The Company’s cash and cash equivalents consists of deposits with commercial banks .  While Applied monitors the creditworthiness 
of these commercial banks and institutions, a crisis in the U.S., Canadian or Mexican financial systems c ould limit access to funds 
and/or result in the loss of principal.  The terms of these deposits and investments provide that all monies are available to the 
Company upon demand. 
Allowances for Doubtful Accounts 
The Company evaluates the coll ectibility of trade accounts receivable based on a combination of factors.  Initially, the Company 
estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience .  This initial 
estimate is adjusted based on recent trends of customers and industries estimated to be greater credit risks, trends within the entire 
customer pool and changes in the overall aging of accounts receivable.  Accounts are written off against the allowance when it 
becomes evident collection will not occur.  While the Company has a large customer base that is ge ographically dispersed, a general 
economic downturn in any of the industry segments in which the Comp any operates could result in higher than expected defaults, 
and therefore, the need to revise estimates for bad debts. 
Inventories 
Inventories are valued at  the lower of cost or market, using the last-in, firs t-out (LIFO) method for U.S. inventories and the average 
cost method for foreign inventories.  The Company adopted the link chain dollar value LIFO method of accounting for U.S. 
inventories in fiscal 1974.  At June 30, 2012, approximately 37% of the Company’s domestic inventory dollars relate to LIFO  layers 
added in the 1970s.  The Company maintains five LIFO pools based on the following product groupings: bearings, power 
transmission products, rubber produ cts, fluid power products and other products.  LIFO layers and/or liquidations are determined 
consistently year-to-year. 
The Company evaluates the recoverab ility of its slow moving or obsolete inventories at least quarterly.  The Company estimates t he 
recoverable cost of such inventory by product type while considering factors such as its age, historic and current demand trends, the 
physical condition of the inventory as well as assumptions regarding future demand .  The Company’s ability to recover its cost for 
slow moving or obsolete inventory can be affected by such factors as general market conditions, future customer demand and 
relationships with suppliers.  Historically, the Company’s inventories have demonstrated long shelf lives, are not highly susceptible to 
obsolescence and are eligible for return under various supplier return programs. 
Supplier Purchasing Programs 
The Company enters into agreements with cert ain suppliers providing for inventory purchase incentives.  The Company’s inventory 
purchase incentive arrangements are unique to each supplier and are generally annual programs ending at either the Company’s 
fiscal year end or the supplier’s year end.  Incentives are received in the form of cash or credits against purchases upon attainment of 
specified purchase volumes and are received monthly, quarterly or annually.  The incentives are generally a specified percentage of 
the Company’s net pu
rchases based upon achieving specific purchasing volume levels.  These percentages can increase or decrease 
based on changes in the volume of purchases.  The Company accrues for the receipt of these in ventory purchase incentives based 
upon cumulative purchases of inventory.  The percentage level utilized is based upon the estimated total volume of purchases 
expected during the life of the program.  Supplier prog rams are analyzed each quarter to determine the a ppropriateness of the 
amount of purchase incentives accrued.  Upon program completion, differences between estimates and actual incentives