HDNG Hardinge Inc. (delisted)

Hardinge Reports 1st Quarter Earnings Per Share of $.16, Up From Loss of ($.01) in 2003 ELMIRA, N.Y., April 30 /PRNewswire-FirstCall/ -- Hardinge Inc. , a leading producer of advanced material-cutting solutions, today reported increased sales, net income, and orders in the first quarter of 2004 as compared to the same quarter in 2003. Net sales were $51.9 million in the first quarter of 2004, an increase of 27% as compared to $40.9 million of sales in the first quarter of 2003. Net income was $1.4 million, or $.16 per share, as compared to a loss of ($0.1) million, or ($.01) per share, in the first quarter of 2003. Orders were $50.5 million, an increase of 24% as compared to $40.8 million in the first quarter of 2003. J. Patrick Ervin, Chairman, President and Chief Executive Officer, commented, "We are pleased to report a solid start to 2004, which represents a significant improvement in our business over the first quarter of 2003. Our strategic initiatives to expand and diversify geographically have been important contributors to our Company's improved business outlook. The contribution of our Asian operations was significant to our first quarter's results. In the U.S., we are seeing signs that the long overdue market rebound is starting and momentum is building. Sales and orders for our non- machine consumable products increased in the quarter, and this is typically a leading indicator of business activity, with increases in capital goods spending to follow. In Europe, although we see a reduced level of activity when compared to a couple of years ago, the first quarter results for Hardinge compared favorably to the weak first quarter of 2003." The following table summarizes the Company's sales by geographical region for the first quarters of 2004 and 2003: (U.S. dollars in thousands) First Quarter Sales to Customers in: 2004 2003 % Change North America $19,729 $16,599 19% Europe 22,311 17,966 24% Asia & Other 9,877 6,337 56% $51,917 $40,902 27% 2004 net sales include the positive impact of the translation of the Company's European subsidiaries' sales into weaker U.S. dollars when compared to 2003. Viewed in constant dollars at the 2003 exchange rates, the Company's 2004 first quarter sales would be 22% above the same quarter in 2003. In its North American markets, Hardinge's sales increased due to the addition of the Bridgeport product line, which began machine shipments in the second quarter of 2003, combined with a continuing rise in the sales of the Company's other Elmira-based products. Sales in Europe in the first quarter, when measured in constant exchange rates, improved by $2.2 million, or 12%, as compared to the very low first quarter of 2003. European markets in general weakened throughout 2003 and into 2004, but the Company's Swiss subsidiaries were able to deliver several machines from backlog in the first quarter of 2004. First quarter sales in the Asia & Other category, which is primarily sales to China, were 56% above the first quarter of 2003. Sales between quarters in China vary based upon delivery requirements, letter of credit terms, and other factors. Sales in the first quarter of 2003 were unusually low. The following table summarizes the Company's orders by geographical region for the first quarters of 2004 and 2003: (U.S. dollars in thousands) First Quarter Orders from Customers in: 2004 2003 % Change North America $23,792 $19,617 21% Europe 17,631 12,607 40% Asia & Other 9,089 8,580 6% $50,512 $40,804 24% Total incoming orders increased by 24% for the quarter. On a constant currency basis, order levels were 21% higher compared to the 2003 first quarter. North American orders rose by 21% reflecting the general increase in manufacturing activity in the U.S. The Company did accept orders for Bridgeport machines in the first quarter of 2003, so this comparison reflects increases in orders of like products. Excluding foreign currency translation effects, first quarter 2004 orders from customers in Europe were approximately 26% above the extremely low order level of the first quarter in 2003. The first quarter 2004 order rate is consistent with the levels experienced in the last two quarters of 2003. Orders in Asia continued to grow in 2004, primarily due to increased demand in China. Current quotation and activity levels provide positive indications that the growth year to year will be higher than the 6% experienced in this first quarter comparison. The Company's consolidated backlog at March 31, 2004 was $41.3 million or 13% above the March 31, 2003 backlog of $36.7 million. Backlog at December 31, 2003 was $42.5 million. The following table summarizes the Company's first quarter, 2004 sales by product category, with comparisons to the same quarter in 2003: (U.S. dollars in thousands) First Quarter 2004 2003 % Change Machines $36,033 $27,222 32% Non-machine products & services 15,884 13,680 16% $51,917 $40,902 27% The Company's first quarter 2004 gross margin was 30.2% of sales, as compared to 31.3% in the first quarter of 2003. This reflects the higher percentage of sales coming from machine sales, which historically have had lower margins than repair parts and service and other non-machine revenue. Selling, general and administrative (SG&A) expenses were $12.6 million in the first quarter of 2004, as compared to $12.1 million in the first quarter of 2003. Foreign exchange translation effects resulted in an increase of $.4 million when compared to last year. Stated as a percentage of sales, SG&A expenses declined from 29.6% of sales in first quarter of 2003 to 24.3% of sales in the first quarter of 2004, reflecting the impact of relating the fixed