SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE
STOCK PURCHASE, SAVINGS AND SIMILAR
PLANS PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to ______.
Commission file number 1-2299
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Applied Industrial Technologies, Inc.
Supplemental Defined Contribution Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Applied Industrial Technologies, Inc.
One Applied Plaza
Cleveland, Ohio 44115-5056
Financial Statements and Exhibit(s)
Page No.
(in this Report)
(a) Financial Statements
Independent Auditors' Report 5
Statements of Net Assets Available
for Benefits --
December 31, 2002 and 2001 6
Statement of Changes in Net Assets
Available for Benefits --
Years Ended December 31,
2002, 2001 and 2000 7
Notes to Financial Statements --
Years Ended December 31,
2002, 2001 and 2000 8-11
(b) Exhibit(s)
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Independent Auditors' Consent 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan has duly caused this annual report to be signed on its behalf by the
undersigned, hereunto duly authorized.
APPLIED INDUSTRIAL TECHNOLOGIES,
INC. SUPPLEMENTAL DEFINED
CONTRIBUTION PLAN
By: Applied Industrial Technologies, Inc.,
as Plan Administrator
By: /s/ Mark O. Eisele
---------------------------------
Signature
Mark O. Eisele
---------------------------------
Printed Name
Vice President
---------------------------------
Title
Date: March 31, 2003
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
Financial Statements
As of December 31, 2002 and 2001 and
For the Years Ended
December 31, 2002, 2001 and 2000,
And Independent Auditors' Report
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
As of December 31, 2002 and 2001 2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2002, 2001 and 2000 3
Notes to Financial Statements 4 - 7
INDEPENDENT AUDITORS' REPORT
Applied Industrial Technologies, Inc. Supplemental Defined Contribution Plan
We have audited the accompanying statements of net assets available for benefits
of the Applied Industrial Technologies, Inc. Supplemental Defined Contribution
Plan (the "Plan") as of December 31, 2002 and 2001, and the related statements
of changes in net assets available for benefits for the years ended December 31,
2002, 2001 and 2000. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2002 and 2001, and the changes in net assets available for benefits for the
years ended December 31, 2002, 2001 and 2000 in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
March 7, 2003
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 and 2001
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2002 2001
ASSETS:
Investments at fair value:
Applied Industrial Technologies, Inc.
common stock $ 230,895 $ 267,258
Mutual funds 3,863,370 4,369,204
Common/collective fixed income funds 372,060 430,343
----------------- ----------------
Total investments 4,466,325 5,066,805
----------------- ----------------
NET ASSETS AVAILABLE FOR BENEFITS $4,466,325 $5,066,805
================= ================
See notes to financial statements.
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------------------------
2002 2001 2000
ADDITIONS:
Participant Contributions $ 366,053 $ 507,201 $ 2,613,549
Investment income:
Dividends:
Common stock 6,328 12,244 26,970
Mutual funds 117,465 124,024 130,955
Common/collective fixed income funds 1 10 12
-------------------- -------------------- --------------------
Total dividends 123,794 136,278 157,937
Net (depreciation)/appreciation in
market value of investments:
Common stock 1,573 (186,675) 515,504
Mutual funds (753,297) (428,672) (380,589)
Common/collective fixed income funds - (3,123) 7,947
-------------------- -------------------- --------------------
Total net (depreciation)/appreciation in
market value of investments (751,724) (618,470) 142,862
-------------------- -------------------- --------------------
Total investment (loss)/income (627,930) (482,192) 300,799
-------------------- -------------------- --------------------
Total (deductions)/additions (261,877) 25,009 2,914,348
DEDUCTIONS:
Distributions to participants 319,241 346,271 91,800
Administrative expenses 19,362 14,911 11,778
-------------------- -------------------- --------------------
Total deductions 338,603 361,182 103,578
-------------------- -------------------- --------------------
(DECREASE)/INCREASE IN NET ASSETS
FOR THE YEAR (600,480) (336,173) 2,810,770
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 5,066,805 5,402,978 2,592,208
NET ASSETS AVAILABLE FOR BENEFITS,
-------------------- -------------------- --------------------
END OF YEAR $ 4,466,325 $ 5,066,805 $ 5,402,978
==================== ==================== ====================
See notes to financial statements.
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
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1. DESCRIPTION OF THE PLAN
The following description of the Applied Industrial Technologies, Inc.
Supplemental Defined Contribution Plan (the "Plan") is provided for general
information purposes only. Participants and users of the financial
statements should refer to the Plan document for more complete information.
GENERAL - The Plan was established by Applied Industrial Technologies, Inc.
and its subsidiaries (the "Company") effective January 1, 1996, for the
benefit of a select group of management or highly compensated employees.
This is a non-qualified plan and is subject to the claims of creditors in
the case of bankruptcy of Applied Industrial Technologies, Inc.
ADMINISTRATION - The Plan is administered by the Company. The Company's
powers and duties relate to making participant and employer contributions
to the Plan's trust, establishing investment objectives, authorizing
disbursements from the trust, and resolving any questions of Plan
interpretation.
The assets of the Plan are administered by Key Trust Co. of Ohio, N.A.
acting as Trustee. The Trustee is responsible for the custody of assets.
PARTICIPANT ACCOUNTS - Each participant's account is credited with that
participant's contribution and allocations of (a) the Company's
contribution and, (b) Plan earnings, and charged with an allocation of
administrative expenses. Allocations are based on participant earnings or
account balances, as defined. The benefit to which a participant is
entitled is the amount that can be provided from the participant's vested
account.
