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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For The Fiscal Year Ended June 30, 1995
Commission File No. 1-2299
BEARINGS, INC.
(Exact name of registrant as specified in its charter)
OHIO 34-0117420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3600 Euclid Avenue, Cleveland, Ohio 44115
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 881-8900.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
------------------- ------------------------------------
Common Stock without New York Stock Exchange
par value
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price at which the stock was sold as
of close of business on September 1, 1995: $249,998,872.
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Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Class Outstanding at September 1, 1995
----- --------------------------------
Common Stock without par value 7,830,765
DOCUMENTS INCORPORATED BY REFERENCE
Listed hereunder are the documents, portions of which are incorporated by
reference, and the Parts of this Form 10-K into which such portions are
incorporated:
(1) Bearings, Inc. 1995 Annual Report to shareholders for the
fiscal year ended June 30, 1995, portions of which are
incorporated by reference into Parts I, II and IV of this Form
10-K; and,
(2) Bearings, Inc. Proxy Statement dated September 15, 1995,
portions of which are incorporated by reference into Parts III
and IV of this Form 10-K.
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PART I.
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ITEM 1. BUSINESS.
---------
BEARINGS, INC., an Ohio corporation, and its wholly-owned operating
subsidiaries, BRUENING BEARINGS, INC., a Kentucky corporation, DIXIE BEARINGS,
INCORPORATED, a Tennessee corporation, KING BEARING, INC., a California
corporation, and MAINLINE INDUSTRIAL DISTRIBUTORS, INC., a Wisconsin
corporation, are in the business of selling and distributing bearings,
mechanical and electrical drive system products, industrial rubber products,
fluid power products and specialty maintenance and repair products manufactured
by others. Bearings, Inc. and its wholly-owned operating subsidiaries are
hereafter referred to in this Report as the "Company", unless the context
indicates otherwise. The Company's executive offices are located at 3600
Euclid Avenue, Cleveland, Ohio. The Company and predecessor companies have
been engaged in this business since 1923. Bearings, Inc. was incorporated
under the laws of Delaware in 1928 and reincorporated from Delaware to Ohio in
1988.
(a) General Development of Business.
--------------------------------
In fiscal 1995, the Company joined a newly-formed strategic alliance
named International Supply Consortium, Inc. ("ISC"). ISC, whose shareholders
also include Cameron & Barkley Company of Charleston, South Carolina and
McJunkin Corporation of Charleston, West Virginia, is a consortium of
industrial distributors that selectively markets and sells its products and
services in tandem to targeted large industrial customers that prefer to
purchase their maintenance, repair and operations products from fewer
suppliers. The Company supplies ISC with its full line of products including
bearings, drive products, industrial rubber products, fluid power products and
specialty items. Cameron & Barkley and McJunkin supply electrical, industrial
and electronic supplies as well as pipes, valves and fittings.
The Company has continued to supplement its position in non-bearing
product lines through acquisition. In January 1995, the Company acquired
substantially all of the assets of Dees Corporation, a distributor of
hydraulic, pneumatic, electro-control and integrated fluid power products. The
business now operates as the Company's Dees Fluid Power Division, with
locations in Baltimore, Philadelphia and Richmond. Other asset acquisitions,
announced early in fiscal 1996, that improved the Company's geographic reach,
were Flood Industries, Inc., a two-branch distributor in the Upper Peninsula of
Michigan, and the Power Transmission Equipment Division of Hines Motor Supply,
Inc., located in Billings, Montana.
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Also in early fiscal 1996 the Company announced plans to build a new
headquarters facility. The new 150,000 square foot complex is expected to be
built in Cleveland's Midtown Corridor and opened in fiscal 1997. It will
replace the Company's current headquarters complex of five unconnected
buildings spread over three blocks in the Midtown Corridor.
Further information regarding developments in the Company's business
can be found in the Bearings, Inc. 1995 Annual Report to shareholders under the
caption "Management's Discussion and Analysis" on pages 10 through 12, which is
incorporated herein by reference.
(b) Financial Information About Industry Segments.
----------------------------------------------
The Company considers its business to involve only one industry
segment.
(c) Narrative Description of Business.
----------------------------------
PRODUCTS. The Company engages in the distribution and sale of ball,
roller, thrust and linear type bearings, mechanical and electrical drive system
products, industrial rubber products, fluid power products and specialty items
used in connection with the foregoing such as seals, lubricants, locking
devices, sealing compounds, adhesives and tools for use therewith. Although
the Company does not generally manufacture the products that it sells, it does
assemble filter carts, fluid power units, speed reducers and electrical panels.
The Company is a non-exclusive distributor for numerous manufacturers
of the products which it sells. The principal bearing lines distributed by the
Company are: American, Barden, Cooper, FAG, INA, Kaydon, MB Manufacturing,
McGill, MRC, Sealmaster, SKF, Thomson, Timken and Torrington/Fafnir. The
principal drive system product lines distributed by the Company are: Baldor,
Browning, Electron, Falk, FMC, Foote Jones, Jeffrey, Kop-Flex, Lincoln
Electric, Lovejoy, Martin, Morse, Reliance/Dodge, Rexnord/Link-Belt, Saftronics,
Stephens Adamson, Symmco, U.S. Electrical Motors, Western Reserve and Winsmith.
The principal industrial rubber product lines distributed by the Company are:
Aeroquip, Boston, Dixon, Flexco, Gates, Globe, Goodyear, Habasit and
Weatherhead. The principal fluid power product lines distributed by the
Company are: ARO, Dana, Dennison, Donaldson, Char-Lyn and Schrader Bellows.
Specialty items, including seals, sealants, "O" rings, retaining rings,
adhesives, lubricants, maintenance equipment, skin care products and tools, are
purchased from various manufacturers. The principal suppliers of specialty
items are: CR Industries, Dow Corning, Garlock, Gojo, Loctite, Lubriplate,
National/Federal Mogul, OTC, Parker Hannifin and Rotor Clip. The Company
believes that its relationships with its suppliers are generally good and that
the Company can continue to
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represent these suppliers. The loss of certain of these suppliers could have
an adverse effect on the Company's business.
Based upon the Company's analysis of product dollar sales volume for
the fiscal year ended June 30, 1995, bearings represented 45%, drive system
products represented 30%, specialty items represented 12%, and other items,
including industrial rubber and fluid power products, represented 13% of sales.
For the year ended June 30, 1994, bearings represented 50%, drive system
products represented 27%, specialty items represented 12%, and other items,
including industrial rubber and fluid power products, represented 12% of sales.
For the year ended June 30, 1993, bearings represented 54%, drive system
products represented 24%, specialty items represented 13%, and other items,
including industrial rubber and fluid power products, represented 9% of sales.
The Company rebuilds precision machine spindles and live centers at its
Spindle Lab in Cleveland, Ohio. Mechanical shops located in Corona,
California; Modesto, California; Atlanta, Georgia; Florence, Kentucky; Butte,
Montana; Charlotte, North Carolina; Cleveland, Ohio; Carlisle, Pennsylvania;
Ft. Worth, Texas; and Longview, Washington rebuild and assemble speed reducers,
provide custom machining and assemble fluid power systems to customer
specifications. Fluid power centers located in Corona, California; Baltimore,
Maryland; Worcester, Massachusetts; Philadelphia, Pennsylvania; Richmond,
Virginia; and Kent, Washington provide customers with technical expertise. The
Company also operates rubber shops in Tucson, Arizona; Corona, California;
Modesto, California; Atlanta, Georgia; Crestwood, Illinois; Dayton, New Jersey;
Arlington, Texas; Longview, Washington; and Appleton, Wisconsin to modify
conveyor belts and provide hose assemblies in accordance with customer
requirements.
SERVICES. The Company's sales personnel advise and assist customers
with respect to the selection and application of various products. The Company
considers this advice and assistance to be an integral part of its overall
sales efforts. Company sales personnel consist of inside customer service and
field account representatives assigned to each branch, in addition to
representatives assigned as industry and product specialists. Inside customer
service representatives receive, process and expedite customer orders, provide
pricing and product information, and provide assistance to field account
representatives in servicing customers. Field account representatives make
on-site calls to customers and potential customers to provide product and
pricing information, make surveys of customer requirements and recommendations,
and assist in the implementation of maintenance programs. Specialists assist
with applications particular to their areas of expertise. The Company
maintains inventory levels in each branch that are tailored to meet the
immediate needs of its customers and maintains back-up inventory in its
distribution centers, thereby enabling customers to minimize their own
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inventories. Such inventories consist of certain standard items stocked at
most branches as well as other items related to the specific needs of customers
in the particular locale. As a result, the business of each branch is
concentrated largely in the geographic area in which it is located. Due to its
high percentage of sales in the maintenance and replacement market, the Company
believes that service is more important than price in its sales effort,
although price is a competitive factor.
Timely delivery of products to customers is an integral part of the
service that the Company provides. Branches and distribution centers utilize
the most effective method of transportation available to meet customer needs
including both surface and air common carrier and courier services. The
Company also maintains a fleet of delivery vehicles to provide for delivery to
customers. These transportation services and delivery vehicles are also
utilized for movement of products between suppliers, distribution centers and
branches to assure availability of merchandise for customer needs.
The Company's ability to service its customers is enhanced by its
computerized inventory and sales information systems. The Company's
point-of-sale OMNEX [TM] 2.0 computer system gives all Company locations
on-line access to inventory, sales analysis and data. Inventory and sales
information is updated as transactions are entered. The OMNEX [TM] 2.0 system
permits direct access for order entry, pricing and price- auditing, order
expediting and back order review. The Company's computer system also permits
Electronic Data Interchange (EDI) with participating customers and suppliers.
Nine network-integrated computer sites serve all branches, distribution centers
and service facilities; however, during the fiscal year ending June 30, 1996
the Company plans to consolidate to a new centralized mainframe system, which
is expected to enhance system performance and response time. Three additional
network-integrated computer systems in Cleveland are tied into a mainframe
computer for sales analysis, management information and accounting
applications. In fiscal 1995 the Company introduced a new Executive
Information System, permitting increased on-line management access to sales and
other operational information.
The Company's operations contrast sharply with those of manufacturers
whose products it sells in that the manufacturers generally confine their
direct sales activities to large-volume transactions with original equipment
manufacturers who incorporate the components purchased into the products they
make. The manufacturers generally do not sell replacement components directly
to the customer but refer the customer to the Company or another nearby
distributor, although there is no assurance that this practice will continue.
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There is a trend among large industrial customers towards reducing the
number of suppliers of maintenance and replacement products with whom they
deal. The Company is responding to this trend by, among other things,
continuing to broaden its product offering and developing new methods for
marketing its products, such as through International Supply Consortium. The
Company continues to develop marketing strategies to anticipate and address
evolving customer needs and concerns.
Patents, trademarks and licenses do not have a significant effect on
the Company's business.
MARKETS AND METHODS OF DISTRIBUTION. The Company estimates that
approximately 84% of its sales are in the maintenance and replacement market,
the balance being sales for original equipment. The Company purchases from
over 100 major suppliers of bearings, drive system products, industrial rubber
products, fluid power products and specialty items and resells to a wide range
of customers, which include industrial plants of all kinds, machine shops,
mines, paper mills, public utilities, all modes of transportation, defense
establishments and other government agencies, garages, textile mills, food
processing plants, hospitals, high technology businesses, contractors,
agricultural concerns and other enterprises using any form of machine, vehicle
or implement that contains the products sold by the Company. Its customers
range from the largest industrial concerns in the country to the smallest. The
Company's business is not significantly dependent upon a single customer or
group of customers, the loss of which would have a material adverse effect upon
the Company's business as a whole, and no single customer of the Company
accounts for more than 2% of the Company's net sales.
