Applied Industrial Technologies Announces Results for Fiscal 2001 Third Quarter

Apr 12, 2001, 01:00 ET from Applied Industrial Technologies

    CLEVELAND, April 12 /PRNewswire/ -- Applied Industrial Technologies
 (NYSE:   AIT) today reported earnings of $0.35 per share for the third quarter
 of fiscal 2001, consistent with the revised outlook discussed in the company's
 March 6 press release.
     Net sales for the quarter, which ended March 31, declined to $408,839,000
 from $420,897,000 for the comparable period a year ago.  Net income decreased
 to $6,956,000, or $0.35 per share, from $8,304,000, or $0.40 per share, for
 last year's third quarter.
     For the first nine months of fiscal 2001, net income rose 10.2 percent to
 $21,549,000, or $1.08 per share, on sales of $1,235,153,000. Last year at this
 time, nine-month net income was $20,399,000, or $0.98 per share, on sales of
 $1,188,471,000.
     Commenting on results, Applied Chairman & Chief Executive Officer David L.
 Pugh said, "The slowdown in U.S. industrial activity hurt our sales
 practically across the board and was particularly pronounced with customers in
 the primary metals, automotive and high-tech machine tools industries.  The
 quarter also contained one less sales day than the same quarter last year.  We
 were disappointed that the historically strong March sales failed to
 materialize.  On a positive note, performance continues strong at Applied
 Industrial Technologies Ltd. in western Canada, as well as in the U.S. food
 processing industry.
     "We have been able to sustain a relatively healthy level of earnings on
 lower-than-anticipated sales due to operational improvements already in place.
 Gross profit margins rose in the quarter in spite of a highly competitive
 environment.  We will continue to maintain a tight rein on operations
 throughout this downturn so our business will remain fundamentally sound and
 ready to accelerate when industrial markets rebound.  Our balance sheet
 remains strong and inventories are consistent with business levels.
     "Applied continues to invest in channels that provide customers with
 easier and faster access to the products we sell.  We recently issued an
 updated, expanded version of our successful Maintenance America(R) industrial
 maintenance catalog and made it available on the Internet.  Additionally, we
 launched version 2 of AppliedACCESS(R), our Internet-based purchasing system,
 with a new, advanced parts identification feature.  Applied's e-commerce
 vehicles continue to gain broader customer acceptance, although they still
 represent only a small portion of our overall sales."
     During the quarter, Applied also announced its participation in a joint
 venture, iSource Performance Materials L.L.C.  "This minority-owned, specialty
 distributor directly responds to our customers' requirements for improved
 safety in the handling and shipping of DOT-regulated products," said Pugh.
 "We are pleased to participate in a minority-owned venture that benefits the
 community as well as our customers.  Through the start-up phase, iSource is
 performing as expected and we are very pleased with its future prospects.
     Related to the Company's financial performance, Pugh stated, "Our reported
 earnings include an increase in bad debt expense of $1 million for the quarter
 to reflect the realities of the slowing industrial economy. At this point, we
 believe the economy will continue to be sluggish at least through the
 remainder of our fiscal year."
     Applied management currently expects earnings per share of between
 $0.30 and $0.35 per share in the fourth quarter (ending June 30, 2001) on
 sales of between $400 million to $410 million.
     During the first nine months of fiscal 2001, the company repurchased
 891,000 shares of its common stock for $15.5 million. This includes 388,000
 shares repurchased in the third quarter.  At March 31, board authorization was
 in place to repurchase up to 579,000 additional shares.
     Applied's third quarter financial teleconference will be available online
 at www.appliedindustrial.com .  The live webcast will begin at 4 p.m. (ET) on
 Tuesday, April 17.  The call will be conducted by Chairman & CEO David L.
 Pugh, President & COO Bill L. Purser and CFO John R. Whitten, who will respond
 to questions submitted in advance. Questions may be submitted to Michael
 Zapola at Applied via e-mail at mzapola@ait-applied.com or by
 fax to 216-426-4352.  A replay of the teleconference will be available
 continuously through April 20 at 800-801-6152.
     With more than 470 facilities and 4800 employee-associates across North
 America, Applied Industrial Technologies 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, 2000, the company recorded sales of $1.6 billion.  Applied
 can be visited on the Internet at www.appliedindustrial.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. All forward-looking statements
 are based on current expectations regarding important risk factors including
 trends in the industrial sector of the economy, the success of our various
 marketing strategies, including e-commerce and catalog initiatives, 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
 publicly update or revise any forward-looking statements, whether due to new
 information, or events, or otherwise.
 