portion of these expenses against increased sales. This also drove an improvement in operating income, which rose from 1.6% of sales in the first quarter of 2003 to 5.9% of sales in the first quarter of 2004. In the first quarter of 2003, the Company recorded a tax benefit of $.5 million on pretax losses in the U.S. Later, in the third quarter of 2003, the Company recorded a valuation reserve against those benefits and determined that no further tax benefits on losses would be recorded until the U.S. Company had returned to profitability for a sustained period of time. Therefore, no similar tax benefit is included in the results of the first quarter of 2004. Mr. Ervin further commented, "We remain optimistic regarding the outlook for Hardinge in 2004. Orders, sales, and profitability from our Asian operations should continue to be strong throughout the year. We are expanding our capabilities there to meet the increased demand. We also expect North American operating results will improve, as it appears that manufacturing activity in this region is finally recovering. Given the anticipated timing of shipment of machines currently in backlog in Europe, we expect our second quarter results there to be below those of the first quarter. Overall, we anticipate positive year on year comparisons in our operating performance for the remainder of 2004." "Hardinge is very well positioned for the opportunities ahead. We have efficient manufacturing facilities on three continents. We have a worldwide distribution network prepared to support our customers wherever they choose to locate their operations. And because we continued our essential new product development efforts throughout this downturn, we are also prepared with the products that our customers want. We will look for opportunities to further leverage these strengths through acquisitions of product lines, assets, or companies wherever appropriate. Most importantly, we will stay focused on improving our existing operations to best serve our customers. During the past few difficult years, our loyal employees steadfastly worked at preparing us for sustainable growth, and for that I am thankful," concluded Mr. Ervin. 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.fulldisclosure.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 and other industrial products. The Company'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 Income Statements (Dollars in thousands, except per share data) Three months ended March 31, 2004 2003 (Unaudited) (Unaudited) Net Sales $51,917 $40,902 Cost of sales 36,237 28,105 Gross profit 15,680 12,797 Selling, general and administrative expenses 12,638 12,124 Income from operations 3,042 673 Interest expense 623 811 Interest (income) (98) (108) Income (loss) before income taxes and minority interest in consolidated subsidiary and investment of equity company 2,517 (30) Income taxes (benefits) 693 (6) Minority interest in (profit) of consolidated subsidiary (395) (93) Profit (loss) in investment of equity company 0 20 Net income (loss) $1,429 ($97) Basic earnings (loss) per share $.16 ($.01) Weighted average shares outstanding 8,757 8,692 Diluted earnings (loss) per share $.16 ($.01) Weighted average shares outstanding 8,868 8,700 Other financial data: Gross margin 30.2% 31.3% Operating margin 5.9% 1.6% Capital expenditures $335 $449 Depreciation and amortization $2,266 $2,098 HARDINGE INC. AND SUBSIDIARIES Consolidated Balance Sheets (In Thousands) March 31, Dec. 31, 2004 2003 (Unaudited) Assets Current assets: Cash $7,350 $4,739 Accounts receivable, net 46,420 44,660 Notes receivable, net 7,490 6,354 Inventories 86,563 87,064 Deferred income taxes - - Prepaid expenses 4,005 4,540 Total current assets 151,828 147,357 Property, plant and equipment: Property, plant and equipment 162,285 162,926 Less accumulated depreciation 98,408 96,741 63,877 66,185 Other assets: Notes receivable 6,409 7,733 Deferred income taxes 135 131 Intangible pension asset 3,937 3,900 Goodwill 17,885 18,314 Other 2,061 2,087 30,427 32,165 Total assets $246,132 $245,707 HARDINGE INC. AND SUBSIDIARIES Consolidated Balance Sheets--Continued (In Thousands) March 31, Dec. 31, 2004 2003 (Unaudited) Liabilities and shareholders' equity Current liabilities: Accounts payable $14,630 $13,760 Notes payable to bank 1,219 624 Accrued expenses 15,798 18,224 Accrued income taxes 3,111 2,990 Deferred income taxes 3,500 3,477 Current portion long-term debt 5,002 5,002 Total current liabilities 43,260 44,077 Other liabilities: Long-term debt 18,472 17,675 Accrued pension plan expense 23,958 23,693 Deferred income taxes 3,203 3,163 Accrued postretirement benefits 5,885 5,864 Derivative financial instruments 6,572 6,194 Other liabilities 2,919 2,267 61,009 58,856 Equity of minority interest 4,083 3,688 Shareholders' equity: Preferred stock, Series A, par value $.01: Authorized - 2,000,000; issued - none Common stock, $.01 par value: Authorized shares - 20,000,000 Issued shares - 9,919,992 at March 31, 2004 and December 31, 2003 99 99 Additional paid-in capital 60,543 60,586 Retained earnings 95,579 94,150 Treasury shares - 1,073,445 at March 31, 2004 and 1,062,143 at December 31, 2003. (13,920) (13,843) Accumulated other comprehensive loss (3,110) (393) Deferred employee benefits (1,411) (1,513) Total shareholders' equity 137,780 139,086 Total liabilities and shareholders' equity $246,132 $245,707 DATASOURCE: Hardinge Inc. CONTACT: Richard L. Simons, Exec VP & CFO, of Hardinge Inc., +1-607-378-4202; or Analyst Inquiries, John McNamara of Financial Relations Board, +1-212-445-8435 Web site: http://www.hardinge.com/

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