Fourth Quarter 2009 Summary: - Cash, net of current debt increased
to $22.7 million from $16.4 million in the third quarter - Orders
for fourth quarter 2009 were $50.9 million, up 9% compared to the
prior year - Recorded one-time fixed asset impairment charge of
$1.7 million associated with previously announced operational
changes - The Board declared a cash dividend of $0.005 per share
ELMIRA, N.Y., Feb. 18 /PRNewswire-FirstCall/ -- Hardinge Inc.
(NASDAQ: HDNG), a leading international provider of advanced
metal-cutting solutions, today announced its fourth quarter and
full year 2009 financial results. Hardinge reported net sales of
$56.6 million for the fourth quarter of 2009, a decrease of 26%
compared to $76.2 million for the fourth quarter 2008. Full year
net sales were $214.1 million, down 38% from 2008 net sales of
$345.0 million. Fourth quarter orders of $50.9 million were up 9%
compared with the prior year quarter, the first increase in total
orders, on a comparative quarter basis, since the third quarter of
2008. Orders for the year were $175.0 million, down 49% compared to
2008. For the fourth quarter of 2009, Hardinge reported a net loss
of ($8.3) million, or ($0.73) per basic and diluted share, down
from a net loss of ($25.7) million, or ($2.27) per basic and
diluted share for the same period of 2008. The Company posted a net
loss for the full year of ($33.3) million also down from a net loss
in 2008 of ($34.3) million. Basic and diluted loss per share for
2009 was ($2.93) compared to basic and diluted loss per share of
($3.03) for 2008. "We accomplished a great deal in 2009, despite
extremely difficult economic conditions and the unprecedented
precipitous fall in worldwide machine tool industry demand," said
Richard L. Simons, President and Chief Executive Officer. "Decisive
actions taken by the Company have resulted in increased cash flow
generation, permanent cost reductions, more efficient management of
inventory levels, simplified worldwide sourcing and supply chain
operations, and balance sheet strength. Our strategic changes have
positioned Hardinge to benefit strongly as our industry
participates in the global economic recovery." "Additionally, we
continue to have strong recognition of and loyalty to the Hardinge
brands combined with geographical, product and customer
diversification," continued Mr. Simons. "With the significant
operational improvements, brand advantages, and our new strategic
alliance with three premier U.S. distributors, we believe Hardinge
is well positioned for growth." Cash provided by operations was
$7.2 million in the fourth quarter, bringing the Company's full
year cash generated from operations to $32.7 million. For the full
year, inventories decreased by $49.6 million. In 2009 Hardinge paid
down debt by $23.2 million and added $6.2 million to its cash
balances by year-end. In addition to the above described balance
sheet changes, at December 31, 2009, pension assets increased by
$4.8 million, accrued pension liability decreased by $25.9 million
and accumulated other comprehensive income (AOCI) increased by
$29.4 million, compared to December 31, 2008. These changes were
primarily related to favorable returns on plan assets as compared
to the expected return of approximately $19.0 million along with
the favorable impact of actuarial assumption and plan changes of
approximately $9.4 million, as compared to December 31, 2008. The
following tables summarize orders and sales by geographical region
for the quarter and year ended December 31, 2009 and 2008: Quarter
Ended Quarter Ended December 31, December 31, Orders from % Sales
from % Customers in: 2009 2008 Change Customers in: 2009 2008
Change ------------- ---- ---- ------ ------------- ---- ----
------ North America $17,568 $18,131 (3)% North America $17,954
$23,895 (25)% Europe 12,016 21,131 (43)% Europe 20,657 35,021 (41)%
Asia & Other 21,344 7,285 193% Asia & Other 18,020 17,312
4% ------ ----- --- ------ ------ --- $50,928 $46,547 9% $56,631
$76,228 (26)% ------- ------- --- ------- ------- ---- Year Ended
Year Ended December 31, December 31, Orders from % Sales from %
Customers in: 2009 2008 Change Customers in: 2009 2008 Change
------------- ---- ---- ------ ------------- ---- ---- ------ North
America $52,547 $103,249 (49)% North America $64,327 $108,501 (41)%
Europe 50,254 156,320 (68)% Europe 87,304 158,947 (45)% Asia &
Other 72,238 81,605 (11)% Asia & Other 62,440 77,558 (19)%
-------- -------- ---- -------- -------- ---- $175,039 $341,174
(49)% $214,071 $345,006 (38)% -------- -------- ---- --------
-------- ---- Fourth quarter total orders increased by $4.4
million, or 9%, to $50.9 million, compared to 2008. Exclusive of
cancellations of $0.5 million and $8.8 million in the fourth
quarter of 2009 and 2008, respectively, orders decreased by $3.9
million or 7%. This decrease was driven by Europe, which was down
approximately 50%, offset by strong demand in the Asia and Other
market where orders were nearly three times the 2008 volume. Sales
for the quarter declined $19.6 million, or 26%, compared to fourth
quarter 2008. Fourth quarter orders and sales in North America were
positively impacted by special discounting to liquidate inventory.
