Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
_______________________
| |
|
|
| þ |
|
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 |
For the fiscal year ended December 31, 2007.
| |
|
|
| o |
|
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For the transition period from to .
Commission file number 1-2299
| |
A. |
|
Full title of the plan and the address of the plan, if different from that of
the issuer named below: |
Applied Industrial Technologies, Inc.
Retirement Savings Plan
| |
B. |
|
Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office: |
Applied Industrial Technologies, Inc.
One Applied Plaza
Cleveland, Ohio 44115-5056
Financial Statements and Exhibit(s) (enclosed)
Reports of Independent Registered Public Accounting Firms
Statements of Net Assets Available for Benefits —
December 31, 2007 and 2006
Statement of Changes in Net Assets Available for Benefits —
Year Ended December 31, 2007
Notes to Financial Statements —
Years Ended December 31, 2007 and 2006
Supplemental Schedules
| |
23 |
|
Consents of Independent Registered Public Accounting Firms |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan has duly caused
this annual report to be signed on its behalf by the undersigned, hereunto duly authorized.
| |
|
|
|
|
| |
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN |
|
|
|
|
|
|
|
By:
|
|
Applied Industrial
Technologies, Inc., as Plan
Administrator |
|
|
|
|
|
|
|
By:
|
|
/s/ Michael L. Coticchia |
|
|
|
|
|
|
|
|
|
Signature |
|
|
|
|
|
|
|
|
|
Michael L. Coticchia |
|
|
|
|
|
|
|
|
|
Printed Name |
|
|
|
|
|
|
|
|
|
Vice President-Chief Administrative |
|
|
|
|
Officer and Government Business |
|
|
|
|
|
|
|
|
|
Title |
|
|
|
|
|
Date: June 27, 2008 |
|
|
|
|
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN
Financial Statements
For the Years Ended December 31, 2007 and 2006
Supplemental Schedules
As of December 31, 2007 and For the Year Ended December 31, 2007
Reports of Independent Registered Public Accounting Firms
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
| |
|
|
|
|
| |
|
Page |
|
|
|
|
|
|
|
|
|
1-2 |
|
|
|
|
|
|
FINANCIAL STATEMENTS: |
|
|
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
5 - 11 |
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULES: |
|
|
|
|
|
|
|
|
|
|
|
|
12 |
|
|
|
|
|
|
|
|
|
13 |
|
|
|
|
|
|
| Exhibit 23 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Participants
Applied Industrial Technologies, Inc. Retirement Savings Plan
We have audited the accompanying statement of net assets available for benefits of Applied
Industrial Technologies, Inc. Retirement Savings Plan (the “Plan”) as of December 31, 2007 and
related statement of changes in net assets available for benefits for the year then ended. These
financial statements are the responsibility of the Plan’s management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets of the Plan as of December 31, 2007 and the changes in net assets for the
year then ended, in conformity with accounting principles generally accepted in the United States
of America.
Our audit was performed for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31,
2007 and schedule of reportable transactions for the year ended December 31, 2007 are presented for
the purpose of additional analysis and are not a required part of the basic financial statements
but are supplementary information required by the Department of Labor’s Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules
have been subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Plante & Moran, PLLC
Cleveland, Ohio
June 27, 2008
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Trustees and Participants of
Applied Industrial Technologies, Inc. Retirement Savings Plan
We have audited the accompanying statement of net assets available for benefits of Applied
Industrial Technologies, Inc. Retirement Savings Plan (the “Plan”) as of December 31, 2006. This
financial statement is the responsibility of the Plan’s management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material misstatement. The
Plan is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statement presents fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 2006 in conformity with accounting principles
generally accepted in the United States of America.
