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 systems, industrial rubber products, fluid power transmission components 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. -------------------------------- During fiscal 1994, the Company established a physical presence in strategic geographic markets in the Upper Midwest. In the summer of 1993, the Company opened two branches in the Chicago area, the largest industrial market in the nation. In March 1994, the Company acquired Mainline Industrial Distributors, Inc. of Appleton, Wisconsin in exchange for 196,000 shares of Company Common Stock. The Mainline acquisition added nine branches to the Company's network, including seven in Wisconsin, one in Minneapolis and one in Chicago. All continue to operate under the Mainline name. Four additional Chicago-area branches were acquired by the Company for cash in May 1994.
Also in fiscal 1994, the Company's implementation of Total Quality Management ("TQM") continued on course. TQM is aimed at maximizing customer satisfaction and improving all aspects of the Company's business, while increasing the understanding, involvement and overall teamwork of the Company's employees at all levels. Virtually all Company branches have undergone quality audits by Company management. Since its adoption of TQM, the Company has been honored with quality-supplier awards from dozens of its customers.
In July 1993, John R. Cunin, a Director and former Chairman & Chief Executive Officer of the Company, died after 45 years of service to the Company. Dr. Jerry Sue Thornton, president of Cuyahoga Community College, was elected in January 1994 to fill the vacancy on the Board of Directors. Also in July 1993, Richard C. Shaw, previously Director of Corporate Communications, was appointed to serve as Vice President-Communications & Public Relations.
Further information regarding developments in the Company's business can be found in the Bearings, Inc. 1994 Annual Report to shareholders under the caption "Management's Discussion and Analysis" on pages 10 and 11, 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, electrical and fluid power transmission components, industrial rubber 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 Bearings, McGill, Rexnord/PTC, Sealmaster, MRC, SKF, Thomson, Timken and Torrington/Fafnir. The principal power transmission components distributed by the Company are: Aeroquip, ARO, Baldor, Browning, Dana, Eaton, Falk, FMC, Gates, Goodyear, Jeffrey, Kop-Flex, Lincoln Electric, Lovejoy, Martin, Morse, Reliance/Dodge, Rexnord/PTC, Schrader Bellows, and U.S. Electrical Motors. Specialty and other items, including bronze, babbit, nylon, rubber, seals, sealants, "O" rings, retaining rings, adhesives, lubricants, maintenance equipment and tools, are purchased from various manufacturers. The principal suppliers of specialty and other items are: CR Industries, Dow Corning, Garlock, Loctite, J.M. Clipper, National/Federal Mogul, OTC, Parker Hannifin, Rotoclip and Symmco. The Company believes that its relationships with its suppliers are generally good and that the Company can continue to 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, 1994, bearings (including mounted bearings, which in some contexts are categorized as power transmission components) represented 50%, power transmission components (including certain rubber and fluid power products) represented 38%, and specialty and other items represented 12% of sales. For the year ended June 30, 1993, bearings represented 52%,
power transmission components represented 32%, and specialty and other items represented 16% of sales. For the year ended June 30, 1992, bearings represented 53%, power transmission components 32%, and specialty and other items 15% of sales.
The Company rebuilds precision machine spindles and live centers at its Spindle Lab in Cleveland, Ohio. Mechanical shops located in Cleveland, Ohio; Corona, California; Longview, Washington; Modesto, California; Fort Worth, Texas; Carlisle, Pennsylvania; Butte, Montana; and Florence, Kentucky rebuild and assemble speed reducers, provide custom machining and assemble fluid power systems to customer specifications. Fluid power centers located in Kent, Washington, Corona, California and Worcester, Massachusetts, provide customers with technical expertise. The Company also operates rubber shops in Arlington, Texas; Longview, Washington; Corona, California; Modesto, California; Tucson, Arizona; Atlanta, Georgia; Dayton, New Jersey; and Crestwood, Illinois 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 bearings, related accessories and power transmission components. 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. 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 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. 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. As a result, the business of each branch is concentrated largely in the geographic area in which it is located. Special products or products for export may be sold from a number of locations.
