult and the cost of issuing new debt or replacing a credit facility could be higher than under our current facilities. Tight credit conditions could limit our ability to finance acquisitions on terms acceptable to us. For more information relating to borrowing and interest rates, see the following sections of Applied's 2013 annual report to shareholders: the “Liquidity and Capital Resources” section of “Management's Discussion and Analysis,” “Quantitative and Qualitative Disclosures about Market Risk,” and note 5 to the consolidated financial statements.

Our growth outside the United States increases our exposure to global economic and political conditions. Foreign operations contributed 18% of our sales in 2013. If we continue to grow outside the U.S., the risks associated with exposure to more volatile economic conditions, political instability, cultural and legal differences in conducting business, and currency fluctuations will increase.

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Our business depends on our ability to attract, develop, motivate, and retain qualified sales and customer service personnel and other skilled managers and professionals. There are significant costs associated with recruiting, training, and developing skilled employees. With respect to sales and customer service positions, we greatly benefit from having employees who are familiar with the products we sell and their applications, as well as with our customer and supplier relationships. We could be adversely affected by a shortage of, or increased competition for, available skilled workers, or by the loss of a significant number of our sales and customer service personnel or other managers or professionals, including through retirement as the workforce ages.

An interruption of operations at our headquarters or distribution centers could adversely impact our business. Our business depends on maintaining operations at our headquarters and distribution centers. A serious, prolonged interruption due to power outage, telecommunications outage, terrorist attack, earthquake, extreme weather events, other natural disasters, fire, flood, or other interruption could have a material adverse effect on our business and financial results.

We are subject to litigation and regulatory risk due to the nature of our business, which may have a material adverse effect on our business. From time to time, we are involved in lawsuits or other legal proceedings that arise from our business. These may, for example, relate to product liability claims, commercial disputes, personal injuries, or employment-related matters. In addition, we could face claims over other matters, such as claims arising from our status as a government contractor or public company, or otherwise relating to our compliance with a wide array of laws and regulations to which we are subject. The defense and ultimate outcome of lawsuits or other legal proceedings or inquiries may result in higher operating expenses, which could have a material adverse effect on our business, financial condition, or results of operations.

In addition to the risks identified above, other risks to our future performance include, but are not limited to, the following:

• changes in customer preferences for products and services of the nature, brands, quality, or cost sold by Applied;

• changes in customer procurement policies and practices;

• changes in the market prices for products and services relative to the costs of providing them;

• changes in operating expenses;

• organizational changes within the company;

• adverse regulation and legislation, both enacted and under consideration, including with respect to health care and federal tax policy (e.g., affecting the use of the LIFO inventory accounting method and the taxation of foreign-sourced income);

• the variability and timing of new business opportunities including acquisitions, alliances, customer relationships, and supplier authorizations;

• the incurrence of debt and contingent liabilities in connection with acquisitions;

• volatility of our stock price and the resulting impact on our consolidated financial statements; and

• changes in accounting policies and practices that could impact our financial reporting and increase compliance costs.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2. PROPERTIES.

We believe having a local presence is important to serving our customers, so we maintain service centers and other operations in local markets throughout the countries in which we operate. At June 30, 2013, we owned real properties at 126 locations and leased 361 locations. Certain properties house more than one operation.

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The following were our principal owned real properties (each of which has more than 30,000 square feet of floor space) at June 30, 2013.

Location of Principal Owned Real Property	Type of Facility
Atlanta, Georgia	Distribution center and service center
Florence, Kentucky	Distribution center
Carlisle, Pennsylvania	Distribution center
Fort Worth, Texas	Distribution center and rubber shop

Our principal leased real properties (each of which has more than 30,000 square feet of floor space) at June 30, 2013 were:

Location of Principal Leased Real Property	Type of Facility
Cleveland, Ohio	Corporate headquarters
Fontana, California	Distribution center, rubber shop, fluid power shop and service center
Newark, California	Fluid power shop
Denver, Colorado	Rubber shop and service center
Lenexa, Kansas	Fluid power shop
Chanhassen, Minnesota	Fluid power shop
Billings, Montana	Fluid power shop
Cleveland, Ohio (two locations)	Offices and warehouse
Elyria, Ohio	Product return center and service center
Portland, Oregon	Distribution center
Kent, Washington	Offices, fluid power shop, and service center
Longview, Washington	Service center, rubber shop and fluid power shop
Appleton, Wisconsin	Offices, service center, and rubber shop
Edmonton, Alberta	Service center and shop
Winnipeg, Manitoba	Distribution center and service center

The properties in Newark, Lenexa, Chanhassen, and Billings are used in our fluid power businesses segment. The Fontana, Kent, and Longview properties are used in both the service center-based distribution segment and the fluid power businesses segment. The remaining properties are used in the service center-based distribution segment.

We consider our properties generally sufficient to meet our requirements for office space and inventory stocking. A service center's size is primarily influenced by the amount and types of inventory the service center requires to meet customers' needs.

In recent years, when opening new operations, we have tended to lease rather than purchase real property. We do not consider any service center, distribution center, or shop property to be material, because we believe that, if it becomes necessary or desirable to relocate an operation, other suitable property could be found.

In addition to operating locations, we own or lease certain properties which in the aggregate are not material and are either for sale, lease, or sublease to third parties due to a relocation or closing. We also may lease or sublease to others unused portions of buildings.

Additional information regarding our properties is included in the 2013 annual report to shareholders in note 11 to the consolidated financial statements. That information is incorporated here by reference.

12

ITEM 3. LEGAL PROCEEDINGS.

Applied and/or one of its subsidiaries is a party to pending legal proceedings with respect to product liability, commercial, personal injury, and other matters. Although it is not possible to predict the outcome of these proceedings or the range of reasonably possible loss, we believe, based on circumstances currently known, that the likelihood is remote that the ultimate resolution of any of these proceedings will have, either individually or in the aggregate, a material adverse effect on Applied's consolidated financial position, results of operations, or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT.

Applied's executive officers are elected by the Board of Directors for a term of one year, or until their successors are chosen and qualified, at the Board's organizational meeting held following the annual meeting of shareholders. The following is a list of the executive officers and a description of their business experience during the past five years. Except as otherwise stated, the positions and offices indicated are with Applied, and the persons were elected to their current positions on October 23, 2012:

Name	Positions and Experience	Age
Neil A. Schrimsher	President (since August 2013) and Chief Executive Officer (since October 2011). From February 2010 to August 2011, Mr. Schrimsher was Executive Vice President of Cooper Industries plc (formerly NYSE: CBE), a global electrical products manufacturer, where he led Cooper's Electrical Products Group and headed numerous domestic and international growth initiatives. He was also President of Cooper Lighting, Inc. throughout the period from 2006 to December 2010.	49
Thomas E. Armold	Vice President-Marketing and Strategic Accounts	58
Todd A. Barlett	Vice President-Acquisitions and Global Business Development	58
Fred D. Bauer	Vice President-General Counsel & Secretary	47
Mark O. Eisele	Vice President-Chief Financial Officer & Treasurer	56
Carl E. Will	Chief Commercial Officer since July 2013. From 2004 to January 2013, he served as an executive with Invacare Corporation (NYSE: IVC), which engages in the design, manufacture, and distribution of medical equipment and supplies worldwide. Most recently, he was Invacare's Senior Vice President-Global Commercial Operations from November 2010 to January 2013 and its Senior Vice President-North American Homecare from 2008 to November 2010.	43

Benjamin J. Mondics, formerly President & Chief Operating Officer, retired from Applied on August 16, 2013. Michael L. Coticchia, Vice President-Chief Human Resources Officer, resigned on July 1, 2013.

13

PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Applied's common stock, without par value, is listed for trading on the New York Stock Exchange with the ticker symbol “AIT.” Information concerning the principal market for Applied's common stock, the quarterly stock prices and dividends for the fiscal years ended June 30, 2013, 2012, and 2011 and the number of shareholders of record as of August 15, 2013 is set forth in the 2013 annual report to shareholders, under the captions “Quarterly Operating Results” and “Quarterly Volume and Price Information,” and that information is incorporated here by reference.

The following table summarizes Applied's repurchases of its common stock in the quarter ended June 30, 2013.

Period	(a) Total Number of Shares (1)	(b) Average Price Paid per Share ($)	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 1, 2013 to April 30, 2013	1,300	40.96	1,300	1,141,500
May 1, 2013 to May 31, 2013	—	—	—	1,141,500
June 1, 2013 to June 30, 2013	—	—	—	1,141,500
Total	1,300	40.96	1,300	1,141,500

(1) During the quarter ended June 30, 2013, Applied purchased 317 shares in connection with an employee deferred compensation program. This purchase is not counted in the authorization in note (2).

(2) On October 25, 2011, the Board of Directors authorized the purchase of up to 1.5 million shares of Applied's common stock. We publicly announced the authorization that day. Purchases can be made in the open market or in privately negotiated transactions. The authorization is in effect until all shares are purchased, or the Board revokes or amends the authorization.

ITEM 6. SELECTED FINANCIAL DATA.

The summary of selected financial data for the last five years is set forth in Exhibit 13 to this Form 10-K under the caption “5 Year Summary.” That information is incorporated here by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS.

“Management's Discussion and Analysis” is set forth in the 2013 annual report to shareholders and is incorporated here by reference.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK.

The disclosures about market risk required by this item are set forth in Applied's 2013 annual report to shareholders, which information is incorporated here by reference. For more information relating to borrowing and interest rates, see the “Liquidity and Capital Resources” section of “Management's Discussion and Analysis” and note 5 to the consolidated financial statements in Applied's 2013 annual report to shareholders. That information is also incorporated here by reference. In addition, see “Risk Factors,” above, for additional risk factors relating to our business.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following consolidated financial statements and supplementary data of Applied and its subsidiaries and the reports of the independent registered public accounting firm listed below, which are included in the 2013 annual report to shareholders at the pages indicated, are incorporated here by reference and filed with this report:

			Page No.
Financial Statements:
Ÿ	Statements of Consolidated Income for the Years Ended June 30, 2013, 2012, and 2011		14
Ÿ	Statements of Consolidated Comprehensive Income for the Years Ended June 30, 2013, 2012, and 2011		15
Ÿ	Consolidated Balance Sheets at June 30, 2013 and 2012		16
Ÿ	Statements of Consolidated Cash Flows for the Years Ended June 30, 2013, 2012, and 2011		17
Ÿ	Statements of Consolidated Shareholders' Equity For the Years Ended June 30, 2013, 2012, and 2011		18
Ÿ	Notes to Consolidated Financial Statements for the Years Ended June 30, 2013, 2012, and 2011		19-37
Reports of Independent Registered Public Accounting Firm			38, 40
Supplementary Data:
Ÿ		Quarterly Operating Results	41

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Applied's management, under the supervision and with the participation of the chief executive officer (CEO) and the chief financial officer (CFO), has evaluated the effectiveness of the company's disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report.  Based on that evaluation, management has concluded that the Company's disclosure controls and procedures are effective.

Applied has undertaken a multi-year project to transform our technology platforms and enhance our business information and transaction systems with SAP enterprise resource planning software. We have begun to implement SAP in parts of our Canadian and U.S. businesses to support both operating and accounting activities. The implementation at operating locations is expected to continue through fiscal year 2014. Changes in Applied's key business applications and financial processes as a result of the continuing implementation of SAP are being

15

evaluated by management. We are designing processes and internal controls to address changes in internal control over financial reporting as a result of the SAP implementation. This ongoing implementation presents transitional risks to maintaining adequate internal controls over financial reporting.

Other than as described above, management has not identified a change in internal control over financial reporting occurring during the fourth quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management's annual report on Applied's internal control over financial reporting and the attestation report of the independent registered public accounting firm are set forth in the 2013 annual report to shareholders and are incorporated here by reference.

ITEM 9B. OTHER INFORMATION.

Applied's Board of Directors elected Neil A. Schrimsher, Chief Executive Officer, to the additional office of President, effective upon the retirement of Benjamin J. Mondics on August 16, 2013.

PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item as to Applied's directors is incorporated by reference to Applied's proxy statement relating to the annual meeting of shareholders to be held October 29, 2013, under the caption “Item 1 - Election of Directors.” The information required by this Item as to Applied's executive officers has been furnished in this report in Part I, after Item 4, under the caption “Executive Officers of the Registrant.”

The information required by this Item regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated by reference to Applied's proxy statement, under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.”

Applied has a code of ethics, named the Code of Business Ethics, that applies to our employees, including our chief executive officer, chief financial officer, and corporate controller. The Code of Business Ethics is posted via hyperlink at the investor relations area of our www.applied.com website. In addition, amendments to and waivers from the Code of Business Ethics will be disclosed promptly at the same location.

Information regarding the composition of Applied's audit committee and the identification of audit committee financial experts serving on the audit committee is incorporated by reference to Applied's proxy statement, under the caption “Corporate Governance.”

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated by reference to Applied's proxy statement for the annual meeting of shareholders to be held October 29, 2013, under the captions “Executive Compensation” and “Compensation Committee Report.”

16

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Applied's shareholders have approved the following equity compensation plans: the 1997 Long-Term Performance Plan, the 2007 Long-Term Performance Plan, the 2011 Long-Term Performance Plan, the Deferred Compensation Plan, and the Deferred Compensation Plan for Non-Employee Directors. All of these plans are currently in effect.

The following table shows information regarding the number of shares of Applied common stock that may be issued pursuant to equity compensation plans or arrangements of Applied as of June 30, 2013.

Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights	Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity compensation plans approved by security holders	1,080,260	$28.79	*
Equity compensation plans not approved by security holders	0	—	0
Total	1,080,260	$28.79	*

* The 2011 Long-Term Performance Plan was adopted to replace the 2007 Long-Term Performance Plan, and the 2007 Long-Term Performance Plan replaced the 1997 Long-Term Performance Plan. Stock options and stock appreciation rights remain outstanding under each of the 1997 and 2007 plans, but no new awards are made under those plans. The aggregate number of shares that remained available for awards under the 2011 Long-Term Performance Plan at June 30, 2013, was 1,647,794. The number of shares issuable under the Deferred Compensation Plan for Non-Employee Directors and the Deferred Compensation Plan depends on the dollar amount of participant contributions deemed invested in Applied common stock.

Information concerning the security ownership of certain beneficial owners and management is incorporated by reference to Applied's proxy statement for the annual meeting of shareholders to be held October 29, 2013, under the caption “Holdings of Major Shareholders, Officers, and Directors.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,

AND DIRECTOR INDEPENDENCE.

The information required by this Item is incorporated by reference to Applied's proxy statement for the annual meeting of shareholders to be held October 29, 2013, under the caption “Corporate Governance.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this Item is incorporated by reference to Applied's proxy statement for the annual meeting of shareholders to be held October 29, 2013, under the caption “Item 3 - Ratification of Auditors.”

17

PART IV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)1. Financial Statements.

The following consolidated financial statements, notes thereto, the reports of independent registered public accounting firm, and supplemental data are included in the 2013 annual report to shareholders, and are incorporated by reference in Item 8 of this report:

Ÿ	Statements of Consolidated Income for the Years Ended June 30, 2013, 2012, and 2011
Ÿ	Statements of Consolidated Comprehensive Income for the Years Ended June 30, 2013, 2012, and 2011
Ÿ	Consolidated Balance Sheets at June 30, 2013 and 2012
Ÿ	Statements of Consolidated Cash Flows for the Years Ended June 30, 2013, 2012, and 2011
Ÿ	Statements of Consolidated Shareholders' Equity For the Years Ended June 30, 2013, 2012, and 2011
Ÿ	Notes to Consolidated Financial Statements for the Years Ended June 30, 2013, 2012, and 2011
Ÿ	Reports of Independent Registered Public Accounting Firm
Ÿ	Supplementary Data:
	Ÿ	Quarterly Operating Results

(a)2. Financial Statement Schedule.

The following report and schedule are included in this Part IV, and are found in this report at the pages indicated:

		Page No.
Ÿ	Report of Independent Registered Public Accounting Firm	22
Ÿ	Schedule II - Valuation and Qualifying Accounts	23

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission have been omitted because they are not required under the related instructions, are not applicable, or the required information is included in the consolidated financial statements and notes thereto.

(a)3. Exhibits.

* Asterisk indicates an executive compensation plan or arrangement.
Exhibit No.	Description
3.1	Amended and Restated Articles of Incorporation of Applied Industrial Technologies, Inc., as amended on October 25, 2005 (filed as Exhibit 3(a) to Applied's Form 10-Q for the quarter ended December 31, 2005, SEC File No. 1-2299, and incorporated here by reference).
3.2	Code of Regulations of Applied Industrial Technologies, Inc., as amended on October 19, 1999 (filed as Exhibit 3(b) to Applied's Form 10-Q for the quarter ended September 30, 1999, SEC File No. 1-2299, and incorporated here by reference).

18

4.1	Certificate of Merger of Bearings, Inc. (Ohio) and Bearings, Inc. (Delaware) filed with the Ohio Secretary of State on October 18, 1988, including an Agreement and Plan of Reorganization dated September 6, 1988 (filed as Exhibit 4(a) to Applied's Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference).
4.2	Private Shelf Agreement dated as of November 27, 1996, as most recently amended on February 4, 2013, between Applied and Prudential Investment Management, Inc. (assignee of The Prudential Insurance Company of America), conformed to show all amendments (filed as Exhibit 4.3 to Applied's Form 10-Q for the quarter ended March 31, 2013, SEC File No. 1-2299, and incorporated here by reference).
4.3	Credit Agreement dated as of May 15, 2012, among Applied Industrial Technologies, Inc., KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 4 to Applied's Form 8-K dated May 17, 2012, SEC File No. 1-2299, and incorporated here by reference).
*10.1	A written description of Applied's director compensation program is incorporated by reference to Applied's proxy statement for the annual meeting of shareholders to be held October 29, 2013 under the caption “Director Compensation.”
*10.2	Deferred Compensation Plan for Non-Employee Directors (September 1, 2003 Restatement), the terms of which govern benefits vested as of December 31, 2004, for certain directors (filed as Exhibit 10(c) to Applied's Form 10-K for the year ended June 30, 2003, SEC File No. 1-2299, and incorporated here by reference).
*10.3	Deferred Compensation Plan for Non-Employee Directors (Post-2004 Terms) (filed as Exhibit 10.2 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference).
*10.4	Form of Director and Officer Indemnification Agreement entered into between Applied and each of its directors and executive officers (filed as Exhibit 10(g) to Applied's Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference).
*10.5	A written description of Applied's Life and Accidental Death and Dismemberment Insurance for executive officers (filed as Exhibit 10(d) to Applied's Form 10-K for the year ended June 30, 2007, SEC File No. 1-2299, and incorporated here by reference).
*10.6	A written description of Applied's Long-Term Disability Insurance for executive officers (filed as Exhibit 10(c) to Applied's Form 10-Q for the quarter ended December 31, 1997, SEC File No. 1-2299, and incorporated here by reference).
*10.7	Form of Change in Control Agreement between Applied and each of its executive officers, except for Neil A. Schrimsher and Carl E. Will (filed as Exhibit 99.1 to Applied's Form 8-K dated April 25, 2008, SEC File No. 1-2299, and incorporated here by reference).
*10.8	Key Executive Restoration Plan, as amended and restated, for Applied's executive officers and list of participants (filed as Exhibit 10.1 to Applied's Form 8-K dated August 16, 2013, SEC File No. 1-2299, and incorporated here by reference).
*10.9	Supplemental Executive Retirement Benefits Plan (Restated Post-2004 Terms) in which the executive officers, except for Neil A. Schrimsher and Carl E. Will, participate (filed as Exhibit 10.1 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference).
*10.10	First Amendment to the Applied Industrial Technologies, Inc. Supplemental Executive Retirement Benefits Plan (Restated Post-2004 Terms) (filed as Exhibit 10.1 to Applied's Form 8-K dated December 22, 2011, SEC File No. 1-2299, and incorporated here by reference).
*10.11	Second Amendment to the Applied Industrial Technologies, Inc. Supplemental Executive Retirement Benefits Plan (Restated Post-2004 Terms) (filed as Exhibit 10.1 to the Company's Form 8-K dated October 22, 2012, SEC File No. 1-2299, and incorporated here by reference).

19

*10.12	Deferred Compensation Plan (September 1, 2003 Restatement), the terms of which govern benefits vested as of December 31, 2004, for Mark O. Eisele (filed as Exhibit 10(h) to Applied's Form 10-K for the year ended June 30, 2003, SEC File No. 1-2299, and incorporated here by reference).
*10.13	First Amendment to Deferred Compensation Plan (September 1, 2003 Restatement) (filed as Exhibit 10 to Applied's Form 10-Q for the quarter ended December 31, 2003, SEC File No. 1-2299, and incorporated here by reference).
*10.14	Deferred Compensation Plan (Post-2004 Terms) (filed as Exhibit 10.3 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference).
*10.15	1997 Long-Term Performance Plan, as amended April 19, 2007 (filed as Exhibit 10(k) to Applied's Form 10-K for the year ended June 30, 2007, SEC File No. 1-2299, and incorporated here by reference).
*10.16	Section 409A Amendment to the 1997 Long-Term Performance Plan (filed as Exhibit 10.4 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference).
*10.17	2007 Long-Term Performance Plan (filed as Exhibit 10 to Applied's Form 8-K dated October 23, 2007, SEC File No. 1-2299, and incorporated here by reference).
*10.18	Section 409A Amendment to the 2007 Long-Term Performance Plan (filed as Exhibit 10.5 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference).
*10.19	2011 Long-Term Performance Plan (filed as Appendix to Applied's proxy statement for the annual meeting of shareholders held on October 25, 2011, SEC File No. 1-2299, and incorporated here by reference).
*10.20	Supplemental Defined Contribution Plan (January 1, 1997 Restatement) the terms of which govern benefits vested as of December 31, 2004, for certain executive officers (filed as Exhibit 10(m) to Applied's Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference).
*10.21	First Amendment to Supplemental Defined Contribution Plan effective as of October 1, 2000 (filed as Exhibit 10(a) to Applied's Form 10-Q for the quarter ended September 30, 2000, SEC File No. 1-2299, and incorporated here by reference).
*10.22	Second Amendment to Supplemental Defined Contribution Plan effective as of January 16, 2001 (filed as Exhibit 10(a) to Applied's Form 10-Q for the quarter ended March 31, 2001, SEC File No. 1-2299, and incorporated here by reference).
*10.23	Supplemental Defined Contribution Plan (Post-2004 Terms) (filed as Exhibit 10.6 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference).
*10.24	Non-Statutory Stock Option Award Terms and Conditions (Directors) (filed as Exhibit 10 to Applied's Form 8-K dated November 30, 2005, SEC File No. 1-2299, and incorporated here by reference).
*10.25	Restricted Stock Award Terms and Conditions (Directors) (filed as Exhibit 10.1 to Applied's Form 10-Q for the quarter ended March 31, 2012, SEC File No. 1-2299, and incorporated here by reference).
*10.26	Stock Appreciation Rights Award Terms and Conditions (Officers) (August 2011 revision) (filed as Exhibit 10.02 to Applied's Form 8-K dated August 9, 2012, SEC File No. 1-2299, and incorporated here by reference).
*10.27	Performance Shares Terms and Conditions (filed as Exhibit 10.04 to Applied's Form 8-K dated August 9, 2012, SEC File No. 1-2299, and incorporated here by reference).
*10.28	Restricted Stock Units Terms and Conditions (filed as Exhibit 10.03 to Applied's Form 8-K dated August 9, 2012, SEC File No. 1-2299, and incorporated here by reference).

20

*10.29	Management Incentive Plan General Terms (filed as Exhibit 10.01 to Applied's Form 8-K dated August 9, 2012, SEC File No. 1-2299, and incorporated here by reference).
*10.30	Offer of Employment for Neil A. Schrimsher (filed as Exhibit 10.1 to Applied's Form 8-K dated October 17, 2011, SEC File No. 1-2299, and incorporated here by reference).
*10.31	Severance Agreement for Neil A. Schrimsher (filed as Exhibit 10.2 to Applied's Form 8-K dated October 31, 2011, SEC File No. 1-2299, and incorporated here by reference).
*10.32	Amendment to Severance Agreement for Neil A. Schrimsher (filed as Exhibit 10.2 to Applied's Form 8-K dated October 22, 2012, SEC File No. 1-2299, and incorporated here by reference).
*10.33	Change in Control Agreement for Neil A. Schrimsher (filed as Exhibit 10.3 to Applied's Form 8-K dated October 31, 2011, SEC File No. 1-2299, and incorporated here by reference).
*10.34	Terms and Conditions for Inducement Restricted Units Award for Neil A. Schrimsher (filed as Exhibit 10.4 to Applied's Form 8-K dated October 31, 2011, SEC File No. 1-2299, and incorporated here by reference).
*10.35	Terms and Conditions for Inducement Stock Appreciation Rights Award for Neil A. Schrimsher (filed as Exhibit 10.5 to Applied's Form 8-K dated October 31, 2011, SEC File No. 1-2299, and incorporated here by reference).
*10.36	Non-qualified Deferred Compensation Agreement between Applied and J. Michael Moore effective as of December 31, 1997 (filed as Exhibit 10(a) to Applied's Form 10-Q for the quarter ended March 31, 1998, SEC File No. 1-2299, and incorporated here by reference).
*10.37	Executive Retirement Agreement between Applied and Benjamin J. Mondics.
10.38	Lease dated as of March 1, 1996 between Applied and the Cleveland-Cuyahoga County Port Authority (filed as Exhibit 10(n) to Applied's Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference).
13	Applied's 2013 annual report to shareholders (not deemed “filed” as part of this Form 10-K except for those portions that are expressly incorporated by reference).
21	Applied's subsidiaries at June 30, 2013.
23	Consent of Independent Registered Public Accounting Firm.
24	Powers of attorney.
31	Rule 13a-14(a)/15d-14(a) certifications.
32	Section 1350 certifications.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Applied will furnish a copy of any exhibit described above and not contained herein upon payment of a specified reasonable fee, which shall be limited to Applied's reasonable expenses in furnishing the exhibit.

21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Applied Industrial Technologies, Inc.

Cleveland, Ohio

We have audited the consolidated financial statements of Applied Industrial Technologies, Inc. and subsidiaries (the "Company") as of June 30, 2013 and 2012, and for each of the three years in the period ended June 30, 2013, and the Company's internal control over financial reporting as of June 30, 2013, and have issued our reports thereon dated August 20, 2013; such consolidated financial statements and reports are included in your 2013 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of the Company listed in Item 15(a)2. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

Cleveland, Ohio

August 20, 2013

22

APPLIED INDUSTRIAL TECHNOLOGIES, INC. & SUBSIDIARIES

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED JUNE 30, 2013, 2012 AND 2011

(in thousands)

COLUMN A	COLUMN B		COLUMN C						COLUMN D			COLUMN E
DESCRIPTION	BALANCE AT BEGINNING OF PERIOD		ADDITIONS CHARGED TO COSTS AND EXPENSES		ADDITIONS (DEDUCTIONS) CHARGED TO OTHER ACCOUNTS				DEDUCTIONS FROM RESERVE			BALANCE AT END OF PERIOD
YEAR ENDED JUNE 30, 2013:
Reserve deducted from assets to which it applies — accounts receivable allowances	$	8,332	$	2,267	$	(104	)	(A)	$	2,758	(B)	$	7,737
YEAR ENDED JUNE 30, 2012:
Reserve deducted from assets to which it applies — accounts receivable allowances	$	7,016	$	3,915	$	122		(A)	$	2,721	(B)	$	8,332
YEAR ENDED JUNE 30, 2011:
Reserve deducted from assets to which it applies — accounts receivable allowances	$	6,379	$	2,029	$	111		(A)	$	1,503	(B)	$	7,016

________________________________

(A) Amounts represent reserves for the return of merchandise by customers.

(B) Amounts represent uncollectible accounts charged off.

23

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

/s/ Neil A. Schrimsher	/s/ Mark O. Eisele
Neil A. Schrimsher President & Chief Executive Officer	Mark O. Eisele Vice President-Chief Financial Officer & Treasurer
/s/ Daniel T. Brezovec
Daniel T. Brezovec Corporate Controller (Principal Accounting Officer)

Date: August 20, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

*	*
William G. Bares, Director	Thomas A. Commes, Director
*	*
Peter A. Dorsman, Director	L. Thomas Hiltz, Director
*	*
Edith Kelly-Green, Director	Dan P. Komnenovich, Director
*	*
John F. Meier, Director and Chairman	J. Michael Moore, Director
*	/s/ Neil A. Schrimsher
Vincent K. Petrella, Director	Neil A. Schrimsher, President & Chief Executive Officer and Director
*	*
Dr. Jerry Sue Thornton, Director	Peter C. Wallace, Director

/s/ Fred D. Bauer  

Fred D. Bauer, as attorney in fact 

for persons indicated by “*” 

Date: August 20, 2013

24

EX-10.37

EXHIBIT 10.37

EXECUTIVE RETIREMENT AGREEMENT

The parties to this Executive Retirement Agreement (this “Agreement”), Benjamin J. Mondics (“Mr. Mondics”) and Applied Industrial Technologies, Inc. (the “Company”), its affiliates, parents, successors, predecessors, and subsidiaries (collectively, the “Company Group”) agree that:

Mr. Mondics desires to retire from his at-will employment with the Company effective at the close of business on August 16, 2013 (the “Retirement Date”) (which shall be Mr. Mondics' “separation from service” date within the meaning of Internal Revenue Code Section 409A and the regulations and other guidance promulgated thereunder (“Section 409A”)) pursuant to the terms set forth below that have been negotiated between Mr. Mondics and the Company.

The Company desires to have Mr. Mondics' knowledge and skills available to the Company Group for a period of six months following the Retirement Date (the “Consulting Period”) and Mr. Mondics is willing to provide consulting services to the Company Group on the terms specified herein during the Consulting Period.

In consideration of the good and valuable consideration set forth in this Agreement, the sufficiency of which is acknowledged, Mr. Mondics and the Company agree as follows:

1.    Retirement. Mr. Mondics will retire from his employment with the Company Group on the Retirement Date. Mr. Mondics agrees to execute all documents necessary to effect his retirement from all positions, offices and directorships with the Company Group effective as of the Retirement Date. Prior to the Retirement Date, Mr. Mondics agrees to dedicate his full business time and attention to the Company's business, in accordance with the instructions of the Company's Chief Executive Officer.

2.    Consulting Services. During the Consulting Period, Mr. Mondics agrees to provide independent consulting services to the Company Group during regular business hours on matters that were in Mr. Mondics' area of responsibility prior to his Retirement Date. In connection with his provision of consulting services, the Company and Mr. Mondics agree that Mr. Mondics will be providing services as an independent consultant and not as an employee, agent, partner or joint venturer and that neither the Company nor Mr. Mondics shall have authority to bind or obligate the other in any manner. The Company and Mr. Mondics further acknowledge that the amount of time required each month will fluctuate and that there is no minimum or maximum number of days per month for which Mr. Mondics is engaged; provided, however, in accordance with the separation from service requirements of Section 409A and applicable regulatory requirements and guidance, during the Consulting Period, Mr. Mondics shall perform not more than 20% of the average level of services he performed as an employee of the Company during the thirty-six (36) months preceding his Retirement Date. Mr. Mondics shall not be required to travel in connection with his provision of consulting services. Mr. Mondics acknowledges and agrees that he shall not be considered an employee of any member of the Company Group during the Consulting Period and he shall not be eligible for any employee benefits as a result of his provision of consulting services. Notwithstanding the foregoing, in addition to the consideration set forth below, during the Consulting Period, the Company will reimburse Mr. Mondics for any expenses reasonably incurred at the request of the Company and submitted for reimbursement in accordance with the Company's expense reimbursement policies in force from time-to-time.

3.    Consideration. In exchange for Mr. Mondics' promises, representations, waivers and releases contained in this Agreement, subject to the terms contained in this Agreement, the Company will provide

Mr. Mondics with the following payments and benefits, conditioned upon (i) Mr. Mondics' execution and delivery to the Company of the Reaffirmation of Retirement Agreement set forth on Appendix A (the “Reaffirmation Agreement”) no earlier than the day following the Retirement Date and no later than twenty-one (21) days following the Retirement Date and his not revoking or attempting to revoke the waiver and release and (ii) Mr. Mondics' compliance in all material respects with the terms contained in this Agreement up to and including the Retirement Date, including, without limitation, the good faith determination by the Company that Mr. Mondics has satisfied the conditions set forth in Paragraph 3.4 in all material respects.

3.1    During the Consulting Period, the Company will pay Mr. Mondics amounts (the “Consulting Payments”) at the higher of the rate of his base salary as of the Effective Date or the Retirement Date. The Consulting Payments will be paid in bi-weekly installments in accordance with a schedule established by the Company and will be subject to appropriate withholdings and deductions. In addition to the Consulting Payments, the Company shall provide to Mr. Mondics, at the Company's sole cost and expense, retirement consultation services through a vendor mutually agreed between the parties. The retirement consultation services shall be provided for up to six months following the Retirement Date.

3.2    During the period commencing on the Effective Date (as defined in Paragraph 4.1) and ending on the Retirement Date, Mr. Mondics shall use all of his accrued but unused vacation days and birthday in accordance with the Company's ordinary policies, such that no unused vacation days and birthday will remain as of the Retirement Date. As of June 17, 2013, Mr. Mondics has twenty-one (21) accrued but unused vacation days under the Company's vacation policy. He will also have one birthday day in August. Mr. Mondics may use his accrued but unused vacation days and birthday as he determines in his sole and absolute discretion, subject to reasonable business requests and demands.

3.3    As of the Retirement Date, Mr. Mondics will become ineligible to participate in the Company's group health plan program in which he participates prior to his retirement, subject to Mr. Mondics' right to group health plan continuation coverage under applicable federal law and/or his right to obtain post-employment coverage pursuant to the Company's existing or successor executive retiree health care program on the same basis as other qualified senior executive retirees of the Company. Notwithstanding the foregoing, nothing shall obligate the Company to maintain any such retiree health care program.

3.4    In order to ensure a smooth transition from Mr. Mondics' employment with the Company, during the period from the Effective Date of this Agreement (as defined in Paragraph 4.1) up to and including the Retirement Date, Mr. Mondics shall use reasonable and diligent efforts to: (a) assist and cooperate with the Company in connection with any Company matters for which he has knowledge or responsibility; and (b) perform and attend to transitional matters as reasonably identified and requested by the Company and the Company's Chief Executive Officer in writing; and (c) provide reasonable and customary written reports and assessments reasonably requested by the Company's Chief Executive Officer pertaining to matters and/or personnel within the scope of Mr. Mondics' responsibilities for the Company.

3.5    Except as otherwise specifically provided herein, as otherwise required to be provided pursuant to the specific terms of the Company's written compensation and benefit programs relating to Mr. Mondics' service with the Company prior to the Retirement Date (none of which are modified, altered, changed or terminated as to Mr. Mondics by this Agreement except as specified herein) or as otherwise required by applicable law, Mr. Mondics acknowledges and agrees that he shall not be entitled to any compensation or benefits or to participate in any past, present or future employee benefit programs, policies or arrangements of the Company Group (including, without limitation, any compensation or benefits under any severance plan, program or arrangement) on or after the Retirement Date. In addition, Mr. Mondics acknowledges and agrees with the Company that, effective as of the Effective Date, he will not be eligible,

and hereby waives any right to participate, in (i) the Company's annual and long-term incentive compensation programs for the Company's 2014 fiscal year commencing July 1, 2013, including, without limitation, the Company's Management Incentive Plan and Long-Term Performance Plan; (ii) any change in control benefits or enhancements, with respect to any change in control of the Company on or after the Effective Date, under any compensation or employee benefit plan of the Company Group, including without limitation any “Change in Control” or “Change of Control” provision or benefits or enhancements under or pursuant to, or with respect to any awards under, the Company's Management Incentive Plan, Long-Term Performance Plan, Key Executive Restoration Plan, and Supplemental Executive Retirement Benefits Plan (the “SERP”) (except for change in control benefits provided under Section 8.4 of the SERP, which provision shall remain in effect); and (iii) the Company's Severance Benefit Plan (applicable to qualified terminations due to reductions in force). Notwithstanding anything to the contrary herein, the Indemnification Agreement between Mr. Mondics and the Company, and Mr. Mondics' rights thereunder, shall not be affected by this Agreement and shall remain in full force and effect.

