þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ohio | 34-0117420 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Title of each class | Name of each exchange on which registered | |
Common Stock, without par value | New York Stock Exchange |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Class | Outstanding at August 5, 2011 | |
Common Stock, without par value | 42,611,078 |
(1) | Applied Industrial Technologies, Inc. annual report to shareholders for the fiscal year ended June 30, 2011, portions of which are incorporated by reference into Parts I, II and IV of this Form 10-K, and | ||
(2) | Applieds proxy statement for the annual meeting of shareholders to be held October 25, 2011, portions of which are incorporated by reference into Parts II, III, and IV of this Form 10-K. |
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2
3
| Applieds 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 | ||
| Applieds Code of Business Ethics | ||
| Applieds Board of Directors Governance Principles and Practices | ||
| Applieds Director Independence Standards | ||
| Charters for the Audit, Corporate Governance, and Executive Organization & Compensation Committees of Applieds Board of Directors |
4
| Service Center-Based Distribution. We distribute a wide range of industrial products through service centers across North America. 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: |
| Regional fabricated rubber shops, which modify and repair conveyor belts and make hose assemblies in accordance with customer requirements, | ||
| Rubber service field crews, which install and repair belts and rubber linings at customer locations, and | ||
| UZ Engineered Products, a distributor of industrial supplies to government and commercial customers. |
The service center-based distribution business accounts for a substantial majority of our field operations and 80% of our 2011 sales dollars. The business operates in the United |
5
States and Canada using the Applied Industrial Technologies and UZ Engineered Products trade names. We also 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 | |||
A&H Fluid Technologies
|
ESI Power Hydraulics | Atelier P.V. Hydraulique (Canada) | ||
Air Draulics Engineering
|
Elect-Air | HyPower (Canada) | ||
Air-Hydraulic Systems
|
Engineered Sales | Pro-Hydraulique (Canada) | ||
Applied Engineered Systems
|
FluidTech | Vycmex (Mexico) | ||
Bay Advanced Technologies
|
HydroAir Hughes | |||
Carolina Fluid Components
|
Kent Fluid Power | |||
DTS Fluid Power
|
Power Systems | |||
Dees Fluid Power
|
Spencer Fluid Power |
6
7
8
9
10
11
12
13
| 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. |
14
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 |
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
|
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 | |
Winnipeg, Manitoba
|
Distribution center and service center |
15
16
Name | Positions and Experience | Age | ||||
David L. Pugh
|
Chairman & Chief Executive Officer, and a member of Board of Directors | 62 | ||||
Benjamin J. Mondics
|
President & Chief Operating Officer (since January 2008); previously served as Executive Vice President & Chief Operating Officer (from February 2007December 2007) and Vice President-Midwest Area (prior to February 2007) | 53 | ||||
Thomas E. Armold
|
Vice President-Marketing and Strategic Accounts (since January 2008); previously served as Vice President-Product Management and Marketing | 56 | ||||
Todd A. Barlett
|
Vice President-Acquisitions and Global Business Development | 56 | ||||
Fred D. Bauer
|
Vice President-General Counsel & Secretary | 45 | ||||
Michael L. Coticchia
|
Vice President-Chief Administrative Officer; previously was Vice President-Chief Administrative Officer and Government Business (prior to October 2010) | 48 | ||||
Mark O. Eisele
|
Vice President-Chief Financial Officer & Treasurer | 54 | ||||
Jeffrey A. Ramras
|
Vice President-Supply Chain Management; previously served as Vice President-Marketing and Supply Chain Management (prior to January 2008) | 56 | ||||
Richard C. Shaw
|
Vice President-Communications and Learning | 62 |
17
(c) Total Number of | (d) Maximum Number | |||||||||||||||
Shares Purchased as | of Shares that May | |||||||||||||||
(a) Total | (b) Average | Part of Publicly | Yet Be Purchased | |||||||||||||
Number of | Price Paid per | Announced Plans or | Under the Plans or | |||||||||||||
Period | Shares (1) | Share ($) | Programs | Programs (2) | ||||||||||||
April 1, 2011 to
April 30, 2011 |
0 | | 0 | 694,400 | ||||||||||||
May 1, 2011 to
May 31, 2011 |
0 | | 0 | 694,400 | ||||||||||||
June 1, 2011 to
June 30, 2011 |
46,800 | 34.06 | 46,800 | 647,600 | ||||||||||||
Total |
46,800 | 34.06 | 46,800 | 647,600 |
(1) | During the quarter ended June 30, 2011, Applied purchased 87 shares in connection with an employee deferred compensation program. This purchase is not counted in the Board of Directors authorization in note (2). | |
(2) | On January 23, 2008, the Board of Directors authorized the purchase of up to 1.5 million shares of Applieds common stock. We publicly announced the authorization that day. Purchases may be made in the open market or in privately negotiated transactions. This authorization is in effect until all shares are purchased, or the Board revokes or amends the authorization. |
18
Caption | Page No. | |||
Financial Statements: |
||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
16 33 | ||||
34, 36 | ||||
Supplementary Data: |
||||
37 |
19
20
Number of | Weighted- | |||||||||||
Securities | Average | |||||||||||
to be | Exercise | Number of | ||||||||||
Issued upon | Price of | Securities | ||||||||||
Exercise of | Outstanding | Remaining | ||||||||||
Outstanding | Options, | Available for Future | ||||||||||
Options, | Warrants | Issuance Under | ||||||||||
Warrants and | and | Equity | ||||||||||
Plan Category | Rights | Rights | Compensation Plans | |||||||||
Equity compensation plans approved by security holders |
1,804,434 | 22.68 | * | |||||||||
Equity compensation plans not approved by security
holders |
0 | | 0 | |||||||||
Total |
1,804,434 | 22.68 | * |
21
* | The 2007 Long-Term Performance Plan was adopted to replace the 1997 Long-Term Performance Plan, under which previously awarded stock options and stock appreciation rights remain outstanding. The aggregate number of shares that remained available for awards under the 2007 Long-Term Performance Plan at June 30, 2011, was 629,195. 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. |
22
Caption | Page No. | |||
Report of Independent Registered Public Accounting Firm |
30 | |||
Schedule II Valuation and Qualifying Accounts |
31 |
* | 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 Applieds Form 10-Q for the quarter ended December 31, 2005, SEC File No. 1-2299, and incorporated here by reference). |
23
Exhibit | ||
No. | Description | |
3.2
|
Code of Regulations of Applied Industrial Technologies, Inc., as amended on October 19, 1999 (filed as Exhibit 3(b) to Applieds Form 10-Q for the quarter ended September 30, 1999, SEC File No. 1-2299, and incorporated here by reference). | |
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 Applieds 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, between Applied and Prudential Investment Management, Inc. (assignee of The Prudential Insurance Company of America), conformed to show all amendments (filed as Exhibit 4.2 to Applieds Form 10-Q for the quarter ended March 31, 2010, SEC File No. 1-2299, and incorporated here by reference). | |
4.3
|
Credit Agreement dated as of June 3, 2005, among Applied, KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 4.7 to Applieds Form 10-Q for the quarter ended December 31, 2009, SEC File No. 1-2299, and incorporated here by reference). | |
4.4
|
First Amendment Agreement dated as of June 6, 2007, among Applied, KeyBank National Association as Agent, and various financial institutions, amending June 3, 2005 Credit Agreement (filed as Exhibit 4 to Applieds Form 8-K dated June 11, 2007, SEC File No. 1-2299, and incorporated here by reference). |
*10.1
|
Form of Change in Control Agreement between Applied and each of its executive officers (filed as Exhibit 99.1 to Applieds Form 8-K dated April 25, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.2
|
A written description of Applieds director compensation program is incorporated by reference to Applieds proxy statement for the annual meeting of shareholders to be held October 25, 2011 under the caption Director Compensation. | |
*10.3
|
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 |
24
Exhibit | ||
No. | Description | |
10(c) to Applieds Form 10-K for the year ended June 30, 2003, SEC File No. 1-2299, and incorporated here by reference). | ||
*10.4
|
Deferred Compensation Plan for Non-Employee Directors (Post-2004 Terms) (filed as Exhibit 10.2 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.5
|
