21.4% in fiscal 2010.  
Operating income as a percentage of sales for the Service Center 
Based Distribution  segment increased to 6.5% in fiscal 2011 from 
5.0% in fiscal 2010, this increase is attributed to higher sales 
levels without a commensurate increase in SD&A (representing 
0.9% of the improvement ) and improved gross profit margins 
(representing 0.6% of the improvement ).   
The Fluid Power Businesses segment operating income increased 
to 9.5% in fiscal 2011 from 7.5% in fiscal 2010, attributed to 
higher sales levels without a commensurate increase  in SD&A  
(representing 1.5% of the improvement ) and improved gross 
profit margins (representing 0.5% of the improvement ).   
Interest expense, net, decreased $3.8 million during fiscal 2011 
compared with the prior year.  We repaid all of our outstanding 
debt in fiscal 2011 which lowered interest expense. 
Other expense (income), net, was $3.8 million of income in fiscal 
2011 compared to income of $0.4 million in fiscal 2010.  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. 
  
 
2 
 
Our gross profit margin was 27.6% in fiscal 2012 versus 27.7% 
in fiscal 2011.  Positive impacts as a result of higher supplier 
purchasing incentives offset the impact of lower LIFO layer 
liquidation benefits recognized in the current year ($3.4 million of 
LIFO layer liquidation benefits in fiscal 2012 versus $12.3 million 
in fiscal 2011). 
Selling, distribution and administrative expenses (SD&A) consist of 
associate compensation, benefits and other expenses associated 
with selli
ng, purchasing, warehousing, supply chain 
management, and providing marketing and distribution of the 
Company’s products, as well as costs associated with a variety of 
administrative functions such as human resources, information 
technology, treasury, accounting, legal, and facility related 
expenses.  SD&A increased $23.7 million or 5.1% during fiscal 
2012 compared to the prior y ear, and as a percent of sales 
decreased to 20.5% from 20.9% in fiscal 2011.  Enterprise 
Resource Planning (ERP) project ca sh expenses were $18.3 million 
($9.8 million above the prior year period).  SD&A of businesses 
acquired since the prior year period added $5.6 million.  Effective 
December 31, 2011, the Executive Organization and 
Compensation Committee of the Board of Directors froze 
participant benefits (credited service and final average earnings) 
and entry into the Supplemental Executive Retirement Benefi ts 
Plan (SERP) which constituted a plan curtailment.  As a result, we 
rec
ognized $3.1 million in prior service costs upon curtailment of 
the plan in the second quarter of fiscal 2012.  We also incurred 
one-time expenses associated with our CEO transition of $1.4 
million in fiscal 2012.  The translation impact of our foreign 
subsidiaries into U.S. dollars had an unfavorable impact of $0.5 
million on SD&A in the year. 
Operating income increased 11.7% to $168.4 million during 
fiscal 2012 from $150.8 million during 2011.  As a percent of 
sales, operating income increased to 7.1% in the curr ent year 
from 6.8% in 2011.  The $17.6 million increase in operating 
income during fiscal 2012 primarily reflects higher sales levels and 
the impact of leverage on increased sales as we kept our SD&A to 
20.5% of sales in 2012 versus 20.9% in fiscal 2011.  
Operating income as a percentage of sales for the Service Center 
Based Distribution segment increased to 7.1% in fiscal 2012 from 
6.5% in fiscal 2011, this increase is attributable to improved 
gross
 profit margins (representing 0.4% of the improvement ) and 
higher sales levels without a commensurate increase  in SD&A 
(representing 0.2% of the improvement ).   
The Fluid Power Businesses segment operating income decreased