The Company and Mr. Mondics acknowledge and agree that (i) Mr. Mondics shall be eligible to receive an award under the Company's Management Incentive Plan for the Company's fiscal year ending June 30, 2013, in accordance with the terms of such plan, and (ii) as of the Retirement Date, Mr. Mondics will be vested in stock appreciation rights, restricted stock units, and performance shares granted pursuant to the Long-Term Performance Plan, and benefits under the SERP and the Key Executive Restoration Plan, with vesting and payments subject to the terms of such awards and plans; and Mr. Mondics acknowledges and re-affirms his confidentiality, noncompetition, non-solicitation, and non-disparagement obligations under all such awards and plans, including without limitation, applicable clawback provisions in the event of Mr. Mondics' breach thereof.

3.6    Mr. Mondics acknowledges and agrees that under the terms of this Agreement he is receiving consideration beyond that which he would otherwise be entitled to receive and which, but for the mutual covenants set forth in this Agreement, the Company would not otherwise be obligated to provide.

4.    Waiver and Release of Claims.

4.1    In exchange for the Company's promises set forth in this Agreement, and except as otherwise provided for or specifically referenced in this Agreement, Mr. Mondics, including his heirs, administrators, executors, spouse, if any, successors, estate, representatives and assigns and all others claiming by or through him, voluntarily and knowingly releases the Company, its parent companies, their subsidiaries, divisions, affiliates, related companies, predecessors, successors, partners, members, directors, officers, trustees, employees, independent contractors, consultants, stockholders, owners, attorneys, agents, benefit plans, subrogees, insurers, representatives and assigns, whether alleged to have acted in their official capacities or personally (collectively, the “Released Parties”) completely and forever, from any and all claims, causes of action, charges, suits, contracts, promises, or demands of any kind, which he may now have, whether known or unknown, intentional or otherwise (the “Claims”), from the beginning of time to the Effective Date of this Agreement. “Effective Date” is the date this Agreement is signed by Mr. Mondics, subject to his right of revocation as set forth in Paragraph 6. Mr. Mondics reserves no claims against any of the Released Parties.

4.2    Mr. Mondics understands and agrees that this Agreement covers all claims described in Paragraph 4.1, including, but not limited to, any alleged violation of the Civil Rights Act of 1991; Title VII of the Civil Rights Act of 1964, as amended; the Americans with Disabilities Act; the Employee Retirement Income Security Act of 1974, as amended; the Family Medical Leave Act; the Age Discrimination in Employment Act as amended by the Older Workers Benefit Protection Act; the Fair Labor Standards Act, to the extent permitted by law; the Occupational Safety and Health Act of 1970; Ohio's

fair employment statutes; and any other federal, state or local civil, labor, pension, wage-hour or human rights law, federal or state public policy, contract or tort law; any claim arising under federal or Ohio common law, including, but not limited to, constructive or wrongful discharge or intentional or negligent infliction of emotional distress; and any claim for costs or attorney's fees.

4.3    Mr. Mondics understands and agrees that he is waiving the right to file, and agreeing not to file, any complaints or civil actions against the Released Parties relating to any facts or events occurring from the beginning of time to the Effective Date of this Agreement. Mr. Mondics further understands and agrees that he is waiving his right to receive any monetary awards from any complaints, charges or civil actions arising out of or relating to his employment with or separation from the Company. Mr. Mondics further understands and agrees that this Agreement may be used by any of the Released Parties as a complete defense to any past, present or future claim or entitlement asserted against any of the Released Parties based on events that have occurred from the beginning of time to the Effective Date of this Agreement.

4.4    Paragraph 4.3 does not limit Mr. Mondics' right to file a civil action to enforce the terms of this Agreement or to test the validity of this Agreement. Paragraph 4.3 likewise does not limit Mr. Mondics' right to participate in any proceedings before an agency or administrative agency responsible for enforcing labor and/or employment laws, e.g., the Equal Employment Opportunity Commission, but it does waive his right to receive any monetary award from such proceedings.

4.5    Mr. Mondics warrants that he has not assigned any of the Claims being released under this Paragraph 4.

5.    Representations. Mr. Mondics declares and expressly warrants that (i) he is not Medicare eligible, that he is not a Medicare beneficiary, and that he is not within 30 months of becoming Medicare eligible; (ii) he is not 65 years of age or older; (iii) that he is not suffering from end stage renal failure or amyotrophic lateral sclerosis; (iv) he has not received Social Security benefits for 24 months or longer; and (v) he has not applied for Social Security benefits, and/or has not been denied Social Security disability benefits and is not appealing any denial of Social Security disability benefits.

5.1    Mr. Mondics affirms, covenants and warrants that he has made no claim for illness or injury against, nor is he aware of any facts supporting any claim against, the Released Parties under which the Released Parties could be liable for medical expenses incurred by him before or after the execution of this Agreement.

5.2    Because Mr. Mondics is not a Medicare recipient as of the date of this release, he is aware of no medical expenses that Medicare paid and for which the Released Parties are or could be liable now or in the future. Mr. Mondics agrees and affirms that, to the best of his knowledge, no liens of any governmental entities, including those for Medicare conditional payments, exist.

6.    ADEA Release. In compliance with the Older Workers Benefit Protection Act, Mr. Mondics is hereby advised to consult with an attorney regarding the terms, meaning and impact of this Agreement. In addition, Mr. Mondics understands and agrees that: (i) by signing this Agreement, Mr. Mondics waives and releases any claims Mr. Mondics might have against any of the Released Parties, including, but not limited to, any claims under the Age Discrimination in Employment Act of 1967; (ii) Mr. Mondics has twenty-one (21) days from the date of receipt of this Agreement to consider whether or not to execute this Agreement, which Mr. Mondics waives by virtue of Mr. Mondics' execution of the Agreement during the consideration period; and (iii) after Mr. Mondics signs this Agreement and it becomes effective, Mr. Mondics has seven (7) days from that date to change his mind and revoke the Agreement. To revoke the Agreement, Mr. Mondics

must clearly communicate his decision in writing to the General Counsel of the Company by the seventh day following the Effective Date of this Agreement. Mr. Mondics understands and agrees that should he revoke his release and waiver as to claims under the Age Discrimination in Employment Act of 1967, as amended, the Company's obligations under this Agreement will become null and void.

7.    Derogatory Comments. Mr. Mondics agrees to refrain from making, directly or indirectly, now or at any time in the future, whether in writing, orally or electronically: (i) any derogatory comment concerning the Company Group or any of their current or former directors, officers, employees or shareholders, or (ii) any other comment that could reasonably be expected to be detrimental to the business or financial prospects or reputation of the Company Group, provided, however, that should Mr. Mondics ever be compelled to testify in any form regarding matters within his knowledge relating to the Company Group, he may testify truthfully to the best of his knowledge even if such testimony is or reasonably could be expected to be detrimental to the business or financial prospects or reputation of the Company Group. The Company agrees that it will direct its directors and executive officers to refrain from making, directly or indirectly, now or at any time in the future, whether in writing, orally or electronically: (i) any derogatory comment concerning Mr. Mondics, or (ii) any other comment that could reasonably be expected to be detrimental to Mr. Mondics' business or financial prospects or reputation.

8.    Return of Property. On or prior to the Retirement Date, as requested by the Company, Mr. Mondics shall promptly surrender to the Company all property of the Company Group in his possession and all property made available to Mr. Mondics in connection with his employment by the Company, including, without limitation, any and all Company credit cards, keys, security access codes, records, manuals, customer lists, notebooks, computers, computer programs and files, papers, electronically stored information and documents kept or made by Mr. Mondics in connection with his employment.

9.    Cooperation. From and after the Retirement Date, Mr. Mondics shall cooperate in all reasonable respects with the Company Group and their respective directors, officers, attorneys and experts in connection with the conduct of any action, proceeding, investigation or litigation involving the Company Group, including any such action, proceeding, investigation or litigation in which Mr. Mondics is called to testify.

10.    Noncompetition.  Mr. Mondics is the President and Chief Operating Officer of the Company and all business plans, strategy, budgets, product, vendor and customer information held by the Company has been available to Mr. Mondics continuously during his service as such.  Therefore, in consideration of the mutual promises set forth herein, in addition to and not in substitution of any similar conditions or covenants either made by Mr. Mondics or applicable under any other award, plan or agreement, Mr. Mondics agrees that for a period commencing on the Retirement Date and ending on the 24-month anniversary of the Retirement Date (the “RestrictedPeriod”), he shall not, without the prior written consent of the Company, directly or indirectly, and whether as principal or investor or as an employee, officer, director, manager, partner, consultant, agent or otherwise, alone or in association with any other person, firm, corporation or other business organization, (i) carry on a Competing Business (as hereinafter defined) in the territories in which the Company Group conducts its business or (ii) engage in business for an Other Prohibited Company.  For purposes of this Paragraph 10, carrying on a “Competing Business” means to engage in the distribution, assembly, or sale to industrial, commercial, institutional or government markets, of bearings, power transmission components, hydraulic and pneumatic components and systems, industrial rubber products, or linear motion components, irrespective of manufacturer or design; engineering, design and systems integration for industrial, hydraulic, or pneumatic applications;  mechanical, fabricated rubber, or hydraulic or pneumatic power shop services; maintenance training services for the foregoing product/service areas; or inventory and storeroom management solutions for the foregoing product/service areas.  For purposes of this

Paragraph 10, the following companies (and their affiliated companies) shall each be deemed an “Other Prohibited Company”: Amazon.com, Inc., Fastenal Company, W. W. Grainger, Inc., Kimball Midwest, Inc., Lawson Products, Inc., MSC Industrial Direct Co., Inc., and McMaster-Carr Supply Company.  Nothing herein shall limit Mr. Mondics' right to own not more than 2% of any of the debt or equity securities of any business organization that is then filing reports with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.

11.    Non-Solicitation. Mr. Mondics agrees that during the Restricted Period, he shall not directly or indirectly (i) interfere with or attempt to interfere with the relationship between the Company Group and any person who is, or was during the then most recent 12-month period, an employee, officer, representative or agent of the Company Group, or (ii) solicit, induce or attempt to solicit, induce any of them to leave the employ of the Company Group or violate the terms of their contracts, or any employment arrangements, with such entities; or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company Group to cease doing business with the Company Group, or in any way interfere with the relationship between the Company Group and any such customer, supplier, licensee or other business relation of the Company Group. As used herein the term “indirectly” shall include without limitation, Mr. Mondics permitting the use of his name by any competitor of the Company Group.

12.    Confidentiality.

12.1    “Confidential Information” means all ideas, designs, processes, drawings, graphics, plans, specifications, techniques, data, know-how, marketing and development information, company strategy, intellectual property, project plans, budgets, customer and potential customer lists and other information related to customers or potential customers, price lists, pricing and purchasing policies, contracting practices, supplier rebate programs, business acquisition targets, information system designs, employee lists and evaluations, cost and financial information as well as any other information that is not publicly available and/or that the Company considers to be proprietary or confidential including, without limitation, all information revealed to or acquired or created by Mr. Mondics during his employment by the Company relating to any of the foregoing or the Company's past, current or future business.

12.2    Mr. Mondics has occupied a fiduciary relationship to the Company and has obtained access to and knowledge of Confidential Information of the Company and the Company Group. Mr. Mondics agrees and acknowledges that the unauthorized use or disclosure by him of Confidential Information to third parties might cause irreparable damage to the Company and the Company Group. Accordingly, in addition to all those restrictions imposed under law as a result of his fiduciary relationship, and unless compelled by legal process from a court or other tribunal of competent jurisdiction (in which case Mr. Mondics will give prompt written notice to the Company's General Counsel and a reasonable opportunity to object), Mr. Mondics agrees that at all times following the Effective Date, he will not, without the prior written consent of the General Counsel of the Company, copy, publish, disclose, divulge or discuss with any third party, nor use for his own benefit or that of any third party, any Confidential Information, except in the normal conduct of his duties under this Agreement.

12.3    On or prior to the Retirement Date, as requested by the Company, irrespective of the time or manner thereof or the reason therefor, Mr. Mondics agrees to promptly return and surrender to the Company all Confidential Information and all copies thereof in any form which is in any manner in his control or possession.

13.    Certain Remedies.

13.1    Without intending to limit the remedies available to the Company Group, including, but not limited to, those set forth in Paragraph 13.2, Mr. Mondics agrees that a breach of any of the covenants contained in this Agreement may result in material and irreparable injury to the Company Group for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, any member of the Company Group shall be entitled to seek a temporary restraining order or a preliminary or permanent injunction, or both, without bond or other security, restraining Mr. Mondics from engaging in activities prohibited by the covenants contained in this Agreement or such other relief as may be required specifically to enforce any of the covenants contained in this Agreement. Such injunctive relief in any court shall be available to the Company Group in lieu of, or prior to or pending determination in, any arbitration proceeding.

13.2    Subject to Paragraph 4.4, in the event that Mr. Mondics (i) files any charge, claim, demand, action or arbitration with regard to his employment, compensation or termination of employment under any federal, state or local law, or an arbitration, except in either case for a claim for breach of this Agreement or failure to honor the obligation set forth herein, or (ii) materially breaches any of the covenants contained in this Agreement, the Company shall be entitled to cease making any payments or benefits due to him under this Agreement.

14.    Section 409A. Any payments and/or benefits provided under this Agreement are intended to be exempt for the requirements of Section 409A and avoid the imputation of any tax, penalty or interest under Section 409A. This Agreement shall be construed and interpreted consistent with that intent.

15.    Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, and all of which shall constitute a single memorandum. If Mr. Mondics signs a facsimile copy of this Agreement, he will thereafter provide the Company with a conforming original copy.

16.    Withholding Taxes. Any payments, including the Consulting Payments, made or benefits provided to Mr. Mondics under this Agreement shall be reduced by any applicable withholding taxes (e.g., income taxes, Social Security taxes, Medicare taxes, etc.,) and other payments required by applicable law and shall be reflected on one or more W-2s issued to Mr. Mondics. The Company shall remit all amounts so withheld to the proper authorities. However, Mr. Mondics shall be responsible for the payment of all taxes and insurance required under applicable law as a result of the payments and benefits provided under this Agreement.

17.    Waiver. The failure of any party to this Agreement to enforce any of its terms, provisions or covenants shall not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by any party hereto of any breach or default by another party of any term or provision of this Agreement shall not operate as a waiver of any other breach or default.

18.    Severability. The parties agree that if any provision of this Agreement is declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, including the general release language, such provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect. In addition, the parties agree that they shall not seek, either directly or indirectly, to have any term of this Agreement held unenforceable, including the general release language. Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively

broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law.

19.    Descriptive Headings. The paragraph headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

20.    Successors and Assigns. Except as otherwise provided herein, this Agreement shall inure to the benefit of and be enforceable by Mr. Mondics and the Company and their respective successors and assigns.

21.    Governing Law. The validity, construction, and interpretation of this Agreement and the rights and duties of the parties hereto shall be subject to the laws of the State of Ohio without regard to any state conflict of law rules.

22.    Entire Agreement. This Agreement contains the complete agreement and understanding between the parties hereto with respect to the matters covered hereby and supersedes and replaces any express or implied, written or oral, prior agreement, plan or arrangement with respect to the terms of Mr. Mondics' employment and the termination thereof which he may have had with the Company Group. The parties agree that no promises or agreements shall be binding or shall modify this understanding unless in writing and signed by both parties.

The parties agree that they have read this Agreement, understand and agree to its terms, and have knowingly and voluntarily signed it on the dates written below (or, if Mr. Mondics does not include a date under his signature line, the date set forth shall be the date this Agreement, signed by Mr. Mondics, is received by the Company).

/s/ Benjamin J. Mondics
BENJAMIN J. MONDICS	Date: 6-18-13
APPLIED INDUSTRIAL TECHNOLOGIES
By: /s/ Neil A. Schrimsher
Its: CEO	Date: 6-18-2013

APPENDIX A

REAFFIRMATION OF EXECUTIVE RETIREMENT AGREEMENT

(the “REAFFIRMATION AGREEMENT”)

(NOT TO BE EXECUTED UNTIL AFTER THE RETIREMENT DATE)

For the consideration and promises of the Company Group set forth in the Agreement, Mr. Mondics hereby reaffirms the covenants, obligations, representations and releases contained in the Agreement, including, but not limited to, the release of all claims set forth in Paragraphs 4, 5 and 6. In compliance with the Older Workers Benefit Protection Act, Mr. Mondics is hereby advised to consult with an attorney regarding the terms, meaning and impact of this Agreement. In addition, Mr. Mondics understands and agrees that: (a) by signing this Reaffirmation Agreement, Mr. Mondics waives and releases any claims he might have against any of the Released Parties, including, but not limited to, any claims under the Age Discrimination in Employment Act of 1967; (b) Mr. Mondics has had at least twenty-one (21) days from the date of receipt of this Reaffirmation Agreement to consider whether or not to execute this Reaffirmation Agreement; and (c) after Mr. Mondics signs this Agreement and it becomes effective, he has seven (7) days from that date to change his mind and revoke the Reaffirmation Agreement. To revoke the Reaffirmation Agreement, Mr. Mondics must clearly communicate Mr. Mondics' decision in writing to the Company's General Counsel, Applied Industrial Technologies, One Applied Plaza, Cleveland, Ohio, 44115 by the seventh day following his execution of this Reaffirmation Agreement. Mr. Mondics understands and agrees that should he revoke his release and waiver as to claims under the Age Discrimination in Employment Act of 1967, the Company's obligations under this Reaffirmation Agreement will become null and void.

THIS REAFFIRMATION AGREEMENT PROVIDES A COMPLETE AND BINDING RELEASE AND WAIVER OF ALL EXISTING CLAIMS AND RIGHTS, KNOWN AND UNKNOWN, MR. MONDICS MAY HAVE AGAINST THE COMPANY AS OF THE DATE HE SIGNS THIS REAFFIRMATION AGREEMENT.

THIS IS A WAIVER AND RELEASE; READ BEFORE SIGNING.

____________________________________

BENJAMIN J. MONDICS

Date: _______________________________                

EX-13

MANAGEMENT'S DISCUSSION AND ANALYSIS                    Exhibit 13

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

With more than 5,000 associates across North America, Australia and New Zealand, Applied Industrial Technologies (“Applied,” the “Company,” “We,” “Us” or “Our”) is a leading industrial distributor serving MRO (Maintenance, Repair & Operations) and OEM (Original Equipment Manufacturer) customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. Applied also offers maintenance training and inventory management solutions that provide added value to our customers. We have a long tradition of growth dating back to 1923, the year our business was founded in Cleveland, Ohio. At June 30, 2013, business was conducted in the United States, Puerto Rico, Canada, Mexico, Australia and New Zealand from 522 facilities.

The following is Management's Discussion and Analysis of significant factors that have affected our financial condition, results of operations and cash flows during the periods included in the accompanying statements of consolidated income, consolidated comprehensive income and consolidated cash flows. When reviewing the discussion and analysis set forth below, please note that the majority of SKUs we sell in any given year were not sold in the prior year, resulting in the inability to quantify certain commonly used comparative metrics analyzing sales, such as changes in product mix and volume.

Our fiscal 2013 consolidated sales were $2.5 billion, an increase of $86.7 million or 3.7% compared to the prior year. Net sales from acquired businesses added $107.8 million or 4.5%. Gross margin was 27.7% compared to 27.6% in the prior year. Our operating margin increased to 7.2% compared to the prior year’s 7.1%. Our earnings per share was $2.78 versus $2.54 in fiscal year 2012, an increase of 9.4%.

Our consolidated balance sheet remains strong. Shareholders’ equity is $759.6 million, up from $672.1 million at June 30, 2012. Working capital increased$55.8 million from June 30, 2012 to $491.4 million at June 30, 2013. Our current ratio remains strong at 3.0 to 1, compared to 2.9 to 1 at June 30, 2012.

Applied monitors several economic indices that have been key indicators for industrial economic activity in the United States. These include the Industrial Production and Manufacturing Capacity Utilization (MCU) indices published by the Federal Reserve Board and the Purchasing Managers Index (PMI) published by the Institute for Supply Management (ISM). Historically, our performance correlates well with the MCU, which measures productivity and calculates a ratio of actual manufacturing output versus potential full capacity output. When manufacturing plants are running at a

high rate of capacity, they tend to wear out machinery and require replacement parts.

Industrial production increased 0.3% in June after having remained the same in May. In the manufacturing sector, output advanced 0.3% in June, following an increase of 0.2% in May and increased at an annual rate of 0.6% in the June quarter. In June, capacity utilization for manufacturing moved up 0.1% to 76.1% compared to May. The ISM PMI registered 50.9 in June, above 50 (its expansionary threshold). We enter fiscal 2014 optimistic about the U.S. industrial economy for our fiscal 2014.

YEAR ENDED JUNE 30, 2013 vs. 2012

The following table is included to aid in review of Applied’s statements of consolidated income.

	Year Ended June 30, As a % of Net Sales				Change in $'s Versus Prior Period
	2013		2012		% Increase
Net Sales	100.0	%	100.0	%	3.7	%
Gross Profit Margin	27.7	%	27.6	%	4.4	%
Selling, Distribution & Administrative	20.6	%	20.5	%	4.2	%
Operating Income	7.2	%	7.1	%	4.8	%
Net Income	4.8	%	4.6	%	8.6	%

Sales in fiscal 2013 were $2.5 billion, which was $86.7 million or 3.7%above the prior year. Incremental net sales from companies acquired since the prior year period contributed $107.8 million or 4.5%. Currency translation decreased fiscal year sales by approximately $1.6 million or less than 1%. We experienced overall declines in sales from our businesses not acquired in the current year of approximately 0.8%. Approximately half of this decrease is due to there being 251.5 selling days in year ended June 30, 2013 versus 252.5 in the year ended June 30, 2012 which would approximate a 0.4% decrease in sales.

Sales of our Service Center Based Distribution segment increased$98.9 million, or 5.2%, compared to fiscal year 2012, primarily attributed to acquisition related sales growth with acquisitions adding $102.8 million or 5.4%.

Sales of our Fluid Power Businesses segment decreased$12.2 million or 2.6%, primarily attributed to weakness within a few of our larger Fluid Power businesses. Acquisitions within this segment added $5.0 million or 1.1%.

5

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

____________________________________________________________________________________________

Sales in our U.S. operations were up $7.9 million or 0.4%, with acquisitions adding $21.7 million or 1.1%. Sales from our Canadian operations increased $5.4 million or 1.8%. Acquisitions added $16.8 million or 5.7%, unfavorable foreign currency translation reduced sales by $1.7 million or 0.6%, with the remaining difference relating to decreases in sales from businesses not acquired in the current year. Consolidated sales from our other country operations which include Mexico, Australia and New Zealand were $69.3 million or 94.7% above the prior year. Virtually all of this increase relates to our new Australian and New Zealand operations.

The sales product mix for fiscal 2013 was 72.1% industrial products and 27.9% fluid power products compared to 70.8% industrial and 29.2% fluid power in the prior year.

At June 30, 2013, we had a total of 522 operating facilities in the United States, Puerto Rico, Canada, Mexico, Australia and New Zealand, versus 476 in the U.S., Canada, Mexico and Puerto Rico at June 30, 2012.

Our gross profit margin was 27.7% in fiscal 2013 versus 27.6% in fiscal 2012. The increased margins are attributable to the impact of relatively higher gross margins from acquired operations.

Selling, distribution and administrative expenses (SD&A) consist of associate compensation, benefits and other expenses associated with selling, purchasing, warehousing, supply chain management, and providing marketing and distribution of the Company’s products, as well as costs associated with a variety of administrative functions such as human resources, information technology, treasury, accounting, legal, and facility related expenses. SD&A increased$20.5 million or 4.2% during fiscal 2013 compared to the prior year, and as a percent of sales increased slightly to 20.6% from 20.5% in fiscal 2012. The increase in SD&A, along with the increase in SD&A as a percentage of sales was entirely driven by the increased SD&A and relatively higher SD&A levels from businesses acquired since the prior year period. These acquired businesses added $37.8 million of SD&A expenses.

Operating income increased$8.0 million or 4.8% to $176.4 million during fiscal 2013 from $168.4 million during 2012. As a percent of sales, operating income increased to 7.2% in the current year from 7.1% in 2012.

Operating income as a percentage of sales for the Service Center Based Distribution segment decreased to 6.9% in fiscal 2013 from 7.1% in fiscal 2012. This decrease is attributable to an increase in SD&A in select regions in which we do business (representing an approximate 0.7% reduction in operating income as a percentage of sales) slightly offset by a less than

commensurate increase in gross profit mostly due to businesses acquired since the prior year (representing an increase of approximately 0.6%).

Operating income as a percentage of sales for the Fluid Power Businesses segment decreased to 9.0% in fiscal 2013 from 9.2% in fiscal 2012. This reduction is attributable to decreases in gross profit across many of our fluid power subsidiaries (representing a decrease of approximately 0.2%).

Segment operating income is impacted by changes in the amounts and levels of expenses allocated to the segments. The expense allocations include corporate charges for working capital, logistics support and other items and impact segment gross profit and operating expense.

Interest expense, net, remained relatively stable as compared to the prior fiscal year.

Other expense (income), net, represents certain non-operating items of income and expense. This was $1.4 million of income in fiscal 2013 compared to $1.6 million of expense in fiscal 2012. Current year income primarily consists of unrealized gains on investments held by non-qualified deferred compensation trusts of $1.3 million. Fiscal 2012 primarily consisted of $1.6 million of foreign currency transaction losses.

Income tax expense as a percent of income before taxes was 33.5% for fiscal 2013 and 34.8% for fiscal 2012. The impact of lower effective tax rates in foreign jurisdictions favorably reduced our rate when compared to the U.S. federal statutory rate by 2.3%. Further reducing our rate compared to the U.S. federal statutory rate is a permanent dividend deduction benefit of 0.5% along with other items which reduced our rate by 1.0%. These reductions compared to the U.S. federal rate were offset by the impact of state and local taxes which increased the rate by 2.3%.

We expect our income tax rate for fiscal 2014 to be in the range of 33.5% to 34.5%.

As a result of the factors addressed above, net income for fiscal 2013 increased$9.4 million or 8.6% from the prior year. Net income per share increased at a slightly higher rate of 9.4% due to lower weighted average shares outstanding in fiscal 2013.

The number of Company associates was 5,109 at June 30, 2013 and 4,664 at June 30, 2012.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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YEAR ENDED JUNE 30, 2012 vs. 2011

The following table is included to aid in review of Applied’s statements of consolidated income.

	Year Ended June 30, As a % of Net Sales				Change in $'s Versus Prior Period
	2012		2011		% Increase
Net Sales	100.0	%	100.0	%	7.3	%
Gross Profit Margin	27.6	%	27.7	%	6.7	%
Selling, Distribution & Administrative	20.5	%	20.9	%	5.1	%
Operating Income	7.1	%	6.8	%	11.7	%
Net Income	4.6	%	4.4	%	12.4	%

Net sales in fiscal 2012 were $2.4 billion, which was $162.6 million or 7.3% above the prior year, driven by improvements in the industrial economy as well as a continued focus on profitable sales growth. Incremental net sales from companies acquired in fiscal 2012 contributed $16.6 million or 0.7%. Currency translation decreased fiscal 2012 year sales by approximately $1.8 million or 0.1%. In local currency, net sales from our Canadian operations were up 12.2% from fiscal 2011, including 2.8% from acquisitions. In local currency, net sales from our Mexican operations were up 25.9%. The number of selling days in fiscal 2012 was the same as in fiscal 2011.

Net sales of our Service Center Based Distribution segment increased $133.8 million, or 7.6%, compared to fiscal year 2011 led by improvements in the industrial economy, as well as a continued focus on profitable sales growth, with acquisitions adding $16.6 million or 0.9%. Net sales of our Fluid Power Businesses segment increased $28.8 million or 6.5%, also driven by improvements in the industrial economy as well as a continued focus on profitable sales growth.

The sales product mix for fiscal 2012 was 70.8% industrial products and 29.2% fluid power products compared to 70.5% industrial and 29.5% fluid power in the prior year.

At June 30, 2012, we had a total of 476 operating facilities in the U.S., Canada and Mexico versus 474 at June 30, 2011.

Our gross profit margin was 27.6% in fiscal 2012 versus 27.7% in fiscal 2011. Positive impacts as a result of higher supplier purchasing incentives offset the impact of lower LIFO layer liquidation benefits recognized in the current year ($3.4 million of LIFO layer liquidation benefits in fiscal 2012 versus $12.3 million in fiscal 2011).

SD&A increased $23.7 million or 5.1% during fiscal 2012 compared to the prior year, and as a percent of

sales decreased to 20.5% from 20.9% in fiscal 2011. Enterprise Resource Planning system (ERP) project cash expenses were $18.3 million ($9.8 million above fiscal 2011). SD&A of businesses acquired since the prior year period added $5.6 million. Effective December 31, 2011, the Executive Organization and Compensation Committee of the Board of Directors froze participant benefits (credited service and final average earnings) and entry into the Supplemental Executive Retirement Benefits Plan (SERP) which constituted a plan curtailment. As a result, we recognized $3.1 million in prior service costs upon curtailment of the plan in the second quarter of fiscal 2012. We also incurred one-time expenses associated with our CEO transition of $1.4 million in fiscal 2012. The translation impact of our foreign subsidiaries into U.S. dollars had an unfavorable impact of $0.5 million on SD&A in the year.

Operating income increased 11.7% to $168.4 million during fiscal 2012 from $150.8 million during 2011. As a percent of sales, operating income increased to 7.1% in fiscal year 2012 from 6.8% in 2011. The $17.6 million increase in operating income during fiscal 2012 primarily reflects higher sales levels and the impact of leverage on increased sales as we kept our SD&A to 20.5% of sales in 2012 versus 20.9% in fiscal 2011.

Operating income as a percentage of sales for the Service Center Based Distribution segment increased to 7.1% in fiscal 2012 from 6.5% in fiscal 2011. This increase was attributable to improved gross profit (representing 0.4% of the improvement) and higher sales levels without a commensurate increase in SD&A (representing 0.2% of the improvement).

The Fluid Power Businesses segment operating income decreased slightly to 9.2% in fiscal 2012 from 9.5% in fiscal 2011. This reduction was attributable to lower net gross profit primarily from one vertical market within one of our Fluid Power Businesses (representing 0.5% of the reduction). Lower SD&A expenses as a percent of sales helped offset the reduction in gross profit.

Segment operating income is impacted by changes in the amounts and levels of expenses allocated to the segments. The expense allocations include corporate charges for working capital, logistics support and other items and impact segment gross profit and operating expense.

Interest expense, net, decreased $1.7 million during fiscal 2012 compared with fiscal 2011. We repaid all of our outstanding debt in fiscal 2011 which lowered interest expense.

Other expense (income), net, was $1.6 million of expense in fiscal 2012 compared to income of $3.8 million in fiscal 2011.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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Fiscal 2012 expense primarily consisted of foreign currency transaction losses of $1.6 million. Fiscal 2011 included $2.0 million of unrealized gains on investments held by non-qualified deferred compensation trusts and recognition of a $1.7 million gain from death benefits received under two life insurance policies.

Income tax expense as a percent of income before taxes was 34.8% for fiscal 2012 and 36.7% for fiscal 2011. The impact of lower effective tax rates and higher income in foreign jurisdictions favorably reduced our rate when compared to the U.S. federal statutory rate by 1.8%. Further reducing our rate compared to the U.S. federal statutory rate is a permanent dividend deduction benefit of 0.5%. These reductions compared to the U.S. federal rate were offset by the impact of state and local taxes which increased the rate by 2.5%.

In fiscal 2011, the impact of lower effective tax rates and higher income in foreign jurisdictions favorably reduced our rate when compared to the U.S. federal statutory rate by 1.0%. Further reducing our rate compared to the U.S. federal statutory rate is a permanent dividend deduction benefit of 0.5%. These reductions compared to the U.S. federal rate were offset by the impact of state and local taxes and by provision made for U.S. income tax on a portion of undistributed earnings not considered permanently reinvested in our Canadian subsidiaries which increased the rate by 2.8% and 1.8%, respectively.

As a result of the factors addressed above, net income for fiscal 2012 increased $12.0 million or 12.4% from the prior year. Net income per share increased at a slightly higher rate of 13.4% due to stock repurchases in fiscal 2012.

The number of Company associates was 4,664 at June 30, 2012 and 4,640 at June 30, 2011.

LIQUIDITY AND CAPITAL RESOURCES

Our primary source of capital is cash flow from operations, supplemented as necessary by bank borrowings or other sources of debt. At June 30, 2013 and June 30, 2012, we had no outstanding borrowings. Management expects that our existing cash, cash equivalents, funds available under the revolving credit and uncommitted shelf facilities, cash provided from operations, and the use of operating leases will be sufficient to finance normal working capital needs in each of the countries we operate in, payment of dividends, acquisitions, investments in properties, facilities and equipment, and the purchase of additional Company common stock. Management also believes that additional long-term debt and line of credit financing could be obtained based on the Company’s credit standing and financial strength.

The Company holds, from time to time, relatively significant cash and cash equivalent balances outside

of the United States of America. The following table shows the Company's total cash as of June 30, 2013 by geographic location.

Country	Amount
United Sates	$	27,222
Canada	40,915
Mexico	3,690
Australia	1,018
New Zealand	319
Total	$	73,164

To the extent cash in foreign countries is distributed to the U.S., it could become subject to U.S. income taxes. Foreign tax credits may be available to offset all or a portion of such taxes. For financial reporting purposes, the Company has provided $2.8 million of U.S. income taxes on approximately $11.0 million of undistributed earnings from Canada.

The Company’s working capital at June 30, 2013 was $491.4 million compared to $435.6 million at June 30, 2012. The current ratio was 3.0 to 1 at June 30, 2013 and 2.9 to 1 at June 30, 2012.

All acquisitions completed in fiscal 2013 were funded from the Company's available cash.

Net Cash Flows

The following table is included to aid in review of Applied’s statements of consolidated cash flows; all amounts are in thousands.

	Year Ended June 30,
Net Cash Provided by (Used in):	2013			2012			2011
Operating Activities	$	111,397		$	90,422		$	76,842
Investing Activities	(78,825		)	(39,434		)	(47,887		)
Financing Activities	(38,025		)	(60,816		)	(116,523		)
Exchange Rate Effect	175			(2,822		)	2,883
(Decrease) in Cash and Cash Equivalents	$	(5,278	)	$	(12,650	)	$	(84,685	)

In the last three fiscal years, and typically during periods of sales expansion, a portion of cash generated from operations is invested in working capital, particularly receivables and inventory.

Net cash used in investing activities in fiscal 2013 used $12.2 million for capital expenditures and $67.6 million for acquisitions. Capital expenditures included $5.6 million related to the ERP project. Fiscal 2012 investing cash activities included the use of $26.0 million for capital expenditures and $14.7 million for acquisitions. Capital expenditures included $16.7 million related to the ERP project. In fiscal 2011, net cash used in investing activities included $30.5 million for acquisitions and $20.4 million for capital

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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expenditures. Capital expenditures included $12.5 million related to the ERP project.