A written description of Applieds Life and Accidental Death and Dismemberment Insurance for executive officers (filed as Exhibit 10(d) to Applieds 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 Applieds Long-Term Disability Insurance for executive officers (filed as Exhibit 10(c) to Applieds Form 10-Q for the quarter ended December 31, 1997, SEC File No. 1-2299, and incorporated here by reference). | |
*10.7
|
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 Applieds Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). | |
*10.8
|
Supplemental Executive Retirement Benefits Plan (January 1, 2002 Restatement), the terms of which govern benefits vested as of December 31, 2004, for one executive officer, R. C. Shaw (filed as Exhibit 10 to Applieds Form 10-Q for the quarter ended March 31, 2002, SEC File No. 1-2299, and incorporated here by reference). | |
*10.9
|
First Amendment to Supplemental Executive Retirement Benefits Plan (January 1, 2002 Restatement) (filed as Exhibit 10 to Applieds Form 10-Q for the quarter ended September 30, 2004, SEC File No. 1-2299, and incorporated here by reference). | |
*10.10
|
Supplemental Executive Retirement Benefits Plan (Restated Post-2004 Terms) (filed as Exhibit 10.1 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.11
|
Deferred Compensation Plan (September 1, 2003 Restatement), the terms of which govern benefits vested as of December 31, 2004, for certain executive officers (filed as Exhibit 10(h) to Applieds Form 10-K for the year ended June 30, 2003, SEC File No. 1-2299, and incorporated here by reference). |
25
Exhibit | ||
No. | Description | |
*10.12
|
First Amendment to Deferred Compensation Plan (September 1, 2003 Restatement) (filed as Exhibit 10 to Applieds Form 10-Q for the quarter ended December 31, 2003, SEC File No. 1-2299, and incorporated here by reference). | |
*10.13
|
Deferred Compensation Plan (Post-2004 Terms) (filed as Exhibit 10.3 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.14
|
1997 Long-Term Performance Plan, as amended April 19, 2007 (filed as Exhibit 10(k) to Applieds Form 10-K for the year ended June 30, 2007, SEC File No. 1-2299, and incorporated here by reference). | |
*10.15
|
Section 409A Amendment to the 1997 Long-Term Performance Plan (filed as Exhibit 10.4 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.16
|
2007 Long-Term Performance Plan (filed as Exhibit 10 to Applieds Form 8-K dated October 23, 2007, SEC File No. 1-2299, and incorporated here by reference). | |
*10.17
|
Section 409A Amendment to the 2007 Long-Term Performance Plan (filed as Exhibit 10.5 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.18
|
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 Applieds Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). | |
*10.19
|
First Amendment to Supplemental Defined Contribution Plan effective as of October 1, 2000 (filed as Exhibit 10(a) to Applieds Form 10-Q for the quarter ended September 30, 2000, SEC File No. 1-2299, and incorporated here by reference). | |
*10.20
|
Second Amendment to Supplemental Defined Contribution Plan effective as of January 16, 2001 (filed as Exhibit 10(a) to Applieds Form 10-Q for the quarter ended March 31, 2001, SEC File No. 1-2299, and incorporated here by reference). |
26
Exhibit | ||
No. | Description | |
*10.21
|
Supplemental Defined Contribution Plan (Post-2004 Terms) (filed as Exhibit 10.6 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.22
|
Non-Statutory Stock Option Award Terms and Conditions (Directors) (filed as Exhibit 10 to Applieds Form 8-K dated November 30, 2005, SEC File No. 1-2299, and incorporated here by reference). | |
*10.23
|
Restricted Stock Award Terms (Directors) (filed as Exhibit 10(b) to Applieds Form 10-Q for the quarter ended March 31, 2007, SEC File No. 1-2299, and incorporated here by reference). | |
*10.24
|
Stock Appreciation Rights Award Terms and Conditions (Officers) (filed as Exhibit 10.02 to Applieds Form 8-K dated September 16, 2009, SEC File No. 1-2299, and incorporated here by reference). | |
*10.25
|
Performance Grant Terms and Conditions (filed as Exhibit 10.3 to Applieds Form 10-Q for the quarter ended September 30, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.26
|
Performance Shares Terms and Conditions (filed as Exhibit 10.04 to Applieds Form 8-K dated September 16, 2009, SEC File No. 1-2299, and incorporated here by reference). | |
*10.27
|
Performance Shares Terms and Conditions, as amended for performance shares awarded to executive officers in September 2010 (filed as Exhibit 10 to Applieds Form 10-Q for the quarter ended September 30, 2010, SEC File No. 1-2299, and incorporated here by reference). | |
*10.28
|
Restricted Stock Units Terms and Conditions (filed as Exhibit 10.03 to Applieds Form 8-K dated September 16, 2009, SEC File No. 1-2299, and incorporated here by reference). | |
*10.29
|
Management Incentive Plan General Terms (filed as Exhibit 10.01 to Applieds Form 8-K dated September 16, 2009, SEC File No. 1-2299, and incorporated here by reference). | |
*10.30
|
Letter agreement dated April 27, 2011 between Applied and David L. Pugh (filed as Exhibit 10.1 to Applieds Form 8-K dated April 27, 2011, SEC File No. 1-2299, and incorporated here by reference). |
27
Exhibit | ||
No. | Description | |
*10.31
|
Non-qualified Deferred Compensation Agreement between Applied and J. Michael Moore effective as of December 31, 1997 (filed as Exhibit 10(a) to Applieds Form 10-Q for the quarter ended March 31, 1998, SEC File No. 1-2299, and incorporated here by reference). | |
10.32
|
Lease dated as of March 1, 1996 between Applied and the Cleveland-Cuyahoga County Port Authority (filed as Exhibit 10(n) to Applieds Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). | |
13
|
Applieds 2011 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
|
Applieds subsidiaries at June 30, 2011. | |
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
|
The following materials formatted in XBRL (Extensible Business Reporting Language): (i) Statements of Consolidated Income for the years ended June 30, 2011, 2010, and 2009; (ii) Consolidated Balance Sheets at June 30, 2011 and 2010; (iii) Statements of Consolidated Cash Flows for the years ended June 30, 2011, 2010 and 2009; (iv) Statements of Consolidated Shareholders Equity for the years ended June 30, 2011, 2010 and 2009; and (v) Notes to Consolidated Financial Statements. |
28
29
30
COLUMN A | COLUMN B | COLUMN C | COLUMN D | COLUMN E | ||||||||||||||||
ADDITIONS | ||||||||||||||||||||
ADDITIONS | (DEDUCTIONS) | |||||||||||||||||||
BALANCE AT | CHARGED TO | CHARGED TO | DEDUCTIONS | BALANCE | ||||||||||||||||
BEGINNING | COSTS AND | OTHER | FROM | AT END OF | ||||||||||||||||
DESCRIPTION | OF PERIOD | EXPENSES | ACCOUNTS | RESERVE | PERIOD | |||||||||||||||
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 | ||||||||
YEAR ENDED JUNE 30, 2010: |
||||||||||||||||||||
Reserve deducted from assets to
which it applies accounts receivable
allowances |
$ | 6,464 | $ | 2,508 | ($95) | (A) | $ | 2,498 | (B) | $ | 6,379 | |||||||||
YEAR ENDED JUNE 30, 2009: |
||||||||||||||||||||
Reserve deducted from assets to
which it applies accounts receivable
allowances |
$ | 6,119 | $ | 4,540 | $ | 18 | (A) | $ | 4,213 | (B) | $ | 6,464 |
(A) | Amounts represent reserves for the return of merchandise by customers. | |
(B) | Amounts represent uncollectible accounts charged off. |
/s/ David L. Pugh
Chief Executive Officer |
/s/ Benjamin J. Mondics
Chief Operating Officer |
|
/s/ Mark O. Eisele
Vice President-Chief Financial Officer & Treasurer |
/s/ Daniel T. Brezovec
Corporate Controller (Principal Accounting Officer) |
*
|
*
|
|
*
|
*
|
|
*
|
*
|
|
*
|
/s/ David L. Pugh
Officer and Director |
|
*
|
*
|
/s/ Fred D. Bauer | ||||
Fred D. Bauer, as attorney in fact | ||||
for persons indicated by * | ||||
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 Applieds 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 Applieds Form 10-Q for the quarter ended September 30, 1999, SEC File No. 1-2299, and incorporated here by reference). | |
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 Applieds 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, between Applied and Prudential Investment Management, Inc. (assignee of The Prudential Insurance Company of America), conformed to show all amendments (filed as Exhibit 4.2 to Applieds Form 10-Q for the quarter ended March 31, 2010, SEC File No. 1-2299, and incorporated here by reference). | |
4.3
|
Credit Agreement dated as of June 3, 2005, among Applied, KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 4.7 to Applieds Form 10-Q for the quarter ended December 31, 2009, SEC File No. 1-2299, and incorporated here by reference). | |
4.4
|
First Amendment Agreement dated as of June 6, 2007, among Applied, KeyBank National Association as Agent, and various financial institutions, amending June 3, 2005 Credit Agreement (filed as Exhibit 4 to Applieds Form 8-K dated June 11, 2007, SEC File No. 1-2299, and incorporated here by reference). |
