Third Quarter Summary: ELMIRA, N.Y., Nov. 6 /PRNewswire-FirstCall/
-- Hardinge Inc. (NASDAQ: HDNG), a leading international provider
of advanced material-cutting solutions, today reported net sales of
$86.6 million for the third quarter of 2008, up 4% in comparison to
$83.7 million for the third quarter of 2007. Year to date sales
increased by $8.4 million to $268.8 million. The Company reported a
net loss for the third quarter 2008 of ($8.3) million, or ($0.74)
per diluted and basic share, compared to net income of $3.7
million, or $0.32 and $0.33 per diluted and basic share for the
same period of 2007. Third quarter results were negatively impacted
by $9.0 million in special charges related to the strategic
repositioning of the Company's operations. During the third
quarter, the Company wrote down the value of inventory by $6.3
million, and wrote off $2.7 million of goodwill and intangible
assets related to our Canadian entity. Excluding these special
charges, net income for the quarter was $0.7 million or $0.06 per
diluted and basic share. "Last week we announced a number of steps
taken to reposition the Company in response to a comprehensive
analysis of our business which began in May," said Richard L.
Simons, President and Chief Executive Officer. "In light of the
global financial crisis and the resulting impact on demand for
capital goods, this is a timely and important action for the
Company. We believe that these steps will result in a more focused
and effective business model for Hardinge." The following tables
summarize orders and sales by geographical region for the quarter
ended September 30, 2008 and 2007: Quarter Ended Quarter Ended
September 30, September 30, Orders from % Sales from % Customers
in: 2008 2007 Change Customers in: 2008 2007 Change North America
$27,659 $28,861 (4)% North America $25,501 $31,397 (19)% Europe
35,723 39,068 (9)% Europe 41,610 38,040 9 % Asia & Other 28,767
15,481 86 % Asia & Other 19,503 14,246 37 % $92,149 $83,410 10
% $86,614 $83,683 4 % Third quarter 2008 total orders increased by
$8.7 million, or 10% compared to the prior year. Of this increase,
$3.4 million was the result of favorable foreign currency exchange
rates in comparison to 2007. North American order activity
decreased by $1.2 million in the quarter compared to the prior
year, primarily due to the current economic crisis and related
credit tightening. European orders decreased by $3.3 million in the
third quarter compared to the prior year primarily in our grinding
division as a result of unseasonably strong activity in 2007;
typically the third quarter results are lower as a result of
vacation and plant shutdowns. The decrease from the prior year
quarter was partially offset by a favorable $2.1 million foreign
currency translation impact. Asia & Other orders increased by
$13.3 million in the third quarter compared to the prior year due
to continued strong demand in China. The third quarter activity
included a $4.5 million order from a customer in the consumer
electronics industry. Net sales for the third quarter were up $2.9
million, most of which was attributable to foreign currency
translation. The decrease in North American net sales for the
quarter can be attributed to the transition issues related to the
development of a direct sales channel, as well as generally slow
business conditions resulting from the ongoing global economic and
credit crisis. Net sales in Europe for the quarter increased as a
result of continued strong grinding demand, as well as the
favorable effects of foreign currency translation of approximately
$2.4 million. Strong shipments of grinding products in the quarter
were offset somewhat by reduced milling and turning product
shipments. Net sales to customers in Asia & Other were up $5.3
million in the quarter compared to the prior year. The strong
increase in Asia & Other sales was driven primarily by
continued strong product demand in China, which was offset by
weakness in the other markets. Third quarter sales included $2.7
million to a customer in the consumer electronics industry. Gross
profit for the quarter was $18.1 million, down $8.1 million
compared to the prior year. The decrease is primarily due to a $6.3
million impairment charge associated with the discontinuance of
certain product lines and a review of other expected inventory
usage patterns, coupled with increased product costs, and lower
capacity utilization in the US and Taiwan. These decreases were
