- Record Net Sales of $73.5 million, an increase of 38% versus
prior year ELMIRA, N.Y., Aug. 4 /PRNewswire-FirstCall/ -- Hardinge
Inc. (NASDAQ:HDNG), a leading provider of advanced material-cutting
solutions, today reported increased net sales, net income, and
orders in the second quarter of 2005 compared to the same quarter
in 2004. Net income for the second quarter of 2005 was $2.5
million, or $0.28 per share, compared to $0.4 million, or $0.04 per
share, in the second quarter of 2004. Net income for the first six
months of 2005 was $4.3 million, or $0.49 per share, compared to
$1.8 million, or $0.20 per share, for the first six months of 2004.
Net sales for the second quarter of 2005 were $73.5 million, an
increase of 38% compared to $53.3 million of net sales for the
second quarter of 2004. Net sales for the first six months of 2005
were $141.6 million, an increase of 35% compared to $105.2 million
of net sales for the first six months of 2004. "The increase in net
sales is driven primarily by two factors. First, the sales of the
new Bridgeport products, which were acquired in November 2004, have
gone very well. Second, we experienced increased shipments in the
majority of our other products in all of our major markets
worldwide" commented J. Patrick Ervin, Chairman, President and
Chief Executive Officer. The following table summarizes the
Company's sales by geographical region for the three and six month
periods ended June 30, 2005 and 2004, respectively: (U.S. dollars
in thousands) Three Months Ended Six Months Ended June 30, June 30,
Sales to Customers in: 2005 2004 % Change 2005 2004 % Change North
America $26,292 $21,822 20% $50,756 $ 41,551 22% Europe 29,932
20,232 48% 61,046 42,543 43% Asia & Other 17,303 11,276 54%
29,773 21,153 41% $73,527 $53,330 38% $141,575 $105,247 35% The
strength of foreign currencies relative to the U.S. dollar also had
a favorable impact on sales in the second quarter of $1.8 million
and $3.7 million in the first six months of 2005. North American
and European sales have continued to improve over 2004, driven by
an improvement in overall manufacturing activity as well as
shipments of our new Bridgeport products. Sales in the "Asia and
Other" regions increased primarily due to sales of new Bridgeport
products, including the first shipments of machines under a large,
multiple machine order received at the end of last year. Our new
Bridgeport products accounted for approximately 15% of our total
net sales during the first six months of 2005. Orders for the
second quarter of 2005 were $76.7 million, an increase of 29%
compared to $59.5 million in the second quarter of 2004 and for the
first six months of 2005 were $147.8 million, an increase of 34%
compared to the first six months of 2004. The following table
summarizes the Company's orders by geographical region for the
three and six-month periods ended June 30, 2005 and 2004,
respectively: (U.S. dollars in thousands) Three Months Ended Six
Months Ended June 30, June 30, Orders from Customers in: 2005 2004
% Change 2005 2004 % Change North America $29,847 $23,283 28%
$56,474 $47,075 20% Europe 29,832 22,007 36% 61,216 39,638 54% Asia
& Other 16,997 14,176 20% 30,094 23,265 29% $76,676 $59,466 29%
$147,784 $109,978 34% Foreign currency translation accounted for
$1.0 million and $3.6 million of the increase for the three and six
month periods ended June 30, 2005, respectively. Orders for the new
Bridgeport products accounted for approximately 17% of total orders
for the three months and six months ended June 30, 2005,
respectively. The Company's consolidated backlog at June 30, 2005
was $72.5 million or 53% above the June 30, 2004 backlog of $47.4
million. Backlog at December 31, 2004 was $66.3 million. Gross
margin for the second quarter of 2005 was 32.0% of sales, compared
to 31.0% of sales in the first quarter of 2005, and 28.5% of sales
in the second quarter of 2004. The improvement resulted from
continued higher production levels at the Company's European and
U.S. manufacturing facilities and from a favorable shipment mix,
which included increased shipments of higher margin machines.