On June 30, 1995, the Company had 338 branches in 40 states. The
Company has no operations outside the continental United States.
The Company's export business during the fiscal year ended June 30,
1995 and prior fiscal years was less than 2% of net sales, and is not
concentrated in any one geographic area.
COMPETITION. The Company considers its overall business to be highly
competitive. The Company's principal competitors are other specialized
bearing, drive system product, industrial rubber product, fluid power and
specialty item distributors, and, to a lesser extent, mine and mill supply
houses. These competitors include single and multiple branch operations, some
of which are divisions or subsidiaries of larger organizations that may have
greater financial resources than the Company. There is a trend in the industry
toward larger multiple branch operations. The Company also competes with the
manufacturers of original equipment and their distributors in the sale of
maintenance and replacement bearings, power transmission components and related
items. Some of
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these manufacturers may have greater financial resources than the Company. The
competitors and the number of competitors vary throughout the geographic areas
in which the Company does business. The Company continues to develop and
implement marketing strategies to maintain a competitive position.
The Company is one of the leading distributors of replacement bearings,
drive system products, industrial rubber products, fluid power products and
specialty items in the United States, but the Company's share of the market for
those products is relatively small compared to the portion of that market
serviced by original equipment manufacturers and other distributors. The
Company may not be the largest distributor in each of the geographic areas in
which a branch is located.
BACKLOG AND SEASONALITY. The Company does not have a substantial
backlog of orders and backlog is not significant in the business of the Company
since prompt delivery of the majority of the Company's products is essential to
the Company's business. The Company does not consider its business to be
seasonal.
RAW MATERIALS AND GENERAL BUSINESS CONDITIONS. The Company's
operations are dependent upon general industrial activities and economic
conditions and would be adversely affected by the unavailability of raw
materials to its suppliers or by any prolonged recession or depression that has
an adverse effect on American industrial activity generally.
NUMBER OF EMPLOYEES. On June 30, 1995, the Company had 4073 employees
(not including the Company's executive officers). None of the Company's
employees are covered by collective bargaining. The Company considers its
relationship with its employees to be generally favorable.
WORKING CAPITAL. The Company's working capital position is disclosed
in the financial statements referred to at Item 8 on page 12 of this Report and
is discussed in "Management's Discussion and Analysis" set forth in the
Bearings, Inc. 1995 Annual Report to shareholders on pages 10 and 11.
The Company requires substantial working capital related to accounts
receivable and inventories. Significant amounts of inventory are required to
be carried to meet rapid delivery requirements of customers. The Company
generally requires all payments for sales on account within 30 days and
generally customers have no right to return merchandise. Returns are not
considered to have a material effect on the Company's working capital
requirements. The Company believes that such practices are consistent with
prevailing industry practices in these areas.
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ENVIRONMENTAL LAWS. The Company believes that compliance with federal,
state and local provisions regulating the discharge of materials into the
environment or otherwise relating to the protection of the environment will not
have a material adverse effect upon capital expenditures, earnings or
competitive position of the Company.
(d) Financial Information About Foreign and Domestic
------------------------------------------------
Operations and Export Sales.
----------------------------
The Company has no operations outside the continental United States.
The Company's export business during the fiscal year ended June 30, 1995, and
prior fiscal years, was less than 2% of net sales, and is not concentrated in
any one geographic area.
ITEM 2. PROPERTIES.
-----------
The Company owns or leases the properties in which its offices,
branches, distribution centers, shops and corporate facilities are located. As
of June 30, 1995, the real properties at 189 locations were owned by the
Company, while 164 locations were leased by the Company. Certain property
locations may contain multiple operations, such as a branch and a distribution
center.
The principal real properties owned by the Company (each of which has
more than 20,000 square feet of floor space) are: the corporate headquarters
office building in Cleveland, Ohio; the corporate finance and information
services office building in Cleveland, Ohio; the Cleveland East branch in
Cleveland, Ohio; the Prospect mechanical shop in Cleveland, Ohio; the Midwest
Distribution Center in Florence, Kentucky; the John R. Cunin Distribution
Center in Carlisle, Pennsylvania; and the Portland branch and Portland
Distribution Center in Portland, Oregon. The principal real properties leased
by the Company (each of which has more than 20,000 square feet of floor space)
are: the Corona offices and Corona Distribution Center in Corona, California;
the Long Beach branch in Long Beach, California; the San Jose branch in San
Jose, California; the Fulton Industrial branch and J. L. Lammers Distribution
Center in Atlanta, Georgia; the Atlanta mechanical shop in Atlanta, Georgia;
the Worcester branch and fluid power center in Worcester, Massachusetts; the
Fort Worth Distribution Center in Fort Worth, Texas; the Longview branch and
Longview Distribution Center in Longview, Washington; the Appleton offices,
branch and rubber shop in Appleton, Wisconsin; and the Milwaukee branch and
distribution center in Milwaukee, Wisconsin. The Company also has announced
plans to build a new 160,000 square feet distribution center in Douglas County,
Georgia, replacing the current center in Atlanta.
The Company considers the properties owned or leased to be generally
sufficient to meet its requirements for office space and inventory stocking.
The size of the buildings in which the
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Company's branches are located is primarily influenced by the amount of
inventory required to be carried to meet the needs of the customers of the
branch. All of the real properties owned or leased by the Company are being
utilized by the Company in its business except for certain properties, which in
the aggregate are not material and are either for sale or lease to third
parties due to relocation or closing of a facility. Unused portions of
buildings may be leased or subleased to others.
Generally, when opening a new branch, the Company will lease space for
a term not exceeding five years. Then, as the business develops, suitable
property may be purchased or leased for relocation of the branch. A new
general purpose office-storeroom building may be constructed. However, the
Company has no fixed policy in this regard, and in each instance the final
decision is made on the basis of availability and cost of suitable property in
the local real estate market, whether purchased or leased. The Company does
not consider any one of its properties to be material, because it believes that
if it becomes necessary or desirable to relocate any of its branches and
distribution centers, other suitable properties could be found.
ITEM 3. PENDING LEGAL PROCEEDINGS.
--------------------------
In 1989, Bearings, Inc. was served with a Second Amended Complaint in a
case captioned SAMMIE ADKINS, ET AL. V. A. P. GREEN INDUSTRIES, INC., ET AL.,
Summit County Court of Common Pleas Case No. ACV 88-7-2398, naming it as an
additional defendant, along with over 200 other defendants. Subsequently, 17
additional cases were filed in the same court naming Bearings, Inc. as a
defendant and setting forth virtually the same allegations against many of the
same defendants on behalf of different plaintiffs. These cases are known
generally as the Akron Tireworker Asbestos Cases and allege that the plaintiffs
(including spouses in some cases) were injured due to exposure to asbestos
while working for various tire and rubber companies in the greater Akron, Ohio
area. In each case the employee plaintiff has sued for $500,000 compensatory
and $500,000 punitive damages. About 40% of the plaintiffs in the cases are
spouses of the employees, and the spouse plaintiffs have each sued for $50,000
compensatory and $50,000 punitive damages.
In September 1994, Dixie Bearings, Incorporated, a wholly-owned
subsidiary of Bearings, Inc. was served with a First Amending and Supplemental
Petition in a case captioned IN RE: ROBERT LEE BICKHAM, ET AL. V. METROPOLITAN
LIFE INSURANCE COMPANY, ET AL., 22nd Judicial District Court for the Parish of
Washington, Louisiana, Case No. 70,760-E, naming it as an additional defendant,
along with over 50 other defendants. The action was initially filed in October
1993. The petition claims to have been filed on behalf of 1,117 persons or
heirs of persons who were allegedly exposed to asbestos-containing products
while employed at the
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Bogalusa, Louisiana, Paper Mill and/or Box Factory, currently operated by
Gaylord Container, Inc. Exposure is claimed to have occurred until
approximately 1989. Compensatory and punitive damages are sought, but no
amount is specified. The case was originally filed as a class action but has
been converted to a regular proceeding by the court. In July 1995, the Company
was served with a Petition in a related case, IDA MAE WILLIAMS, ET AL. V.
METROPOLITAN LIFE INSURANCE COMPANY, ET AL., 22nd Judicial District Court for
the Parish of Washington, Louisiana, Case No. 72,986-F. This case, involving
34 persons or heirs of persons who worked at the same Bogalusa facility, is
essentially identical to the BICKHAM case.
Preliminary information made available to the Company indicates that
the Company has been named a defendant in the foregoing cases only as a
supplier of certain products manufactured by others, which products allegedly
contained a small percentage of encapsulated asbestos fiber. In each of the
cases, the proceedings as they relate to the Company are in the preliminary
stages; the Company believes, however, based upon circumstances presently known
that such cases are not material to its business or its financial condition.
The Company intends to defend these cases vigorously. Even if liability were
assessed, the Company would seek indemnification from its suppliers and its
insurance carriers.
In 1992, a jury in a case captioned KING BEARING, INC., ET AL. V. CARYL
EDMUND ORANGES, ET AL., Superior Court of the State of California, County of
Orange, Case No. 53-42-31, awarded a $32.4 million judgment against King
Bearing, Inc., a wholly-owned subsidiary of Bearings, Inc.; however, as
explained below, the Company believes that this judgment will have no material
adverse effect on its business or financial condition. The verdict was based
on contractual and other claims asserted by various cross-complainants against
King Bearing in a breach of contract and unfair competition case initially
filed by King Bearing in 1987. The suit, which involved a former owner of King
Bearing, was pending at the time Bearings, Inc. acquired King Bearing in June
1990. All events relative to the judgment occurred prior to the Company's
purchase of King Bearing. Although Bearings, Inc. was subsequently named as a
party to the lawsuit in 1991, the jury found no liability on the part of
Bearings, Inc. Under the 1990 Stock Purchase Agreement relative to the
acquisition of King Bearing, both Bearings, Inc. and King Bearing were
specifically indemnified by the ultimate parent of the former owner of King
Bearing (whose stockholders' equity exceeded $4 billion at June 30, 1995) for
any damages or loss related to the judgment. The judgment is being strongly
contested by counsel retained by the indemnitor on behalf of King Bearing, and
in September 1992, the trial court granted the motion of King Bearing for a new
trial as to all but $219,000 in damages returned by the jury. A notice of
appeal was filed by the cross-complainants, and the case is now
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pending in the California Court of Appeal, Fourth Appellate District.
The Company is a defendant in several employment-related lawsuits. The
Company is vigorously defending these lawsuits, which it believes are without
merit. Although the Company cannot predict the outcome of these actions, the
Company believes, based upon circumstances presently known, that such cases are
not material to its business or its financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
No matters were submitted to a vote of security holders of Bearings,
Inc. during the last quarter of the fiscal year ended June 30, 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT.
-------------------------------------
The Executive Officers are elected for a term of one year, or until
their successors are chosen and qualified, at the organizational meeting of the
Board of Directors held immediately following the annual meeting of
shareholders. The following is a listing of the Executive Officers of
Bearings, Inc. and a description of their business experience during the past
five years. Except as otherwise stated, the positions and offices indicated
are with Bearings, Inc. and the persons were elected to their present positions
on October 18, 1994:
JOHN C. DANNEMILLER. Mr. Dannemiller is Chairman
(since January 1992), Chief Executive Officer (since January
1992) and a Director (since 1985). He was President (from
1990 to January 1992) and Chief Operating Officer (from 1988
to January 1992). He is 57 years of age.
