2008 Summary: ELMIRA, N.Y., Feb. 19 /PRNewswire-FirstCall/ --
Hardinge Inc. (NASDAQ: HDNG), a leading international provider of
advanced metal-cutting solutions, today reported net sales of $76.2
million for the fourth quarter of 2008, a decrease of 21% compared
to $96.0 million for the fourth quarter 2007. Net sales for the
full year were $345.0 million, a decrease of 3% over 2007 net sales
of $356.3 million. Hardinge reported a net loss for fourth quarter
2008 of ($4.1) million, or ($0.36) per diluted and basic share,
compared to a net loss of ($0.1) million, or ($0.01) per diluted
and basic share for the same period of 2007. Net loss for the full
year was ($12.7) million compared to net income of $14.9 million in
2007. Diluted loss per share for 2008 was ($1.12) compared to
diluted earnings per share of $1.41 for 2007. Cash flow from
operations was $6.8 million in the quarter and $9.7 million for the
year. The cash generation was primarily a result of breakeven
performance at the operating EBITDA level and reduced working
capital requirements that were driven by the Company's inventory
reduction actions and reduced accounts receivable balances as sales
volumes have declined. Fourth quarter results were impacted by a
$19.7 million reduction in sales, compared with the prior year, and
are reflective of the challenging business climate that exists
worldwide. The Company reduced fourth quarter SG&A expenses by
$2.0 million, in comparison to 2007, after excluding non-recurring
charges of $0.4 million for a voluntary early retirement program,
$0.3 million in severance related costs and $0.3 million related to
the closure of our Canadian facility taken during the fourth
quarter of 2008. "Fourth quarter sales and customer orders reflect
the very difficult business environment that exists for
manufacturing companies worldwide," said Richard L. Simons,
President and Chief Executive Officer. "During 2009 we will focus
our efforts on reducing overhead costs and maximizing our cash
flow. We expect these actions will accelerate our return to
profitability once the economic environment improves. Our balance
sheet remains a strength with low-debt (net of cash) and should
enable Hardinge to effectively weather this storm and emerge from
the worldwide recession as a strong survivor." The following tables
summarize orders and sales by geographical region for the quarters
and years ended December 31, 2008 and 2007: Quarter Ended Quarter
Ended December 31, December 31, Orders from % Sales from %
Customers in: 2008 2007 Change Customers in: 2008 2007 Change North
America $18,131 $29,662 (39)% North America $23,895 $29,530 (19)%
Europe 21,131 46,040 (54)% Europe 35,021 47,460 (26)% Asia &
Other 7,286 19,852 (63)% Asia & Other 17,312 18,973 (9)%
$46,548 $95,554 (51)% $76,228 $95,963 (21)% Year Ended Year Ended
December 31, December 31, Orders from % Sales from % Customers in:
2008 2007 Change Customers in: 2008 2007 Change North North America
$103,249 $117,532 (12)% America $108,501 $121,520 (11)% Europe
156,320 170,916 (9)% Europe 158,947 165,144 (4)% Asia & Other
81,605 72,092 13% Asia & Other 77,558 69,658 11% $341,174
$360,540 (5)% $345,006 $356,322 (3)% Fourth quarter orders and
sales decreased by $49.0 million or 51% and $19.7 million or 21%
respectively, compared to the prior year. These decreases occurred
across all regions as the recession is worldwide and eliminated
year to date increases of $29.6 million or 11% and $8.4 million or
3%, respectively, at the end of the third quarter. The decreases in
orders and sales were impacted by $9 million in order cancellations
and $11 million in shipment deferrals primarily due to the current
global economic conditions. The Company currently anticipates that
these deferrals will generate sales during the first half of 2009.
On a full year basis, orders and sales decreased by $19.3 million
or 5% and $11.3 million or 3% compared to the prior year. These
declines were generated as a result of fourth quarter activity
which eliminated full year increases in orders and sales of 11% and
3%, respectively, at the end of the third quarter. Gross profit for
the quarter was $18.7 million and $92.3 million for the full year,
decreases of 22% and 14%, respectively, compared to 2007. Gross
profit in the fourth quarter was negatively impacted by $1.9
million in reduced margins related to actions taken to reduce
discontinued product lines in the U.S., $1.2 million in inventory
write downs and $0.6 as a result of a voluntary early retirement
program and lower sales volume. Gross profit for the year decreased
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, $4.6 million due to reduced
factory utilization, $3.0 million in reduced margins associated
with the Company's efforts to reduce discontinued product lines and
overall sales volume. These negative impacts were offset by
approximately $4.6 million related to the strengthening of foreign
currencies relative to the U.S. dollar. Gross profit percentage for
the quarter and full year was 24.6% and 26.7% of net sales,
compared to 25.0% and 30.1% for the same periods in 2007. Selling,
general and administrative (SG&A) expenses for the quarter
decreased 4% or $1.0 million to $21.7 million compared to the prior
year. Excluding non-recurring charges of $0.4 million related to a
voluntary early retirement program, $0.3 million in severance and
$0.3 million related to the closure of our Canadian facility, the
Company reduced SG&A expenses by $2.0 million during the fourth
quarter. The reduction in SG&A expenses is the result of cost
cutting actions taken by the company, which included head count
reductions, plant shut downs, and reduced levels of discretionary
spending. SG&A expenses for the year increased by 10% or $8.5
million to $95.7 million compared to the prior year. This increase
is primarily related to $3.4 million in severance and early
retirement related charges, $3.4 million year over year change in
foreign currency losses and $3.3 million related to translation.