Net cash used in financing activities in fiscal 2013 included $37.2 million for dividend payments and $3.8 million related to acquisition holdback payments, partially offset by $2.6 million of excess tax benefits from share-based compensation. Net cash used in financing activities in fiscal 2012 included $33.8 million for dividend payments and $31.0 million to repurchase 997,200 shares of treasury stock. These uses were partially offset by $3.7 million of excess tax benefits from share-based compensation. In fiscal 2011, we repaid $50.0 million under our revolving credit facility, $25.0 million under our private placement debt and $12.8 million related to associated cross-currency swaps. Additionally, we paid dividends of $29.8 million and repurchased 189,600 shares of treasury stock for $6.1 million.

The increase in dividends over the last three fiscal years is the result of increases in our dividend payout rates. We paid dividends of $0.88, $0.80 and $0.70 per share in fiscal 2013, 2012 and 2011, respectively.

Capital Expenditures

We expect capital expenditures for fiscal 2014 to be in the $9.0 million to $12.0 million range, primarily consisting of capital associated with additional information technology equipment and infrastructure investments. Depreciation for fiscal 2014 is expected to be in the range of $13.5 million to $14.5 million.

ERP Project

In the second quarter of 2011 Applied commenced its ERP (SAP) project to transform the Company's technology platforms and enhance its business information and technology systems for future growth. We have deployed our solution in a portion of our Canadian and U.S. operations. Deployments have continued in the fourth quarter with further deployments planned for fiscal 2014. We expect to complete the U.S. deployment in fiscal 2014.

Share Repurchases

The Board of Directors has authorized the repurchase of shares of the Company’s stock. These purchases may be made in open market and negotiated transactions, from time to time, depending upon market conditions. At June 30, 2013, we had authorization to purchase an additional 1,141,500 shares.

In fiscal 2013, 2012 and 2011, we repurchased 1,300, 997,200 and 189,600 shares of the Company’s common stock, respectively, at an average price per share of $40.96, $31.12 and $32.09, respectively.

Borrowing Arrangements

The Company has a five-year committed revolving credit agreement that expires in May 2017. This agreement provides for unsecured borrowings of up to

$150.0 million. We had no borrowings outstanding under our revolving credit agreements at June 30, 2013 or June 30, 2012. Unused lines under this facility, net of outstanding letters of credit, totaled $141.3 million and were available to fund future acquisitions or other capital and operating requirements. Borrowings under this agreement would be at variable interest rates tied to either LIBOR, prime, or the bank’s cost of funds.

We also have an uncommitted long-term financing shelf facility which expires in February 2016 and enables us to borrow up to $125.0 million with terms of up to fifteen years. We had no outstanding borrowings under this facility at June 30, 2013 or June 30, 2012.

The revolving credit facility and uncommitted shelf facility contain restrictive covenants regarding liquidity, net worth, financial ratios, and other covenants. At June 30, 2013, the most restrictive of these covenants required that the Company have consolidated income before interest, taxes, depreciation and amortization at least equal to 300% of net interest expense. At June 30, 2013, the Company was in compliance with all covenants and expects to remain in compliance during the terms of the agreements.

Accounts Receivable Analysis

The following table is included to aid in analysis of accounts receivable and the associated provision for losses on accounts receivable (amounts in thousands):

June 30,	2013			2012
Accounts receivable, gross	$	337,617		$	315,375
Allowance for doubtful accounts	7,737			8,332
Accounts receivable, net	$	329,880		$	307,043
Allowance for doubtful accounts, % of gross receivables	2.3		%	2.6		%
Year Ended June 30,	2013			2012
Provision for losses on accounts receivable	$	2,267		$	3,915
Provision as a % of net sales	0.09		%	0.16		%

Accounts receivable are reported at net realizable value and consist of trade receivables from customers. Management monitors accounts receivable by reviewing Days Sales Outstanding (DSO) and the aging of receivables for each of the Company's locations.

On a consolidated basis, DSO was 47.2 at June 30, 2013 versus 45.2 at June 30, 2012. Accounts receivable increased 7.4% this year, compared to a 3.7% increase in sales in the twelve months ended June 30, 2013. We primarily attribute the increase in DSO to acquisitions which historically operate at a longer DSO, coupled with higher sales to large contract accounts.

9

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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Less than 2.5% of our accounts receivable balances are more than 90 days past due. On an overall basis, our provision for losses from uncollected receivables represents 0.09% of our sales in the year ended June 30, 2013. Historically, this percentage is around 0.15%. Our experience with accounts which have uncollected receivables was better than our historical averages in fiscal 2013. Management believes the overall receivables aging and provision for losses on uncollected receivables are at reasonable levels.

Inventory Analysis

Inventories are valued at the lower of cost or market, using the last-in, first-out (LIFO) method for U.S. inventories and the average cost method for foreign inventories. Management uses an inventory turnover ratio to monitor and evaluate inventory. Management calculates this ratio on an annual as well as a quarterly basis and uses inventory valued at current costs. The annualized inventory turnover (using current costs) for the period ended June 30, 2013 was 4.1 versus 4.6 at June 30, 2012. This decrease is due to the impact of our acquisitions which historically have had lower inventory turnover rates, coupled with strategic inventory investments that we believe will assist with future sales growth. We believe our inventory turnover ratio in fiscal 2014 will remain similar to the fiscal 2013 levels.

CONTRACTUAL OBLIGATIONS

The following table shows the approximate value of the Company’s contractual obligations and other commitments to make future payments as of June 30, 2013 (in thousands):

	Total		Period Less Than 1 yr		Period 2-3 yrs		Period 4-5 yrs		Period Over 5 yrs		Other
Operating leases	$	81,000	$	26,700	$	33,100	$	12,000	$	9,200
Planned funding of post-retirement obligations	38,200		6,900		12,100		4,000		15,200
Unrecognized income tax benefit liabilities, including interest and penalties	3,088										3,088
Total Contractual Cash Obligations	$	122,288	$	33,600	$	45,200	$	16,000	$	24,400	$	3,088

Purchase orders for inventory and other goods and services are not included in our estimates as we are unable to aggregate the amount of such purchase orders that represent enforceable and legally binding agreements specifying all significant terms. The previous table includes the gross liability for unrecognized income tax benefits including interest and

penalties in the “Other” column as the Company is unable to make a reasonable estimate regarding the timing of cash settlements, if any, with the respective taxing authorities.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates at a specific point in time that affect the amounts reported in the consolidated financial statements and disclosed in the accompanying notes. The Business and Accounting Policies note to the consolidated financial statements describes the significant accounting policies and methods used in preparation of the consolidated financial statements. Estimates are used for, but not limited to, determining the net carrying value of trade accounts receivable, inventories, recording self-insurance liabilities and other accrued liabilities. Actual results could differ from these estimates. The following critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements.

LIFO Inventory Valuation and Methodology

Inventories are valued at the lower of cost or market, using the last-in, first-out (LIFO) method for U.S. inventories, and the average cost method for foreign inventories. We adopted the link chain dollar value LIFO method for accounting for U.S. inventories in fiscal 1974. Approximately 31% of our domestic inventory dollars relate to LIFO layers added in the 1970s. The excess of current cost over LIFO cost is $145.7 million as reflected in our consolidated balance sheet at June 30, 2013. The Company maintains five LIFO pools based on the following product groupings: bearings, power transmission products, rubber products, fluid power products and other products.

LIFO layers and/or liquidations are determined consistently year-to-year. See the Inventories note to the consolidated financial statements for further information.

Allowances for Slow-Moving and Obsolete Inventories

We evaluate the recoverability of our slow-moving or obsolete inventories at least quarterly. We estimate the recoverable cost of such inventory by product type while considering factors such as its age, historic and current demand trends, the physical condition of the inventory, as well as assumptions regarding future demand. Our ability to recover our cost for slow moving or obsolete inventory can be affected by such factors as general market conditions, future customer demand and relationships with suppliers.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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Most of the products we hold in inventory have long shelf lives, are not highly susceptible to obsolescence and are eligible for return under various supplier return programs.

Allowances for Doubtful Accounts

We evaluate the collectibility of trade accounts receivable based on a combination of factors. Initially, we estimate an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is adjusted based on recent trends of certain customers and industries estimated to be a greater credit risk, trends within the entire customer pool and changes in the overall aging of accounts receivable. While we have a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which we operate could result in higher than expected defaults, and therefore, the need to revise estimates for bad debts. Accounts are written off against the allowance when it becomes evident that collection will not occur.

As of June 30, 2013 and 2012, our allowance for doubtful accounts was 2.3% and 2.6% of gross receivables, respectively. Our provision for losses on accounts receivable was $2.3 million, $3.9 million and $2.0 million in fiscal 2013, 2012 and 2011, respectively.

Goodwill and Intangibles

Goodwill is recognized as the amount by which the cost of an acquired entity exceeds the net amount assigned to assets acquired and liabilities assumed. As part of acquisition accounting, we also recognize acquired intangible assets such as customer relationships, vendor relationships, trade names, and non-competition agreements apart from goodwill. Finite-lived intangibles are evaluated for impairment when changes in conditions indicate carrying value may not be recoverable. We evaluate goodwill and indefinite-lived intangibles for impairment at least annually. This evaluation requires significant judgment by management, including estimated future operating results, estimated future cash flows, the long-term rate of growth of our business, and determination of an appropriate discount rate. While we use available information to prepare the estimates and evaluations, actual results could differ significantly. For example, a worsening of economic conditions beyond those assumed in an impairment analysis could impact the estimates of future growth and result in an impairment charge in a future period. Any resulting impairment charge could be viewed as having a material adverse impact on our financial condition and results of operations.

Goodwill on our consolidated financial statements is related to both the Service Center Based Distribution segment and the Fluid Power Businesses segment.

We believe the fair value of each segment is well in excess of its carrying value.

Self-Insurance Liabilities

We maintain business insurance programs with significant self-insured retention covering workers’ compensation, business, automobile, general product liability and other claims. We accrue estimated losses using actuarial calculations, models and assumptions based on historical loss experience. We maintain a self-insured health benefits plan, which provides medical benefits to U.S. based employees electing coverage. We maintain a reserve for all unpaid medical claims including those incurred but not reported based on historical experience and other assumptions. Although management believes that the estimated liabilities for self-insurance are adequate, the estimates described above may not be indicative of current and future losses. In addition, the actuarial calculations used to estimate self-insurance liabilities are based on numerous assumptions, some of which are subjective. We will continue to adjust our estimated liabilities for self-insurance, as deemed necessary, in the event that future loss experience differs from historical loss patterns.

Pension and Other Postemployment Benefit Plans

The measurement of liabilities related to pension plans and other postemployment benefit plans is based on management’s assumptions related to future events including interest rates, return on pension plan assets, and healthcare cost trend rates. We evaluate these assumptions and adjust them as necessary. Changes to these assumptions could result in a material change to the Company’s pension obligation causing a related increase or decrease in reported net operating results in the period of change in the estimate. At June 30, 2013, a 1% point change would have the following effects (in thousands):

	One-Percentage Point
Effect of change in:	Increase			Decrease
Discount rate on liability	$	(2,665	)	$	2,988
Discount rate on net periodic benefit cost	(165		)	188

A 1% change in the return on assets is not material since most of the plans are non-qualified and unfunded.

Income Taxes

Deferred income taxes are recorded for estimated future tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes, giving consideration to enacted tax laws. As of June 30, 2013, the Company had recognized $21.1 million of net deferred tax assets. Management believes that sufficient income will be earned in the future to realize its deferred income tax assets.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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The realization of these deferred tax assets can be impacted by changes to tax laws, statutory tax rates and future taxable income levels.

Income taxes on undistributed earnings of non-U.S. subsidiaries are not accrued for the portion of such earnings that management considers to be permanently reinvested. At June 30, 2013, undistributed earnings of non-U.S. subsidiaries considered permanently reinvested totaled approximately $103.9 million for which no provision for U.S. income tax had been made. At June 30, 2013, undistributed earnings of non-U.S. subsidiaries not considered permanently reinvested totaled $11.0 million for which $2.8 million in U.S. income taxes were accrued and charged to income tax expense during fiscal 2011.

CAUTIONARY STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT

This Annual Report to Shareholders, including Management’s Discussion and Analysis, contains statements that are forward-looking based on management’s current expectations about the future. Forward-looking statements are often identified by qualifiers, such as “guidance,” “expect,” “believe,” “plan,” “intend,” “will,” “should,” “could,” “would,” “anticipate,” “estimate,” “forecast,” “may,” and derivative or similar words or expressions. Similarly, descriptions of objectives, strategies, plans, or goals are also forward-looking statements. These statements may discuss, among other things, expected growth, future sales, future cash flows, future capital expenditures, future performance, and the anticipation and expectations of the Company and its management as to future occurrences and trends. The Company intends that the forward-looking statements be subject to the safe harbors established in the Private Securities Litigation Reform Act of 1995 and by the Securities and Exchange Commission in its rules, regulations and releases.

Readers are cautioned not to place undue reliance on any forward-looking statements. All forward-looking statements are based on current expectations regarding important risk factors, many of which are outside the Company’s control. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of those statements should not be regarded as a representation by the Company or any other person that the results expressed in the statements will be achieved. In addition, the Company assumes no obligation publicly to update or revise any forward-looking statements, whether because of new information or events, or otherwise, except as may be required by law.

Important risk factors include, but are not limited to, the following: risks relating to the operations levels of our customers and the economic factors that affect them; changes in the prices for products and services relative to the cost of providing them; reduction in supplier inventory purchase incentives; loss of key supplier authorizations, lack of product availability, or changes in supplier distribution programs; the cost of products and energy and other operating costs; changes in customer preferences for products and services of the nature and brands sold by us; changes in customer procurement policies and practices; competitive pressures; our reliance on information systems; our ability to implement our ERP system in a timely, cost-effective, and competent manner, and to capture its planned benefits while maintaining an adequate internal control environment; the impact of economic conditions on the collectability of trade receivables; reduced demand for our products in targeted markets due to reasons including consolidation in customer industries and the transfer of manufacturing capacity to foreign countries; our ability to retain and attract qualified sales and customer service personnel and other skilled managers and professionals; our ability to identify and complete acquisitions, integrate them effectively, and realize their anticipated benefits; the variability and timing of new business opportunities including acquisitions, alliances, customer relationships, and supplier authorizations; the incurrence of debt and contingent liabilities in connection with acquisitions; our ability to access capital markets as needed on reasonable terms; disruption of operations at our headquarters or distribution centers; risks and uncertainties associated with our foreign operations, including volatile economic conditions, political instability, cultural and legal differences, and currency exchange fluctuations; the potential for goodwill and intangible asset impairment; changes in accounting policies and practices; organizational changes within the Company; the volatility of our stock price and the resulting impact on our consolidated financial statements; risks related to legal proceedings to which we are a party; adverse regulation and legislation, both enacted and under consideration, including with respect to health care and federal tax policy (e.g., affecting the use of the LIFO inventory accounting method and the taxation of foreign-sourced income); and the occurrence of extraordinary events (including prolonged labor disputes, power outages,telecommunication outages, terrorist acts, earthquakes, extreme weather events, other natural disasters, fires, floods, and accidents). Other factors and unanticipated events could also adversely affect our business, financial condition or results of operations.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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We discuss certain of these matters more fully throughout our “Management’s Discussion and Analysis” as well as other of our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended June 30, 2013.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk is impacted by changes in foreign currency exchange rates and to a lesser extent by changes in interest rates. We occasionally utilize derivative instruments as part of our overall financial risk management policy, but do not use derivative instruments for speculative or trading purposes. We do not currently have any outstanding derivative instruments.

Foreign Currency Exchange Rate Risk

Since we operate throughout North America, Australia and New Zealand and approximately 18.1% of our fiscal year 2013 net sales were generated outside the United States, foreign currency exchange rates can impact our financial position, results of operations and competitive position. The financial statements of foreign subsidiaries are translated into their U.S. dollar equivalents at end-of-period exchange rates for assets and liabilities, while income and expenses are translated at average monthly exchange rates. Translation gains and losses are components of other comprehensive income (loss) as reported in the statements of consolidated comprehensive income. Transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized in the statements of consolidated income as a component of other expense (income), net. Applied does not currently hedge the net investments in our foreign operations.

During the course of the fiscal year, the Canadian, Australian and New Zealand foreign exchange rates to the U.S. dollar decreased by 1.6%, 9.2% and 2.6%, respectively, while the Mexican exchange rates to the U.S. dollar increased by 12.5%. In the twelve months ended June 30, 2013, we experienced net foreign currency translation losses totaling $1.4 million, which were included in other comprehensive income (loss). We utilize a sensitivity analysis to measure the potential impact on earnings based on a hypothetical 10% change in foreign currency rates. A 10% strengthening from the levels experienced during the year-ended June 30, 2013 of the U.S. dollar relative to foreign currencies that affect the Company would have resulted in a $2.1 million decrease in net income for the year ended June 30, 2013. A 10% weakening from the levels experienced during the year ended June 30, 2013 of the U.S. dollar relative to foreign currencies

that affect the Company would have resulted in a $2.1 million increase in net income for the year ended June 30, 2013.

Interest Rate Risk

We borrowed funds periodically during fiscal 2013, however as of June 30, 2013 all outstanding amounts have been paid back; thus, at June 30, 2013, we were not exposed to interest rate fluctuations on outstanding debt. We monitor depository institutions that hold our cash and cash equivalents, primarily for safety of principal and secondarily for maximizing yield on those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any of these entities.

13

STATEMENTS OF CONSOLIDATED INCOME

(In thousands, except per share amounts)

Year Ended June 30,	2013			2012			2011
Net Sales	$	2,462,171		$	2,375,445		$	2,212,849
Cost of Sales	1,779,209			1,720,973			1,599,739
Gross Profit	682,962			654,472			613,110
Selling, Distribution and Administrative,including depreciation	506,563			486,077			462,347
Operating Income	176,399			168,395			150,763
Interest Expense	621			457			2,081
Interest Income	(456		)	(466		)	(413		)
Other Expense (Income), net	(1,431		)	1,578			(3,793		)
Income Before Income Taxes	177,665			166,826			152,888
Income Tax Expense	59,516			58,047			56,129
Net Income	$	118,149		$	108,779		$	96,759
Net Income Per Share — Basic	$	2.81		$	2.58		$	2.28
Net Income Per Share — Diluted	$	2.78		$	2.54		$	2.24

See notes to consolidated financial statements.

14

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(In thousands)

Year Ended June 30,	2013			2012			2011
Net income per the statements of consolidated income	118,149			108,779			96,759
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(1,358		)	(14,471		)	10,011
Postemployment benefits:
Actuarial gain (loss) on remeasurement	3,153			(5,028		)	(930		)
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	872			1,123			2,214
Impact of reduction in postemployment benefit liability (as forecasted salary increases will not be realized) due to plan curtailment	—			8,860			—
Reclassification of prior service cost into SD&A expense upon plan curtailment	—			3,117			—
Unrealized gain (loss) on investment securities available for sale	10			(220		)	(84		)
Unrealized loss on cash flow hedges	—			—			(266		)
Reclassification of interest from cash flow hedge into interest expense	—			—			316
Total of other comprehensive income (loss), before tax	2,677			(6,619		)	11,261
Income tax expense related to items of other comprehensive income	1,529			3,009			154
Other comprehensive income (loss), net of tax	1,148			(9,628		)	11,107
Comprehensive income, net of tax	$	119,297		$	99,151		$	107,866

See notes to consolidated financial statements.

15

CONSOLIDATED BALANCE SHEETS

(In thousands)

June 30,	2013			2012
Assets
Current assets
Cash and cash equivalents	$	73,164		$	78,442
Accounts receivable, less allowances of $7,737 and $8,332	329,880			307,043
Inventories	281,417			228,506
Other current assets	52,819			51,771
Total current assets	737,280			665,762
Property — at cost
Land	10,125			10,245
Buildings	75,463			74,477
Equipment, including computers and software	155,161			147,004
Total Property — at cost	240,749			231,726
Less accumulated depreciation	157,506			148,623
Property — net	83,243			83,103
Intangibles, net	91,267			84,840
Goodwill	106,849			83,080
Deferred tax assets	21,026			26,424
Other assets	19,041			18,974
Total Assets	$	1,058,706		$	962,183
Liabilities
Current liabilities
Accounts payable	$	136,575		$	120,890
Compensation and related benefits	63,899			63,149
Other current liabilities	45,426			46,130
Total current liabilities	245,900			230,169
Postemployment benefits	30,919			39,750
Other liabilities	22,272			20,133
Total Liabilities	299,091			290,052
Shareholders’ Equity
Preferred stock — no par value; 2,500 shares authorized; none issued or outstanding	—			—
Common stock — no par value; 80,000 shares authorized; 54,213 shares issued	10,000			10,000
Additional paid-in capital	153,893			150,070
Income retained for use in the business	824,362			743,360
Treasury shares — at cost (12,044 and 12,246 shares)	(225,219		)	(226,730		)
Accumulated other comprehensive income (loss)	(3,421		)	(4,569		)
Total Shareholders’ Equity	759,615			672,131
Total Liabilities and Shareholders’ Equity	$	1,058,706		$	962,183

See notes to consolidated financial statements.

16

STATEMENTS OF CONSOLIDATED CASH FLOWS

(In thousands)

Year Ended June 30,	2013			2012			2011
Cash Flows from Operating Activities
Net income	$	118,149		$	108,779		$	96,759
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property	12,501			11,236			11,234
Amortization of intangibles	13,233			11,465			11,382
Amortization of stock appreciation rights and options	2,317			2,058			2,473
Deferred income taxes	10,179			8,641			4,784
Provision for losses on accounts receivable	2,267			3,915			2,029
Unrealized foreign exchange transaction (gains) losses	(1,410		)	1,298			—
Other share-based compensation expense	3,444			4,308			3,158
Shares issued for deferred compensation plans	241			284			221
Gain on sale of property	(321		)	(627		)	(765		)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(15,721		)	(22,748		)	(36,271		)
Inventories	(26,745		)	(28,511		)	(21,197		)
Other operating assets	(7,857		)	(14,735		)	(11,185		)
Accounts payable	12,206			14,157			12,926
Other operating liabilities	(11,086		)	(9,098		)	1,294
Net Cash provided by Operating Activities	111,397			90,422			76,842
Cash Flows from Investing Activities
Property purchases	(12,214		)	(26,021		)	(20,431		)
Proceeds from property sales	979			1,258			1,326
Net cash paid for acquisition of businesses, net of cash acquired of $0, $38 and $168 in 2013, 2012 and 2011, respectively	(67,590		)	(14,671		)	(30,504		)
Other	—			—			1,722
Net Cash (used in) Investing Activities	(78,825		)	(39,434		)	(47,887		)
Cash Flows from Financing Activities
Repayments under revolving credit facility	—			—			(50,000		)
Long-term debt repayment	—			—			(25,000		)
Settlements of cross-currency swap agreements	—			—			(12,752		)
Purchases of treasury shares	(53		)	(31,032		)	(6,085		)
Dividends paid	(37,194		)	(33,800		)	(29,751		)
Excess tax benefits from share-based compensation	2,566			3,695			6,404
Acquisition holdback payments	(3,843		)	—			—
Exercise of stock appreciation rights and options	499			321			661
Net Cash (used in) Financing Activities	(38,025		)	(60,816		)	(116,523		)
Effect of Exchange Rate Changes on Cash	175			(2,822		)	2,883
(Decrease) in cash and cash equivalents	(5,278		)	(12,650		)	(84,685		)
Cash and cash equivalents at beginning of year	78,442			91,092			175,777
Cash and Cash Equivalents at End of Year	$	73,164		$	78,442		$	91,092
Supplemental Cash Flow Information
Cash paid during the year for:
Income taxes	$	51,816		$	53,463		$	47,251
Interest	501			672			2,248

See notes to consolidated financial statements.

17

STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

(In thousands)

For the Years Ended June 30, 2013, 2012 and 2011	Shares of Common Stock Outstanding		Common Stock		Additional Paid-In Capital			Income Retained for Use in the Business			Treasury Shares- at Cost			Accumulated Other Compre-hensive Income (Loss)			Total Shareholders' Equity
Balance at July 1, 2010	42,376		$	10,000	$	143,185		$	601,370		$	(193,468	)	$	(6,048	)	$	555,039
Net income								96,759									96,759
Other comprehensive income														11,107			11,107
Cash dividends — $0.70 per share								(29,751		)							(29,751		)
Purchases of common stock for treasury	(190	)									(6,085		)				(6,085		)
Treasury shares issued for:
Exercise of stock appreciation rights and options	379				(109		)				706						597
Deferred compensation plans	6				102						119						221
Compensation expense — stock appreciation rights and options					2,473												2,473
Other share-based compensation expense					3,158												3,158
Other	31				(502		)	43			504						45
Balance at June 30, 2011	42,602		10,000		148,307			668,421			(198,224		)	5,059			633,563
Net income								108,779									108,779
Other comprehensive (loss)														(9,628		)	(9,628		)
Cash dividends — $0.80 per share								(33,800		)							(33,800		)
Purchases of common stock for treasury	(997	)									(31,032		)				(31,032		)
Treasury shares issued for:
Exercise of stock appreciation rights and options	250				(1,853		)				1,448						(405		)
Performance share awards	91				(2,664		)				714						(1,950		)
Deferred compensation plans	9				128						156						284
Compensation expense — stock appreciation rights and options					2,058												2,058
Other share-based compensation expense					4,308												4,308
Other	12				(214		)	(40		)	208						(46		)
Balance at June 30, 2012	41,967		10,000		150,070			743,360			(226,730		)	(4,569		)	672,131
Net income								118,149									118,149
Other comprehensive income														1,148			1,148
Cash dividends — $0.88 per share								(37,194		)							(37,194		)
Purchases of common stock for treasury	(1	)									(53		)				(53		)
Treasury shares issued for:
Exercise of stock appreciation rights and options	129				(175		)				1,086						911
Restricted stock units	53				(1,675		)				74						(1,601		)
Deferred compensation plans	5				131						110						241
Compensation expense — stock appreciation rights and options					2,317												2,317
Other share-based compensation expense					3,444												3,444
Other	16				(219		)	47			294						122
Balance at June 30, 2013	42,169		$	10,000	$	153,893		$	824,362		$	(225,219	)	$	(3,421	)	$	759,615

See notes to consolidated financial statements.

18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

NOTE 1: BUSINESS AND ACCOUNTING POLICIES

Business

Applied Industrial Technologies, Inc. and subsidiaries (the “Company” or “Applied”) is a leading industrial distributor serving Maintenance Repair & Operations (MRO) and Original Equipment Manufacturer (OEM) customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. Applied also offers maintenance training and inventory management solutions that provide added value to its customers. Although the Company does not generally manufacture the products it sells, it does assemble and repair certain products and systems.

Consolidation

The consolidated financial statements include the accounts of Applied Industrial Technologies, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. The financial results of the Company’s Canadian and Mexican subsidiaries are included in the consolidated financial statements for the twelve months ended May 31.

Foreign Currency

The financial statements of the Company’s Canadian, Mexican, Australian and New Zealand subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss) in the statements of consolidated comprehensive income. Gains and losses resulting from transactions denominated in foreign currencies are included in the statements of consolidated income as a component of other expense (income), net.

Estimates

The preparation of 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 amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements.

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value.

Marketable Securities

The primary marketable security investments of the Company include money market and mutual funds held in a rabbi trust for a non-qualified deferred compensation plan. These are included in other assets in the consolidated balance sheets, are classified as trading securities, and reported at fair value based on quoted market prices. Changes in the fair value of the investments during the period are recorded in other expense (income), net in the statements of consolidated income.

Concentration of Credit Risk

The Company has a broad customer base representing many diverse industries primarily across North America, Australia and New Zealand. As such, the Company does not believe that a significant concentration of credit risk exists in its accounts receivable. The Company’s cash and cash equivalents consist of deposits with commercial banks and regulated non-bank subsidiaries. While Applied monitors the creditworthiness of these institutions, a crisis in the financial systems could limit access to funds and/or result in the loss of principal. The terms of these deposits and investments provide that all monies are available to the Company upon demand.

Allowances for Doubtful Accounts

The Company evaluates the collectibility of trade accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is adjusted based on recent trends of customers and industries estimated to be greater credit risks, trends within the entire customer pool and changes in the overall aging of accounts receivable. Accounts are written off against the allowance when it becomes evident collection will not occur. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults, and therefore, the need to revise estimates for bad debts.

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

Inventories

Inventories are valued at the lower of cost or market, using the last-in, first-out (LIFO) method for U.S. inventories and the average cost method for foreign inventories. The Company adopted the link chain dollar value LIFO method of accounting for U.S. inventories in fiscal 1974. At June 30, 2013, approximately 31% of the Company’s domestic inventory dollars relate to LIFO layers added in the 1970s. The Company maintains five LIFO pools based on the following product groupings: bearings, power transmission products, rubber products, fluid power products and other products. LIFO layers and/or liquidations are determined consistently year-to-year.

The Company evaluates the recoverability of its slow moving or obsolete inventories at least quarterly. The Company estimates the recoverable cost of such inventory by product type while considering factors such as its age, historic and current demand trends, the physical condition of the inventory as well as assumptions regarding future demand. The Company’s ability to recover its cost for slow moving or obsolete inventory can be affected by such factors as general market conditions, future customer demand and relationships with suppliers. Historically, the Company’s inventories have demonstrated long shelf lives, are not highly susceptible to obsolescence and can be eligible for return under various supplier return programs.

Supplier Purchasing Programs

The Company enters into agreements with certain suppliers providing inventory purchase incentives. The Company’s inventory purchase incentive arrangements are unique to each supplier and are generally annual programs ending at either the Company’s fiscal year end or the supplier’s year end; however, program length and ending dates can vary. Incentives are received in the form of cash or credits against purchases upon attainment of specified purchase volumes and are received either monthly, quarterly or annually. The incentives are generally a specified percentage of the Company’s net purchases based upon achieving specific purchasing volume levels. These percentages can increase or decrease based on changes in the volume of purchases. The Company accrues for the receipt of these inventory purchase incentives based upon cumulative purchases of inventory. The percentage level utilized is based upon the estimated total volume of purchases expected during the life of the program. Supplier programs are analyzed each quarter to determine the appropriateness of the amount of purchase incentives accrued. Upon program completion, differences between estimates and actual incentives subsequently received have not been material. Benefits under these supplier purchasing programs are recognized under the Company’s LIFO inventory accounting method as a reduction of cost of sales when the inventories representing these purchases are recorded as cost of sales. Accrued incentives expected to be settled as a credit against future purchases are reported on the consolidated balance sheet as an offset to amounts due to the related supplier.

Property and Related Depreciation and Amortization

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets and is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Buildings, building improvements and leasehold improvements are depreciated over ten to thirty years or the life of the lease if a shorter period, and equipment is depreciated over three to ten years. The Company capitalizes internal use software development costs in accordance with guidance on accounting for costs of computer software developed or obtained for internal use. Amortization of software begins when it is ready for its intended use, and is amortized on a straight-line basis over the estimated useful life of the software, generally not to exceed twelve years. Capitalized software and hardware costs are classified as property on the consolidated balance sheets. The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate that the recorded value cannot be recovered from undiscounted future cash flows. Impairment losses, if any, would be measured based upon the difference between the carrying amount and the fair value of the assets.

Goodwill and Intangible Assets

Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized. Goodwill is reviewed for impairment annually as of January 1 or whenever changes in conditions indicate an evaluation should be completed. These conditions could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. The Company utilizes discounted cash flow models and market multiples for comparable businesses to determine the fair value of reporting units. Evaluating impairment requires significant judgment by management, including estimated future operating results, estimated future cash flows, the long-term rate of growth of the business, and determination of an appropriate discount rate. While the Company uses available information to prepare the estimates and evaluations, actual results could differ significantly.

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

The Company recognizes acquired intangible assets such as customer relationships, trade names, vendor relationships, and non-competition agreements apart from goodwill. Customer relationship intangibles are amortized using the sum-of-the-years-digits method over estimated useful lives consistent with assumptions used in the determination of their value. Amortization of all other finite-lived intangible assets is computed using the straight-line method over the estimated period of benefit. Amortization of intangible assets is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Intangible assets with finite lives are reviewed for impairment when changes in conditions indicate carrying value may not be recoverable. Intangible assets with indefinite lives are reviewed for impairment on an annual basis or whenever changes in conditions indicate an evaluation should be completed.

Self-Insurance Liabilities

The Company maintains business insurance programs with significant self-insured retention covering workers’ compensation, business, automobile, general product liability and other claims. The Company accrues estimated losses including those incurred but not reported using actuarial calculations, models and assumptions based on historical loss experience. The Company maintains a self-insured health benefits plan, which provides medical benefits to U.S. based employees electing coverage under the plan. The Company estimates its reserve for all unpaid medical claims including those incurred but not reported based on historical experience, adjusted as necessary based upon management’s reasoned judgment.

Revenue Recognition

Sales are recognized when the sales price is fixed, collectibility is reasonably assured and the product’s title and risk of loss is transferred to the customer. Typically, these conditions are met when the product is shipped to the customer. The Company charges shipping and handling fees when products are shipped or delivered to a customer, and includes such amounts in net sales. The Company reports its sales net of actual sales returns and the amount of reserves established for anticipated sales returns based on historical rates. Sales tax collected from customers is excluded from net sales in the accompanying statements of consolidated income.

Shipping and Handling Costs

The Company records freight payments to third parties in cost of sales and internal delivery costs in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Internal delivery costs in selling, distribution and administrative expenses were approximately $15,650, $15,500 and $15,400 for the fiscal years ended June 30, 2013, 2012 and 2011, respectively.

Income Taxes

Income taxes are determined based upon income and expenses recorded for financial reporting purposes. Deferred income taxes are recorded for estimated future tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes, giving consideration to enacted tax laws. Uncertain tax positions meeting a more-likely-than-not recognition threshold are recognized in accordance with the Income Taxes topic of the ASC (Accounting Standards Codification). The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in the provision for income taxes.

Share-Based Compensation

Share-based compensation represents the cost related to share-based awards granted to associates under either the 2011 Plan or the 2007 Plan. The Company measures share-based compensation cost at grant date, based on the estimated fair value of the award and recognizes the cost over the requisite service period. Non-qualified stock appreciation rights (SARs) and stock options are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant and the fair values are determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield. SARs and stock option awards generally vest over four years of continuous service and have ten-year contractual terms. The fair value of restricted stock awards, restricted stock units (RSUs), and performance shares are based on the closing market price of Company common stock on the grant date.

Treasury Shares

Shares of common stock repurchased by the Company are recorded at cost as treasury shares and result in a reduction of shareholders’ equity in the consolidated balance sheets. The Company uses the weighted-average cost method for determining the cost of shares reissued. The difference between the cost of the shares and the reissuance price is added to or deducted from additional paid-in capital.

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the 2013 presentation.

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

New Accounting Pronouncement

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (ASC Topic 220) - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU No. 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income by the respective line items of net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The update is effective for financial statement periods beginning after December 15, 2012 with early adoption permitted. The Company has chosen to early adopt this standard and has updated its 2013 annual report to conform to the requirements of ASU No. 2013-02.

NOTE 2: BUSINESS COMBINATIONS

The Company acquired the following distributors and fluid power businesses to complement and extend its business over a broader geographic area. The results of operations for these acquisitions are not material for any year presented. Results of operations of acquired businesses are included in the accompanying consolidated financial statements from their respective acquisition dates.