PARTICIPATION AND CONTRIBUTIONS - Participation in the Plan is limited to
select management or highly compensated employees of the Company and whose
contributions under the Applied Industrial Technologies, Inc. Retirement
Savings Plan (the "Retirement Savings Plan") are limited.
There are no limits to the amount they can contribute. Participants may
elect to transfer excess contributions from the Retirement Savings Plan.
The company makes Supplemental Matching Contributions equal to the amount
that matching contributions under the Retirement Savings Plan are limited
each year due to Sections 401(k) and 401(m) of the Internal Revenue Code.
Effective October 2000, the Plan was amended to allow transfers from the
Applied Industrial Technologies, Inc. Deferred Compensation Plan upon
retirement. Subsequently in 2001, this provision to allow transfers from
the Applied Industrial Technologies, Inc. Deferred Compensation Plan was
revoked.
Supplemental Matching Contributions are segregated in the Matching
Contributions Account and are invested in the Company Stock Fund.
Non-participant directed investments included in the Company Stock Fund
were $ 26,790 and $ 30,131 at December 31, 2002 and 2001, respectively.
During the years ended December 31, 2002, 2001 and 2000, there were no
Supplemental Matching Contributions made to the plan.
Contributions are excluded from participants' taxable income until such
amounts are received by them as a distribution from the Plan.
INVESTMENT OF CONTRIBUTIONS - Participants elect investment of their
contributions in 1% increments in the Plan's Company Stock Fund, American
Fundamental Investors Fund, EuroPacific Growth Fund, Pimco Total Return
Fund, Financial Reserves Fund, Victory Stock Index Fund, Growth Fund
Portfolio, Alliance Growth and Income Fund, T Rowe Price Mid-Cap Growth
Fund, Vanguard Asset Allocation Fund, Franklin Small-Cap Growth Fund, Royce
Total Return Fund, Mfs Mid-Cap Growth Fund or the Lord Abbett Mid-Cap Value
Fund. Participants may change their investment elections as to future
contributions and may also elect to reallocate a portion or all of their
account balances among the investment funds in increments of 1% of the
total amount to be reallocated. All such elections are filed with the
Trustee and become effective daily.
The value of the funds and the interest of individual participants under
each fund are calculated daily (daily valuation).
VESTING AND DISTRIBUTIONS - Each participant is immediately and fully
vested in all participant contributions and earnings thereon. Participants
vest in Supplemental Matching Contributions at a rate of 25% for each year
of eligible service, becoming completely vested after four years, or at
death, termination of employment due to permanent and total disability, or
normal or early retirement as defined in the Plan.
Upon termination of service, participants may receive lump sum
distributions of their vested account balances no later than 60 days after
the end of the Plan year in which they terminate employment with the
Company. Distributions upon retirement may be received as a lump sum or as
installments in accordance with the participant's election. Participants
may also apply for hardship withdrawals from their Supplemental Salary
Savings Contributions, subject to adherence to Internal Revenue Service
regulations and approval by the Company.
Forfeitures of nonvested amounts are applied to reduce future Supplemental
Matching Contributions. There were no forfeitures in 2002, 2001 or 2000.
PLAN TERMINATION - The Plan was adopted with the expectation that it will
continue indefinitely. The Company may, however, terminate the Plan at any
time and may amend the Plan from time to time. In the event of termination
of the Plan, all participants will immediately become fully vested in the
value of all Supplemental Matching Employer Contributions made on their
behalf.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES - The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of
assets and liabilities and 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. The investment in Company common stock is valued
using the year-end closing price listed by the New York Stock Exchange.
Investment funds are stated at fair values using year-end closing price for
each of the funds or quoted market prices.
BENEFITS PAYABLE - Distributions to participants are recorded by the Plan
when payments are made.
ADMINISTRATIVE EXPENSES - Administrative expenses of the Plan are paid by
the Plan or the Company, as determined by the Company.
3. INVESTMENTS
The Plan provides that, in accordance with the investment objectives
established by the Company, the Trustee of the Plan shall hold, invest,
reinvest, manage and administer all assets of the Plan as a trust fund for
the exclusive benefit of participants and their beneficiaries.
Plan investments exceeding 5% of net assets available for benefits as of
December 31, 2002 and 2001, respectively, were as follows:
Description of 2002 2001
Investment
Applied Industrial Technologies, Inc.
Common Stock $ 230,895 $ 267,258
American Fundamental Investors Fund 246,819 574,538
Franklin Small-Cap Growth Fund 223,412 570,113
Growth Fund Portfolio 430,219 593,042
Financial Reserves Fund 372,060 430,343
EuroPacific Growth Fund 754,252 732,796
Bond Fund of America - 1,126,711
T Rowe Price Mid-Cap Growth Fund 627,928 466,707
Royce Total Return Fund 224,613 -
Pimco Total Return Fund 1,036,816 -
4. SUBSEQUENT EVENT
Effective March 1, 2003, American Express Trust Company and American
Express Retirement Services, a service group of American Express Financial
Advisors, Inc., are the new trustee and record keeper for the Applied
Industrial Technologies, Inc. Supplemental Defined Contribution Plan. The
transfer of the assets from Key Trust Co. of Ohio, N.A. to American Express
Trust Company took place on March 3, 2003. There will be a "blackout
period" until April 1, 2003. At that time, participants will once again be
able to exercise their rights related to the Plan.
******
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
033-65509 of Applied Industrial Technologies, Inc. on Form S-8 of our report
dated March 7, 2003, appearing in this Annual Report on Form 11-K of the Applied
Industrial Technologies, Inc. Supplemental Defined Contribution Plan for the
year ended December 31, 2002.
/s/ Deloitte & Touche LLP
Cleveland, Ohio
March 26, 2003