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Applied Industrial Technologies Reports Fiscal 2013 First Quarter Results and Declares Quarterly Dividend

October 23, 2012

CLEVELAND, Oct. 23, 2012 /PRNewswire-FirstCall/ — Applied Industrial Technologies (NYSE: AIT) today reported first quarter fiscal 2013 sales and earnings for the three months ended September 30, 2012.

Net sales for the first quarter increased to $610.5 million from $579.6 million in the comparable period a year ago. Net income for the quarter increased to $29.5 million, or $0.70 per share, compared to $26.4 million, or $0.61 per share, last year.

Commenting on results, Applied’s Chief Executive Officer Neil A. Schrimsher said, “We continued to leverage our sales growth into solid earnings performance, converting a 5.3% sales increase to an 11.9% improvement in net income and a 14% increase in earnings per share. In addition, our strong operating margin of 7.3% for the quarter reflects the numerous initiatives we have in place to increase our efficiency, productivity and profitability.

“We are actively implementing and driving our long-range strategic plan throughout the organization. Applied associates are building upon our strong capabilities, expanding our value-add and generating success with our customers. We have great potential and excellent opportunities for growth and increased profitability – organically, via acquisition and through our technology investments. In the current macroeconomic industrial environment, we are maintaining our full-year fiscal 2013 earnings per share guidance of $2.90 to $3.05, while we are adjusting our revenue growth expectations
to 6% to 10%.”

In addition, Mr. Schrimsher announced today that the Company’s Board of Directors declared a quarterly cash dividend of $0.21 per common share, payable on November 30, 2012, to shareholders of record on November 15, 2012.

The Company will host its quarterly conference call for investors and analysts at 4 p.m. ET on October 23, 2012. To join the call, dial 1-888-771-4371 or 1-847-585-4405 (for International callers) prior to the scheduled start using passcode 33464732. 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 or 1-630-652-3042 (International) using passcode 33464732.

With approximately 500 facilities and 4,900 employee associates, Applied Industrial Technologies is a leading industrial distributor that offers more than four million parts to serve the needs 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 and inventory management solutions that provide added value to its customers. Applied can be visited on the Internet at 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 “expect,” “guidance,” 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.

      APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
       CONDENSED STATEMENTS OF CONSOLIDATED INCOME
       -------------------------------------------
          (In thousands, except per share data)

                                            Three Months Ended
                                               September 30,
                                               2012        2011
                                               ----        ----
    Net Sales                              $610,519    $579,574
    Cost of sales                           445,986     420,870
    -------------                           -------     -------
    Gross Profit                            164,533     158,704
    Selling, distribution and administrative,
       including
        depreciation                        120,215     115,437
       -------------                        -------     -------
    Operating Income                         44,318      43,267
    Interest expense,
     net                                         25          47
    Other (income)
     expense, net                              (459)      1,932
    --------------                             ----       -----
    Income Before
     Income Taxes                            44,752      41,288
    Income Tax Expense                       15,220      14,906
    Net Income                              $29,532     $26,382
    ----------                              -------     -------
    Net Income Per
     Share -Basic                             $0.70       $0.62
    ==============                            =====       =====
    Net Income Per
     Share -Diluted                           $0.70       $0.61
    ===============                           =====       =====
    Average Shares
     Outstanding -
     Basic                                   41,966      42,397
    ==============                           ======      ======
    Average Shares
     Outstanding -
     Diluted                                 42,477      42,961
    ==============                           ======      ======

                                  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.

    There were no LIFO layer liquidation benefits recognized for the
     quarters ended September 30, 2012 and 2011.

    ---

    APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED BALANCE SHEETS
             -------------------------------------
                     (Amounts in thousands)

                                                           September 30,        June 30,
                                                                           2012             2012
                                                                           ----             ----

    Assets
      Cash and cash
       equivalents                                                      $56,673          $78,442
      Accounts
       receivable,
       less allowances
       of $8,239 and
       $8,332                                                           325,753          307,043
      Inventories                                                       268,960          228,506
      Other current
       assets                                                            35,709           51,771
      -------------                                                      ------           ------
           Total current
            assets                                                      687,095          665,762
      Property, net                                                      84,357           83,103
      Goodwill                                                           94,626           83,080
      Intangibles, net                                                   90,087           84,840
      Other assets                                                       45,602           45,398
      ------------                                                       ------           ------
    Total Assets                                                     $1,001,767         $962,183
    ============                                                     ==========         ========

    Liabilities
      Accounts payable                                                 $145,932         $120,890
      Other accrued
       liabilities                                                       96,075          109,279
      -------------                                                      ------          -------
           Total current
            liabilities                                                 242,007          230,169
      Other
       liabilities                                                       56,661           59,883
      ------------                                                       ------           ------
    Total
     Liabilities                                                        298,668          290,052
    ------------                                                        -------          -------
    Shareholders'
     Equity                                                             703,099          672,131
    -------------                                                       -------          -------
    Total
     Liabilities and
     Shareholders'
     Equity                                                          $1,001,767         $962,183
    ================                                                 ==========         ========
            APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
               CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
               -----------------------------------------------
                                (In thousands)

                                              Three Months Ended
                                                 September 30,

                                                 2012                  2011
                                                 ----                  ----

    Cash Flows from Operating Activities
    Net income                                $29,532               $26,382
    Adjustments to reconcile net income to
     net cash provided
       by operating activities:
       Depreciation
        and
        amortization
        of property                             3,022                 2,818
       Amortization of
        intangibles                             3,055                 2,809
       Amortization of
        stock
        appreciation
        rights and
        options                                   809                   633
       Gain on sale of
        property                                 (117)                 (386)
       Other share-
        based
        compensation
        expense                                 1,035                 1,260
    Changes in
     assets and
     liabilities,
     net of
     acquisitions                             (13,456)              (17,371)
    Other, net                                     67                   256
    ----------                                    ---                   ---
    Net Cash
     provided by
     Operating
     Activities                                23,947                16,401
    ------------                               ------                ------
    Cash Flows from Investing Activities
    Property
     purchases                                 (3,892)               (7,142)
    Proceeds from
     property sales                               243                   637
    Net cash paid
     for
     acquisition of
     businesses,
     net of cash
     acquired                                 (35,409)               (1,241)
    ---------------                           -------                ------
    Net Cash used
     in Investing
     Activities                               (39,058)               (7,746)
    -------------                             -------                ------
    Cash Flows from Financing Activities
    Purchases of treasury shares                         (18,178)
    Dividends paid                             (8,867)               (8,099)
    Excess tax
     benefits from
     share-based
     compensation                               1,168                   149
    Acquisition
     holdback
     payments                                    (760)
    Exercise of
     stock
     appreciation
     rights and
     options                                       36                    84
    -------------                                 ---                   ---
    Net Cash used
     in Financing
     Activities                                (8,423)              (26,044)
    -------------                              ------               -------
    Effect of
     Exchange Rate
     Changes on
     Cash                                       1,765                  (485)
    Decrease in
     cash and cash
     equivalents                              (21,769)              (17,874)
    Cash and cash
     equivalents at
     beginning of
     period                                    78,442                91,092
    ---------------                            ------                ------
    Cash and Cash
     Equivalents at
     End of Period                            $56,673               $73,218
    ===============                           =======               =======

SOURCE Applied Industrial Technologies


Source: PR Newswire