Exhibit | ||
No. | Description | |
*10.1
|
Form of Change in Control Agreement between Applied and each of its executive officers (filed as Exhibit 99.1 to Applieds Form 8-K dated April 25, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.2
|
A written description of Applieds director compensation program is incorporated by reference to Applieds proxy statement for the annual meeting of shareholders to be held October 25, 2011, under the caption Director Compensation. | |
*10.3
|
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 Applieds Form 10-K for the year ended June 30, 2003, SEC File No. 1-2299, and incorporated here by reference). | |
*10.4
|
Deferred Compensation Plan for Non-Employee Directors (Post-2004 Terms) (filed as Exhibit 10.2 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.5
|
A written description of Applieds Life and Accidental Death and Dismemberment Insurance for executive officers (filed as Exhibit 10(d) to Applieds 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 Applieds Long-Term Disability Insurance for executive officers (filed as Exhibit 10(c) to Applieds Form 10-Q for the quarter ended December 31, 1997, SEC File No. 1-2299, and incorporated here by reference). | |
*10.7
|
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 Applieds Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). | |
*10.8
|
Supplemental Executive Retirement Benefits Plan (January 1, 2002 Restatement), the terms of which govern benefits vested as of December 31, 2004, for one executive officer, R. C. Shaw (filed as Exhibit 10 to Applieds Form 10-Q for the quarter ended March 31, 2002, SEC File No. 1-2299, and incorporated here by reference). | |
*10.9
|
First Amendment to Supplemental Executive Retirement Benefits Plan (January 1, 2002 Restatement) (filed as Exhibit 10 to Applieds Form 10-Q for the quarter ended September 30, 2004, SEC File No. 1-2299, and incorporated here by reference). |
Exhibit | ||
No. | Description | |
*10.10
|
Supplemental Executive Retirement Benefits Plan (Restated Post-2004 Terms) (filed as Exhibit 10.1 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.11
|
Deferred Compensation Plan (September 1, 2003 Restatement), the terms of which govern benefits vested as of December 31, 2004, for certain executive officers (filed as Exhibit 10(h) to Applieds Form 10-K for the year ended June 30, 2003, SEC File No. 1-2299, and incorporated here by reference). | |
*10.12
|
First Amendment to Deferred Compensation Plan (September 1, 2003 Restatement) (filed as Exhibit 10 to Applieds Form 10-Q for the quarter ended December 31, 2003, SEC File No. 1-2299, and incorporated here by reference). | |
*10.13
|
Deferred Compensation Plan (Post-2004 Terms) (filed as Exhibit 10.3 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.14
|
1997 Long-Term Performance Plan, as amended April 19, 2007 (filed as Exhibit 10(k) to Applieds Form 10-K for the year ended June 30, 2007, SEC File No. 1-2299, and incorporated here by reference). | |
*10.15
|
Section 409A Amendment to the 1997 Long-Term Performance Plan (filed as Exhibit 10.4 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.16
|
2007 Long-Term Performance Plan (filed as Exhibit 10 to the Applieds Form 8-K dated October 23, 2007, SEC File No. 1-2299, and incorporated here by reference). | |
*10.17
|
Section 409A Amendment to the 2007 Long-Term Performance Plan (filed as Exhibit 10.5 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.18
|
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 Applieds Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). |
Exhibit | ||
No. | Description | |
*10.19
|
First Amendment to Supplemental Defined Contribution Plan effective as of October 1, 2000 (filed as Exhibit 10(a) to Applieds Form 10-Q for the quarter ended September 30, 2000, SEC File No. 1-2299, and incorporated here by reference). | |
*10.20
|
Second Amendment to Supplemental Defined Contribution Plan effective as of January 16, 2001 (filed as Exhibit 10(a) to Applieds Form 10-Q for the quarter ended March 31, 2001, SEC File No. 1-2299, and incorporated here by reference). | |
*10.21
|
Supplemental Defined Contribution Plan (Post-2004 Terms) (filed as Exhibit 10.6 to Applieds Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.22
|
Non-Statutory Stock Option Award Terms and Conditions (Directors) (filed as Exhibit 10 to Applieds Form 8-K dated November 30, 2005, SEC File No. 1-2299, and incorporated here by reference). | |
*10.23
|
Restricted Stock Award Terms (Directors) (filed as Exhibit 10(b) to Applieds Form 10-Q for the quarter ended March 31, 2007, SEC File No. 1-2299, and incorporated here by reference). | |
*10.24
|
Stock Appreciation Rights Award Terms and Conditions (Officers) (filed as Exhibit 10.02 to Applieds Form 8-K dated September 16, 2009, SEC File No. 1-2299, and incorporated here by reference). | |
*10.25
|
Performance Grant Terms and Conditions (filed as Exhibit 10.3 to Applieds Form 10-Q for the quarter ended September 30, 2008, SEC File No. 1-2299, and incorporated here by reference). | |
*10.26
|
Performance Shares Terms and Conditions (filed as Exhibit 10.04 to Applieds Form 8-K dated September 16, 2009, SEC File No. 1-2299, and incorporated here by reference). | |
*10.27
|
Performance Shares Terms and Conditions, as amended for performance shares awarded to executive officers in September 2010 (filed as Exhibit 10 to Applieds Form 10-Q for the quarter ended September 30, 2010, SEC File No. 1-2299, and incorporated here by reference). | |
*10.28
|
Restricted Stock Units Terms and Conditions (filed as Exhibit 10.03 to Applieds Form 8-K dated September 16, 2009, SEC File No. 1-2299, and incorporated here by reference). |
Exhibit | ||||
No. | Description | |||
*10.29
|
Management Incentive Plan General Terms (filed as Exhibit 10.01 to Applieds Form 8-K dated September 16, 2009, SEC File No. 1-2299, and incorporated here by reference). | |||
*10.30
|
Letter agreement dated April 27, 2011 between Applied and David L. Pugh (filed as Exhibit 10.1 to Applieds Form 8-K dated April 27, 2011, SEC File No. 1-2299, and incorporated here by reference). | |||
*10.31
|
Non-qualified Deferred Compensation Agreement between Applied and J. Michael Moore effective as of December 31, 1997 (filed as Exhibit 10(a) to Applieds Form 10-Q for the quarter ended March 31, 1998, SEC File No. 1-2299, and incorporated here by reference). | |||
10.32
|
Lease dated as of March 1, 1996 between Applied and the Cleveland-Cuyahoga County Port Authority (filed as Exhibit 10(n) to Applieds Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). | |||
13
|
Applieds 2011 annual report to shareholders (not deemed filed as part of this Form 10-K except for those portions that are expressly incorporated by reference). | Attached | ||
21
|
Applieds subsidiaries at June 30, 2011. | Attached | ||
23
|
Consent of Independent Registered Public Accounting Firm. | Attached | ||
24
|
Powers of attorney. | Attached | ||
31
|
Rule 13a-14(a)/15d-14(a) certifications. | Attached | ||
32
|
Section 1350 certifications. | Attached | ||
101
|
The following materials formatted in XBRL (Extensible Business Reporting Language): (i) Statements of Consolidated Income for the years ended June 30, 2011, 2010, and 2009; (ii) Consolidated Balance Sheets at June 30, 2011 and 2010; (iii) Statements of Consolidated Cash Flows for the years ended June 30, 2011, 2010 and 2009; (iv) Statements of Consolidated Shareholders Equity for the years ended June 30, 2011, 2010 and 2009; and (v) Notes to Consolidated Financial Statements. | Attached |
Year Ended June 30, | ||||||||||||
As a % of Net Sales | Percent | |||||||||||
2011 | 2010 | Increase | ||||||||||
Net Sales |
100.0 | % | 100.0 | % | 16.9 | % | ||||||
Gross Profit |
27.7 | % | 27.2 | % | 18.9 | % | ||||||
Selling, Distribution &
Administrative |
20.9 | % | 21.4 | % | 14.0 | % | ||||||
Operating Income |
6.8 | % | 5.8 | % | 37.0 | % | ||||||
Net Income |
4.4 | % | 3.5 | % | 46.8 | % | ||||||
Year Ended June 30, | ||||||||||||
Net Cash Provided by (Used in): | 2011 | 2010 | 2009 | |||||||||
Operating Activities |
$ | 76,842 | $ | 184,324 | $ | 81,300 | ||||||
Investing Activities |
(47,887 | ) | (6,784 | ) | (178,430 | ) | ||||||
Financing Activities |
(116,523 | ) | (30,514 | ) | 28,502 | |||||||
Exchange Rate Effect |
2,883 | 1,109 | (5,560 | ) | ||||||||
(Decrease) Increase in Cash and
Cash Equivalents |
$ | (84,685 | ) | $ | 148,135 | $ | (74,188 | ) | ||||
Period Less | Period | Period | Period | |||||||||||||||||||||
Total | Than 1 yr | 1-3 yrs | 4-5 yrs | Over 5 yrs | Other | |||||||||||||||||||
Operating leases |
$ | 75,000 | $ | 23,200 | $ | 30,500 | $ | 16,000 | $ | 5,300 | ||||||||||||||
Planned funding of postretirement obligations | 61,500 | 4,400 | 10,100 | 10,000 | 37,000 | |||||||||||||||||||
Unrecognized income tax benefit liabilities, including interest and penalties | 1,700 | $ | 1,700 | |||||||||||||||||||||
