CLEVELAND, Aug. 8 /EMWNews/ -- Applied Industrial

Technologies (NYSE: AIT) today reported sales and earnings for its fourth

quarter and fiscal 2008 year ended June 30. Fiscal 2008 sales increased

3.7% to a record $2,089,456,000 from $2,014,109,000 in fiscal 2007. Net

income for the year also established a new high as it rose 11% to

$95,456,000 versus $86,022,000 in the previous year. Earnings per share

increased 13.5% to $2.19 compared with $1.93 last year.



    Net sales for the fourth quarter increased slightly to $529,745,000

from $528,025,000 in the comparable period a year ago. Net income for the

quarter was $24,437,000 compared with $24,640,000 last year. The prior year

quarter benefited from nonrecurring year end adjustments for self-insurance

reserves. Fiscal 2008 fourth quarter earnings per share were $0.57 compared

with $0.56 last year.



    Commenting on results, Applied Chairman & Chief Executive Officer David

L. Pugh said, "We are pleased with our fiscal 2008 performance having hit

our sixth consecutive year of record sales and earnings. Our active

management of inventory and other assets, productivity improvements, and

implementation of cost controls have again yielded strong financial

results.



    "While our financial performance was strong, we definitely saw the

effect of a slowing economy during the second half of our fiscal year with

only half of our top thirty industries showing positive growth. Our sales

to the forest products industry and the transportation industry,

historically strong markets for us, were especially soft.



    "Our operating margin continued to show strength, as we achieved 7.3%

for both our fourth quarter and our full year. We also enjoyed significant

cash flow, ending the year with $101,830,000 in cash, giving us a strong

balance sheet with which to continue to pursue strategic growth

opportunities. In the second half of our fiscal year, we strengthened our

presence in Mexico with the acquisitions of VYCMEX and Suministros

Industriales Enol. While these acquisitions had little impact on our 2008

sales and earnings, they will provide a nice boost going forward.

Additionally, we recently reached an agreement to acquire Fluid Power

Resource (FPR) and seven of its fluid power distribution businesses in the

United States.



    "Looking ahead to fiscal 2009, we expect certain segments of the

economy to remain soft. We believe we will achieve earnings of $2.20 to

$2.40 per share on sales of $2.13 to $2.24 billion. This guidance does not

include any amounts from the pending acquisition of FPR."



    During 2008, the Company purchased 1,144,900 shares of the Company's

common stock on the open market for approximately $33,224,000. No shares

were purchased during the fourth quarter. At June 30, 2008, the Company had

remaining authorization to purchase 1,065,000 additional shares.



    Applied will host its fourth quarter conference call for investors and

analysts at 3 p.m. today. To join in the call, dial 1-888-581-9259,

passcode 54843171. The call will be conducted by Chairman & CEO David L.

Pugh, President & COO Benjamin J. Mondics, and CFO Mark O. Eisele. The call

will also be webcast and can be accessed live online at

http://www.applied.com and will be archived there for 14 days. A replay of

the teleconference will be available for two weeks at 1-800-642-1687

(passcode 54843171).



    Applied will hold its Annual Meeting of Shareholders on Tuesday,

October 21, 2008, 10 a.m. ET, at its Corporate Headquarters, 1 Applied

Plaza (E. 36th & Euclid Avenue), Cleveland, Ohio. August 22, 2008, is the

record date for determining shareholders entitled to notice of and to vote

at the Annual Meeting.



    With 459 facilities and 4,800 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. For its fiscal year ended June 30, 2008, Applied

posted sales of $2.1 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 "looking ahead," "expect," "will,"

"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

                  (Amounts in thousands, except per share data)



                                    Three Months Ended        Year Ended

                                         June 30,              June 30,

                                      2008      2007       2008        2007

    Net Sales                      $529,745  $528,025  $2,089,456  $2,014,109

    Cost of sales                   386,509   385,830   1,520,173   1,466,057

                                    143,236   142,195     569,283     548,052

    Selling, distribution and

     administrative, including

     depreciation                   104,581   103,595     416,459     413,041

    Operating Income                 38,655    38,600     152,824     135,011

    Interest expense, net               366       354         882       2,360

    Other (income) expense, net        (326)      (82)        227      (1,179)

