EXHIBIT 99
Applied Industrial Technologies Reports
Record 4th Quarter and Year-end Results
- - 4th quarter earnings per share up 27.3% on 4.7% sales gain
- - Fiscal 2007 earnings per share up 22.9% on 6.0% sales gain
Record 4th Quarter and Year-end Results
- - 4th quarter earnings per share up 27.3% on 4.7% sales gain
- - Fiscal 2007 earnings per share up 22.9% on 6.0% sales gain
CLEVELAND, Ohio, August 9, 2007— Applied Industrial Technologies (NYSE: AIT) today reported record sales and earnings for its fourth quarter and fiscal 2007 year ended June 30. Fiscal 2007 sales increased 6.0% to $2,014,109,000 from $1,900,780,000 in fiscal 2006. Net income for the year rose 19.0% to $86,022,000 versus $72,299,000 in the previous year. Earnings per share for the year increased 22.9% to $1.93 compared with $1.57 last year.
Net sales for the fourth quarter increased 4.7% to $528,025,000 from $504,197,000 in the comparable period a year ago. Net income for the quarter increased 22.2% to $24,640,000 compared to $20,165,000 last year. Fourth quarter earnings per share increased 27.3% to $0.56 from $0.44 last year.
Commenting on results, Applied Chairman & Chief Executive Officer David L. Pugh said, “Fiscal 2007 was a record sales year for Applied, though the economic expansion was less robust than it was a year ago. The current slump in the housing industry has impacted some of our key related markets, as has the sluggish performance by the automobile manufacturing sector. Offsetting the slowdown in sales growth, we have had good focus on operating fundamentals.
“Our operating margin increased from 6.1% last year to 6.7% in fiscal 2007. Combined with appropriate asset control, this allowed us to once again generate significant cash flow, giving us a strong balance sheet with which to pursue other strategic growth opportunities. As certain segments of the economy improve, we believe we are in a strong position to leverage sales gains into even stronger earnings performance.
“Looking ahead, we expect to continue our growth in fiscal 2008 and achieve earnings of $2.05 to $2.15 per share on sales of $2.10 to $2.18 billion.”
During 2007, the Company purchased 1.4 million shares of the Company’s common stock on the open market for approximately $34 million. These shares represent approximately 3% of the shares outstanding. At June 30, 2007, the Company had remaining authorization to repurchase 1.5 million shares on the open market.
Applied will host its fourth quarter conference call for investors and analysts at 4 p.m today. The call will be conducted by Chairman & CEO David L. Pugh, President Bill L. Purser, Executive Vice President & COO Ben Mondics, and CFO Mark O. Eisele. To join the call, dial 1-800-818-5264, or use the live audio webcast accessible at http://www.Applied.com. A replay of the teleconference will be available August 9 — 23 by dialing 1-888-203-1112, passcode 1941226.
The Company will hold its Annual Meeting of Shareholders at 10:00 a.m., Tuesday, October 23, 2007, at its Corporate Headquarters, One Applied Plaza (E. 36th & Euclid Avenue), Cleveland, Ohio. August 27, 2007, is the record date for determining shareholders entitled to notice of and to vote at the Annual Meeting.
With 445 facilities and 4,600 employee-associates across North America, Applied Industrial Technologies is an industrial distributor that offers more than 2 million parts critical to the operations of MRO and OEM customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. For its fiscal year ended June 30, 2007, Applied posted sales of $2.0 billion. Applied can be visited on the Internet at http://www.applied.com.
This press release contains statements that are forward-looking, as that term is defined by the Securities and Exchange Commission in its rules, regulations and releases. Forward-looking statements are often identified by qualifiers such as “believe,” “expect” and similar expressions. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectations regarding important risk factors including trends in the industrial sector of the economy, and other risk factors identified in Applied’s most recent periodic report and other filings made with the Securities and Exchange Commission. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that the results expressed therein will be achieved. Applied assumes no obligation to update publicly or revise any forward-looking statements, whether due to new information, or events, or otherwise, except as required by law.
