Summary of Third Quarter Results: - The Company improved its
positive net cash position with consolidated cash of $25.4 million,
and total debt of $12.2 million - Sales for the quarter were $50.1
million, down 42% compared to 2008 - Orders for the quarter were
$46.7 million, down 49% compared to 2008 - The Company recorded
one-time charges of $6.6 million related to its strategic decision
to cease manufacturing non-critical parts in its Elmira, NY
facility and $1.0 million for severance in Europe - Dividend of
$0.005 per share declared ELMIRA, N.Y., Nov. 5
/PRNewswire-FirstCall/ -- Hardinge Inc. (NASDAQ: HDNG), a leading
international provider of advanced metal-cutting solutions, today
reported net sales of $50.1 million for the quarter and $157.4
million for the nine months ended September 30, 2009. Sales for the
comparable periods in 2008 were $86.6 million and $268.8 million,
respectively. Orders for the three and nine months ended September
30, 2009 were $46.7 million and $124.1 million, respectively, down
from $92.1 million and $294.6 million for the comparable periods in
2008. The Company realized a net loss of ($14.7) million, or
($1.29) per share for the third quarter, compared with a net loss
of ($8.3) million, or ($0.74) per share, for the third quarter of
2008. Third quarter 2009 results include one-time charges of $7.6
million, or ($0.67) per share, which included severance related
expense of $2.6 million, or ($0.23) per share, and inventory
write-downs related to the strategic decision to cease production
of non-critical manufacturing parts and certain machine models of
$5.0 million, or ($0.44) per share. In addition to the one-time
charges there were lower of cost or market write-downs of $1.1
million, or ($0.10) per share on machine inventory as a result of
current market conditions as many manufacturers and distributors
discounted prices below cost to reduce inventories. "Worldwide
demand for machine tools remains severely depressed which is
reflected in our sales and order numbers for the third quarter and
for 2009 to date," said Richard L. Simons, President and Chief
Executive Officer. "We are aggressively competing for the limited
order opportunities available and remain focused on improving
operating efficiencies and increasing cash flow which has
positioned Hardinge to effectively compete when industry demand
recovers." In August 2009, the Company announced that it was moving
to a more variable cost business model in its Elmira, NY facility,
and therefore would begin the process of outsourcing many of the
components and subassemblies for machines made in the Elmira
facility. The Company also announced that it would close
significant sections of the Elmira manufacturing operation involved
in non-critical parts production, further reduce the Company's U.S.
workforce by approximately 15%, and record severance related
expenses of between $1.3 million and $2.0 million and asset
write-downs of up to $10 million during the second half of 2009.
During the third quarter, the Company recorded one-time charges of
$1.6 million for severance and $5.0 million for inventory
write-downs related to this initiative. The Company intends to
identify certain machinery and equipment related to non-critical
parts manufacturing in its Elmira, NY facility as available for
sale in the fourth quarter of 2009, and will record an impairment
charge at that time, which is not expected to exceed $2.5 million.
"Approximately 120 positions were eliminated in the U.S. and Europe
during the third quarter and worldwide staffing will be further
reduced by approximately 90 positions during fourth quarter 2009,"
Mr. Simons continued. "We continue to review every aspect of our
cost structure and to make the adjustments necessary to simplify
and focus our operations and to maintain our financial strength and
flexibility going forward." The following tables summarize orders
and sales by geographical region for the three and nine months
ended September 30, 2009 and 2008: Quarter Ended September 30,
Orders from % Customers in: 2009 2008 Change ------------- ----
---- ------ North America $11,433 $27,659 (59)% Europe 12,891
35,723 (64)% Asia & Other 22,414 28,767 (22)% ------ ------
---- $46,738 $92,149 (49)% ------- ------- ---- Quarter Ended
September 30, Sales from % Customers in: 2009 2008 Change
------------- ---- ---- ------ North America $15,704 $25,501 (38)%
Europe 18,581 41,610 (55)% Asia & Other 15,779 19,503 (19)%
------ ------ ---- $50,064 $86,614 (42)% ------- ------- ---- Nine
Months Ended September 30, Orders from % Customers in: 2009 2008
Change ------------- ---- ---- ------ North America $34,979 $85,118
(59)% Europe 38,238 135,189 (72)% Asia & Other 50,894 74,319
(32)% ------ ------ ---- $124,111 $294,626 (58)% -------- --------
---- Nine Months Ended September 30, Sales from % Customers in:
2009 2008 Change ------------- ---- ---- ------ North America
$46,373 $84,606 (45)% Europe 66,647 123,926 (46)% Asia & Other
44,420 60,246 (26)% ------ ------ ---- $157,440 $268,778 (41)%