 
                APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                    CONDENSED STATEMENTS OF CONSOLIDATED INCOME
                   (Unaudited) (Thousands, except per share data)
 
                                   Three Months Ended    Nine Months Ended
                                         March 31              March 31
                                      2001      2000       2001        2000
 
     Net Sales                      $408,839  $420,897  $1,235,153  $1,188,471
     Cost of sales                   306,802   317,875     924,760     898,997
       Total                         102,037   103,022     310,393     289,474
     Selling, distribution and
      administrative                  88,797    87,424     268,235     249,746
     Operating Income                 13,240    15,598      42,158      39,728
     Interest expense, net             1,984     1,646       6,709       5,447
     Income Before Income Taxes       11,256    13,952      35,449      34,281
     Income Taxes                      4,300     5,648      13,900      13,882
     Net Income                       $6,956    $8,304     $21,549     $20,399
     Net Income Per Share - Basic      $0.36     $0.41       $1.10       $0.99
     Net Income Per Share - Diluted    $0.35     $0.40       $1.08       $0.98
     Average Shares Outstanding -
      Basic                           19,568    20,305      19,654      20,589
     Average Shares Outstanding -
      Diluted                         19,880    20,527      19,979      20,816
 
 
     NOTES TO CONDENSED STATEMENTS OF CONSOLIDATED INCOME
 
     (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 upon the annual physical inventory and the effect
         of year-end inventory quantities on LIFO costs.
 
     (2) Effective July 1, 2000, the Company adopted Emerging Issues Task Force
         Issue No. 00-10, "Accounting for Shipping and Handling Fees and
         Costs." Accordingly, freight charged to customers is now classified as
         Sales, whereas previously it was classified as an offset to Cost of
         Sales.  All prior amounts have been restated to conform to the current
         presentation.
 
 
               APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                               (Amounts in Thousands)
 
                                         March 31, 2001      June 30, 2000
                                           (Unaudited)
 
     Assets
       Cash                                  $12,162             $12,349
       Accounts receivable, net of
        allowances of $4,400 and $3,800      198,576             212,254
       Inventories                           210,313             182,102
       Other current assets                    9,211               8,286
            Total current assets             430,262             414,991
       Property - net                         90,698              97,200
       Goodwill - net                         67,062              67,089
       Other assets                           15,691              15,387
     Total Assets                           $603,713            $594,667
 
     Liabilities
       Accounts payable                     $104,581             $93,587
       Other current liabilities              58,538              66,272
            Total current liabilities        163,119             159,859
       Long-term debt                        110,789             112,168
       Other liabilities                      23,872              23,309
     Total Liabilities                       297,780             295,336
     Shareholders' Equity                    305,933             299,331
     Total Liabilities and Shareholders'
      Equity                                $603,713            $594,667
 
 
              APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                  CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                        (Unaudited)  (Amounts in Thousands)
 
                                                   Nine Months Ended March 31
                                                     2001               2000
 
     Cash provided from operations:
       Net income                                   $21,549           $20,399
       Items not requiring cash:
         Depreciation and amortization               16,923            17,433
         Other                                        3,840             2,237
       Cash effect of changes in working capital     (9,880)           18,238
     Cash provided from operations                   32,432            58,307
     Investing Activities:
       Property additions-net                        (4,280)           (2,729)
       Acquisition of businesses, less
        cash acquired                                (5,491)             (693)
       Deposits and other                               523              (797)
     Cash used in investing activities               (9,248)           (4,219)
     Financing Activities:
       Repayment of notes payable
        and long-term debt                           (1,379)          (34,354)
       Purchase of common stock for treasury        (15,487)          (16,264)
       Cash dividends paid                           (7,178)           (7,499)
       Other                                            673               108
     Cash used by financing activities              (23,371)          (58,009)
     Decrease in cash                                 $(187)          $(3,921)
 
