UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 13, 2004
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
OHIO 1-2299 34-0117420
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(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation or Organization) Number) Identification No.)
One Applied Plaza, Cleveland, Ohio 44115
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (216) 426-4000.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
Attached to this filing and incorporated by reference herein is the
text of registrant's press release dated January 13, 2004 regarding second
quarter results.
None of the contents of this Form 8-K should be deemed incorporated by
reference into a Securities Act registration statement.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
(Registrant)
By: /s/ Fred D. Bauer
--------------------------------
Fred D. Bauer
Vice President-General Counsel
& Secretary
Date: January 13, 2004
Applied Industrial Technologies Reports
Improved Second Quarter Sales, Earnings
CLEVELAND, OHIO (January 13, 2004) - Applied Industrial Technologies (NYSE: AIT)
today reported sales and earnings that exceeded guidance for its fiscal 2004
second quarter, which ended December 31, 2003. Earnings per share rose by more
than 20% for the fifth consecutive quarter.
Net sales for the quarter were $359,711,000, up 1.1% compared with $355,707,000
in the same period a year ago. Net income for the quarter increased 33% to
$5,133,000 from $3,860,000. Earnings per share increased by 30% to $0.26 from
$0.20 per share last year.
For the six months ended December 31, 2003, sales decreased 0.4% to $720,857,000
from $723,726,000 in the same period last year. Net income increased 28% to
$9,965,000, or $0.51 per share, compared to $7,765,000, or $0.40 per share, last
year.
Commenting on results, Applied Chairman & Chief Executive Officer David L. Pugh
said, "We continue to show good attention to detail in driving efficiencies in
our operations. The discipline we have instilled should serve us well when the
economic recovery reaches the MRO buyers. If the manufacturing sector continues
on its current path, we should begin to see the benefits in our fourth quarter.
"While optimism reigns, our current quarter sales trend remained similar to what
we had been experiencing. Canada still is showing improvement to offset a
decline of 1.5% in our U.S. same store sales compared to last year. Our
operations have done an excellent job of increasing their profitability.
"Looking ahead, we expect our third quarter to offer more of the same that we
have been seeing with sales in the $370 million to $380 million range,
delivering earnings between $0.26 and $0.31 per share. We expect to end the year
in line with previous guidance of sales in the $1.4 billion to $1.5 billion
range and earnings of $1.10 to $1.20 per share."
For the six months ended December 31, 2003, the company repurchased 96,000
shares of stock for $2.1 million. At December 31, 2003, board authorization was
in place to repurchase up to 1 million additional shares.
Applied will host its second quarter conference call at 3 p.m. today (Tuesday,
January 13). To join in the call, dial 1-800-810-0924 and use passcode 381657.
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 www.applied.com and will be archived there for seven
days. A replay of the teleconference will be available at 1-888-203-1112 from 6
p.m. on January 13 through 12 midnight on January 28.
With more than 430 facilities and 4,300 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, 2003, the Company posted sales of $1.46 billion. 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," "should," "see" 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.
(A financial summary is attached.)
For more information, contact Mark O. Eisele, Vice President - Chief Financial
Officer & Treasurer, at 216/426-4417.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONDENSED STATEMENTS OF CONSOLIDATED INCOME
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(Thousands, except per share data)
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Three Months Ended Six Months Ended
December 31 December 31
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2003 2002 2003 2002
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NET SALES $ 359,711 $ 355,707 $ 720,857 $ 723,726
Cost of sales 264,545 264,516 532,214 542,633
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GROSS PROFIT 95,166 91,191 188,643 181,093
Selling, distribution and administrative 85,916 83,871 170,397 165,929
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OPERATING INCOME 9,250 7,320 18,246 15,164
Interest expense, net 1,405 1,342 2,723 2,603
Other (108) 38 58 326
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INCOME BEFORE INCOME TAXES 7,953 5,940 15,465 12,235
INCOME TAXES 2,820 2,080 5,500 4,470
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NET INCOME $ 5,133 $ 3,860 $ 9,965 $ 7,765
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NET INCOME PER SHARE - BASIC $ 0.27 $ 0.20 $ 0.52 $ 0.41
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NET INCOME PER SHARE - DILUTED $ 0.26 $ 0.20 $ 0.51 $ 0.40
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AVERAGE SHARES OUTSTANDING - BASIC 19,227 18,954 19,117 18,985
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AVERAGE SHARES OUTSTANDING - DILUTED 19,637 19,233 19,540 19,267
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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 that are adjusted throughout the
year based upon available information. Adjustments to actual cost are
primarily made based upon physical inventories and the effect of
year-end inventory quantities on LIFO costs.
(2) During the quarter ended September 30, 2003, the Company adopted the
fair value recognition provisions of SFAS 123, "Accounting for
Stock-Based Compensation," using the modified prospective method for
the transition. Under the modified prospective method, stock based
compensation cost recognized during this fiscal year is the same as
that which would have been recognized had the fair value recognition
provisions been applied to all awards granted after July 1, 1995. The
compensation expense recorded during the quarter ended December 31,
2003 was $327 or $.01 per share. During the six months ended December
31, 2003, compensation expense recorded for stock based compensation
was $686 or $.02 per share.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(Amount in Thousands)
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December 31, June 30,
2003 2003
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ASSETS
Cash $ 24,401 $ 55,079
Accounts receivable, less allowances of $6,200 and $6,100 170,074 173,915
Inventories 191,249 159,798
Other current assets 13,536 11,702
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Total current assets 399,260 400,494
Property - net 81,207 77,942
Goodwill 50,433 49,687
Other assets 25,600 25,281
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TOTAL ASSETS $556,500 $553,404
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LIABILITIES
Accounts payable $ 74,040 $ 75,411
Other current liabilities 58,592 65,724
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Total current liabilities 132,632 141,135
Long-term debt 78,163 78,558
Other liabilities 26,684 25,855
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TOTAL LIABILITIES 237,479 245,548
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SHAREHOLDERS' EQUITY 319,021 307,856
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $556,500 $553,404
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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Amount in Thousands)
Six Months Ended December 31
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2003 2002
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CASH PROVIDED FROM OPERATIONS:
Net income $ 9,965 $ 7,765
Items not requiring cash:
Depreciation and amortization 8,491 7,953
Other 3,380 1,394
Gain on sale of property (89) (2,577)
Cash effect of changes in working capital (35,053) 8,063
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CASH PROVIDED FROM (USED IN) OPERATIONS (13,306) 22,598
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INVESTING ACTIVITIES:
Property purchases (10,317) (5,049)
Proceeds from property sales 373 5,151
Net cash paid for acquisition of business (1,285) (10,255)
Deposits and other (149) 1,426
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CASH PROVIDED FROM (USED IN) INVESTING ACTIVITIES (11,378) (8,727)
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FINANCING ACTIVITIES:
Borrowings and repayments of notes payable - net (2,850)
Repayment of long-term debt (5,714)
Proceeds from termination of interest rate swap 2,517
Purchase of common stock for treasury (2,091) (3,934)
Cash dividends paid (4,610) (4,596)
Exercise of stock options 3,557 275
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CASH USED BY FINANCING ACTIVITIES (5,994) (11,452)
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INCREASE (DECREASE) IN CASH $(30,678) $ 2,419
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