Total Contractual Cash Obligations | $ | 138,200 | $ | 27,600 | $ | 40,600 | $ | 26,000 | $ | 42,300 | $ | 1,700 | ||||||||||||
One-Percentage Point | ||||||||
Effect of change in: | Increase | Decrease | ||||||
Discount rate on liability | $ | (3,554 | ) | $ | 4,049 | |||
Discount rate on net periodic benefit cost | (151 | ) | 158 | |||||
Salary scale on liability | 1,900 | (1,700 | ) | |||||
Salary scale on net periodic benefit cost | 328 | (302 | ) | |||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Net Sales |
$ | 2,212,849 | $ | 1,893,208 | $ | 1,923,148 | ||||||
Cost of Sales |
1,599,739 | 1,377,486 | 1,403,138 | |||||||||
Gross Profit |
613,110 | 515,722 | 520,010 | |||||||||
Selling, Distribution and Administrative, including depreciation |
462,347 | 405,672 | 410,912 | |||||||||
Goodwill Impairment |
36,605 | |||||||||||
Operating Income |
150,763 | 110,050 | 72,493 | |||||||||
Interest Expense |
2,081 | 5,738 | 5,523 | |||||||||
Interest Income |
(413 | ) | (280 | ) | (1,099 | ) | ||||||
Other (Income) Expense, net |
(3,793 | ) | (425 | ) | 2,255 | |||||||
Income Before Income Taxes |
152,888 | 105,017 | 65,814 | |||||||||
Income Tax Expense |
56,129 | 39,114 | 23,554 | |||||||||
Net Income |
$ | 96,759 | $ | 65,903 | $ | 42,260 | ||||||
Net Income Per Share Basic |
$ | 2.28 | $ | 1.56 | $ | 1.00 | ||||||
Net Income Per Share Diluted |
$ | 2.24 | $ | 1.54 | $ | 0.99 | ||||||
June 30, | 2011 | 2010 | ||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 91,092 | $ | 175,777 | ||||
Accounts receivable, less allowances of $7,016 and $6,379 |
290,751 | 246,402 | ||||||
Inventories |
204,066 | 173,253 | ||||||
Other current assets |
33,005 | 23,428 | ||||||
Total current assets |
618,914 | 618,860 | ||||||
Property at cost |
||||||||
Land |
10,428 | 10,569 | ||||||
Buildings |
73,399 | 73,099 | ||||||
Equipment, including computers and software |
129,117 | 113,593 | ||||||
Total Property at cost |
212,944 | 197,261 | ||||||
Less accumulated depreciation |
143,930 | 138,790 | ||||||
Property net |
69,014 | 58,471 | ||||||
Intangibles, net |
89,551 | 85,916 | ||||||
Goodwill |
76,981 | 63,405 | ||||||
Deferred tax assets |
43,447 | 48,493 | ||||||
Other assets |
17,024 | 16,375 | ||||||
Total Assets |
$ | 914,931 | $ | 891,520 | ||||
Liabilities |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 108,509 | $ | 94,529 | ||||
Short-term debt |
75,000 | |||||||
Compensation and related benefits |
65,413 | 50,107 | ||||||
Other current liabilities |
40,766 | 51,696 | ||||||
Total current liabilities |
214,688 | 271,332 | ||||||
Postemployment benefits |
47,730 | 48,560 | ||||||
Other liabilities |
18,950 | 16,589 | ||||||
Total Liabilities |
281,368 | 336,481 | ||||||
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 |
148,307 | 143,185 | ||||||
Income retained for use in the business |
668,421 | 601,370 | ||||||
Treasury shares at cost (11,611 and 11,837 shares) |
(198,224 | ) | (193,468 | ) | ||||
Accumulated other comprehensive income (loss) |
5,059 | (6,048 | ) | |||||
Total Shareholders Equity |
633,563 | 555,039 | ||||||
Total Liabilities and Shareholders Equity |
$ | 914,931 | $ | 891,520 | ||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Cash Flows from Operating Activities |
||||||||||||
Net income |
$ | 96,759 | $ | 65,903 | $ | 42,260 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Goodwill impairment |
36,605 | |||||||||||
Deferred income taxes |
4,784 | 2,408 | (16,648 | ) | ||||||||
Depreciation and amortization of property |
11,234 | 11,465 | 12,736 | |||||||||
Amortization of intangibles |
11,382 | 10,151 | 9,655 | |||||||||
Provision for losses on accounts receivable |
2,029 | 2,508 | 4,540 | |||||||||
Amortization of stock options and appreciation rights |
2,473 | 3,020 | 3,702 | |||||||||
Unrealized foreign exchange transaction (gains) losses |
(4 | ) | 806 | |||||||||
Other share-based compensation expense |
3,379 | 2,361 | 800 | |||||||||
Gain on sale of property |
(765 | ) | (198 | ) | (320 | ) | ||||||
Changes in assets and liabilities, net of acquisitions: |
||||||||||||
Accounts receivable |
(36,271 | ) | (48,578 | ) | 63,929 | |||||||
Inventories |
(21,197 | ) | 83,497 | (20,581 | ) | |||||||
Other operating assets |
(11,185 | ) | 17,408 | 6,858 | ||||||||
Accounts payable |
12,926 | 13,566 | (38,124 | ) | ||||||||
Other operating liabilities |
1,294 | 20,817 | (24,918 | ) | ||||||||
Net Cash provided by Operating Activities |
76,842 | 184,324 | 81,300 | |||||||||
Cash Flows from Investing Activities |
||||||||||||
Property purchases |
(20,431 | ) | (7,216 | ) | (6,988 | ) | ||||||
Proceeds from property sales |
1,326 | 532 | 757 | |||||||||
Net cash paid for acquisition of businesses, net of cash acquired of $168 and $185 in 2011
and 2009, respectively |
(30,504 | ) | (100 | ) | (172,199 | ) | ||||||
Other |
1,722 | |||||||||||
Net Cash used in Investing Activities |
(47,887 | ) | (6,784 | ) | (178,430 | ) | ||||||
Cash Flows from Financing Activities |
||||||||||||
Net short-term (repayments) borrowings under revolving credit facility |
(5,000 | ) | 5,000 | |||||||||
(Repayments) borrowings under revolving credit facility originally classified as long-term |
(50,000 | ) | 50,000 | |||||||||
Long-term debt repayment |
(25,000 | ) | ||||||||||
Settlements of cross-currency swap agreements |
(12,752 | ) | ||||||||||
Purchases of treasury shares |
(6,085 | ) | (3,929 | ) | (1,210 | ) | ||||||
Dividends paid |
(29,751 | ) | (25,416 | ) | (25,378 | ) | ||||||
Excess tax benefits from share-based compensation |
6,404 | 2,492 | 802 | |||||||||
Exercise of stock options and appreciation rights |
661 | 1,339 | 408 | |||||||||
Other |
(1,120 | ) | ||||||||||
Net Cash (used in) provided by Financing Activities |
(116,523 | ) | (30,514 | ) | 28,502 | |||||||
Effect of Exchange Rate Changes on Cash |
2,883 | 1,109 | (5,560 | ) | ||||||||
(Decrease) increase in cash and cash equivalents |
(84,685 | ) | 148,135 | (74,188 | ) | |||||||
Cash and cash equivalents at beginning of year |
175,777 | 27,642 | 101,830 | |||||||||
Cash and Cash Equivalents at End of Year |
$ | 91,092 | $ | 175,777 | $ | 27,642 | ||||||
Supplemental Cash Flow Information |
||||||||||||
Cash paid during the year for: |
||||||||||||
Income taxes |
$ | 47,251 | $ | 31,179 | $ | 43,081 | ||||||
Interest |
2,248 | 5,195 | 5,265 |
Shares of | Income | Accumulated | ||||||||||||||||||||||||||
Common | Additional | Retained | Treasury | Other | Total | |||||||||||||||||||||||
Stock | Common | Paid-in | for Use in | Shares- | Comprehensive | Shareholders | ||||||||||||||||||||||
For the Years Ended June 30, 2011, 2010 and 2009 | Outstanding | Stock | Capital | the Business | at Cost | Income (Loss) | Equity | |||||||||||||||||||||
Balance at July 1, 2008 |
42,290 | $ | 10,000 | $ | 133,078 | $ | 543,692 | $ | (190,944 | ) | $ | 6,249 | $ | 502,075 | ||||||||||||||
Net income |
42,260 | 42,260 | ||||||||||||||||||||||||||
Unrealized loss on cash flow hedges, net of income tax of $(457) |
(569 | ) | (569 | ) | ||||||||||||||||||||||||
Reclassification of interest expense into income, net of income tax of $264 |
437 | 437 | ||||||||||||||||||||||||||
Unrealized
loss on investment securities available for sale, net of income tax of $(105) |
(177 | ) | (177 | ) | ||||||||||||||||||||||||
Reclassification of pension and postemployment expense into income, net of income tax of $691 |
1,127 | 1,127 | ||||||||||||||||||||||||||
Pension and postemployment adjustment, net of income tax of $(1,154) |
(1,883 | ) | (1,883 | ) | ||||||||||||||||||||||||
Foreign currency translation adjustment, net of income tax of $(3,793) |
(13,033 | ) | (13,033 | ) | ||||||||||||||||||||||||
Total comprehensive income |
28,162 | |||||||||||||||||||||||||||
Cash dividends $0.60 per share |
(25,378 | ) | (25,378 | ) | ||||||||||||||||||||||||
Purchases of common stock for treasury |
(68 | ) | (1,210 | ) | (1,210 | ) | ||||||||||||||||||||||
Treasury shares issued for: |
||||||||||||||||||||||||||||
Exercise of stock options and appreciation rights |
73 | 47 | 1,007 | 1,054 | ||||||||||||||||||||||||
Deferred compensation plans |
18 | 110 | 300 | 410 | ||||||||||||||||||||||||
Compensation expense stock options and appreciation rights |
3,701 | 3,701 | ||||||||||||||||||||||||||
Amortization of restricted common stock compensation |
391 | 391 | ||||||||||||||||||||||||||
Other |
(29 | ) | (432 | ) | (671 | ) | (1,103 | ) | ||||||||||||||||||||
Balance at June 30, 2009 |
42,284 | 10,000 | 136,895 | 560,574 | (191,518 | ) | (7,849 | ) | 508,102 | |||||||||||||||||||
Net income |
65,903 | 65,903 | ||||||||||||||||||||||||||
Unrealized loss on cash flow hedges, net of income tax of $(365) |
(738 | ) | (738 | ) | ||||||||||||||||||||||||
Reclassification of interest expense into income, net of income tax of $535 |
873 | 873 | ||||||||||||||||||||||||||
Unrealized
loss on investment securities available for sale, net of income tax of $(19) |
(27 | ) | (27 | ) | ||||||||||||||||||||||||