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. Nine network-integrated computer sites serve all branches, distribution centers and service facilities. Three additional network-integrated computer systems in Cleveland are tied into a mainframe computer for sales analysis, management information and accounting applications.
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.
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 85% 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, power transmission components and related 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, schools and universities, hospitals, high technology businesses, contractors, agricultural concerns and other enterprises using any form of machine, vehicle or implement that
contains bearings, power transmission components or related maintenance items. 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 total sales.
During fiscal 1994, 5 branches were closed or consolidated with other branches and 21 branches were newly opened or acquired. On June 30, 1994, the Company had 339 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, 1994 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 and power transmission distributors and industrial parts 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 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. As a distributor, the Company's market continues to be influenced by competitive products of European and Asian manufacturers, which are sold in the United States. 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, power transmission components and related 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, including dealers in distressed and surplus merchandise. 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, 1994, the Company had 4056 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. 1994 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.
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, 1994, and prior fiscal years, was less than 2% of net sales, and is not concentrated in any one geographic area.
ITEM 2.
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, 1994, the real properties at 187 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 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 Fulton Industrial branch and J. L. Lammers Distribution Center in Atlanta, Georgia; the Fort Worth Distribution Center in Fort Worth, Texas; the Long Beach branch in Long Beach, California; the San Jose branch in San Jose, California; the Worcester branch and fluid power center in Worcester, Massachusetts; the Longview branch and Longview Distribution Center in Longview, Washington; the Appleton offices and branch in Appleton, Wisconsin; and the Milwaukee branch in Milwaukee, Wisconsin.
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 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.
During the fiscal year ended June 30, 1994, the Company opened or acquired 21 new branches and closed or consolidated 5 branches. ITEM 3.
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.
Preliminary information made available to the Company indicates that Bearings, Inc. has been named a defendant in these cases only as a supplier of certain products manufactured by others, which products allegedly contained asbestos. Due to the court's case management order, the proceedings as they relate to Bearings, Inc. 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 $3 billion at June 30,
1994) 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 pending in the California Court of Appeal, Fourth Appellate District.
ITEM 4.
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, 1994.
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 19, 1993:
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 January 1990 to January 1992), Chief Operating Officer (from October 1988 to January 1992) and Executive Vice President (from 1988 to January 1990). He is 56 years of age.
JOHN C. ROBINSON. Mr. Robinson is President (since January 1992), Chief Operating Officer (since January 1992), and a Director (since 1991). He was Vice President (from October 1989 to January 1992) and Executive Vice President & General Manager of the Corporation's wholly-owned subsidiary, King Bearing, Inc. (from June 1990 to October 1991). He was Director of Development & Strategic Planning from 1987 to October 1989. He is 52 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 37 years of age.
FRANCIS A. MARTINS. Mr. Martins is Vice President-Marketing (since May 1992). 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 51 years of age.
FREDERICK L. MOHR. Mr. Mohr is Vice President-Sales & Marketing (since 1983). He is 64 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 45 years of age.
ROBERT C. STINSON. Mr. Stinson is Vice President-General Counsel (since 1989) and Secretary (since October 1990). He was Assistant Secretary (from 1978 to October 1990). He is 48 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 48 years of age.
PART II. -------- ITEM 5.
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, 1994 and 1993 and the number of shareholders of record as of September 1, 1994 is set forth in the Bearings, Inc. 1994 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.
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. 1994 Annual Report to shareholders in the table on pages 26 and 27 under the caption "10 Year Summary" and is incorporated here by reference.
ITEM 7.
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. 1994 Annual Report to shareholders on pages 10 and 11 and is incorporated here by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. -------------------------------------------- The following consolidated financial statements and supplementary data of Bearings, Inc. and subsidiaries for the 1994, 1993 and 1992 fiscal years and the independent auditors' report listed below, which are included in the Bearings, Inc. 1994 Annual Report to shareholders at the pages indicated, are incorporated here by reference and filed herewith:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ------------------------------------------------ ACCOUNTING AND FINANCIAL DISCLOSURE. ------------------------------------ Not applicable.
PART III. --------- ITEM 10.