Selling, general and administrative expenses were $18.1 million, or
24.7% of net sales in the second quarter of 2005, compared to $13.5
million, or 25.4% of net sales in the second quarter of 2004. The
increase is primarily due to our addition of two new sales, service
and technical centers located in the UK and Holland and the
addition of over 70 people associated with these operations to
support our new Bridgeport acquisition. These expenses accounted
for $2.7 million of the overall increase of $4.6 million. $0.9
million was the result of increased commission expense due to the
higher sales volume, $0.4 million was due to additional promotional
and support efforts in China, and another $0.4 million was due to
foreign currency translation. Interest expense increased due to
higher average borrowings, which was related to the acquisition of
Bridgeport assets at the end of 2004 and an increase in capital
required to support higher inventory and higher receivables
resulting from our increased sales levels. Mr. Ervin further
commented, "We are very pleased with our performance for the
quarter and half year and we are excited that strengthening of
manufacturing activity in both the U.S. and Europe appears to be
encouraging looking forward. At this point, I believe the outlook
for worldwide manufacturing is positive, which in turn makes me
optimistic regarding our outlook for the balance of 2005 and
beyond. Based on our current backlog, our recent new order rates,
and current business activity levels, we are confident we will
continue to see strong performance for the remainder of 2005
compared to 2004. As we look forward to the balance of 2005, we
must remember historically the third quarter is generally the
slowest quarter of the year due to vacation shutdowns in many of
our manufacturing facilities around the world. This is true for
many of our customers also." 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) June 30, December 31, 2005 2004 (Unaudited)
Assets Current assets: Cash $4,686 $4,189 Accounts receivable, net
69,850 65,005 Notes receivable, net 5,684 6,946 Inventories 115,167
100,738 Prepaid expenses 8,323 6,509 Total current assets 203,710
183,387 Property, plant and equipment: Property, plant and
equipment 169,712 172,743 Less accumulated depreciation 107,881
105,968 Net property, plant and equipment 61,831 66,775 Other
assets: Notes receivable 5,168 6,445 Deferred income taxes 428 427
Intangible pension asset 298 304 Other intangible assets 7,472
7,551 Goodwill 18,146 20,376 Other 922 1,046 32,434 36,149 Total
assets $297,975 $286,311 Liabilities and shareholders' equity
Current liabilities: Accounts payable $26,774 $25,404 Notes payable
to bank 3,073 2,762 Accrued expenses 15,357 18,670 Accrued pension
expense 1,335 1,541 Accrued income taxes 3,349 4,230 Deferred
income taxes 3,367 3,706 Current portion of long-term debt 4,891
4,893 Total current liabilities 58,146 61,206 Other liabilities:
Long-term debt 56,366 35,213 Accrued pension expense 15,867 15,909
Deferred income taxes 3,296 3,208 Accrued postretirement benefits
5,862 5,927 Derivative financial instruments 2,880 5,502 Other
liabilities 3,358 3,225 87,629 68,984 Equity of minority interest
7,189 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 June 30, 2005 and December 31, 2004 99 99
Additional paid-in capital 60,445 60,538 Retained earnings 102,064
98,277 Treasury shares - 1,024,303 at June 30, 2005 and 1,090,941
shares at December 31, 2004. (13,142) (14,119) Accumulated other
comprehensive income (2,973) 6,230 Deferred employee benefits
(1,482) (1,025) Total shareholders' equity 145,011 150,000 Total
liabilities and shareholders' equity $297,975 $286,311 HARDINGE
INC. AND SUBSIDIARIES Consolidated Statements of Operations (In
Thousands Except Per Share Data) Three Months Ended Six Months
Ended June 30, June 30, 2005 2004 2005 2004 (Unaudited) (Unaudited)
(Unaudited) (Unaudited) Net sales $73,527 $53,330 $141,575 $105,247
Cost of sales 50,030 38,107 96,964 74,152 Gross profit 23,497
15,223 44,611 31,095 Selling, general and administrative expenses
18,114 13,523 35,590 26,353 Income from operations 5,383 1,700
9,021 4,742 Interest expense 1,021 590 1,861 1,213 Interest
(income) (155) (101) (291) (199) Income before income taxes and
minority interest in (profit) of consolidated subsidiary 4,517
1,211 7,451 3,728 Income taxes 1,271 332 2,064 1,025 Minority
interest in (profit) of consolidated subsidiary (791) (523) (1,068)
(918) Net income 2,455 356 4,319 1,785 Per share data: Basic
earnings per share $.28 $.04 $.49 $.20 Weighted average number of
common shares outstanding 8,767 8,735 8,756 8,748 Diluted earnings
per share: $.28 $.04 $.49 $.20 Weighted average number of common
shares outstanding 8,829 8,786 8,840 8,807 Other Financial Data:
Gross margin 32.0% 28.5% 31.5% 29.5% Operating margin 7.3% 3.2%
6.4% 4.5% Capital expenditures 2,277 1,035 2,947 1,370 Depreciation
and amortization 2,286 2,246 4,606 4,512 HARDINGE INC. AND
SUBSIDIARIES Consolidated Statements of Cash Flows (In Thousands)
Six Months Ended June 30, 2005 2004 (Unaudited) (Unaudited)
Operating activities Net income $4,319 $1,785 Adjustments to
reconcile net income to net cash (used in) provided by operating
activities: Depreciation and amortization 4,606 4,512 Provision for
deferred income taxes 425 666 Minority interest 1068 836 Foreign
currency transaction loss 295 (79) Changes in operating assets and
liabilities: Accounts receivable (7,576) (4,849) Notes receivable
2,222 705 Inventories (19,762) (3,191) Other assets (1,870) (95)
Accounts payable 2,220 3,301 Accrued expenses (3,335) (5,131)
Accrued postretirement benefits (65) 28 Net cash (used in)
operating activities (17,453) (1,512) Investing activities Capital
expenditures (2,947) (1,370) Net cash (used in) investing
activities (2,947) (1,370) Financing activities Increase in
short-term notes payable to bank 368 1,945 Increase (decrease) in
long-term debt 21,067 (48) Net sales (purchases) of treasury stock
210 (144) Dividends paid (532) (88) Net cash provided by financing
activities 21,113 1,665 Effect of exchange rate changes on cash
(216) 21 Net increase (decrease) in cash 497 (1,196) Cash at
beginning of period 4,189 4,739 Cash at end of period $4,686 $3,543
DATASOURCE: Hardinge Inc. CONTACT: J. Patrick Ervin, Chairman,
President & CEO of Hardinge Inc., +1-607-378-4420; or John
McNamara, Analyst Inquiries of Financial Relations Board,
+1-212-827-3771 Web Site: http://www.hardinge.com/
http://www.earnings.com/
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