Fiscal 2013 Acquisitions

In December 2012, the Company acquired substantially all of the net assets of Norma Bearings, Inc., a distributor of bearings and power transmission products, located in Laval, Quebec. The acquired business is included in the Service Center Based Distribution segment. In December 2012, the Company acquired substantially all of the net assets of Parts Associates, Inc., a distributor of maintenance supplies and solutions, headquartered in Cleveland, Ohio. The acquired business is included in the Service Center Based Distribution segment. In November 2012, the Company acquired substantially all of the net assets of Hyquip, Inc., a Wisconsin distributor of a broad line of hydraulic, rubber and plastic industrial hose and tubing, plus related accessories. The acquired business is included in the Fluid Power Businesses segment. In September 2012, the Company acquired 100% of the outstanding stock of Bearings & Oil Seals Specialists Inc., a distributor of gaskets, seals, bearing and power transmission products, located in Hamilton, Ontario. The acquired business is included in the Service Center Based Distribution segment. In August 2012, the Company acquired 100% of the outstanding stock of SKF Group's company-owned distribution business in Australia and New Zealand ("Applied Australia"). As one of the largest bearing suppliers in these markets, Applied Australia also distributes seals, lubrication products, and power transmission products. The acquired business is included in the Service Center Based Distribution segment.

The following table summarizes the fair values of assets acquired and liabilities assumed for fiscal 2013:

	2013
Accounts receivable	$	7,514
Inventories	23,723
Other current assets	217
Property	1,090
Intangibles	19,814
Goodwill	24,324
Total assets acquired	76,682
Accounts payable	1,867
Other current liabilities	6,192
Net assets acquired	68,623
Purchase price	$	68,623

The purchase price includes $1,015 which has been deferred, and will be paid as acquisition holdback payments in future periods. Additional 2013 pro-forma information has not been included since it is not material.

Fiscal 2012 Acquisitions

In February 2012, the Company acquired Solutions Industrielles Chicoutimi, which provides bearings, power transmission products and repair services, and Spécialités Industrielles Harvey, which distributes bearings and power transmission products, plus hydraulic, pneumatic and electrical components.

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

In August 2011, the Company acquired Chaines-Plus, a distributor of bearings, power transmission and related products. These distributors are all located in Quebec, Canada. The acquired businesses are included in the Service Center Based Distribution segment. The overall purchase price for these acquisitions was $18,493, tangible assets acquired was $1,549 and intangibles, including goodwill was $16,944. The purchase price includes $3,738 which was deferred, and will be paid as acquisition holdback payments in subsequent periods.

Fiscal 2011 Acquisitions

In May 2011, the Company acquired Gulf Coast Bearing & Supply Co., a full line bearing and power transmission distributor, located in the U.S. In July 2010, the Company acquired UZ Engineered Products, a distributor of industrial supply products for maintenance, repair and operational needs, in government and commercial sectors, throughout the U.S. and Canada. In August 2010, the Company acquired SCS Supply Group, a distributor of bearings, power transmission components, electrical components, fluid power products and industrial supplies located in Ontario, Canada. The acquired businesses are included in the Service Center Based Distribution segment. The overall purchase price for these acquisitions was $35,072, tangible assets acquired was $8,417 and intangibles, including goodwill was $26,655. The purchase price includes $2,792 which was deferred, and will be paid as acquisition holdback payments in subsequent periods.

NOTE 3: INVENTORIES

Inventories consist of the following:

June 30,	2013		2012
U.S. inventories at current cost	$	323,642	$	302,465
Foreign inventories at average cost	103,483		70,797
	427,125		373,262
Less: Excess of current cost over LIFO cost for U.S. inventories	145,708		144,756
Inventories on consolidated balance sheets	$	281,417	$	228,506

In fiscal 2013, 2012 and 2011, reductions in U.S. inventories, primarily in the bearings pool, resulted in liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years. The overall impact of LIFO layer liquidations increased gross profit by $6,300, $3,400 and $12,300 in fiscal 2013, 2012 and 2011, respectively.

NOTE 4: GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill for both the Service Center Based Distribution Segment and the Fluid Power Businesses segment for the years ended June 30, 2013 and 2012 are as follows:

	Service Center Based Distribution			Fluid Power Businesses		Total
Balance at July 1, 2011	$	76,981				$	76,981
Goodwill acquired during the year	8,403					8,403
Other, primarily currency translation	(2,304		)			(2,304		)
Balance at June 30, 2012	83,080					83,080
Goodwill acquired during the year	23,395			$	929	24,324
Other, primarily currency translation	(555		)	—		(555		)
Balance at June 30, 2013	$	105,920		$	929	$	106,849

At June 30, 2013, accumulated goodwill impairment losses subsequent to fiscal year 2002 totaled $36,605 and relate entirely to the Fluid Power Businesses segment.

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

The Company's intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:

June 30, 2013	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Intangibles:
Customer relationships	$	100,854	$	38,844	$	62,010
Trade names	26,690		8,643		18,047
Vendor relationships	15,433		5,443		9,990
Non-competition agreements	4,743		3,523		1,220
Total Intangibles	$	147,720	$	56,453	$	91,267

June 30, 2012	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Intangibles:
Customer relationships	$	84,249	$	29,905	$	54,344
Trade names	25,677		7,428		18,249
Vendor relationships	13,605		4,500		9,105
Non-competition agreements	4,740		2,888		1,852
Total Finite-Lived Intangibles	128,271		44,721		83,550
Indefinite-Lived Trade Name	1,290				1,290
Total Intangibles	$	129,561	$	44,721	$	84,840

Amounts include the impact of foreign currency translation. Fully amortized amounts are written off. During fiscal year 2013 the Company re-categorized its previously indefinite-lived trade name to finite-lived trade names and as a result began amortizing it.

During 2013, the Company acquired intangible assets with a preliminary acquisition cost allocation and weighted-average life as follows:

	Acquisition Cost Allocation		Weighted-Average Life
Customer relationships	$	16,755	18 years
Trade names	651		5 years
Vendor relationships	2,138		10 years
Non-competition agreements	270		4.5 years
Total Intangibles Acquired	$	19,814	16 years

Amortization of intangibles totaled $13,233, $11,465 and $11,382 in fiscal 2013, 2012 and 2011, respectively, and is included in selling, distribution and administrative expenses in the statements of consolidated income. Amortization expense based on the Company’s intangible assets as of June 30, 2013 is estimated to be $12,200 for 2014, $11,200 for 2015, $10,100 for 2016, $9,500 for 2017 and $8,400 for 2018.

NOTE 5: DEBT

The Company had no outstanding borrowings as of June 30, 2013 or June 30, 2012.

The Company has a revolving credit facility with a group of banks expiring in May 2017. This agreement provides for unsecured borrowings of up to $150,000. Fees on this facility range from 0.09% to 0.175% per year based upon the Company's leverage ratio at each quarter end. Borrowings under this agreement carry variable interest rates tied to either LIBOR, prime, or the bank’s cost of funds at the Company’s discretion. Unused lines under this facility, net of outstanding letters of credit of $8,696 to secure certain insurance obligations, totaled $141,304 at June 30, 2013 and are available to fund future acquisitions or other capital and operating requirements.

24

The Company has an agreement with Prudential Insurance Company for an uncommitted shelf facility that enables the Company to borrow up to $125,000 in additional long-term financing with terms of up to fifteen years. The agreement expires in February 2016. There were no borrowings under this agreement at June 30, 2013 or June 30, 2012.

The revolving credit facility and uncommitted shelf facility contain restrictive covenants regarding liquidity, net worth, financial ratios, and other covenants. At June 30, 2013, the most restrictive of these covenants required that the Company have consolidated income before interest, taxes, depreciation and amortization at least equal to 300% of net interest expense. At June 30, 2013, the Company was in compliance with all covenants.

NOTE 6: FAIR VALUE MEASUREMENTS

Marketable securities measured at fair value at June 30, 2013 and June 30, 2012 totaled $10,483 and $10,322, respectively. These marketable securities are held in a rabbi trust for a non-qualified deferred compensation plan. The marketable securities are included in other assets on the consolidated balance sheets and their fair values were valued using quoted market prices (Level 1 in the fair value hierarchy).

NOTE 7: INCOME TAXES

Income Before Income Taxes

The components of income before income taxes are as follows:

Year Ended June 30,	2013		2012		2011
U.S.	$	153,546	$	137,667	$	127,567
Foreign	24,119		29,159		25,321
Total income before income taxes	$	177,665	$	166,826	$	152,888

Provision

The provision (benefit) for income taxes consists of:

Year Ended June 30,	2013			2012			2011
Current:
Federal	$	38,859		$	36,178		$	36,799
State and local	5,736			5,522			6,208
Foreign	4,742			7,706			8,338
Total current	49,337			49,406			51,345
Deferred:
Federal	10,277			8,577			5,648
State and local	346			503			169
Foreign	(444		)	(439		)	(1,033		)
Total deferred	10,179			8,641			4,784
Total	$	59,516		$	58,047		$	56,129

The exercise of non-qualified stock appreciation rights and options during fiscal 2013, 2012 and 2011 resulted in $1,675, $2,725 and $6,003, respectively, of income tax benefits to the Company derived from the difference between the market price at the date of exercise and the option price. Vesting of stock awards and other stock compensation in fiscal 2013, 2012 and 2011 resulted in $890, $970 and $401, respectively, of incremental income tax benefits over the amounts previously reported for financial reporting purposes. These tax benefits were recorded in additional paid-in capital.

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

Effective Tax Rates

The following reconciles the U.S. federal statutory income tax rate and the Company’s effective income tax rate:

Year Ended June 30,	2013		2012		2011
Statutory income tax rate	35.0	%	35.0	%	35.0	%
Effects of:
State and local taxes	2.3	%	2.5	%	2.8	%
U.S. tax on foreign income, net	—	%	—	%	1.8	%
Valuation allowance	—	%	—	%	(0.6	)%
Foreign income taxes	(2.3	)%	(1.8	)%	(1.0	)%
Deductible dividend	(0.5	)%	(0.5	)%	(0.5	)%
Other, net	(1.0	)%	(0.4	)%	(0.8	)%
Effective income tax rate	33.5	%	34.8	%	36.7	%

Consolidated Balance Sheets

Significant components of the Company’s net deferred tax assets are as follows:

June 30,	2013			2012
Deferred tax assets:
Compensation liabilities not currently deductible	$	33,506		$	37,341
Expenses and reserves not currently deductible	6,131			6,151
Goodwill and intangibles	3,781			6,518
Net operating loss carryforwards (expiring in years 2027-2033)	432			444
Foreign tax credits (expiring in years 2018, 2020, 2021)	38			4,092
Other	569			480
Total deferred tax assets	44,457			55,026
Less: Valuation allowance	(11		)	(157		)
Deferred tax assets, net of valuation allowance	44,446			54,869
Deferred tax liabilities:
Inventories	(9,057		)	(6,021		)
Unremitted foreign earnings	(2,804		)	(2,804		)
Depreciation and differences in property bases	(11,460		)	(11,602		)
Total deferred tax liabilities	(23,321		)	(20,427		)
Net deferred tax assets	$	21,125		$	34,442
The net deferred tax asset is classified as follows:
Other current assets	$	6,315		$	12,189
Deferred tax assets (long-term)	21,026			26,424
Other liabilities	(6,216		)	(4,171		)
Net deferred tax assets	$	21,125		$	34,442

Valuation allowances are provided against deferred tax assets where it is considered more-likely-than-not that the Company will not realize the benefit of such assets. The remaining net deferred tax asset is the amount management believes is more-likely-than-not of being realized. The realization of these deferred tax assets can be impacted by changes to tax laws, statutory rates and future income levels.

U.S. federal income taxes are provided on the portion of non-U.S. subsidiaries income that is not considered to be permanently reinvested outside the U.S. and may be remitted to the U.S. At June 30, 2013, undistributed earnings of non-U.S. subsidiaries considered to be permanently reinvested and for which no U.S. tax has been provided totaled approximately $103,905. Determination of the net amount of the unrecognized tax liability with respect to these earnings is not practicable; however, foreign tax credits would be available to partially reduce U.S. income taxes in the event of a distribution. Undistributed earnings of non-U.S. subsidiaries not considered permanently reinvested totaled approximately $11,000. U.S. taxes totaling $2,804 have been accrued on these earnings.

26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

Unrecognized Income Tax Benefits

The Company and its subsidiaries file income tax returns in U.S. federal, various state, local and foreign jurisdictions. The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2013, 2012 and 2011:

Year Ended June 30,	2013			2012			2011
Unrecognized Income Tax Benefits at beginning of the year	$	1,539		$	1,181		$	1,842
Current year tax positions	957			331			153
Prior year tax positions	790			398			50
Expirations of statutes of limitations	(565		)	(371		)	(273		)
Settlements	(66		)	—			(591		)
Unrecognized Income Tax Benefits at end of year	$	2,655		$	1,539		$	1,181

Included in the balance of unrecognized income tax benefits at June 30, 2013, 2012 and 2011 are $2,342, $1,221 and $659, respectively, of income tax benefits that, if recognized, would affect the effective income tax rate.

During 2013, 2012 and 2011, the Company recognized $3, $(95) and $(22), respectively, for interest and penalties related to unrecognized income tax benefits in its statements of consolidated income. The Company had a liability for penalties and interest of $433 and $430 as of June 30, 2013 and 2012, respectively. The Company does not anticipate a significant change to the total amount of unrecognized income tax benefits within the next twelve months.

The Company is subject to U.S. federal income tax examinations for the tax years 2009 through 2013 and to state and local income tax examinations for the tax years 2009 through 2013. In addition, the Company is subject to foreign income tax examinations for the tax years 2006 through 2013.

The Company’s unrecognized income tax benefits are included in other liabilities in the consolidated balance sheets since payment of cash is not expected within one year.

NOTE 8: SHAREHOLDERS’ EQUITY

Treasury Shares

At June 30, 2013, 596 shares of the Company’s common stock held as treasury shares were restricted as collateral under escrow arrangements relating to change in control and director and officer indemnification agreements.

Accumulated Other Comprehensive Income (Loss)

Changes in the accumulated other comprehensive income (loss) for the year ended June 30, 2013, is comprised of the following:

	Foreign currency translation adjustment			Unrealized gain (loss) on securities available for sale			Postemployment benefits			Total Accumulated other comprehensive income (loss)
Balance at June 30, 2012	$	1,718		$	(58	)	$	(6,229	)	$	(4,569	)
Other comprehensive income (loss)	(1,358		)	6			1,967			615
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			533			533
Net current-period other comprehensive income (loss), net of taxes	(1,358		)	6			2,500			1,148
Balance at June 30, 2013	$	360		$	(52	)	$	(3,729	)	$	(3,421	)

27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

Other Comprehensive Income (Loss)

Details of other comprehensive income (loss) are as follows:

Year Ended June 30,	2013								2012									2011
	Pre-Tax Amount			Tax Expense (Benefit)		Net Amount			Pre-Tax Amount			Tax Expense (Benefit)			Net Amount			Pre-Tax Amount			Tax Expense (Benefit)			Net Amount
Foreign currency translation adjustments	$	(1,358	)	$	—	$	(1,358	)	$	(14,471	)	$	—		$	(14,471	)	$	10,011		$	(264	)	$	10,275
Postemployment benefits:
Actuarial gain (loss) on remeasurement	3,153			1,186		1,967			(5,028		)	(1,954		)	(3,074		)	(930		)	(435		)	(495		)
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	872			339		533			1,123			432			691			2,214			850			1,364
Impact of reduction in postemployment benefit liability (as forecasted salary increases will not be realized) due to a plan curtailment	—			—		—			8,860			3,411			5,449			—			—			—
Reclassification of prior service cost into SD&A expense upon plan curtailment	—			—		—			3,117			1,200			1,917			—			—			—
Unrealized gain (loss) on investment securities available for sale	10			4		6			(220		)	(80		)	(140		)	(84		)	(31		)	(53		)
Unrealized loss on cash flow hedges	—			—		—			—			—			—			(266		)	(82		)	(184		)
Reclassification of interest from cash flow hedge into interest expense	—			—		—			—			—			—			316			116			200
Other comprehensive income (loss)	$	2,677		$	1,529	$	1,148		$	(6,619	)	$	3,009		$	(9,628	)	$	11,261		$	154		$	11,107

Net Income Per Share

The following is a computation of basic and diluted earnings per share:

Year Ended June 30,	2013		2012		2011
Net Income	$	118,149	$	108,779	$	96,759
Average Shares Outstanding:
Weighted-average common shares outstanding for basic computation	42,060		42,139		42,433
Dilutive effect of potential common shares	482		684		821
Weighted-average common shares outstanding for dilutive computation	42,542		42,823		43,254
Net Income Per Share — Basic	$	2.81	$	2.58	$	2.28
Net Income Per Share — Diluted	$	2.78	$	2.54	$	2.24

Stock appreciation rights and options relating to the acquisition of 212, 140 and 176 shares of common stock were outstanding at June 30, 2013, 2012 and 2011, respectively, but were not included in the computation of diluted earnings per share for the fiscal years then ended as they were anti-dilutive.

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

NOTE 9: SHARE-BASED COMPENSATION

Share-Based Incentive Plans

The 2011 Plan, which expires in 2016, provides for granting of SARs, stock options, stock awards, cash awards, and such other awards or combination thereof as the Executive Organization and Compensation Committee or the Corporate Governance Committee of the Board of Directors (the Committee) may determine to officers, other key associates and members of the Board of Directors. Grants are generally made by the Committee at regularly scheduled meetings. Compensation costs charged to expense under award programs paid (or to be paid) with shares (including SARs, stock options, performance shares, restricted stock, and RSUs) are summarized in the table below:

Year Ended June 30,	2013		2012		2011
SARs and options	$	2,317	$	2,058	$	2,473
Performance shares	1,074		1,983		1,705
Restricted stock and RSUs	2,370		2,325		1,453
Total compensation costs under award programs	$	5,761	$	6,366	$	5,631

Such amounts are included in SD&A in the accompanying statements of consolidated income. It has been the practice of the Company to issue shares from treasury to satisfy requirements of awards paid with shares.

The aggregate unrecognized compensation cost for share-based award programs paid (or with the potential to be paid) at June 30, 2013 are summarized in the table below:

Year Ended June 30,	2013		Expected Period of Recognition
SARs and options	$	2,193	2.5
Performance shares	2,648		1.8
Restricted stock and RSUs	2,760		1.4
Total unrecognized compensation costs under award programs	$	7,601	1.9

Cost of these programs will be recognized as expense over the weighted-average remaining vesting period of 1.9 years. The aggregate number of shares of common stock which may be awarded under the 2011 Plan is 2,000; shares available for future grants at June 30, 2013 were 1,648.

Stock Appreciation Rights and Stock Options

The weighted-average assumptions used for SARs and stock option grants issued in fiscal 2013, 2012 and 2011 are:

	2013			2012			2011
Expected life, in years	5.5			5.6			5.1
Risk free interest rate	0.9		%	1.1		%	1.6		%
Dividend yield	2.5		%	2.5		%	2.5		%
Volatility	43.3		%	44.2		%	46.2		%
Per share fair value of SARs and stock options granted during the year	$	13.11		$	9.88		$	9.78

The expected life is based upon historical exercise experience of the officers, other key associates and members of the Board of Directors. The risk free interest rate is based upon U.S. Treasury zero-coupon bonds with remaining terms equal to the expected life of the SARs and stock options. The assumed dividend yield has been estimated based upon the Company’s historical results and expectations for changes in dividends and stock prices. The volatility assumption is calculated based upon historical daily price observations of the Company’s common stock for a period equal to the expected life.

SARs are redeemable solely in Company common stock. The exercise price of stock option awards may be settled by the holder with cash or by tendering Company common stock.

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

A summary of SARs and stock options activity is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Exercise Price
(Share amounts in thousands)
Outstanding, beginning of year	1,228		$	24.68
Granted	218		41.71
Exercised	(349	)	22.22
Forfeited	(17	)	31.56
Outstanding, end of year	1,080		$	28.79
Exercisable at end of year	654		$	25.47

The weighted-average remaining contractual terms for SARs and stock options outstanding and exercisable at June 30, 2013 were 6.3 and 5.0 years, respectively. The aggregate intrinsic values of SARs and stock options outstanding and exercisable at June 30, 2013 were $21,104 and $14,958, respectively. The aggregate intrinsic value of the SARs and stock options exercised during fiscal 2013, 2012 and 2011 was $7,135, $13,747 and $18,526, respectively.

The total fair value of shares vested during fiscal 2013, 2012 and 2011 was $2,135, $4,266 and $2,645, respectively.

Performance Shares

Performance shares are intended to provide incentives to achieve three-year goals. Performance shares pay out in shares of Applied stock at the end of a three-year period provided the Company achieves the established goals. The number of Applied shares payable will vary depending on the level of the goals achieved.

A summary of nonvested performance shares activity at June 30, 2013 is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Grant-Date Fair Value
(Share amounts in thousands)
Nonvested, beginning of year	62		$	28.80
Awarded	29		33.76
Forfeitures	(1	)	25.07
Vested	—		—
Nonvested, end of year	90		$	30.45

The Committee set threeone-year goals for each of the 2013, 2012 and 2011 grants. Each fiscal year during the three-year term has its own separate goals, tied to the Company’s earnings before interest, tax, depreciation, and amortization (EBITDA) and after-tax return on assets (ROA). Achievement during any particular fiscal year is awarded and “banked” for payout at the end of the three-year term. Based upon the outstanding grants as of June 30, 2013, the maximum number of shares which could be earned in future periods was 70.

Restricted Stock and Restricted Stock Units

Restricted stock award recipients are entitled to receive dividends on, and have voting rights with respect to their respective shares, but are restricted from selling or transferring the shares prior to vesting. Restricted stock awards vest over periods of one to four years. RSUs are grants valued in shares of Applied stock, but shares are not issued until the grants vest three years from the award date, assuming continued employment with Applied. Applied pays dividend equivalents on RSUs on a current basis.

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

A summary of the status of the Company’s nonvested restricted stock and RSUs at June 30, 2013 is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Grant-Date Fair Value
(Share amounts in thousands)
Nonvested, beginning of year	251		$	28.50
Granted	41		42.05
Forfeitures	(9	)	30.34
Vested	(105	)	26.09
Nonvested, end of year	178		$	32.96

Performance Grants

Prior to the establishment of the performance shares as incentive compensation, performance grants were used to reward performance. All performance periods had expired by June 30, 2011. During fiscal 2011, the Company recorded $1,020 of compensation expense for achievement relative to the total shareholder return-based goals of the Company’s performance grants.

NOTE 10: BENEFIT PLANS

Retirement Savings Plan

Substantially all U.S. associates participate in the Applied Industrial Technologies, Inc. Retirement Savings Plan. Participants may elect 401(k) contributions of up to 50% of their compensation, subject to Internal Revenue Code maximums. The Company partially matches 401(k) contributions by participants. The Company also makes a discretionary profit-sharing contribution to the Retirement Savings Plan generally based upon a percentage of the Company’s U.S. income before income taxes and before the amount of the contribution (5% for fiscal 2013, 2012 and 2011). The Company’s expense for profit sharing and matching of associates’ 401(k) contributions was $11,231, $10,866 and $11,251 during fiscal 2013, 2012 and 2011, respectively.

Deferred Compensation Plans

The Company has deferred compensation plans that enable certain associates of the Company to defer receipt of a portion of their compensation and non-employee directors to defer receipt of director fees. The Company funds these deferred compensation liabilities by making contributions to rabbi trusts. Assets held in these rabbi trusts consist of investments in money market and mutual funds and Company common stock.

Postemployment Benefit Plans

The Company provides the following postemployment benefits which, except for the Qualified Defined Benefit Retirement Plan, are unfunded:

Supplemental Executive Retirement Benefits Plan

The Company has a non-qualified pension plan to provide supplemental retirement benefits to certain officers. Benefits are payable and determinable at retirement based upon a percentage of the participant’s historical compensation. The Executive Organization and Compensation Committee of the Board of Directors froze participant benefits (credited service and final average earnings) and entry into the Supplemental Executive Retirement Benefits Plan (SERP) effective December 31, 2011. This action constituted a plan curtailment. The plan liability was remeasured in conjunction with the curtailment using a 3.5% discount rate and participant final average earnings through the curtailment date. The remeasurement in conjunction with the curtailment resulted in an actuarial loss (recorded in other comprehensive income (loss)) of $302 ($492 loss, net of income tax of $190).

The curtailment is reflected in the Company's fiscal 2012 consolidated balance sheet as: 1) a reduction to the overall SERP liability (included in postemployment benefits) of $8,860, 2) a reduction to deferred tax assets of $3,411 and 3) an increase in accumulated other comprehensive income (loss) of $5,449. Prior service costs previously recorded through accumulated other comprehensive income (loss) were reclassified into the statements of consolidated income ($3,117 gross expense, net of income tax of $1,200). The gross expense is recorded in selling, distribution and administrative expense in fiscal 2012.

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

Key Executive Restoration Plan

In fiscal 2012, the Executive Organization & Compensation Committee of the Board of Directors adopted the Key Executive Restoration Plan (KERP), an unfunded, non-qualified deferred compensation plan, to replace the SERP. The Company recorded $233 and $128 of expense associated with this plan in fiscal 2013 and 2012, respectively.

Qualified Defined Benefit Retirement Plan

The Company has a qualified defined benefit retirement plan that provides benefits to certain hourly associates at retirement. These associates do not participate in the Retirement Savings Plan. The benefits are based on length of service and date of retirement.

Salary Continuation Benefits

The Company has agreements with certain retirees of acquired companies to pay monthly retirement benefits through fiscal 2020.

Retiree Health Care Benefits

The Company provides health care benefits, through third-party policies, to eligible retired associates who pay a specified monthly premium. Premium payments are based upon current insurance rates for the type of coverage provided and are adjusted annually. Certain monthly health care premium payments are partially subsidized by the Company. Additionally, in conjunction with a fiscal 1998 acquisition, the Company assumed the obligation for a postretirement medical benefit plan which provides health care benefits to eligible retired associates at no cost to the individual.

During the year ended June 30, 2013, the Company changed the retiree health care plans to include the purchase of insurance policies at lower rates. Previously this plan was self-insured. This change resulted in plan amendment benefits of $1,788 recorded in other comprehensive income.

The Company uses a June 30 measurement date for all plans.

The following table sets forth the changes in benefit obligations and plan assets during the year and the funded status for the postemployment plans at June 30:

	Pension Benefits						Retiree Health Care Benefits
	2013			2012			2013			2012
Change in benefit obligation:
Benefit obligation at beginning of the year	$	47,151		$	53,490		$	5,148		$	4,667
Service cost	78			289			80			30
Interest cost	1,260			2,047			188			237
Plan participants’ contributions	—			—			65			47
Benefits paid	(6,183		)	(4,144		)	(254		)	(256		)
Amendments	(17		)	150			(1,788		)	—
Actuarial (gain) loss during year	(1,625		)	4,179			280			423
Curtailment	—			(8,860		)	—			—
Benefit obligation at end of year	$	40,664		$	47,151		$	3,719		$	5,148
Change in plan assets:
Fair value of plan assets at beginning of year	$	6,439		$	6,056		$	—		$	—
Actual gain (loss) on plan assets	424			(30		)	—			—
Employer contributions	6,017			4,557			189			209
Plan participants’ contributions	—			—			65			47
Benefits paid	(6,183		)	(4,144		)	(254		)	(256		)
Fair value of plan assets at end of year	$	6,697		$	6,439		$	—		$	—
Funded status at end of year	$	(33,967	)	$	(40,712	)	$	(3,719	)	$	(5,148	)

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

The amounts recognized in the consolidated balance sheets and in accumulated other comprehensive income (loss) for the postemployment plans were as follows:

	Pension Benefits						Retiree Health Care Benefits
June 30,	2013			2012			2013		2012
Amounts recognized in the consolidated balance sheets:
Other current liabilities	$	6,666		$	6,018		$	220	$	220
Postemployment benefits	27,301			34,694			3,499		4,928
Net amount recognized	$	33,967		$	40,712		$	3,719	$	5,148
Amounts recognized in accumulated other comprehensive income (loss):
Net actuarial (loss) gain	$	(7,732	)	$	(10,112	)	$	65	$	398
Prior service cost	(196		)	(279		)	1,760		(135		)
Total amounts recognized in accumulated other comprehensive (loss) income	$	(7,928	)	$	(10,391	)	$	1,825	$	263

The following table provides information for pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:

	Pension Benefits
June 30,	2013		2012
Projected benefit obligations	$	40,664	$	47,151
Accumulated benefit obligations	40,664		47,151
Fair value of plan assets	6,697		6,439

The net periodic costs are as follows:

	Pension Benefits									Retiree Health Care Benefits
Year Ended June 30,	2013			2012			2011			2013			2012			2011
Service cost	$	78		$	289		$	460		$	80		$	30		$	39
Interest cost	1,260			2,047			2,232			188			237			235
Expected return on plan assets	(403		)	(396		)	(385		)	—			—			—
Recognized net actuarial loss (gain)	735			644			1,449			(53		)	(72		)	(83		)
Amortization of prior service cost	83			412			710			107			139			139
Recognition of prior service cost upon plan curtailment	—			3,117			—			—			—			—
Net periodic cost	$	1,753		$	6,113		$	4,466		$	322		$	334		$	330

The estimated net actuarial loss and prior service cost for the pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $615 and $78, respectively. The estimated net actuarial gain and prior service cost for the retiree health care benefits that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $(38) and $(271), respectively.

Assumptions

The discount rate is used to determine the present value of future payments. In general, the Company’s liability increases as the discount rate decreases and decreases as the discount rate increases. The Company computes a weighted-average discount rate taking into account anticipated plan payments and the associated interest rates from the Citigroup Pension Discount Yield Curve.

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

The weighted-average actuarial assumptions used to determine benefit obligations and net periodic benefit cost for the plans were as follows:

	Pension Benefits				Retiree Health Care Benefits
June 30,	2013		2012		2013		2012
Assumptions used to determine benefit obligations at year end:
Discount rate	3.0	%	2.8	%	4.0	%	4.0	%
Assumptions used to determine net periodic benefit cost:
Discount rate	2.8	%	3.5	%	4.0	%	5.5	%
Expected return on plan assets	7.0	%	7.5	%	N/A		N/A
Rate of compensation increase	N/A		5.5	%	N/A		N/A

The assumed health care cost trend rates used in measuring the accumulated benefit obligation for retiree health care benefits were 7.3% and 7.5% as of June 30, 2013 and 2012, respectively, decreasing to 5.0% by 2023.

A one-percentage point change in the assumed health care cost trend rates would have had the following effects as of June 30, 2013 and for the year then ended:

	One-Percentage Point
	Increase		Decrease
Effect on total service and interest cost components of periodic expense	$	59	$	(47	)
Effect on postretirement benefit obligation	339		(295		)

Plan Assets

The fair value of each major class of plan assets for the Company’s Qualified Benefit Retirement Plan are valued using either quoted market prices in active markets for identical instruments; Level 1 in the fair value hierarchy, or other inputs that are observable, either directly or indirectly; Level 2 in the fair value hierarchy. Following are the fair values and target allocation as of June 30:

	Target Allocation		Fair Value
			2013		2012
Asset Class:
Equity securities (Level 1)	40 – 70%		$	3,189	$	3,735
Debt securities (Level 2)	20 – 50%		3,208		2,382
Other	0 – 20%		300		322
Total	100	%	$	6,697	$	6,439

Equity securities do not include any Company common stock.

The Company has established an investment policy and regularly monitors the performance of the assets of the trust maintained in conjunction with the Qualified Defined Benefit Retirement Plan. The strategy implemented by the trustee of the Qualified Defined Benefit Retirement Plan is to achieve long-term objectives and invest the pension assets in accordance with ERISA and fiduciary standards. The long-term primary objectives are to provide for a reasonable amount of long-term capital, without undue exposure to risk; to protect the Qualified Defined Benefit Retirement Plan assets from erosion of purchasing power; and to provide investment results that meet or exceed the actuarially assumed long-term rate of return. The expected long-term rate of return on assets assumption was developed by considering the historical returns and the future expectations for returns of each asset class as well as the target asset allocation of the pension portfolio.

Cash Flows

Employer Contributions

The Company expects to contribute $6,700 to its pension benefit plans and $250 to its retiree health care benefit plans in 2014. Contributions do not equal estimated future payments as certain payments are made from plan assets.

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as applicable, are expected to be paid in each of the next five years and in the aggregate for the subsequent five years:

During Fiscal Years	Pension Benefits		Retiree Health Care Benefits
2014	$	7,000	$	250
2015	6,700		230
2016	5,600		250
2017	1,800		330
2018	2,300		400
2019 through 2023	12,500		1,470

NOTE 11: LEASES

The Company leases its corporate headquarters facility along with many service center and distribution center facilities, vehicles and equipment under non-cancelable lease agreements accounted for as operating leases. The minimum annual rental commitments under non-cancelable operating leases as of June 30, 2013 are as follows:

During Fiscal Years
2014	$	26,700
2015	19,700
2016	13,400
2017	7,900
2018	4,100
Thereafter	9,200
Total minimum lease payments	$	81,000

Rental expenses incurred for operating leases, principally from leases for real property, vehicles and computer equipment were $36,300 in 2013, $31,200 in 2012 and $31,400 in 2011.

NOTE 12: SEGMENT AND GEOGRAPHIC INFORMATION

The Company's reportable segments are: Service Center Based Distribution and Fluid Power Businesses. The Service Center Based Distribution segment provides customers with solutions to their maintenance, repair and original equipment manufacturing needs through the distribution of industrial products including bearings, power transmission components, fluid power components and systems, industrial rubber products, linear motion products, tools, safety products, and other industrial and maintenance supplies. The Fluid Power Businesses segment distributes fluid power components and operates shops that assemble fluid power systems and components, performs equipment repair, and offers technical advice to customers.

The accounting policies of the Company’s reportable segments are generally the same as those described in Note 1. Sales primarily from the Fluid Power Businesses segment to the Service Center Based Distribution segment of $20,217, $18,097 and $17,665, in fiscal 2013, 2012 and 2011, respectively, have been eliminated in the following table.

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

Segment Financial Information

	Service Center Based Distribution		Fluid Power Businesses		Total
Year Ended June 30, 2013
Net sales	$	2,003,440	$	458,731	$	2,462,171
Operating income for reportable segments	138,484		41,083		179,567
Assets used in the business	859,547		199,159		1,058,706
Depreciation and amortization of property	10,692		1,809		12,501
Capital expenditures	10,415		1,799		12,214
Year Ended June 30, 2012
Net sales	$	1,904,564	$	470,881	$	2,375,445
Operating income for reportable segments	135,240		43,236		178,476
Assets used in the business	731,915		230,268		962,183
Depreciation and amortization of property	9,403		1,833		11,236
Capital expenditures	24,339		1,682		26,021
Year Ended June 30, 2011
Net sales	$	1,770,798	$	442,051	$	2,212,849
Operating income for reportable segments	115,798		41,793		157,591
Assets used in the business	700,486		214,445		914,931
Depreciation and amortization of property	9,152		2,082		11,234
Capital expenditures	19,392		1,039		20,431

ERP related assets are included in assets used in the business and capital expenditures within the Service Center Based Distribution segment. Within the geographic disclosures, these assets are included in the United States. Expenses associated with the ERP are included in the Corporate and other income, net, line in the reconciliation of operating income for reportable segments to the consolidated income before income taxes table below.