Reclassification of pension and postemployment expense into income, net of income tax of $677 |
1,104 | 1,104 | ||||||||||||||||||||||||||
Pension and postemployment adjustment, net of income tax of $(1,467) |
(2,393 | ) | (2,393 | ) | ||||||||||||||||||||||||
Foreign currency translation adjustment, net of income tax of $(32) |
2,982 | 2,982 | ||||||||||||||||||||||||||
Total comprehensive income |
67,704 | |||||||||||||||||||||||||||
Cash dividends $0.60 per share |
(25,416 | ) | (25,416 | ) | ||||||||||||||||||||||||
Purchases of common stock for treasury |
(160 | ) | (3,929 | ) | (3,929 | ) | ||||||||||||||||||||||
Treasury shares issued for: |
||||||||||||||||||||||||||||
Exercise of stock options and appreciation rights |
214 | 1,499 | 1,372 | 2,871 | ||||||||||||||||||||||||
Deferred compensation plans |
11 | 68 | 187 | 255 | ||||||||||||||||||||||||
Compensation expense stock options and appreciation rights |
3,020 | 3,020 | ||||||||||||||||||||||||||
Amortization of other share-based compensation |
2,106 | 2,106 | ||||||||||||||||||||||||||
Other |
27 | (403 | ) | 309 | 420 | 326 | ||||||||||||||||||||||
Balance
at June 30, 2010 |
42,376 | 10,000 | 143,185 | 601,370 | (193,468 | ) | (6,048 | ) | 555,039 | |||||||||||||||||||
Net income |
96,759 | 96,759 | ||||||||||||||||||||||||||
Current
period cashflow hedging activity, net of income tax of $(82) |
(184 | ) | (184 | ) | ||||||||||||||||||||||||
Reclassification of interest expense info income, net of income tax of $116 |
200 | 200 | ||||||||||||||||||||||||||
Unrealized
loss on investment securities available for sale, net of income tax of
$(31) |
(53 | ) | (53 | ) | ||||||||||||||||||||||||
Reclassification
of pension and post employment expense into income, net of Income tax of $850 |
1,364 | 1,364 | ||||||||||||||||||||||||||
Pension and postemployment adjustment, net of income tax of $(435) |
(495 | ) | (495 | ) | ||||||||||||||||||||||||
Foreign
currency translation adjustment, net of income tax of $(264) |
10,275 | 10,275 | ||||||||||||||||||||||||||
Total comprehensive income |
107,866 | |||||||||||||||||||||||||||
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 options and appreciation rights |
379 | (109 | ) | 706 | 597 | |||||||||||||||||||||||
Deferred compensation plans |
6 | 102 | 119 | 221 | ||||||||||||||||||||||||
Compensation expense stock options and appreciation rights |
2,473 | 2,473 | ||||||||||||||||||||||||||
Amortization of other share-based compensation |
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 | ||||||||||||||
(unaudited) | 2009 | |||
| | ||||
Net sales |
$ | 1,962,882 | ||
Income before income taxes |
66,357 | |||
Net income |
42,601 | |||
Net income per share diluted |
$ | 1.00 | ||
June 30, | 2011 | 2010 | ||||||
U.S. inventories at current cost |
$ | 280,875 | $ | 268,021 | ||||
Foreign inventories at average cost |
60,837 | 48,403 | ||||||
341,712 | 316,424 | |||||||
Less: Excess of current cost over LIFO cost for U.S. inventories |
137,646 | 143,171 | ||||||
Inventories on consolidated balance sheets |
$ | 204,066 | $ | 173,253 | ||||
Balance at July 1, 2009 |
$ | 63,108 | ||
Other, primarily currency translation |
297 | |||
Balance at June 30, 2010 |
63,405 | |||
Goodwill acquired during the year |
11,700 | |||
Other, primarily currency translation |
1,876 | |||
Balance at June 30, 2011 |
$ | 76,981 | ||
Accumulated | Net | |||||||||||
June 30, 2011 | Amount | Amortization | Book Value | |||||||||
Finite-Lived Intangibles: |
||||||||||||
Customer relationships |
$ | 78,084 | $ | 23,111 | $ | 54,973 | ||||||
Trade names |
25,944 | 5,666 | 20,278 | |||||||||
Vendor relationships |
14,211 | 3,696 | 10,515 | |||||||||
Non-competition agreements |
5,127 | 2,632 | 2,495 | |||||||||
Total Finite-Lived Intangibles |
123,366 | 35,105 | 88,261 | |||||||||
Indefinite-Lived Trade Names |
1,290 | 1,290 | ||||||||||
Total Intangibles |
$ | 124,656 | $ | 35,105 | $ | 89,551 | ||||||
Accumulated | Net | |||||||||||
June 30, 2010 | Amount | Amortization | Book Value | |||||||||
Customer relationships |
$ | 65,324 | $ | 15,328 | $ | 49,996 | ||||||
Trade names |
25,648 | 3,777 | 21,871 | |||||||||
Vendor relationships |
13,842 | 2,511 | 11,331 | |||||||||
Non-competition agreements |
4,394 | 1,676 | 2,718 | |||||||||
Total Intangibles |
$ | 109,208 | $ | 23,292 | $ | 85,916 | ||||||
June 30, | 2010 | |||
7.98% Private placement debt, paid at maturity in November 2010 |
$ | 25,000 | ||
Revolving credit facility |
50,000 | |||
Total outstanding debt |
75,000 | |||
Less: Payable within one year |
75,000 | |||
Long-term portion of outstanding debt |
$ | 0 | ||
June 30, | 2010 | |||
Derivatives designated as hedging instruments: |
||||
Cross-currency swap |
$ | 8,728 | ||
Interest rate swap |
316 | |||
Total derivatives designated as hedging instruments |
9,044 | |||
Derivative not designated as a hedging instrument cross-currency swap |
2,182 | |||
Total Derivatives |
$ | 11,226 | ||
Amount of Loss Reclassified from | ||||||||||||||||||||||||
Derivatives in Cash Flow | Amount of Gain (Loss) Recognized in OCI | Accumulated OCI into Income (Effective | ||||||||||||||||||||||
Hedging Relationships | on Derivatives (Effective Portion) | Portion), Included in Interest Expense | ||||||||||||||||||||||
2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
Cross-currency swap |
$ | (2,039 | ) | $ | 3,790 | |||||||||||||||||||
Interest rate swap |
(343 | ) | (1,381 | ) | $ | (316 | ) | $ | (1,408 | ) | $ | (701 | ) | |||||||||||
Total |
$ | (2,382 | ) | $ | 2,409 | $ | (316 | ) | $ | (1,408 | ) | $ | (701 | ) | ||||||||||
Derivative Not | Amount of Gain (Loss) Recognized on | |||||||||||||||||||||||
Designated | Derivative, Included in Other (Income) | |||||||||||||||||||||||
as Hedging Instrument | Expense, net | |||||||||||||||||||||||
2011 | 2010 | 2009 | ||||||||||||||||||||||
Cross-currency swap |
$ | (368 | ) | $ | (510 | ) | $ | 947 | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||||||||||||||||||
Quoted Prices in | ||||||||||||||||||||||||||||||||
Active Markets | Significant Other | Significant | ||||||||||||||||||||||||||||||
for Identical Instruments | Observable Inputs | Unobservable Inputs | ||||||||||||||||||||||||||||||
Recorded Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
June 30, | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||
Marketable securities |
$ | 10,881 | $ | 8,592 | $ | 10,881 | $ | 8,592 | ||||||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||||||
Cross-currency swaps |
$ | 10,910 | $ | 10,910 | ||||||||||||||||||||||||||||
Interest rate swap |
316 | 316 | ||||||||||||||||||||||||||||||
Total Liabilities |
$ | 11,226 | $ | 11,226 | ||||||||||||||||||||||||||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
U.S. |
$ | 127,567 | $ | 91,932 | $ | 54,916 | ||||||
Foreign |
25,321 | 13,085 | 10,898 | |||||||||
Total income before income taxes |
$ | 152,888 | $ | 105,017 | $ | 65,814 | ||||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Current: |
||||||||||||
Federal |
$ | 36,799 | $ | 28,342 | $ | 30,142 | ||||||
State and local |
6,208 | 4,123 | 4,235 | |||||||||
Foreign |
8,338 | 4,241 | 5,825 | |||||||||
Total current |
51,345 | 36,706 | 40,202 | |||||||||
Deferred: |
||||||||||||
Federal |
5,648 | 1,880 | (14,492 | ) | ||||||||
State and local |
169 | (311 | ) | (769 | ) | |||||||
Foreign |
(1,033 | ) | 839 | (1,387 | ) | |||||||
Total deferred |
4,784 | 2,408 | (16,648 | ) | ||||||||
Total |
$ | 56,129 | $ | 39,114 | $ | 23,554 | ||||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Statutory income tax rate |
35.0 | % | 35.0 | % | 35.0 | % | ||||||
Effects of: |
||||||||||||
State and local taxes |
2.8 | 2.2 | 3.2 | |||||||||
U.S. tax on foreign income, net |
1.8 | 6.4 | ||||||||||
Foreign tax credit carryforwards |
(6.0 | ) | ||||||||||
Valuation allowance |
(.6 | ) | .8 | (1.5 | ) | |||||||
Foreign income taxes |
(1.0 | ) | .5 | (.4 | ) | |||||||
Deductible dividend |
(.5 | ) | (.7 | ) | (1.2 | ) | ||||||
Other, net |
(.8 | ) | (.6 | ) | .3 | |||||||
Effective income tax rate |
36.7 | % | 37.2 | % | 35.8 | % | ||||||
June 30, | 2011 | 2010 | ||||||
Deferred tax assets: |
||||||||
Compensation liabilities not currently deductible |
$ | 36,746 | $ | 34,963 | ||||
Expenses and reserves not currently deductible |
5,498 | 8,442 | ||||||
Goodwill and intangibles |
9,075 | 11,334 | ||||||
Net operating loss carryforwards (expiring in years 2015-2026) |
432 | 843 | ||||||
Foreign tax credits (expiring in years 2020 and 2021) |
4,090 | 4,086 | ||||||
Other |
677 | 939 | ||||||
Total deferred tax assets |
56,518 | 60,607 | ||||||
Less: Valuation allowance |
(158 | ) | (997 | ) | ||||
Deferred tax assets, net of valuation allowance |
56,360 | 59,610 | ||||||
Deferred tax liabilities: |
||||||||
Inventories |
(4,755 | ) | (4,764 | ) | ||||
Unremitted foreign earnings |
(2,804 | ) | ||||||
Depreciation and differences in property bases |
(2,062 | ) | (480 | ) | ||||
Currency translation |
(264 | ) | ||||||