JOHN C. ROBINSON. Mr. Robinson is President (since
January 1992), Chief Operating Officer (since January 1992),
and a Director (since October 1991). He was Vice President
(from 1989 to January 1992) and Executive Vice President &
General Manager of the Corporation's wholly-owned subsidiary,
King Bearing, Inc. (from 1990 to October 1991). He is 53
years of age.
MARK O. EISELE. Mr. Eisele is Controller (since
October 1992). He was Manager of Internal Audit (from June
1991 to October 1992). Prior to that, Mr. Eisele was a Senior
Manager with Deloitte & Touche. He is 38 years of age.
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FRANCIS A. MARTINS. Mr. Martins is Vice
President-Sales & Marketing (since October 1994). He was Vice
President- Marketing (from May 1992 to October 1994). Before
joining the Company, he was Vice President, Industrial
Aftermarket Operations for SKF USA Inc., a manufacturer of
bearings and related products (from 1985 to May 1992). He is
52 years of age.
RICHARD C. SHAW. Mr. Shaw is Vice
President-Communications & Public Relations (since July 1993).
He was Director of Corporate Communications from 1989 to July
1993. He is 46 years of age.
ROBERT C. STINSON. Mr. Stinson is Vice
President-Administration, Human Resources, General Counsel &
Secretary (since October 1994) and has served as Secretary
since October 1990. He was Vice President-General Counsel
(from 1989 to October 1994) and Assistant Secretary (from 1978
to October 1990). He is 49 years of age.
JOHN R. WHITTEN. Mr. Whitten is Vice
President-Finance & Treasurer (since October 1992). He was
Vice President (since 1985) and Controller (from 1981 to
October 1992). He is 49 years of age.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
-------------------------------------------------
STOCKHOLDER MATTERS.
--------------------
The Company's Common Stock, without par value, is listed for trading on
the New York Stock Exchange. The information concerning the principal market
for the Company's Common Stock, the quarterly stock prices and dividends for
the fiscal years ended June 30, 1995 and 1994 and the number of shareholders of
record as of August 15, 1995 is set forth in the Bearings, Inc. 1995 Annual
Report to shareholders on page 25, under the caption "Quarterly Operating
Results and Market Data", and such information is incorporated here by
reference.
ITEM 6. SELECTED FINANCIAL DATA.
------------------------
The summary of selected financial data for each of the last five years
is set forth in the Bearings, Inc. 1995 Annual Report to shareholders in the
table on pages 26 and 27 under the caption "10 Year Summary" and is
incorporated here by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS.
------------------------------------
The "Management's Discussion and Analysis" is set forth in the
Bearings, Inc. 1995 Annual Report to shareholders on pages 10 through 12 and is
incorporated here by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------
The following consolidated financial statements and supplementary data
of Bearings, Inc. and subsidiaries and the independent auditors' report listed
below, which are included in the Bearings, Inc. 1995 Annual Report to
shareholders at the pages indicated, are incorporated here by reference and
filed herewith:
<TABLE>
<CAPTION>
Caption Page No.
------- --------
<S> <C>
Financial Statements:
Statements of Consolidated
Income for the Years Ended
June 30, 1995, 1994 and 1993 13
Consolidated Balance Sheets
June 30, 1995 and 1994 14
Statements of Consolidated
Cash Flows for the Years Ended
June 30, 1995, 1994 and 1993 15
Statements of Consolidated
Shareholders' Equity for the
Years Ended June 30, 1995,
1994 and 1993 16
Notes to Consolidated
Financial Statements for the
Years Ended June 30, 1995, 1994
and 1993 17 - 22
Independent Auditors' Report 23
Supplementary Data:
Quarterly Operating Results and
Market Data 25
</TABLE>
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
---------------------------------------------
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
---------------------------------------
Not applicable.
PART III.
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
---------------------------------------------------
The information required by this Item as to the Directors is set forth
in the Bearings, Inc. Proxy Statement dated September 15, 1995 on pages 3
through 5 under the caption "Election of Directors" and is incorporated here by
reference. As an addition to the information set forth therein, John J. Kahl,
a Director of the Company, was also elected a director of Royal Appliance Mfg.
Co. in September 1995. The information required by this Item as to the
Executive Officers has been furnished in this Report on pages 11 and 12 in Part
I, after Item 4, under the caption "Executive Officers of the Registrant".
ITEM 11. EXECUTIVE COMPENSATION.
-----------------------
The information required by this Item is set forth in the Bearings,
Inc. Proxy Statement dated September 15, 1995, under the captions "Summary
Compensation" on pages 8 and 9, "Aggregate Option Exercises and Fiscal Year-End
Option Value Table" on page 9, "Estimated Retirement Benefits Under
Supplemental Executive Retirement Benefits Plan" on page 9, "Compensation of
Directors" on page 14, "Deferred Compensation Plan for Non-employee Directors"
on pages 14 and 15, "Deferred Compensation Plan" on page 15, and "Severance
Payment Agreements" on pages 15 and 16, and is incorporated here by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
----------------------------------------
OWNERS AND MANAGEMENT.
----------------------
(a) Information concerning the security ownership of certain
beneficial owners is set forth under the caption "Security Ownership of Certain
Beneficial Owners" on page 6 of the Bearings, Inc. Proxy Statement dated
September 15, 1995, and is incorporated here by reference.
(b) Information concerning security ownership of management is set
forth under the caption "Security Ownership of Management" on page 7 of the
Bearings, Inc. Proxy Statement dated September 15, 1995, and is incorporated
here by reference.
14
16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------
Not applicable.
PART IV.
--------
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
---------------------------------------------------
SCHEDULES AND REPORTS ON FORM 8-K.
----------------------------------
(a)1. Financial Statements.
---------------------
The following consolidated financial statements of the Company, notes
thereto, the independent auditors' report and supplemental data are included in
the Bearings, Inc. 1995 Annual Report to shareholders on pages 13 through 23
and page 25, and are incorporated by reference in Item 8 of this Report.
Caption
-------
Statements of Consolidated Income for the
Years Ended June 30, 1995, 1994 and 1993
Consolidated Balance Sheets
June 30, 1995 and 1994
Statements of Consolidated Cash Flows for
the Years Ended June 30, 1995, 1994 and 1993
Statements of Consolidated Shareholders'
Equity for the Years Ended June 30, 1995,
1994 and 1993
Notes to Consolidated Financial Statements
for the Years Ended June 30, 1995, 1994
and 1993
Independent Auditors' Report
Supplementary Data:
Quarterly Operating Results and Market Data
(a)2. Financial Statement Schedule.
-----------------------------
The following Report and Schedule are included in this Part IV, and are
found in this Report at the pages indicated:
<TABLE>
<CAPTION>
Caption Page No.
------- --------
<S> <C>
Independent Auditors' Report 21
Schedule VIII - Valuation and
Qualifying Accounts 22
</TABLE>
15
17
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission have been
omitted because they are not required under the related instructions, are not
applicable, or the required information is included in the consolidated
financial statements and notes thereto.
(a)3. Exhibits.
* Asterisk indicates an executive compensation plan or arrangement.
<TABLE>
<CAPTION>
Exhibit
No. Description
--- -----------
<S> <C>
3(a) Amended and Restated Articles of Incorporation of Bearings, Inc., an Ohio corporation, filed
with the Ohio Secretary of State on October 18, 1988 (filed as Exhibit 4(a) to the
Bearings, Inc. Form 8-K dated October 21, 1988, SEC File No. 1-2299, and incorporated here by
reference).
3(b) Code of Regulations of Bearings, Inc., an Ohio corporation, adopted September 6, 1988 (filed as
Exhibit 4(b) to the Bearings, Inc. Form 8-K dated October 21, 1988, SEC File No. 1-2299, and
incorporated here by reference).
3(c) Certificate of Amendment of Amended and Restated Articles of Incorporation of Bearings, Inc., an
Ohio corporation, filed with the Ohio Secretary of State on October 27, 1988 (filed as
Exhibit 4(c) to the Bearings, Inc. Form 10-Q for the quarter ended September 30, 1988, SEC File
No. 1-2299, and incorporated here by reference).
3(d) Certificate of Amendment of Amended and Restated Articles of Incorporation of Bearings, Inc.
filed with the Ohio Secretary of State on October 17, 1990 (filed as Exhibit 4(e) to the
Bearings, Inc. Form 10-Q for the quarter ended September 30, 1990, SEC File No. 1-2299, and
incorporated here by reference).
4(a) Certificate of Merger of Bearings, Inc. (Ohio) and Bearings, Inc. (Delaware) filed with the Ohio
Secretary of State on October 18, 1988 (filed as Exhibit 4 to the Bearings, Inc. Annual
Report on Form 10-K for the fiscal year
</TABLE>
16
18
<TABLE>
<S> <C>
ended June 30, 1989, SEC File No. 1-2299, and incorporated here by reference).
4(b) $80,000,000 Maximum Aggregate Principal Amount Note Purchase and Private Shelf Facility dated
October 31, 1992 between Bearings, Inc. and The Prudential Insurance Company of America
(filed as Exhibit 4(f) to the Bearings, Inc. Form 10-Q for the quarter ended September 30, 1992,
SEC File No. 1-2299, and incorporated here by reference).
*10(a) Form of Executive Severance Agreement between the Company and 6 executive officers (filed as
Exhibit 10(b) to the Bearings, Inc. Annual Report on Form 10-K for the fiscal year ended June 30,
1989, SEC File No. 1-2299, and incorporated here by reference), together with schedule
pursuant to Instruction 2 of Item 601(a) of Regulation S-K identifying the officers and setting
forth the material details in which the agreements differ from the form of agreement that is
filed.
*10(b) Form of amendment dated January 17, 1991 amending the Executive Severance Agreements filed as
Exhibit 10(b) to the Bearings, Inc. Annual Report on Form 10-K for the fiscal year ended June 30,
1989 (filed as Exhibit 19(a) to the Bearings, Inc. Form 10-Q for the quarter ended December 31,
1990, SEC File No. 1-2299, and incorporated here by reference). The amendment is applicable to
all executive officers named in the schedule filed as part of Exhibit 10(a) of this Report and
that schedule is incorporated here by reference.
*10(c) A written description of the Directors' compensation program is found in the Bearings, Inc. Proxy
Statement dated September 15, 1995, SEC File No. 1-2299, on page 14, under the caption
"Compensation of Directors", and is incorporated here by reference.
*10(d) Deferred Compensation Plan for Non-employee Directors (filed as Exhibit 19 to the Bearings, Inc.
Form 10-Q for the quarter ended December 31, 1991, SEC File No. 1-2299, and incorporated here by
reference).
*10(e) First Amendment to Deferred Compensation Plan for Non-Employee Directors effective July 1,
</TABLE>
17
19
<TABLE>
<S> <C>
1993, providing participants with additional flexibility in electing to defer receipt of
compensation, and in amending and terminating such elections (filed as Exhibit 10(e) to
the Bearings, Inc. Form 10-K for the fiscal year ended June 30, 1993, SEC File No. 1-2299, and
incorporated here by reference).
*10(f) A written description of the Company's Non-Contributory Life and Accidental Death and
Dismemberment Insurance for executive officers.
*10(g) A written description of the Company's Long-Term Disability Insurance for executive officers.
*10(h) Form of Director and Officer Indemnification Agreement entered into between the Company and its
directors and its executive officers (filed as Appendix A to the Bearings, Inc. Proxy Statement
dated September 17, 1992, SEC File No. 1-2299, and incorporated here by reference), together
with a schedule pursuant to Instruction 2 of Item 601(a) of Regulation S-K identifying the
directors and executive officers executing such Agreements.
