HDNG Hardinge Inc. (delisted)

Earnings per share rise 4.8% over year-ago period ELMIRA, N.Y., May 8 /PRNewswire-FirstCall/ -- Hardinge Inc. (NASDAQ:HDNG), a leading international provider of advanced material-cutting solutions, today reported increased orders, net sales and EPS during the first quarter of 2006, compared to the same quarter in 2005. Net sales were $75.4 million in the first quarter of 2006, an increase of 10.9% as compared to $68.0 million of net sales in the first quarter of 2005. Net income was $1.9 million, or $.22 per share, as compared to $1.9 million, or $.21 per share, in the first quarter of 2005. Orders were $76.7 million, an increase of 7.9%, as compared to $71.1 million in the first quarter of 2005. J. Patrick Ervin, Chairman, President and Chief Executive Officer, commented, "We are pleased with the continued strength demonstrated in the manufacturing sectors around the globe. Our first quarter increases in orders, net sales and net income are reflective of our strong international market position as a provider of advanced material-cutting solutions. While we achieved our sales objective in the quarter, the mix of sales resulted in lower-than-planned gross profit and margin. The mix change was the primary factor contributing to the lower growth rates found within our year-over-year operating and net income compared to our sales growth." The following table summarizes the Company's sales by geographical region for the first quarter of 2006 versus 2005: (U.S. dollars in thousands) First Quarter Sales to customers in: 2006 2005 % Change North America $29,181 $24,464 19 % Europe 29,221 31,114 (6)% Asia & Other 17,034 12,470 37 % Total $75,436 $68,048 11 % First quarter 2006 net sales were tempered by a $3.1 million reduction related to the unfavorable effects of net foreign currency translation, almost entirely due to the changes between the value of the U.S. dollar versus the Swiss Franc, Euro and British Pound. Overall market conditions in the Company's "North America" and "Asia and Other" regions improved significantly over the first quarter of 2005, with industry-wide activity remaining strong. European sales for the first quarter were also up slightly in local currencies; however, reported sales decreased due to the impact of exchange rates. The following table summarizes the Company's orders by geographical region for the first quarters of 2006 and 2005: (U.S. dollars in thousands) First Quarter Orders from customers in: 2006 2005 % Change North America $29,107 $26,627 9 % Europe 32,605 31,384 4 % Asia & Other 15,018 13,097 15 % Total $76,730 $71,108 8 % The Company's consolidated backlog at March 31, 2006 was $75.0 million. The Company's consolidated backlog increased $1.3 million this quarter from December 31, 2005. Gross margin was $22.9 million, or 30.4% of sales, as compared to $21.1 million, or 31.0% of sales, in the first quarter of 2005. This decrease in gross margin was the result of changes in product and market mix, along with higher-than-anticipated costs on first-time turnkey projects. Selling, general and administrative expenses (SG&A) were $19.3 million, or 25.5% of net sales, in the first quarter of 2006, as compared to $17.5 million, or 25.7% of net sales, in the first quarter of 2005. The increase in SG&A expense was attributable to planned increases in spending for commissions, marketing and customer support, pension and benefit costs, tradeshows, and information technology enhancements. Interest expense increased $0.3 million because of higher average borrowings, driven by the additional debt incurred to finance the buyout of our minority partner in Hardinge Taiwan in December 2005 and the purchase of the Bridgeport technical information in January 2006. Mr. Ervin further commented, "We understand the drivers of our operating performance, and we remain confident that the combination of a strong manufacturing environment, coupled with the focused execution of our business strategy, will generate positive trends in future operating performance." The company also announced that its Board of Directors has declared a cash dividend of $0.03 per share on the Company's common stock. The dividend is payable on June 9, 2006 to stockholders of record as of June 1, 2006. The Company will host a conference call at 2:00 PM today to provide additional detail related to first quarter performance. The call can be accessed by dialing 1-866-838-2057, or via the internet live at http://videonewswire.com/event.asp?id=33312. It may also be accessed in replay form within the "Investor Relations" section at the Company's website, http://www.hardinge.com/, where it will be posted for one full year. You may also access a recording approximately one hour after its completion by dialing 1-888-284-7564, and entering the reference number: 187276. This telephone recording will be available through the second quarter, ending June 30, 2006. 