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For investor relations information, contact Mark O. Eisele, Vice President — Chief Financial Officer, at 216-426-4417. For corporate information, contact Richard C. Shaw, Vice President — Communications, at 216-426-4343.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Amounts in Thousands, except per share data)
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Amounts in Thousands, except per share data)
Three Months Ended | Year Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net Sales | $ | 528,025 | $ | 504,197 | $ | 2,014,109 | $ | 1,900,780 | ||||||||
Cost of sales | 385,830 | 370,828 | 1,466,057 | 1,386,895 | ||||||||||||
142,195 | 133,369 | 548,052 | 513,885 | |||||||||||||
Selling, distribution and administrative expenses | 103,595 | 102,878 | 413,041 | 398,293 | ||||||||||||
Operating Income | 38,600 | 30,491 | 135,011 | 115,592 | ||||||||||||
Interest expense, net | 354 | 474 | 2,360 | 3,210 | ||||||||||||
Other (income) expense, net | (82 | ) | (148 | ) | (1,179 | ) | (717 | ) | ||||||||
Income Before Income Taxes | 38,328 | 30,165 | 133,830 | 113,099 | ||||||||||||
Income Tax Expense | 13,688 | 10,000 | 47,808 | 40,800 | ||||||||||||
Net Income | $ | 24,640 | $ | 20,165 | $ | 86,022 | $ | 72,299 | ||||||||
Net Income Per Share — Basic | $ | 0.57 | $ | 0.45 | $ | 1.97 | $ | 1.62 | ||||||||
Net Income Per Share — Diluted | $ | 0.56 | $ | 0.44 | $ | 1.93 | $ | 1.57 | ||||||||
Average Shares Outstanding — Basic | 43,089 | 44,623 | 43,630 | 44,620 | ||||||||||||
Average Shares Outstanding — Diluted | 43,935 | 45,775 | 44,495 | 46,180 | ||||||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) 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 primarily made based on periodic physical inventory and the effect of year-end inventory quantities on LIFO costs. Reductions in year end inventories during the fiscal year ended June 30, 2006 resulted in liquidations of LIFO inventory quantities carried at lower costs prevailing in prior years. The effect of these liquidations for the year ended June 30, 2006 increased gross profit by $1,647, net income by $1,013 and diluted net income per share by $0.02, respectively. There were no LIFO layer liquidations for fiscal 2007 and 2005.
(2) The Company’s $50 million in senior unsecured term notes mature in December 2007 and have been classified as a current liability as of June 30, 2007.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
June 30, | June 30, | |||||||
2007 | 2006 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 119,665 | $ | 106,428 | ||||
Accounts receivable, net of allowances of $6,134 and $6,000 | 248,698 | 231,524 | ||||||
Inventories | 199,886 | 190,537 | ||||||
Other current assets | 32,284 | 29,955 | ||||||
Total current assets | 600,533 | 558,444 | ||||||
Property — net | 67,788 | 70,794 | ||||||
Goodwill | 57,550 | 57,222 | ||||||
Other assets | 51,498 | 44,211 | ||||||
Total Assets | $ | 777,369 | $ | 730,671 | ||||
Liabilities | ||||||||
Accounts payable | $ | 97,166 | $ | 109,440 | ||||
Long-term debt payable within one year | 50,395 | |||||||
Other accrued liabilities | 87,449 | 78,991 | ||||||
Total current liabilities | 235,010 | 188,431 | ||||||
Long-term debt | 25,000 | 76,186 | ||||||
Other liabilities | 66,376 | 51,232 | ||||||
Total Liabilities | 326,386 | 315,849 | ||||||
Shareholders’ Equity | 450,983 | 414,822 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 777,369 | $ | 730,671 | ||||
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(In Thousands)
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(In Thousands)
Year Ended June 30, | ||||||||
2007 | 2006 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ | 86,022 | $ | 72,299 | ||||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||||||
Depreciation | 13,489 | 13,128 | ||||||
Share-based compensation and amortization of intangibles | 3,972 | 3,710 | ||||||
Gain on sale of property | (334 | ) | (294 | ) | ||||
Treasury shares contributed to employee benefit and deferred compensation plans | 1,921 | 8,937 | ||||||
Changes in operating assets and liabilities, net of effects from acquisition of business | (28,392 | ) | (30,089 | ) | ||||
Other | (5,753 | ) | 2,162 | |||||
Net Cash provided by Operating Activities | 70,925 | 69,853 | ||||||
Cash Flows from Investing Activities | ||||||||
Property purchases | (11,192 | ) | (11,057 | ) | ||||
Proceeds from property sales | 1,275 | 1,244 | ||||||
Net cash paid for acquisition of businesses, net of cash acquired | (27,672 | ) | ||||||
Deposits and other | (302 | ) | (429 | ) | ||||
Net Cash used in Investing Activities | (10,219 | ) | (37,914 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Purchase of treasury shares | (33,988 | ) | (54,778 | ) | ||||
Dividends paid | (20,970 | ) | (17,973 | ) | ||||
Excess tax benefits from share-based compensation | 3,885 | 16,400 | ||||||
Exercise of stock options | 2,663 | 2,569 | ||||||
Net Cash used in Financing Activities | (48,410 | ) | (53,782 | ) | ||||
Effect of Exchange Rate Changes on Cash | 941 | 1,135 | ||||||
Increase (decrease) in cash and cash equivalents | 13,237 | (20,708 | ) | |||||
Cash and cash equivalents at beginning of period | 106,428 | 127,136 | ||||||
Cash and Cash Equivalents at End of Period | $ | 119,665 | $ | 106,428 | ||||