Applied Industrial (AIT) 8-K Applied Industrial Technologies Reports Record Fiscal 2008 Third Quarter Results

EXHIBIT 99.1

Applied Industrial Technologies Reports Record
Fiscal 2008 Third Quarter Results

• 12% increase in EPS on 1.7% sales gain

• Reaffirms sales and raises lower end of EPS forecast

CLEVELAND, Ohio, April 24, 2008– Applied Industrial Technologies (NYSE: AIT) today reported record third quarter sales and earnings for the three months ended March 31, 2008.

Net sales for the third quarter increased 1.7% to $530,156,000 from $521,129,000 in the comparable period a year ago. Net income for the quarter increased 8.7% to $23,595,000 from $21,697,000, and earnings per share increased 12.2% to $0.55 per share from $0.49 per share in the third quarter last year.

For the nine months ended March 31, 2008, sales increased 5% to $1,559,711,000 from $1,486,084,000 in the same period last year. Net income increased 15.7% to $71,019,000 or $1.62 per share versus $61,382,000, or $1.37 per share, last year.

“Although our quarterly sales growth rate declined slightly more than we thought it would, we are pleased in our ability to leverage our productivity improvements and continued cost controls to achieve a double-digit increase in earnings per share,” stated David L. Pugh, Applied’s Chairman and Chief Executive Officer. “Sales during the quarter were impacted by the continued deterioration of the housing and the automotive markets, and this weakness appears to be migrating into other sectors as consumers and businesses are becoming a bit more anxious about the economy.

“While we do not expect significant economic improvement during the fourth quarter, based on our results to date and the continued strength in our operational controls, we expect fiscal 2008 sales to be within the lower range of our previously issued guidance of $2.10 billion to $2.18 billion. Earnings are now expected to be in the range of $2.15 to $2.25 per share, compared to prior guidance of $2.10 to $2.25 per share for fiscal 2008.”

During the quarter, Applied purchased 435,000 shares of its common stock in open market transactions for $12.2 million. At March 31, 2008, Applied had remaining authorization to purchase 1,065,000 additional shares.

Applied will host its third quarter conference call for investors and analysts at 4 p.m. ET today (Thursday, April 24). The call will be conducted by Chairman & CEO Dave Pugh, President & COO Ben Mondics and Vice President & CFO Mark Eisele. To join the call, dial 1-888-581-9259 for US or Canadian callers, or 1-706-679-2792 for International callers and use passcode 39989871. A live audio webcast can be accessed online at www.Applied.com. A replay of the teleconference will be available for two weeks by dialing 1-800-642-1687 (US/Canada) or 1-706-645-9291 (International) using passcode 39989871.

With more than 445 facilities and 4,600 employee-associates across North America, Applied Industrial Technologies is an industrial distributor that offers more than 3 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 “guidance,” “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)

	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2008		2007			2008		2007
Net Sales	$	530,156	$	521,129		$	1,559,711	$	1,486,084
Cost of sales		385,656		380,557			1,133,664		1,080,227
		144,500		140,572			426,047		405,857
Selling, distribution and administrative, including depreciation		106,815		106,467			311,878		309,446
Operating Income		37,685		34,105			114,169		96,411
Interest expense, net		241		749			516		2,006
Other expense (income), net		162		(308	)		553		(1,097	)
Income Before Income Taxes		37,282		33,664			113,100		95,502
Income Tax Expense		13,687		11,967			42,081		34,120
Net Income	$	23,595	$	21,697		$	71,019	$	61,382
Net Income Per Share — Basic	$	0.55	$	0.50		$	1.65	$	1.40
Net Income Per Share — Diluted	$	0.55	$	0.49		$	1.62	$	1.37
Average Shares Outstanding — Basic		42,558		43,616			42,963		43,810
Average Shares Outstanding — Diluted		43,259		44,414			43,751		44,685

     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Cost of sales for interim financial statements is 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 inventories and the effect of year-end inventory quantities on LIFO costs.

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)

	March 31,		June 30,
	2008		2007
Assets
Cash and cash equivalents	$	70,580	$	119,665
Accounts receivable, net of allowances of $6,390 and $6,134		244,863		248,698
Inventories		219,265		199,886
Other current assets		34,407		32,284
Total current assets		569,115		600,533
Property — net		65,158		67,788
Goodwill		61,760		57,550
Other assets		56,634		51,498
Total Assets	$	752,667	$	777,369
Liabilities
Accounts payable	$	85,928	$	97,166
Long-term debt payable within one year		—		50,395
Other accrued liabilities		85,871		87,449
Total current liabilities		171,799		235,010
Long-term debt		25,000		25,000
Other liabilities		73,089		66,376
Total Liabilities		269,888		326,386
Shareholders’ Equity		482,779		450,983
Total Liabilities and Shareholders’ Equity	$	752,667	$	777,369

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Amounts in Thousands)

	Nine Months Ended March 31,
	2008			2007
Cash Flows from Operating Activities
Net income	$	71,019		$	61,382
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		9,081			10,208
Share-based compensation and amortization of intangible assets		3,849			3,889
Gain on sale of property		(1,192	)		(349	)
Treasury shares contributed to employee benefit and deferred compensation plans		683			1,778
Changes in operating assets and liabilities, net of acquisitions		(22,117	)		(43,561	)
Other,net		627			(1,692	)
Net Cash provided by Operating Activities		61,950			31,655
Cash Flows from Investing Activities
Property purchases		(6,108	)		(8,125	)
Proceeds from property sales		1,881			999
Net cash paid for acquisition of business		(11,128	)
Other		(78	)		(229	)
Net Cash used in Investing Activities		(15,433	)		(7,355	)
Cash Flows from Financing Activities
Long-term debt repayments		(50,000	)
Purchase of treasury shares		(33,224	)		(33,988	)
Dividends paid		(19,382	)		(15,799	)
Excess tax benefits from share-based compensation		3,153			2,714
Exercise of stock options		1,458			2,323
Net Cash used in Financing Activities		(97,995	)		(44,750	)
Effect of Exchange Rate Changes on Cash		2,393			(960	)
Decrease in cash and cash equivalents		(49,085	)		(21,410	)
Cash and cash equivalents at beginning of period		119,665			106,428
Cash and Cash Equivalents at End of Period	$	70,580		$	85,018