/s/
Deloitte & Touche LLP
Cleveland, Ohio
June 18, 2007
2
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2007 AND 2006
| |
|
|
|
|
|
|
|
|
| |
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
ASSETS: |
|
|
|
|
|
|
|
|
Investments at fair value: |
|
|
|
|
|
|
|
|
Applied Industrial Technologies, Inc. Stock Fund |
|
$ |
112,345,488 |
|
|
$ |
115,541,701 |
|
Mutual funds |
|
|
225,175,052 |
|
|
|
192,538,638 |
|
Common/collective trust funds |
|
|
51,798,054 |
|
|
|
47,319,676 |
|
Loans to participants |
|
|
9,111,633 |
|
|
|
8,958,556 |
|
|
|
|
|
|
|
|
Total investments |
|
|
398,430,227 |
|
|
|
364,358,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS AVAILABLE FOR BENEFITS, AT FAIR VALUE |
|
|
398,430,227 |
|
|
|
364,358,571 |
|
|
|
|
|
|
|
|
|
|
Adjustments from fair value to contract value for fully benefit-
responsive investment contracts (Note 2) |
|
|
(174,618 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS AVAILABLE FOR BENEFITS |
|
$ |
398,255,609 |
|
|
$ |
364,358,571 |
|
|
|
|
|
|
|
|
See notes to financial statements.
3
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2007
| |
|
|
|
|
| |
|
2007 |
|
|
|
|
|
|
ADDITIONS TO NET ASSETS: |
|
|
|
|
Contributions: |
|
|
|
|
Participants |
|
$ |
11,439,935 |
|
Participants’ rollovers |
|
|
370,308 |
|
Employer |
|
|
11,193,923 |
|
|
|
|
|
Total contributions |
|
|
23,004,166 |
|
|
|
|
|
|
Investment income: |
|
|
|
|
Dividends, interest and other: |
|
|
|
|
Applied Industrial Technologies, Inc. Stock Fund |
|
|
2,248,669 |
|
Mutual funds |
|
|
13,013,579 |
|
Participant loan interest |
|
|
703,421 |
|
Common/collective trust funds |
|
|
2,385,415 |
|
|
|
|
|
Total dividends, interest and other |
|
|
18,351,084 |
|
Net appreciation in fair value of investments: |
|
|
|
|
Applied Industrial Technologies, Inc. Stock Fund |
|
|
11,626,039 |
|
Mutual funds |
|
|
8,632,069 |
|
|
|
|
|
Total net appreciation in fair value of investments |
|
|
20,258,108 |
|
|
|
|
|
Total investment income |
|
|
38,609,192 |
|
|
|
|
|
|
|
|
|
|
Total additions |
|
|
61,613,358 |
|
|
|
|
|
|
DEDUCTIONS FROM NET ASSETS: |
|
|
|
|
Distributions to participants |
|
|
27,585,391 |
|
Administrative expenses |
|
|
130,929 |
|
|
|
|
|
|
|
|
|
|
Total deductions |
|
|
27,716,320 |
|
|
|
|
|
|
|
|
|
|
INCREASE IN NET ASSETS FOR THE YEAR |
|
|
33,897,038 |
|
|
|
|
|
|
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF THE YEAR |
|
|
364,358,571 |
|
|
|
|
|
|
|
|
|
|
NET ASSETS AVAILABLE FOR BENEFITS, END OF THE YEAR |
|
$ |
398,255,609 |
|
|
|
|
|
See notes to financial statements.
4
APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
1. DESCRIPTION OF THE PLAN
The following description of the Applied Industrial Technologies, Inc. Retirement Savings Plan (the
“Plan”) is provided for general purposes only. Participants and users of the financial statements
should refer to the Plan document for more complete information.
General — The Plan was established for the purpose of encouraging and assisting domestic employees
of Applied Industrial Technologies, Inc. and its subsidiaries (the “Company”) to provide long-term,
tax-deferred savings for retirement. The Plan is subject to reporting and disclosure requirements,
minimum participation and vesting standards, and fiduciary responsibility requirements of the
Employee Retirement Income Security Act of 1974.
Administration — The Plan is administered by the Company. The Company’s powers and duties relate
to making participant and employer contributions to the Plan, establishing investment options,
authorizing disbursements from the Plan, and resolving any questions of Plan interpretation.
On June 1, 2006, Wachovia Bank, NA acquired Ameriprise Trust Company (collectively, the “Trustee”).
Effective April 1, 2007, Wachovia Bank, NA became the new recordkeeper and trustee for the assets
of the Plan. The transfer of the assets from Ameriprise Trust Company to Wachovia Bank, NA took
place on April 1, 2007. There was a “blackout period” from March 29, 2007 to April 1, 2007 during
which time participants were unable to exercise their rights related to the Plan. The Trustee is
responsible for the custody of assets.