offset by the strengthening of foreign currencies relative to the
U.S. dollar during the quarter compared to the prior year. Selling,
general and administrative expenses decreased to $22.5 million, or
26.0% of net sales for the quarter compared to $23.5 million or
28.1% of net sales in the prior year. This decrease is attributable
to $0.3 million in bad debt recoveries, along with $0.6 million
related to the reduction of management bonus accruals. Mr. Simons
said, "While we continue to evaluate our business and make
decisions which are based upon the long-term best interests of the
Company, we are also cognizant of the challenging near-term
economic environment. We are taking necessary actions to further
reduce our inventory levels, and improve our working capital
position, along with implementing expense controls in the face of
deteriorating worldwide business conditions." Dividend Declared The
company announced that its Board of Directors has declared a cash
dividend of $0.01 per share on the Company's common stock. The
dividend is payable on December 10, 2008 to stockholders of record
as of December 1, 2008. This dividend reflects a reduction from the
previous quarter's rate of $0.05 per share. The Company's Board of
Directors noted that it was a difficult, but necessary decision to
reduce the dividend due to lack of profitability, and the uncertain
economic conditions ahead of the Company. Conference Call The
Company will host a conference call at 11:00 AM Eastern Time today
to discuss third quarter results. The call can be accessed live at
1-866-548- 2693, or via the internet at
http://videonewswire.com/event.asp?id=52794. A recording of the
call can be accessed from the "Investor Relations" section of the
Company's website, http://www.hardinge.com/, where it will be
posted for one year. A recording of the call can also be accessed
approximately one hour after its completion by dialing
1-888-284-7564, or 1-904-596-3174 if outside the U.S. & Canada,
and entering the reference number: 239768. This telephone recording
will be available through February 5, 2009. Hardinge is a global
designer, manufacturer and distributor of machine tools,
specializing in high-precision, computer controlled,
material-cutting machines. The Company's products are distributed
to most of the industrialized markets around the world and in 2007
approximately 66% of sales were from outside of North America.
Hardinge has a very diverse international customer base and serves
a wide variety of end-user markets. Along with metalworking
manufacturers which make parts for a variety of industries, our
customers include a wide range of end users in the aerospace,
agricultural, transportation, basic consumer goods, communications
and electronics, construction, defense, energy, pharmaceutical and
medical equipment, and recreation industries, among others. The
Company has manufacturing operations in the United States,
Switzerland, Taiwan and China. Hardinge's common stock trades on
NASDAQ Global Select Market under the symbol, "HDNG." For more
information, please visit http://www.hardinge.com/. Contact: Edward
Gaio Vice President and CFO (607) 378-4207 This news release
contains forward-looking statements (within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of
the Securities Exchange Act of 1934, as amended). Such statements
are based on management's current expectations that involve risks
and uncertainties. Any statements that are not statements of
historical fact or that are about future events may be deemed to be
forward-looking statements. For example, words such as "may,"
"will," "should," "estimates," "predicts," "potential," "continue,"
"strategy," "believes," "anticipates," "plans," "expects,"
"intends," and similar expressions are intended to identify
forward-looking statements. The company's actual results or
outcomes and the timing of certain events may differ significantly
from those discussed in any forward-looking statements. The company
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events,
or otherwise. Hardinge Inc. and Subsidiaries Consolidated Balance
Sheets (In Thousands) September 30, December 31, 2008 2007
(Unaudited) Assets Current assets: Cash and cash equivalents
$13,238 $16,003 Accounts receivable, net 69,629 71,228 Notes
receivable, net 1,341 1,555 Inventories, net 149,596 158,617
Deferred income tax 1,036 1,032 Prepaid expenses 10,941 8,573 Total
current assets 245,781 257,008 Property, plant and equipment:
Property, plant and equipment 183,567 180,427 Less accumulated
