to the Company’s pension obligation causing a related increase 
or decrease in reported net operating results in the period of 
change in the estimate.  At June 30, 2012, a 1% point change 
would have the following effects (in thousands):  
 One-Percen tage Point 
Effect of change in:   -Increase  Decrease 
Discount rate on liability $ (3,501) 
) 
$ 3,965 
Discount rate on net periodic benefit cost (117) 
) 
130 
Effective December 31, 2011, participant benefits and entry into 
the SERP was frozen.  As such, compensation increases no longer 
have an impact on the postemployment liability or the associated 
periodic benefit cost.  Additionally, a 1% change in the return on 
assets is not material since most of the plans are non-qualified 
and unfunded. 
Income Taxes 
Deferred income taxes are recorded for estimated future tax effects 
of differences between the bases of assets and liabilities for 
finan
cial reporting and income tax purposes, giving consideration 
to enacted tax laws.  As of June 30, 2012, the Company had 
recognized $34.4 million of net deferred tax assets.  This includes a 
$0.2 million valuation allowance recorded related to estimated 
limitations in the deductibility of certain expenses.  Management 
believes that sufficient income will be earned in the future to 
realize its deferred income tax assets.  The realization of these 
deferred tax assets can be impacted by changes to tax laws, 
statutory tax rates an d future taxable income levels. 
  
 
6 
 
CONTRACTUAL OBLIGATIONS 
The following table shows the approximate value of the 
Company’s contractual obligations and other commitments to 
make future payments as of June 30, 2012 (in thousands): 
 Total 
Period 
Less 
Than  
1 yr 
Period 
1-3 yrs 
Period 
4-5 yrs 
Period 
Over  
5 yrs Other 
Operating leases $ 81,600 $ 23,500 $ 32,300 $ 14,700 $ 11,100  
Planned funding of 
post-retirement 
obligations 45,100 6,300 11,500 6,100 21,200  
Unrecognized 
income tax benefit 
liabilities, including 
interest and 
penalties 1,970     $ 1,970 
Total Contractual 
Cash Obligations $ 128,670 $ 29,800 $ 43,800 $ 20,800 $ 32,300 $ 1,970 
Purchase orders for inventory and other goods and services are 
not included in our estimates as we are unable to aggregate the 
amount of such purchase orders that represent enforceable and 
legally binding agreements specifying all significant terms.  The 
previous table includes the gross liability for unrecognized income 
tax benefits including interest and penalties in the “Other” 
column as the Company is unable to make a reasonable estimate 
regarding
 the timing of cash settlements with the respective 
taxing authorities. 
SUBSEQUENT EVENT 
On August 1, 2012, the Company acquired SKF's company-
owned distribution businesses in Australia and New Zealand for 
cash consideration.  These businesses will expand Applied's global 
capabilities and are part of the Service Center Based Distribution 
segment.  The Company funded the acquisition from its available 
cash and existing revolving credit facilities.  Results of operations 
acquired will be includ ed in the Company's results of operations 
from the date of closing.  
CRITICAL ACCOUNTING POLICIES 
The preparation of financial statements and related disclosures in 
conformity with accounting principles generally accepted in the 
United States of America requires management to make 
judgments, assumptions and estimates at a specific point in time 
that affect the amounts reported in the consolidated financial 
statements and disclosed in the accompanying notes.  The 
Business and Accounting  Policies note to the consolidated 
financial statements describes the si gnificant accounting policies 
and methods used in preparation of the consolidated financial 
statements.  
Estimates are used for, but not limited to, determining the net 
carrying value of trade accounts receivable, inventories, recording 
self-insurance liabilities and other accrued liabilities.  Actual