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      Applied Industrial Technologies Reports Record Sales and Earnings for Fiscal 2011


      News provided by

      Applied Industrial Technologies

      Aug 09, 2011, 08:30 ET

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      CLEVELAND, Aug. 9, 2011 /PRNewswire-FirstCall/ -- Applied Industrial Technologies (NYSE: AIT) today reported results for its fourth quarter and fiscal 2011 year ended June 30, 2011.

      Fiscal 2011 full-year sales were a record $2,212,849,000, up 16.9% from fiscal 2010 sales of $1,893,208,000.  Net income for the year was a record $96,759,000, or $2.24 per share, compared with $65,903,000, or $1.54 per share in fiscal 2010, an increase in net income of 46.8%.  

      Quarterly performance also set new records with net sales for the fourth quarter of $589,861,000, up 12.8% from $523,071,000 in the prior-year quarter. Net income for the quarter was $28,275,000 or $0.65 per share, up 2.1% from $27,704,000 or $0.64 in the same quarter last year. Comparing 2011 fourth quarter net income to the same period last year, 2011 included $4.8 million of expense for the development of Applied's new ERP system, an expense which did not occur in fiscal 2010.  Additionally, last year's fourth quarter net income was bolstered by a substantially higher LIFO layer liquidation benefit.

      Commenting on results, Applied Chairman & Chief Executive Officer David L. Pugh said, "We had an excellent year, turning in our highest year-over-year percentage sales increase since 1998, and exceeding all expectations on net income. Our sales growth initiatives during the year were very effective and, combined with our attention to detail and our balanced approach to operating fundamentals, enabled us to generate strong earnings growth.  

      "For the second year in a row, our asset management efforts positioned us to record LIFO benefits and provided excellent cash flow. We ended the year debt free, which puts us in an excellent position to pursue accretive acquisitions.

      "We have made good progress on our ERP implementation. We are on-time and on-budget as I would have expected given our advance planning and the level of oversight we have extended to the project." Pugh continued, "First implementation with certain of our Canadian businesses is expected by calendar year end, and we will then roll it out to other North American businesses over the next two years. We fully expect that the new system will contribute to greater productivity, enhanced profitability, improved visibility, and more efficient overall operation of Applied's business.

      "Looking forward, we believe we'll see continued improvement in our results, although at a slower pace than we have recently experienced due to tougher comparables and a weaker industrial economy.  Based on these expectations, we are providing earnings per share guidance for fiscal 2012 in the range of $2.40 to $2.55, on expected sales of $2.35 billion to $2.45 billion."

      During the quarter, the Company purchased 46,800 shares of its common stock in open market transactions for $1.6 million.  For the full fiscal year, purchases totaled 189,600 shares for $6.1 million.  At June 30, 2011, the Company had remaining authorization to purchase 647,600 additional shares.

      Applied will host its conference call for investors and analysts at 11 a.m. ET, today.  The call will be conducted by Chairman & CEO David L. Pugh, President & COO Benjamin J. Mondics, and Vice President & CFO Mark O. Eisele. To join the call, dial 1-800-774-6070 (for US/Canada callers) or 1-630-691-2753 (for International callers) prior to the scheduled start using passcode 6908413.  A live audio webcast can be accessed online at www.Applied.com. A replay of the call will be available for two weeks by dialing 1-888-843-7419 (for US/Canada callers) or 1-630-652-3042 (International) using passcode 6908413.

      With approximately 470 facilities and 4,600 employee associates across North America, Applied Industrial Technologies is an industrial distributor that offers more than 4 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. Applied also offers maintenance training, plus solutions to meet inventory and storeroom management needs that help provide enhanced value to its customers.  For its fiscal year ended June 30, 2011, Applied posted sales of $2.2 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," "believe," "will," "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.

       APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

      CONDENSED STATEMENTS OF CONSOLIDATED INCOME

      (In thousands, except per share data)





      Three Months Ended  

      June 30,


      Year Ended

      June 30,



      2011


      2010


      2011


      2010

      Net Sales


      $ 589,861


      $ 523,071


      $2,212,849


      $ 1,893,208

      Cost of sales


      420,719


      370,054


      1,599,739


      1,377,486



      169,142


      153,017


      613,110


      515,722

      Selling, distribution and administrative,









          including depreciation


      124,528


      106,548


      462,347


      405,672

      Operating Income


      44,614


      46,469


      150,763


      110,050

      Interest expense, net


      34


      1,537


      1,668


      5,458

      Other (income) expense, net


      (384)


      217


      (3,793)


      (425)