These increases were offset by the initial impact of cost reduction
initiatives. During the past 8 months, the Company has moved
aggressively to adjust its production levels and cost structure in
response to deteriorating global economic conditions. During this
time the company has: -- Reduced U.S. based staffing by 144 people
or 21% -- Shut down the U.S. machine production facility for two
weeks in December 2008 -- Shut down Asian facilities for a week in
January and February 2009 -- Initiated a four-day, 32-hour work
week at the U.S. production facility beginning in February --
Reduced the base pay of all U.S. employees (including corporate
officers), not subject to the reduced workweek, by 5% --
Discontinued overtime at all facilities -- Initiated a hiring
freeze and salary freeze -- Significantly restricted all
discretionary spending Giving full effect of these actions, the
Company anticipates quarterly SG&A to be between $17.0 and
$18.0 million in 2009. At December 31, 2008 Hardinge classified
$24.0 million in long-term debt outstanding under the
multi-currency credit facility (Credit Facility) as current. This
action was a result of the Company not being in compliance with
required debt covenants. An additional $4.1 million outstanding
under a mortgage on our Taiwan factory remains as long-term debt,
of which $0.5 million is classified as current. The Company's
borrowings under the Credit Facility, net of the $18.4 million of
cash on hand represents $5.6 million in net borrowing, which is
less than 3.6% of tangible net worth. The Company is currently in
discussion with our lenders regarding an amendment to the Credit
Facility. With the low net debt and our strong working capital
position, the Company remains confident that a workable amendment
can be reached with its lenders prior to filing our 2008 Form 10-K
on or before March 16, 2009. Accrued pension liability increased by
$36.8 million to $45.0 million primarily due to decreases in the
fair market value of the pension plans assets. As the fair market
value of the pension assets decreases, the Company's obligation
under these plans increases. A corresponding change was recorded in
accumulated other comprehensive income. As required under U.S.
GAAP, the Company is currently completing its annual impairment
test on goodwill and indefinite life intangible assets. These tests
are being performed at the business unit reporting level to
evaluate the unit's carrying value compared with an estimate of its
fair market value. The Company has not yet completed the complex
calculations associated with these tests, but preliminary analysis
indicates that all of the goodwill may be impaired. If it is
determined that goodwill is impaired, a non-cash charge, which
would reduce net income by as much as $21.6 million, would be
recorded in the final fourth quarter results. These calculations
will be completed prior to filing the 2008 10-K. "We understand the
severity of the global economic situation and have moved swiftly to
take appropriate actions," Mr. Simons said. "Although we believe
that the steps taken to date have appropriately positioned the
Company for the current economic environment, we will continue to
evaluate business conditions and make adjustments as necessary to
maximize cash flow and improve our competitive position. 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 March 10, 2009 to stockholders of
record as of March 2, 2009. Conference Call The Company will host a
conference call at 11:00 AM Eastern Time today to discuss fourth
quarter 2008 results. The call can be accessed live at
1-866-548-2693, or via the internet at
http://videonewswire.com/event.asp?id=56048. 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: 245360. This telephone recording
will be available through March 31, 2009. Hardinge is a global
designer, manufacturer and distributor of machine tools,
specializing in high-precision, computer controlled, metal-cutting
machines. The Company's products are distributed to most of the
industrialized markets around the world and in 2008 approximately
69% 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/. 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. - Financial Tables Follow
- HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of
Operations (Unaudited; In Thousands, Except Per Share Data) Three
Months Ended Twelve Months Ended December 31, December 31, 2008
2007 2008 2007 Net sales $76,228 $95,963 $345,006 $356,322 Cost of
sales 57,479 71,985 252,741 248,911 Gross profit 18,749 23,978
92,265 107,411 Selling, general and administrative expenses 21,730