    Income Before Income Taxes       38,615    38,328     151,715     133,830

    Income Tax Expense               14,178    13,688      56,259      47,808

    Net Income                      $24,437   $24,640     $95,456     $86,022

    Net Income Per Share - Basic      $0.58     $0.57       $2.23       $1.97

    Net Income Per Share - Diluted    $0.57     $0.56       $2.19       $1.93

    Average Shares Outstanding -

     Basic                           42,297    43,089      42,797      43,630

    Average Shares Outstanding -

     Diluted                         42,967    43,935      43,552      44,495





    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



    (1)  Cost of sales for interim financial statements are computed using

    estimated gross profit percentages which are adjusted throughout the year

    based upon available information.  Adjustments to actual cost are

    primarily made based on periodic physical inventory and the effect of year

    end inventory quantities on LIFO costs.  Reductions in year end

    inventories during the fiscal years ended June 30, 2008 resulted in

    liquidations of LIFO inventory quantities carried at lower costs

    prevailing in prior years.  The effect of these liquidations for the year

    ended June 30, 2008 increased gross profit by $626, net income by $383 and

    diluted net income per share by $0.01.  There were no LIFO layer

    liquidations for fiscal 2007.



    (2)  On July 14, 2008, Applied Industrial Technologies, Inc., entered into

    an agreement to acquire certain assets of Fluid Power Resource, LLC,

    including seven fluid power businesses for cash consideration of $169.0

    million.  The Company intends to fund the acquisition by drawing down its

    existing revolving credit facility and from its available cash.  These

    businesses employ 455 people and for the year ended December 31, 2007 had

    sales of approximately $244.0 million.  Results of operations acquired

    will be included in the Company's results of operations from the date of

    closing.







              APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                              (Amounts in thousands)



                                                    June 30,        June 30,

                                                      2008            2007



    Assets

      Cash and cash equivalents                    $101,830          $119,665

      Accounts receivable, less allowances

       of $6,119 and $6,134                         245,119           248,698

      Inventories                                   210,723           199,886

      Other current assets                           48,525            32,284

           Total current assets                     606,197           600,533

      Property - net                                 64,997            67,788

      Goodwill                                       64,685            57,550

      Other assets                                   62,892            51,498

    Total Assets                                   $798,771          $777,369



    Liabilities

      Accounts payable                             $109,822           $97,166

      Long-term debt payable within one year                           50,395

      Other accrued liabilities                      87,189            87,449

           Total current liabilities                197,011           235,010

      Long-term debt                                 25,000            25,000

      Other liabilities                              74,685            66,376

    Total Liabilities                               296,696           326,386

    Shareholders' Equity                            502,075           450,983

    Total Liabilities and Shareholders' Equity     $798,771          $777,369







             APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

                 CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

                              (Amounts in thousands)



                                                       Year Ended June 30,

                                                     2008              2007



    Cash Flows from Operating Activities

      Net income                                   $95,456           $86,022

      Adjustments to reconcile net income

       to net cash provided by operating

       activities:

        Depreciation                                12,776            13,489

        Share-based compensation                     3,376             2,927

        Amortization of intangibles                  1,663             1,045

        Gain on sale of property                    (1,214)             (334)

        Changes in assets and liabilities, net

         of acquisitions                             1,043           (28,392)

        Other, net                                  (2,797)           (3,832)

    Net Cash provided by Operating Activities      110,303            70,925

    Cash Flows from Investing Activities

      Property purchases                            (8,410)          (11,192)

      Proceeds from property sales                   1,372             1,275

      Net cash paid for acquisition of businesses  (22,105)

      Other                                          2,304              (302)

    Net Cash used in Investing Activities          (26,839)          (10,219)

    Cash Flows from Financing Activities

      Long-term debt repayment                     (50,000)

      Purchase of treasury shares                  (33,224)          (33,988)

      Dividends paid                               (25,728)          (20,970)

      Excess tax benefits from share-based

       compensation                                  3,761             3,885

      Exercise of stock options                      1,664             2,663

    Net Cash used in Financing Activities         (103,527)          (48,410)

    Effect of Exchange Rate Changes on Cash          2,228               941

      (Decrease) increase in cash and cash

        equivalents                                (17,835)           13,237

      Cash and cash equivalents at beginning of

       period                                      119,665           106,428

    Cash and Cash Equivalents at End of Period    $101,830          $119,665