HDNG Hardinge Inc. (delisted)

- Record Net Sales of $73.5 million, an increase of 38% versus prior year ELMIRA, N.Y., Aug. 4 /PRNewswire-FirstCall/ -- Hardinge Inc. (NASDAQ:HDNG), a leading provider of advanced material-cutting solutions, today reported increased net sales, net income, and orders in the second quarter of 2005 compared to the same quarter in 2004. Net income for the second quarter of 2005 was $2.5 million, or $0.28 per share, compared to $0.4 million, or $0.04 per share, in the second quarter of 2004. Net income for the first six months of 2005 was $4.3 million, or $0.49 per share, compared to $1.8 million, or $0.20 per share, for the first six months of 2004. Net sales for the second quarter of 2005 were $73.5 million, an increase of 38% compared to $53.3 million of net sales for the second quarter of 2004. Net sales for the first six months of 2005 were $141.6 million, an increase of 35% compared to $105.2 million of net sales for the first six months of 2004. "The increase in net sales is driven primarily by two factors. First, the sales of the new Bridgeport products, which were acquired in November 2004, have gone very well. Second, we experienced increased shipments in the majority of our other products in all of our major markets worldwide" commented J. Patrick Ervin, Chairman, President and Chief Executive Officer. The following table summarizes the Company's sales by geographical region for the three and six month periods ended June 30, 2005 and 2004, respectively: (U.S. dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, Sales to Customers in: 2005 2004 % Change 2005 2004 % Change North America $26,292 $21,822 20% $50,756 $ 41,551 22% Europe 29,932 20,232 48% 61,046 42,543 43% Asia & Other 17,303 11,276 54% 29,773 21,153 41% $73,527 $53,330 38% $141,575 $105,247 35% The strength of foreign currencies relative to the U.S. dollar also had a favorable impact on sales in the second quarter of $1.8 million and $3.7 million in the first six months of 2005. North American and European sales have continued to improve over 2004, driven by an improvement in overall manufacturing activity as well as shipments of our new Bridgeport products. Sales in the "Asia and Other" regions increased primarily due to sales of new Bridgeport products, including the first shipments of machines under a large, multiple machine order received at the end of last year. Our new Bridgeport products accounted for approximately 15% of our total net sales during the first six months of 2005. Orders for the second quarter of 2005 were $76.7 million, an increase of 29% compared to $59.5 million in the second quarter of 2004 and for the first six months of 2005 were $147.8 million, an increase of 34% compared to the first six months of 2004. The following table summarizes the Company's orders by geographical region for the three and six-month periods ended June 30, 2005 and 2004, respectively: (U.S. dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, Orders from Customers in: 2005 2004 % Change 2005 2004 % Change North America $29,847 $23,283 28% $56,474 $47,075 20% Europe 29,832 22,007 36% 61,216 39,638 54% Asia & Other 16,997 14,176 20% 30,094 23,265 29% $76,676 $59,466 29% $147,784 $109,978 34% Foreign currency translation accounted for $1.0 million and $3.6 million of the increase for the three and six month periods ended June 30, 2005, respectively. Orders for the new Bridgeport products accounted for approximately 17% of total orders for the three months and six months ended June 30, 2005, respectively. The Company's consolidated backlog at June 30, 2005 was $72.5 million or 53% above the June 30, 2004 backlog of $47.4 million. Backlog at December 31, 2004 was $66.3 million. Gross margin for the second quarter of 2005 was 32.0% of sales, compared to 31.0% of sales in the first quarter of 2005, and 28.5% of sales in the second quarter of 2004. The improvement resulted from continued higher production levels at the Company's European and U.S. manufacturing facilities and from a favorable shipment mix, which included increased shipments of higher margin machines. Selling, general and administrative expenses were $18.1 million, or 24.7% of net sales in the second quarter of 2005, compared to $13.5 million, or 25.4% of net sales in the second quarter of 2004. The increase is primarily due to our addition of two