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 16, 1994 on pages 3 through 5 under the caption "Election of Directors" and is incorporated here by reference. The information required by this Item as to the Executive Officers has been furnished in this Report on pages 10 and 11 in Part I, after Item 4, under the caption "Executive Officers of the Registrant". The information required by this Item as to Forms 3, 4 and 5 reporting delinquencies is set forth in the Bearings, Inc. Proxy Statement dated September 16, 1994 on page 18 under the caption "Compliance with Section 16(a) of the Securities Exchange Act of 1934" and is incorporated here by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION. ----------------------- The information required by this Item is set forth in the Bearings, Inc. Proxy Statement dated September 16, 1994, under the captions "Summary Compensation" on pages 8 and 9, "Aggregate Option/SAR Exercises and Fiscal Year-End Option Value Table" on page 9, "Estimated Retirement Benefits Under Supplemental Executive Retirement Benefits Plan" on page 10, "Compensation of Directors" on page 14, "Deferred Compensation Plan for Non-employee Directors" on page 15, "G. L. LaMore Consulting Agreement" on page 16, "Deferred Compensation Plan" on page 16, and "Severance Payment Agreements" on pages 16 and 17, and is incorporated here by reference.
ITEM 12.
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 16, 1994, 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 16, 1994, and is incorporated here by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. ---------------------------------------------- Not applicable.
PART IV. --------
ITEM 14.
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. 1994 Annual Report to shareholders on pages 12 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, 1994, 1993 and 1992
Consolidated Balance Sheets June 30, 1994 and 1993
Statements of Consolidated Cash Flows for the Years Ended June 30, 1994, 1993 and 1992
Statements of Consolidated Shareholders' Equity for the Years Ended June 30, 1994, 1993 and 1992
Notes to Consolidated Financial Statements for the Years Ended June 30, 1994, 1993 and 1992
Independent Auditors' Report
Supplementary Data: Quarterly Operating Results and Market Data
(a)2. FINANCIAL STATEMENT SCHEDULES. ------------------------------ The following Report and Schedules are included in this Part IV, and are found in this Report at the pages indicated:
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 financial statements and notes thereto.
(a)3. EXHIBITS. --------- * Asterisk indicates an executive compensation plan or arrangement.
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 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 7 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 16, 1994, SEC File No. 1-2299, on pages 14 and 15 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, 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 7 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, 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 16, 1994, SEC File No. 1-2299, on pages 11 and 12, 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.
*10(p) Consulting Agreement effective January 2, 1992 between the Company and George L. LaMore, Director and former Chairman & Chief Executive
Officer of the Company (filed as Exhibit 28 to the Bearings, Inc. Form 10-Q for the quarter ended December 31, 1991, SEC File No. 1-2299, and incorporated here by reference).
11 Computation of Net Income Per Share.
13 Bearings, Inc. 1994 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.
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, 1994.
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, 1994 and 1993 and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three year period ended June 30, 1994 and have issued our report thereon dated August 5, 1994; such consolidated financial statements and report are included in your 1994 Annual Report to shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedules of the Company, listed in Item 14(a)2. These consolidated financial statement schedules are 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 schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Cleveland, Ohio August 5, 1994
BEARINGS, INC.
EXHIBIT INDEX TO FORM 10-K FOR THE YEAR ENDED JUNE 30, 1994
Exhibit No. Description Reference - - -------- ----------- ---------
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 7 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) 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 7 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) 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)
10(p) Consulting Agreement effective January 2, 1992 between the Company and George L. LaMore, Director and former Chairman & Chief Executive Officer of the Company. Note (h)
11 Computation of Net Income Per Share. Attached
13 Bearings, Inc. 1994 Annual Report to shareholders. 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
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. (g) Incorporated by reference from the Company's Proxy Statement dated September 16, 1994, SEC File No. 1-2299, on pages 14 and 15 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 16, 1994, SEC File No. 1-2299, on pages 11 and 12 in the Report of the Executive Organization & Compensation Committee of the Board of Directors on Executive Compensation, under the subcaption "Management Incentive Plan".