*10(i) Bearings, Inc. Supplemental Executive Retirement Benefits Plan (July 1, 1993 Restatement)
presently covering 6 executive officers of Bearings, Inc. (as well as certain retired executive
officers) (filed as Exhibit 10(j) to the Bearings, Inc. Form 10-K for the fiscal year ended
June 30, 1993, SEC File No. 1-2299, and incorporated here by reference).
*10(j) First Amendment to Bearings, Inc. Supplemental Executive Retirement Benefits Plan (July 1, 1993
Restatement) (filed as Exhibit 10(a) to the Bearings, Inc. Form 10-Q for the quarter ended
December 31, 1993, SEC File No. 1-2299, and incorporated here by reference).
*10(k) Bearings, Inc. Deferred Compensation Plan (filed as Exhibit A to the Bearings, Inc. Proxy
Statement dated September 16, 1993, SEC File No. 1-2299, and incorporated here by reference).
10(l) Stock Purchase Agreement between Bearings, Inc. and MLS Industries, Inc. dated June 12,
</TABLE>
18
20
<TABLE>
<S> <C>
1990 (filed as Exhibit 2 to the Bearings, Inc. Form 8-K dated July 12, 1990, SEC File No.
1-2299, and incorporated here by reference).
10(m) Amendment to Stock Purchase Agreement and Related Guarantee and Agreement among Bearings, Inc.,
MLS Industries, Inc. and Emerson Electric Co., dated as of June 29, 1990 (filed as Exhibit 2(a) to
the Bearings, Inc. Form 8-K dated July 12, 1990, SEC File No. 1-2299, and incorporated here
by reference).
*10(n) Bearings, Inc. 1990 Long-Term Performance Plan adopted by Shareholders on October 16, 1990 (filed
as Exhibit 10(t) to the Bearings, Inc. Form 10-K for the fiscal year ended June 30, 1991, SEC File
No. 1-2299, and incorporated here by reference).
*10(o) A written description of the Company's Management Incentive Plan applicable to key executives,
including the five most highly compensated executive officers, is found in the Bearings, Inc.
Proxy Statement dated September 15, 1995, SEC File No. 1-2299, on pages 10 and 11, in the Report
of the Executive Organization & Compensation Committee of the Board of Directors on Executive
Compensation, under the subcaption "Management Incentive Plan", and is incorporated here by
reference.
11 Computation of Net Income Per Share.
13 Bearings, Inc. 1995 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 Subsidiaries of Bearings, Inc. -- This information is set forth at "Item 1. Business" on page 2
of this Report and is incorporated here by reference.
23 Independent Auditors' Consent.
27 Financial Data Schedule.
</TABLE>
19
21
The Company will furnish a copy of any exhibit
described above and not contained herein upon payment of a
specified reasonable fee which fee shall be limited to the
Company's reasonable expenses in furnishing such exhibit.
(b) Reports on Form 8-K.
--------------------
None during the quarter ended June 30, 1995.
20
22
INDEPENDENT AUDITORS' REPORT
----------------------------
Shareholders and Board of Directors
Bearings, Inc.
We have audited the consolidated balance sheets of Bearings, Inc. and
its subsidiaries (the "Company") as of June 30, 1995 and 1994 and the related
statements of consolidated income, shareholders' equity, and cash flows for
each of the years in the three year period ended June 30, 1995 and have issued
our report thereon dated August 4, 1995; such consolidated financial statements
and report are included in your 1995 Annual Report to shareholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedule of the Company, listed in Item 14(a)2. This
consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
August 4, 1995
21
23
BEARINGS, INC. & SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS FOR
THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
(in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND FROM AT END OF
DESCRIPTION OF PERIOD EXPENSES RESERVE PERIOD
<S> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1995:
Reserve deducted from asset to
which it applies - allowance for
doubtful accounts $1,900 $1,710 $1,310 (A) $2,300
YEAR ENDED JUNE 30, 1994:
Reserve deducted from asset to
which it applies - allowance for
doubtful accounts $2,000 $1,418 $1,518 (A) $1,900
YEAR ENDED JUNE 30, 1993:
Reserve deducted from asset to
which it applies - allowance for
doubtful accounts $3,000 $2,190 $3,190 (A) $2,000
</TABLE>
(A) Amounts represent uncollectible accounts charged off.
SCHEDULE VIII
24
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BEARINGS, INC.
<TABLE>
<S> <C>
/s/ John C. Dannemiller /s/ John C. Robinson
------------------------------ --------------------------------
John C. Dannemiller, Chairman John C. Robinson, President
& Chief Executive Officer & Chief Operating Officer
/s/ John R. Whitten /s/ Mark O. Eisele
------------------------------ --------------------------------
John R. Whitten Mark O. Eisele
Vice President-Finance Controller
& Treasurer (Principal Accounting
(Principal Financial Officer) Officer)
</TABLE>
Date: September 21, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C>
/s/ William G. Bares /s/ William E. Butler
------------------------------ --------------------------------
William G. Bares, Director William E. Butler, Director
/s/ John C. Dannemiller /s/ Russel B. Every
------------------------------ --------------------------------
John C. Dannemiller Russel B. Every, Director
Chairman, Chief Executive
Officer and Director
/s/ Russell R. Gifford /s/ L. Thomas Hiltz
------------------------------ -------------------------------
Russell R. Gifford, Director L. Thomas Hiltz, Director
/s/ John J. Kahl /s/ George L. LaMore
------------------------------ -------------------------------
John J. Kahl, Director George L. LaMore, Director
/s/ John C. Robinson /s/ Dr. Jerry Sue Thornton
------------------------------ -------------------------------
John C. Robinson, President, Dr. Jerry Sue Thornton, Director
Chief Operating Officer and
Director
------------------------------
Russel B. Every, as attorney
in fact for persons indicated by "*"
Date: September 21, 1995
</TABLE>
23
25
BEARINGS, INC.
EXHIBIT INDEX
TO FORM 10-K FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Exhibit
No. Description Reference
------- ----------- ---------
<S> <C> <C>
3(a) Amended and Restated Articles of
Incorporation of Bearings, Inc., an
Ohio corporation, filed with the Ohio
Secretary of State on October 18, 1988. Note (a)
3(b) Code of Regulations of Bearings, Inc.,
an Ohio corporation, adopted
September 6, 1988. Note (a)
3(c) Certificate of Amendment of Amended and
Restated Articles of Incorporation of
Bearings, Inc., an Ohio corporation,
filed with the Ohio Secretary of State
on October 27, 1988. Note (b)
3(d) Certificate of Amendment of Amended and
Restated Articles of Incorporation of
Bearings, Inc., filed with the Ohio
Secretary of State on October 17, 1990. Note (c)
4(a) Certificate of Merger of Bearings, Inc.
(Ohio) and Bearings, Inc. (Delaware)
filed with the Ohio Secretary of State
on October 18, 1988. Note (d)
4(b) $80,000,000 Maximum Aggregate Principal
Amount Note Purchase and Private Shelf
Facility dated October 31, 1992 between
Bearings, Inc. and The Prudential
Insurance Company of America. Note (e)
10(a) Form of Executive Severance Agreement
between the Company and 6 executive
officers. Note (d)
Schedule pursuant to Instruction 2 of
Item 601(a) of Regulation S-K identifying
the officers and setting forth material
details in which the agreements differ
from the form of agreement filed. Attached
10(b) Form of amendment amending the Executive
Severance Agreements referenced in
Exhibit 10(a) hereto. Note (f)
</TABLE>
26
<TABLE>
<S> <C> <C>
10(c) A written description of the Directors'
compensation program. Note (g)
10(d) Deferred Compensation Plan for Non-
employee Directors. Note (h)
10(e) First Amendment to Deferred Compensation
Plan for Non-employee Directors effective
July 1, 1993. Note (i)
10(f) A written description of the Company's
Non-Contributory Life and Accidental Death
and Dismemberment Insurance for executive
officers. Attached
10(g) A written description of the Company's
Long-Term Disability Insurance for
executive officers. Attached
10(h) Form of Director and Officer Indemnifi-
cation Agreement entered into between
the Company and its directors and
executive officers. Note (j)
Schedule pursuant to Instruction 2 of
Item 601(a) of Regulation S-K identifying
the directors and executive officers
executing such agreements. Attached
10(i) Bearings, Inc. Supplemental Executive
Retirement Benefits Plan (July 1, 1993
Restatement) presently covering 6
executive officers of Bearings, Inc. Note (i)
10(j) First Amendment to Bearings, Inc.
Supplemental Executive Retirement
Benefits Plan (July 1, 1993 Restatement). Note (k)
10(k) Bearings, Inc. Deferred Compensation
Plan. Note (l)
10(l) Stock Purchase Agreement between Bearings,
Inc. and MLS Industries, Inc. dated
June 12, 1990. Note (m)
10(m) Amendment to Stock Purchase Agreement
and Related Guarantee and Agreement among
Bearings, Inc., MLS Industries, Inc. and
Emerson Electric Co., dated as of June 29,
1990. Note (m)
10(n) Bearings, Inc. 1990 Long-Term Performance
Plan adopted by Shareholders on
October 16, 1990. Note (n)
</TABLE>
27
<TABLE>
<S> <C> <C>
10(o) A written description of the Company's
Management Incentive Plan applicable to
key executives of the Company, including
the five most highly compensated executive
officers. Note (o)
11 Computation of Net Income Per Share. Attached
13 Bearings, Inc. 1995 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 Subsidiaries of Bearings, Inc.--This
information is set forth at "Item 1.
Business" on page 2 of this Report.
23 Independent Auditors' Consent. Attached
27 Financial Data Schedule. Attached
<FN>
Notes: (a) Incorporated by reference from the Company's Report on Form 8-K dated October 21, 1988, SEC File No.
1-2299.
(b) Incorporated by reference from the Company's Report on Form 10-Q for the quarter ended September 30,
1988, SEC File No. 1-2299.
(c) Incorporated by reference from the Company's Report on Form 10-Q for the quarter ended September 30,
1990, SEC File No. 1-2299.
(d) Incorporated by reference from the Company's Report on Form 10-K for the fiscal year ended June 30,
1989, SEC File No. 1-2299.
(e) Incorporated by reference from the Company's Report on Form 10-Q for the quarter ended September 30,
1992, SEC File No. 1-2299.
(f) Incorporated by reference from the Company's Report on Form 10-Q for the quarter ended December 31,
1990, SEC File No. 1-2299.
</TABLE>
28
<TABLE>
<S> <C>
(g) Incorporated by reference from the Company's Proxy Statement dated September 15, 1995, SEC File No.
1-2299, on page 14 under the caption "Compensation of Directors".
(h) Incorporated by reference from the Company's Report on Form 10-Q for the quarter ended December 31, 1991,
SEC File No. 1-2299.
(i) Incorporated by reference from the Company's Report on Form 10-K for the fiscal year ended June 30, 1993,
SEC File No. 1-2299.
(j) Incorporated by reference from the Company's Proxy Statement dated September 17, 1992, SEC File No.
1-2299, at Appendix A.
(k) Incorporated by reference from the Company's Report on Form 10-Q for the quarter ended December 31, 1993,
SEC File No. 1-2299.
(l) Incorporated by reference from the Company's Proxy Statement dated September 16, 1993, SEC File No.
1-2299, at Exhibit A.
(m) Incorporated by reference from the Company's Report on Form 8-K dated July 12, 1990, SEC File No. 1-2299.