Participant Accounts — Each participant’s account is credited with the participant’s contributions
and allocations of (a) the Company’s contributions and (b) Plan earnings, and charged with an
allocation of administrative expenses. Allocated expenses are based on participant contributions,
account balances, or can be per capita, as defined. The benefit to which a participant is entitled
is the benefit that can be provided from the participant’s vested portion of their account.
Participation and Contributions — All eligible employees may participate in the Plan on the first
payroll period following 30 days of employment. Eligible employees may elect to make pretax
contributions to the Plan ranging from 1% to 50% of compensation, subject to limitations under the
Internal Revenue Code. For those eligible employees who do not make a contribution election, their
compensation is automatically reduced by 2% and contributed on their behalf to the Plan until
superseded by a subsequent contribution election. The Company may make additional contributions to
the Plan, including, but not limited to, matching contributions equal to a percentage of
participant pretax contributions not in excess of 6% of the participant’s compensation, and
discretionary profit-sharing contributions as determined annually. Until July 1, 2007, matching
employer contributions were determined based upon the Company’s earnings per share for the
immediately preceding calendar year quarter. Effective July 1, 2007, matching employer
contributions are determined based upon the Company’s net income for the preceding calendar year
quarter. Through September 2006, except in the case of death, disability, or retirement, a
participant had to be employed through the last payroll period of the quarter to receive the Plan’s
quarter match. Effective October 2006, the match is made monthly rather than quarterly. As such,
a participant must be employed during the last pay period of the month to receive the monthly
match.
5
APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
The matching employer contribution is updated annually based on the Company’s June 30 fiscal year
end and was determined using the following schedule for the calendar year 2007:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Subsequent Quarter Matching Contribution
|
|
|
|
$ |
.25 |
|
|
$ |
.35 |
|
|
$ |
.50 |
|
|
$ |
.75 |
|
|
$ |
1.00 |
|
| |
|
|
Quarterly EPS
|
|
Quarter Ended 12/31/06 |
|
$ |
.35 or less |
|
|
$ |
.36 |
|
|
$ |
.40 |
|
|
$ |
.44 |
|
|
$ |
.47 |
|
Quarter Ended 03/31/07 |
|
|
.44 or less |
|
|
|
.45 |
|
|
|
.49 |
|
|
|
.53 |
|
|
|
.55 |
|
Quarter Ended 06/30/07 |
|
|
.44 or less |
|
|
|
.45 |
|
|
|
.49 |
|
|
|
.53 |
|
|
|
.55 |
|
| |
|
|
Quarterly Net Income (expressed in millions)
|
|
Quarter Ended 09/30/07 |
|
$ |
21.0 or less |
|
|
$ |
21.1 |
|
|
$ |
22.4 |
|
|
$ |
24.6 |
|
|
$ |
25.5 |
|
The employer match on participant contributions was $.50, $.50, $1.00 and $.50 for the four
quarters of 2007, respectively, and $1.00 for each of the four quarters of 2006.
Until June 30, 2006, matching employer contributions were made primarily in shares of Applied
Industrial Technologies, Inc. common stock. Effective July 1, 2006, employer matching
contributions consist of cash which is then used by the plan administrator to purchase Applied
Industrial Technologies, Inc. common stock on the open market. Participants that elected to
contribute to the Applied Industrial Technologies, Inc. Stock Fund (which purchases shares of
Applied Industrial Technologies Inc. common stock) (the “Company Stock Fund”) received an
additional 10% bonus match on the participant’s pretax contributions to the Company Stock Fund not
in excess of 6% of the participant’s compensation. The bonus match was made primarily in shares of
Applied Industrial Technologies, Inc. common stock; as of March 15, 2007, this bonus match was
eliminated.
The Company may also make a profit-sharing contribution to the Plan annually. Participants must be
employed on June 30 of such Plan year and have completed at least one year of service, as defined
in the Plan agreement, as of June 30 to be eligible to receive an allocation of the profit-sharing
contribution. Additionally, the Company may contribute a special profit-sharing contribution to
individuals who retire after attaining age 55 and completing 10 years of service, as more fully
described in the Plan document. Profit-sharing contributions are allocated to each participant’s
profit-sharing contribution account based upon the ratio of each participant’s total compensation
to the aggregate compensation of all participants eligible to receive a profit-sharing
contribution. Profit-sharing contributions were $6,078,000 and $5,116,000 for the years ended
December 31, 2007 and 2006, respectively.
