HDNG Hardinge Inc. (delisted)

Hardinge Reports First Quarter EPS of $.21, Up 31% From 2004 First Quarter - Sales Increase by 31%, Orders Increase by 41% over First Quarter of 2004 ELMIRA, N.Y., May 5 /PRNewswire-FirstCall/ -- Hardinge Inc. (NASDAQ:HDNG), a leading provider of advanced material-cutting solutions, today reported increased sales, net income, and orders in the first quarter of 2005 as compared to the same quarter in 2004. Net sales were $68.0 million in the first quarter of 2005, an increase of 31% as compared to $51.9 million of sales in the first quarter of 2004. Net income was $1.9 million, or $.21 per share, as compared to $1.4 million, or $.16 per share, in the first quarter of 2004. Orders were $71.1 million, an increase of 41% as compared to $50.5 million in the first quarter of 2004. J. Patrick Ervin, Chairman, President and Chief Executive Officer, commented, "We are pleased to report a strong start to 2005. Our first quarter results were in line with our expectations. We continue to see success from our strategy to expand sales in regions outside of the U.S. to take advantage of market segments where the greatest growth opportunities exist, while also expanding sales through diversifying our product offering. Sales of our new Bridgeport products, which Hardinge acquired in the fourth quarter of 2004, contributed over $11 million to consolidated net sales. Sales of all other products increased by approximately 10%, with increases in all regions." The following table summarizes the Company's sales by geographical region for the first quarters of 2005 and 2004: (U.S. dollars in thousands) First Quarter Sales to Customers in: 2005 2004 % Change North America $24,464 $19,729 24% Europe 31,114 22,311 39% Asia & Other 12,470 9,877 26% $68,048 $51,917 31% The weakening of the U.S. dollar against the currencies in which our entities operate resulted in increases in the dollar value of sales reported. Net sales in the first quarter of 2005 were $1.8 million higher than the same quarter of 2004 because of foreign currency translation effects. Overall market conditions in the U.S. improved over 2004, with industry-wide activity strengthening. European sales increased due to shipments of the new Bridgeport machining centers and stronger sales of grinding products. Sales in the Asia and Other region increased primarily because of sales of new Bridgeport products, including the first shipments of machines under a large, multiple machine order received at the end of last year. The following table summarizes the Company's orders by geographical region for the first quarters of 2005 and 2004: (U.S. dollars in thousands) First Quarter Orders from Customers in: 2005 2004 % Change North America $26,627 $23,792 12% Europe 31,384 17,631 78% Asia & Other 13,097 9,089 44% $71,108 $50,512 41% The comparative order numbers were also impacted by the translation impact of a weaker dollar, with $2.7 million of the $20.6 million increase resulting from this change. New Bridgeport products accounted for $12.6 million of the increase in worldwide orders. The Company's consolidated backlog at March 31, 2005 was $69.4 million or 68% above the March 31, 2004 backlog of $41.3 million. Backlog at December 31, 2004 was $66.3 million. The Company's first quarter 2005 gross margin was 31.0% of sales, as compared to 30.2% in the first quarter of 2004. The improvement in margin percentage resulted primarily from higher production levels at the Company's U.S. manufacturing facility. Selling, general and administrative expenses were $17.5 million, or 25.7% of net sales in the first quarter of 2005, as compared to $12.6 million, or 24.3% of net sales in the first quarter of 2004. The addition of people and other marketing costs associated with the new Bridgeport products accounted for approximately $2.5 million of the overall increase of $4.9 million. Commission expense increased by $.6 million on the higher sales volume, and additional promotional and support efforts in China added $.4 million. The translation impact of the weaker dollar also added $.4 million to these expenses. Interest expense increased because of higher average borrowings driven by the acquisition of Bridgeport assets at the end of last year and an increase in inventory resulting from higher production levels. The elimination of the minority interest in the profit of a consolidated subsidiary decreased by $.1 million due to slightly lower profits at the Company's Taiwanese operations, driven by pricing pressures on their U.S. dollar denominated sales translated into local currencies. Mr. Ervin further commented, "The first quarter increases in orders, sales, and profitability in our major markets give us optimism regarding the outlook for Hardinge in 2005. Our customers' favorable response to the Bridgeport product lines has exceeded our expectations. We continue to invest in Asia with additional capacity, promotional activity, and support personnel to take advantage of the strong growth opportunities in that area. At this time, we anticipate continued positive trends in year over year comparisons of our operating performance for the remainder of 2005." The Company also announced that its Board of Directors has declared a cash dividend of $0.03 per share on the Company's common stock. The dividend is payable on June 10, 2005 to stockholders of record as of June 1, 2005. The Company will host its usual conference call at 10:00 am today to discuss these results. The call can be accessed via the Internet live or as a replay at http://www.earnings.com/. The archive will be available for replay for 14 days following the call. 