-------- -------- ---- Third quarter and nine month order and sales
results were down significantly across all regions compared with
the same periods in 2008, consistent with the slowdown in global
manufacturing activity. Currency exchange rates had an unfavorable
impact on new orders of approximately $0.8 million for the quarter,
and $4.1 million for the nine months ended September 30, 2009
compared to the same periods in the prior year. Currency exchange
rates had an unfavorable impact on sales of approximately $0.8
million for the quarter, and approximately $8.5 million for the
nine months compared to the same periods in 2008. Gross profit for
the quarter was $3.7 million compared to $18.1 million in 2008. The
decreased gross profit is primarily due to the $36.6 million
reduction in sales for the quarter compared to the same period in
2008. Third quarter gross profit also reflected an inventory write
down of $5.0 million resulting from the discontinuance of the
production of non-critical manufacturing parts and certain machines
in our Elmira, NY facility that was discussed in the Company's
second quarter release, as well as $1.1 million related to lower of
cost or market write-downs on machines as a result of the current
competitive market conditions as many manufacturers and
distributors cut prices to reduce inventories. Gross profit was
$30.7 million for the nine months ended September 30, 2009,
compared with $73.5 million for the prior year period. The gross
margin was 7.5% for the third quarter, and 19.5% for the nine month
period, compared to 20.9% and 27.4%, respectively, in 2008. Gross
profit for the quarter and nine months ended September 30, 2008 was
negatively impacted by an inventory charge of $6.3 million related
to the discontinuance of certain machines lines. Selling, general
and administrative (SG&A) expenses for the quarter were $17.9
million, down 21% from third quarter 2008, despite additional
one-time severance and restructuring related costs. Third quarter
SG&A expense includes $2.6 million primarily related to
severance costs associated with the discontinuance of the
production of non-critical manufacturing parts and certain machines
in our Elmira, NY facility as well as workforce reductions in
Europe. Exclusive of the one-time charges, the 32% decrease in
SG&A was driven by the impact of lower commissions and
strategic actions taken by the Company to manage operating expenses
as a result of the current order and sales activity levels. Foreign
currency translation favorably impacted third quarter SG&A by
approximately $0.6 million compared to the prior year. SG&A for
the nine months ended September 30, 2009 declined by 28% to $53.1
million compared to $73.9 million for the same period last year.
SG&A for the nine months ended September 30, 2009 included $4.1
million primarily related to severance costs. As a result of the
reduced global demand for machine tools, the Company implemented
workforce reduction programs in all subsidiaries except China
during 2009. Exclusive of the one-time charges, the 34% decrease in
SG&A was driven by the impact of lower commissions and
strategic actions taken by the Company to manage operating expenses
as a result of the current order and sales activity levels. Foreign
currency translation had a favorable impact of approximately $3.3
million compared to the same period in 2008. Mr. Simons concluded,
"We remain focused on cash flow as we anticipate that the market
will continue to be difficult for the foreseeable future. Actions
we have taken over the past 15 months have permanently changed the
cost structure of the Company, which puts us in a stronger position
to compete when the market does recover." Dividend Declared The
Hardinge Board of Directors declared a cash dividend of $0.005 per
share on the Company's common stock, payable on December 10, 2009
to stockholders of record as of December 1, 2009. Conference Call
The Company will host an investor call at 11:00 AM (ET) today to
discuss results for the third quarter of 2009. The call can be
accessed live at 866-790-1863, or via the internet at
http://www.videonewswire.com/event.asp?id=63120. 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: 2392531. This telephone
recording will be available through December 31, 2009. Hardinge is
a global designer, manufacturer and distributor of machine tools,
specializing in SUPER PRECISION(TM) and precision CNC Lathes, high
performance Machining Centers, high-end cylindrical and jig
Grinding Machines, and technologically advanced Workholding &
Rotary Products. The Company's products are distributed to most of
the industrialized markets around the world with approximately 69%
of the 2008 sales outside of North America. Hardinge has a very
diverse international customer base and serves a wide variety of
end-user markets. This customer base includes metalworking
manufacturers which make parts for a variety of industries, as well
as 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. Contact: Edward Gaio Vice