 

SOURCE Applied Industrial Technologies
    CLEVELAND, April 12 /PRNewswire/ -- Applied Industrial Technologies
 (NYSE:   AIT) today reported earnings of $0.35 per share for the third quarter
 of fiscal 2001, consistent with the revised outlook discussed in the company's
 March 6 press release.
     Net sales for the quarter, which ended March 31, declined to $408,839,000
 from $420,897,000 for the comparable period a year ago.  Net income decreased
 to $6,956,000, or $0.35 per share, from $8,304,000, or $0.40 per share, for
 last year's third quarter.
     For the first nine months of fiscal 2001, net income rose 10.2 percent to
 $21,549,000, or $1.08 per share, on sales of $1,235,153,000. Last year at this
 time, nine-month net income was $20,399,000, or $0.98 per share, on sales of
 $1,188,471,000.
     Commenting on results, Applied Chairman & Chief Executive Officer David L.
 Pugh said, "The slowdown in U.S. industrial activity hurt our sales
 practically across the board and was particularly pronounced with customers in
 the primary metals, automotive and high-tech machine tools industries.  The
 quarter also contained one less sales day than the same quarter last year.  We
 were disappointed that the historically strong March sales failed to
 materialize.  On a positive note, performance continues strong at Applied
 Industrial Technologies Ltd. in western Canada, as well as in the U.S. food
 processing industry.
     "We have been able to sustain a relatively healthy level of earnings on
 lower-than-anticipated sales due to operational improvements already in place.
 Gross profit margins rose in the quarter in spite of a highly competitive
 environment.  We will continue to maintain a tight rein on operations
 throughout this downturn so our business will remain fundamentally sound and
 ready to accelerate when industrial markets rebound.  Our balance sheet
 remains strong and inventories are consistent with business levels.
     "Applied continues to invest in channels that provide customers with
 easier and faster access to the products we sell.  We recently issued an
 updated, expanded version of our successful Maintenance America(R) industrial
 maintenance catalog and made it available on the Internet.  Additionally, we
 launched version 2 of AppliedACCESS(R), our Internet-based purchasing system,
 with a new, advanced parts identification feature.  Applied's e-commerce
 vehicles continue to gain broader customer acceptance, although they still
 represent only a small portion of our overall sales."
     During the quarter, Applied also announced its participation in a joint
 venture, iSource Performance Materials L.L.C.  "This minority-owned, specialty
 distributor directly responds to our customers' requirements for improved
 safety in the handling and shipping of DOT-regulated products," said Pugh.
 "We are pleased to participate in a minority-owned venture that benefits the
 community as well as our customers.  Through the start-up phase, iSource is
 performing as expected and we are very pleased with its future prospects.
     Related to the Company's financial performance, Pugh stated, "Our reported
 earnings include an increase in bad debt expense of $1 million for the quarter
 to reflect the realities of the slowing industrial economy. At this point, we
 believe the economy will continue to be sluggish at least through the
 remainder of our fiscal year."
     Applied management currently expects earnings per share of between
 $0.30 and $0.35 per share in the fourth quarter (ending June 30, 2001) on
 sales of between $400 million to $410 million.
     During the first nine months of fiscal 2001, the company repurchased
 891,000 shares of its common stock for $15.5 million. This includes 388,000
 shares repurchased in the third quarter.  At March 31, board authorization was
 in place to repurchase up to 579,000 additional shares.
     Applied's third quarter financial teleconference will be available online
 at www.appliedindustrial.com .  The live webcast will begin at 4 p.m. (ET) on
 Tuesday, April 17.  The call will be conducted by Chairman & CEO David L.
 Pugh, President & COO Bill L. Purser and CFO John R. Whitten, who will respond
 to questions submitted in advance. Questions may be submitted to Michael
 Zapola at Applied via e-mail at mzapola@ait-applied.com or by
 fax to 216-426-4352.  A replay of the teleconference will be available
 continuously through April 20 at 800-801-6152.
     With more than 470 facilities and 4800 employee-associates across North
 America, Applied Industrial Technologies 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, 2000, the company recorded sales of $1.6 billion.  Applied
 can be visited on the Internet at www.appliedindustrial.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. All forward-looking statements
 are based on current expectations regarding important risk factors including
 trends in the industrial sector of the economy, the success of our various
 marketing strategies, including e-commerce and catalog initiatives, 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
 publicly update or revise any forward-looking statements, whether due to new
 information, or events, or otherwise.
 
