Applied Industrial Reports Fiscal Year 2003 Results

Applied Industrial Technologies Inc. (USA, formerly Bearings Inc.) reported results for fiscal fourth quarter and full year 2003, ended June 30, 2003. Applied is a key distributor of industrial aftermarket replacement bearings and similar products. The company also provides engineering and design assistance. Applied has over 4,300 employees in more than 430 facilities across the United States, Canada and Mexico. Sales in fourth quarter were up slightly to $372.4 million from $369.5 million in 2002, while net income was up sharply to $7.7 million from $4.2 million in 2002. Excluding an insurance settlement and real estate gain, net income in would have been up $700,000 from 2002, or $4.9 million. For the entire fiscal year 2003, sales were $1.46 billion, up from $1.45 billion in 2003. Net income improved to $19.8 million in 2003, from $2.6 million ($14.8 million before a one-time goodwill write-down) in 2002. During the year, Applied sold down systemwide inventory from $166 million to $160 million. The company also got customers to pay more promptly, reducing accounts receivable from $181 million to $174 million. Chairman and CEO, David Pugh, said, "While our domestic core business continues to be weak, we had very positive improvements in our Canadian operations and our fluid power business," echoing similar reports of scattered bright spots by other power transmission and bearing companies. Mr. Pugh reinforced other industrial distributor comments about recent financial conditions when he said, "Our industry saw demand slacken in response to the continuing economic problems in the domestic manufacturing economy, and we do not foresee any noticeable recovery in the near future." Looking to the current quarter and full year 2004, Mr. Pugh said, "...we expect domestic markets to be flat to down slightly." Mr. Pugh projected full-year fiscal 2004 sales would be essentially flat from 2003.