higher sales levels without a commensurate increase  in SD&A 
(representing 0.2% of the improvement ).   
The Fluid Power Businesses segment operating income decreased 
slightly to 9.2% in fiscal 2012 from 9.5% in fiscal 2011.  This 
reduction is attributable to lower net gross profit margins 
primarily from one vertical market within one of our Fluid Power 
Businesses (representing 0.5% of the redu ction).  Lower SD&A 
expenses as a percent of sales helped o ffset the reduction in 
gross profit.  Management continues to seek opportunities to 
take advantage of economies of scale to improve the SD&A 
expenses in this segment.   
Interest expense, net, decreased $1.7 million during fiscal 2012 
compared with the prior year.  We repaid all of our outstanding 
debt in fiscal 2011 which lowered interest expense. 
Other expense (income), net, represents certain no n-operating 
items of income and expense.  This was $1.6 million of expense 
in fiscal 2012 compared to income of $3.8 million of income in 
fiscal 2011.  Current year expense primarily consists of foreign 
currency transaction losses of $1.6 million.  Fiscal 2011 included 
$2.0 million of unrealized gains on investments held by non-
qualified deferred compensation trusts and recognition of a 
$1.7 million gain from death benefits received under two life 
insurance policies. 
Income tax expense as a percent of income before tax es was 
34.8% for fiscal 2012 and 36.7% for fiscal 2011.  The impact of 
lower effective tax rates and higher income in foreign jurisdictions 
favorably reduced our rate when compared to the U.S . federal 
statutory rate by 1.8%.  Further reducing our rate compared to 
the U.S. federal statutory rate is a permanent divide nd deduction 
benefit of 0.5%.  These reductions compared to the U.S. federal 
rate were offset by the impact of state and  local taxes which 
increased the rate by 2.5%.   
In fiscal 2011, the impact of lower effective tax rates and higher 
income in foreign jurisdictions favorably reduced our rate when 
compared to the U.S. federal statutory rate by 1.0%.  Further 
reducing our rate compared to the U.S federal statutory rate is a 
permanent dividend deduction benefit of 0.5%.  These 
reductions compared to the U.S. federal rate were offset by the 
impact of state and local taxes and  by provision made for U.S. 
income tax on a portion of undistributed earnings not considered 
permanently reinvested in our Canadian subsidiaries which 
increased the rate by 2.8% and 1.8%, respectively.   
We expect our income tax rate for fiscal 2013 to be in the range 
of 34.0% to 35.0%. 
As a result of the factors addressed above, net income for fi scal 
2012 increased $12.0 million or 12.4% from the prior year.  Net 
income per sha re increased at a slightly higher rate of 13.4% due 
to stock repurchases in fiscal 2012. 
The number of Company associates was 4,664 at June 30, 2012 
and 4,640 at June 30, 2011.   
6 Applied Industrial Technologies, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
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