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. Hardinge Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands) March 31, December 31, 2005 2004 (Unaudited) Assets Current assets: Cash $5,820 $4,189 Accounts receivable, net 64,062 65,005 Notes receivable, net 6,217 6,946 Inventories 110,302 100,738 Prepaid expenses 7,832 6,509 Total current assets 194,233 183,387 Property, plant and equipment: Property, plant and equipment 172,138 172,743 Less accumulated depreciation 107,173 105,968 Net property, plant and equipment 64,965 66,775 Other assets: Notes receivable 6,123 6,445 Deferred income taxes 430 427 Intangible pension asset 298 304 Other intangible assets 7,500 7,551 Goodwill 19,470 20,376 Other 1,016 1,046 34,837 36,149 Total assets $294,035 $286,311 See accompanying notes. Hardinge Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands) March 31, December 31, 2005 2004 (Unaudited) Liabilities and shareholders' equity Current liabilities: Accounts payable $26,990 $25,404 Notes payable to bank 5,081 2,762 Accrued expenses 14,097 18,670 Accrued pension expense 1,541 1,541 Accrued income taxes 4,460 4,230 Deferred income taxes 3,302 3,706 Current portion of long-term debt 4,893 4,893 Total current liabilities 60,364 61,206 Other liabilities: Long-term debt 45,958 35,213 Accrued pension expense 15,800 15,909 Deferred income taxes 3,469 3,208 Accrued postretirement benefits 5,945 5,927 Derivative financial instruments 4,245 5,502 Other liabilities 3,240 3,225 78,657 68,984 Equity of minority interest 6,398 6,121 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 - 9,919,992 at March 31, 2005 and December 31, 2004 99 99 Additional paid-in capital 60,473 60,538 Retained earnings 99,876 98,277 Treasury shares - 1,032,488 at March 31, 2005 and 1,090,941 shares at December 31, 2004. (13,237) (14,119) Accumulated other comprehensive income 3,004 6,230 Deferred employee benefits (1,599) (1,025) Total shareholders' equity 148,616 150,000 Total liabilities and shareholders' equity $294,035 $286,311 See accompanying notes. Hardinge Inc. and Subsidiaries Consolidated Statements of Operations (In Thousands Except Per Share Data) Three Months Ended March 31, 2005 2004 (Unaudited) (Unaudited) Net sales $68,048 $51,917 Cost of sales 46,934 36,237 Gross profit 21,114 15,680 Selling, general and administrative expenses 17,476 12,638 Income from operations 3,638 3,042 Interest expense 840 623 Interest (income) (136) (98) Income before income taxes and minority interest in (profit) of consolidated subsidiary 2,934 2,517 Income taxes 793 693 Minority interest in (profit) of consolidated subsidiary (277) (395) Net income $1,864 $1,429 Per share data: Basic earnings per share: Weighted average number of common shares outstanding 8,749 8,757 Basic earnings per share $.21 $.16 Diluted earnings per share: Weighted average number of common shares outstanding 8,838 8,868 Diluted earnings per share $.21 $.16 Other Financial Data: Gross margin 31.0% 30.2% Operating Margin 5.3% 5.9% Capital expenditures $670 $335 Depreciation and amortization $ 2,320 $ 2,266 See accompanying notes. HARDINGE INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In Thousands) Three Months Ended March 31, 2005 2004 (Unaudited) (Unaudited) Operating activities Net income $ 1,864 $ 1,429 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 2,320 2,266 Provision for deferred income taxes 95 485 Minority interest 277 302 Foreign currency transaction loss 9 (86) Changes in operating assets and liabilities: Accounts receivable 333 (1,955) Notes receivable 659 181 Inventories (11,290) (187) Other assets (1,517) 707 Accounts payable 1,848 849 Accrued expenses (5,212) (2,340) Accrued postretirement benefits 18 21 Net cash (used in) provided by operating activities (10,596) 1,672 Investing activities Capital expenditures (670) (335) Net cash (used in) investing activities (670) (335) Financing activities Increase in short-term notes payable to bank 2,350 595 Increase in long-term debt 10,751 820 Net sales (purchases) of treasury stock 142 (144) Dividends paid (265) - Net cash provided by financing activities 12,978 1,271 Effect of exchange rate changes on cash (81) 3 Net increase in cash 1,631 2,611 Cash at beginning of quarter 4,189 4,739 Cash at end of quarter $5,820 $7,350 See accompanying notes. DATASOURCE: Hardinge Inc. CONTACT: Richard L. Simons, Exec VP & CFO of Hardinge Inc., +1-607-378-4202; Analyst Inquiries: John McNamara of Financial Relations Board, +1-212-827-3771, for Hardinge Inc. Web site: http://www.hardinge.com/

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