A reconciliation of operating income for reportable segments to the consolidated income before income taxes is as follows:

Year Ended June 30,	2013			2012			2011
Operating income for reportable segments	$	179,567		$	178,476		$	157,591
Adjustments for:
Intangible amortization — Service Center Based Distribution	5,829			3,834			3,384
Intangible amortization — Fluid Power Businesses	7,404			7,631			7,998
Corporate and other income, net	(10,065		)	(1,384		)	(4,554		)
Total operating income	176,399			168,395			150,763
Interest (income) expense, net	165			(9		)	1,668
Other expense (income), net	(1,431		)	1,578			(3,793		)
Income before income taxes	$	177,665		$	166,826		$	152,888

Corporate and other income, net, in fiscal 2012 includes the SERP curtailment loss of $3,117 recognized in the second quarter of fiscal 2012. Additional fluctuations in corporate and other income, net, are due to changes in the levels and amounts of expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support and other items.

Product Category

Net sales by product category are as follows:

Year Ended June 30,	2013		2012		2011
Industrial	$	1,776,172	$	1,680,926	$	1,559,859
Fluid power	685,999		694,519		652,990
Net sales	$	2,462,171	$	2,375,445	$	2,212,849

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands, except per share amounts)

The fluid power product category includes sales of hydraulic, pneumatic, lubrication and filtration components and systems, and repair services through the Company’s Fluid Power Businesses segment as well as the Service Center Based Distribution segment.

Geographic Information

Net sales are presented in geographic areas based on the location of the facility shipping the product. Long-lived assets are based on physical locations and are comprised of the net book value of property, goodwill and intangible assets. Information by geographic area is as follows:

Year Ended June 30,	2013		2012		2011
Net Sales:
United States	$	2,017,168	$	2,009,317	$	1,891,700
Canada	298,269		292,913		260,015
Other Countries	146,734		73,215		61,134
Total	$	2,462,171	$	2,375,445	$	2,212,849

June 30,	2013		2012		2011
Long-Lived Assets:
United States	$	210,289	$	198,076	$	191,947
Canada	44,290		42,624		29,893
Other Countries	26,780		10,323		13,706
Total	$	281,359	$	251,023	$	235,546

Other countries consisted of Mexico, Australia and New Zealand for the period ended June 30, 2013, and Mexico for the periods ended June 30, 2012 and June 30, 2011.

NOTE 13: COMMITMENTS AND CONTINGENCIES

In connection with the construction and lease of its corporate headquarters facility, the Company has guaranteed repayment of $4,300 of taxable development revenue bonds issued by Cuyahoga County and the Cleveland-Cuyahoga County Port Authority. These bonds were issued with a 20-year term and are scheduled to mature in March 2016. Any default, as defined in the guarantee agreements, would obligate the Company for the full amount of the outstanding bonds through maturity. Due to the nature of the guarantee, the Company has not recorded any liability on the consolidated financial statements. In the event of a default and subsequent payout under any or all guarantees, the Company maintains the right to pursue all legal options available to mitigate its exposure.

The Company is a party to various pending judicial and administrative proceedings. Based on circumstances currently known, the Company believes the likelihood is remote that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

NOTE 14: OTHER EXPENSE (INCOME), NET

Other expense (income), net, consists of the following:

Year Ended June 30,	2013			2012			2011
Unrealized (gain) loss on assets held in rabbi trust for a non-qualified deferred compensation plan	$	(1,280	)	$	36		$	(2,016	)
Benefit from payouts on corporate-owned life insurance policies	—			—			(1,722		)
Foreign currency transaction (gains) losses	(143		)	1,592			(541		)
Loss on cross-currency swap	—			—			368
Other, net	(8		)	(50		)	118
Total other expense (income), net	$	(1,431	)	$	1,578		$	(3,793	)

The Company is the owner and beneficiary under life insurance policies acquired in conjunction with a fiscal 1998 acquisition, with benefits in force of $12,300 and a net cash surrender value of $3,400 at June 30, 2013. In January 2011, the Company received death benefits under two of these policies and realized a gain of $1,722.

37

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Applied Industrial Technologies, Inc.

Cleveland, Ohio

We have audited the accompanying consolidated balance sheets of Applied Industrial Technologies, Inc. and subsidiaries (the "Company") as of June 30, 2013 and 2012, and the related statements of consolidated income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended June 30, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated financial statements present fairly, in all material respects, the financial position of theCompany at June 30, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2013, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of June 30, 2013, based on the criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated August 20, 2013 expressed an unqualified opinion on the Company's internal control over financial reporting.

Cleveland, Ohio

August 20, 2013

38

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Management of Applied Industrial Technologies, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Vice President - Chief Financial Officer & Treasurer, and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s Management and Board of Directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of inherent limitations, internal control over financial reporting can provide only reasonable, not absolute, assurance with respect to the preparation and presentation of the consolidated financial statements and may not prevent or detect misstatements. Further, because of changes in conditions, effectiveness of internal control over financial reporting may vary over time.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2013. This evaluation was based on the criteria set forth in the framework Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, Management determined that the Company’s internal control over financial reporting was effective as of June 30, 2013.

The effectiveness of the Company’s internal control over financial reporting has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Neil A. Schrimsher	Mark O. Eisele
President & Chief Executive Officer	Vice President - Chief Financial Officer & Treasurer
Daniel T. Brezovec
Corporate Controller

August 20, 2013

39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Applied Industrial Technologies, Inc.

Cleveland, Ohio

We have audited the internal control over financial reporting of Applied Industrial Technologies, Inc. and subsidiaries (the "Company") as of June 30, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet and related statements of consolidated income, comprehensive income, shareholders' equity and cash flows as of and for the year ended June 30, 2013 of the Company and our report dated August 20, 2013 expressed an unqualified opinion on those financial statements.

Cleveland, Ohio

August 20, 2013

40

QUARTERLY OPERATING RESULTS

(In thousands, except per share amounts)

(UNAUDITED)

									Per Common Share
	Net Sales		Gross Profit		Operating Income		Net Income		Net Income		Cash Dividend
2013
First Quarter	$	610,519	$	164,533	$	44,318	$	29,532	$	0.70	$	0.21
Second Quarter	589,517		162,919		40,569		27,043		0.64		0.21
Third Quarter	621,654		174,400		43,477		29,302		0.69		0.23
Fourth Quarter	640,481		181,110		48,035		32,272		0.76		0.23
	$	2,462,171	$	682,962	$	176,399	$	118,149	$	2.78	$	0.88
2012
First Quarter	$	579,574	$	158,704	$	43,267	$	26,382	$	0.61	$	0.19
Second Quarter	570,397		155,469		33,335		20,935		0.49		0.19
Third Quarter	605,461		167,613		42,019		29,418		0.69		0.21
Fourth Quarter	620,013		172,686		49,774		32,044		0.75		0.21
	$	2,375,445	$	654,472	$	168,395	$	108,779	$	2.54	$	0.80
2011
First Quarter	$	527,501	$	143,120	$	34,891	$	20,755	$	0.48	$	0.17
Second Quarter	529,517		144,281		33,056		21,193		0.49		0.17
Third Quarter	565,970		156,566		38,201		26,536		0.61		0.17
Fourth Quarter	589,861		169,143		44,615		28,275		0.65		0.19
	$	2,212,849	$	613,110	$	150,763	$	96,759	$	2.24	$	0.70

On August 15, 2013 there were 6,228 shareholders of record including 4,469 shareholders in the Applied Industrial Technologies, Inc. Retirement Savings Plan. The Company’s common stock is listed on the New York Stock Exchange. The closing price on August 15, 2013 was $48.17 per share.

The sum of the quarterly per share amounts may not equal per share amounts reported for year-to-date. This is due to changes in the number of weighted shares outstanding and the effects of rounding for each period.

Cost of sales for interim financial statements are computed using estimated gross profit percentages which are adjusted throughout the year based upon available information. Adjustments to actual cost are primarily made based on periodic physical inventory and the effect of year-end inventory quantities on LIFO costs.

During the June 30, 2013 quarter, the Company realized LIFO layer liquidation benefits of $6,300 from certain inventory quantity levels decreasing. Additional scrap expense of $3.0 million above our normal scrap rate was also recorded in the June 30, 2013 quarter.

During the year ended June 30, 2012, the Company realized $3,400 of LIFO layer liquidation benefits recorded in the fourth quarter.

In the second quarter of fiscal 2012, the Company's earnings were reduced by $4,400 due to two one-time items: freezing the Company's Supplemental Executive Retirement Benefits Plan and CEO transition expense.

During the year ended June 30, 2011, the Company recorded overall LIFO benefits of $5,294, which reduced cost of goods sold. The overall LIFO reserves were reduced by the same amount. Total fiscal year 2011 LIFO benefits were recorded as follows: $301 in the first quarter, $1,800 in the second quarter, $356 in the third quarter and $2,814 in the fourth quarter.

In the third quarter of fiscal 2011, the Company received death benefits under life insurance policies and realized a gain of $1,722.

41

QUARTERLY VOLUME AND PRICE INFORMATION

			Price Range
	Shares Traded	Average Daily Volume	High		Low
2013
First Quarter	12,149,000	196,000	$	44.86	$	34.67
Second Quarter	12,434,700	201,600	42.54		36.52
Third Quarter	11,238,700	187,300	45.67		42.02
Fourth Quarter	11,295,800	176,500	49.44		40.39
2012
First Quarter	26,284,500	410,700	$	36.77	$	24.50
Second Quarter	19,521,900	309,900	36.07		25.63
Third Quarter	15,756,700	254,100	42.01		34.78
Fourth Quarter	16,697,600	265,000	41.79		34.44
2011
First Quarter	18,731,300	292,700	$	31.08	$	24.15
Second Quarter	22,875,900	357,400	33.34		29.00
Third Quarter	17,150,600	276,600	34.92		30.36
Fourth Quarter	19,014,600	301,800	36.01		31.94

42

5 YEAR SUMMARY

(In thousands, except per share amounts and statistical data)

(UNAUDITED)

	2013			2012			2011			2010			2009(a)
Consolidated Operations — Year Ended June 30
Net sales	$	2,462,171		$	2,375,445		$	2,212,849		$	1,893,208		$	1,923,148
Depreciation and amortization of property	12,501			11,236			11,234			11,465			12,736
Amortization:
Intangible assets	13,233			11,465			11,382			10,151			46,260
SARs and stock options	2,317			2,058			2,473			3,020			3,702
Operating income	176,399			168,395			150,763			110,050			72,493
Net income	118,149			108,779			96,759			65,903			42,260
Per share data:
Net income:
Basic	2.81			2.58			2.28			1.56			1.00
Diluted	2.78			2.54			2.24			1.54			0.99
Cash dividend	$	0.88		0.80			0.70			0.60			0.60
Year-End Position — June 30
Working capital	$	491,380		$	435,593		$	404,226		$	347,528		$	369,038
Long-term debt (including long-term debt classified as current)										75,000			75,000
Total assets	1,058,706			962,183			914,931			891,520			809,328
Shareholders’ equity	759,615			672,131			633,563			555,039			508,102
Year-End Statistics — June 30
Current ratio	3.0			2.9			2.9			2.3			3.4
Operating facilities	522			476			474			455			464
Shareholders of record	6,319			6,225			6,208			5,884			6,329
Return on assets (b)	11.6		%	11.8		%	11.1		%	7.9		%	7.7		%
Return on equity (c)	16.5		%	16.7		%	16.3		%	12.4		%	8.4		%
Capital expenditures (d)	$	12,214		$	26,021		$	20,431		$	7,216		$	6,988
Cash Returned to Shareholders During the Year
Dividends Paid	$	37,194		$	33,800		$	29,751		$	25,416		$	25,378
Purchases of Treasury Shares	$	53		$	31,032		$	6,085		$	3,929		$	1,210
Total	$	37,247		$	64,832		$	35,836		$	29,345		$	26,588

^(a)  The goodwill impairment charge in fiscal 2009 reduced operating income by $36,605, net income by $23,000 and net income per share by $0.54.

^(b)  Return on assets is calculated as net income divided by monthly average assets, exclusive of the goodwill impairment.

^(c)  Return on equity is calculated as net income divided by the average shareholders’ equity (beginning of the year and end of the year divided by 2).

^(d)  Capital expenditures for fiscal 2013, 2012 and 2011 include $5.6 million, $16.7 million and $12.5 million related to the ERP project, respectively.

43

EX-21

EXHIBIT 21

APPLIED INDUSTRIAL TECHNOLOGIES, INC. FORM 10-K FOR

FISCAL YEAR ENDED JUNE 30, 2013

SUBSIDIARIES (as of June 30, 2013)

Name	Jurisdiction of Incorporation or Organization
* Air-Hydraulic Systems, Inc.	Minnesota
* Air Draulics Engineering Co.	Tennessee
AIT Canada, ULC	Nova Scotia
AIT International Inc.	Ohio
Applied Australia Holdings Pty Ltd.	Australia
Applied Canada, ULC	Nova Scotia
Applied Canada Holdings, ULC	Nova Scotia
* Applied Fluid Power Holdings, LLC	Ohio
Applied Industrial Technologies - CA LLC	Delaware
Applied Industrial Technologies - Capital, Inc.	Delaware
Applied Industrial Technologies - Dixie, Inc.	Tennessee
Applied Industrial Technologies, LP	Ontario
Applied Industrial Technologies Limited	New Zealand
Applied Industrial Technologies - PA LLC	Pennsylvania
Applied Industrial Technologies - PACIFIC LLC	Delaware
Applied Industrial Technologies Pty Ltd.	Australia
Applied Luxembourg, S.a.r.l.	Luxembourg
* Applied México, S.A. de C.V. (97%-owned by subsidiaries of Applied Industrial Technologies, Inc.)	Mexico
Applied Mexico Holdings, S.A. de C.V.	Mexico
Applied Northern Holdings, ULC	Nova Scotia
Applied Nova Scotia Company	Nova Scotia
Applied US, L.P.	Delaware
BER International, Inc.	Barbados
* Bay Advanced Technologies, LLC	Ohio
Bearing Sales & Services Inc.	Washington
* Bearings & Oil Seals Specialists Inc.	Canada
Bearings Pan American, Inc.	Ohio
* Carolina Fluid Components, LLC	Ohio
* DTS Fluid Power, LLC	Ohio
* ESI Acquisition Corporation (d/b/a Engineered Sales, Inc., ESI Power Hydraulics, and Applied Engineered Systems)	Ohio
* FluidTech, LLC	Ohio
* HydroAir Hughes, LLC	Ohio

* HyQuip, LLC	Ohio
* PAI, LLC	Ohio
* Power Systems, LLC	Ohio
* Rafael Benitez Carrillo Inc.	Puerto Rico
* Solutions Industrielles ULC	Canada
* Specialites Industrielles Harvey ULC	Quebec
* Spencer Fluid Power, Inc.	Ohio
* UZ Engineered Products Inc.	Canada (Federal)
* UZ Engineered Products LLC	Ohio
* VYCMEX Mexico, S.A. de C.V.	Mexico
* Operating companies that do not conduct business under Applied Industrial Technologies trade name

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-179354, 333-149183, 333-138054, 333-138053, 333-124574, 333-69002, 333-83809, 033-65509, 033-53361, and 033-53401 on Form S-8 of our reports dated August 20, 2013, relating to the consolidated financial statements and financial statement schedule of Applied Industrial Technologies, Inc. and subsidiaries (the “Company”), and the effectiveness of the Company's internal control over financial reporting, appearing in and incorporated by reference in this Annual Report on Form 10-K of the Company for the year ended June 30, 2013.

Cleveland, Ohio

August 20, 2013

EX-24

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By: /s/ William G. Bares 

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By:  /s/ T. A. Commes  

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By: /s/ Peter A. Dorsman  

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By: /s/ L. Thomas Hiltz  

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By:  /s/ Edith Kelly-Green

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By:  /s/ Dan P. Komnenovich 

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By: /s/ John F. Meier  

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By:  /s/ J. Michael Moore  

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By:  /s/ Vincent K. Petrella  

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By:  /s/ Jerry Sue Thornton  

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned director and/or officer of Applied Industrial Technologies, Inc., an Ohio corporation, hereby constitutes and appoints Fred D. Bauer and Mark O. Eisele, and each of them, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority, and in either or both of them, to sign for the undersigned and in his or her respective name as director and/or officer of the Corporation, the Corporation's Annual Report for the fiscal year ended June 30, 2013 on Form 10-K to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and the rules and regulations issued thereunder, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, or any one of them, as herein authorized.

Date: August 13, 2013 By: /s/ Peter C. Wallace  

EX-31

EXHIBIT 31

APPLIED INDUSTRIAL TECHNOLOGIES, INC. FORM 10-K FOR

FISCAL YEAR ENDED JUNE 30, 2013

CERTIFICATIONS

I, Neil A. Schrimsher, certify that:

1.		I have reviewed this annual report on Form 10-K of Applied Industrial Technologies, Inc.;
2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.		The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.		The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 20, 2013	/s/ Neil A. Schrimsher
	Neil A. Schrimsher
	President & Chief Executive Officer

I, Mark O. Eisele, certify that:

1.		I have reviewed this annual report on Form 10-K of Applied Industrial Technologies, Inc.;
2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.		The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.		The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 20, 2013	/s/ Mark O. Eisele
	Mark O. Eisele
	Vice President-Chief Financial Officer & Treasurer

EX-32

EXHIBIT 32

APPLIED INDUSTRIAL TECHNOLOGIES, INC. FORM 10-K FOR

FISCAL YEAR ENDED JUNE 30, 2013

[The following certification accompanies the Annual Report on Form 10-K for the year

ended June 30, 2013, and is not filed, as provided in applicable SEC releases.]

CERTIFICATIONS PURSUANT TO 18 U.S.C. 1350

     In connection with the Form 10-K (the “Report”) of Applied Industrial Technologies, Inc.

(the “Company”) for the period ending June 30, 2013, we, Neil A. Schrimsher, President & Chief Executive Officer, and Mark O. Eisele, Vice President-Chief Financial Officer & Treasurer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Neil A. Schrimsher	/s/ Mark O. Eisele
Neil A. Schrimsher President & Chief Executive Officer	Mark O. Eisele Vice President-Chief Financial Officer & Treasurer
Dated: August 20, 2013

[A signed original of this written statement has been provided to Applied Industrial Technologies,

Inc. and will be retained by Applied Industrial Technologies, Inc. and furnished to the Securities

and Exchange Commission or its staff upon request.]

XML

Segment and Geographic Information Textuals (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Segment and Geographic Information (Textuals) [Abstract]
Sales primarily from businesses segment	$ 20,217	$ 18,097	$ 17,665
Segment Reporting Information [Line Items]
Reclassification of prior service cost into SD&A expense upon plan curtailment	0	(3,117)	0
Pension Benefits [Member]
Segment Reporting Information [Line Items]
Reclassification of prior service cost into SD&A expense upon plan curtailment	$ 0	$ 3,117	$ 0

XML

Other Expense (Income), Net (Details) (USD $) In Thousands, unless otherwise specified	1 Months Ended	12 Months Ended
	Jan. 31, 2011	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Other (income) expense, net
Unrealized (gain) loss on assets held in rabbi trust for a non-qualified deferred compensation plan		$ (1,280)	$ 36	$ (2,016)
Benefit from payouts on corporate-owned life insurance policies	(1,722)	0	0	(1,722)
Foreign currency transaction (gains) losses		(143)	1,592	(541)
Loss on cross-currency swap		0	0	368
Other, net		(8)	(50)	118
Total other expense (income), net		(1,431)	1,578	(3,793)
Other (Income) Expense, Net (Textuals) [Abstract]
Benefits in life insurance policies acquired in 1998 acquisition		12,300
Net cash surrender value in life insurance policies acquired in 1998 acquisition		3,400
Benefit from payouts on corporate-owned life insurance policies		$ 0	$ 0	$ (1,722)

XML

Shareholders' Equity

12 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS’ EQUITY

Treasury Shares

At June 30, 2013, 596 shares of the Company’s common stock held as treasury shares were restricted as collateral under escrow arrangements relating to change in control and director and officer indemnification agreements.

Accumulated Other Comprehensive Income (Loss)

Changes in the accumulated other comprehensive income (loss) for the year ended June 30, 2013, is comprised of the following:

	Foreign currency translation adjustment			Unrealized gain (loss) on securities available for sale			Postemployment benefits			Total Accumulated other comprehensive income (loss)
Balance at June 30, 2012	$	1,718		$	(58	)	$	(6,229	)	$	(4,569	)
Other comprehensive income (loss)	(1,358		)	6			1,967			615
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			533			533
Net current-period other comprehensive income (loss), net of taxes	(1,358		)	6			2,500			1,148
Balance at June 30, 2013	$	360		$	(52	)	$	(3,729	)	$	(3,421	)

Other Comprehensive Income (Loss)

Details of other comprehensive income (loss) are as follows:

Year Ended June 30,	2013								2012									2011
	Pre-Tax Amount			Tax Expense (Benefit)		Net Amount			Pre-Tax Amount			Tax Expense (Benefit)			Net Amount			Pre-Tax Amount			Tax Expense (Benefit)			Net Amount
Foreign currency translation adjustments	$	(1,358	)	$	—	$	(1,358	)	$	(14,471	)	$	—		$	(14,471	)	$	10,011		$	(264	)	$	10,275
Postemployment benefits:
Actuarial gain (loss) on remeasurement	3,153			1,186		1,967			(5,028		)	(1,954		)	(3,074		)	(930		)	(435		)	(495		)
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	872			339		533			1,123			432			691			2,214			850			1,364
Impact of reduction in postemployment benefit liability (as forecasted salary increases will not be realized) due to a plan curtailment	—			—		—			8,860			3,411			5,449			—			—			—
Reclassification of prior service cost into SD&A expense upon plan curtailment	—			—		—			3,117			1,200			1,917			—			—			—
Unrealized gain (loss) on investment securities available for sale	10			4		6			(220		)	(80		)	(140		)	(84		)	(31		)	(53		)
Unrealized loss on cash flow hedges	—			—		—			—			—			—			(266		)	(82		)	(184		)
Reclassification of interest from cash flow hedge into interest expense	—			—		—			—			—			—			316			116			200
Other comprehensive income (loss)	$	2,677		$	1,529	$	1,148		$	(6,619	)	$	3,009		$	(9,628	)	$	11,261		$	154		$	11,107

Net Income Per Share

The following is a computation of basic and diluted earnings per share:

Year Ended June 30,	2013		2012		2011
Net Income	$	118,149	$	108,779	$	96,759
Average Shares Outstanding:
Weighted-average common shares outstanding for basic computation	42,060		42,139		42,433
Dilutive effect of potential common shares	482		684		821
Weighted-average common shares outstanding for dilutive computation	42,542		42,823		43,254
Net Income Per Share — Basic	$	2.81	$	2.58	$	2.28
Net Income Per Share — Diluted	$	2.78	$	2.54	$	2.24

Stock appreciation rights and options relating to the acquisition of 212, 140 and 176 shares of common stock were outstanding at June 30, 2013, 2012 and 2011, respectively, but were not included in the computation of diluted earnings per share for the fiscal years then ended as they were anti-dilutive.

XML

Shareholders' Equity OCI (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Other comprehensive income (loss) [Abstract]
Foreign currency translation adjustment pre-tax amount	$ (1,358)	$ (14,471)	$ 10,011
Foreign currency translation adjustment tax expense (benefit)	0	0	(264)
Foreign Currency Translation Adjustment, Net Amount	(1,358)	(14,471)	10,275
Actuarial gain (loss) on remeasurement	3,153	(5,028)	(930)
Actuarial gain (loss) on remeasurement, tax expense (benefit)	1,186	(1,954)	(435)
Actuarial gain ( loss) on remeasurement, net amount	1,967	(3,074)	(495)
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs, pre-tax amount	872	1,123	2,214
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs, tax expense (benefit)	339	432	850
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs, net amount	533	691	1,364
Impact of reduction in postemployment benefit liability (as forecasted salary increases will not be realized) due to a plan curtailment, pre-tax amount	0	8,860	0
Impact of reduction in postemployment benefit liability (as forecasted salary increases will not be realized) due to a plan curtailment, tax expense (benefit)	0	3,411	0
Impact of reduction in postemployment benefit liability (as forecasted salary increases will not be realized) due to a plan curtailment, net amount	0	5,449	0
Reclassification of prior service cost into SD&A expense upon plan curtailment	0	3,117	0
Reclassification of prior service cost into SD&A expense upon plan curtailment, tax expense (benefit)	0	1,200	0
Reclassification of prior service cost into SD&A expense upon plan curtailment, net amount	0	1,917	0
Unrealized gain (loss) on investment securities available for sale, pre-tax amount	10	(220)	(84)
Unrealized gain (loss) on investment securities available for sale, tax expense (benefit)	4	(80)	(31)
Unrealized gain (loss) on investment securities available for sale, net amount	6	(140)	(53)
Unrealized loss on cash flow hedges, pre-tax amount	0	0	(266)
Unrealized loss on cash flow hedges, tax expense (benefit)	0	0	(82)
Unrealized loss on cash flow hedges, net amount	0	0	(184)
Reclassification of interest from cash flow hedge into interest expense, pre-tax amount	0	0	316
Reclassification of interest from cash flow hedge into interest expense, tax expense (benefit)	0	0	116
Reclassification of interest from cash flow hedge into interest expense, net amount	0	0	200
Other Comprehensive Income (Loss), pre-tax amount	2,677	(6,619)	11,261
Other Comprehensive Income (Loss), tax expense (benefit)	1,529	3,009	154
Other comprehensive income	$ 1,148	$ (9,628)	$ 11,107

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Current assets
Cash and cash equivalents	$ 73,164	$ 78,442
Accounts receivable, less allowances of $7,737 and $8,332	329,880	307,043
Inventories	281,417	228,506
Other current assets	52,819	51,771
Total current assets	737,280	665,762
Property — at cost
Land	10,125	10,245
Buildings	75,463	74,477
Equipment, including computers and software	155,161	147,004
Total Property — at cost	240,749	231,726
Less accumulated depreciation	157,506	148,623
Property — net	83,243	83,103
Intangibles, net	91,267	84,840
Goodwill	106,849	83,080
Deferred tax assets	21,026	26,424
Other assets	19,041	18,974
Total Assets	1,058,706	962,183
Current liabilities
Accounts payable	136,575	120,890
Compensation and related benefits	63,899	63,149
Other current liabilities	45,426	46,130
Total current liabilities	245,900	230,169
Postemployment benefits	30,919	39,750
Other liabilities	22,272	20,133
Total Liabilities	299,091	290,052
Shareholders’ Equity
Preferred stock — no par value; 2,500 shares authorized; none issued or outstanding	0	0
Common stock — no par value; 80,000 shares authorized; 54,213 shares issued	10,000	10,000
Additional paid-in capital	153,893	150,070
Income retained for use in the business	824,362	743,360
Treasury shares — at cost (12,044 and 12,246 shares)	(225,219)	(226,730)
Accumulated other comprehensive income (loss)	(3,421)	(4,569)
Total Shareholders’ Equity	759,615	672,131
Total Liabilities and Shareholders’ Equity	$ 1,058,706	$ 962,183

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Business and Accounting Policies

12 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Significant Accounting Policies

BUSINESS AND ACCOUNTING POLICIES

Business

Applied Industrial Technologies, Inc. and subsidiaries (the “Company” or “Applied”) is a leading industrial distributor serving Maintenance Repair & Operations (MRO) and Original Equipment Manufacturer (OEM) customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. Applied also offers maintenance training and inventory management solutions that provide added value to its customers. Although the Company does not generally manufacture the products it sells, it does assemble and repair certain products and systems.

Consolidation

The consolidated financial statements include the accounts of Applied Industrial Technologies, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. The financial results of the Company’s Canadian and Mexican subsidiaries are included in the consolidated financial statements for the twelve months ended May 31.

Foreign Currency

The financial statements of the Company’s Canadian, Mexican, Australian and New Zealand subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss) in the statements of consolidated comprehensive income. Gains and losses resulting from transactions denominated in foreign currencies are included in the statements of consolidated income as a component of other expense (income), net.

Estimates

The preparation of 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 amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements.

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value.

Marketable Securities

The primary marketable security investments of the Company include money market and mutual funds held in a rabbi trust for a non-qualified deferred compensation plan. These are included in other assets in the consolidated balance sheets, are classified as trading securities, and reported at fair value based on quoted market prices. Changes in the fair value of the investments during the period are recorded in other expense (income), net in the statements of consolidated income.

Concentration of Credit Risk

The Company has a broad customer base representing many diverse industries primarily across North America, Australia and New Zealand. As such, the Company does not believe that a significant concentration of credit risk exists in its accounts receivable. The Company’s cash and cash equivalents consist of deposits with commercial banks and regulated non-bank subsidiaries. While Applied monitors the creditworthiness of these institutions, a crisis in the financial systems could limit access to funds and/or result in the loss of principal. The terms of these deposits and investments provide that all monies are available to the Company upon demand.

Allowances for Doubtful Accounts

The Company evaluates the collectibility of trade accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is adjusted based on recent trends of customers and industries estimated to be greater credit risks, trends within the entire customer pool and changes in the overall aging of accounts receivable. Accounts are written off against the allowance when it becomes evident collection will not occur. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults, and therefore, the need to revise estimates for bad debts.

Inventories

Inventories are valued at the lower of cost or market, using the last-in, first-out (LIFO) method for U.S. inventories and the average cost method for foreign inventories. The Company adopted the link chain dollar value LIFO method of accounting for U.S. inventories in fiscal 1974. At June 30, 2013, approximately 31% of the Company’s domestic inventory dollars relate to LIFO layers added in the 1970s. The Company maintains five LIFO pools based on the following product groupings: bearings, power transmission products, rubber products, fluid power products and other products. LIFO layers and/or liquidations are determined consistently year-to-year.

The Company evaluates the recoverability of its slow moving or obsolete inventories at least quarterly. The Company estimates the recoverable cost of such inventory by product type while considering factors such as its age, historic and current demand trends, the physical condition of the inventory as well as assumptions regarding future demand. The Company’s ability to recover its cost for slow moving or obsolete inventory can be affected by such factors as general market conditions, future customer demand and relationships with suppliers. Historically, the Company’s inventories have demonstrated long shelf lives, are not highly susceptible to obsolescence and can be eligible for return under various supplier return programs.

Supplier Purchasing Programs

The Company enters into agreements with certain suppliers providing inventory purchase incentives. The Company’s inventory purchase incentive arrangements are unique to each supplier and are generally annual programs ending at either the Company’s fiscal year end or the supplier’s year end; however, program length and ending dates can vary. Incentives are received in the form of cash or credits against purchases upon attainment of specified purchase volumes and are received either monthly, quarterly or annually. The incentives are generally a specified percentage of the Company’s net purchases based upon achieving specific purchasing volume levels. These percentages can increase or decrease based on changes in the volume of purchases. The Company accrues for the receipt of these inventory purchase incentives based upon cumulative purchases of inventory. The percentage level utilized is based upon the estimated total volume of purchases expected during the life of the program. Supplier programs are analyzed each quarter to determine the appropriateness of the amount of purchase incentives accrued. Upon program completion, differences between estimates and actual incentives subsequently received have not been material. Benefits under these supplier purchasing programs are recognized under the Company’s LIFO inventory accounting method as a reduction of cost of sales when the inventories representing these purchases are recorded as cost of sales. Accrued incentives expected to be settled as a credit against future purchases are reported on the consolidated balance sheet as an offset to amounts due to the related supplier.

Property and Related Depreciation and Amortization

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets and is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Buildings, building improvements and leasehold improvements are depreciated over ten to thirty years or the life of the lease if a shorter period, and equipment is depreciated over three to ten years. The Company capitalizes internal use software development costs in accordance with guidance on accounting for costs of computer software developed or obtained for internal use. Amortization of software begins when it is ready for its intended use, and is amortized on a straight-line basis over the estimated useful life of the software, generally not to exceed twelve years. Capitalized software and hardware costs are classified as property on the consolidated balance sheets. The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate that the recorded value cannot be recovered from undiscounted future cash flows. Impairment losses, if any, would be measured based upon the difference between the carrying amount and the fair value of the assets.

Goodwill and Intangible Assets

Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized. Goodwill is reviewed for impairment annually as of January 1 or whenever changes in conditions indicate an evaluation should be completed. These conditions could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. The Company utilizes discounted cash flow models and market multiples for comparable businesses to determine the fair value of reporting units. Evaluating impairment requires significant judgment by management, including estimated future operating results, estimated future cash flows, the long-term rate of growth of the business, and determination of an appropriate discount rate. While the Company uses available information to prepare the estimates and evaluations, actual results could differ significantly.

The Company recognizes acquired intangible assets such as customer relationships, trade names, vendor relationships, and non-competition agreements apart from goodwill. Customer relationship intangibles are amortized using the sum-of-the-years-digits method over estimated useful lives consistent with assumptions used in the determination of their value. Amortization of all other finite-lived intangible assets is computed using the straight-line method over the estimated period of benefit. Amortization of intangible assets is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Intangible assets with finite lives are reviewed for impairment when changes in conditions indicate carrying value may not be recoverable. Intangible assets with indefinite lives are reviewed for impairment on an annual basis or whenever changes in conditions indicate an evaluation should be completed.

Self-Insurance Liabilities

The Company maintains business insurance programs with significant self-insured retention covering workers’ compensation, business, automobile, general product liability and other claims. The Company accrues estimated losses including those incurred but not reported using actuarial calculations, models and assumptions based on historical loss experience. The Company maintains a self-insured health benefits plan, which provides medical benefits to U.S. based employees electing coverage under the plan. The Company estimates its reserve for all unpaid medical claims including those incurred but not reported based on historical experience, adjusted as necessary based upon management’s reasoned judgment.

Revenue Recognition

Sales are recognized when the sales price is fixed, collectibility is reasonably assured and the product’s title and risk of loss is transferred to the customer. Typically, these conditions are met when the product is shipped to the customer. The Company charges shipping and handling fees when products are shipped or delivered to a customer, and includes such amounts in net sales. The Company reports its sales net of actual sales returns and the amount of reserves established for anticipated sales returns based on historical rates. Sales tax collected from customers is excluded from net sales in the accompanying statements of consolidated income.

Shipping and Handling Costs

The Company records freight payments to third parties in cost of sales and internal delivery costs in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Internal delivery costs in selling, distribution and administrative expenses were approximately $15,650, $15,500 and $15,400 for the fiscal years ended June 30, 2013, 2012 and 2011, respectively.

Income Taxes

Income taxes are determined based upon income and expenses recorded for financial reporting purposes. Deferred income taxes are recorded for estimated future tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes, giving consideration to enacted tax laws. Uncertain tax positions meeting a more-likely-than-not recognition threshold are recognized in accordance with the Income Taxes topic of the ASC (Accounting Standards Codification). The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in the provision for income taxes.

Share-Based Compensation

Share-based compensation represents the cost related to share-based awards granted to associates under either the 2011 Plan or the 2007 Plan. The Company measures share-based compensation cost at grant date, based on the estimated fair value of the award and recognizes the cost over the requisite service period. Non-qualified stock appreciation rights (SARs) and stock options are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant and the fair values are determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield. SARs and stock option awards generally vest over four years of continuous service and have ten-year contractual terms. The fair value of restricted stock awards, restricted stock units (RSUs), and performance shares are based on the closing market price of Company common stock on the grant date.

Treasury Shares

Shares of common stock repurchased by the Company are recorded at cost as treasury shares and result in a reduction of shareholders’ equity in the consolidated balance sheets. The Company uses the weighted-average cost method for determining the cost of shares reissued. The difference between the cost of the shares and the reissuance price is added to or deducted from additional paid-in capital.

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the 2013 presentation.