Total deferred tax liabilities |
(9,621 | ) | (5,508 | ) | ||||
Net deferred tax assets |
$ | 46,739 | $ | 54,102 | ||||
The net deferred tax asset is classified as follows: |
||||||||
Other current assets |
$ | 5,510 | $ | 6,813 | ||||
Deferred tax assets (long-term) |
43,447 | 48,493 | ||||||
Other current liabilities |
(349 | ) | ||||||
Other liabilities |
(2,218 | ) | (855 | ) | ||||
Net deferred tax assets |
$ | 46,739 | $ | 54,102 | ||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Unrecognized Income Tax Benefits at beginning of the year |
$ | 1,842 | $ | 1,860 | $ | 2,004 | ||||||
Current year tax positions |
153 | 130 | 183 | |||||||||
Prior year tax positions |
50 | 46 | (51 | ) | ||||||||
Expirations of statutes of limitations |
(273 | ) | (194 | ) | (167 | ) | ||||||
Settlements |
(591 | ) | (109 | ) | ||||||||
Unrecognized Income Tax Benefits at end of year |
$ | 1,181 | $ | 1,842 | $ | 1,860 | ||||||
June 30, | 2011 | 2010 | ||||||
Pension liability, net of taxes |
$ | (11,212 | ) | $ | (12,081 | ) | ||
Foreign currency translation, net of taxes |
16,189 | 5,914 | ||||||
Unrealized gains on investment securities available for sale, net of taxes |
82 | 135 | ||||||
Unrealized losses on cash flow hedges, net of taxes |
(16 | ) | ||||||
Total accumulated other comprehensive income (loss) |
$ | 5,059 | $ | (6,048 | ) | |||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Net Income |
$ | 96,759 | $ | 65,903 | $ | 42,260 | ||||||
Average Shares Outstanding: |
||||||||||||
Weighted-average common shares
outstanding for basic computation |
42,433 | 42,312 | 42,287 | |||||||||
Dilutive effect of potential common shares |
821 | 549 | 507 | |||||||||
Weighted-average common shares
outstanding for dilutive computation |
43,254 | 42,861 | 42,794 | |||||||||
Net Income Per Share Basic |
$ | 2.28 | $ | 1.56 | $ | 1.00 | ||||||
Net Income Per Share Diluted |
$ | 2.24 | $ | 1.54 | $ | 0.99 | ||||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
SARs and options |
$ | 2,473 | $ | 3,020 | $ | 3,702 | ||||||
Performance shares |
1,705 | 1,076 | ||||||||||
Restricted stock and RSUs |
1,453 | 1,029 | 392 | |||||||||
Total compensation costs under award programs |
$ | 5,631 | $ | 5,125 | $ | 4,094 | ||||||
2011 | 2010 | 2009 | ||||||||||
Expected life, in years |
5.1 | 5.5 | 5.5 | |||||||||
Risk free interest rate |
1.6 | % | 2.4 | % | 2.9 | % | ||||||
Dividend yield |
2.5 | % | 2.5 | % | 2.2 | % | ||||||
Volatility |
46.2 | % | 52.2 | % | 48.4 | % | ||||||
Per share fair value of SARs and stock
options granted during the year |
$ | 9.78 | $ | 8.45 | $ | 10.31 | ||||||
June 30, 2011 | Weighted-Average | |||||||
(Share amounts in thousands) | Shares | Exercise Price | ||||||
Outstanding, beginning of year | 2,400 | $ | 18.19 | |||||
Granted | 227 | 29.60 | ||||||
Exercised | (822 | ) | 11.50 | |||||
Forfeited | (1 | ) | 20.99 | |||||
Outstanding, end of year | 1,804 | $ | 22.68 | |||||
Exercisable at end of year | 1,169 | $ | 21.03 | |||||
Weighted-Average | ||||||||
June 30, 2011 | Grant-Date | |||||||
(Share amounts in thousands) | Shares | Fair Value | ||||||
Nonvested, beginning of year |
156 | $ | 20.67 | |||||
Granted |
66 | 29.27 | ||||||
Vested |
||||||||
Nonvested, end of year |
222 | $ | 23.23 | |||||
Weighted-Average | ||||||||
June 30, 2011 | Grant-Date | |||||||
(Share amounts in thousands) | Shares | Fair Value | ||||||
Nonvested, beginning of year |
104 | $ | 21.41 | |||||
Granted |
85 | 30.31 | ||||||
Vested |
(27 | ) | 22.13 | |||||
Nonvested, end of year |
162 | $ | 25.97 | |||||
Pension Benefits | Retiree Health Care Benefits | |||||||||||||||
June 30, | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Change in benefit obligation: |
||||||||||||||||
Benefit obligation at beginning of the year |
$ | 51,114 | $ | 45,466 | $ | 4,593 | $ | 4,353 | ||||||||
Service cost |
460 | 574 | 39 | 52 | ||||||||||||
Interest cost |
2,232 | 2,911 | 235 | 259 | ||||||||||||
Plan participants contributions |
37 | 35 | ||||||||||||||
Benefits paid |
(1,856 | ) | (1,801 | ) | (227 | ) | (226 | ) | ||||||||
Amendments |
151 | |||||||||||||||
Actuarial loss (gain) during year |
1,389 | 3,964 | (10 | ) | 120 | |||||||||||
Benefit obligation at end of year |
$ | 53,490 | $ | 51,114 | $ | 4,667 | $ | 4,593 | ||||||||
Change in plan assets: |
||||||||||||||||
Fair value of plan assets at beginning of
year |
$ | 5,229 | $ | 4,757 | ||||||||||||
Actual gain (loss) on plan assets |
984 | 575 | ||||||||||||||
Employer contributions |
1,699 | 1,698 | $ | 190 | $ | 191 | ||||||||||
Plan participants contributions |
37 | 35 | ||||||||||||||
Benefits paid |
(1,856 | ) | (1,801 | ) | (227 | ) | (226 | ) | ||||||||
Fair value of plan assets at end of year |
$ | 6,056 | $ | 5,229 | $ | 0 | $ | 0 | ||||||||
Funded status at end of year |
$ | (47,434 | ) | $ | (45,885 | ) | $ | (4,667 | ) | $ | (4,593 | ) | ||||
Pension Benefits | Retiree Health Care Benefits | |||||||||||||||
June 30, | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Amounts recognized in
the consolidated balance
sheets: |
||||||||||||||||
Other current liabilities |
$ | 4,151 | $ | 1,698 | $ | 220 | $ | 220 | ||||||||
Postemployment benefits |
43,283 | 44,187 | 4,447 | 4,373 | ||||||||||||
Net amount recognized |
$ | 47,434 | $ | 45,885 | $ | 4,667 | $ | 4,593 | ||||||||
Amounts recognized in
accumulated other
comprehensive income
(loss): |
||||||||||||||||
Net actuarial (loss) gain |
$ | (15,012 | ) | $ | (15,670 | ) | $ | 892 | $ | 965 | ||||||
Prior service cost |
(3,808 | ) | (4,368 | ) | (274 | ) | (413 | ) | ||||||||
Total amounts recognized
in accumulated other
comprehensive income (loss) |
$ | (18,820 | ) | $ | (20,038 | ) | $ | 618 | $ | 552 | ||||||
Pension Benefits | ||||||||
June 30, | 2011 | 2010 | ||||||
Projected benefit obligations |
$ | 53,490 | $ | 51,114 | ||||
Accumulated benefit obligations |
43,528 | 39,363 | ||||||
Fair value of plan assets |
6,056 | 5,229 | ||||||
Pension Benefits | Retiree Health Care Benefits | |||||||||||||||||||||||
Year Ended June 30, | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||
Service cost |
$ | 460 | $ | 574 | $ | 2,139 | $ | 39 | $ | 52 | $ | 41 | ||||||||||||
Interest cost |
2,232 | 2,911 | 2,518 | 235 | 259 | 228 | ||||||||||||||||||
Expected return on plan assets |
(385 | ) | (351 | ) | (436 | ) | ||||||||||||||||||
Recognized net actuarial loss
(gain) |
1,449 | 924 | 911 | (83 | ) | (87 | ) | (125 | ) | |||||||||||||||
Amortization of prior service cost |
710 | 797 | 920 | 139 | 148 | 119 | ||||||||||||||||||
Net periodic cost |
$ | 4,466 | $ | 4,855 | $ | 6,052 | $ | 330 | $ | 372 | $ | 263 | ||||||||||||
Pension Benefits | Retiree Health Care Benefits | |||||||||||||||
June 30, | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Assumptions used to determine benefit obligations at year end: |
||||||||||||||||
Discount rate |
4.5 | % | 4.3 | % | 5.5 | % | 5.5 | % | ||||||||
Rate of compensation increase |
5.5 | % | 5.5 | % | N/A | N/A | ||||||||||
Assumptions used to determine net periodic benefit cost: |
||||||||||||||||
Discount rate |
4.3 | % | 6.0 | % | 5.5 | % | 6.3 | % | ||||||||
Expected return on plan assets |
7.5 | % | 7.5 | % | N/A | N/A | ||||||||||
Rate of compensation increase |
5.5 | % | 5.5 | % | N/A | N/A | ||||||||||
One-Percentage Point | ||||||||
Increase | Decrease | |||||||
Effect on total service and interest cost components of periodic expense |
$ | 47 | $ | (39 | ) | |||
Effect on postretirement benefit obligation |
722 | (598 | ) | |||||
Target Allocation | Fair Value | |||||||||||
2011 | 2010 | |||||||||||
Asset Class: |
||||||||||||
Equity securities |
40 70 | % | $ | 3,876 | $ | 2,987 | ||||||
Debt securities |
20 50 | % | 1,756 | 1,977 | ||||||||
Other |
0 20 | % | 424 | 265 | ||||||||
Total |
100 | % | $ | 6,056 | $ | 5,229 | ||||||
Retiree Health Care | ||||||||
During Fiscal Years | Pension Benefits | Benefits | ||||||
2012 |
$ | 4,300 | $ | 200 | ||||
2013 |
4,300 | 300 | ||||||
2014 |
5,600 | 200 | ||||||
2015 |
5,000 | 200 | ||||||
2016 |
5,100 | 200 | ||||||
2017 through 2021 |
25,500 | 1,500 | ||||||
During Fiscal Years | ||||
2012 |
$ | 23,200 | ||
2013 |
16,900 | |||
2014 |
13,600 | |||
2015 |
10,300 | |||
2016 |
5,700 | |||
Thereafter |
5,300 | |||
Total minimum lease payments |
$ | 75,000 | ||
Service Center | Fluid Power | |||||||||||
Based Distribution | Businesses | Total | ||||||||||
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 | |||||||||
Year Ended June 30, 2010 |
||||||||||||
Net sales |
$ | 1,536,543 | $ | 356,665 | $ | 1,893,208 | ||||||
Operating income for reportable segments |
77,029 | 26,794 | 103,823 | |||||||||
Assets used in the business |
690,970 | 200,550 | 891,520 | |||||||||
Depreciation and amortization of property |
9,336 | 2,129 | 11,465 | |||||||||
Capital expenditures |
6,389 | 827 | 7,216 | |||||||||
Year Ended June 30, 2009 |
||||||||||||
Net sales |
$ | 1,596,998 | $ | 326,150 | $ | 1,923,148 | ||||||
Operating income for reportable segments |