Contributions are excluded from participants’ taxable income until such amounts are received by
them as a distribution from the Plan.
The Plan permits catch-up contributions for participants who are age 50 or older and defer the
maximum amount allowed under the Plan. Maximum catch-up contribution limits were $5,000 for both
2007 and 2006.
The Plan provides for rollover contributions (amounts previously distributed to participants from
certain other tax-qualified plans) and transfer contributions (assets transferred from certain
other tax-qualified plans) by or on behalf of an employee in accordance with procedures established
by the Company.
6
APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
Investment of Contributions — Participants elect investment of profit-sharing and pretax
contributions in 1% increments to any of several investment funds or options. The portion of the
Plan that is invested in the Company Stock Fund is intended to be an Employee Stock Ownership Plan
(ESOP) under Code Section 4975 (e)(7) and ERISA Section 407 (d)(6). Participants may elect to
change their investment elections as to future contributions and may also elect to reallocate a
portion or all of their account balances among the investment choices in increments of 1% of the
total amount to be reallocated. In addition, regardless of age, a participant is able to transfer
any portion of their matching contribution account that is invested in the Company Stock Fund into
other investment funds under the Plan. This change was effective March 15, 2007 and means that a
participant will be able to transfer 100% of their matching contributions from the Company Stock
Fund into other investment options under the Plan regardless of age. All such elections are filed
with the Trustee and become effective daily.
On May 2, 2006, the Company’s Board of Directors declared a three-for-two stock split of the
Company’s common stock. The stock split was effective on June 15, 2006 to shareholders of record
on June 1, 2006. All share and per share data have been restated to reflect this three-for-two
stock split.
The value of the Company’s common stock and other funds and the interest of individual participants
under each investment are calculated daily (daily valuation).
Vesting and Distributions — Each participant is immediately and fully vested in their participant
contributions and earnings thereon. Participants vest in matching employer contributions and
profit-sharing contributions at a rate of 25% for each year of eligible service, becoming
completely vested after four years, or at death, termination of employment due to physical or
mental disability (determined by the Company upon the basis of a written certificate of a physician
selected by it), or normal early retirement as defined in the Plan.
Upon termination of employment, participants may receive lump-sum or installment distributions of
their vested account balances as soon as administratively possible. The Plan permits hardship
withdrawals, if the hardship criteria are met, or in-service distributions at age 59 1/2. These
distributions are limited to participant rollovers, salary deferral and catch-up contributions.
Forfeitures of nonvested amounts are used to reduce future matching employer contributions. Total
forfeitures were $133,787 in 2007 and $76,126 in 2006.
Loans — Participants may borrow (from their pre-tax contributions, rollover contributions and
transferred contributions) a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or
50% of the aggregate sum of the participants’ accounts. Loan terms range from 1-5 years or up to
10 years if used for the purchase of a primary residence. Loans that originated from merged plans
are also reflected in loans to participants in the Plan’s financial statements. These loans are to
be repaid to the Plan in accordance with their original terms. Loans are secured by the balance in
the participants’ accounts and bear interest at rates prevailing at the time the loans were made.
Principal and interest are paid ratably through bi-weekly payroll deductions. Funds cannot be
borrowed from the profit-sharing or Company matching contributions.
7
APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
Plan Termination — The Plan was adopted with the expectation that it will continue indefinitely.
The Company may, however, terminate the Plan at any time and may amend the Plan from time to time.
In the event of termination of the Plan, all participants will immediately become fully vested in
their accounts.
Tax Status of the Plan —The Plan obtained its latest determination letter dated July 12, 2003, in
which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with
the applicable requirements of the Internal Revenue Code. The Plan has been amended since
receiving this determination letter. The amended Plan is dated November 5, 2005 which amends the
Plan effective March 1, 2003. The Plan administrator believes that the Plan is designed and is
currently being operated in compliance with the applicable requirements of the Internal Revenue
Code. Therefore, no provision for income taxes has been included in the Plan’s financial
statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed in the preparation of
the Plan’s financial statements.
Basis of Accounting — The accompanying financial statements have been prepared on the accrual
basis of accounting. Financial Accounting Standards Board Staff Position AAG INV-1 and SOP 94-4-1,
Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies
Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and
Pension Plans, requires the Statement of Net Assets Available for Benefits to present the fair
value of the investment contracts as well as the adjustment of the fully benefit responsive
investment contracts from fair value to contract value. The related activity is presented at
contract value in the Statement of Changes in Net Assets Available for Benefits.