 
                APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                    CONDENSED STATEMENTS OF CONSOLIDATED INCOME
                   (Unaudited) (Thousands, except per share data)
 
                                   Three Months Ended    Nine Months Ended
                                         March 31              March 31
                                      2001      2000       2001        2000
 
     Net Sales                      $408,839  $420,897  $1,235,153  $1,188,471
     Cost of sales                   306,802   317,875     924,760     898,997
       Total                         102,037   103,022     310,393     289,474
     Selling, distribution and
      administrative                  88,797    87,424     268,235     249,746
     Operating Income                 13,240    15,598      42,158      39,728
     Interest expense, net             1,984     1,646       6,709       5,447
     Income Before Income Taxes       11,256    13,952      35,449      34,281
     Income Taxes                      4,300     5,648      13,900      13,882
     Net Income                       $6,956    $8,304     $21,549     $20,399
     Net Income Per Share - Basic      $0.36     $0.41       $1.10       $0.99
     Net Income Per Share - Diluted    $0.35     $0.40       $1.08       $0.98
     Average Shares Outstanding -
      Basic                           19,568    20,305      19,654      20,589
     Average Shares Outstanding -
      Diluted                         19,880    20,527      19,979      20,816
 
 
     NOTES TO CONDENSED STATEMENTS OF CONSOLIDATED INCOME
 
     (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 upon the annual physical inventory and the effect
         of year-end inventory quantities on LIFO costs.
 
     (2) Effective July 1, 2000, the Company adopted Emerging Issues Task Force
         Issue No. 00-10, "Accounting for Shipping and Handling Fees and
         Costs." Accordingly, freight charged to customers is now classified as
         Sales, whereas previously it was classified as an offset to Cost of
         Sales.  All prior amounts have been restated to conform to the current
         presentation.
 
 
               APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                               (Amounts in Thousands)
 
                                         March 31, 2001      June 30, 2000
                                           (Unaudited)
 
     Assets
       Cash                                  $12,162             $12,349
       Accounts receivable, net of
        allowances of $4,400 and $3,800      198,576             212,254
       Inventories                           210,313             182,102
       Other current assets                    9,211               8,286
            Total current assets             430,262             414,991
       Property - net                         90,698              97,200
       Goodwill - net                         67,062              67,089
       Other assets                           15,691              15,387
     Total Assets                           $603,713            $594,667
 
     Liabilities
       Accounts payable                     $104,581             $93,587
       Other current liabilities              58,538              66,272
            Total current liabilities        163,119             159,859
       Long-term debt                        110,789             112,168
       Other liabilities                      23,872              23,309
     Total Liabilities                       297,780             295,336
     Shareholders' Equity                    305,933             299,331
     Total Liabilities and Shareholders'
      Equity                                $603,713            $594,667
 
 
              APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                  CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                        (Unaudited)  (Amounts in Thousands)
 
                                                   Nine Months Ended March 31
                                                     2001               2000
 
     Cash provided from operations:
       Net income                                   $21,549           $20,399
       Items not requiring cash:
         Depreciation and amortization               16,923            17,433
         Other                                        3,840             2,237
       Cash effect of changes in working capital     (9,880)           18,238
     Cash provided from operations                   32,432            58,307
     Investing Activities:
       Property additions-net                        (4,280)           (2,729)
       Acquisition of businesses, less
        cash acquired                                (5,491)             (693)
       Deposits and other                               523              (797)
     Cash used in investing activities               (9,248)           (4,219)
     Financing Activities:
       Repayment of notes payable
        and long-term debt                           (1,379)          (34,354)
       Purchase of common stock for treasury        (15,487)          (16,264)
       Cash dividends paid                           (7,178)           (7,499)
       Other                                            673               108
     Cash used by financing activities              (23,371)          (58,009)
     Decrease in cash                                 $(187)          $(3,921)
 
 SOURCE  Applied Industrial Technologies

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