New Accounting Pronouncement

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (ASC Topic 220) - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU No. 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income by the respective line items of net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The update is effective for financial statement periods beginning after December 15, 2012 with early adoption permitted. The Company has chosen to early adopt this standard and has updated its 2013 annual report to conform to the requirements of ASU No. 2013-02.

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Jun. 30, 2013

Valuation and Qualifying Accounts [Abstract]

VALUATION AND QUALIFYING ACCOUNTS

APPLIED INDUSTRIAL TECHNOLOGIES, INC. & SUBSIDIARIES

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED JUNE 30, 2013, 2012 AND 2011

(in thousands)

COLUMN A	COLUMN B		COLUMN C						COLUMN D			COLUMN E
DESCRIPTION	BALANCE AT BEGINNING OF PERIOD		ADDITIONS CHARGED TO COSTS AND EXPENSES		ADDITIONS (DEDUCTIONS) CHARGED TO OTHER ACCOUNTS				DEDUCTIONS FROM RESERVE			BALANCE AT END OF PERIOD
YEAR ENDED JUNE 30, 2013:
Reserve deducted from assets to which it applies — accounts receivable allowances	$	8,332	$	2,267	$	(104	)	(A)	$	2,758	(B)	$	7,737
YEAR ENDED JUNE 30, 2012:
Reserve deducted from assets to which it applies — accounts receivable allowances	$	7,016	$	3,915	$	122		(A)	$	2,721	(B)	$	8,332
YEAR ENDED JUNE 30, 2011:
Reserve deducted from assets to which it applies — accounts receivable allowances	$	6,379	$	2,029	$	111		(A)	$	1,503	(B)	$	7,016

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Benefit Plans 4 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
One-Percentage Point Change in Assumed Health Care Cost Trend Rates
Effect on total service and interest cost components of periodic expense (Increase)	$ 59
Effect on total service and interest cost components of periodic expense (Decrease)	(47)
Effect on postretirement benefit obligation (Increase)	339
Effect on postretirement benefit obligation (Decrease)	$ (295)

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Share - Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Compensation costs charged to expense under award programs
Total compensation costs under award programs	$ 5,761	$ 6,366	$ 5,631
Stock Options and Stock Appreciation Rights [ Member]
Compensation costs charged to expense under award programs
Total compensation costs under award programs	2,317	2,058	2,473
Performance Shares [Member]
Compensation costs charged to expense under award programs
Total compensation costs under award programs	1,074	1,983	1,705
Restricted stock and Restricted Stock units [Member]
Compensation costs charged to expense under award programs
Total compensation costs under award programs	$ 2,370	$ 2,325	$ 1,453

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Share - Based Compensation

12 Months Ended

Jun. 30, 2013

Share-based Compensation [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

Share-Based Incentive Plans

The 2011 Plan, which expires in 2016, provides for granting of SARs, stock options, stock awards, cash awards, and such other awards or combination thereof as the Executive Organization and Compensation Committee or the Corporate Governance Committee of the Board of Directors (the Committee) may determine to officers, other key associates and members of the Board of Directors. Grants are generally made by the Committee at regularly scheduled meetings. Compensation costs charged to expense under award programs paid (or to be paid) with shares (including SARs, stock options, performance shares, restricted stock, and RSUs) are summarized in the table below:

Year Ended June 30,	2013		2012		2011
SARs and options	$	2,317	$	2,058	$	2,473
Performance shares	1,074		1,983		1,705
Restricted stock and RSUs	2,370		2,325		1,453
Total compensation costs under award programs	$	5,761	$	6,366	$	5,631

Such amounts are included in SD&A in the accompanying statements of consolidated income. It has been the practice of the Company to issue shares from treasury to satisfy requirements of awards paid with shares.

The aggregate unrecognized compensation cost for share-based award programs paid (or with the potential to be paid) at June 30, 2013 are summarized in the table below:

Year Ended June 30,	2013		Expected Period of Recognition
SARs and options	$	2,193	2.5
Performance shares	2,648		1.8
Restricted stock and RSUs	2,760		1.4
Total unrecognized compensation costs under award programs	$	7,601	1.9

Cost of these programs will be recognized as expense over the weighted-average remaining vesting period of 1.9 years. The aggregate number of shares of common stock which may be awarded under the 2011 Plan is 2,000; shares available for future grants at June 30, 2013 were 1,648.

Stock Appreciation Rights and Stock Options

The weighted-average assumptions used for SARs and stock option grants issued in fiscal 2013, 2012 and 2011 are:

	2013			2012			2011
Expected life, in years	5.5			5.6			5.1
Risk free interest rate	0.9		%	1.1		%	1.6		%
Dividend yield	2.5		%	2.5		%	2.5		%
Volatility	43.3		%	44.2		%	46.2		%
Per share fair value of SARs and stock options granted during the year	$	13.11		$	9.88		$	9.78

The expected life is based upon historical exercise experience of the officers, other key associates and members of the Board of Directors. The risk free interest rate is based upon U.S. Treasury zero-coupon bonds with remaining terms equal to the expected life of the SARs and stock options. The assumed dividend yield has been estimated based upon the Company’s historical results and expectations for changes in dividends and stock prices. The volatility assumption is calculated based upon historical daily price observations of the Company’s common stock for a period equal to the expected life.

SARs are redeemable solely in Company common stock. The exercise price of stock option awards may be settled by the holder with cash or by tendering Company common stock.

A summary of SARs and stock options activity is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Exercise Price
(Share amounts in thousands)
Outstanding, beginning of year	1,228		$	24.68
Granted	218		41.71
Exercised	(349	)	22.22
Forfeited	(17	)	31.56
Outstanding, end of year	1,080		$	28.79
Exercisable at end of year	654		$	25.47

The weighted-average remaining contractual terms for SARs and stock options outstanding and exercisable at June 30, 2013 were 6.3 and 5.0 years, respectively. The aggregate intrinsic values of SARs and stock options outstanding and exercisable at June 30, 2013 were $21,104 and $14,958, respectively. The aggregate intrinsic value of the SARs and stock options exercised during fiscal 2013, 2012 and 2011 was $7,135, $13,747 and $18,526, respectively.

The total fair value of shares vested during fiscal 2013, 2012 and 2011 was $2,135, $4,266 and $2,645, respectively.

Performance Shares

Performance shares are intended to provide incentives to achieve three-year goals. Performance shares pay out in shares of Applied stock at the end of a three-year period provided the Company achieves the established goals. The number of Applied shares payable will vary depending on the level of the goals achieved.

A summary of nonvested performance shares activity at June 30, 2013 is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Grant-Date Fair Value
(Share amounts in thousands)
Nonvested, beginning of year	62		$	28.80
Awarded	29		33.76
Forfeitures	(1	)	25.07
Vested	—		—
Nonvested, end of year	90		$	30.45

The Committee set threeone-year goals for each of the 2013, 2012 and 2011 grants. Each fiscal year during the three-year term has its own separate goals, tied to the Company’s earnings before interest, tax, depreciation, and amortization (EBITDA) and after-tax return on assets (ROA). Achievement during any particular fiscal year is awarded and “banked” for payout at the end of the three-year term. Based upon the outstanding grants as of June 30, 2013, the maximum number of shares which could be earned in future periods was 70.

Restricted Stock and Restricted Stock Units

Restricted stock award recipients are entitled to receive dividends on, and have voting rights with respect to their respective shares, but are restricted from selling or transferring the shares prior to vesting. Restricted stock awards vest over periods of one to four years. RSUs are grants valued in shares of Applied stock, but shares are not issued until the grants vest three years from the award date, assuming continued employment with Applied. Applied pays dividend equivalents on RSUs on a current basis.

A summary of the status of the Company’s nonvested restricted stock and RSUs at June 30, 2013 is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Grant-Date Fair Value
(Share amounts in thousands)
Nonvested, beginning of year	251		$	28.50
Granted	41		42.05
Forfeitures	(9	)	30.34
Vested	(105	)	26.09
Nonvested, end of year	178		$	32.96

Performance Grants

Prior to the establishment of the performance shares as incentive compensation, performance grants were used to reward performance. All performance periods had expired by June 30, 2011. During fiscal 2011, the Company recorded $1,020 of compensation expense for achievement relative to the total shareholder return-based goals of the Company’s performance grants.

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Income Taxes 2 (Details)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Reconciliations of federal statutory income tax rate and Company's effective income tax rate:
Statutory income tax rate	35.00%	35.00%	35.00%
State and local taxes	2.30%	2.50%	2.80%
U.S. tax on foreign income, net	0.00%	0.00%	1.80%
Valuation allowance	0.00%	0.00%	(0.60%)
Foreign income taxes	(2.30%)	(1.80%)	(1.00%)
Deductible dividend	(0.50%)	(0.50%)	(0.50%)
Other, net	(1.00%)	(0.40%)	(0.80%)
Effective income tax rate	33.50%	34.80%	36.70%

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Share - Based Compensation Share Based Compensation 1 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Schedule Of Unrecognized Compensation Cost Nonvested Awards Table Text Block [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 7,601
Expected Period for Recognition	1 year 11 months
Stock Options and Stock Appreciation Rights [ Member]
Schedule Of Unrecognized Compensation Cost Nonvested Awards Table Text Block [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	2,193
Expected Period for Recognition	2 years 6 months
Performance Shares [Member]
Schedule Of Unrecognized Compensation Cost Nonvested Awards Table Text Block [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	2,648
Expected Period for Recognition	1 year 9 months
Restricted stock and Restricted Stock units [Member]
Schedule Of Unrecognized Compensation Cost Nonvested Awards Table Text Block [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 2,760
Expected Period for Recognition	1 year 5 months

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Inventory [Line Items]
Effect of LIFO Inventory Liquidation on Income	$ 6,300	$ 3,400	$ 12,300
Items Of Inventories
U.S. inventories at current cost	323,642	302,465
Foreign inventories at average cost	103,483	70,797
Inventory, Gross, Total	427,125	373,262
Less: Excess of current cost over LIFO cost for U.S. inventories	145,708	144,756
Inventories on consolidated balance sheets	$ 281,417	$ 228,506

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Inventories (Tables)

12 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

Items of Inventories

Inventories consist of the following:

June 30,	2013		2012
U.S. inventories at current cost	$	323,642	$	302,465
Foreign inventories at average cost	103,483		70,797
	427,125		373,262
Less: Excess of current cost over LIFO cost for U.S. inventories	145,708		144,756
Inventories on consolidated balance sheets	$	281,417	$	228,506

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Business Combinations FY2013 Assets Acquired (Tables)

12 Months Ended

Jun. 30, 2013

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following table summarizes the fair values of assets acquired and liabilities assumed for fiscal 2013:

	2013
Accounts receivable	$	7,514
Inventories	23,723
Other current assets	217
Property	1,090
Intangibles	19,814
Goodwill	24,324
Total assets acquired	76,682
Accounts payable	1,867
Other current liabilities	6,192
Net assets acquired	68,623
Purchase price	$	68,623

The purchase price includes $1,015 which has been deferred, and will be paid as acquisition holdback payments in future periods. Additional 2013 pro-forma information has not been included since it is not material.

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Components of income before income taxes
U.S.	$ 153,546	$ 137,667	$ 127,567
Foreign	24,119	29,159	25,321
Income Before Income Taxes	$ 177,665	$ 166,826	$ 152,888

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Segment and Geographic Information (Tables)

12 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment financial information

	Service Center Based Distribution		Fluid Power Businesses		Total
Year Ended June 30, 2013
Net sales	$	2,003,440	$	458,731	$	2,462,171
Operating income for reportable segments	138,484		41,083		179,567
Assets used in the business	859,547		199,159		1,058,706
Depreciation and amortization of property	10,692		1,809		12,501
Capital expenditures	10,415		1,799		12,214
Year Ended June 30, 2012
Net sales	$	1,904,564	$	470,881	$	2,375,445
Operating income for reportable segments	135,240		43,236		178,476
Assets used in the business	731,915		230,268		962,183
Depreciation and amortization of property	9,403		1,833		11,236
Capital expenditures	24,339		1,682		26,021
Year Ended June 30, 2011
Net sales	$	1,770,798	$	442,051	$	2,212,849
Operating income for reportable segments	115,798		41,793		157,591
Assets used in the business	700,486		214,445		914,931
Depreciation and amortization of property	9,152		2,082		11,234
Capital expenditures	19,392		1,039		20,431

Reconciliation of operating income for reportable segments to the consolidated income before income taxes

A reconciliation of operating income for reportable segments to the consolidated income before income taxes is as follows:

Year Ended June 30,	2013			2012			2011
Operating income for reportable segments	$	179,567		$	178,476		$	157,591
Adjustments for:
Intangible amortization — Service Center Based Distribution	5,829			3,834			3,384
Intangible amortization — Fluid Power Businesses	7,404			7,631			7,998
Corporate and other income, net	(10,065		)	(1,384		)	(4,554		)
Total operating income	176,399			168,395			150,763
Interest (income) expense, net	165			(9		)	1,668
Other expense (income), net	(1,431		)	1,578			(3,793		)
Income before income taxes	$	177,665		$	166,826		$	152,888

Net sales by product category

Net sales by product category are as follows:

Year Ended June 30,	2013		2012		2011
Industrial	$	1,776,172	$	1,680,926	$	1,559,859
Fluid power	685,999		694,519		652,990
Net sales	$	2,462,171	$	2,375,445	$	2,212,849

Information by geographic area

Information by geographic area is as follows:

Year Ended June 30,	2013		2012		2011
Net Sales:
United States	$	2,017,168	$	2,009,317	$	1,891,700
Canada	298,269		292,913		260,015
Other Countries	146,734		73,215		61,134
Total	$	2,462,171	$	2,375,445	$	2,212,849

June 30,	2013		2012		2011
Long-Lived Assets:
United States	$	210,289	$	198,076	$	191,947
Canada	44,290		42,624		29,893
Other Countries	26,780		10,323		13,706
Total	$	281,359	$	251,023	$	235,546

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Goodwill and Intangibles 1 (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Amortization details resulting from business combinations
Amount	$ 147,720	$ 128,271
Intangible assets gross excluding goodwill		129,561
Accumulated Amortization	56,453	44,721
Net Book Value	91,267	83,550
Intangible Assets, Net (Excluding Goodwill)	91,267	84,840
Indefinite-Lived Trade Names [Member]
Amortization details resulting from business combinations
Indefinite - Lived Trade Names		1,290
Customer relationships [Member]
Amortization details resulting from business combinations
Amount	100,854	84,249
Accumulated Amortization	38,844	29,905
Net Book Value	62,010	54,344
Trade names [Member]
Amortization details resulting from business combinations
Amount	26,690	25,677
Accumulated Amortization	8,643	7,428
Net Book Value	18,047	18,249
Vendor relationships [Member]
Amortization details resulting from business combinations
Amount	15,433	13,605
Accumulated Amortization	5,443	4,500
Net Book Value	9,990	9,105
Non-competition agreements [Member]
Amortization details resulting from business combinations
Amount	4,743	4,740
Accumulated Amortization	3,523	2,888
Net Book Value	$ 1,220	$ 1,852

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Income Taxes 3 (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Deferred tax assets:
Compensation liabilities not currently deductible	$ 33,506	$ 37,341
Expenses and reserves not currently deductible	6,131	6,151
Goodwill and intangibles	3,781	6,518
Net operating loss carryforwards (expiring in years 2027-2033)	432	444
Foreign tax credits (expiring in years 2018, 2020, 2021)	38	4,092
Other	569	480
Total deferred tax assets	44,457	55,026
Less: Valuation allowance	(11)	(157)
Deferred tax assets, net of valuation allowance	44,446	54,869
Deferred tax liabilities:
Inventories	(9,057)	(6,021)
Unremitted foreign earnings	(2,804)	(2,804)
Depreciation and differences in property bases	(11,460)	(11,602)
Total deferred tax liabilities	(23,321)	(20,427)
Net deferred tax assets	21,125	34,442
The net deferred tax asset is classified as follows:
Other current assets	6,315	12,189
Deferred tax assets (long-term)	21,026	26,424
Other liabilities	(6,216)	(4,171)
Net deferred tax assets	$ 21,125	$ 34,442

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Share - Based Compensation (Tables)

12 Months Ended

Jun. 30, 2013

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of share based compensation expense

The 2011 Plan, which expires in 2016, provides for granting of SARs, stock options, stock awards, cash awards, and such other awards or combination thereof as the Executive Organization and Compensation Committee or the Corporate Governance Committee of the Board of Directors (the Committee) may determine to officers, other key associates and members of the Board of Directors. Grants are generally made by the Committee at regularly scheduled meetings. Compensation costs charged to expense under award programs paid (or to be paid) with shares (including SARs, stock options, performance shares, restricted stock, and RSUs) are summarized in the table below:

Year Ended June 30,	2013		2012		2011
SARs and options	$	2,317	$	2,058	$	2,473
Performance shares	1,074		1,983		1,705
Restricted stock and RSUs	2,370		2,325		1,453
Total compensation costs under award programs	$	5,761	$	6,366	$	5,631

Schedule of Unrecognized Compensation Cost, Nonvested Awards [Table Text Block]

The aggregate unrecognized compensation cost for share-based award programs paid (or with the potential to be paid) at June 30, 2013 are summarized in the table below:

Year Ended June 30,	2013		Expected Period of Recognition
SARs and options	$	2,193	2.5
Performance shares	2,648		1.8
Restricted stock and RSUs	2,760		1.4
Total unrecognized compensation costs under award programs	$	7,601	1.9

Weighted-average assumptions used for SARs and stock option grants issued

The weighted-average assumptions used for SARs and stock option grants issued in fiscal 2013, 2012 and 2011 are:

	2013			2012			2011
Expected life, in years	5.5			5.6			5.1
Risk free interest rate	0.9		%	1.1		%	1.6		%
Dividend yield	2.5		%	2.5		%	2.5		%
Volatility	43.3		%	44.2		%	46.2		%
Per share fair value of SARs and stock options granted during the year	$	13.11		$	9.88		$	9.78

Summary of SARs and stock option activity

A summary of SARs and stock options activity is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Exercise Price
(Share amounts in thousands)
Outstanding, beginning of year	1,228		$	24.68
Granted	218		41.71
Exercised	(349	)	22.22
Forfeited	(17	)	31.56
Outstanding, end of year	1,080		$	28.79
Exercisable at end of year	654		$	25.47

Performance Shares [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of the performance shares and restricted stock activity

A summary of nonvested performance shares activity at June 30, 2013 is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Grant-Date Fair Value
(Share amounts in thousands)
Nonvested, beginning of year	62		$	28.80
Awarded	29		33.76
Forfeitures	(1	)	25.07
Vested	—		—
Nonvested, end of year	90		$	30.45

Restricted stock and Restricted Stock units [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of the performance shares and restricted stock activity

A summary of the status of the Company’s nonvested restricted stock and RSUs at June 30, 2013 is presented below:

Year Ended June 30, 2013	Shares		Weighted-Average Grant-Date Fair Value
(Share amounts in thousands)
Nonvested, beginning of year	251		$	28.50
Granted	41		42.05
Forfeitures	(9	)	30.34
Vested	(105	)	26.09
Nonvested, end of year	178		$	32.96

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Benefit Plans 1 (Details) (Pension Benefits [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Pension Benefits [Member]
Information for pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets
Projected benefit obligations	$ 40,664	$ 47,151
Accumulated benefit obligations	40,664	47,151
Fair value of plan assets	$ 6,697	$ 6,439

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Segment and Geographic Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Segment financial information
Net Sales	$ 2,462,171	$ 2,375,445	$ 2,212,849
Operating income for reportable segments	176,399	168,395	150,763
Assets used in the business	1,058,706	962,183
Depreciation and amortization of property	12,501	11,236	11,234
Capital expenditures	12,214	26,021	20,431
Service Center Based Distribution Segment [Member]
Segment financial information
Net Sales	2,003,440	1,904,564	1,770,798
Operating income for reportable segments	138,484	135,240	115,798
Assets used in the business	859,547	731,915	700,486
Depreciation and amortization of property	10,692	9,403	9,152
Capital expenditures	10,415	24,339	19,392
Fluid Power Businesses [Member]
Segment financial information
Net Sales	458,731	470,881	442,051
Operating income for reportable segments	41,083	43,236	41,793
Assets used in the business	199,159	230,268	214,445
Depreciation and amortization of property	1,809	1,833	2,082
Capital expenditures	1,799	1,682	1,039
Reportable Segment [Member]
Segment financial information
Net Sales	2,462,171	2,375,445	2,212,849
Operating income for reportable segments	179,567	178,476	157,591
Assets used in the business	1,058,706	962,183	914,931
Depreciation and amortization of property	12,501	11,236	11,234
Capital expenditures	$ 12,214	$ 26,021	$ 20,431

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Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Amounts recognized in the consolidated balance sheets:
Postemployment benefits	$ 30,919	$ 39,750
Pension Benefits [Member]
Change in benefit obligation:
Benefit obligation at beginning of the year	47,151	53,490
Service cost	78	289	460
Interest cost	1,260	2,047	2,232
Plan participants' contributions	0	0
Benefits paid	(6,183)	(4,144)
Amendments	(17)	150
Actuarial (gain) loss during year	(1,625)	4,179
Curtailment	0	(8,860)
Benefit obligation at end of year	40,664	47,151	53,490
Change in plan assets:
Fair value of plan assets at beginning of year	6,439	6,056
Actual gain (loss) on plan assets	424	(30)
Employer contributions	6,017	4,557
Fair value of plan assets at end of year	6,697	6,439	6,056
Funded status at end of year	(33,967)	(40,712)
Amounts recognized in the consolidated balance sheets:
Other current liabilities	6,666	6,018
Postemployment benefits	27,301	34,694
Net amount recognized	33,967	40,712
Amounts recognized in accumulated other comprehensive income (loss):
Net actuarial (loss) gain	(7,732)	(10,112)
Prior service cost	(196)	(279)
Total amounts recognized in accumulated other comprehensive (loss) income	(7,928)	(10,391)
Retiree Health Care Benefits [Member]
Change in benefit obligation:
Benefit obligation at beginning of the year	5,148	4,667
Service cost	80	30	39
Interest cost	188	237	235
Plan participants' contributions	65	47
Benefits paid	(254)	(256)
Amendments	(1,788)	0
Actuarial (gain) loss during year	280	423
Curtailment	0	0
Benefit obligation at end of year	3,719	5,148	4,667
Change in plan assets:
Fair value of plan assets at beginning of year	0	0
Actual gain (loss) on plan assets	0	0
Employer contributions	189	209
Fair value of plan assets at end of year	0	0	0
Funded status at end of year	(3,719)	(5,148)
Amounts recognized in the consolidated balance sheets:
Other current liabilities	220	220
Postemployment benefits	3,499	4,928
Net amount recognized	3,719	5,148
Amounts recognized in accumulated other comprehensive income (loss):
Net actuarial (loss) gain	65	398
Prior service cost	1,760	(135)
Total amounts recognized in accumulated other comprehensive (loss) income	$ 1,825	$ 263

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Debt (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Debt Instrument [Line Items]
Line of credit facility unsecured borrowings amount	$ 150,000
Line of credit facility, amount outstanding	8,696
Line of Credit Facility, Remaining Borrowing Capacity	141,304
Additional long-term financing under uncommitted shelf facility agreement amount	$ 125,000
Ratio of consolidated income before interest, taxes, depreciation and amortization to net interest expense	300.00%
Minimum [Member]
Debt Instrument [Line Items]
Fees on credit facility	0.09%
Maximum [Member]
Debt Instrument [Line Items]
Fees on credit facility	0.175%

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Benefit Plans 6 (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Pension Benefits [Member]
Estimated future benefit payments
2014	$ 7,000
2015	6,700
2016	5,600
2017	1,800
2018	2,300
2019 through 2023	12,500
Retiree Health Care Benefits [Member]
Estimated future benefit payments
2014	250
2015	230
2016	250
2017	330
2018	400
2019 through 2023	$ 1,470

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Business and Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Business

Business

Applied Industrial Technologies, Inc. and subsidiaries (the “Company” or “Applied”) is a leading industrial distributor serving Maintenance Repair & Operations (MRO) and Original Equipment Manufacturer (OEM) customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. Applied also offers maintenance training and inventory management solutions that provide added value to its customers. Although the Company does not generally manufacture the products it sells, it does assemble and repair certain products and systems.

Consolidation

Consolidation

The consolidated financial statements include the accounts of Applied Industrial Technologies, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. The financial results of the Company’s Canadian and Mexican subsidiaries are included in the consolidated financial statements for the twelve months ended May 31.

Foreign Currency

Foreign Currency

The financial statements of the Company’s Canadian, Mexican, Australian and New Zealand subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss) in the statements of consolidated comprehensive income. Gains and losses resulting from transactions denominated in foreign currencies are included in the statements of consolidated income as a component of other expense (income), net.

Use of Estimates, Policy [Policy Text Block]

Estimates

The preparation of 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 amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value.

Marketable Securities

Marketable Securities

The primary marketable security investments of the Company include money market and mutual funds held in a rabbi trust for a non-qualified deferred compensation plan. These are included in other assets in the consolidated balance sheets, are classified as trading securities, and reported at fair value based on quoted market prices. Changes in the fair value of the investments during the period are recorded in other expense (income), net in the statements of consolidated income.

Concentration of Credit Risk

Concentration of Credit Risk

The Company has a broad customer base representing many diverse industries primarily across North America, Australia and New Zealand. As such, the Company does not believe that a significant concentration of credit risk exists in its accounts receivable. The Company’s cash and cash equivalents consist of deposits with commercial banks and regulated non-bank subsidiaries. While Applied monitors the creditworthiness of these institutions, a crisis in the financial systems could limit access to funds and/or result in the loss of principal. The terms of these deposits and investments provide that all monies are available to the Company upon demand.

Allowances for Doubtful Accounts

Allowances for Doubtful Accounts

The Company evaluates the collectibility of trade accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is adjusted based on recent trends of customers and industries estimated to be greater credit risks, trends within the entire customer pool and changes in the overall aging of accounts receivable. Accounts are written off against the allowance when it becomes evident collection will not occur. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults, and therefore, the need to revise estimates for bad debts

Inventories

Inventories

Inventories are valued at the lower of cost or market, using the last-in, first-out (LIFO) method for U.S. inventories and the average cost method for foreign inventories. The Company adopted the link chain dollar value LIFO method of accounting for U.S. inventories in fiscal 1974. At June 30, 2013, approximately 31% of the Company’s domestic inventory dollars relate to LIFO layers added in the 1970s. The Company maintains five LIFO pools based on the following product groupings: bearings, power transmission products, rubber products, fluid power products and other products. LIFO layers and/or liquidations are determined consistently year-to-year.

The Company evaluates the recoverability of its slow moving or obsolete inventories at least quarterly. The Company estimates the recoverable cost of such inventory by product type while considering factors such as its age, historic and current demand trends, the physical condition of the inventory as well as assumptions regarding future demand. The Company’s ability to recover its cost for slow moving or obsolete inventory can be affected by such factors as general market conditions, future customer demand and relationships with suppliers. Historically, the Company’s inventories have demonstrated long shelf lives, are not highly susceptible to obsolescence and can be eligible for return under various supplier return programs

Supplier Purchasing Programs

Supplier Purchasing Programs

The Company enters into agreements with certain suppliers providing inventory purchase incentives. The Company’s inventory purchase incentive arrangements are unique to each supplier and are generally annual programs ending at either the Company’s fiscal year end or the supplier’s year end; however, program length and ending dates can vary. Incentives are received in the form of cash or credits against purchases upon attainment of specified purchase volumes and are received either monthly, quarterly or annually. The incentives are generally a specified percentage of the Company’s net purchases based upon achieving specific purchasing volume levels. These percentages can increase or decrease based on changes in the volume of purchases. The Company accrues for the receipt of these inventory purchase incentives based upon cumulative purchases of inventory. The percentage level utilized is based upon the estimated total volume of purchases expected during the life of the program. Supplier programs are analyzed each quarter to determine the appropriateness of the amount of purchase incentives accrued. Upon program completion, differences between estimates and actual incentives subsequently received have not been material. Benefits under these supplier purchasing programs are recognized under the Company’s LIFO inventory accounting method as a reduction of cost of sales when the inventories representing these purchases are recorded as cost of sales. Accrued incentives expected to be settled as a credit against future purchases are reported on the consolidated balance sheet as an offset to amounts due to the related supplier

Property and related Depreciation and Amortization

Property and Related Depreciation and Amortization

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets and is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Buildings, building improvements and leasehold improvements are depreciated over ten to thirty years or the life of the lease if a shorter period, and equipment is depreciated over three to ten years. The Company capitalizes internal use software development costs in accordance with guidance on accounting for costs of computer software developed or obtained for internal use. Amortization of software begins when it is ready for its intended use, and is amortized on a straight-line basis over the estimated useful life of the software, generally not to exceed twelve years. Capitalized software and hardware costs are classified as property on the consolidated balance sheets. The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate that the recorded value cannot be recovered from undiscounted future cash flows. Impairment losses, if any, would be measured based upon the difference between the carrying amount and the fair value of the assets

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized. Goodwill is reviewed for impairment annually as of January 1 or whenever changes in conditions indicate an evaluation should be completed. These conditions could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. The Company utilizes discounted cash flow models and market multiples for comparable businesses to determine the fair value of reporting units. Evaluating impairment requires significant judgment by management, including estimated future operating results, estimated future cash flows, the long-term rate of growth of the business, and determination of an appropriate discount rate. While the Company uses available information to prepare the estimates and evaluations, actual results could differ significantly.

The Company recognizes acquired intangible assets such as customer relationships, trade names, vendor relationships, and non-competition agreements apart from goodwill. Customer relationship intangibles are amortized using the sum-of-the-years-digits method over estimated useful lives consistent with assumptions used in the determination of their value. Amortization of all other finite-lived intangible assets is computed using the straight-line method over the estimated period of benefit. Amortization of intangible assets is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Intangible assets with finite lives are reviewed for impairment when changes in conditions indicate carrying value may not be recoverable. Intangible assets with indefinite lives are reviewed for impairment on an annual basis or whenever changes in conditions indicate an evaluation should be completed

Self-Insurance Liabilities

Self-Insurance Liabilities

The Company maintains business insurance programs with significant self-insured retention covering workers’ compensation, business, automobile, general product liability and other claims. The Company accrues estimated losses including those incurred but not reported using actuarial calculations, models and assumptions based on historical loss experience. The Company maintains a self-insured health benefits plan, which provides medical benefits to U.S. based employees electing coverage under the plan. The Company estimates its reserve for all unpaid medical claims including those incurred but not reported based on historical experience, adjusted as necessary based upon management’s reasoned judgment

Revenue Recognition

Revenue Recognition

Sales are recognized when the sales price is fixed, collectibility is reasonably assured and the product’s title and risk of loss is transferred to the customer. Typically, these conditions are met when the product is shipped to the customer. The Company charges shipping and handling fees when products are shipped or delivered to a customer, and includes such amounts in net sales. The Company reports its sales net of actual sales returns and the amount of reserves established for anticipated sales returns based on historical rates. Sales tax collected from customers is excluded from net sales in the accompanying statements of consolidated income

Shipping and Handling Costs

Shipping and Handling Costs

The Company records freight payments to third parties in cost of sales and internal delivery costs in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Internal delivery costs in selling, distribution and administrative expenses were approximately $15,650, $15,500 and $15,400 for the fiscal years ended June 30, 2013, 2012 and 2011, respectively

Income Taxes

Income Taxes

Income taxes are determined based upon income and expenses recorded for financial reporting purposes. Deferred income taxes are recorded for estimated future tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes, giving consideration to enacted tax laws. Uncertain tax positions meeting a more-likely-than-not recognition threshold are recognized in accordance with the Income Taxes topic of the ASC (Accounting Standards Codification). The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in the provision for income taxes

Share-Based Compensation

Share-Based Compensation

Share-based compensation represents the cost related to share-based awards granted to associates under either the 2011 Plan or the 2007 Plan. The Company measures share-based compensation cost at grant date, based on the estimated fair value of the award and recognizes the cost over the requisite service period. Non-qualified stock appreciation rights (SARs) and stock options are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant and the fair values are determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield. SARs and stock option awards generally vest over four years of continuous service and have ten-year contractual terms. The fair value of restricted stock awards, restricted stock units (RSUs), and performance shares are based on the closing market price of Company common stock on the grant date

Treasury Shares

Treasury Shares

Shares of common stock repurchased by the Company are recorded at cost as treasury shares and result in a reduction of shareholders’ equity in the consolidated balance sheets. The Company uses the weighted-average cost method for determining the cost of shares reissued. The difference between the cost of the shares and the reissuance price is added to or deducted from additional paid-in capital

Reclassifications [Text Block]

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the 2013 presentation.

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

New Accounting Pronouncement

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (ASC Topic 220) - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU No. 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income by the respective line items of net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The update is effective for financial statement periods beginning after December 15, 2012 with early adoption permitted. The Company has chosen to early adopt this standard and has updated its 2013 annual report to conform to the requirements of ASU No. 2013-02

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Statements of Consolidated Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Cash Flows from Operating Activities
Net income	$ 118,149	$ 108,779	$ 96,759
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property	12,501	11,236	11,234
Amortization of intangibles	13,233	11,465	11,382
Amortization of stock appreciation rights and options	2,317	2,058	2,473
Deferred income taxes	10,179	8,641	4,784
Provision for losses on accounts receivable	2,267	3,915	2,029
Unrealized foreign exchange transaction (gains) losses	(1,410)	1,298	0
Other share-based compensation expense	3,444	4,308	3,158
Shares issued for deferred compensation plans	241	284	221
Gain on sale of property	(321)	(627)	(765)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(15,721)	(22,748)	(36,271)
Inventories	(26,745)	(28,511)	(21,197)
Other operating assets	(7,857)	(14,735)	(11,185)
Accounts payable	12,206	14,157	12,926
Other operating liabilities	(11,086)	(9,098)	1,294
Net Cash provided by Operating Activities	111,397	90,422	76,842
Cash Flows from Investing Activities
Property purchases	(12,214)	(26,021)	(20,431)
Proceeds from property sales	979	1,258	1,326
Net cash paid for acquisition of businesses, net of cash acquired of $0, $38 and $168 in 2013, 2012 and 2011, respectively	(67,590)	(14,671)	(30,504)
Other	0	0	1,722
Net Cash (used in) Investing Activities	(78,825)	(39,434)	(47,887)
Cash Flows from Financing Activities
Repayments under revolving credit facility	0	0	(50,000)
Long-term debt repayment	0	0	(25,000)
Settlements of cross-currency swap agreements	0	0	(12,752)
Purchases of treasury shares	(53)	(31,032)	(6,085)
Dividends paid	(37,194)	(33,800)	(29,751)
Excess tax benefits from share-based compensation	2,566	3,695	6,404
Acquisition holdback payments	(3,843)	0	0
Exercise of stock appreciation rights and options	499	321	661
Net Cash (used in) Financing Activities	(38,025)	(60,816)	(116,523)
Effect of Exchange Rate Changes on Cash	175	(2,822)	2,883
(Decrease) in cash and cash equivalents	(5,278)	(12,650)	(84,685)
Cash and cash equivalents at beginning of year	78,442	91,092	175,777
Cash and Cash Equivalents at End of Year	73,164	78,442	91,092
Cash paid during the year for:
Income taxes	51,816	53,463	47,251
Interest	$ 501	$ 672	$ 2,248

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Statements of Consolidated Shareholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Income Retained for Use in the Business	Treasury Shares-at Cost	Accumulated Other Comprehensive (Loss) Income
Beginning balance at Jun. 30, 2010	$ 555,039	$ 10,000	$ 143,185	$ 601,370	$ (193,468)	$ (6,048)
Beginning balance, shares at Jun. 30, 2010		42,376
Net income	96,759			96,759
Other comprehensive income	11,107					11,107
Cash dividends - $0.70, $0.80 and $0.88 per share for 2011, 2012 and 2013 respectively	(29,751)			(29,751)
Purchases of common stock for treasury	(6,085)				(6,085)
Purchases of common stock for treasury, shares		(190)
Treasury shares issued for:
Exercise of stock appreciation rights and options, shares		379
Exercise of stock appreciation rights and options	597		(109)		706
Deferred compensation plans, shares		6
Deferred compensation plans	221		102		119
Compensation expense -- stock appreciation rights and options	2,473		2,473
Other share-based compensation expense	3,158		3,158
Other, shares		31
Other	45		(502)	43	504
Ending balance at Jun. 30, 2011	633,563	10,000	148,307	668,421	(198,224)	5,059
Ending balance, shares at Jun. 30, 2011		42,602
Net income	108,779			108,779
Other comprehensive income	(9,628)					(9,628)
Cash dividends - $0.70, $0.80 and $0.88 per share for 2011, 2012 and 2013 respectively	(33,800)			(33,800)
Purchases of common stock for treasury	(31,032)				(31,032)
Purchases of common stock for treasury, shares		(997)
Treasury shares issued for:
Exercise of stock appreciation rights and options, shares		250
Exercise of stock appreciation rights and options	(405)		(1,853)		1,448
Performance share awards, shares		91
Performance share awards	(1,950)		(2,664)		714
Deferred compensation plans, shares		9
Deferred compensation plans	284		128		156
Compensation expense -- stock appreciation rights and options	2,058		2,058
Other share-based compensation expense	4,308		4,308
Other, shares		12
Other	(46)		(214)	(40)	208
Ending balance at Jun. 30, 2012	672,131	10,000	150,070	743,360	(226,730)	(4,569)
Ending balance, shares at Jun. 30, 2012		41,967
Net income	118,149			118,149
Other comprehensive income	1,148					1,148
Cash dividends - $0.70, $0.80 and $0.88 per share for 2011, 2012 and 2013 respectively	(37,194)			(37,194)
Purchases of common stock for treasury	(53)				(53)
Purchases of common stock for treasury, shares		(1)
Treasury shares issued for:
Exercise of stock appreciation rights and options, shares		129
Exercise of stock appreciation rights and options	911		(175)		1,086
Restricted stock units, shares		53
Restricted stock units	(1,601)		(1,675)		74
Deferred compensation plans, shares		5
Deferred compensation plans	241		131		110
Compensation expense -- stock appreciation rights and options	2,317		2,317
Other share-based compensation expense	3,444		3,444
Other, shares		16
Other	122		(219)	47	294
Ending balance at Jun. 30, 2013	$ 759,615	$ 10,000	$ 153,893	$ 824,362	$ (225,219)	$ (3,421)
Ending balance, shares at Jun. 30, 2013		42,169

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Business Combinations

12 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

The Company acquired the following distributors and fluid power businesses to complement and extend its business over a broader geographic area. The results of operations for these acquisitions are not material for any year presented. Results of operations of acquired businesses are included in the accompanying consolidated financial statements from their respective acquisition dates.