Use of Estimates — The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and changes therein, and
disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Valuation of Investments — Investments are accounted for at cost on the trade date and are
reported in the statement of net assets available for benefits at fair value, except for the
investment in a stable value fund, which is valued at contract value. Contract value represents
investments at cost plus accrued interest income less amounts withdrawn to pay benefits. The fair
value of the stable value fund, which is a common collective trust, is based on discounting the
related cash flows of the underlying guaranteed investment contracts based on current yields of
similar instruments with comparable durations. The investment in Applied Industrial Technologies,
Inc. common stock is valued using the year-end closing price listed by the New York Stock Exchange.
Mutual funds are stated at values using year-end closing prices for each of the funds or quoted
market prices. Participant loans are valued at the outstanding loan balances, which approximate
fair value.
8
APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
Risks and Uncertainties — In general, investment securities are exposed to various risks, such as
interest rate, credit and overall market volatility risks. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes in the values of
investment securities could occur in the near term, and such changes could materially affect the
amounts reported in the financial statements.
Benefit Payments — Distributions to participants are recorded by the Plan when payments are made.
Administrative Expenses — Administrative expenses of the Plan are paid by the Plan or the Company,
as determined by the Company.
New Accounting Pronouncement — In September 2006, the Financial Accounting Standards Board
(“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value
Measurements, (“SFAS 157”). This statement defines fair value, establishes a framework for
measuring fair value in accounting principles generally accepted in the United States of America,
and expands disclosures about fair value measurements. The provisions of SFAS 157 apply under
other accounting pronouncements that require or permit fair value measurements; it does not expand
the use of fair value in any new circumstances. SFAS 157 is effective for fiscal years beginning
after November 15, 2007. The impact of SFAS 157 on the Plan’s financial statements has not been
determined.
9
APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
3. INVESTMENTS
The Plan provides that, in accordance with the investment objectives established by the Company,
the Trustee of the Plan shall hold, invest, reinvest, manage and administer all assets of the Plan
as a trust fund for the exclusive benefit of participants and their beneficiaries.
Net assets available for benefits as of December 31, 2007 and 2006 included the following
significant investments:
| |
|
|
|
|
|
|
|
|
| Description of Investment |
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
At fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Industrial Technologies, Inc. Stock Fund
(non-participant directed): |
|
|
|
|
|
|
|
|
Applied Industrial Technologies, Inc. Stock |
|
$ |
109,754,249 |
|
|
$ |
112,336,694 |
|
Evergreen Inst Money Market Fund CL I |
|
|
2,591,239 |
|
|
|
— |
|
Riversource Money Market Fund |
|
|
— |
|
|
|
3,205,007 |
|
|
|
|
|
|
|
|
Total Applied Industrial Technologies, Inc. Stock Fund |
|
|
112,345,488 |
|
|
|
115,541,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Fundamental Investors Fund |
|
|
49,654,808 |
|
|
|
43,497,095 |
|
|
|
|
|
|
|
|
|
|
American EuroPacific Growth Fund |
|
|
42,997,859 |
|
|
|
32,948,866 |
|
|
|
|
|
|
|
|
|
|
AIT Large-Cap Growth Portfolio: |
|
|
|
|
|
|
|
|
Vanguard Growth Index Fund |
|
|
9,919,083 |
|
|
|
8,689,429 |
|
The Hartford Growth Fund |
|
|
9,634,870 |
|
|
|
8,429,812 |
|
Harbor Capital Appreciation Fund |
|
|
9,624,489 |
|
|
|
8,443,455 |
|
|
|
|
|
|
|
|
Total AIT Large-Cap Growth Portfolio |
|
|