President and CFO (607) 378-4207 - Financial Tables Follow -
Hardinge Inc. and Subsidiaries Consolidated Balance Sheets
September 30, December 31, (In Thousands) 2009 2008 ---- ----
Assets (Unaudited) Cash and cash equivalents $25,355 $18,430
Accounts receivable, net 35,641 60,110 Notes receivable, net 1,063
994 Inventories, net 115,400 144,957 Deferred income taxes 407 398
Prepaid expenses 10,439 10,964 ------ ------ Total current assets
188,305 235,853 Property, plant and equipment 182,458 183,387 Less
accumulated depreciation 125,161 123,790 ------- ------- Net
property, plant and equipment 57,297 59,597 Notes receivable, net
634 923 Deferred income taxes 1,555 1,406 Intangible assets 10,554
10,725 Other long-term assets 627 1,321 --- ----- Total non-current
assets 13,370 14,375 Total assets $258,972 $309,825 ========
======== Liabilities and shareholders' equity Accounts payable
$15,703 $20,059 Notes payable to bank 8,354 - Accrued expenses
24,670 33,255 Accrued income taxes 1,709 2,911 Deferred income
taxes 3,568 3,466 Current portion of long-term debt 563 24,549 ---
------ Total current liabilities 54,567 84,240 Long-term debt 3,234
3,572 Accrued pension expense 43,435 44,962 Accrued postretirement
benefits 2,764 2,528 Accrued income taxes 2,321 2,153 Other
liabilities 4,423 4,243 ----- ----- Total other liabilities 56,177
57,458 Common Stock - $0.01 par value 125 125 Additional paid-in
capital 114,429 114,841 Retained earnings 67,444 92,700 Treasury
shares - 950,740 shares at September 30, 2009 and 1,003,828 shares
at December 31, 2008 (12,133) (13,037) Accumulated other
comprehensive (loss) (21,637) (26,502) ------- ------- Total
shareholders' equity 148,228 168,127 Total liabilities and
shareholders' equity $258,972 $309,825 ======== ======== HARDINGE
INC. AND SUBSIDIARIES Consolidated Statements of Operations (In
Thousands, Except Per Share Data) Three Months Ended Nine Months
Ended September 30, September 30, ------------- ------------- 2009
2008 2009 2008 ---- ---- ---- ---- (Unaudited) (Unaudited)
(Unaudited) (Unaudited) Net sales $50,064 $86,614 $157,440 $268,778
Cost of sales 46,315 68,536 126,694 195,262 ------ ------ -------
------- Gross profit 3,749 18,078 30,746 73,516 Selling, general
and administrative expenses 17,856 22,482 53,148 73,923 Other
expense (income) 304 150 752 2,129 Impairment charge 2,720 - 2,720
-- ----- -- ----- (Loss) income from operations (14,411) (7,274)
(23,154) (5,256) Interest expense 232 377 1,705 1,298 Interest
income (41) (70) (95) (253) --- --- --- ---- (Loss) income before
income taxes (14,602) (7,581) (24,764) (6,301) Income tax expense
90 757 261 2,319 -- --- --- ----- Net (loss) income $(14,692)
$(8,338) $(25,025) $(8,620) ======== ======= ======== ======= Per
share data: Basic (loss) earnings per share: $(1.29) $( 0.74)
$(2.20) $(0.76) ====== ======= ====== ====== Weighted average
number of common shares outstanding (in thousands) 11,373 11,304
11,372 11,309 ====== ====== ====== ====== Diluted (loss) earnings
per share: $(1.29) $( 0.74) $(2.20) $(0.76) ====== ======= ======
====== Weighted average number of common shares outstanding (in
thousands) 11,373 11,304 11,372 11,309 ====== ====== ====== ======
Cash dividends declared per share $0.005 $0.05 $0.02 $0.15 ======
===== ===== ===== HARDINGE INC. AND SUBSIDIARIES Consolidated
Statements of Cash Flows (In Thousands) Nine Months Ended September
30, 2009 2008 ---- ---- (Unaudited) (Unaudited) Operating
activities Net (loss) $(25,025) $(8,620) Adjustments to reconcile
net (loss) to net cash provided by operating activities: Noncash -
inventory write down 7,591 6,275 Impairment charge - 2,720
Depreciation and amortization 6,471 7,456 Provision for deferred
income taxes (468) 1,100 Loss (gain) on sale of asset 105 (23) Debt
issuance amortization 1,243 239 Unrealized intercompany foreign
currency transaction (gain) loss (215) 1,831 Changes in operating
assets and liabilities: Accounts receivable 24,937 494 Notes
receivable 229 1,049 Inventories 24,669 845 Prepaids/other assets
1,015 (6,255) Accounts payable (4,628) (965) Accrued expenses
(10,316) (1,959) Accrued postretirement benefits (154) (320) ----
---- Net cash provided by operating activities 25,454 3,867
Investing activities Capital expenditures (2,254) (3,356) Proceeds
from sale of asset 21 60 -- -- Net cash (used in) investing
activities (2,233) (3,296) Financing activities Increase (decrease)
in short-term notes payable to bank 8,354 (2,458) (Decrease)
increase in long-term debt (24,406) 2,265 Net purchases of treasury
stock - (589) Dividends paid (231) (1,719) Debt issuance fees paid
(706) (893) ---- ---- Net cash (used in) financing activities
(16,989) (3,394) Effect of exchange rate changes on cash 693 58 ---
-- Net increase (decrease) in cash 6,925 (2,765) Cash at beginning
of period 18,430 16,003 ------ ------ Cash at end of period $25,355
$13,238 ======= ======= DATASOURCE: Hardinge Inc. CONTACT: Edward
Gaio, Vice President and CFO, +1-607-378-4207 Web Site:
http://www.hardinge.com/
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