- Net Sales of $79.2 million, an increase of 13% versus prior year
ELMIRA, N.Y., Nov. 9 /PRNewswire-FirstCall/ -- Hardinge Inc.
(NASDAQ: HDNG), a leading provider of advanced material-cutting
solutions, today reported increased net sales, net income, and
orders for the third quarter of 2006 compared to the same quarter
in 2005. Net income for the third quarter of 2006 was $2.8 million,
or $0.31 per basic and diluted share, compared to $0.8 million, or
$0.09 per basic and diluted share, in the third quarter of 2005.
Net income for the first nine months of 2006 was $7.7 million, or
$0.88 per basic and diluted share, compared to $5.1 million, or
$0.59 per basic share and $0.58 per diluted share, for the first
nine months of 2005. Net sales for the third quarter of 2006 were
$79.2 million, an increase of 13% compared to $69.8 million of net
sales for the third quarter of 2005. Net sales for the first nine
months of 2006 were $233.2 million, an increase of 10% compared to
$211.4 million of net sales for the first nine months of 2005. "Our
strategy of product and market diversification continues to provide
strong growth in orders and net sales through the first nine months
of 2006," commented J. Patrick Ervin, Chairman, President, and
Chief Executive Officer. "Our third quarter expansion in orders and
net sales for 2006 reflects the sustained strength of the
manufacturing sector around the globe as well as the success of our
new expanded product lines. We are also pleased with our ability to
leverage our incremental shipments into a solid improvement in
operating and net income. We fully expect this leveraging to
continue as we increase our sales in coming months. Given our
current backlog and customer activity levels, we are confident of
our ability to continue growing our sales performance for the
foreseeable future." The following table summarizes the Company's
net sales by geographical region for the three and nine-month
periods ended September 30, 2006 and 2005, respectively: (U.S.
dollars in thousands) Three Months Ended Nine Months Ended
September 30, September 30, Sales to Customers in: 2006 2005 %
Change 2006 2005 % Change North America $ 29,709 $24,986 19%
$87,136 $ 75,742 15% Europe 26,917 24,516 10% 87,825 85,562 3% Asia
& Other 22,617 20,343 11% 58,236 50,116 16% $79,243 $69,845 13%
$233,197 $211,420 10% Net sales to customers in all regions
increased in the three and nine- month periods ending September 30,
2006 compared to the same periods of 2005. The net sales increase
was driven by growth in each of the main product lines in virtually
all of the Company's major markets. The net impact of the changes
in foreign currencies relative to the U.S. dollar was a favorable
impact on net sales of $1.3 million for the third quarter of 2006,
and an unfavorable impact on net sales of $2.1 million for the
nine-month period of 2006 compared to same periods in the prior
year. The following table summarizes the Company's orders by
geographical region for the three and nine-month periods ended
September 30, 2006 and 2005, respectively: (U.S. dollars in
thousands) Three Months Ended Nine Months Ended September 30,
September 30, Orders from Customers in: 2006 2005 % Change 2006
2005 % Change North America $36,433 $ 26,949 35% $99,615 $83,423
19% Europe 40,387 31,070 30% 104,992 92,286 14% Asia & Other
15,383 14,412 7% 56,709 44,506 27% $92,203 $ 72,431 27% $261,316
$220,215 19% Orders for the three months ended September 30, 2006
were $92.2 million, an increase of $19.8 million or 27% compared to
the three months ended September 30, 2005. Orders for the nine
months ended September 30, 2006 were $261.3 million, an increase of
$41.1 million or 19% compared to the nine months ended September
30, 2005. Mr. Ervin commented further, "Our increase in orders was
driven by growth from our traditional product lines coupled with
new products recently introduced to the market. In North America,
orders were also positively impacted by strong customer response to
our complete product line displayed at the International
Manufacturing Technology Show (IMTS) held during September in
Chicago. Our success at IMTS was the direct result of hard work by
our employees along with the continuing product development efforts
which have been a focus of our worldwide operations. In addition,
we have experienced a strong improvement in demand for many of our
machine products throughout Europe, especially for our grinding
machines." The consolidated backlog at September 30, 2006 was
$101.8 million compared to $88.8 million at June 30, 2006 and $75.0
million at March 31, 2006. Gross profit for the three months ended