29,178,442 |
|
|
|
25,562,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. Rowe Price Mid-Cap Growth Fund |
|
|
23,346,174 |
|
|
|
14,983,998 |
|
|
|
|
|
|
|
|
|
|
At contract value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Riversource Trust Income Fund II |
|
|
51,623,436 |
|
|
|
47,319,676 |
|
10
APPLIED INDUSTRIAL TECHNOLOGIES, INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
4. NONPARTICIPANT-DIRECTED INVESTMENTS
The Plan’s only nonparticipant-directed transactions are contained within the Company Stock Fund,
which includes both participant and nonparticipant-directed transactions. Information about the
net assets and significant components of the changes in net assets relating to the Company Stock
Fund are as follows:
| |
|
|
|
|
| |
|
2007 |
|
Net Assets: |
|
|
|
|
Applied Industrial Technologies, Inc. Stock |
|
$ |
109,754,249 |
|
Evergreen Inst Money Market Fund CL I |
|
|
2,591,239 |
|
|
|
|
|
Total Net Assets |
|
$ |
112,345,488 |
|
|
|
|
|
|
|
|
|
|
Change in Net Assets: |
|
|
|
|
Contributions |
|
$ |
6,769,966 |
|
Dividends |
|
|
2,152,043 |
|
Interest |
|
|
96,626 |
|
Net appreciation in fair value |
|
|
11,626,039 |
|
Benefits paid to participants |
|
|
(6,009,211 |
) |
Transfers to participant-directed investments, net |
|
|
(17,791,344 |
) |
Administrative expense |
|
|
(40,332 |
) |
|
|
|
|
Total Change in Net Assets |
|
$ |
(3,196,213 |
) |
|
|
|
|
5. RECONCILIATION TO FORM 5500
The following is a reconciliation of net assets available for benefits per the financial statements
to Form 5500 at December 31, 2007 and 2006:
| |
|
|
|
|
|
|
|
|
| |
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
Net assets available for benefits per financial statements |
|
$ |
398,255,609 |
|
|
$ |
364,358,571 |
|
Less: Deemed loan activity |
|
|
(257,075 |
) |
|
|
(266,406 |
) |
|
|
|
|
|
|
|
Net assets available for benefits per Form 5500 |
|
$ |
397,998,534 |
|
|
$ |
364,092,165 |
|
|
|
|
|
|
|
|
The
following is a reconciliation of the total increase in net assets per the financial statements to
Form 5500 at December 31, 2007:
| |
|
|
|
|
| |
|
2007 |
|
|
|
|
|
|
Total increase in net assets per financial statements |
|
$ |
33,897,038 |
|
Change in deemed loan activity |
|
|
9,331 |
|
|
|
|
|
Total increase in net assets per Form 5500 |
|
$ |
33,906,369 |
|
|
|
|
|
******
11
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN
Employer ID Number: 34-0117420
Plan Number: 003
SCHEDULE H LINE 4(i) — SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2007
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ( a ) |
|
( b ) |
|
( c ) |
|
( d ) |
|
|
( e ) |
|
| |
|
Identity of Issuer, Borrower, |
|
|
|
|
|
|
Current |
|
| |
|
Lessor or Similar Party |
|
Description of Investment |
|
Cost |
|
|
Value |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| * |
|
Applied Industrial Technologies, Inc. Stock Fund: |
|
|
|
|
|
|
|
|
|
|
| |
|
Applied Industrial Technologies, Inc. Stock |
|
Common Stock - 3,782,003 shares |
|
$ |
43,481,638 |
|
|
$ |
109,754,249 |
|
| |
|
Evergreen Inst Money Market Fund CL I |
|
Money Market Fund - 2,591,239 shares |
|
|
2,591,239 |
|
|
|
2,591,239 |
|
| |
|
Applied Industrial Technologies, Inc. Stock Fund
Total |
|
|
|
|
|
|
|
|
112,345,488 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| * |
|
Riversource Trust Income Fund II |
|
Common Collective Trust - 1,848,911 shares |
|
|
* |
* |
|
|
51,798,054 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
American Fundamental Investors Fund (Class A) |
|
Mutual Fund - 1,169,725 shares |
|
|
* |
* |
|
|
49,654,808 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
American EuroPacific Growth Fund (Class A) |
|
Mutual Fund - 845,250 shares |
|
|
* |
* |
|
|
42,997,859 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
T. Rowe Price Mid-Cap Growth Fund |
|
Mutual Fund - 404,824 shares |
|
|
* |
* |
|
|
23,346,174 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
PIMCO Total Return Fund (Admin) |
|
Mutual Fund - 1,725,595 shares |
|
|
* |
* |
|
|
19,259,363 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Vanguard Asset Allocation Fund (Invs) |