75,411 | 18,942 | 94,353 | |||||||||
Assets used in the business |
611,255 | 198,073 | 809,328 | |||||||||
Depreciation and amortization of property |
10,876 | 1,860 | 12,736 | |||||||||
Capital expenditures |
5,537 | 1,451 | 6,988 | |||||||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Operating income for reportable segments |
$ | 157,591 | $ | 103,823 | $ | 94,353 | ||||||
Adjustments for: |
||||||||||||
Goodwill impairment |
36,605 | |||||||||||
Intangible amortization Service Center Based
Distribution |
3,384 | 1,890 | 2,265 | |||||||||
Intangible amortization Fluid Power Businesses |
7,998 | 8,261 | 7,390 | |||||||||
Corporate and other income, net |
(4,554 | ) | (16,378 | ) | (24,400 | ) | ||||||
Total operating income |
150,763 | 110,050 | 72,493 | |||||||||
Interest expense, net |
1,668 | 5,458 | 4,424 | |||||||||
Other (income) expense, net |
(3,793 | ) | (425 | ) | 2,255 | |||||||
Income before income taxes |
$ | 152,888 | $ | 105,017 | $ | 65,814 | ||||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Industrial |
$ | 1,559,859 | $ | 1,357,206 | $ | 1,422,518 | ||||||
Fluid power |
652,990 | 536,002 | 500,630 | |||||||||
Net sales |
$ | 2,212,849 | $ | 1,893,208 | $ | 1,923,148 | ||||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Net Sales: |
||||||||||||
United States |
$ | 1,891,700 | $ | 1,644,237 | $ | 1,674,769 | ||||||
Canada |
260,015 | 199,772 | 197,795 | |||||||||
Mexico |
61,134 | 49,199 | 50,584 | |||||||||
Total |
$ | 2,212,849 | $ | 1,893,208 | $ | 1,923,148 | ||||||
June 30, | 2011 | 2010 | ||||||
Long-Lived Assets: |
||||||||
United States |
$ | 191,947 | $ | 177,713 | ||||
Canada |
29,893 | 16,356 | ||||||
Mexico |
13,706 | 13,723 | ||||||
Total |
$ | 235,546 | $ | 207,792 | ||||
Year Ended June 30, | 2011 | 2010 | 2009 | |||||||||
Unrealized (gain) loss on assets held in
rabbi trust for a nonqualified deferred
compensation plan |
$ | (2,016 | ) | $ | (1,012 | ) | $ | 1,741 | ||||
Benefit from payouts on corporate-owned life
insurance policies |
(1,722 | ) | ||||||||||
Foreign currency transaction (gains) losses |
(541 | ) | 36 | 1,466 | ||||||||
Unrealized loss (gain) on cross-currency swap |
368 | 510 | (947 | ) | ||||||||
Other, net |
118 | 41 | (5 | ) | ||||||||
Total other (income) expense, net |
$ | (3,793 | ) | $ | (425 | ) | $ | 2,255 | ||||
To
the Board of Directors and Shareholders of Applied Industrial
Technologies, Inc. Cleveland, Ohio |
David L. Pugh
|
Mark O. Eisele | |
Chairman & Chief Executive Officer
|
Vice President Chief Financial Officer & Treasurer | |
Benjamin J. Mondics
|
Daniel T. Brezovec | |
President & Chief Operating Officer
|
Corporate Controller |
To the Board of Directors and Shareholders of Applied Industrial Technologies, Inc. |
||
Cleveland, Ohio
|
Per Common Share | ||||||||||||||||||||||||
(UNAUDITED) | Operating | Net Income | Net Income | |||||||||||||||||||||
Net Sales | Gross Profit | Income (Loss) | (Loss) | (Loss) | Cash Dividend | |||||||||||||||||||
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 | |||||||||||||
2010 |
||||||||||||||||||||||||
First Quarter |
$ | 437,743 | $ | 115,444 | $ | 17,641 | $ | 11,187 | $ | 0.26 | $ | 0.15 | ||||||||||||
Second Quarter |
446,253 | 116,905 | 18,903 | 10,487 | 0.24 | 0.15 | ||||||||||||||||||
Third Quarter |
486,141 | 130,356 | 27,037 | 16,525 | 0.39 | 0.15 | ||||||||||||||||||
Fourth Quarter |
523,071 | 153,017 | 46,469 | 27,704 | 0.64 | 0.15 | ||||||||||||||||||
$ | 1,893,208 | $ | 515,722 | $ | 110,050 | $ | 65,903 | $ | 1.54 | $ | 0.60 | |||||||||||||
2009 |
||||||||||||||||||||||||
First Quarter |
$ | 543,906 | $ | 146,058 | $ | 37,375 | $ | 22,536 | $ | 0.52 | $ | 0.15 | ||||||||||||
Second Quarter |
502,412 | 135,469 | 28,807 | 16,194 | 0.38 | 0.15 | ||||||||||||||||||
Third Quarter |
451,647 | 122,246 | 21,019 | 11,560 | 0.27 | 0.15 | ||||||||||||||||||
Fourth Quarter |
425,183 | 116,237 | (14,708 | ) | (8,030 | ) | (0.19 | ) | 0.15 | |||||||||||||||
$ | 1,923,148 | $ | 520,010 | $ | 72,493 | $ | 42,260 | $ | 0.99 | $ | 0.60 | |||||||||||||
Price Range | ||||||||||||||||
Shares Traded | Average Daily Volume | High | Low | |||||||||||||
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 | ||||||||||||
2010 |
||||||||||||||||
First Quarter |
12,316,800 | 192,400 | $23.17 | $18.11 | ||||||||||||
Second Quarter |
13,876,700 | 216,800 | 22.91 | 18.80 | ||||||||||||
Third Quarter |
11,246,000 | 184,400 | 25.20 | 21.06 | ||||||||||||
Fourth Quarter |
23,193,800 | 368,200 | 33.00 | 24.80 | ||||||||||||
2009 |
||||||||||||||||
First Quarter |
23,839,000 | 372,500 | $31.29 | $22.92 | ||||||||||||
Second Quarter |
25,940,700 | 405,300 | 26.78 | 14.12 | ||||||||||||
Third Quarter |
27,478,700 | 450,500 | 20.49 | 14.63 | ||||||||||||
Fourth Quarter |
22,937,700 | 364,100 | 23.95 | 16.25 | ||||||||||||
2011 | 2010 | 2009(a) | 2008 | 2007 | ||||||||||||||||
Consolidated Operations Year Ended June 30 |
||||||||||||||||||||
Net sales |
$ | 2,212,849 | $ | 1,893,208 | $ | 1,923,148 | $ | 2,089,456 | $ | 2,014,109 | ||||||||||
Depreciation and amortization of property |
11,234 | 11,465 | 12,736 | 12,776 | 13,489 | |||||||||||||||
Amortization: |
||||||||||||||||||||
Intangible assets |
11,382 | 10,151 | 46,260 | 1,663 | 1,045 | |||||||||||||||
Stock options and SARs (b) |
2,473 | 3,020 | 3,702 | 2,999 | 2,494 | |||||||||||||||
Operating income |
150,763 | 110,050 | 72,493 | 152,824 | 135,011 | |||||||||||||||
Income before cumulative effect of accounting change |
96,759 | 65,903 | 42,260 | 95,456 | 86,022 | |||||||||||||||
Net income |
96,759 | 65,903 | 42,260 | 95,456 | 86,022 | |||||||||||||||
Per share data: |
||||||||||||||||||||
Income before cumulative effect of accounting change |
||||||||||||||||||||
Basic |
2.28 | 1.56 | 1.00 | 2.23 | 1.97 | |||||||||||||||
Diluted |
2.24 | 1.54 | 0.99 | 2.19 | 1.93 | |||||||||||||||
Net income |
||||||||||||||||||||
Basic |
2.28 | 1.56 | 1.00 | 2.23 | 1.97 | |||||||||||||||
Diluted |
2.24 | 1.54 | 0.99 | 2.19 | 1.93 | |||||||||||||||
Cash dividend |
0.70 | 0.60 | 0.60 | 0.60 | 0.48 | |||||||||||||||
Year-End Position June 30 |
||||||||||||||||||||
Working capital |
$ | 404,226 | $ | 347,528 | $ | 369,038 | $ | 409,186 | $ | 365,523 | ||||||||||
Long-term debt (including long-term debt classified as current) |
75,000 | 75,000 | 25,000 | 75,395 | ||||||||||||||||
Total assets |
914,931 | 891,520 | 809,328 | 798,771 | 777,369 | |||||||||||||||
Shareholders equity |
633,563 | 555,039 | 508,102 | 502,075 | 450,983 | |||||||||||||||
Year-End Statistics June 30 |
||||||||||||||||||||
Current ratio |
2.9 | 2.3 | 3.4 | 3.1 | 2.6 | |||||||||||||||
Operating facilities |
474 | 455 | 464 | 459 | 445 | |||||||||||||||
Shareholders of record |
6,208 | 5,884 | 6,329 | 6,305 | 6,242 | |||||||||||||||
Return on assets (c) |
11.1 | % | 7.9 | % | 7.7 | % | 12.2 | % | 11.6 | % | ||||||||||
Return on equity (d) |
16.3 | % | 12.4 | % | 8.4 | % | 20.0 | % | 19.9 | % | ||||||||||
Capital expenditures |
$ | 20,431 | $ | 7,216 | $ | 6,988 | $ | 8,410 | $ | 11,192 | ||||||||||
EBITDA (e) |
175,852 | 134,686 | 135,191 | 170,262 | 152,039 |
(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) | Prior to 2004, the Company did not record stock option expense as it was not required by Generally Accepted Accounting Principles. | |
(c) | Return on Assets is calculated as net income divided by monthly average assets, exclusive of the goodwill impairment. | |
(d) | 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). | |
(e) | EBITDA is calculated as operating income, plus depreciation and amortization of property and amortization of intangible assets, stock options and SARs. |
Jurisdiction of | ||
Name | Incorporation or Organization | |
* A&H Fluid Technologies, Inc.
|
Alabama | |
* Air-Hydraulic Systems, Inc.
|
Minnesota | |
* Air Draulics Engineering Co.
|
Tennessee | |
* Applied Fluid Power Holdings, LLC
|
Ohio | |
Applied Industrial Technologies Ltd.
|
Canada (Federal) | |
Applied Industrial Technologies CA LLC
|
Delaware | |
Applied Industrial Technologies CAPITAL LLC
|
Delaware | |
Applied Industrial Technologies DBB, Inc.
|
Ohio | |
Applied Industrial Technologies Dixie, Inc.
|
Tennessee | |
Applied Industrial Technologies Indiana LLC
|
Ohio | |
Applied Industrial Technologies Mainline, Inc.
|
Wisconsin | |
Applied Industrial Technologies MBC, Inc.
|
Minnesota | |
Applied Industrial Technologies PA LLC
|
Pennsylvania | |
Applied Industrial Technologies PACIFIC LLC
|
Delaware | |
Applied Industrial Technologies TX LP
|
Delaware | |
* Applied México, S.A. de C.V. (99%-owned by subsidiaries of Applied Industrial Technologies, Inc.) |
Mexico | |
Applied Mexico Holdings, S.A. de C.V.
|
Mexico |
Jurisdiction of | ||
Name | Incorporation or Organization | |
Applied Michigan, Ltd.
|
Ohio | |
Applied Nova Scotia Company
|
Nova Scotia, Canada | |
* Atelier P.V. Hydraulique 2004 Inc.
|
Canada (Federal) | |
BER International, Inc.
|
Barbados | |
* Bay Advanced Technologies, LLC
|
Ohio | |
Bearing Sales & Service, Inc.
