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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