new sales, service and technical centers located in the UK and Holland and the addition of over 70 people associated with these operations to support our new Bridgeport acquisition. These expenses accounted for $2.7 million of the overall increase of $4.6 million. $0.9 million was the result of increased commission expense due to the higher sales volume, $0.4 million was due to additional promotional and support efforts in China, and another $0.4 million was due to foreign currency translation. Interest expense increased due to higher average borrowings, which was related to the acquisition of Bridgeport assets at the end of 2004 and an increase in capital required to support higher inventory and higher receivables resulting from our increased sales levels. Mr. Ervin further commented, "We are very pleased with our performance for the quarter and half year and we are excited that strengthening of manufacturing activity in both the U.S. and Europe appears to be encouraging looking forward. At this point, I believe the outlook for worldwide manufacturing is positive, which in turn makes me optimistic regarding our outlook for the balance of 2005 and beyond. Based on our current backlog, our recent new order rates, and current business activity levels, we are confident we will continue to see strong performance for the remainder of 2005 compared to 2004. As we look forward to the balance of 2005, we must remember historically the third quarter is generally the slowest quarter of the year due to vacation shutdowns in many of our manufacturing facilities around the world. This is true for many of our customers also." The Company will host its usual conference call at 10:00 am today to discuss these results. The call can be accessed via the Internet live or as a replay at http://www.earnings.com/. The archive will be available for replay for 14 days following the call. Hardinge Inc., founded more than 100 years ago, is an international leader in providing the latest industrial technology to companies requiring material- cutting solutions. The Company designs and manufactures computer-numerically controlled metal-cutting lathes, machining centers, grinding machines, collets, chucks, indexing fixtures, and other industrial products. The Company has manufacturing operations in the United States, Switzerland, Taiwan and China and distributes machines in all major industrialized countries of the world. Hardinge's common stock trades on NASDAQ under the symbol "HDNG." For more information, please visit the Company's website at http://www.hardinge.com/. This news release contains statements of a forward-looking nature relating to the financial performance of Hardinge Inc. Such statements are based upon information known to management at this time. The company cautions that such statements necessarily involve uncertainties and risk, and deal with matters beyond the company's ability to control and in many cases the company cannot predict what factors would cause actual results to differ materially from those indicated. Among the many factors that could cause actual results to differ from those set forth in the forward-looking statements are fluctuations in the machine tool business cycles, changes in general economic conditions in the U.S. or internationally, the mix of products sold and the profit margins thereon, the relative success of the company's entry into new product and geographic markets, the company's ability to manage its operating costs, actions taken by customers such as order cancellations or reduced bookings by customers or distributors, competitors' actions such as price discounting or new product introductions, governmental regulations and environmental matters, changes in the availability and cost of materials and supplies, the implementation of new technologies and currency fluctuations. Any forward- looking statement should be considered in light of these factors. The company undertakes no obligation to revise its forward-looking statements if unanticipated events alter their accuracy. Hardinge Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands) June 30, December 31, 2005 2004 (Unaudited) Assets Current assets: Cash $4,686 $4,189 Accounts receivable, net 69,850 65,005 Notes receivable, net 5,684 6,946 Inventories 115,167 100,738 Prepaid expenses 8,323 6,509 Total current assets 203,710 183,387 