|
Washington | |
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 | |
Iowa Bearing Co.
|
Iowa | |
* Le Groupe GLM (2005) Inc.
|
Canada (Federal) | |
* Power Systems, LLC
|
Ohio | |
* Rafael Benitez Carrillo Inc.
|
Puerto Rico | |
SCS Supply Group Inc.
|
Ontario, Canada | |
* Spencer Fluid Power, Inc.
|
Ohio | |
The Ohio Ball Bearing Company
|
Ohio | |
* UZ Engineered Products Inc.
|
Canada (Federal) | |
* UZ Engineered Products LLC
|
Ohio | |
* VYCMEX Mexico, S.A. de C.V. * Operating companies that do not conduct business under Applied Industrial Technologies trade name |
Mexico |
/s/ Deloitte & Touche LLP | ||||
Date: 8/9/11 | /s/ William G. Bares | |||
Date: 8/9/11 | /s/ T. A. Commes | |||
Date: 8/6/11 | /s/ Peter A. Dorsman | |||
Date: 8/9/11 | /s/ L. Thomas Hiltz | |||
Date: 8/9/2011 | /s/ Edith Kelly-Green | |||
Date: 8/9/2011 | /s/ John F. Meier | |||
Date: August 9, 2011 | /s/ J. M. Moore | |||
Date: 8/8/11 | /s/ Jerry Sue Thornton | |||
Date: August 9, 2011 | /s/ Peter C. Wallace | |||
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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: August 17, 2011 | /s/ David L. Pugh | |||
David L. Pugh | ||||
Chairman & Chief Executive Officer | ||||
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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
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 registrants 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 registrants internal control over financial reporting. |
Date: August 17, 2011 | /s/ Mark O. Eisele | |||
Mark O. Eisele | ||||
Vice President-Chief Financial Officer & Treasurer |
/s/ David L. Pugh | /s/ Mark O. Eisele | |
David L. Pugh Chairman & Chief Executive Officer |
Mark O. Eisele Vice President-Chief Financial Officer & Treasurer |
|
Dated: August 17, 2011 |
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Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data |
Jun. 30, 2011
|
Jun. 30, 2010
|
---|---|---|
Current assets | ||
Accounts receivable, allowances | $ 7,016 | $ 6,379 |
Shareholders' Equity | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 2,500 | 2,500 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 80,000 | 80,000 |
Common stock, shares issued | 54,213 | 54,213 |
Treasury stock, shares | 11,611 | 11,837 |
Benefit Plans (Details 6) (USD $)
In Thousands |
Jun. 30, 2011
|
---|---|
Pension Benefits [Member]
|
|
Estimated future benefit payments | |
2012 | $ 4,300 |
2013 | 4,300 |
2014 | 5,600 |
2015 | 5,000 |
2016 | 5,100 |
2017 through 2021 | 25,500 |
Retiree Health Care Benefits [Member]
|
|
Estimated future benefit payments | |
2012 | 200 |
2013 | 300 |
2014 | 200 |
2015 | 200 |
2016 | 200 |
2017 through 2021 | $ 1,500 |
Income Taxes (Details 2)
|
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2009
|
|
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 | 2.80% | 2.20% | 3.20% |
U.S. tax on foreign income, net | 1.80% | 6.40% | |
Foreign tax credit carryforwards | (6.00%) | ||
Valuation allowance | (0.60%) | 0.80% | (1.50%) |
Foreign income taxes | (1.00%) | 0.50% | (0.40%) |
Deductible dividend | (0.50%) | (0.70%) | (1.20%) |
Other, net | (0.80%) | (0.60%) | 0.30% |
Effective income tax rate | 36.70% | 37.20% | 35.80% |
Other (Income) Expense, Net
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (Income) Expense, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER (INCOME) EXPENSE, NET |
NOTE 15: OTHER (INCOME) EXPENSE, NET
Other (income) expense, net, consists of the following:
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 $3,100 at June 30, 2011. In January 2011, the Company received death benefits under two of
these policies and realized a gain of $1,722.
|
Other (Income) Expense, Net (Details) (USD $)
In Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2009
|
|
Other (income) expense, net | |||
Unrealized (gain) loss on assets held in rabbi trust for a nonqualified deferred compensation plan | $ (2,016) | $ (1,012) | $ 1,741 |
Benefit from payouts on corporate-owned life insurance policies | (1,722) | ||
Foreign currency transaction (gains) losses | (541) | 36 | 1,466 |
Unrealized loss (gain) on cross-currency swap | 368 | 510 | (947) |
Other, net | 118 | 41 | (5) |
Total other (income) expense, net | (3,793) | (425) | 2,255 |
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 | 3,100 | ||
Realized gain from life insurance policy | $ 1,722 |
Document and Entity Information (USD $)
|
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Aug. 05, 2011
|
Dec. 31, 2010
|
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | APPLIED INDUSTRIAL TECHNOLOGIES INC | ||
Entity Central Index Key | 0000109563 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2011 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,339,175,832 | ||
Entity Common Stock, Shares Outstanding (actual number) | 42,611,078 |
Risk Management Activities (Details) (USD $)
In Thousands |
Jun. 30, 2010
|
---|---|
Summary of Fair Value of Derivative Instruments | |
Total derivatives designated as hedging instruments | $ 9,044 |
Derivative not designated as a hedging instrument - cross-currency swap | 2,182 |
Total Derivatives | 11,226 |
Cross-currency swap [Member]
|
|
Summary of Fair Value of Derivative Instruments | |
Cross-currency swap | 8,728 |
Interest rate swap [Member]
|
|
Summary of Fair Value of Derivative Instruments | |
Interest rate swap | $ 316 |
Business Combinations (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||
Business Combinations (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Summarized unaudited pro forma results of operations |
|
Segment and Geographic Information (Details 3) (USD $)
In Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2009
|
|
Revenues From External Customers and Long Lived Assets [Line Items] | |||
Net Sales | $ 2,212,849 | $ 1,893,208 | $ 1,923,148 |
Total Long-Lived Assets | 235,546 | 207,792 | |
United States [Member]
|
|||
Revenues From External Customers and Long Lived Assets [Line Items] | |||
Net Sales | 1,891,700 | 1,644,237 | 1,674,769 |
Long-Lived Assets, United States | 191,947 | 177,713 | |
Canada [Member]
|
|||
Revenues From External Customers and Long Lived Assets [Line Items] | |||
Net Sales | 260,015 | 199,772 | 197,795 |
Long-Lived Assets, Foreign countries | 29,893 | 16,356 | |
Mexico [Member]
|
|||
Revenues From External Customers and Long Lived Assets [Line Items] | |||
Net Sales | 61,134 | 49,199 | 50,584 |
Long-Lived Assets, Foreign countries | $ 13,706 | $ 13,723 |
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Goodwill and Intangibles
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangibles [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLES |
NOTE 4: GOODWILL AND INTANGIBLES
The changes in the carrying amount of goodwill for the Service Center Based Distribution
segment for the years ended June 30, 2011 and 2010 is as follows:
At June 30, 2011, accumulated goodwill impairment losses subsequent to fiscal year 2002, totaled
$36,605 and related to the Fluid Power Businesses segment.
During the fourth quarter of fiscal 2009, the Company performed an interim goodwill impairment
test since operating results and expected future market conditions had deteriorated from the
annual goodwill impairment testing performed during the third quarter of fiscal 2009. The fair
value of the Fluid Power Businesses segment was estimated based on discounted cash flows. The
Company utilized information from the annual financial planning process completed in the fourth
quarter of fiscal 2009, reviewed external economic forecasts published in the fourth quarter of
fiscal 2009, considered continuing declines in key economic indices that correlate with the
business, and considered the continuing declines in sales and operating results experienced in
the third and fourth quarters of fiscal 2009 compared to previous forecasts and projections. The
Company deemed the business climate to have dramatically changed and adjusted the longer term
outlook for recovery of operating results to reflect management’s belief that it would take
longer and be more gradual than initially forecast. As a result of this interim test, the
Company determined that all of the goodwill associated with the Fluid Power Businesses segment
was impaired as of June 30, 2009. Virtually all of the goodwill in the Fluid Power Businesses
segment related to the FPR acquisition in August 2008. Therefore, in accordance with the
Intangibles — Goodwill and Other topic of the ASC, the Company recognized an impairment charge
of $36,605 for goodwill in the fourth quarter of fiscal 2009, which decreased net income by
$23,000 and earnings per share by $0.54. In addition, the Company performed an impairment
analysis of its intangible assets and noted no further impairment.
Intangibles consist of the following:
Amounts include the impact of foreign currency translation. Fully amortized amounts are written
off.
Finite-lived intangible assets acquired in fiscal 2011 had original weighted-average useful lives
of 18 years. These consist of customer relationships of $12,100 (19-year weighted-average useful
life), finite-lived trade names of $267 (3-year weighted-average useful life),
and non-competition agreements of $554 (4-year weighted-average useful life). Indefinite-lived trade
names valued at $1,290 were also acquired in fiscal 2011.
Amortization of intangibles totaled $11,382, $10,151 and $9,655 in fiscal 2011, 2010 and 2009,
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, 2011 is estimated to be $10,900 for 2012, $10,200 for 2013, $8,800 for 2014,
$8,200 for 2015 and $7,600 for 2016.
|
Inventories (Tables)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
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Inventories (Tables) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Items of Inventories |
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Goodwill and Intangibles (Details) (USD $)
In Thousands |
12 Months Ended | |
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Jun. 30, 2011
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Jun. 30, 2010
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Changes in the carrying amount of goodwill by reportable segment | ||
Goodwill, Ending Balance | $ 76,981 | $ 63,405 |
Service Center Based Distribution Segment [Member]
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Changes in the carrying amount of goodwill by reportable segment | ||
Goodwill, Beginning Balance | 63,405 | 63,108 |
Goodwill acquired during the year | 11,700 | |
Other, primarily currency translation | 1,876 | 297 |
Goodwill, Ending Balance | $ 76,981 | $ 63,405 |
Other (Income) Expense, Net (Tables)
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Jun. 30, 2011
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Other (Income) Expense, Net (Tables) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (income) expense, net |
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