(n) Incorporated by reference from the Company's Report on Form 10-K for the fiscal year ended June 30, 1991,
SEC File No. 1-2299.
(o) Incorporated by reference from the Company's Proxy Statement dated September 15, 1995, SEC File No.
1-2299, on pages 10 and 11 in the Report of the Executive Organization & Compensation Committee of the
Board of Directors on Executive Compensation, under the subcaption "Management Incentive Plan".
</TABLE>
1
EXHIBIT 10(a)
BEARINGS, INC. FORM 10-K FOR
FISCAL YEAR ENDED JUNE 30, 1995
SCHEDULE
The Executive Severance Agreements ("Agreements") presently in
effect for six (6) executive officers are substantially identical in all
material respects. This revised schedule is included pursuant to Instruction 2
of Item 601(a) of Regulation S-K for the purpose of setting forth the material
details in which the specific Agreements differ from the form of Agreement
filed as Exhibit 10(b) to the Bearings, Inc. Form 10-K for the fiscal year
ended June 30, 1989:
<TABLE>
<CAPTION>
"Base Compensation"
Multiple Pursuant
Name Title to Paragraph 3(b)
---- ----- -------------------
<S> <C> <C>
J. C. Dannemiller Chairman & Chief Three (3)
Executive Officer
J. C. Robinson President & Chief Three (3)
Operating Officer
F. A. Martins Vice President- Two (2)
Sales & Marketing
R. C. Shaw Vice President- One and one-half
Communications & (1.5)
Public Relations
R. C. Stinson Vice President- One and one-half
Administration, (1.5)
Human Resources,
General Counsel
& Secretary
J. R. Whitten Vice President- One and one-half
Finance & Treasurer (1.5)
</TABLE>
The continuation of employee benefit plans, programs and arrangements
set forth in Paragraph 4 is three (3) years for Messrs. Dannemiller and
Robinson, and two (2) years for the other executive officers listed.
1
EXHIBIT 10(f)
BEARINGS, INC.
FORM 10-K FOR FISCAL YEAR ENDED JUNE 30, 1995
NON-CONTRIBUTORY LIFE & ACCIDENTAL
DEATH & DISMEMBERMENT INSURANCE
The Company maintains ongoing Non-Contributory Life & Accidental Death
& Dismemberment Insurance for its executive officers, which provides benefits
equal to two and one-half (2-1/2) times annual compensation, but in no event
more than $250,000. The Company also provides its executive officers with
travel and accident insurance in the amount of $500,000. All such insurance
has certain reductions after age 65.
1
EXHIBIT 10(g)
BEARINGS, INC. FORM 10-K
FOR FISCAL YEAR ENDED JUNE 30, 1995
LONG-TERM DISABILITY INSURANCE
The Company's long-term disability Insurance plan provides for
long-term disability coverage to all employees of the Company who become
eligible after a one-year waiting period based on plan requirements. Under the
plan, eligible employees who become totally disabled as defined in the plan
would receive 60% of monthly earnings, subject to a maximum schedule amount of
$5,000 per month without evidence of insurability. The Corporation's executive
officers, including its five most highly compensated officers, are covered
under the plan, subject to a maximum schedule amount of $18,000 per month, with
evidence of insurability required for amounts in excess of $15,000 per month.
1
EXHIBIT 10(h)
BEARINGS, INC. FORM 10-K FOR
FISCAL YEAR ENDED JUNE 30, 1995
SCHEDULE
PURSUANT TO INSTRUCTION 2
ITEM 601 (a) OF REGULATION S-K
The Director and Officer Indemnification Agreements presently in effect for the
Company's directors and executive officers are identical in all material
respects. The Directors having executed such form of Agreement are:
W. G. Bares
W. E. Butler
J. C. Dannemiller
R. B. Every
R. R. Gifford
L. T. Hiltz
J. J. Kahl
G. L. LaMore
J. C. Robinson
J. S. Thornton
The Officers having executed such form of Agreement are (in addition to Messrs.
Dannemiller and Robinson):
F. A. Martins - Vice President-Sales & Marketing
R. C. Shaw - Vice President-Communications &
Public Relations
R. C. Stinson - Vice President-Administration, Human
Resources, General Counsel &
Secretary
J. R. Whitten - Vice President-Finance & Treasurer
M. O. Eisele - Controller
1
EXHIBIT 11
BEARINGS, INC. AND SUBSIDIARIES
Computation of Net Income Per Share
(Thousands, except per share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30,
1995 1994 1993
---- ---- ----
Average Shares Outstanding
--------------------------
<S> <C> <C> <C>
1. Average common shares
outstanding 7,701 7,546 7,238
2. Net additional shares
outstanding assuming stock
options exercised and
proceeds used to purchase
treasury stock 131 154 60
------- ------- ------
3. Adjusted average common
shares outstanding for
fully diluted computation 7,832 7,700 7,298
======= ======= ======
Net Income
----------
4. Net income as reported in
statements of consolidated
income $16,909 $12,687 $8,927
======= ======= ======
Net Income Per Share
--------------------
5. Net income per average
common share outstanding
(4/1) $ 2.20 $ 1.68 $ 1.23
======= ======= ======
6. Net income per common
share on a fully
dilutive basis (4/3) $ 2.16 (A) $ 1.65 (A) $ 1.22 (A)
======= ======= ======
<FN>
(A) Amount is not presented in the statements as the dilutive effect is less
than 3%.
</TABLE>
1
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Bearings, Inc. and Subsidiaries
YEAR ENDED JUNE 30, 1995 VS 1994
Sales for 1995 exceeded one billion dollars for the first time in the Company's
history. Sales increased to $1,054.8 million from $936.3 million, an increase
of 13%. The increase in sales was mainly due to additional volume. Price
increases averaged 4% for most product lines over the course of the fiscal
year. The Company, in 1995, continued to implement its strategy of selling
additional products to its existing customers, as well as better penetration of
the market with products beyond the traditional bearing product lines. Results
for the fiscal year ended June 30, 1995, continued to improve with net income
increasing 33% over the prior year.
Gross margin (net sales less cost of sales) as a percent of sales was
25.8% in 1995 and 26.9% in 1994. The gross margin percentage decreased in
fiscal 1995 due to a reduction in favorable LIFO cost adjustments and delays
in passing along certain price increases due to contract timing and the
competitive environment.
Selling, distribution and administrative expenses as a percent of sales
were 22.3% in 1995 and 23.9% in 1994. The decrease in expenses as a percent
of sales was the result of an active effort to control expenses and the rise in
sales volume. In fiscal 1995, the Company incurred higher expenses for
hospitalization, and sales commissions paid to account representatives.
Expenses decreased due to accelerated vesting in the prior year of performance
accelerated restricted stock (PARS).
The number of associates was 4,080 at June 30, 1995, and 4,066 at June
30, 1994.
Interest expense for 1995 increased $1.3 million over the prior year.
This increase was due, in part, to the higher average interest rates on
short-term borrowings. Further, the Company in fiscal 1994 partially offset
interest expense by net interest income earned under interest rate swap
agreements. In 1995, the Company incurred additional interest expense from
the termination of an interest rate swap agreement. (See Note 4 to the
Consolidated Financial Statements.)
Income tax expense as a percent of income before income taxes was 43.0%
in 1995. The effective tax rate was greater than the federal statutory rate
primarily due to state and local income taxes and non-deductible expenses.
YEAR ENDED JUNE 30, 1994 VS 1993
Sales in 1994 increased 13% to $936.3 million from 1993 sales of $831.4
million. The increase in sales was principally due to volume increases and the
acquisition of Mainline Industrial Distributors, Inc. (Mainline). Further, net
income for the fiscal year ended June 30, 1994 improved 42% over the prior year.
Gross margin as a percent of sales was 26.9% in 1994 and 26.2% in 1993.
The gross margin percentage improved in fiscal 1994 due to more focused
purchasing strategies and favorable LIFO cost adjustments. During 1994, the
Company liquidated LIFO inventory quantities carried at lower costs prevailing
in prior years. The effect of the liquidation includes the effect of a change
in the application of the LIFO method of calculating inventory. This new
method determines the Company's LIFO inventory pools by class
10
2
Bearings, Inc. and Subsidiaries
of product rather than the operating company. (See Note 3 to the Consolidated
Financial Statements.)
Selling, distribution and administrative expenses as a percent of sales
were 23.9% in 1994 and 23.8% in 1993. During fiscal 1994, the Company incurred
increased expenses due to a new sales commission program for account
representatives, and a new incentive program for sales management, increased
advertising costs due to additional marketing programs, costs associated with
the acquisition of Mainline and the accelerated vesting of PARS based upon the
price performance of the Company's common stock during the year.
The number of associates was 4,066 at June 30, 1994 and 3,986 at June
30, 1993.
Interest expense for 1994 increased by 15% as a result of the issuance
of $80 million of long-term debt in December 1992 and repayment of previously
existing short-term debt. As long-term interest rates were higher than
short-term interest rates, interest expense increased. The increased expense
was partially offset by net interest earned under interest rate swap agreements
and lower average borrowings during the year.
Income tax expense as a percent of income before income taxes was 41.4%
in 1994. The effective tax rate was greater than the federal statutory rate
primarily due to state and local income taxes and non-deductible expenses.
LIQUIDITY AND WORKING CAPITAL
The Company generated cash from operating activities in the amount of $13.4
million and $30.5 million in 1995 and 1994, respectively.
Cash flow from operations depends primarily upon generating operating
income and controlling the investment in inventory and receivables. The
Company's growth in accounts receivable and inventory in 1995 was necessary to
service the increased sales volume, including greater sales of non-bearing
products. These decreases in cash from operating activities, plus higher
income tax payments, were partially offset by increased operating income in
1995.
Investments in property totaled $15.1 million in 1995 and $16.6 million
in 1994. These capital expenditures were primarily made for building and
upgrading branch facilities, acquisition of data processing equipment, and
vehicles.
Working capital at June 30, 1995, was $153.6 million compared to $144.6
million at June 30, 1994. The current ratio was 2.4 at June 30, 1995 and 1994.
11
3
Bearings, Inc. and Subsidiaries
CAPITAL RESOURCES
Capital resources are obtained from income retained in the business,
indebtedness under the Company's lines of credit and long-term debt and, to a
lesser extent, from operating lease arrangements. Average combined short-term
and long-term borrowing was $97.9 million in 1995 and $103.0 million in 1994.
Effective interest rates on short-term borrowings were 5.9% in 1995 and 4.0% in
1994. The Company has short-term lines of credit totaling $105 million. The
Company had $18.6 million of borrowings under these short-term lines of credit
at June 30, 1995.
The Company is obligated for rental payments for operating leases on
164 of its 353 branch, distribution center and other operating locations. (See
Note 8 to the Consolidated Financial Statements for annual rental commitments.)
Management expects that capital resources provided from operations,
available lines of credit, and long-term debt will be sufficient to finance
normal working capital needs, capital expenditure programs, and the purchase of
additional Bearings, Inc. common stock. Management also believes that
additional long-term debt and line of credit financing could be obtained if
desired.
OTHER MATTERS
The 1990 agreement for the acquisition of King Bearing included specific
indemnification of Bearings, Inc. and King for any financial damages or losses
related to a lawsuit pending against King in the Superior Court of Orange
County, California. The indemnification was also guaranteed by the ultimate
parent of King's former owner, a Fortune 500 company with stockholders' equity
exceeding $4 billion at June 30, 1995. A $32.4 million judgment relating to
this lawsuit was rendered against King in June 1992. As further explained in
Note 9 to the Consolidated Financial Statements, management believes that the
outcome of this matter will not have a material adverse affect on the
consolidated financial position or results of operations of the Company due to
the indemnification and guarantee.