On a full year basis, orders and sales decreased by $166.1 million,
or 49%, and $130.9 million or 38%, respectively, compared to 2008.
Gross profit for the quarter was $10.1 million and $40.8 million
for the full year, decreases of 46% and 56%, respectively, compared
to 2008. Gross profit in the fourth quarter was negatively impacted
by the $19.6 million reduction in sales compared to the same period
in 2008, and the continuation of heavy discounting by many
manufacturers and distributors attempting to reduce inventories.
Gross profit for the year was negatively impacted by the $130.9
million reduction in sales compared to the prior year. Gross profit
for the year also reflected an inventory write down of $5.0 million
resulting from discontinued production of non-critical
manufacturing parts and certain machines in our Elmira, NY
facility, as well as $1.5 million in charges related to lower of
cost or market write-downs on machines reflecting the current
competitive market conditions. Gross profit percentage for the
quarter and full year was 17.7% and 19.1% of net sales,
respectively, compared to 24.6% and 26.7% for the same periods in
2008. Selling, general and administrative (SG&A) expenses for
the quarter decreased $7.0 million to $14.8 million down 32%
compared to the prior year. The fourth quarter decline in SG&A,
compared to 2008, was primarily driven by the strategic actions
taken by the Company to manage operating expenses in response to
current order and sales activity. Fourth quarter 2008 included
charges of $1.1 million related to restructuring activities which
were also driven by the reduced global demand for machine tools.
Foreign currency translation had a favorable impact of
approximately $0.7 million during the fourth quarter compared to
the same period in 2008. SG&A for the year decreased $29.2
million to $68.6 million, down 30% compared to the prior year.
SG&A for 2009 and 2008 included one-time charges for
restructuring activities driven by the reduced global demand for
machine tools of $3.9 million and $3.1 million, respectively.
Exclusive of one-time charges, SG&A for the year decreased by
$30.0 million compared to 2008. This decrease was primarily driven
by a $25.1 million reduction due to the strategic actions taken by
the Company to manage operating expenses as a result of the current
order and sales activity levels as well as a $2.3 million reduction
in commissions. Foreign currency translation had a favorable impact
of approximately $2.6 million during the year compared to the same
period in 2008. The Company recorded a one-time impairment charge
of $1.7 million associated with certain machinery and equipment
formerly utilized in the manufacture of non-critical parts in its
Elmira, NY facility. The tax provision for the quarter is higher
than the expected statutory tax rate due to valuation allowances
being recorded for several jurisdictions in a loss position, the
impact of planned dividends in 2010 from foreign subsidiaries, as
well as the adjustments for the final earnings mix by jurisdictions
in which the Company operates and the adjustment for the final true
up of prior year provisions. "While we expect some sequential
stabilization in demand, worldwide demand for machine tools in 2010
is likely to remain depressed when measured against the strong
period of machine tool demand from 2006 through mid-2008. Demand
for machine tools typically lags overall economic recoveries, and
our expectation is that 2010 will follow that normal path. Our
internal projections indicate a relatively flat market in the US
for most of the year, with some improvement possible near the end
of 2010. We expect European demand to be flat to down as their
economies struggle to recover, and year-on-year growth in Asia, at
roughly 30% of our total sales, which is driven by activity in
China," Mr. Simons said. "Our fourth quarter sales and order rates
were impacted by very aggressive pricing as we converted finished
goods inventory into cash. The estimated amount of orders and sales
under this program was approximately $10.0 million and is not
expected to recur in the first quarter of 2010 as we start the year
out slowly. First quarter sales in the US are expected to be
negatively impacted reflecting the transition from our previous
distributors and direct sales to the new distribution arrangement