22,700 95,676 87,213 Other expense (income) (9) (273) 2,120 (2,693)
Impairment charge - - 2,720 - (Loss) income from operations (2,972)
1,551 (8,251) 22,891 (Gain) on sale of assets (31) - (54) (1,372)
Interest expense 416 466 1,714 3,051 Interest (income) (32) (53)
(285) (224) (Loss) income before income taxes (3,325) 1,138 (9,626)
21,436 Income taxes 729 1,235 3,048 6,510 Net (loss) income
$(4,054) $(97) $(12,674) $14,926 Per share data: Basic (loss)
earnings per share: $(0.36) $(0.01) $(1.12) $1.43 Weighted average
number of common shares outstanding (in thousands) 11,307 11,317
11,309 10,442 Diluted (loss) earnings per share: $(0.36) $(0.01)
$(1.12) $1.41 Weighted average number of common shares outstanding
(in thousands) 11,307 11,417 11,309 10,562 Cash dividends declared
per share $0.01 $0.05 $0.16 $0.20 HARDINGE INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited; In Thousands) December 31,
December 31, 2008 2007 Assets Current assets: Cash and cash
equivalents $18,430 $16,003 Accounts receivable, net 60,110 71,228
Notes receivable, net 994 1,555 Inventories, net 144,957 158,617
Deferred income tax 398 1,032 Prepaid expenses 10,964 8,573 Total
current assets 235,853 257,008 Property, plant and equipment:
Property, plant and equipment 183,387 180,427 Less accumulated
depreciation 123,790 118,896 Net property, plant and equipment
59,597 61,531 Non-current assets: Notes receivable, net 923 1,847
Deferred income taxes 1,406 306 Other intangible assets 10,725
11,927 Goodwill 21,631 22,841 Other long-term assets 1,321 6,368
36,006 43,289 Total assets $331,456 $361,828 Hardinge Inc. and
Subsidiaries Consolidated Balance Sheets - Continued (Unaudited; In
Thousands, Except Share Data) December 31, December 31, 2008 2007
Total liabilities and shareholders' equity Current liabilities:
Accounts payable $20,059 $27,266 Notes payable to bank - 2,801
Accrued expenses 33,254 26,873 Accrued income taxes 2,911 2,574
Deferred income taxes 3,466 2,375 Current portion of long-term debt
24,549 5,655 Total current liabilities 84,239 67,544 Other
liabilities: Long-term debt 3,572 19,363 Accrued pension expense
44,962 8,145 Deferred income taxes - 4,361 Accrued postretirement
benefits 2,528 2,199 Accrued income taxes 2,153 1,054 Other
liabilities 4,243 4,017 Total other liabilities 57,458 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 December 31, 2008 and December 31, 2007 125 125 Additional
paid-in capital 114,841 114,971 Retained earnings 114,332 128,838
Treasury shares - 1,003,828 at December 31, 2008 and 993,076 shares
at December 31, 2007 (13,037) (13,023) Accumulated other
comprehensive income (26,502) 24,234 Total shareholders' equity
189,759 255,145 Total liabilities and shareholders' equity $331,456
$361,828 HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of
Cash Flows (Unaudited; In Thousands) Year Ended December 31, 2008
2007 Operating Activities Net (loss) income $(12,674) $14,926
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: Noncash - inventory write down 6,266 -
Impairment charge 2,720 - Depreciation and amortization 9,439 9,446
Provision for deferred income taxes 1,278 250 Gain on sale of
assets (54) (1,372) Unrealized intercompany foreign currency
transaction loss (gain) 1,673 (1,062) Changes in operating assets
and liabilities: Accounts receivable 8,503 5,560 Notes receivable
1,512 2,495 Inventories 4,203 (21,448) Prepaids/other assets
(4,009) 2,537 Accounts payable (6,036) (4,857) Accrued expenses
(3,162) 1,262 Accrued postretirement benefits 80 (432) Net cash
provided by operating activities 9,739 7,305 Investing activities
Capital expenditures (4,693) (5,582) Proceeds from sale of assets
106 3,629 Purchase of technical information (175) - Purchase of
Canadian entity net of cash acquired - (240) Net cash (used in)
investing activities (4,762) (2,193) Financing activities
(Decrease) in short-term notes payable to bank (2,800) (1,542)
Increase (decrease) in long-term debt 3,129 (48,724) Net proceeds
from issuance of common stock - 55,946 Net (purchases) of treasury
stock (585) (89) Dividends paid (1,833) (2,164) Net cash (used in)
provided by financing activities (2,089) 3,427 Effect of exchange
rate changes on cash (461) 702 Net increase in cash 2,427 9,241
Cash at beginning of period 16,003 6,762 Cash at end of period
$18,430 $16,003 Contact: Edward Gaio Vice President and CFO (607)
378-4207 http://videonewswire.com/event.asp?id=50196DATASOURCE:
Hardinge Inc. CONTACT: Edward Gaio, Vice President and CFO of
Hardinge Inc., +1-607-378-4207 Web Site: http://www.hardinge.com/
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