EXHIBIT 99
APPLIED INDUSTRIAL TECHNOLOGIES REPORTS
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RECORD 4TH QUARTER AND YEAR-END RESULTS
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- 4th quarter earnings per share up 29.4% on 11.2% sales gain
- Fiscal 2006 earnings per share up 30.8% on 10.7% sales gain
CLEVELAND, OHIO, AUGUST 8, 2006 -- Applied Industrial Technologies (NYSE: AIT)
today reported record sales and earnings for its fourth quarter and fiscal 2006
ended June 30. Fiscal 2006 sales increased by 10.7% to $1,900,780,000 from
$1,717,055,000 in fiscal 2005. Net income rose 30.6% to $72,299,000 versus
$55,339,000 in the previous year. Earnings per share increased 30.8% to a
split-adjusted $1.57 compared to $1.20 last year (The prior year included a
$0.06 gain from a life insurance settlement).
Net sales for the fourth quarter increased by 11.2% to $504,197,000 from
$453,320,000 in the comparable period a year ago. Net income for the quarter
increased 26.2% to $20,165,000 compared to $15,983,000 last year. Fourth quarter
earnings per share increased 29.4% to $0.44 from $0.34 last year. This was the
company's fifteenth consecutive quarter of year-over-year EPS increases of 20
percent or more.
(Note: all per-share amounts have been adjusted to reflect the 3-for-2 stock
split paid June 15, 2006.)
Commenting on results, Applied Chairman & Chief Executive Officer David L. Pugh
said, "Fiscal 2006 was a record sales year for Applied as the economy remained
strong and we completed two strategic acquisitions, Spencer Fluid Power and
Minnesota Bearing Company. Operating margin improved to 6.1% for the year
compared to 5.1% last year. This improvement was a result of cost controls,
higher sales and effective management of inventories and other assets.
"Asset control remains a strong focus and we continue to generate significant
cash flows from operations. Our cash balances and financial strength have us
well-positioned to pursue strategic growth opportunities as they are identified.
During the quarter we took steps to enhance our long-term inventory management
position. These efforts resulted in a one-time reduction in our quarterly gross
profit as a result of reduced purchasing incentives. This was partially offset
by a positive impact from a LIFO layer liquidation.
"Looking ahead, we expect earnings of $1.76 to $1.80 per share on sales growth
of 7 to 10% to $2.03 to $2.09 billion in fiscal 2007."
During 2006, the company purchased 2.4 million shares of the company's common
stock (adjusted for the June 2006 stock split) on the open market representing
approximately 5% of the shares outstanding. On July 18, 2006, the Board of
Directors authorized the purchase of an additional 1.5 million shares.
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 & COO Bill L. Purser and CFO Mark O. Eisele. To join the call, dial
1-800-810-0924, or use the live audio webcast accessible at
http://www.Applied.com. A replay of the teleconference will be available August
8 -- 22 by dialing 1-888-203-1112, passcode 6334151.
The company will hold its Annual Meeting of Shareholders at 10:00 a.m., Tuesday,
October 24, 2006, at its Corporate Headquarters, 3301 Euclid Avenue, Cleveland,
Ohio. August 28, 2006, is the record date for determining shareholders entitled
to notice of and to vote at the Annual Meeting.
With more than 450 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, 2006, Applied posted
sales of $1.9 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.
#####
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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(In Thousands, except per share amounts)
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Three Months Ended Year Ended
June 30, June 30,
2006 2005 2006 2005
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NET SALES $ 504,197 $453,320 $ 1,900,780 $ 1,717,055
Cost of Sales 370,828 331,234 1,386,895 1,262,206
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133,369 122,086 513,885 454,849
Selling, Distribution and Administrative 102,878 96,924 398,293 366,881
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OPERATING INCOME 30,491 25,162 115,592 87,968
Interest Expense, net 474 882 3,210 4,730
Other Income, net (148) (303) (717) (3,101)
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INCOME BEFORE INCOME TAXES 30,165 24,583 113,099 86,339
INCOME TAX EXPENSE 10,000 8,600 40,800 31,000
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NET INCOME $ 20,165 $ 15,983 $ 72,299 $ 55,339
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NET INCOME PER SHARE - BASIC $ 0.45 $ 0.36 $ 1.62 $ 1.24
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NET INCOME PER SHARE - DILUTED $ 0.44 $ 0.34 $ 1.57 $ 1.20
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AVERAGE SHARES OUTSTANDING - BASIC 44,623 44,921 44,620 44,481
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AVERAGE SHARES OUTSTANDING - DILUTED 45,775 46,439 46,180 46,091
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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. 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
net income per share by $0.02. There were no LIFO layer liquidations in fiscal
2005.
(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 their acquisition date and
their results are included in the condensed statements of consolidated income
for periods beginning after the dates of acquisition.
(3) Other income, net for the year ended June 30, 2005 includes a gain of $3,000
related to the proceeds from a life insurance policy.
(4) All share and per share data have been restated to reflect a 3 for 2 stock
split effective June 15, 2006.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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(In Thousands)
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June 30, June 30,
2006 2005
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ASSETS
Cash and cash equivalents $ 106,428 $127,136
Accounts receivable, net of allowances of $6,000 and $6,500 231,524 202,226
Inventories 190,537 175,533
Other current assets 29,955 22,606
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Total current assets 558,444 527,501
Property - net 70,794 71,441
Goodwill 57,222 51,083
Other assets 44,211 40,145
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TOTAL ASSETS $ 730,671 $690,170
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LIABILITIES
Accounts payable $ 109,440 $ 99,047
Other current liabilities 78,991 82,648
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Total current liabilities 188,431 181,695
Long-term debt 76,186 76,977
Other liabilities 51,232 38,211
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TOTAL LIABILITIES 315,849 296,883
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SHAREHOLDERS' EQUITY 414,822 393,287
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 730,671 $690,170
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
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(In Thousands)
Year Ended June 30,
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2006 2005
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 72,299 $ 55,339
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation 13,128 13,832
Amortization 4,158 3,429
Other 8,146 8,716
Gain on sale of property (294) (1,427)
Cash effect of changes in working capital (27,584) 1,145
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NET CASH PROVIDED BY OPERATING ACTIVITIES 69,853 81,034
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CASH FLOWS FROM INVESTING ACTIVITIES
Property purchases (11,057) (9,208)
Proceeds from property sales 1,244 4,020
Net cash paid for acquisition of businesses, net of
cash acquired (27,672) (5,914)
Deposits and other (429) (1,437)
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NET CASH USED IN INVESTING ACTIVITIES (37,914) (12,539)
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CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury shares (54,778) (14,596)
Dividends paid (17,973) (12,740)
Excess tax benefits from share-based compensation 16,400
Exercise of stock options 2,569 15,590
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NET CASH USED IN FINANCING ACTIVITIES (53,782) (11,746)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,135 720
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(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (20,708) 57,469
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 127,136 69,667
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CASH AND CASH EQUIVALENTS AT END OF YEAR $106,428 $127,136
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