Fiscal 2013 Acquisitions

In December 2012, the Company acquired substantially all of the net assets of Norma Bearings, Inc., a distributor of bearings and power transmission products, located in Laval, Quebec. The acquired business is included in the Service Center Based Distribution segment. In December 2012, the Company acquired substantially all of the net assets of Parts Associates, Inc., a distributor of maintenance supplies and solutions, headquartered in Cleveland, Ohio. The acquired business is included in the Service Center Based Distribution segment. In November 2012, the Company acquired substantially all of the net assets of Hyquip, Inc., a Wisconsin distributor of a broad line of hydraulic, rubber and plastic industrial hose and tubing, plus related accessories. The acquired business is included in the Fluid Power Businesses segment. In September 2012, the Company acquired 100% of the outstanding stock of Bearings & Oil Seals Specialists Inc., a distributor of gaskets, seals, bearing and power transmission products, located in Hamilton, Ontario. The acquired business is included in the Service Center Based Distribution segment. In August 2012, the Company acquired 100% of the outstanding stock of SKF Group's company-owned distribution business in Australia and New Zealand ("Applied Australia"). As one of the largest bearing suppliers in these markets, Applied Australia also distributes seals, lubrication products, and power transmission products. The acquired business is included in the Service Center Based Distribution segment.

The following table summarizes the fair values of assets acquired and liabilities assumed for fiscal 2013:

	2013
Accounts receivable	$	7,514
Inventories	23,723
Other current assets	217
Property	1,090
Intangibles	19,814
Goodwill	24,324
Total assets acquired	76,682
Accounts payable	1,867
Other current liabilities	6,192
Net assets acquired	68,623
Purchase price	$	68,623

The purchase price includes $1,015 which has been deferred, and will be paid as acquisition holdback payments in future periods. Additional 2013 pro-forma information has not been included since it is not material.

Fiscal 2012 Acquisitions

In February 2012, the Company acquired Solutions Industrielles Chicoutimi, which provides bearings, power transmission products and repair services, and Spécialités Industrielles Harvey, which distributes bearings and power transmission products, plus hydraulic, pneumatic and electrical components.

In August 2011, the Company acquired Chaines-Plus, a distributor of bearings, power transmission and related products. These distributors are all located in Quebec, Canada. The acquired businesses are included in the Service Center Based Distribution segment. The overall purchase price for these acquisitions was $18,493, tangible assets acquired was $1,549 and intangibles, including goodwill was $16,944. The purchase price includes $3,738 which was deferred, and will be paid as acquisition holdback payments in subsequent periods.

Fiscal 2011 Acquisitions

In May 2011, the Company acquired Gulf Coast Bearing & Supply Co., a full line bearing and power transmission distributor, located in the U.S. In July 2010, the Company acquired UZ Engineered Products, a distributor of industrial supply products for maintenance, repair and operational needs, in government and commercial sectors, throughout the U.S. and Canada. In August 2010, the Company acquired SCS Supply Group, a distributor of bearings, power transmission components, electrical components, fluid power products and industrial supplies located in Ontario, Canada. The acquired businesses are included in the Service Center Based Distribution segment. The overall purchase price for these acquisitions was $35,072, tangible assets acquired was $8,417 and intangibles, including goodwill was $26,655. The purchase price includes $2,792 which was deferred, and will be paid as acquisition holdback payments in subsequent periods.

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Segment and Geographic Information 1 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Operating income for reportable segments	$ 176,399	$ 168,395	$ 150,763
Adjustments for:
Intangible amortization	13,233	11,465	11,382
Corporate and other income, net	(10,065)	(1,384)	(4,554)
Total operating income	176,399	168,395	150,763
Interest (income) expense, net	165	(9)	1,668
Other Expense (Income), net	(1,431)	1,578	(3,793)
Income Before Income Taxes	177,665	166,826	152,888
Reportable Segment [Member]
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Operating income for reportable segments	179,567	178,476	157,591
Adjustments for:
Total operating income	179,567	178,476	157,591
Service Center Based Distribution Segment [Member]
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Operating income for reportable segments	138,484	135,240	115,798
Adjustments for:
Intangible amortization	5,829	3,834	3,384
Total operating income	138,484	135,240	115,798
Fluid Power Businesses [Member]
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Operating income for reportable segments	41,083	43,236	41,793
Adjustments for:
Intangible amortization	7,404	7,631	7,998
Total operating income	$ 41,083	$ 43,236	$ 41,793

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Statements of Consolidated Shareholders' Equity Statements of Consolidated Shareholders' Equity (Parenthetical) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Cash dividends (usd per share)	$ 0.88	$ 0.80	$ 0.70

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Goodwill and Intangibles Goodwill and Intangilbes 2 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	$ 19,814
Weighted-Average Life (in years)	16 years
Customer Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	16,755
Weighted-Average Life (in years)	18 years
Trade names [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	651
Weighted-Average Life (in years)	5 years
Vendor Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	2,138
Weighted-Average Life (in years)	10 years
Non-competition agreements [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	$ 270
Weighted-Average Life (in years)	4 years 6 months

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Goodwill and Intangibles (Tables)

12 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill by reportable segment

	Service Center Based Distribution			Fluid Power Businesses		Total
Balance at July 1, 2011	$	76,981				$	76,981
Goodwill acquired during the year	8,403					8,403
Other, primarily currency translation	(2,304		)			(2,304		)
Balance at June 30, 2012	83,080					83,080
Goodwill acquired during the year	23,395			$	929	24,324
Other, primarily currency translation	(555		)	—		(555		)
Balance at June 30, 2013	$	105,920		$	929	$	106,849

Amortization details resulting from business combinations

The Company's intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:

June 30, 2013	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Intangibles:
Customer relationships	$	100,854	$	38,844	$	62,010
Trade names	26,690		8,643		18,047
Vendor relationships	15,433		5,443		9,990
Non-competition agreements	4,743		3,523		1,220
Total Intangibles	$	147,720	$	56,453	$	91,267

June 30, 2012	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Intangibles:
Customer relationships	$	84,249	$	29,905	$	54,344
Trade names	25,677		7,428		18,249
Vendor relationships	13,605		4,500		9,105
Non-competition agreements	4,740		2,888		1,852
Total Finite-Lived Intangibles	128,271		44,721		83,550
Indefinite-Lived Trade Name	1,290				1,290
Total Intangibles	$	129,561	$	44,721	$	84,840

Amounts include the impact of foreign currency translation. Fully amortized amounts are written off. During fiscal year 2013 the Company re-categorized its previously indefinite-lived trade name to finite-lived trade names and as a result began amortizing it.

Schedule of purchase price allocation and associated weighted average life

During 2013, the Company acquired intangible assets with a preliminary acquisition cost allocation and weighted-average life as follows:

	Acquisition Cost Allocation		Weighted-Average Life
Customer relationships	$	16,755	18 years
Trade names	651		5 years
Vendor relationships	2,138		10 years
Non-competition agreements	270		4.5 years
Total Intangibles Acquired	$	19,814	16 years

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Benefit Plans (Tables)

12 Months Ended

Jun. 30, 2013

General Discussion of Pension and Other Postretirement Benefits [Abstract]

Summary of changes in benefit obligations, plan assets and funded status for the post employment plans

The following table sets forth the changes in benefit obligations and plan assets during the year and the funded status for the postemployment plans at June 30:

	Pension Benefits						Retiree Health Care Benefits
	2013			2012			2013			2012
Change in benefit obligation:
Benefit obligation at beginning of the year	$	47,151		$	53,490		$	5,148		$	4,667
Service cost	78			289			80			30
Interest cost	1,260			2,047			188			237
Plan participants’ contributions	—			—			65			47
Benefits paid	(6,183		)	(4,144		)	(254		)	(256		)
Amendments	(17		)	150			(1,788		)	—
Actuarial (gain) loss during year	(1,625		)	4,179			280			423
Curtailment	—			(8,860		)	—			—
Benefit obligation at end of year	$	40,664		$	47,151		$	3,719		$	5,148
Change in plan assets:
Fair value of plan assets at beginning of year	$	6,439		$	6,056		$	—		$	—
Actual gain (loss) on plan assets	424			(30		)	—			—
Employer contributions	6,017			4,557			189			209
Plan participants’ contributions	—			—			65			47
Benefits paid	(6,183		)	(4,144		)	(254		)	(256		)
Fair value of plan assets at end of year	$	6,697		$	6,439		$	—		$	—
Funded status at end of year	$	(33,967	)	$	(40,712	)	$	(3,719	)	$	(5,148	)

The amounts recognized in the consolidated balance sheets and in accumulated other comprehensive income (loss) for the postemployment plans were as follows:

	Pension Benefits						Retiree Health Care Benefits
June 30,	2013			2012			2013		2012
Amounts recognized in the consolidated balance sheets:
Other current liabilities	$	6,666		$	6,018		$	220	$	220
Postemployment benefits	27,301			34,694			3,499		4,928
Net amount recognized	$	33,967		$	40,712		$	3,719	$	5,148
Amounts recognized in accumulated other comprehensive income (loss):
Net actuarial (loss) gain	$	(7,732	)	$	(10,112	)	$	65	$	398
Prior service cost	(196		)	(279		)	1,760		(135		)
Total amounts recognized in accumulated other comprehensive (loss) income	$	(7,928	)	$	(10,391	)	$	1,825	$	263

Information for pension plans with projected benefit obligations in excess of plan assets

The following table provides information for pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:

	Pension Benefits
June 30,	2013		2012
Projected benefit obligations	$	40,664	$	47,151
Accumulated benefit obligations	40,664		47,151
Fair value of plan assets	6,697		6,439

Net periodic costs

The net periodic costs are as follows:

	Pension Benefits									Retiree Health Care Benefits
Year Ended June 30,	2013			2012			2011			2013			2012			2011
Service cost	$	78		$	289		$	460		$	80		$	30		$	39
Interest cost	1,260			2,047			2,232			188			237			235
Expected return on plan assets	(403		)	(396		)	(385		)	—			—			—
Recognized net actuarial loss (gain)	735			644			1,449			(53		)	(72		)	(83		)
Amortization of prior service cost	83			412			710			107			139			139
Recognition of prior service cost upon plan curtailment	—			3,117			—			—			—			—
Net periodic cost	$	1,753		$	6,113		$	4,466		$	322		$	334		$	330

Weighted-average actuarial assumptions used to determine benefit obligations and net periodic benefit cost

The weighted-average actuarial assumptions used to determine benefit obligations and net periodic benefit cost for the plans were as follows:

	Pension Benefits				Retiree Health Care Benefits
June 30,	2013		2012		2013		2012
Assumptions used to determine benefit obligations at year end:
Discount rate	3.0	%	2.8	%	4.0	%	4.0	%
Assumptions used to determine net periodic benefit cost:
Discount rate	2.8	%	3.5	%	4.0	%	5.5	%
Expected return on plan assets	7.0	%	7.5	%	N/A		N/A
Rate of compensation increase	N/A		5.5	%	N/A		N/A

One-Percentage Point Change in Assumed Health Care Cost Trend Rates

A one-percentage point change in the assumed health care cost trend rates would have had the following effects as of June 30, 2013 and for the year then ended:

	One-Percentage Point
	Increase		Decrease
Effect on total service and interest cost components of periodic expense	$	59	$	(47	)
Effect on postretirement benefit obligation	339		(295		)

Defined Benefit Plan Asset Information

Following are the fair values and target allocation as of June 30:

	Target Allocation		Fair Value
			2013		2012
Asset Class:
Equity securities (Level 1)	40 – 70%		$	3,189	$	3,735
Debt securities (Level 2)	20 – 50%		3,208		2,382
Other	0 – 20%		300		322
Total	100	%	$	6,697	$	6,439

Estimated future benefit payments

The following benefit payments, which reflect expected future service, as applicable, are expected to be paid in each of the next five years and in the aggregate for the subsequent five years:

During Fiscal Years	Pension Benefits		Retiree Health Care Benefits
2014	$	7,000	$	250
2015	6,700		230
2016	5,600		250
2017	1,800		330
2018	2,300		400
2019 through 2023	12,500		1,470

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Leases (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Minimum Annual Rental Commitments Under Non Cancelable Operating Leases
2014	$ 26,700
2015	19,700
2016	13,400
2017	7,900
2018	4,100
Thereafter	9,200
Total minimum lease payments	81,000
Leases (Textuals) [Abstract]
Rental expenses of operating leases	$ 36,300	$ 31,200	$ 31,400

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Business Combinations Percentage of Businesses Acquired (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011	Sep. 01, 2012	Aug. 01, 2012
Accounts receivable	$ 7,514
Inventories	23,723
Other current assets	217
Property	1,090
Intangibles	19,814
Goodwill	24,324	8,403
Total assets acquired	76,682
Accounts payable	1,867
Other current liabilities	6,192
Net assets acquired	68,623
Purchase Price	68,623	18,493	35,072
NetTangibleAssetsAcquired		1,549	8,417
GoodwillandIntagibles Acquired		16,944	26,655
Business Acquisition, Percentage of Voting Interests Acquired				100.00%	100.00%
Acquisition Holdback Payable	$ 1,015	$ 3,738	$ 2,792

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Benefit Plans Textuals (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Dec. 31, 2011	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate	3.50%
Actuarial Loss on Remeasurement of Postemployment Benefits, Net Of Tax	$ 302
Actuarial Loss on Remeasurement of Postemployment Benefits, Gross	492
Other Comprehensive Income, Actuarial Loss on Remeasurement Of Postemployment Benefits, Tax	190
Other Comprehensive Income (Loss), Finalization of Pension and Non-Pension Postretirement Plan Valuation, Net of Tax		0	5,449	0
Reclassification of prior service cost into SD&A expense upon plan curtailment		0	3,117	0
DefinedBenefitPlanRecognizedNetGainLossDueToCurtailmentsTax		0	1,200	0
Other Comprehensive Income (Loss), Finalization of Pension and Non-Pension Postretirement Plan Valuation, before Tax		0	8,860	0
Other Comprehensive Income (Loss), Finalization of Pension and Non-Pension Postretirement Plan Valuation, Tax		0	3,411	0
Benefit Plans (Textuals) [Abstract]
Percentage of defined contribution plan by plan participants		50.00%
Percentage of defined contribution plan		5.00%	5.00%	5.00%
Assumed health care cost trend rates used in measuring the accumulated benefit obligation for retiree health care benefits		7.30%	7.50%
Assumed health care cost trend rates used in measuring the accumulated benefit obligation for retiree health care 2018 rate		5.00%
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate		3.00%	2.80%
Reclassification of prior service cost into SD&A expense upon plan curtailment		0	(3,117)	0
Estimated net actuarial gain (loss)		615
Estimated prior service cost		78
Expected contribution to benefit plans in 2012		6,700
Retiree Health Care Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate		4.00%	4.00%
Reclassification of prior service cost into SD&A expense upon plan curtailment		0	0	0
Estimated net actuarial gain (loss)		(38)
Estimated prior service cost		(271)
Expected contribution to benefit plans in 2012		250
KERP [Member]
Benefit Plans (Textuals) [Abstract]
Defined contribution plan cost		233	128
401(k) [Member]
Benefit Plans (Textuals) [Abstract]
Defined contribution plan cost		$ 11,231	$ 10,866	$ 11,251

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Shareholders' Equity Textuals (Details) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Shareholders' Equity (Textuals) [Abstract]
Common stock held as treasury shares restricted as (in shares)	596
Antidilutive Stock options and appreciation rights relating to the acquisition of shares of common stock not included in the computation of diluted earnings per share (in shares)	212	140	176

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Income Taxes 4 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Reconciliation of the Company's total gross unrecognized income tax benefits
Unrecognized Income Tax Benefits at beginning of the year	$ 1,539	$ 1,181	$ 1,842
Current year tax positions	957	331	153
Prior year tax positions	790	398	50
Expirations of statutes of limitations	(565)	(371)	(273)
Settlements	(66)	0	(591)
Unrecognized Income Tax Benefits at end of year	$ 2,655	$ 1,539	$ 1,181

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Fair Value Measurements (Details) (Level 1 [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Level 1 [Member]
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Marketable securities	$ 10,483	$ 10,322

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Statements of Consolidated Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Net income per the statements of consolidated income	$ 118,149	$ 108,779	$ 96,759
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(1,358)	(14,471)	10,011
Postemployment benefits:
Actuarial gain (loss) on remeasurement	3,153	(5,028)	(930)
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	872	1,123	2,214
Impact of reduction in postemployment benefit liability (as forecasted salary increases will not be realized) due to plan curtailment	0	8,860	0
Reclassification of prior service cost into SD&A expense upon plan curtailment	0	3,117	0
Unrealized gain (loss) on investment securities available for sale	10	(220)	(84)
Unrealized loss on cash flow hedges	0	0	(266)
Reclassification of interest from cash flow hedge into interest expense	0	0	316
Total of other comprehensive income (loss), before tax	2,677	(6,619)	11,261
Income tax expense related to items of other comprehensive income	1,529	3,009	154
Other comprehensive income (loss), net of tax	1,148	(9,628)	11,107
Comprehensive income, net of tax	$ 119,297	$ 99,151	$ 107,866

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Debt

12 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

DEBT

DEBT

The Company had no outstanding borrowings as of June 30, 2013 or June 30, 2012.

The Company has a revolving credit facility with a group of banks expiring in May 2017. This agreement provides for unsecured borrowings of up to $150,000. Fees on this facility range from 0.09% to 0.175% per year based upon the Company's leverage ratio at each quarter end. Borrowings under this agreement carry variable interest rates tied to either LIBOR, prime, or the bank’s cost of funds at the Company’s discretion. Unused lines under this facility, net of outstanding letters of credit of $8,696 to secure certain insurance obligations, totaled $141,304 at June 30, 2013 and are available to fund future acquisitions or other capital and operating requirements.

The Company has an agreement with Prudential Insurance Company for an uncommitted shelf facility that enables the Company to borrow up to $125,000 in additional long-term financing with terms of up to fifteen years. The agreement expires in February 2016. There were no borrowings under this agreement at June 30, 2013 or June 30, 2012.

The revolving credit facility and uncommitted shelf facility contain restrictive covenants regarding liquidity, net worth, financial ratios, and other covenants. At June 30, 2013, the most restrictive of these covenants required that the Company have consolidated income before interest, taxes, depreciation and amortization at least equal to 300% of net interest expense. At June 30, 2013, the Company was in compliance with all covenants.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Current assets
Accounts receivable, allowances	$ 7,737	$ 8,332
Shareholders’ Equity
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	2,500,000	2,500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0	$ 0
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	54,213,000	54,213,000
Treasury stock, shares	12,044,000	12,246,000

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Share - Based Compensation 2 (Details) (Stock Options and Stock Appreciation Rights [ Member], USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Stock Options and Stock Appreciation Rights [ Member]
Weighted-average assumptions used for SARs and stock option grants issued
Expected life, in years	5 years 6 months	5 years 7 months	5 years 1 month
Risk free interest rate	0.90%	1.10%	1.60%
Dividend yield	2.50%	2.50%	2.50%
Volatility	43.30%	44.20%	46.20%
Per share fair value of SAR's and stock options granted during the year	$ 13.11	$ 9.88	$ 9.78

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Statements of Consolidated Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Income Statement [Abstract]
Net Sales	$ 2,462,171	$ 2,375,445	$ 2,212,849
Cost of Sales	1,779,209	1,720,973	1,599,739
Gross Profit	682,962	654,472	613,110
Selling, Distribution and Administrative, including depreciation	506,563	486,077	462,347
Operating Income	176,399	168,395	150,763
Interest Expense	621	457	2,081
Interest Income	(456)	(466)	(413)
Other Expense (Income), net	(1,431)	1,578	(3,793)
Income Before Income Taxes	177,665	166,826	152,888
Income Tax Expense	59,516	58,047	56,129
Net Income	$ 118,149	$ 108,779	$ 96,759
Net Income Per Share — Basic	$ 2.81	$ 2.58	$ 2.28
Net Income Per Share — Diluted	$ 2.78	$ 2.54	$ 2.24

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Income Taxes Textuals (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Income Tax Disclosure [Abstract]
Undistributed Earnings Of Foreign Subsidiaries On Which No Provision Has Been Made For Income Taxes	$ 103,905
Income Taxes (Textuals) [Abstract]
Income tax benefits from exercise of non-qualified stock options and appreciation rights	1,675	2,725	6,003
Incremental income tax benefits from vesting of stock awards and other stock compensation recorded in additional paid-in capital	890	970	401
Undistributed earnings of foreign subsidiaries on which no provision has been made for income taxes	11,000
Unremitted foreign earnings	2,804	2,804
Unrecognized income tax benefits that would affect the effective income tax rate	2,342	1,221	659
Interest and penalties related to unrecognized income tax benefits	3	(95)	(22)
Liability for penalties and interest	$ 433	$ 430

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Schedule II - Valuation and Qualifying Accounts (Details) (Allowance for Doubtful Accounts [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2011
Allowance for Doubtful Accounts [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	$ 8,332		$ 7,016		$ 6,379
Additions charged to costs and expenses	2,267		3,915		2,029
Additions (Deductions) charged to other accounts	(104)	[1]	122	[1]	111	[1]
Deductions from reserves	2,758	[2]	2,721	[2]	1,503	[2]
Balance at end of period	$ 7,737		$ 8,332		$ 7,016

[1] Amounts represent reserves for the return of merchandise by customers.

[2] Amounts represent uncollectible accounts charged off.

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Segment and Geographic Information 3 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Revenues From External Customers and Long Lived Assets [Line Items]
Net Sales	$ 2,462,171	$ 2,375,445	$ 2,212,849
Long-Lived Assets	281,359	251,023	235,546
United States [Member]
Revenues From External Customers and Long Lived Assets [Line Items]
Net Sales	2,017,168	2,009,317	1,891,700
Long-Lived Assets	210,289	198,076	191,947
Canada [Member]
Revenues From External Customers and Long Lived Assets [Line Items]
Net Sales	298,269	292,913	260,015
Long-Lived Assets	44,290	42,624	29,893
Other Countries [Member]
Revenues From External Customers and Long Lived Assets [Line Items]
Net Sales	146,734	73,215	61,134
Long-Lived Assets	$ 26,780	$ 10,323	$ 13,706

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Income Taxes (Tables)

12 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Components of income before income taxes

The components of income before income taxes are as follows:

Year Ended June 30,	2013		2012		2011
U.S.	$	153,546	$	137,667	$	127,567
Foreign	24,119		29,159		25,321
Total income before income taxes	$	177,665	$	166,826	$	152,888

Provision (benefit) for income taxes

The provision (benefit) for income taxes consists of:

Year Ended June 30,	2013			2012			2011
Current:
Federal	$	38,859		$	36,178		$	36,799
State and local	5,736			5,522			6,208
Foreign	4,742			7,706			8,338
Total current	49,337			49,406			51,345
Deferred:
Federal	10,277			8,577			5,648
State and local	346			503			169
Foreign	(444		)	(439		)	(1,033		)
Total deferred	10,179			8,641			4,784
Total	$	59,516		$	58,047		$	56,129

Reconciliations of federal statutory income tax rate and Company's effective income tax rate

The following reconciles the U.S. federal statutory income tax rate and the Company’s effective income tax rate:

Year Ended June 30,	2013		2012		2011
Statutory income tax rate	35.0	%	35.0	%	35.0	%
Effects of:
State and local taxes	2.3	%	2.5	%	2.8	%
U.S. tax on foreign income, net	—	%	—	%	1.8	%
Valuation allowance	—	%	—	%	(0.6	)%
Foreign income taxes	(2.3	)%	(1.8	)%	(1.0	)%
Deductible dividend	(0.5	)%	(0.5	)%	(0.5	)%
Other, net	(1.0	)%	(0.4	)%	(0.8	)%
Effective income tax rate	33.5	%	34.8	%	36.7	%

Components of the Company's net deferred tax assets

Significant components of the Company’s net deferred tax assets are as follows:

June 30,	2013			2012
Deferred tax assets:
Compensation liabilities not currently deductible	$	33,506		$	37,341
Expenses and reserves not currently deductible	6,131			6,151
Goodwill and intangibles	3,781			6,518
Net operating loss carryforwards (expiring in years 2027-2033)	432			444
Foreign tax credits (expiring in years 2018, 2020, 2021)	38			4,092
Other	569			480
Total deferred tax assets	44,457			55,026
Less: Valuation allowance	(11		)	(157		)
Deferred tax assets, net of valuation allowance	44,446			54,869
Deferred tax liabilities:
Inventories	(9,057		)	(6,021		)
Unremitted foreign earnings	(2,804		)	(2,804		)
Depreciation and differences in property bases	(11,460		)	(11,602		)
Total deferred tax liabilities	(23,321		)	(20,427		)
Net deferred tax assets	$	21,125		$	34,442
The net deferred tax asset is classified as follows:
Other current assets	$	6,315		$	12,189
Deferred tax assets (long-term)	21,026			26,424
Other liabilities	(6,216		)	(4,171		)
Net deferred tax assets	$	21,125		$	34,442

Reconciliation of the Company's total gross unrecognized income tax benefits

The Company and its subsidiaries file income tax returns in U.S. federal, various state, local and foreign jurisdictions. The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2013, 2012 and 2011:

Year Ended June 30,	2013			2012			2011
Unrecognized Income Tax Benefits at beginning of the year	$	1,539		$	1,181		$	1,842
Current year tax positions	957			331			153
Prior year tax positions	790			398			50
Expirations of statutes of limitations	(565		)	(371		)	(273		)
Settlements	(66		)	—			(591		)
Unrecognized Income Tax Benefits at end of year	$	2,655		$	1,539		$	1,181

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Other Expense (Income), Net

12 Months Ended

Jun. 30, 2013

Other (Income) Expense, Net [Abstract]

OTHER (INCOME) EXPENSE, NET

OTHER EXPENSE (INCOME), NET

Other expense (income), net, consists of the following:

Year Ended June 30,	2013			2012			2011
Unrealized (gain) loss on assets held in rabbi trust for a non-qualified deferred compensation plan	$	(1,280	)	$	36		$	(2,016	)
Benefit from payouts on corporate-owned life insurance policies	—			—			(1,722		)
Foreign currency transaction (gains) losses	(143		)	1,592			(541		)
Loss on cross-currency swap	—			—			368
Other, net	(8		)	(50		)	118
Total other expense (income), net	$	(1,431	)	$	1,578		$	(3,793	)

The Company is the owner and beneficiary under life insurance policies acquired in conjunction with a fiscal 1998 acquisition, with benefits in force of $12,300 and a net cash surrender value of $3,400 at June 30, 2013. In January 2011, the Company received death benefits under two of these policies and realized a gain of $1,722.

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Debt Financing Terms (Details)	12 Months Ended
	Jun. 30, 2013
Debt Disclosure [Abstract]
Debt Instrument Maximum Duration Of Additional Long Term Financing	15 years

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Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Commitments and Contingencies (Textuals) [Abstract]
Duration of bonds	20 years
Cuyahoga County and the Cleveland Cuyahoga County Port Authority [Member]
Guarantor Obligations [Line Items]
Repayment Guarantee of taxable development revenue bond	$ 4,300

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Shareholders' Equity Net Income Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share [Abstract]
Net income	$ 118,149	$ 108,779	$ 96,759
Average Shares Outstanding:
Weighted-average common shares outstanding for basic computation	42,060	42,139	42,433
Dilutive effect of potential common shares	482	684	821
Weighted-average common shares outstanding for dilutive computation	42,542	42,823	43,254
Net Income Per Share — Basic	$ 2.81	$ 2.58	$ 2.28
Net Income Per Share — Diluted	$ 2.78	$ 2.54	$ 2.24

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Benefit Plans 2 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Net periodic costs
Recognition of prior service cost upon plan curtailment	$ 0	$ (3,117)	$ 0
Pension Benefits [Member]
Net periodic costs
Service cost	78	289	460
Interest cost	1,260	2,047	2,232
Expected return on plan assets	(403)	(396)	(385)
Recognized net actuarial loss (gain)	735	644	1,449
Amortization of prior service cost	83	412	710
Recognition of prior service cost upon plan curtailment	0	3,117	0
Net periodic cost	1,753	6,113	4,466
Retiree Health Care Benefits [Member]
Net periodic costs
Service cost	80	30	39
Interest cost	188	237	235
Expected return on plan assets	0	0	0
Recognized net actuarial loss (gain)	(53)	(72)	(83)
Amortization of prior service cost	107	139	139
Recognition of prior service cost upon plan curtailment	0	0	0
Net periodic cost	$ 322	$ 334	$ 330

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Goodwill and Intangibles (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Changes in the carrying amount of goodwill by reportable segment
Goodwill, beginning balance	$ 83,080	$ 76,981
Goodwill acquired during the year	24,324	8,403
Other, primarily currency translation	(555)	(2,304)
Goodwill, ending balance	106,849	83,080
Service Center Based Distribution Segment [Member]
Changes in the carrying amount of goodwill by reportable segment
Goodwill, beginning balance	83,080	76,981
Goodwill acquired during the year	23,395	8,403
Other, primarily currency translation	(555)	(2,304)
Goodwill, ending balance	105,920	83,080
Fluid Power Businesses Segment [Member]
Changes in the carrying amount of goodwill by reportable segment
Goodwill, beginning balance
Goodwill acquired during the year	929
Other, primarily currency translation	0
Goodwill, ending balance	$ 929

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Other Expense (Income), Net (Tables)

12 Months Ended

Jun. 30, 2013

Other (Income) Expense, Net [Abstract]

Other (income) expense, net

Other expense (income), net, consists of the following:

Year Ended June 30,	2013			2012			2011
Unrealized (gain) loss on assets held in rabbi trust for a non-qualified deferred compensation plan	$	(1,280	)	$	36		$	(2,016	)
Benefit from payouts on corporate-owned life insurance policies	—			—			(1,722		)
Foreign currency transaction (gains) losses	(143		)	1,592			(541		)
Loss on cross-currency swap	—			—			368
Other, net	(8		)	(50		)	118
Total other expense (income), net	$	(1,431	)	$	1,578		$	(3,793	)

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Business and Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Finite Lived Assets [Line Items]
Shipping, Handling and Transportation Costs	$ 15,650	$ 15,500	$ 15,400
Business and Accounting Policies (Textuals) [Abstract]
Company's domestic inventory relate to LIFO layers	31.00%
Number of LIFO pools maintained (in pools)	5
Vesting period of SARs and stock option awards	4 years
Contractual terms of SARs and stock option awards	10 years
Software [Member]
Finite Lived Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	12 years
Buildings,BuildingsImprovementsandLeaseholdImprovementsMinimumUsefulLife[Member] [Member]
Finite Lived Assets [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Buildings,BuildingsImprovementsandLeaseholdImprovements MaximumUsefulLife[Member} [Member]
Finite Lived Assets [Line Items]
Property, Plant and Equipment, Useful Life	30 years
PropertyandEquipmentMinimumUsefulLife[Member] [Member]
Finite Lived Assets [Line Items]
Property, Plant and Equipment, Useful Life	3 years
PropertyandEquipmentMaximumUsefulLife [Member] [Member]
Finite Lived Assets [Line Items]
Property, Plant and Equipment, Useful Life	10 years

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Goodwill and Intangibles

12 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLES

GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill for both the Service Center Based Distribution Segment and the Fluid Power Businesses segment for the years ended June 30, 2013 and 2012 are as follows:

	Service Center Based Distribution			Fluid Power Businesses		Total
Balance at July 1, 2011	$	76,981				$	76,981
Goodwill acquired during the year	8,403					8,403
Other, primarily currency translation	(2,304		)			(2,304		)
Balance at June 30, 2012	83,080					83,080
Goodwill acquired during the year	23,395			$	929	24,324
Other, primarily currency translation	(555		)	—		(555		)
Balance at June 30, 2013	$	105,920		$	929	$	106,849

At June 30, 2013, accumulated goodwill impairment losses subsequent to fiscal year 2002 totaled $36,605 and relate entirely to the Fluid Power Businesses segment.

The Company's intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:

June 30, 2013	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Intangibles:
Customer relationships	$	100,854	$	38,844	$	62,010
Trade names	26,690		8,643		18,047
Vendor relationships	15,433		5,443		9,990
Non-competition agreements	4,743		3,523		1,220
Total Intangibles	$	147,720	$	56,453	$	91,267

June 30, 2012	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Intangibles:
Customer relationships	$	84,249	$	29,905	$	54,344
Trade names	25,677		7,428		18,249
Vendor relationships	13,605		4,500		9,105
Non-competition agreements	4,740		2,888		1,852
Total Finite-Lived Intangibles	128,271		44,721		83,550
Indefinite-Lived Trade Name	1,290				1,290
Total Intangibles	$	129,561	$	44,721	$	84,840

Amounts include the impact of foreign currency translation. Fully amortized amounts are written off. During fiscal year 2013 the Company re-categorized its previously indefinite-lived trade name to finite-lived trade names and as a result began amortizing it.