Property, plant and equipment: Property, plant and equipment 169,712 172,743 Less accumulated depreciation 107,881 105,968 Net property, plant and equipment 61,831 66,775 Other assets: Notes receivable 5,168 6,445 Deferred income taxes 428 427 Intangible pension asset 298 304 Other intangible assets 7,472 7,551 Goodwill 18,146 20,376 Other 922 1,046 32,434 36,149 Total assets $297,975 $286,311 Liabilities and shareholders' equity Current liabilities: Accounts payable $26,774 $25,404 Notes payable to bank 3,073 2,762 Accrued expenses 15,357 18,670 Accrued pension expense 1,335 1,541 Accrued income taxes 3,349 4,230 Deferred income taxes 3,367 3,706 Current portion of long-term debt 4,891 4,893 Total current liabilities 58,146 61,206 Other liabilities: Long-term debt 56,366 35,213 Accrued pension expense 15,867 15,909 Deferred income taxes 3,296 3,208 Accrued postretirement benefits 5,862 5,927 Derivative financial instruments 2,880 5,502 Other liabilities 3,358 3,225 87,629 68,984 Equity of minority interest 7,189 6,121 Shareholders' equity: Preferred stock, Series A, par value $.01 per share; Authorized 2,000,000; issued - none Common stock, $.01 par value: Authorized shares - 20,000,000; Issued shares - 9,919,992 at June 30, 2005 and December 31, 2004 99 99 Additional paid-in capital 60,445 60,538 Retained earnings 102,064 98,277 Treasury shares - 1,024,303 at June 30, 2005 and 1,090,941 shares at December 31, 2004. (13,142) (14,119) Accumulated other comprehensive income (2,973) 6,230 Deferred employee benefits (1,482) (1,025) Total shareholders' equity 145,011 150,000 Total liabilities and shareholders' equity $297,975 $286,311 HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of Operations (In Thousands Except Per Share Data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net sales $73,527 $53,330 $141,575 $105,247 Cost of sales 50,030 38,107 96,964 74,152 Gross profit 23,497 15,223 44,611 31,095 Selling, general and administrative expenses 18,114 13,523 35,590 26,353 Income from operations 5,383 1,700 9,021 4,742 Interest expense 1,021 590 1,861 1,213 Interest (income) (155) (101) (291) (199) Income before income taxes and minority interest in (profit) of consolidated subsidiary 4,517 1,211 7,451 3,728 Income taxes 1,271 332 2,064 1,025 Minority interest in (profit) of consolidated subsidiary (791) (523) (1,068) (918) Net income 2,455 356 4,319 1,785 Per share data: Basic earnings per share $.28 $.04 $.49 $.20 Weighted average number of common shares outstanding 8,767 8,735 8,756 8,748 Diluted earnings per share: $.28 $.04 $.49 $.20 Weighted average number of common shares outstanding 8,829 8,786 8,840 8,807 Other Financial Data: Gross margin 32.0% 28.5% 31.5% 29.5% Operating margin 7.3% 3.2% 6.4% 4.5% Capital expenditures 2,277 1,035 2,947 1,370 Depreciation and amortization 2,286 2,246 4,606 4,512 HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In Thousands) Six Months Ended June 30, 2005 2004 (Unaudited) (Unaudited) Operating activities Net income $4,319 $1,785 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 4,606 4,512 Provision for deferred income taxes 425 666 Minority interest 1068 836 Foreign currency transaction loss 295 (79) Changes in operating assets and liabilities: Accounts receivable (7,576) (4,849) Notes receivable 2,222 705 Inventories (19,762) (3,191) Other assets (1,870) (95) Accounts payable 2,220 3,301 Accrued expenses (3,335) (5,131) Accrued postretirement benefits (65) 28 Net cash (used in) operating activities (17,453) (1,512) Investing activities Capital expenditures (2,947) (1,370) Net cash (used in) investing activities (2,947) (1,370) Financing activities Increase in short-term notes payable to bank 368 1,945 Increase (decrease) in long-term debt 21,067 (48) Net sales (purchases) of treasury stock 210 (144) Dividends paid (532) (88) Net cash provided by financing activities 21,113 1,665 Effect of exchange rate changes on cash (216) 21 Net increase (decrease) in cash 497 (1,196) Cash at beginning of period 4,189 4,739 Cash at end of period $4,686 $3,543 DATASOURCE: Hardinge Inc. CONTACT: J. Patrick Ervin, Chairman, President & CEO of Hardinge Inc., +1-607-378-4420; or John McNamara, Analyst Inquiries of Financial Relations Board, +1-212-827-3771 Web Site: http://www.hardinge.com/ http://www.earnings.com/

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