September 30, 2006 was $24.0 million, an increase of $4.4 million
or 22% compared to the three months ended September 30, 2005. Gross
profit for the nine months ended September 30, 2006 was $70.5
million, an increase of $6.2 million or 10% compared to the nine
months ended September 30, 2005. Gross profit increased primarily
due to the increased sales. Gross margin for the three and nine
months ended September 30, 2006 was 30.3% and 30.2% of net sales,
respectively, compared to 28.1% and 30.4% of net sales for the
three and nine months ended September 30, 2005. The changes in
gross margin for 2006 compared to 2005 resulted from differences in
product mix, market mix, and channel of distribution. Selling,
general and administrative (SG&A) expenses were $18.3 million,
or 23.0% of net sales for the three months ended September 30,
2006, an increase of $1.8 million or 11% compared to $16.4 million
or 23.5% of net sales for the three months ended September 30,
2005. SG&A expenses were $55.8 million or 23.9% of net sales
for the nine months ended September 30, 2006, compared to $52.0
million or 24.6% of net sales for the nine months ended September
30, 2005. The change in SG&A expense for 2006 was attributable
to increases in spending for: commissions; wages, pension and
benefit costs; tradeshows; information technology enhancements; and
other income and expense; offset by decreases in selling and
marketing expenses. Interest expense was $1.4 million and $3.9
million for the three months and nine months ended September 30,
2006 compared to $1.1 million and $3.0 million for the same periods
in 2005. The increase is due primarily to higher average borrowings
incurred to finance the buyout of our minority interest in Hardinge
Taiwan Limited, in December 2005, along with the purchase of the
Bridgeport technical information in January 2006. The provision for
income taxes was $1.6 million and $3.3 million for the three and
nine months ended September 30, 2006, compared to $0.8 million and
$2.9 million for the three and nine months ended September 30,
2005. The effective tax rate was 36.7% and 30.1% for the three and
nine months ended September 30, 2006, compared to 38.0% and 30.0%
for the same periods in 2005. In December 2005, the Company
acquired the remaining 49% minority interest in Hardinge Taiwan
Precision Machinery Limited, which is treated as a consolidated
subsidiary. As a result of this transaction, there is no minority
interest reduction to consolidated net income in 2006 compared to a
reduction of $0.5 million and $1.6 million, respectively, for the
three and nine months ended September 30, 2005. The Company also
announced that its Board of Directors approved a 67% increase in
its quarterly cash dividend to $0.05 per share, up from $0.03 per
share, on the Company's common stock. The dividend is payable on
December 8, 2006 to stockholders of record as of December 1, 2006.
Mr. Ervin further stated, "We remain focused on generating
worldwide growth opportunities and are confident in our ability to
generate both top and bottom-line improvement in our operating
performance. The significant increase to our cash dividend reflects
our improved operating results along with our confidence in the
Company's future prospects." The Company will host a conference
call at 11:00 AM today to provide additional detail related to
third quarter and year-to-date performance. The call can be
accessed by dialing 1-866-838-2057, or via the internet live at
http://videonewswire.com/event.asp?id=36340 . 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: 199635. This
telephone recording will be available throughout the fourth
quarter, ending December 31, 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. Contacts: J. Patrick Ervin Charles R. Trego, Jr.
Chairman, President and CEO Senior Vice President and CFO (607)
378-4420 (607) 378-4202 Hardinge Inc. and Subsidiaries Consolidated
Balance Sheets (In thousands, except preferred and common share and
per share amounts) September 30, December 31, 2006 2005 (Unaudited)
Assets Current assets: Cash $7,215 $6,552 Accounts receivable, net
67,509 67,559 Notes receivable, net 2,559 4,060 Inventories 132,176
117,036 Deferred income tax 783 744 Prepaid expenses 9,465 6,921
Total current assets 219,707 202,872 Property, plant and equipment:
Property, plant and equipment 175,161 170,961 Less accumulated
depreciation 110,954 104,640 Net property, plant and equipment
64,207 66,321 Other assets: Notes receivable 3,881 3,683 Deferred
income taxes 450 455 Intangible pension asset 268 247 Other
intangible assets 12,004 7,438 Goodwill 18,740 17,699 Other 3,467
1,561 38,810 31,083 Total assets $322,724 $300,276 Hardinge Inc.
