8-K

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 20, 2010

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

OHIO	1-2299	34-0117420
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Applied Plaza, Cleveland, Ohio	44115
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (216) 426-4000.

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On January 20, 2010, Applied Industrial Technologies, Inc. (“Applied”) issued an earnings release related to its second quarter ended December 31, 2009. The earnings release is attached as Exhibit 99.1 to this Report on Form 8-K.

The information in this Report on Form 8-K, including the Exhibit, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

Exhibit 99.1 — Earnings release of Applied Industrial Technologies, Inc. dated January 20, 2010.

SIGNATURE

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 20, 2010

EXHIBIT INDEX

Exhibit No.		Description
	99.1	The following exhibit is furnished with this Report on Form 8-K: Earnings release of Applied Industrial Technologies, Inc. dated January 20, 2010.

EX-99.1

EXHIBIT 99.1

Applied Industrial Technologies Reports
Fiscal 2010 Second Quarter Results

CLEVELAND, Ohio, January 20, 2010 — Applied Industrial Technologies (NYSE: AIT) today reported sales and earnings for its fiscal 2010 second quarter, ended December 31, 2009.

Net sales for the second quarter decreased 11% to $446,253,000 compared to $502,412,000 in the same period last year. Net income for the quarter was $10,487,000 or $0.24 per share compared to $16,194,000 or $0.38 per share last year.

For the six months ended December 31, 2009, sales were $883,996,000 compared to $1,046,318,000 in the same period last year. Net income was $21,674,000 or $0.51 per share compared to $38,730,000 or $0.90 per share, last year.

Commenting on the Company’s performance, Applied Chairman & Chief Executive Officer David L. Pugh said, “The general market continues to be difficult. While some sectors have shown improvement in activity, there is a concern that it may be a transient response to stimulus initiatives. Other sectors, especially those impacted by new construction, are still declining. Overall, demand is low and tight competition has lead to gross margin pressure. Business activity is consistent with our expectations for a slow, protracted economic recovery.

“Remaining nimble in such an environment is essential. Our efforts remain focused on the underlying fundamentals of our business with an emphasis on tight cost control and conservative asset management. The Company is stable and our cash position is strong and well-positioned for the long-term.

“For fiscal 2010, we now expect earnings per share to be in the range of $0.95 to $1.25 on sales of $1.75 billion to $1.85 billion.”

The Company did not repurchase any shares during the quarter. At December 31, 2009, the Company had remaining authorization to purchase 997,100 additional shares.

Applied will host its conference call for investors and analysts at 4 p.m. ET today, Wednesday, January 20. 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 1-866-352-2112 (for US/Canada callers) or 1-630-691-2779 (for International callers) prior to the scheduled start using passcode 6506299. A live audio webcast can be accessed online at www.Applied.com. A replay of the teleconference will be available for two weeks by dialing 1-888-843-8996 using passcode 6506299.

With approximately 460 facilities and 4,600 employee associates across North America, Applied Industrial Technologies is an industrial distributor that offers more than 3 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, 2009, 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 “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
(Amounts in thousands, except per share data)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2009		2008		2009			2008
Net Sales	$	446,253	$	502,412	$	883,996		$	1,046,318
Cost of sales		329,348		366,943		651,647			764,791
		116,905		135,469		232,349			281,527
Selling, distribution and administrative, including depreciation		98,002		106,662		195,805			215,345
Operating Income		18,903		28,807		36,544			66,182
Interest expense, net		1,333		1,302		2,547			1,987
Other expense (income), net		58		2,225		(245	)		3,040
Income Before Income Taxes		17,512		25,280		34,242			61,155
Income Tax Expense		7,025		9,086		12,568			22,425
Net Income	$	10,487	$	16,194	$	21,674		$	38,730
Net Income Per Share — Basic	$	0.25	$	0.38	$	0.51		$	0.92
Net Income Per Share — Diluted	$	0.24	$	0.38	$	0.51		$	0.90
Average Shares Outstanding — Basic		42,298		42,316		42,287			42,316
Average Shares Outstanding — Diluted		42,830		42,798		42,793			42,873

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) The Company uses the last-in, first-out (“LIFO”) method of valuing U.S. inventory. An actual valuation of inventory under the LIFO method can be made only 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. The Company is estimating reductions in certain U.S. inventories during fiscal 2010 which would result in the liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years.

The Company recorded LIFO income of $1.8 million and $2.5 million during the quarter and six months ended December 31, 2009, respectively, which reduced the overall LIFO reserve by the same amount. The effect of LIFO layer liquidations during the current quarter and six months increased gross profit by $5.7 million and $10.0 million, respectively. There were no comparable LIFO layer liquidations recorded for the quarter and six months ended December 31, 2008.

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	December 31,		June 30,
	2009		2009
Assets
Cash and cash equivalents	$	104,203	$	27,642
Accounts receivable, less allowances of $6,264 and $6,464		211,920		198,792
Inventories		201,872		254,690
Other current assets		28,859		44,470
Total current assets		546,854		525,594
Property, net		59,845		62,735
Intangibles, net		91,024		95,832
Goodwill		63,100		63,108
Other assets		65,317		62,059
Total Assets	$	826,140	$	809,328
Liabilities
Accounts payable	$	82,354	$	80,655
Short-term debt		75,000		5,000
Other accrued liabilities		85,235		70,901
Total current liabilities		242,589		156,556
Long-term debt				75,000
Other liabilities		61,395		69,670
Total Liabilities		303,984		301,226
Shareholders’ Equity		522,156		508,102
Total Liabilities and Shareholders’ Equity	$	826,140	$	809,328

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(In thousands)

	Six Months Ended
	December 31,
	2009			2008
Cash Flows from Operating Activities
Net income	$	21,674		$	38,730
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		5,770			6,273
Amortization of intangibles		5,047			4,135
Share-based compensation		2,898			2,744
Gain on sale of property		(116	)		(209	)
Treasury shares contributed to employee benefit and deferred compensation plans		154			263
Changes in assets and liabilities, net of acquisitions		59,705			(20,886	)
Other, net		531			1,418
Net Cash provided by Operating Activities		95,663			32,468
Cash Flows from Investing Activities
Property purchases		(2,951	)		(4,265	)
Proceeds from property sales		421			323
Net cash paid for acquisition of businesses, net of cash acquired		(100	)		(172,019	)
Net Cash used in Investing Activities		(2,630	)		(175,961	)
Cash Flows from Financing Activities
Net short-term (repayments) borrowings under revolving credit facility		(5,000	)		61,000
Borrowings under revolving credit facility classified as long-term					50,000
Purchase of treasury shares					(1,210	)
Dividends paid		(12,699	)		(12,699	)
Excess tax benefits from share-based compensation		251			261
Exercise of stock options and appreciation rights		205			241
Net Cash (used in) provided by Financing Activities		(17,243	)		97,593
Effect of Exchange Rate Changes on Cash		771			(9,310	)
Increase (decrease) in cash and cash equivalents		76,561			(55,210	)
Cash and cash equivalents at beginning of period		27,642			101,830
Cash and Cash Equivalents at End of Period	$	104,203		$	46,620