with the very strong trio of Gosiger, Inc., Hartwig, Inc. and
Morris Group, Inc. that we announced in December 2009. The Asian
market is heating up to the point where the possibility exists that
component supply shortages, especially in CNC controls, could
affect our shipments in the first quarter. Given all of these
factors, we expect first quarter sales to be in the range of $42.0
million to $45.0 million." "The impact of our cost savings
initiatives from 2008 and 2009 will be fully reflected in our 2010
SG&A, with an anticipated run rate of between $13.0 million and
$14.0 million per quarter, excluding legal and other costs incurred
to evaluate the unsolicited acquisition proposal. Our SG&A run
rate reflects a reduction of approximately $20.0 million compared
with the early 2008 level, along with the removal of $10.0 million
in fixed manufacturing costs over the same period. Despite making
considerable progress we anticipate a negative bottom line in 2010
reflecting this difficult market. We also anticipate positive cash
flow from operations for the year as well as a return to order and
sales growth starting late in the year based upon economists
projections, and returning to positive earnings in 2011." New
Capital Investment The Company also announced today that it has
committed to a CHF 9.0 million ($8.7 million) capital investment in
its Swiss subsidiary, Kellenberger. This investment includes a new
manufacturing facility and upgrades to its parts manufacturing
capabilities. This investment will increase manufacturing capacity
and efficiency. The Company anticipates this project to be
completed in late 2011. New Distributor Alliance In December 2009,
the Company announced that it had entered into a strategic alliance
with three premier U.S. distributors: Gosiger, Inc., Hartwig, Inc.,
and Morris Group, Inc., which provided them exclusive sales and
support responsibilities for Hardinge machine products in virtually
all of the United States. Each distributor brings at least 50 years
of history and a team of well trained sales, service and
applications people to assist in future sales and to provide
service support on existing Hardinge equipment in the field.
Combined they have a workforce of over 700 employees and their
combined sales in 2008 were in excess of $600 million. Unsolicited
Takeover Proposal On February 4, 2010 the Company received an
unsolicited proposal from Industrias Romi S.A. of Brazil to acquire
all outstanding stock for $8.00 per share. Our Board of Directors,
in consultation with financial and legal advisers, unanimously
rejected the proposal as grossly inadequate, opportunistic, and not
in the best interests of Hardinge and its shareholders. The Company
issued a separate press release on this matter today. Dividend
Declared The Company announced that its Board of Directors has
declared a cash dividend of $0.005 per share on the Company's
common stock. The dividend is payable on March 10, 2010 to
stockholders of record as of March 1, 2010. Conference Call The
Company will host a conference call at 11:00 AM Eastern Time today
to discuss fourth quarter 2009 results. The call can be accessed
live at 1-866-790-1863, or via the internet at
http://www.videonewswire.com/event.asp?id=65670. 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 904-596-3174 if outside the U.S. & Canada,
and entering the reference number: 2434941. This telephone
recording will be available through March 31, 2010. 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 68%
of the 2009 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. - Financial Tables Follow
- HARDINGE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, December 31, 2009 2008 ---- ---- (In Thousands Except
Share and Per Share Data) Assets Cash and cash equivalents $24,632
$18,430 Accounts receivable, net 39,936 60,110 Notes receivable,
net 2,364 994 Inventories, net 97,266 144,957 Deferred income taxes
732 398 Prepaid expenses 9,375 10,964 ----- ------ Total current
assets 174,305 235,853 Property, plant and equipment 144,635
183,387 Less accumulated depreciation 89,924 123,790 ------ -------
Net property, plant and equipment 54,711 59,597 Notes receivable,
net 157 923 Deferred income taxes 446 1,406 Intangible assets
10,527 10,725 Pension assets 5,240 437 Other long-term assets 26
884 --- --- Total non-current assets 16,396 14,375 --------