On July 6, 1995, the Company announced the acquisition of the assets of
a two-branch distributor of power transmission equipment, bearings, rubber and
electrical products.
12
4
<TABLE>
STATEMENTS OF
CONSOLIDATED INCOME
<CAPTION>
Bearings, Inc. and Subsidiaries Year ended June 30,
[Thousands, except per share amounts] 1 9 9 5 1 9 9 4 1 9 9 3
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $1,054,809 $936,254 $831,432
-----------------------------------------------------------------------------------------------------------------
COST AND EXPENSES
Cost of sales 783,105 684,213 613,246
Selling, distribution and administrative 234,781 224,224 197,665
-----------------------------------------------------------------------------------------------------------------
1,017,886 908,437 810,911
-----------------------------------------------------------------------------------------------------------------
OPERATING INCOME 36,923 27,817 20,521
-----------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE 7,650 6,385 5,546
INTEREST INCOME (386) (225) (382)
-----------------------------------------------------------------------------------------------------------------
7,264 6,160 5,164
-----------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 29,659 21,657 15,357
-----------------------------------------------------------------------------------------------------------------
INCOME TAX EXPENSE
Federal 10,630 7,172 5,365
State and local 2,120 1,798 1,065
-----------------------------------------------------------------------------------------------------------------
12,750 8,970 6,430
-----------------------------------------------------------------------------------------------------------------
NET INCOME $ 16,909 $ 12,687 $ 8,927
=================================================================================================================
NET INCOME PER SHARE $ 2.20 $ 1.68 $ 1.23
=================================================================================================================
</TABLE>
See notes to consolidated financial statements.
13
5
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Bearings, Inc. and Subsidiaries June 30
[Amounts in thousands] 1 9 9 5 1 9 9 4
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and temporary investments $ 4,789 $ 10,935
Accounts receivable, less allowance of
$2,300 and $1,900 145,680 129,798
Inventories 112,596 106,233
Other current assets 2,307 2,278
-----------------------------------------------------------------------------------------------------------
Total current assets 265,372 249,244
-----------------------------------------------------------------------------------------------------------
Property - at cost
Land 11,783 11,642
Buildings 57,365 54,889
Equipment 68,926 66,906
-----------------------------------------------------------------------------------------------------------
138,074 133,437
Less accumulated depreciation 58,802 53,318
-----------------------------------------------------------------------------------------------------------
Property - net 79,272 80,119
-----------------------------------------------------------------------------------------------------------
Other assets 14,587 14,156
-----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $359,231 $343,519
===========================================================================================================
LIABILITIES
Current liabilities
Notes payable $ 18,575 $ 19,805
Current portion of long-term debt 5,714
Accounts payable 53,722 50,937
Compensation and related benefits 18,248 21,508
Other accrued liabilities 15,558 12,389
-----------------------------------------------------------------------------------------------------------
Total current liabilities 111,817 104,639
Long-term debt 74,286 80,000
Deferred income taxes 918 3,370
Other liabilities 6,809 5,019
-----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 193,830 193,028
-----------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock - no par value; 2,500
shares authorized; none issued or outstanding
Common stock - no par value; 30,000 shares
authorized; 9,303 shares issued 10,000 10,000
Additional paid-in capital 11,311 6,962
Income retained for use in the business 177,402 165,807
Treasury shares - at cost (1,511 and 1,757 shares) (29,253) (32,278)
Shares held in trust for deferred compensation plans (1,426)
Unearned restricted common stock compensation (2,633)
-----------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 165,401 150,491
-----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $359,231 $343,519
===========================================================================================================
See notes to consolidated financial statements.
</TABLE>
14
6
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Bearings, Inc. and Subsidiaries Year ended June 30
[Amounts in thousands] 1 9 9 5 1 9 9 4 1 9 9 3
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 16,909 $ 12,687 $ 8,927
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Depreciation 13,275 13,586 12,766
Deferred income taxes (3,345) 2,448 3,507
Provision for losses on accounts receivable 1,710 1,418 2,190
(Gain) loss on sale of property (1,412) (775) 225
Amortization of restricted common stock
compensation and goodwill 680 2,779 580
Treasury shares contributed to employee
benefit plans 2,912 1,510 856
Treasury shares contributed to deferred
compensation plans 1,023
Changes in current assets and liabilities:
Accounts receivable (16,313) (14,344) (5,207)
Inventories (5,075) (2,042) 6,676
Other current assets (4) 885 1,049
Accounts payable and accrued expenses 2,548 9,810 (14,273)
Other - net 513 2,547 1,611
---------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 13,421 30,509 18,907
---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property purchases (15,055) (16,585) (13,600)
Proceeds from property sales 4,081 4,901 3,160
Acquisition of businesses, less cash acquired (1,852)
Other (164) (519) (1,170)
---------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (12,990) (12,203) (11,610)
---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (repayments) under:
Line-of-credit agreements:
Maturities three months or less-net (1,230) (5,321) (87,322)
Maturities greater than three months:
Borrowings 60,000
Repayments (60,000)
Long-term debt 80,000
Exercise of stock options 3,924
Dividends paid (5,397) (4,739) (4,640)
Purchase of treasury shares (3,874) (1,945)
---------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (6,577) (12,005) (11,962)
---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash
and temporary investments (6,146) 6,301 (4,665)
Cash and temporary investments
at beginning of year 10,935 4,634 9,299
---------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY INVESTMENTS
AT END OF YEAR $ 4,789 $ 10,935 $ 4,634
=================================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 14,827 $ 3,697 $ 2,288
Interest $ 8,411 $ 5,928 $ 4,935
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
15
7
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
Bearings, Inc. and Subsidiaries For the Years ended June 30, 1995, 1994 and 1993
[Amounts in thousands]
Shares of Income
Common Additional Retained
Stock Common Paid-In For Use in
Outstanding Stock Capital the Business
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT JULY 1, 1992 7,104 $10,000 $ 6,636 $151,530
Net income 8,927
Cash dividends - $.64 per share (4,640)
Treasury shares issued for:
401(k) Savings Plan contribution 44 86
Exercise of stock options 30 (19)
Restricted common stock awards 140 (2)
Other 1 9
Amortization of restricted common
stock compensation
Other 91
--------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1993
As previously reported 7,319 10,000 6,710 155,908
Pooling of interests with
Mainline Industrial Distributors 196 (1,353) 1,876
--------------------------------------------------------------------------------------------------------------------
BALANCE AS RESTATED 7,515 10,000 5,357 157,784
Net income 12,687
Cash dividends - $.64 per share (4,739)
Purchase of common stock for treasury (59)
Treasury shares issued for:
401(k) Savings Plan contribution 56 503
Exercise of stock options 13 74
Restricted common stock awards 13 53
Other 8 64
Amortization of restricted common
stock compensation 911
Other 75
--------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1994 7,546 10,000 6,962 165,807
Net income 16,909
Cash dividends - $.70 per share (5,397)
Purchase of common stock for treasury (120)
Treasury shares issued for:
401(k) Savings Plan contribution 93 1,124
Exercise of stock options 150 1,565
Restricted common stock awards 92 1,232
Deferred compensation plans 31 428
Amortization of restricted common stock compensation
Other 83
--------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1995 7,792 $10,000 $11,311 $177,402
====================================================================================================================
See notes to consolidated financial statements.
Shares Held In Unearned
Treasury Trust for Deferred Restricted Total
Shares- Compensation Common Stock Shareholders'
at Cost Plans Compensation Equity
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT JULY 1, 1992 $(39,336) $128,830
Net income 8,927
Cash dividends - $.64 per share (4,640)
Treasury shares issued for:
401(k) Savings Plan contribution 770 856
Exercise of stock options 543 524
Restricted common stock awards 2,505 $(2,503)
Other 29 38
Amortization of restricted common
stock compensation 314 314
Other 91
---------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1993
As previously reported (35,489) (2,189) 134,940
Pooling of interests with
Mainline Industrial Distributors 3,542 4,065
---------------------------------------------------------------------------------------------------------------------
BALANCE AS RESTATED (31,947) (2,189) 139,005
Net income 12,687
Cash dividends - $.64 per share (4,739)
Purchase of common stock for treasury (1,945) (1,945)
Treasury shares issued for:
401(k) Savings Plan contribution 1,007 1,510
Exercise of stock options 237 311
Restricted common stock awards 233 (286)
Other 137 201
Amortization of restricted common stock compensation 2,475 3,386
Other 75
---------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1994 (32,278) 0 150,491
Net income 16,909
Cash dividends - $.70 per share (5,397)
Purchase of common stock for treasury (3,874) (3,874)
Treasury shares issued for:
401(k) Savings Plan contribution 1,788 2,912
Exercise of stock options 2,789 4,354
Restricted common stock awards 1,727 (2,959)
Deferred compensation plans 595 $(1,023)
Amortization of restricted common stock compensation 326 326
Other (403) (320)
---------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1995 $(29,253) $(1,426) $(2,633) $165,401
=====================================================================================================================
See notes to consolidated financial statements.
</TABLE>
16
8
Notes to Consolidated Financial Statements
Years Ended June 30, 1995, 1994, and 1993
(dollar amounts in thousands, except per share amounts)
1. BUSINESS AND ACCOUNTING POLICIES
BUSINESS The Company's principal business is the sale and distribution of
bearings, mechanical and electrical drive systems, industrial rubber products,
fluid power transmission components, and specialty maintenance and repair
products. The Company does not manufacture the products it sells.
CASH EQUIVALENTS The Company considers all temporary investments with
maturities of three months or less to be cash equivalents for purposes of the
statements of consolidated cash flows.
CONSOLIDATION The consolidated financial statements include the accounts of
Bearings, Inc. and its wholly-owned subsidiaries Bruening Bearings, Inc., Dixie
Bearings, Incorporated, King Bearing, Inc., and for the years ended June 30,
1995 and 1994, Mainline Industrial Distributors, Inc. All significant
intercompany transactions and balances have been eliminated in consolidation.
GOODWILL Goodwill is recorded for the purchase price of acquired operations in
excess of the fair value of identifiable net assets. Goodwill, net of
accumulated amortization, of $4,554 at June 30, 1995 and $4,752 at June 30,
1994 is included in other assets in the accompanying consolidated balance
sheets. Goodwill is amortized on a straight-line basis over 15 to 20 years.
INVENTORIES Inventories are valued at the lower of cost or market,
using the last-in, first-out (LIFO) method. As of July 1, 1993, the Company
changed its application of the LIFO method used to determine inventory
amounts for financial reporting purposes. See Note 3 for further information
regarding inventories.
DEPRECIATION Depreciation of buildings and equipment is computed using the
straight-line method over the estimated useful lives of the assets. Buildings
are depreciated over 30 years and equipment over 3.75 to 8 years.
INCOME TAXES Income taxes in the accompanying financial statements are
determined based upon income and expenses recorded for financial reporting
purposes. Deferred income taxes are recorded for temporary differences between
amounts determined for financial reporting purposes and for tax purposes. As
of July 1, 1993, the Company changed its method of accounting for income taxes
to adopt Statement of Financial Accounting Standards (SFAS) No. 109.
NET INCOME PER SHARE Net income per share is computed using the weighted
average number of common shares outstanding for the period. Net income per
share has not been adjusted for the effect of stock options as the dilutive
effect would be less than 3% for each year.
