EXHIBIT 99
APPLIED INDUSTRIAL TECHNOLOGIES REPORTS 33% JUMP IN OPERATING INCOME
AND 11% SALES GAIN IN FISCAL 2006 THIRD QUARTER,
RAISES FISCAL YEAR GUIDANCE
CLEVELAND, OHIO, APRIL 25, 2006 - APPLIED INDUSTRIAL TECHNOLOGIES (NYSE: AIT)
today reported record sales and earnings for the fiscal 2006 third quarter ended
March 31, 2006.
Net sales for the third quarter increased 11.4% to $497.2 million from $446.5
million in the comparable period a year ago. Operating income for the quarter
increased by 33.2%. Earnings per share increased to $0.65 versus $0.53 last
year. Margins for the period were above normal trend lines due to timing on
certain purchasing incentives received during the quarter, effecting an
approximate $0.04 EPS gain for operations from prior quarters. Prior year
earnings included a $0.09 per share boost from non-operating gains on insurance
and bankruptcy settlements.
For the nine month period ending March 31, 2006, sales increased 10.5% to $1.397
billion from $1.264 billion in the same period last year. Operating income for
the nine months was up 35.5%. Earnings per share increased to $1.69 versus $1.29
last year.
Commenting on the results, Applied Chairman & Chief Executive Officer David L.
Pugh said, "Our performance is indicative of the focused efforts we are
directing at all fundamentals of our business. Our balanced growth initiatives
are taking advantage of a continuing strong market, and our cost control and
margin improvement efforts have allowed us to leverage our sales gains into very
good profit contribution. Our asset management is equally strong, resulting in
an excellent balance sheet.
"As a result of our strong operating performance and continued favorable
outlook, we are raising our annual earnings guidance from a range of $2.10 to
$2.20 per share, to a range of $2.29 to $2.34 per share on sales of $1.89
billion to $1.90 billion."
In the first nine months of fiscal 2006, the Company purchased 855,600 shares of
its common stock in open market transactions for $28.6 million. At March 31,
2006, the company had remaining authorization to repurchase 1,000,000 additional
shares.
Applied will host its third quarter conference call for investors and analysts
at 4 p.m. ET today (Tuesday, April 25). To join in the call, dial
1-800-289-0494. 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 http://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 6828040).
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," "outlook," 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
-------------------------------------------
(Amounts in Thousands, except per share data)
- -------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
2006 2005 2006 2005
---------------------------------------------------------
NET SALES $ 497,198 $ 446,470 $1,396,583 $1,263,735
Cost of sales 360,383 327,177 1,016,067 930,972
- --------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 136,815 119,293 380,516 332,763
Selling, distribution and administrative expenses 104,730 95,213 295,415 269,957
- --------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 32,085 24,080 85,101 62,806
Interest expense, net 1,000 1,214 2,736 3,848
Other income, net (405) (2,640) (569) (2,798)
- --------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 31,490 25,506 82,934 61,756
INCOME TAXES 11,500 9,170 30,800 22,400
- --------------------------------------------------------------------------------------------------------------------
NET INCOME $ 19,990 $ 16,336 $ 52,134 $ 39,356
- --------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE - BASIC $ 0.68 $ 0.55 $ 1.75 $ 1.33
====================================================================================================================
NET INCOME PER SHARE - DILUTED $ 0.65 $ 0.53 $ 1.69 $ 1.29
====================================================================================================================
AVERAGE SHARES OUTSTANDING - BASIC 29,596 29,857 29,746 29,556
====================================================================================================================
AVERAGE SHARES OUTSTANDING - DILUTED 30,598 30,874 30,858 30,619
====================================================================================================================
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 completed two business combinations during the current fiscal
year. Spencer Fluid Power was acquired on September 30, 2005 and Minnesota
Bearing Company was acquired on March 31, 2006. These acquisitions are included
in the condensed consolidated balance sheet as of the acquisition date. Results
of acquired operations are included in the condensed statements of consolidated
income for periods beginning after the date of acquisition.
(3) Other income, net for the quarter ended March 31, 2005 includes a
non-recurring gain of $2,500 related to the proceeds from a life insurance
policy.
(4) 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)
- --------------------------------------------------------------------------------------------------------
March 31, June 30,
2006 2005
- --------------------------------------------------------------------------------------------------------
<C.
ASSETS
Cash $ 76,225 $127,136
Accounts receivable, net of allowances of $6,100 and $6,500 235,960 202,226
Inventories 208,086 175,533
Other current assets 28,404 22,606
- --------------------------------------------------------------------------------------------------------
Total current assets 548,675 527,501
Property - net 69,560 71,441
Goodwill 55,507 51,083
Other assets 46,061 40,145
- --------------------------------------------------------------------------------------------------------
TOTAL ASSETS $719,803 $690,170
========================================================================================================
LIABILITIES
Accounts payable $102,859 $ 99,047
Other current liabilities 76,124 82,648
- --------------------------------------------------------------------------------------------------------
Total current liabilities 178,983 181,695
Long-term debt 76,384 76,977
Other liabilities 52,493 38,211
- --------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 307,860 296,883
- --------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY 411,943 393,287
- --------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $719,803 $690,170
========================================================================================================
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
-----------------------------------------------
(Amounts in Thousands)
Nine Months Ended March 31,
-----------------------------
2006 2005
- -------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) OPERATIONS:
Net income $ 52,134 $ 39,356
Items not requiring cash:
Depreciation 10,000 10,366
Amortization 2,993 2,735
Other 5,830 6,930
Gain on sale of property (3) (1,121)
Cash effect of changes in working capital (50,411) (27,226)
- -------------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS 20,543 31,040
- -------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Property purchases (6,805) (6,283)
Proceeds from property sales 330 3,206
Acquisition of businesses, less cash acquired (27,024) (5,635)
Deposits and other 211 (1,093)
- -------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (33,288) (9,805)
- -------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Purchase of common stock for treasury (28,623) (8,884)
Cash dividends paid (12,540) (9,133)
Exercise of stock options 1,878 9,961
- -------------------------------------------------------------------------------------------------
CASH USED IN FINANCING ACTIVITIES (39,285) (8,056)
- -------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,119 528
- -------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH (50,911) 13,707
CASH AND TEMPORARY INVESTMENTS AT BEGINNING
OF PERIOD 127,136 69,667
- -------------------------------------------------------------------------------------------------
CASH AND TEMPORARY INVESTMENTS AT END
OF PERIOD $ 76,225 $ 83,374
=================================================================================================