depreciation 124,715 118,896 Net property, plant and equipment
58,852 61,531 Non-current assets: Notes receivable, net 1,049 1,847
Deferred income taxes 277 306 Other intangible assets 10,875 11,927
Goodwill 20,734 22,841 Other long-term assets 10,355 6,368 43,290
43,289 Total assets $347,923 $361,828 Hardinge Inc. and
Subsidiaries Consolidated Balance Sheets - Continued (In Thousands,
Except Share Data) September 30, December 31, 2008 2007 (Unaudited)
Liabilities and shareholders' equity Current liabilities: Accounts
payable $25,281 $27,266 Notes payable to bank 342 2,801 Accrued
expenses 34,170 26,873 Accrued income taxes - 2,574 Deferred income
taxes 2,375 2,375 Current portion of long-term debt 558 5,655 Total
current liabilities 62,726 67,544 Other liabilities: Long-term debt
26,770 19,363 Accrued pension expense 2,744 8,145 Deferred income
taxes 4,303 4,361 Accrued postretirement benefits 1,879 2,199
Accrued income taxes 1,949 1,054 Other liabilities 4,932 4,017
Total other liabilities 42,577 39,139 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 - 12,472,992 at September 30,
2008 and December 31, 2007 125 125 Additional paid-in capital
115,251 114,971 Retained earnings 118,499 128,838 Treasury shares -
1,039,768 at September 30, 2008 and 993,076 shares at December 31,
2007 (13,603) (13,023) Accumulated other comprehensive income
22,348 24,234 Total shareholders' equity 242,620 255,145 Total
liabilities and shareholders' equity $347,923 $361,828 Hardinge
Inc. and Subsidiaries Consolidated Statements of Operations (In
Thousands, Except Per Share Data) Three Months Ended Nine Months
Ended September 30, September 30, 2008 2007 2008 2007 (Unaudited)
(Unaudited) (Unaudited)(Unaudited) Net sales $86,614 $83,683
$268,778 $260,359 Cost of sales 68,536 57,517 195,262 176,926 Gross
profit 18,078 26,166 73,516 83,433 Selling, general and
administrative expenses 22,482 23,521 73,946 64,513 Other expense
(income) 150 (1,054) 2,129 (2,420) Impairment charge 2,720 - 2,720
- (Loss) income from operations (7,274) 3,699 (5,279) 21,340 (Gain)
on sale of assets - (1,372) (23) (1,372) Interest expense 377 502
1,298 2,585 Interest (income) (70) (63) (253) (171) (Loss) income
before income taxes (7,581) 4,632 (6,301) 20,298 Income taxes 757
917 2,319 5,275 Net (loss) income $(8,338) $3,715 $(8,620) $15,023
Per share data: Basic (loss) earnings per share: $(0.74) $0.33
$(0.76) $1.48 Weighted average number of common shares outstanding
(in thousands) 11,304 11,301 11,309 10,151 Diluted (loss) earnings
per share: $(0.74) $0.32 $(0.76) $1.46 Weighted average number of
common shares outstanding (in thousands) 11,304 11,432 11,309
10,277 Cash dividends declared per share $0.05 $0.05 $0.15 $0.15
HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of Cash
Flows (In Thousands) Nine Months Ended September 30, 2008 2007
(Unaudited) (Unaudited) Operating activities Net (loss) income
$(8,620) $15,023 Adjustments to reconcile net (loss) income to net
cash provided by operating activities: Noncash - charge for
discontinued products 6,275 - Impairment charge 2,720 -
Depreciation and amortization 7,456 7,253 Provision for deferred
income taxes 1,100 462 Gain on sale of assets (23) (1,352)
Unrealized intercompany foreign currency transaction loss (gain)
1,831 (1,439) Changes in operating assets and liabilities: Accounts
receivable 494 256 Notes receivable 1,049 2,682 Inventories 845
(26,374) Prepaids/other assets (6,909) 1,094 Accounts payable (965)
(473) Accrued expenses (1,959) 3,690 Accrued postretirement
benefits (320) (334) Net cash provided by operating activities
2,974 488 Investing activities Capital expenditures (3,356) (3,615)
Proceeds from sale of assets 60 3,629 Purchase of Canadian entity
net of cash acquired - (238) Net cash (used in) investing
activities (3,296) (224) Financing activities (Decrease) in
short-term notes payable to bank (2,458) (158) Increase (decrease)
in long-term debt 2,265 (50,237) Net proceeds from issuance of
common stock - 55,946 Net (purchases) of treasury stock (589) (89)
Dividends paid (1,719) (1,590) Net cash (used in) provided by
financing activities (2,501) 3,872 Effect of exchange rate changes
on cash 58 628 Net (decrease) increase in cash (2,765) 4,764 Cash
at beginning of period 16,003 6,762 Cash at end of period $13,238
$11,526 DATASOURCE: Hardinge Inc. CONTACT: Edward Gaio, Vice
President and CFO, +1-607-378-4207 Web site:
http://www.hardinge.com/
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