-------- Total assets $245,412 $309,825 ======== ========
Liabilities and shareholders' equity Accounts payable $16,285
$20,059 Notes payable to bank 1,364 - Accrued expenses 22,177
33,255 Accrued income taxes 1,535 2,911 Deferred income taxes 2,832
3,466 Current portion of long-term debt 563 24,549 --- ------ Total
current liabilities 44,756 84,240 Long-term debt 3,095 3,572
Accrued pension liability 18,986 44,962 Accrued postretirement
benefits 2,472 2,528 Accrued income taxes 2,377 2,153 Deferred
income taxes 4,732 - Other liabilities 4,472 4,243 ----- -----
Total other liabilities 36,134 57,458 Common Stock - $0.01 par
value 125 125 Additional paid-in capital 114,387 114,841 Retained
earnings 59,103 92,700 Treasury shares - 939,240 shares at December
31, 2009 and 1,003,828 shares at December 31, 2008 (11,978)
(13,037) Accumulated other comprehensive income (loss) 2,885
(26,502) ----- ------- Total shareholders' equity 164,522 168,127
-------- -------- Total liabilities and shareholders' equity
$245,412 $309,825 ======== ======== HARDINGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per
Share Data) Three Months Ended Twelve Months Ended December 31,
December 31, 2009 2008 2009 2008 ---- ---- ---- ---- Net sales
$56,631 $76,228 $214,071 $345,006 Cost of sales 46,581 57,479
173,275 252,741 ------ ------ ------- ------- Gross profit 10,050
18,749 40,796 92,265 Selling, general and administrative expenses
14,761 21,721 68,556 97,796 Loss (gain) on sale of assets 135 (31)
240 (54) Impairment charge 1,650 21,631 1,650 24,351 ----- ------
----- ------ (Loss) from operations (6,496) (24,572) (29,650)
(29,828) Interest expense 221 416 1,926 1,714 Interest (income)
(19) (32) (114) (285) --- --- ---- ---- (Loss) before income taxes
(6,698) (24,956) (31,462) (31,257) Income taxes 1,586 729 1,847
3,048 ----- --- ----- ----- Net (loss) $(8,284) $(25,685) $(33,309)
$(34,305) ======= ======== ======== ======== Per share data: Basic
(loss) per share: $(0.73) $( 2.27) $(2.93) $(3.03) ====== =======
====== ====== Weighted average number of common shares outstanding
(in thousands) 11,373 11,307 11,372 11,309 ------ ------ ------
------ Diluted (loss) per share: $(0.73) $(2.27) $(2.93) $(3.03)
====== ====== ====== ====== Weighted average number of common
shares outstanding (in thousands) 11,373 11,307 11,372 11,309
------ ------ ------ ------ Cash dividends declared per share
$0.005 $0.01 $0.025 $0.16 ====== ===== ====== ===== HARDINGE INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended
December 31, 2009 2008 ---- ---- (In Thousands) Operating
activities Net (loss) $(33,309) $(34,305) Adjustments to reconcile
net (loss) income to net cash provided by operating activities:
Non-cash - inventory write down 8,127 7,560 Impairment charge 1,650
24,351 Depreciation and amortization 8,504 9,439 Debt issuance
amortization 1,341 421 Provision for deferred income taxes 347
1,278 Loss (gain) on sale of asset 240 (54) Unrealized intercompany
foreign currency transaction (gain) loss (140) 1,673 Changes in
operating assets and liabilities: Accounts receivable 21,009 8,503
Notes receivable (580) 1,512 Inventories 41,474 2,909
Prepaids/other assets 1,317 (3,437) Accounts payable (3,574)
(6,036) Accrued expenses (12,744) (3,162) Accrued postretirement
benefits (1,010) 80 ------ --- Net cash provided by operating
activities 32,652 10,732 Investing activities Capital expenditures
(3,178) (4,693) Proceeds on sale of assets 125 106 Purchase of
technical information - (175) --- ---- Net cash (used in) investing
activities (3,053) (4,762) Financing activities Borrowings under
short-term notes payable to bank 11,357 49,010 Repayments to
short-term notes payable to bank (10,038) (51,810) (Decrease)
increase in long-term debt (24,545) 3,129 Net (purchases) of
treasury stock - (585) Debt issuance fees paid (739) (993)
Dividends paid (288) (1,833) ---- ------ Net cash (used in)
financing activities (24,253) (3,082) Effect of exchange rate
changes on cash 856 (461) --- ---- Net increase in cash 6,202 2,427
Cash and cash equivalents at beginning of year 18,430 16,003 ------
------ Cash and cash equivalents at end of year $24,632 $18,430
======= ======= Hardinge Inc. Contact: One Hardinge Drive Edward
Gaio Elmira, N.Y. 14902 Vice President and CFO (607) 378-4207
DATASOURCE: 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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