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) March 31, December 31, 2006 2005 (Unaudited) Assets Current assets: Cash $3,871 $6,552 Accounts receivable, net 65,693 67,559 Notes receivable, net 4,175 4,060 Inventories 116,371 117,036 Deferred income tax 752 744 Prepaid expenses 8,993 6,921 Total current assets 199,855 202,872 Property, plant and equipment: Property, plant and equipment 171,500 170,961 Less accumulated depreciation 106,110 104,640 Net property, plant and equipment 65,390 66,321 Other assets: Notes receivable 3,128 3,683 Deferred income taxes 460 455 Intangible pension asset 250 247 Other intangible assets 12,268 7,438 Goodwill 17,866 17,699 Other 1,569 1,561 35,541 31,083 Total assets $300,786 $300,276 Hardinge Inc. and Subsidiaries Consolidated Balance Sheets - Continued (In Thousands) March 31, December 31, 2006 2005 (Unaudited) Liabilities and shareholders' equity Current liabilities: Accounts payable $25,235 $26,454 Notes payable to bank 4,622 3,803 Deferred purchase price of acquisitions - 5,129 Accrued expenses 20,441 19,920 Accrued pension expense 2,061 2,375 Accrued income taxes 3,719 3,223 Deferred income taxes 2,577 2,592 Current portion of long-term debt 17,970 12,955 Total current liabilities 76,625 76,451 Other liabilities: Long-term debt 49,197 50,356 Accrued pension expense 19,928 19,731 Deferred income taxes 2,705 2,646 Accrued postretirement benefits 5,817 5,985 Derivative financial instruments 1,389 1,709 Other liabilities 3,471 4,405 82,507 84,832 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 March 31, 2006 and December 31, 2005 99 99 Additional paid-in capital 60,380 60,387 Retained earnings 105,900 104,219 Treasury shares - 1,089,037 at March 31, 2006 and 1,063,287 shares at December 31, 2005. (14,022) (13,697) Accumulated other comprehensive (loss) income (9,907) (11,029) Deferred employee benefits (796) (986) Total shareholders' equity 141,654 138,993 Total liabilities and shareholders' equity $300,786 $300,276 HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of Operations (In Thousands Except Per Share Data) Three Months Ended March 31, 2006 2005 (Unaudited) (Unaudited) Net sales $75,436 $68,048 Cost of sales 52,533 46,934 Gross profit 22,903 21,114 Selling, general and administrative expenses 19,261 17,476 Income from operations 3,642 3,638 Interest expense 1,146 840 Interest (income) (122) (136) Income before income taxes and minority interest in (profit) of consolidated subsidiary 2,618 2,934 Income taxes 671 793 Minority interest in (profit) of consolidated subsidiary - (277) Net income $1,947 $1,864 Retained earnings at beginning of period 104,219 98,277 Less dividends declared 266 265 Retained earnings at end of period $105,900 $99,876 Per share data: Basic earnings per share $.22 $.21 Weighted average number of common shares outstanding 8,767 8,749 Diluted earnings per share: $.22 $.21 Weighted average number of common shares outstanding 8,800 8,838 Other Financial Data: Gross Margin 30.4 % 31.0 % Operating Margin 4.8 % 5.3 % Capital expenditures $832 $670 Depreciation and amortization $2,333 $2,320 HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In Thousands) Three Months Ended March 31, 2006 2005 (Unaudited) (Unaudited) Operating activities Net income $1,947 $1,864 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 2,333 2,320 Provision for deferred income taxes 30 95 Minority interest - 277 Foreign currency transaction loss 91 9 Changes in operating assets and liabilities: Accounts receivable 2,295 333 Notes receivable 455 659 Inventories 1,327 (11,290) Other assets (2,279) (1,517) Accounts payable (1,380) 1,848 Accrued expenses (399) (5,212) Accrued postretirement benefits (168) 18 Net cash provided by (used in) operating activities 4,252 (10,596) Investing activities Capital expenditures (832) (670) Purchase Bridgeport kneemill technical information (5,000) - Purchase of minority interest in Hardinge Taiwan (110) - Purchase of U-Sung (5,071) - Net cash (used in) investing activities (11,013) (670) Financing activities Increase in short-term notes payable to bank 798 2,350 Increase in long-term debt 3,796 10,751 Net sales (purchases) of treasury stock (332) 142 Dividends paid (266) (265) Net cash provided by financing activities 3,996 12,978 Effect of exchange rate changes on cash 84 (81) Net (decrease) increase in cash (2,681) 1,631 Cash at beginning of period 6,552 4,189 Cash at end of period $3,871 $5,820 Contacts: J. Patrick Ervin Charles R. Trego, Jr. Chairman, President and CEO Senior Vice President and CFO (607) 378-4420 (607) 378-4202 DATASOURCE: Hardinge Inc. CONTACT: J. Patrick Ervin, Chairman, President and CEO, +1-607-378-4420, or Charles R. Trego, Jr., Senior Vice President and CFO, +1-607-378-4202, both of Hardinge Inc. Web site: http://www.hardinge.com/

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