      Income Before Income Taxes


      44,964


      44,715


      152,888


      105,017

      Income Tax Expense


      16,689


      17,011


      56,129


      39,114

      Net Income


      $   28,275


      $    27,704


      $   96,759


      $      65,903

      Net Income Per Share - Basic


      $       0.67


      $        0.65


      $       2.28



      $          1.56

      Net Income Per Share - Diluted


      $       0.65


      $        0.64


      $       2.24



      $          1.54

      Average Shares Outstanding - Basic


      42,504


      42,352


      42,433



      42,312

      Average Shares Outstanding - Diluted


      43,267


      43,076



      43,254



      42,861










      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


      (1)  Applied uses the last-in, first-out (LIFO) method of valuing U.S. inventory.  An actual valuation of  inventory under the LIFO method can only be made at the end of each year based on the inventory levels and costs at that time.  Accordingly, interim LIFO calculations are based on management's estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination.


      During the quarter and year ended June 30, 2011, the Company recorded overall LIFO benefits of $2.8 million and $5.3 million, respectively and the LIFO reserves were reduced by the same amounts.  These reductions resulted from some effective supplier price decreases in the first half of our fiscal year as well as LIFO layer liquidation benefits (of $9.6 million for the quarter and $12.3 million for the year) from certain inventory quantity levels decreasing.  If inventory levels had remained constant, additional LIFO expense in the amount of the layer liquidation would have been recorded.


      In the prior year, overall LIFO benefits were $16.2 million for the quarter and were $23.5 million for the year.  These benefits resulted from decreases in inventory quantities which generated LIFO layer liquidation benefits of $23.1 million for the quarter and $42.7 million for the year to date.


      (2)  During the year end June 30, 2011, the Company received death benefits under two life insurance policies and realized a gain (included in other (income) expense, net) of $1.7 million.



      APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

      CONDENSED CONSOLIDATED BALANCE SHEETS

      (Amounts in thousands)






      June 30,


      June 30,



      2011


      2010






      Assets





       Cash and cash equivalents


      $      91,092


      $   175,777

       Accounts receivable, net of allowances of $7,016 and $6,379


      290,751


      246,402

       Inventories


      204,066


      173,253

       Other current assets


      33,005


      23,428

            Total current assets


      618,914


      618,860

       Property, net


      69,014


      58,471

       Intangibles, net


      89,551


      85,916

       Goodwill


      76,981


      63,405

       Other assets


      60,471


      64,868

      Total Assets


      $    914,931


      $     891,520






      Liabilities





       Accounts payable


      $    108,509


      $       94,529

       Short-term debt




      75,000

       Other accrued liabilities


      106,179


      101,803

            Total current liabilities


      214,688


      271,332

       Other liabilities


      66,680


      65,149

      Total Liabilities 


      281,368


      336,481

      Shareholders' Equity


      633,563


      555,039

      Total Liabilities and Shareholders' Equity


      $    914,931


      $     891,520



      APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

      CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

      (In thousands)



      Year Ended June 30,



      2011


      2010






      Cash Flows from Operating Activities





      Net income


      $ 96,759


      $   65,903

      Adjustments to reconcile net income to net cash provided





        by operating activities:





        Depreciation and amortization of property


      11,234


      11,465

        Amortization of intangibles


      11,382


      10,151

        Amortization of stock options and appreciation rights


      2,473


      3,020

        Gain on sale of property


      (765)


      (198)

        Other share-based compensation


      3,379


      2,361

      Changes in assets and liabilities, net of acquisitions


      (54,433)


      86,710

      Other, net


      6,813


      4,912

      Net Cash provided by Operating Activities


      76,842


      184,324

      Cash Flows from Investing Activities





      Property purchases


      (20,431)


      (7,216)

      Proceeds from property sales


      1,326


      532

      Net cash paid for acquisition of businesses, net of cash acquired


      (30,504)


      (100)

      Other


      1,722



      Net Cash used in Investing Activities


      (47,887)


      (6,784)

      Cash Flows from Financing Activities





      Repayments under revolving credit facility


      (50,000)


      (5,000)

      Long-term debt repayments


      (25,000)



      Purchases of treasury shares


      (6,085)


      (3,929)

      Settlements of cross currency swap agreements


      (12,752)



      Dividends paid


      (29,751)


      (25,416)

      Excess tax benefits from share-based compensation


      6,404


      2,492

      Exercise of stock options and appreciation rights


      661


      1,339

      Net Cash used in Financing Activities


      (116,523)


      (30,514)

      Effect of Exchange Rate Changes on Cash


      2,883


      1,109

      (Decrease) increase in cash and cash equivalents


      (84,685)


      148,135

      Cash and cash equivalents at beginning of period


      175,777


      27,642

      Cash and Cash Equivalents at End of Period


      $ 91,092


      $ 175,777



      SOURCE Applied Industrial Technologies

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