and Subsidiaries Consolidated Balance Sheets - Continued (In
thousands, except preferred and common share and per share amounts)
September 30, December 31, 2006 2005 (Unaudited) Liabilities and
shareholders' equity Current liabilities: Accounts payable $30,326
$26,454 Notes payable to bank 6,514 3,803 Deferred purchase price
of acquisitions - 5,129 Accrued expenses 21,577 19,920 Accrued
pension expense 1,155 2,375 Accrued income taxes 3,484 3,223
Deferred income taxes 2,670 2,592 Current portion of long-term debt
14,144 12,955 Total current liabilities 79,870 76,451 Other
liabilities: Long-term debt 58,050 50,356 Accrued pension expense
20,118 19,731 Deferred income taxes 2,913 2,646 Accrued
postretirement benefits 5,677 5,985 Derivative financial
instruments 803 1,709 Other liabilities 3,981 4,405 91,542 84,832
Shareholders' equity: Preferred stock, Series A, par value $.01 per
share; Authorized 2,000,000; but unissued at Sept. 30, 2006 and
December 31, 2005. Common stock, $.01 par value: Authorized shares
- 20,000,000; Issued shares - 9,919,992 at Sept. 30, 2006 and
December 31, 2005 99 99 Additional paid-in capital 59,703 60,387
Retained earnings 111,138 104,219 Treasury shares - 1,087,298 at
Sept. 30, 2006 and 1,063,287 shares at December 31, 2005. (13,982)
(13,697) Accumulated other comprehensive income (5,646) (11,029)
Deferred employee benefits - (986) Total shareholders' equity
151,312 138,993 Total liabilities and shareholders' equity $322,724
$300,276 HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of
Operations (In thousands, Except Per Share Data) Three Months Ended
Nine Months Ended September 30, September 30, 2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Net sales $79,243
$69,845 $233,197 $211,420 Cost of sales 55,229 50,185 162,694
147,149 Gross profit 24,014 19,660 70,503 64,271 Selling, general
and administrative expenses 18,257 16,442 55,797 52,032 Income from
operations 5,757 3,218 14,706 12,239 Interest expense 1,425 1,148
3,882 3,009 Interest (income) (33) (102) (213) (393) Income before
income taxes and minority interest in (profit) of consolidated
subsidiary 4,365 2,172 11,037 9,623 Income taxes 1,604 826 3,322
2,890 Minority interest in (profit) of consolidated subsidiary
(536) (1,604) Net income 2,761 810 7,715 5,129 Retained earnings at
beginning of period 108,642 102,064 104,219 98,277 Less dividends
declared 265 266 796 798 Retained earnings at end of period
$111,138 $102,608 $111,138 $102,608 Per share data: Basic earnings
per share: $0.31 $0.09 $0.88 $0.59 Weighted average number of
common shares outstanding 8,771 8,761 8,767 8,759 Diluted earnings
per share: $0.31 $0.09 $0.88 $0.58 Weighted average number of
common shares outstanding 8,806 8,810 8,800 8,811 Cash dividends
declared per share $0.03 $0.03 $0.09 $0.09 HARDINGE INC. AND
SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands)
Nine Months Ended September 30, 2006 2005 (Unaudited) (Unaudited)
Operating activities Net income $7,715 $5,129 Adjustments to
reconcile net income to net cash used in operating activities:
Depreciation and amortization 7,372 6,488 Provision for deferred
income taxes 104 662 Minority interest - 1,604 Unrealized
intercompany foreign currency transaction impact (1,276) (85)
Changes in operating assets and liabilities: Accounts receivable
487 (5,953) Notes receivable 1,350 3,399 Inventories (11,606)
(21,208) Prepaids/other assets (2,984) (5,189) Accounts payable
3,324 (368) Accrued expenses (1,365) (1,911) Accrued postretirement
benefits (308) 49 Net cash provided by (used in) operating
activities 2,813 (17,383) Investing activities Capital expenditures
(2,715) (4,137) Purchase of Bridgeport kneemill technical
information (5,000) - Purchase of minority interest in Hardinge
Taiwan (110) - Purchase of U-Sung Co., Ltd. (5,071) - Net cash
(used in) investing activities (12,896) (4,137) Financing
activities Increase (decrease) in short-term notes payable to bank
2,227 (388) Increase in long-term debt 9,252 22,337 Net (purchases)
sales of treasury stock (83) 303 Dividends paid (796) (798) Net
cash provided by financing activities 10,600 21,454 Effect of
exchange rate changes on cash 146 (232) Net increase (decrease) in
cash 663 (298) Cash at beginning of period 6,552 4,189 Cash at end
of period $7,215 $3,891 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/
http://videonewswire.com/event.asp?id=36340
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