2 . BUSINESS COMBINATIONS
During fiscal 1995, the Company made acquisitions of the assets of a
distributor of fluid power products, and of a distributor of bearings and drive
systems products, for a total of $3,255. The acquisitions of these businesses
were accounted for as purchases and their results of operations are included in
the accompanying consolidated financial statements from their respective
acquisition dates. Results of operations for these acquisitions are not
material for all years presented. Goodwill recognized in connection with these
combinations is being amortized over 15 years.
In fiscal 1994, the Company exchanged 196,000 shares of Bearings, Inc.
common stock for Mainline Industrial Distributors, Inc., a high quality applied
technology distributor of drive systems, rubber products and bearings. The
business combination was accounted for as a pooling of interests. The
Company's 1995 and 1994 consolidated financial statements include Mainline's
results of operations for the entire fiscal year. Fiscal 1993 consolidated
financial statements were not restated because the effects were not material.
17
9
3. INVENTORIES
CURRENT COST The current cost of inventories exceeded the LIFO cost as follows:
June 30
---------------------
1995 1994
LIFO cost $112,596 $106,233
Excess of current cost
over LIFO cost 94,670 86,429
-------------------------------------------------------------
Current cost $207,266 $192,662
-------------------------------------------------------------
LIFO LIQUIDATIONS During the years ended June 30,1995, 1994 and 1993, the
Company liquidated LIFO inventory quantities carried at lower costs
prevailing in prior years. The effect of these liquidations, including the
effect of the accounting change discussed below, reduced cost of sales and
increased net income and net income per share, respectively, by $3,127, $1,692,
and $.22 per share during 1995, $6,784, $3,841, and $.51 per share during 1994
and $4,714, $2,749 and $.38 per share during 1993.
OTHER As of July 1, 1993, the Company changed its application of the LIFO
method used to determine inventory amounts for financial reporting purposes.
This change revised the Company's LIFO pools to establish inventory pools by
major class of product. Previously, the LIFO inventory pools were established
by legal entity, rather than by class of product. The Company believes that
reporting LIFO pools by major class of products generally results in a better
matching of current costs with current revenues, and is consistent with how the
Company manages its operations. The cumulative effect on previous years from
this change in LIFO pools is not determinable. This change in LIFO pools
reduced cost of sales and increased net income and net income per share,
respectively, by $627, $355, and $.05 for the year ended June 30, 1995 and
$3,344, $1,894, and $.25 for the year ended June 30, 1994. These effects are
incorporated in the LIFO liquidation effects discussed above.
4. NOTES PAYABLE AND LONG-TERM DEBT
NOTES PAYABLE The Company has $105,000 of short-term lines of credit which
provide for payment of interest at various interest rate options, none of which
is in excess of the banks' prime rate at interest determination dates.
Borrowings under these lines of credit totaled $18,575 at June 30, 1995. The
weighted average interest rate on short-term borrowing outstanding at June 30,
1995 and 1994 was 6.71% and 5.32%, respectively. The remaining unused lines
available for short-term borrowings at June 30, 1995 were $86,425.
LONG-TERM DEBT The Company has $80,000 of long-term Senior Unsecured Term
Notes, including $5,714 due during fiscal 1996. Interest is payable quarterly
at a fixed interest rate of 7.82%. The principal amount is to be paid in
fourteen equal semi-annual installments beginning in June 1996. These notes
contain certain restrictive covenants regarding liquidity, tangible net worth,
financial ratios and other covenants. At June 30, 1995, the most restrictive
of these covenants required that the Company maintain a minimum tangible net
worth of $111,410. Based upon current market rates for debt of similar
maturities, the Company estimates that the fair value of its long-term debt is
more than its carrying value at June 30, 1995 by $2,000.
During fiscal 1995, the Company terminated a two year interest rate
swap agreement initiated in fiscal 1994. As of June 30, 1995 deferred
interest cost of $645 from this termination remains to be amortized to interest
expense over the term of the original swap agreement. The Company has no
outstanding swap agreements or other derivative instruments at June 30, 1995.
5. INCOME TAXES
As of July 1, 1993, the Company changed its method of accounting for income
taxes from the deferred method used in prior years to the liability method, as
required by SFAS No. 109, "Accounting for Income Taxes." As permitted by SFAS
No. 109, the Company elected not to restate the financial statements of any
prior year. There was no significant cumulative effect on the Statements of
Consolidated Income for adopting SFAS No. 109.
18
10
<TABLE>
PROVISION The provision for income taxes consists of:
<CAPTION>
Liability Liability Deferred
Method Method Method
Year ended June 30 1995 1994 1993
-------------------------------------------------------------
<S> <C> <C> <C>
Current $16,095 $6,522 $2,923
Deferred (3,345) 2,448 3,507
-----------------------------------------------------------------------------
Total $12,750 $8,970 $6,430
=============================================================================
</TABLE>
The exercise of non-qualified stock options during fiscal 1995 resulted in $431
of income tax benefits to the Company related to the difference between the
market price at the date of exercise and the option price. These tax benefits
are credited directly to additional paid-in capital.
<TABLE>
Prior to the change in accounting methods, the net tax effects giving rise to
deferred amounts were:
<CAPTION>
Year Ended
June 30,
1993
----------
<S> <C>
Accrued restructuring charge $1,238
Accrued vacation (146)
Inventory obsolescence 1,448
Depreciation 144
Allowance for doubtful accounts 343
Other 480
------------------------------------------------------------------
Total $3,507
==================================================================
</TABLE>
<TABLE>
EFFECTIVE TAX RATES A reconciliation between the federal statutory income tax
rate and the Company's effective tax rate is:
<CAPTION>
Liability Liability Deferred
Method Method Method
Year ended June 30 1995 1994 1993
-------------------------------------------------------------
<C> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 34.0%
Effects of:
State and local income taxes 4.7 5.4 4.6
Non-deductible expenses 2.3 1.8 2.1
Alternative minimum tax 0.4
Other, net 1.0 (0.8) 0.8
-----------------------------------------------------------------------------
Effective tax rate 43.0% 41.4% 41.9%
=============================================================================
</TABLE>
BALANCE SHEET Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
significant components of the Company's deferred tax assets (liabilities) as of
June 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
June 30
---------------------
1995 1994
<S> <C> <C>
Depreciation and differences in property bases $( 4,771) $(5,443)
Inventory (8,180) (8,394)
Compensation liabilities not currently deductible 4,298 3,791
Reserves not currently deductible 3,474 1,968
Goodwill 1,502 1,389
Tax loss carryforwards 526 393
Other 1,086 686
Valuation allowance (404) (211)
-----------------------------------------------------------------------------
Net deferred tax liability $(2,469) $(5,821)
=============================================================================
</TABLE>
Net current deferred tax liabilities of $1,551 and $2,451 at June 30, 1995 and
1994, respectively, are included in other accrued liabilities in the
Consolidated Balance Sheets.
The valuation allowance results from the Company's estimation that
certain state income tax loss carryforwards and other deferred tax assets may
not be realized.
19
11
6. STOCK INCENTIVE PLANS
The 1990 Long-Term Performance Plan (the "1990 Plan") provides for granting of
stock options, stock awards, cash awards, and such other awards or combination
thereof as the Executive Organization and Compensation Committee of the Board
of Directors may determine. The number of shares of Common Stock which may be
awarded in each fiscal year under the 1990 Plan is two percent (2%) of the
total number of shares of Common Stock outstanding on the first day of each
year for which the plan is in effect. Common Stock available for distribution
under the 1990 Plan, but not distributed, may be carried over to the following
year.
In fiscal 1995 the Company awarded 92,000 shares of Performance
Accelerated Restricted Stock (PARS) to officers and other key associates. This
restricted stock was awarded under the 1990 Plan. PARS recipients are entitled
to receive dividends and have voting rights on their respective shares but are
restricted from selling or transferring the shares prior to vesting. The
restricted stock vests after a period of six years, with accelerated vesting
based upon achievement of certain return on asset objectives or minimum stock
price levels. The aggregate fair market value of the restricted stock is
considered unearned compensation at the time of grant and is amortized over the
six year vesting period or until such time as acceleration of vesting takes
place.
During fiscal 1994, accelerated vesting occurred for all 153,000 shares
of PARS awarded to officers and other key associates during fiscal 1994 and
1993. With the accelerated vesting of all then-outstanding PARS during 1994,
all remaining unearned compensation for these awards was recorded as an expense.
<TABLE>
The following is a summary of transactions with respect to the stock
incentive plans:
<CAPTION>
Number of Shares
--------------------------------------------
Available
Option Price for future
Per Share Outstanding Exercisable Grants
<S> <C> <C> <C> <C>
Balance at
July 1, 1992 548,416 225,468 188,737
Additional available 142,082
Became exercisable 130,030
Canceled upon exercise $14.19-$20.56 (40,828) (40,828)
Expired/canceled $20.56-$30.00 (25,634) (24,250) (188,645)
PARS common
stock awards (140,000)
----------------------------------------------------------------------------------------------
Balance at
June 30, 1993 481,954 290,420 2,174
Additional available 146,382
Became exercisable 115,050
Canceled upon exercise $14.19-$30.00 (98,795) (98,795)
Expired/canceled $14.19-$30.00 (20,325) (16,475)
Options granted $21.94-$32.31 119,450 (119,450)
PARS common
stock awards (13,000)
----------------------------------------------------------------------------------------------
Balance at
June 30, 1994 482,284 290,200 16,106
Additional available 150,922
Became exercisable 82,953
Canceled upon exercise $14.19-$30.00 (149,721) (149,721)
Expired/canceled $14.19-$30.00 (6,450) (2,025)
Options granted $33.44 1,600 (1,600)
PARS common
stock awards (92,000)
----------------------------------------------------------------------------------------------
Balance at June 30, 1995 327,713 221,407 73,428
==============================================================================================
</TABLE>
At June 30, 1995, option prices related to the balance outstanding ranged from
$14.19 to $33.44 per share.
20
12
7 . BENEFIT PLANS
QUALIFIED RETIREMENT PLANS Substantially all associates of the Company are
covered by the following defined contribution retirement plans. The Company
makes a discretionary contribution to the Employees' Profit-Sharing Trust
generally based upon a percentage of the Company's income before income taxes
and before the amount of the contribution. The 401(k) Savings Plan allows
participants to contribute up to 15% (from 10% in fiscal 1995) of their
compensation. The Company partially matches the participants' contributions. The
matching contribution is made with the Company's Common Stock and is determined
quarterly using rates based on achieving certain quarterly earnings per share
levels. Effective July 1, 1995 the Employees' Profit-Sharing Trust and the
Bearings, Inc. 401(k) Savings Plan were merged into one plan. The merged plan,
known as the Bearings, Inc. Retirement Savings Plan, continues similar
discretionary Company contributions and Company matching of participants'
contributions.
The Company's expense for contributions to the above plans was $3,958,
$2,602, and $1,496 for the years ended June 30, 1995, 1994, and 1993,
respectively.
RETIREE MEDICAL BENEFITS The Company provides health care benefits to eligible
retired associates who elect to pay the Company a specified monthly premium.
Premium payments are based upon current insurance rates for the type of
coverage provided and are adjusted annually. Certain monthly health care
premium payments are partially subsidized by the Company. The Company accounts
for retiree medical benefits in accordance with the provisions of SFAS No. 106,
"Employers' Accounting for Post-retirement Benefits Other Than Pensions," which
requires accrual of such post-retirement benefits over the years the associ-
ate provides services and becomes eligible to receive benefits upon retirement.
At June 30, 1995, the accumulated post-retirement benefit obligation was $685.