During 2013, the Company acquired intangible assets with a preliminary acquisition cost allocation and weighted-average life as follows:

	Acquisition Cost Allocation		Weighted-Average Life
Customer relationships	$	16,755	18 years
Trade names	651		5 years
Vendor relationships	2,138		10 years
Non-competition agreements	270		4.5 years
Total Intangibles Acquired	$	19,814	16 years

Amortization of intangibles totaled $13,233, $11,465 and $11,382 in fiscal 2013, 2012 and 2011, respectively, and is included in selling, distribution and administrative expenses in the statements of consolidated income. Amortization expense based on the Company’s intangible assets as of June 30, 2013 is estimated to be $12,200 for 2014, $11,200 for 2015, $10,100 for 2016, $9,500 for 2017 and $8,400 for 2018.

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Share - Based Compensation Textuals (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 11 months
Aggregate number of shares of common stock awarded under the 2007 Plan	2,000
Shares available for future grants	1,648
Performance shares, goal reaching period, tied to Company’s EBITDA	1 year
Compensation expense	$ 5,761	$ 6,366	$ 5,631
Share-based compensation arrangement by share-based payment award, award vesting period	4 years
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	3 years
Stock Options and Stock Appreciation Rights [ Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 6 months
Weighted-average remaining contractual terms for SARs/stock options outstanding	6 years 4 months
Weighted-average remaining contractual terms for SARs/stock options exercisable	5 years
Aggregate intrinsic values of SARs and stock options outstanding	21,104
Aggregate intrinsic values of SARs/stock options exercisable	14,958
Aggregate intrinsic value of the SARs/stock options exercised	7,135	13,747	18,526
Total fair value of shares vested	2,135	4,266	2,645
Compensation expense	2,317	2,058	2,473
Long-Term Performance Grants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense			1,020
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 9 months
Shares available for future grants	70
Compensation expense	1,074	1,983	1,705
Share-based compensation arrangement by share-based payment award, award vesting period	3 years
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	1 year
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	4 years
Restricted stock and Restricted Stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 5 months
Compensation expense	$ 2,370	$ 2,325	$ 1,453

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Shareholders' Equity (Tables)

12 Months Ended

Jun. 30, 2013

Shareholders' Equity (Tables) [Abstract]

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

Changes in the accumulated other comprehensive income (loss) for the year ended June 30, 2013, is comprised of the following:

	Foreign currency translation adjustment			Unrealized gain (loss) on securities available for sale			Postemployment benefits			Total Accumulated other comprehensive income (loss)
Balance at June 30, 2012	$	1,718		$	(58	)	$	(6,229	)	$	(4,569	)
Other comprehensive income (loss)	(1,358		)	6			1,967			615
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			533			533
Net current-period other comprehensive income (loss), net of taxes	(1,358		)	6			2,500			1,148
Balance at June 30, 2013	$	360		$	(52	)	$	(3,729	)	$	(3,421	)

Schedule of Comprehensive Income (Loss)

Details of other comprehensive income (loss) are as follows:

Year Ended June 30,	2013								2012									2011
	Pre-Tax Amount			Tax Expense (Benefit)		Net Amount			Pre-Tax Amount			Tax Expense (Benefit)			Net Amount			Pre-Tax Amount			Tax Expense (Benefit)			Net Amount
Foreign currency translation adjustments	$	(1,358	)	$	—	$	(1,358	)	$	(14,471	)	$	—		$	(14,471	)	$	10,011		$	(264	)	$	10,275
Postemployment benefits:
Actuarial gain (loss) on remeasurement	3,153			1,186		1,967			(5,028		)	(1,954		)	(3,074		)	(930		)	(435		)	(495		)
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	872			339		533			1,123			432			691			2,214			850			1,364
Impact of reduction in postemployment benefit liability (as forecasted salary increases will not be realized) due to a plan curtailment	—			—		—			8,860			3,411			5,449			—			—			—
Reclassification of prior service cost into SD&A expense upon plan curtailment	—			—		—			3,117			1,200			1,917			—			—			—
Unrealized gain (loss) on investment securities available for sale	10			4		6			(220		)	(80		)	(140		)	(84		)	(31		)	(53		)
Unrealized loss on cash flow hedges	—			—		—			—			—			—			(266		)	(82		)	(184		)
Reclassification of interest from cash flow hedge into interest expense	—			—		—			—			—			—			316			116			200
Other comprehensive income (loss)	$	2,677		$	1,529	$	1,148		$	(6,619	)	$	3,009		$	(9,628	)	$	11,261		$	154		$	11,107

Computation of basic and diluted earnings per share

The following is a computation of basic and diluted earnings per share:

Year Ended June 30,	2013		2012		2011
Net Income	$	118,149	$	108,779	$	96,759
Average Shares Outstanding:
Weighted-average common shares outstanding for basic computation	42,060		42,139		42,433
Dilutive effect of potential common shares	482		684		821
Weighted-average common shares outstanding for dilutive computation	42,542		42,823		43,254
Net Income Per Share — Basic	$	2.81	$	2.58	$	2.28
Net Income Per Share — Diluted	$	2.78	$	2.54	$	2.24

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Goodwill and Intangibles Textuals (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Goodwill and Intangibles (Textuals) [Abstract]
Amortization of intangibles	$ 13,233	$ 11,465	$ 11,382
Amortization Expense for For 2014	12,200
Amortization Expense for For 2015	11,200
Amortization Expense for For 2016	10,100
Amortization Expense for For 2017	9,500
Amortization Expense for For 2018	8,400
Fluid Power Businesses Segment [Member]
Goodwill [Line Items]
Accumulated goodwill impairment losses	$ 36,605

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Income Taxes

12 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Before Income Taxes

The components of income before income taxes are as follows:

Year Ended June 30,	2013		2012		2011
U.S.	$	153,546	$	137,667	$	127,567
Foreign	24,119		29,159		25,321
Total income before income taxes	$	177,665	$	166,826	$	152,888

Provision

The provision (benefit) for income taxes consists of:

Year Ended June 30,	2013			2012			2011
Current:
Federal	$	38,859		$	36,178		$	36,799
State and local	5,736			5,522			6,208
Foreign	4,742			7,706			8,338
Total current	49,337			49,406			51,345
Deferred:
Federal	10,277			8,577			5,648
State and local	346			503			169
Foreign	(444		)	(439		)	(1,033		)
Total deferred	10,179			8,641			4,784
Total	$	59,516		$	58,047		$	56,129

The exercise of non-qualified stock appreciation rights and options during fiscal 2013, 2012 and 2011 resulted in $1,675, $2,725 and $6,003, respectively, of income tax benefits to the Company derived from the difference between the market price at the date of exercise and the option price. Vesting of stock awards and other stock compensation in fiscal 2013, 2012 and 2011 resulted in $890, $970 and $401, respectively, of incremental income tax benefits over the amounts previously reported for financial reporting purposes. These tax benefits were recorded in additional paid-in capital.

Effective Tax Rates

The following reconciles the U.S. federal statutory income tax rate and the Company’s effective income tax rate:

Year Ended June 30,	2013		2012		2011
Statutory income tax rate	35.0	%	35.0	%	35.0	%
Effects of:
State and local taxes	2.3	%	2.5	%	2.8	%
U.S. tax on foreign income, net	—	%	—	%	1.8	%
Valuation allowance	—	%	—	%	(0.6	)%
Foreign income taxes	(2.3	)%	(1.8	)%	(1.0	)%
Deductible dividend	(0.5	)%	(0.5	)%	(0.5	)%
Other, net	(1.0	)%	(0.4	)%	(0.8	)%
Effective income tax rate	33.5	%	34.8	%	36.7	%

Consolidated Balance Sheets

Significant components of the Company’s net deferred tax assets are as follows:

June 30,	2013			2012
Deferred tax assets:
Compensation liabilities not currently deductible	$	33,506		$	37,341
Expenses and reserves not currently deductible	6,131			6,151
Goodwill and intangibles	3,781			6,518
Net operating loss carryforwards (expiring in years 2027-2033)	432			444
Foreign tax credits (expiring in years 2018, 2020, 2021)	38			4,092
Other	569			480
Total deferred tax assets	44,457			55,026
Less: Valuation allowance	(11		)	(157		)
Deferred tax assets, net of valuation allowance	44,446			54,869
Deferred tax liabilities:
Inventories	(9,057		)	(6,021		)
Unremitted foreign earnings	(2,804		)	(2,804		)
Depreciation and differences in property bases	(11,460		)	(11,602		)
Total deferred tax liabilities	(23,321		)	(20,427		)
Net deferred tax assets	$	21,125		$	34,442
The net deferred tax asset is classified as follows:
Other current assets	$	6,315		$	12,189
Deferred tax assets (long-term)	21,026			26,424
Other liabilities	(6,216		)	(4,171		)
Net deferred tax assets	$	21,125		$	34,442

Valuation allowances are provided against deferred tax assets where it is considered more-likely-than-not that the Company will not realize the benefit of such assets. The remaining net deferred tax asset is the amount management believes is more-likely-than-not of being realized. The realization of these deferred tax assets can be impacted by changes to tax laws, statutory rates and future income levels.

U.S. federal income taxes are provided on the portion of non-U.S. subsidiaries income that is not considered to be permanently reinvested outside the U.S. and may be remitted to the U.S. At June 30, 2013, undistributed earnings of non-U.S. subsidiaries considered to be permanently reinvested and for which no U.S. tax has been provided totaled approximately $103,905. Determination of the net amount of the unrecognized tax liability with respect to these earnings is not practicable; however, foreign tax credits would be available to partially reduce U.S. income taxes in the event of a distribution. Undistributed earnings of non-U.S. subsidiaries not considered permanently reinvested totaled approximately $11,000. U.S. taxes totaling $2,804 have been accrued on these earnings.

Unrecognized Income Tax Benefits

The Company and its subsidiaries file income tax returns in U.S. federal, various state, local and foreign jurisdictions. The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2013, 2012 and 2011:

Year Ended June 30,	2013			2012			2011
Unrecognized Income Tax Benefits at beginning of the year	$	1,539		$	1,181		$	1,842
Current year tax positions	957			331			153
Prior year tax positions	790			398			50
Expirations of statutes of limitations	(565		)	(371		)	(273		)
Settlements	(66		)	—			(591		)
Unrecognized Income Tax Benefits at end of year	$	2,655		$	1,539		$	1,181

Included in the balance of unrecognized income tax benefits at June 30, 2013, 2012 and 2011 are $2,342, $1,221 and $659, respectively, of income tax benefits that, if recognized, would affect the effective income tax rate.

During 2013, 2012 and 2011, the Company recognized $3, $(95) and $(22), respectively, for interest and penalties related to unrecognized income tax benefits in its statements of consolidated income. The Company had a liability for penalties and interest of $433 and $430 as of June 30, 2013 and 2012, respectively. The Company does not anticipate a significant change to the total amount of unrecognized income tax benefits within the next twelve months.

The Company is subject to U.S. federal income tax examinations for the tax years 2009 through 2013 and to state and local income tax examinations for the tax years 2009 through 2013. In addition, the Company is subject to foreign income tax examinations for the tax years 2006 through 2013.

The Company’s unrecognized income tax benefits are included in other liabilities in the consolidated balance sheets since payment of cash is not expected within one year.

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Segment and Geographic Information 2 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Net sales by product category
Net Sales	$ 2,462,171	$ 2,375,445	$ 2,212,849
Industrial [Member]
Net sales by product category
Net Sales	1,776,172	1,680,926	1,559,859
Fluid Power [Member]
Net sales by product category
Net Sales	$ 685,999	$ 694,519	$ 652,990

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Inventories

12 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

Inventories consist of the following:

June 30,	2013		2012
U.S. inventories at current cost	$	323,642	$	302,465
Foreign inventories at average cost	103,483		70,797
	427,125		373,262
Less: Excess of current cost over LIFO cost for U.S. inventories	145,708		144,756
Inventories on consolidated balance sheets	$	281,417	$	228,506

In fiscal 2013, 2012 and 2011, reductions in U.S. inventories, primarily in the bearings pool, resulted in liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years. The overall impact of LIFO layer liquidations increased gross profit by $6,300, $3,400 and $12,300 in fiscal 2013, 2012 and 2011, respectively.

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Statements of Consolidated Cash Flows (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Cash Flows from Investing Activities
Cash acquired from businesses acquisition	$ 0	$ 38	$ 168

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Shareholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Balance at June 30, 2012	$ (4,569)
Other comprehensive income (loss)	6	(140)	(53)
Net current-period other comprehensive income (loss), net of taxes	(1,358)	(14,471)	10,275
Other comprehensive income	1,148	(9,628)	11,107
Balance at June 30, 2013	(3,421)	(4,569)
Foreign currency translation adjustment
Balance at June 30, 2012	1,718
Other comprehensive income (loss)	(1,358)
Amounts reclassified from accumulated other comprehensive income (loss)	0
Net current-period other comprehensive income (loss), net of taxes	(1,358)
Balance at June 30, 2013	360
Unrealized gain (loss) on securities available for sale
Balance at June 30, 2012	(58)
Other comprehensive income (loss)	6
Amounts reclassified from accumulated other comprehensive income (loss)	0
Net current-period other comprehensive income (loss), net of taxes	6
Balance at June 30, 2013	(52)
Postemployment benefits
Balance at June 30, 2012	(6,229)
Other comprehensive income (loss)	1,967
Amounts reclassified from accumulated other comprehensive income (loss)	533
Net current-period other comprehensive income (loss), net of taxes	2,500
Balance at June 30, 2013	(3,729)
Accumulated Other Comprehensive Income (Loss) [Member]
Balance at June 30, 2012	(4,569)
Other comprehensive income (loss)	615
Amounts reclassified from accumulated other comprehensive income (loss)	533
Other comprehensive income	1,148
Balance at June 30, 2013	$ (3,421)

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Income Taxes Income Taxes 1 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011
Current:
Federal	$ 38,859	$ 36,178	$ 36,799
State and local	5,736	5,522	6,208
Foreign	4,742	7,706	8,338
Total current	49,337	49,406	51,345
Deferred:
Federal	10,277	8,577	5,648
State and local	346	503	169
Foreign	(444)	(439)	(1,033)
Total deferred	10,179	8,641	4,784
Total	$ 59,516	$ 58,047	$ 56,129

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Leases (Tables)

12 Months Ended

Jun. 30, 2013

Leases [Abstract]

Minimum annual rental commitments under non-cancelable operating leases

The minimum annual rental commitments under non-cancelable operating leases as of June 30, 2013 are as follows:

During Fiscal Years
2014	$	26,700
2015	19,700
2016	13,400
2017	7,900
2018	4,100
Thereafter	9,200
Total minimum lease payments	$	81,000

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Benefit Plans 3 (Details)		12 Months Ended
	Dec. 31, 2011	Jun. 30, 2013 Pension Benefits [Member]	Jun. 30, 2012 Pension Benefits [Member]	Jun. 30, 2013 Retiree Health Care Benefits [Member]	Jun. 30, 2012 Retiree Health Care Benefits [Member]
Assumptions used to determine benefit obligations at year-end:
Discount rate	3.50%	3.00%	2.80%	4.00%	4.00%
Assumptions used to determine net periodic benefit cost:
Discount rate		2.80%	3.50%	4.00%	5.50%
Expected return on plan assets		7.00%	7.50%
Rate of compensation increase			5.50%

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Share - Based Compensation 3 (Details) (Stock Options and Stock Appreciation Rights [ Member], USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Stock Options and Stock Appreciation Rights [ Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning of year, Shares	1,228
Granted, Shares	218
Exercised, Shares	(349)
Forfeited, Shares	(17)
Outstanding, end of year, Shares	1,080
Exercisable at end of year, Shares	654
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning of year, Weighted-Average Exercise Price	$ 24.68
Granted, Weighted-Average Exercise Price	$ 41.71
Exercised, Weighted-Average Exercise Price	$ 22.22
Forfeited, Weighted-Average Exercise Price	$ 31.56
Outstanding, end of year, Weighted-Average Exercise Price	$ 28.79
Exercisable at end of year, Weighted-Average Exercise Price	$ 25.47

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Benefit Plans

12 Months Ended

Jun. 30, 2013

General Discussion of Pension and Other Postretirement Benefits [Abstract]

BENEFIT PLANS

BENEFIT PLANS

Retirement Savings Plan

Substantially all U.S. associates participate in the Applied Industrial Technologies, Inc. Retirement Savings Plan. Participants may elect 401(k) contributions of up to 50% of their compensation, subject to Internal Revenue Code maximums. The Company partially matches 401(k) contributions by participants. The Company also makes a discretionary profit-sharing contribution to the Retirement Savings Plan generally based upon a percentage of the Company’s U.S. income before income taxes and before the amount of the contribution (5% for fiscal 2013, 2012 and 2011). The Company’s expense for profit sharing and matching of associates’ 401(k) contributions was $11,231, $10,866 and $11,251 during fiscal 2013, 2012 and 2011, respectively.

Deferred Compensation Plans

The Company has deferred compensation plans that enable certain associates of the Company to defer receipt of a portion of their compensation and non-employee directors to defer receipt of director fees. The Company funds these deferred compensation liabilities by making contributions to rabbi trusts. Assets held in these rabbi trusts consist of investments in money market and mutual funds and Company common stock.

Postemployment Benefit Plans

The Company provides the following postemployment benefits which, except for the Qualified Defined Benefit Retirement Plan, are unfunded:

Supplemental Executive Retirement Benefits Plan

The Company has a non-qualified pension plan to provide supplemental retirement benefits to certain officers. Benefits are payable and determinable at retirement based upon a percentage of the participant’s historical compensation. The Executive Organization and Compensation Committee of the Board of Directors froze participant benefits (credited service and final average earnings) and entry into the Supplemental Executive Retirement Benefits Plan (SERP) effective December 31, 2011. This action constituted a plan curtailment. The plan liability was remeasured in conjunction with the curtailment using a 3.5% discount rate and participant final average earnings through the curtailment date. The remeasurement in conjunction with the curtailment resulted in an actuarial loss (recorded in other comprehensive income (loss)) of $302 ($492 loss, net of income tax of $190).

The curtailment is reflected in the Company's fiscal 2012 consolidated balance sheet as: 1) a reduction to the overall SERP liability (included in postemployment benefits) of $8,860, 2) a reduction to deferred tax assets of $3,411 and 3) an increase in accumulated other comprehensive income (loss) of $5,449. Prior service costs previously recorded through accumulated other comprehensive income (loss) were reclassified into the statements of consolidated income ($3,117 gross expense, net of income tax of $1,200). The gross expense is recorded in selling, distribution and administrative expense in fiscal 2012.

Key Executive Restoration Plan

In fiscal 2012, the Executive Organization & Compensation Committee of the Board of Directors adopted the Key Executive Restoration Plan (KERP), an unfunded, non-qualified deferred compensation plan, to replace the SERP. The Company recorded $233 and $128 of expense associated with this plan in fiscal 2013 and 2012, respectively.

Qualified Defined Benefit Retirement Plan

The Company has a qualified defined benefit retirement plan that provides benefits to certain hourly associates at retirement. These associates do not participate in the Retirement Savings Plan. The benefits are based on length of service and date of retirement.

Salary Continuation Benefits

The Company has agreements with certain retirees of acquired companies to pay monthly retirement benefits through fiscal 2020.

Retiree Health Care Benefits

The Company provides health care benefits, through third-party policies, to eligible retired associates who pay a specified monthly premium. Premium payments are based upon current insurance rates for the type of coverage provided and are adjusted annually. Certain monthly health care premium payments are partially subsidized by the Company. Additionally, in conjunction with a fiscal 1998 acquisition, the Company assumed the obligation for a postretirement medical benefit plan which provides health care benefits to eligible retired associates at no cost to the individual.

During the year ended June 30, 2013, the Company changed the retiree health care plans to include the purchase of insurance policies at lower rates. Previously this plan was self-insured. This change resulted in plan amendment benefits of $1,788 recorded in other comprehensive income.

The Company uses a June 30 measurement date for all plans.

The following table sets forth the changes in benefit obligations and plan assets during the year and the funded status for the postemployment plans at June 30:

	Pension Benefits						Retiree Health Care Benefits
	2013			2012			2013			2012
Change in benefit obligation:
Benefit obligation at beginning of the year	$	47,151		$	53,490		$	5,148		$	4,667
Service cost	78			289			80			30
Interest cost	1,260			2,047			188			237
Plan participants’ contributions	—			—			65			47
Benefits paid	(6,183		)	(4,144		)	(254		)	(256		)
Amendments	(17		)	150			(1,788		)	—
Actuarial (gain) loss during year	(1,625		)	4,179			280			423
Curtailment	—			(8,860		)	—			—
Benefit obligation at end of year	$	40,664		$	47,151		$	3,719		$	5,148
Change in plan assets:
Fair value of plan assets at beginning of year	$	6,439		$	6,056		$	—		$	—
Actual gain (loss) on plan assets	424			(30		)	—			—
Employer contributions	6,017			4,557			189			209
Plan participants’ contributions	—			—			65			47
Benefits paid	(6,183		)	(4,144		)	(254		)	(256		)
Fair value of plan assets at end of year	$	6,697		$	6,439		$	—		$	—
Funded status at end of year	$	(33,967	)	$	(40,712	)	$	(3,719	)	$	(5,148	)

The amounts recognized in the consolidated balance sheets and in accumulated other comprehensive income (loss) for the postemployment plans were as follows:

	Pension Benefits						Retiree Health Care Benefits
June 30,	2013			2012			2013		2012
Amounts recognized in the consolidated balance sheets:
Other current liabilities	$	6,666		$	6,018		$	220	$	220
Postemployment benefits	27,301			34,694			3,499		4,928
Net amount recognized	$	33,967		$	40,712		$	3,719	$	5,148
Amounts recognized in accumulated other comprehensive income (loss):
Net actuarial (loss) gain	$	(7,732	)	$	(10,112	)	$	65	$	398
Prior service cost	(196		)	(279		)	1,760		(135		)
Total amounts recognized in accumulated other comprehensive (loss) income	$	(7,928	)	$	(10,391	)	$	1,825	$	263

The following table provides information for pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:

	Pension Benefits
June 30,	2013		2012
Projected benefit obligations	$	40,664	$	47,151
Accumulated benefit obligations	40,664		47,151
Fair value of plan assets	6,697		6,439

The net periodic costs are as follows:

	Pension Benefits									Retiree Health Care Benefits
Year Ended June 30,	2013			2012			2011			2013			2012			2011
Service cost	$	78		$	289		$	460		$	80		$	30		$	39
Interest cost	1,260			2,047			2,232			188			237			235
Expected return on plan assets	(403		)	(396		)	(385		)	—			—			—
Recognized net actuarial loss (gain)	735			644			1,449			(53		)	(72		)	(83		)
Amortization of prior service cost	83			412			710			107			139			139
Recognition of prior service cost upon plan curtailment	—			3,117			—			—			—			—
Net periodic cost	$	1,753		$	6,113		$	4,466		$	322		$	334		$	330

The estimated net actuarial loss and prior service cost for the pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $615 and $78, respectively. The estimated net actuarial gain and prior service cost for the retiree health care benefits that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $(38) and $(271), respectively.

Assumptions

The discount rate is used to determine the present value of future payments. In general, the Company’s liability increases as the discount rate decreases and decreases as the discount rate increases. The Company computes a weighted-average discount rate taking into account anticipated plan payments and the associated interest rates from the Citigroup Pension Discount Yield Curve.

The weighted-average actuarial assumptions used to determine benefit obligations and net periodic benefit cost for the plans were as follows:

	Pension Benefits				Retiree Health Care Benefits
June 30,	2013		2012		2013		2012
Assumptions used to determine benefit obligations at year end:
Discount rate	3.0	%	2.8	%	4.0	%	4.0	%
Assumptions used to determine net periodic benefit cost:
Discount rate	2.8	%	3.5	%	4.0	%	5.5	%
Expected return on plan assets	7.0	%	7.5	%	N/A		N/A
Rate of compensation increase	N/A		5.5	%	N/A		N/A

The assumed health care cost trend rates used in measuring the accumulated benefit obligation for retiree health care benefits were 7.3% and 7.5% as of June 30, 2013 and 2012, respectively, decreasing to 5.0% by 2023.

A one-percentage point change in the assumed health care cost trend rates would have had the following effects as of June 30, 2013 and for the year then ended:

	One-Percentage Point
	Increase		Decrease
Effect on total service and interest cost components of periodic expense	$	59	$	(47	)
Effect on postretirement benefit obligation	339		(295		)

Plan Assets

The fair value of each major class of plan assets for the Company’s Qualified Benefit Retirement Plan are valued using either quoted market prices in active markets for identical instruments; Level 1 in the fair value hierarchy, or other inputs that are observable, either directly or indirectly; Level 2 in the fair value hierarchy. Following are the fair values and target allocation as of June 30:

	Target Allocation		Fair Value
			2013		2012
Asset Class:
Equity securities (Level 1)	40 – 70%		$	3,189	$	3,735
Debt securities (Level 2)	20 – 50%		3,208		2,382
Other	0 – 20%		300		322
Total	100	%	$	6,697	$	6,439

Equity securities do not include any Company common stock.

The Company has established an investment policy and regularly monitors the performance of the assets of the trust maintained in conjunction with the Qualified Defined Benefit Retirement Plan. The strategy implemented by the trustee of the Qualified Defined Benefit Retirement Plan is to achieve long-term objectives and invest the pension assets in accordance with ERISA and fiduciary standards. The long-term primary objectives are to provide for a reasonable amount of long-term capital, without undue exposure to risk; to protect the Qualified Defined Benefit Retirement Plan assets from erosion of purchasing power; and to provide investment results that meet or exceed the actuarially assumed long-term rate of return. The expected long-term rate of return on assets assumption was developed by considering the historical returns and the future expectations for returns of each asset class as well as the target asset allocation of the pension portfolio.

Cash Flows

Employer Contributions

The Company expects to contribute $6,700 to its pension benefit plans and $250 to its retiree health care benefit plans in 2014. Contributions do not equal estimated future payments as certain payments are made from plan assets.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as applicable, are expected to be paid in each of the next five years and in the aggregate for the subsequent five years:

During Fiscal Years	Pension Benefits		Retiree Health Care Benefits
2014	$	7,000	$	250
2015	6,700		230
2016	5,600		250
2017	1,800		330
2018	2,300		400
2019 through 2023	12,500		1,470

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Fair Value Measurements

12 Months Ended

Jun. 30, 2013

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Marketable securities measured at fair value at June 30, 2013 and June 30, 2012 totaled $10,483 and $10,322, respectively. These marketable securities are held in a rabbi trust for a non-qualified deferred compensation plan. The marketable securities are included in other assets on the consolidated balance sheets and their fair values were valued using quoted market prices (Level 1 in the fair value hierarchy).

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Benefit Plans 5 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended									12 Months Ended
	Jun. 30, 2013	Jun. 30, 2013 Fair Value, Inputs, Level 1 [Member]	Jun. 30, 2012 Fair Value, Inputs, Level 1 [Member]	Jun. 30, 2013 Equity Securities [Member] Fair Value, Inputs, Level 1 [Member]	Jun. 30, 2012 Equity Securities [Member] Fair Value, Inputs, Level 1 [Member]	Jun. 30, 2013 Debt Securities [Member] Fair Value, Inputs, Level 1 [Member]	Jun. 30, 2012 Debt Securities [Member] Fair Value, Inputs, Level 1 [Member]	Jun. 30, 2013 Other Asset [Member] Fair Value, Inputs, Level 1 [Member]	Jun. 30, 2012 Other Asset [Member] Fair Value, Inputs, Level 1 [Member]	Jun. 30, 2013 Debt Securities [Member]	Jun. 30, 2013 Equity Securities [Member]	Jun. 30, 2013 OtherSecurities [Member]
Defined Benefit Plan Asset Information
Equity securities Minimum										20.00%	40.00%	0.00%
Equity securities Maximum										50.00%	70.00%	20.00%
Target Allocation, Total	100.00%
Fair value of plan assets		$ 6,697	$ 6,439	$ 3,189	$ 3,735	$ 3,208	$ 2,382	$ 300	$ 322

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Commitments and Contingencies

12 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

In connection with the construction and lease of its corporate headquarters facility, the Company has guaranteed repayment of $4,300 of taxable development revenue bonds issued by Cuyahoga County and the Cleveland-Cuyahoga County Port Authority. These bonds were issued with a 20-year term and are scheduled to mature in March 2016. Any default, as defined in the guarantee agreements, would obligate the Company for the full amount of the outstanding bonds through maturity. Due to the nature of the guarantee, the Company has not recorded any liability on the consolidated financial statements. In the event of a default and subsequent payout under any or all guarantees, the Company maintains the right to pursue all legal options available to mitigate its exposure.

The Company is a party to various pending judicial and administrative proceedings. Based on circumstances currently known, the Company believes the likelihood is remote that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

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Leases

12 Months Ended

Jun. 30, 2013

Leases [Abstract]

LEASES

LEASES

The Company leases its corporate headquarters facility along with many service center and distribution center facilities, vehicles and equipment under non-cancelable lease agreements accounted for as operating leases. The minimum annual rental commitments under non-cancelable operating leases as of June 30, 2013 are as follows:

During Fiscal Years
2014	$	26,700
2015	19,700
2016	13,400
2017	7,900
2018	4,100
Thereafter	9,200
Total minimum lease payments	$	81,000

Rental expenses incurred for operating leases, principally from leases for real property, vehicles and computer equipment were $36,300 in 2013, $31,200 in 2012 and $31,400 in 2011.

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Document and Entity Information (USD $)	12 Months Ended
	Jun. 30, 2013	Aug. 15, 2013	Dec. 31, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	APPLIED INDUSTRIAL TECHNOLOGIES INC
Entity Central Index Key	0000109563
Current Fiscal Year End Date	--06-30
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding (actual number)		42,207,810
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 1,453,338,000

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Segment and Geographic Information

12 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

The Company's reportable segments are: Service Center Based Distribution and Fluid Power Businesses. The Service Center Based Distribution segment provides customers with solutions to their maintenance, repair and original equipment manufacturing needs through the distribution of industrial products including bearings, power transmission components, fluid power components and systems, industrial rubber products, linear motion products, tools, safety products, and other industrial and maintenance supplies. The Fluid Power Businesses segment distributes fluid power components and operates shops that assemble fluid power systems and components, performs equipment repair, and offers technical advice to customers.

The accounting policies of the Company’s reportable segments are generally the same as those described in Note 1. Sales primarily from the Fluid Power Businesses segment to the Service Center Based Distribution segment of $20,217, $18,097 and $17,665, in fiscal 2013, 2012 and 2011, respectively, have been eliminated in the following table.

Segment Financial Information

	Service Center Based Distribution		Fluid Power Businesses		Total
Year Ended June 30, 2013
Net sales	$	2,003,440	$	458,731	$	2,462,171
Operating income for reportable segments	138,484		41,083		179,567
Assets used in the business	859,547		199,159		1,058,706
Depreciation and amortization of property	10,692		1,809		12,501
Capital expenditures	10,415		1,799		12,214
Year Ended June 30, 2012
Net sales	$	1,904,564	$	470,881	$	2,375,445
Operating income for reportable segments	135,240		43,236		178,476
Assets used in the business	731,915		230,268		962,183
Depreciation and amortization of property	9,403		1,833		11,236
Capital expenditures	24,339		1,682		26,021
Year Ended June 30, 2011
Net sales	$	1,770,798	$	442,051	$	2,212,849
Operating income for reportable segments	115,798		41,793		157,591
Assets used in the business	700,486		214,445		914,931
Depreciation and amortization of property	9,152		2,082		11,234
Capital expenditures	19,392		1,039		20,431

ERP related assets are included in assets used in the business and capital expenditures within the Service Center Based Distribution segment. Within the geographic disclosures, these assets are included in the United States. Expenses associated with the ERP are included in the Corporate and other income, net, line in the reconciliation of operating income for reportable segments to the consolidated income before income taxes table below.

A reconciliation of operating income for reportable segments to the consolidated income before income taxes is as follows:

Year Ended June 30,	2013			2012			2011
Operating income for reportable segments	$	179,567		$	178,476		$	157,591
Adjustments for:
Intangible amortization — Service Center Based Distribution	5,829			3,834			3,384
Intangible amortization — Fluid Power Businesses	7,404			7,631			7,998
Corporate and other income, net	(10,065		)	(1,384		)	(4,554		)
Total operating income	176,399			168,395			150,763
Interest (income) expense, net	165			(9		)	1,668
Other expense (income), net	(1,431		)	1,578			(3,793		)
Income before income taxes	$	177,665		$	166,826		$	152,888

Corporate and other income, net, in fiscal 2012 includes the SERP curtailment loss of $3,117 recognized in the second quarter of fiscal 2012. Additional fluctuations in corporate and other income, net, are due to changes in the levels and amounts of expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support and other items.

Product Category

Net sales by product category are as follows:

Year Ended June 30,	2013		2012		2011
Industrial	$	1,776,172	$	1,680,926	$	1,559,859
Fluid power	685,999		694,519		652,990
Net sales	$	2,462,171	$	2,375,445	$	2,212,849

The fluid power product category includes sales of hydraulic, pneumatic, lubrication and filtration components and systems, and repair services through the Company’s Fluid Power Businesses segment as well as the Service Center Based Distribution segment.

Geographic Information

Net sales are presented in geographic areas based on the location of the facility shipping the product. Long-lived assets are based on physical locations and are comprised of the net book value of property, goodwill and intangible assets. Information by geographic area is as follows:

Year Ended June 30,	2013		2012		2011
Net Sales:
United States	$	2,017,168	$	2,009,317	$	1,891,700
Canada	298,269		292,913		260,015
Other Countries	146,734		73,215		61,134
Total	$	2,462,171	$	2,375,445	$	2,212,849

June 30,	2013		2012		2011
Long-Lived Assets:
United States	$	210,289	$	198,076	$	191,947
Canada	44,290		42,624		29,893
Other Countries	26,780		10,323		13,706
Total	$	281,359	$	251,023	$	235,546

Other countries consisted of Mexico, Australia and New Zealand for the period ended June 30, 2013, and Mexico for the periods ended June 30, 2012 and June 30, 2011.

XML

Share - Based Compensation Share Based Compensation - 5 (Details) (Restricted stock and Restricted Stock units [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Restricted stock and Restricted Stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Shares	251
Beginning Balance, Weighted-Average Grant-Date Fair Value	$ 28.50
Granted, shares	41
Granted, Weighted-Average Grant-Date Fair Value	$ 42.05
Forfeitures	(9)
Forfeitures, Weighted Average Grant Date Fair Value	$ 30.34
Vested, Shares	(105)
Vested, Weighted-Average Grant- Date Fair Value	$ 26.09
Ending Balance, Shares	178
Ending Balance, Weighted-Average Grant-Date Fair Value	$ 32.96

XML

Share - Based Compensation 4 (Details) (Performance shares [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2013
Performance shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning Balance, Shares	62
Granted, shares	29
Forfeitures	(1)
Vested, Shares	0
Ending Balance, Shares	90
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Beginning Balance, Weighted-Average Grant-Date Fair Value	$ 28.80
Granted, Weighted-Average Grant-Date Fair Value	$ 33.76
Forfeitures, Weighted Average Grant Date Fair Value	$ 25.07
Vested, Weighted-Average Grant- Date Fair Value	$ 0.00
Ending Balance, Weighted-Average Grant-Date Fair Value	$ 30.45