EXHIBIT 99
APPLIED INDUSTRIAL TECHNOLOGIES REPORTS 53% EARNINGS
INCREASE ON 13% SALES GAIN IN FISCAL 2006 SECOND QUARTER,
RAISES FISCAL YEAR GUIDANCE
CLEVELAND, OHIO, JANUARY 18, 2006 - Applied Industrial Technologies (NYSE: AIT)
today reported record sales and earnings for the fiscal 2006 second quarter
ended December 31, 2005.
Net sales for the second quarter increased 13% to $456,180,000 from $404,139,000
in the comparable period a year ago. Net income for the quarter increased 53% to
$15,294,000, or $0.50 per share, compared to $9,980,000, or $0.33 per share last
year. This represents the thirteenth consecutive quarter of year-over-year
increases in earnings per share of 25% or more.
For the six months ended December 31, 2005, sales increased 10% to $899,385,000
from $817,265,000 in the same period last year. Net income increased 40% to
$32,144,000, or $1.04 per share versus $23,020,000, or $0.76 per share, last
year.
Commenting on the company's performance, Applied Chairman & Chief Executive
Officer David L. Pugh said, "We are very pleased with our overall performance
this quarter. Our sales growth reflects both a solid market and well-considered
strategic initiatives. We continue to keep our costs in line with our plans
while investing for future growth. Our strong balance sheet, while impacted this
quarter by seasonal inventory adjustments and above-average stock repurchases,
is well-positioned to be where we want it at year end. Our business is
well-balanced and is delivering results which continue to reward our
shareholders.
"This balance gives us optimism for the remainder of the year, and as a result
we are raising our guidance. For our fiscal 2006 third quarter we expect
earnings per share to be in the range of $0.53 to $0.58 on sales ranging from
$483 million to $493 million. For fiscal 2006, we expect earnings per share to
be in the range of $2.10 to $2.20 on sales of $1.86 billion to $1.89 billion."
During the second quarter of 2006, the company purchased 544,300 shares of its
common stock in open market transactions for $17.9 million. At December 31,
2005, the company had remaining authorization to repurchase 455,700 additional
shares.
Applied will host its second quarter conference call for investors and analysts
at 2 p.m. ET today (Wednesday, January 18th). To join in the call,
dial1-800-289-0730. The call will be
conducted by Chairman & CEO David L. Pugh, President & COO Bill L. Purser and
CFO Mark O. Eisele. The call will also be webcast and can be accessed live
online at www.applied.com and will be archived there for 14 days. A replay of
the teleconference will be available for two weeks at 1-888-203-1112 (passcode
5249371).
With more than 440 facilities and 4,500 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, 2005, Applied posted
sales of $1.72 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. Applied intends that such forward-looking statements be subject to the
safe harbors created thereby. Forward-looking statements are often identified by
qualifiers such as "expect," "guidance," and similar expressions. 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 Applied 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.
#####
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
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(Amounts in Thousands, except per share data)
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Three Months Ended Six Months Ended
December 31, December 31,
2005 2004 2005 2004
-----------------------------------------------
NET SALES $ 456,180 $ 404,139 $ 899,385 $ 817,265
Cost of sales 334,783 300,191 655,684 603,795
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GROSS PROFIT 121,397 103,948 243,701 213,470
Selling, distribution and administrative expenses 96,183 86,725 190,685 174,744
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OPERATING INCOME 25,214 17,223 53,016 38,726
Interest expense, net 964 1,331 1,736 2,634
Other (income) expense, net (314) 112 (164) (158)
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INCOME BEFORE INCOME TAXES 24,564 15,780 51,444 36,250
INCOME TAXES 9,270 5,800 19,300 13,230
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NET INCOME $ 15,294 $ 9,980 $ 32,144 $ 23,020
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NET INCOME PER SHARE - BASIC $ 0.52 $ 0.34 $ 1.08 $ 0.78
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NET INCOME PER SHARE - DILUTED $ 0.50 $ 0.33 $ 1.04 $ 0.76
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AVERAGE SHARES OUTSTANDING - BASIC 29,662 29,580 29,819 29,409
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AVERAGE SHARES OUTSTANDING - DILUTED 30,678 30,671 30,878 30,470
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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.
(2) The Company acquired certain assets and assumed certain liabilities of
Spencer Industries, Inc. on September 30, 2005 and included these amounts in the
September 30, 2005 condensed consolidated balance sheet. Results of acquired
operations were included in the condensed statement of consolidated income
beginning October 1, 2005.
(3) Certain reclassifications have been made to prior year amounts to be
consistent with the presentation in the current year.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Amounts in Thousands)
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December 31, June 30,
2005 2005
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ASSETS
Cash $ 55,110 $127,136
Accounts receivable, net of allowances of $6,200 and $6,500 212,743 202,226
Inventories 217,898 175,533
Other current assets 32,210 22,606
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Total current assets 517,961 527,501
Property - net 70,340 71,441
Goodwill 52,231 51,083
Other assets 40,827 40,145
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TOTAL ASSETS $681,359 $690,170
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LIABILITIES
Accounts payable $ 94,370 $ 99,047
Other current liabilities 60,813 82,648
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Total current liabilities 155,183 181,695
Long-term debt 76,581 76,977
Other liabilities 51,587 38,211
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TOTAL LIABILITIES 283,351 296,883
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SHAREHOLDERS' EQUITY 398,008 393,287
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $681,359 $690,170
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
-----------------------------------------------
(Amounts in Thousands)
Six Months Ended December 31,
------------------------------
2005 2004
- ---------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) OPERATIONS:
Net income $ 32,144 $ 23,020
Items not requiring cash:
Depreciation 6,624 6,955
Amortization 1,505 1,089
Other 4,039 5,097
Gain on sale of property (60) (531)
Cash effect of changes in working capital (61,562) (39,894)
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CASH USED IN OPERATIONS (17,310) (4,264)
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INVESTING ACTIVITIES:
Property purchases (4,189) (3,973)
Proceeds from property sales 145 1,661
Acquisition of business, less cash acquired (16,298)
Deposits and other (195) (1,095)
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CASH USED IN INVESTING ACTIVITIES (20,537) (3,407)
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FINANCING ACTIVITIES:
Purchase of common stock for treasury (28,096) (7,234)
Cash dividends paid (8,084) (5,539)
Exercise of stock options 1,165 7,556
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CASH USED BY FINANCING ACTIVITIES (35,015) (5,217)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 836 526
- ---------------------------------------------------------------------------------------------------------------------
DECREASE IN CASH (72,026) (12,362)
CASH AND TEMPORARY INVESTMENTS AT BEGINNING
OF PERIOD 127,136 69,667
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CASH AND TEMPORARY INVESTMENTS AT END
OF PERIOD $ 55,110 $ 57,305
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