|
Mutual Fund - 461,743 shares |
|
|
* |
* |
|
|
13,847,660 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
William Blair Small Cap Growth (I) |
|
Mutual Fund - 531,996 shares |
|
|
* |
* |
|
|
12,709,387 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
AIT Large-Cap Growth Portfolio: |
|
|
|
|
|
|
|
|
|
|
| |
|
Vanguard Growth Index Fund |
|
Mutual Fund - 298,536 shares |
|
|
* |
* |
|
|
9,919,083 |
|
| |
|
The Hartford Growth Fund |
|
Mutual Fund - 492,141 shares |
|
|
* |
* |
|
|
9,634,870 |
|
| |
|
Harbor Capital Appreciation Fund |
|
Mutual Fund - 257,994 shares |
|
|
* |
* |
|
|
9,624,489 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
AIT Large-Cap Growth Portfolio Total |
|
|
|
|
|
|
|
|
29,178,442 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
American Washington Mutual Investors Fund A |
|
Mutual Fund - 276,220 shares |
|
|
* |
* |
|
|
9,289,263 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| * |
|
Participant Loans |
|
Participant loans (with interest rates ranging from 5.00% to 11.50% and maturity dates ranging from January 2008 to July 2027) |
|
|
* |
* |
|
|
9,111,633 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| * |
|
Riversource S&P500 Index Fund (Class E) |
|
Mutual Fund - 1,655,018 shares |
|
|
* |
* |
|
|
8,672,296 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Royce Total Return Fund (Investment) |
|
Mutual Fund - 559,760 shares |
|
|
* |
* |
|
|
7,237,701 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Wells Fargo Advance Mid-Cap Discipline (Inst) |
|
Mutual Fund - 321,882 shares |
|
|
* |
* |
|
|
6,308,892 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Western Asset Tr-Core Port Fund (Inst) |
|
Mutual Fund - 100,703 shares |
|
|
* |
* |
|
|
1,190,539 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Cambiar Opportunity Fund (Institutional Cl) |
|
Mutual Fund - 40,934 shares |
|
|
* |
* |
|
|
779,385 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Lazard Mid Cap (Institutional) |
|
Mutual Fund - 56,443 shares |
|
|
* |
* |
|
|
703,283 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Total |
|
|
|
|
|
$ |
398,430,227 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| * |
|
Represents a party-in-interest |
| |
| ** |
|
Indicates a participant-directed fund. The cost disclosure is not required. |
12
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
RETIREMENT SAVINGS PLAN
Employer ID Number: 34-0117420
Plan Number: 003
SCHEDULE H LINE 4(j) — SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2007
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( a ) |
|
( b ) |
|
|
( c ) |
|
|
( d ) |
|
|
( f ) |
|
|
( g ) |
|
|
( h ) |
|
|
( i ) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Value |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Expense |
|
|
|
|
|
of Asset on |
|
|
|
|
| |
|
|
|
|
Purchase |
|
|
Selling |
|
|
Incurred with |
|
|
Cost of |
|
|
Transaction |
|
|
|
|
| Identity of Party Involved |
|
Description of Asset |
|
|
Price |
|
|
Price |
|
|
Transaction |
|
|
Asset |
|
|
Date |
|
|
Net Gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Category (iii) — A Series of Transactions in Excess of 5 Percent of Plan Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Industrial Technologies, Inc. |
|
Shares of Common Stock |
|
$ |
6,970,936 |
|
|
$ |
— |
|
|
$ |
9,153 |
|
|
$ |
6,970,936 |
|
|
$ |
6,970,936 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
— |
|
|
|
21,001,069 |
|
|
|
27,633 |
|
|
|
7,319,182 |
|
|
|
21,001,069 |
|
|
|
13,654,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Evergreen Inst Money Market Fund CL I |
|
Money Market Fund |
|
|
54,577,277 |
|
|
|
— |
|
|
|
— |
|
|
|
54,577,277 |
|
|
|
54,577,277 |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
52,322,549 |
|
|
|
— |
|
|
|
52,322,549 |
|
|
|
52,322,549 |
|
|
|
— |
|
There were no category i, ii or iv transactions during the year.
13
EXHIBIT INDEX
| |
|
|
| Exhibit |
|
|
| No. |
|
Description |
|
|
|
23
|
|
Consents of Independent Registered Public Accounting Firms |
14