The costs recognized for post-retirement benefits for fiscal 1995, 1994, and
1993 were not material.
SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFIT PLAN (SERP) The Company has a
non-qualified pension plan to provide supplemental retirement benefits to
certain officers. Benefits are payable at retirement based upon a percentage of
the participant's compensation. The plan specifies minimum annual retirement
benefits for certain participants.
<TABLE>
The funded status of the SERP plan is:
<CAPTION> June 30
------------------------
1995 1994
<S> <C> <C>
Projected benefit obligation $4,629 $4,446
Unrecognized net transition obligation (262) (536)
Unrecognized net loss (796) (801)
Unrecognized prior service cost (207) (268)
Adjustment required to recognize
minimum liability 418 886
-----------------------------------------------------------------------------------
Accrued pension liability, included in
other liabilities on the Consolidated
Balance Sheets $3,782 $3,727
===================================================================================
Accumulated benefit obligation, fully vested $3,782 $3,727
===================================================================================
</TABLE>
<TABLE>
<CAPTION>
Periodic pension cost for the SERP consists of:
Year ended June 30
---------------------------------------------------------------
1995 1994 1993
---------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned $115 $ 91 $ 64
Interest cost on projected benefit
obligation 350 347 334
Net amortization and deferral 361 483 388
---------------------------------------------------------------------------------
Total $826 $921 $786
=================================================================================
</TABLE>
21
13
Pension cost and benefit obligations shown in the table above were
determined using a discount rate of 8.0% and a rate of increase in
compensation levels of 5.5%. At June 30, 1995, there were no
assets under the plan. The Company funds the benefits when pay-
ments are made to participants.
DEFERRED COMPENSATION PLANS The Company has a deferred
compensation plan that enables non-employee directors to defer
receipt of director fees. In addition, during 1994 a deferred com-
pensation plan was established enabling certain executives to defer
a portion of their annual incentive awards. The Company con-
tributed common stock of the Company and money market
investments to rabbi trusts to fund these deferred compensation
liabilities. The common stock is reported as a contra-equity
account and the money market investments are included in other
assets in the accompanying Consolidated Balance Sheets. At June
30, 1995, the deferred compensation liability of $1,461 for these
plans is recorded in other liabilities in the accompanying
Consolidated Balance Sheets.
8. COMMITMENTS, LEASE OBLIGATIONS AND RENT EXPENSES
The Company leases certain branch and distribution center facili-
ties and computer equipment under non-cancelable lease agree-
ments. The minimum annual rental commitments under operating
leases are $7,783 in 1996; $5,821 in 1997; $5,171 in 1998; $2,697 in
1999; $1,247 in 2000 and $1,887 after 2000.
Rental cost, principally from leases for real property, vehicles
and computer equipment was $10,756 in 1995, $10,013 in 1994,
and $8,527 in 1993.
9 . LITIGATION
The 1990 agreement for the acquisition of King Bearing (King)
included specific indemnification of Bearings, Inc. and King for any
financial damages or losses related to a lawsuit pending against
King in the Superior Court of Orange County, California. The
indemnification was also guaranteed by the ultimate parent of
King's former owner, a Fortune 500 company with stockholders'
equity exceeding $4 billion at June 30, 1995. A $32,400 judgment
relating to this lawsuit was rendered against King in June 1992.
The judgment is being strongly contested by counsel retained by
the indemnitor on behalf of King, and in September 1992 the trial
court granted the motion of King for a new trial as to all but $219
in damages returned by the jury. A notice of appeal has been filed
by the cross-complainants, and the case is now pending in the
California Court of Appeal, Fourth Appellate District. All alleged
events relevant to the judgment occurred prior to the Company's
purchase of King, and the jury found no liability on the part of
Bearings, Inc. Due to the indemnification and guarantee, manage-
ment believes that the outcome of this matter will not have a
material adverse effect on the consolidated financial position or
results of operations of the Company.
The Company is a defendant in several lawsuits for product and
employment related matters. The Company is vigorously defend-
ing these lawsuits, which management believes are without merit.
Although management cannot predict the outcomes of these law-
suits, they are not expected to have a material adverse effect on the
Company's consolidated financial position.
22
14
Independent Auditors' Report
Deloitte & Touche LLP
[LOGO]
Shareholders and Board of Directors
Bearings, Inc.
We have audited the accompanying consolidated balance sheets of Bearings, Inc.
and its subsidiaries (the "Company") as of June 30, 1995 and 1994 and the
related statements of consolidated income, shareholders' equity, and cash flows
for each of the three years in the period ended June 30, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the consolidated financial statements present fairly, in
all material respects, the financial position of the Company at June 30, 1995
and 1994 and the results of its operations and its cash flows for each of the
three years in the period ended June 30, 1995 in conformity with generally
accepted accounting principles.
As discussed in Notes 5 and 3 to the consolidated financial statements, in
the year ended June 30, 1994, the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No.
109 and its application of the last-in, first-out (LIFO) method for valuing
inventories.
Deloitte & Touche LLP
Cleveland, Ohio
August 4, 1995
23
15
Quarterly Operating Results (Unaudited) and Market Data
Bearings, Inc. and Subsidiaries
<TABLE>
<CAPTION>
[dollar amounts in thousands, execept per share amounts]
Per Common Share
-----------------------------------------
Price Range
Net Gross Net Net Cash ---------------
Sales Profit Income Income Dividend High Low
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995
FIRST QUARTER $ 247,605 $ 63,611 $ 3,019 $0.40 $0.16 $33.25 $30.25
SECOND QUARTER 249,906 63,183 3,353 0.44 0.18 34.63 30.63
THIRD QUARTER 277,029 70,241 4,349 0.56 0.18 34.00 28.25
FOURTH QUARTER 280,269 74,669 6,188 0.80 0.18 32.25 27.50
--------------------------------------------------------------------------------
$1,054,809 $271,704 $16,909 $2.20 $0.70
================================================================================
1994
First Quarter(B) $ 222,712 $ 56,672 $ 2,398 $0.32 $0.16 $25.25 $21.13
Second Quarter(B) 226,285 61,528 2,314 0.31 0.16 31.13 25.38
Third Quarter 239,743 65,498 2,886 0.38 0.16 37.50 27.75
Fourth Quarter 247,514 68,343 5,089 0.68 0.16 34.00 30.00
--------------------------------------------------------------------------------
$ 936,254 $252,041 $12,687 $1.68 $0.64
================================================================================
1993
First Quarter $ 204,175 $ 50,603 $ 1,505 $0.21 $0.16 $18.75 $16.75
Second Quarter 198,535 51,587 1,755 0.24 0.16 23.25 16.88
Third Quarter 210,789 54,673 2,378 0.33 0.16 23.50 20.50
Fourth Quarter 217,933 61,323 3,289 0.45 0.16 24.75 21.38
--------------------------------------------------------------------------------
$ 831,432 $218,186 $ 8,927 $1.23 $0.64
================================================================================
<FN>
(A) Cost of sales for interim financial statements are computed using
estimated gross profit percentages which are adjusted throughout the
year based upon available information. Adjustments to actual cost
are made based upon the annual physical inventory and the effect of
year-end inventory quantities on LIFO costs. The physical inventory
adjustments in 1995, 1994 and 1993 were not material. Reductions in
inventories during the fiscal years ended June 30, 1995, 1994 and
1993 resulted in liquidations of LIFO inventory quantities carried
at lower costs prevailing in prior years. The effect of these
liquidations for the years ended June 30, 1995, 1994 and 1993
increased annual gross profit by $3,127, $6,784 and $4,714; annual
net income by $1,692, $3,841 and $2,749 and net income per share by
$.22, $.51 and $.38, respectively. (See Note 3 to Consolidated
Financial Statements.)
(B) The first two quarters of 1994 have been restated to reflect the
acquisition of Mainline. (See Note 2 Consolidated Financial Statements.)
(C) On August 15, 1995 there were 1,381 shareholders of record.
Additionally, at June 30, 1995, there were 2,983 participants in the
Bearings, Inc. 401(k) Savings Plan. The Company's common stock is
listed on the New York Stock Exchange. The closing price on August
15, 1995 was $33.25 per share.
</TABLE>
25
16
10 Year Summary
<TABLE>
<CAPTION>
Bearings, Inc. and Subsidiaries
[Thousands, except per share amounts] 1 9 9 5 1 9 9 4 1 9 9 3 1 9 9 2
<S> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS-
YEAR ENDED JUNE 30
Net sales $1,054,809 $936,254 $831,432 $817,813
Operating income 36,923 27,817 20,521 4,703
Net income 16,909 12,687 8,927 (1,666)
Per share data
Net income 2.20 1.68 1.23 (.24)
Cash dividend .70 .64 .64 .64
YEAR-END POSITION - JUNE 30
Working capital $ 153,555 $144,605 $130,860 $ 41,967
Long-term debt 74,286 80,000 80,000
Total assets 359,231 343,519 315,935 330,619
Shareholders' equity 165,401 150,491 134,940 128,830
YEAR-END STATISTICS - JUNE 30
Current ratio 2.4 2.4 2.4 1.2
Branches 338 339 323 333
Shareholders of record 1,396(A) 1,484 1,543 1,617
<FN>
(A) In addition there were 2,983 employee participants in the Bearings, Inc. 401(k) Savings Plan.
</TABLE>
26
17
<TABLE>
<CAPTION>
1 9 9 1 1 9 9 0 1 9 8 9 1 9 8 8 1 9 8 7 1 9 8 6
<S> <C> <C> <C> <C> <C>
$814,000 $651,271 $630,281 $542,883 $490,995 $490,249
17,115 25,281 33,463 25,000 13,964 7,591
4,282 12,201 18,313 14,948 6,247 2,244
.61 1.70 2.45 1.89 .71 .25
.64 .64 .56 .49 .45 .45
54,695 $ 64,091 $ 75,134 $ 77,606 $121,068 $129,288
44,750 44,750
327,939 380,224 251,376 222,957 223,202 231,894
134,203 135,338 134,848 128,919 125,419 133,912
1.3 1.3 1.7 1.9 3.5 3.7
341 363 267 266 269 274
1,679 1,694 1,358 1,318 1,361 1,476
</TABLE>
27
1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
Bearings, Inc.
We consent to the incorporation by reference in Registration Statements Nos.
2-81660, 33-42623, 33-43506, 33-53345, 33-53401 and 33-53361 of Bearings, Inc.
on Forms S-3 and S-8 of our reports dated August 4, 1995 appearing in and
incorporated by reference in the Annual Report on Form 10-K of Bearings, Inc.
for the year ended June 30, 1995.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
September 20, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,789
<SECURITIES> 0
<RECEIVABLES> 147,980
<ALLOWANCES> 2,300
<INVENTORY> 112,596
<CURRENT-ASSETS> 265,372
<PP&E> 138,074
<DEPRECIATION> 58,802
<TOTAL-ASSETS> 359,231
<CURRENT-LIABILITIES> 111,817
<BONDS> 0
<COMMON> 10,000
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<OTHER-SE> 155,401
<TOTAL-LIABILITY-AND-EQUITY> 359,231
<SALES> 1,054,809
<TOTAL-REVENUES> 1,054,809
<CGS> 783,105
<TOTAL-COSTS> 783,105
<OTHER-EXPENSES> 233,071
<LOSS-PROVISION> 1,710
<INTEREST-EXPENSE> 7,264
<INCOME-PRETAX> 29,659
<INCOME-TAX> 12,750
<INCOME-CONTINUING> 16,909
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,909
<EPS-PRIMARY> 2.20
<EPS-DILUTED> 2.16
</TABLE>