FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 000-15760
Hardinge Inc.
(Exact name of Registrant as specified in its charter)
New York 16-0470200
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Hardinge Inc.
One Hardinge Drive
Elmira, NY 14902
(Address of principal executive offices) (Zip code)
(607) 734-2281
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
As of September 30, 1998 there were 9,824,746 shares of Common Sock of
the Registrant outstanding.
HARDINGE INC. AND SUBSIDIARIES
INDEX
Part I Financial Information Page
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1998 and
December 31, 1997. 3
Consolidated Statements of Income and Retained
Earnings for the three months ended September 30, 1998
and 1997 and the nine months ended September 30, 1998
and 1997. 5
Condensed Consolidated Statements of Cash Flows for
the nine months ended September 30, 1998 and 1997. 6
Notes to Consolidated Financial Statements. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 10
Item 3. Quantitative and Qualitative Disclosures About Market
Risks. 14
Part II Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Default upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
PART I, ITEM 1
HARDINGE INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands)
Sept. 30, Dec. 31,
1998 1997
-------------------------------
(Unaudited)
Assets
Current assets:
Cash $ 3,170 $ 1,565
Accounts receivable 55,069 56,210
Notes receivable 6,472 5,886
Inventories 94,979 91,969
Deferred income taxes 2,961 2,961
Prepaid expenses 1,635 1,790
-------------------------------
Total current assets 164,286 160,381
Property, plant and equipment:
Property, plant and equipment 144,807 128,640
Less accumulated depreciation 69,156 63,453
-------------------------------
75,651 65,187
Other assets:
Notes receivable 11,927 11,951
Deferred income taxes 837 837
Goodwill 3,974 4,082
Other 1,808 2,846
-------------------------------
18,546 19,716
-------------------------------
Total assets $258,483 $245,284
===============================
See accompanying notes.
HARDINGE INC. AND SUBSIDIARIES
Consolidated Balance Sheets--Continued
(Dollars In Thousands)
Sept. 30, Dec. 31,
1998 1997
------------------------------
(Unaudited)
Liabilities and shareholders' equity:
Current liabilities:
Accounts payable $ 12,466 $ 18,323
Notes payable to bank 4,251 7,282
Accrued expenses 13,565 9,756
Accrued income taxes 2,980 1,614
Deferred income taxes 2,012 1,553
Current portion long-term debt 3,629 3,468
-------------------------------
Total current liabilities 38,903 41,996
Other liabilities:
Long-term debt 34,362 31,012
Accrued pension plan expense 2,311 2,311
Deferred income taxes 1,646 1,575
Accrued postretirement benefits 5,316 5,206
-------------------------------
43,635 40,104
Shareholders' equity:
Preferred stock, Series A, par value $.01:
Authorized - 2,000,000; issued - none
Common stock, $.01 par value:
Authorized shares - 20,000,000
Issued shares - 9,843,992 at Sept. 30, 1998
and 6,511,703 at December 31, 1997 98 65
Additional paid-in capital 60,012 58,065
Retained earnings 123,868 112,625
Treasury shares (444) (552)
Accumulated other comprehensive income -
Foreign currency translation adjustments (2,253) (2,763)
Deferred employee benefits (5,336) (4,256)
-------------------------------
Total shareholders' equity 175,945 163,184
-------------------------------
Total liabilities and shareholders' equity $258,483 $245,284
===============================
See accompanying notes.
HARDINGE INC AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings (Unaudited)
(In Thousands, Except Per Share Data)
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
----------------------------- -----------------------------
Net Sales $62,041 $56,772 $192,891 $180,496
Cost of sales 39,435 37,579 123,832 119,791
----------------------------------------------------------------------------------------- -----------------------------
Gross profit 22,606 19,193 69,059 60,705
Selling, general and
administrative expenses 14,886 12,393 43,089 37,172
Unusual expense 1,960
----------------------------------------------------------------------------------------- -----------------------------
Income from operations 7,720 6,800 25,970 21,573
Interest expense 572 531 1,743 1,896
Interest (income) (120) (176) (379) (530)
----------------------------------------------------------------------------------------- -----------------------------
Income before income taxes 7,268 6,445 24,606 20,207
Income taxes 2,737 2,460 9,212 7,875
----------------------------------------------------------------------------------------- -----------------------------
Net income 4,531 3,985 15,394 12,332
Retained earnings at beginning of period 120,714 105,498 112,625 99,622
Less dividends declared 1,377 1,234 4,118 3,705
Less stock split effected in the form
of a dividend 33
========================================================================================= =============================
Retained earnings at end of period $123,868 $ 108,249 $123,868 $ 108,249
========================================================================================= =============================
Per share data:
Basic earnings per share $ .48 $ .42 $ 1.63 $ 1.32
========================================================================================= =============================
Weighted average number
of common shares outstanding 9,426 9,380 9,419 9,339
============================= =============================
Diluted earnings per share $ .48 $ .42 $ 1.63 $ 1.31
========================================================================================= =============================
Weighted average number
of common shares outstanding 9,468 9,413 9,452 9,419
============================= =============================
Cash dividends declared $ .14 $ .13 $ .42 $ .39
============================= =============================
1997 per share data restated for stock split - see Note D.
See accompanying notes.
HARDINGE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
Nine Months Ended
September 30,
1998 1997
----------------------------------
Net cash provided by operating activities $20,659 $ 32,042
Investing activities:
Capital expenditures (15,263) (6,211)
Proceeds frpm sale of assets 17
Investment in subsidiary (4,588)
----------------------------------
Net cash (used in) investing activities (15,263) (10,782)
Financing activities:
(Decrease) in short-term notes payable to bank (3,158) (8,124)
Increase (decrease) in long-term debt 3,835 (7,977)
(Purchase) sale of treasury stock (430) 84
Dividends paid (4,118) (3,705)
---------------------------------
Net cash (used in) financing activities (3,871) (19,722)
Effect of exchange rate changes on cash 80 (57)
---------------------------------
Net increase in cash $ 1,605 $1,481
=================================
See accompanying notes
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1998
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1998, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report for the year ended December 31, 1997.
The Company has adopted Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information."
The Company operates in only one business segment - industrial machine tools.
NOTE B--INVENTORIES
Inventories are summarized as follows (dollars in thousands):
September 30, December 31,
1998 1997
----------------------------------
Finished products $ 39,885 $ 32,290
Work-in-process 27,921 32,328
Raw materials and purchased components 27,173 27,351
=========== ===========
$ 94,979 $ 91,969
=========== ===========
NOTE C--UNUSUAL EXPENSE
1997's first quarter included a one-time charge of $1,960,000
(approximately $1,200,000 after tax, or $.13 per share). This non-recurring
charge involves outside costs incurred in connection with a major acquisition
that the Company carried into the final stages of the due diligence process but
decided not to complete.
NOTE D--CHANGES IN SHAREHOLDERS' EQUITY
On April 28, 1998, the Board of Directors approved a three-for-two
stock split of the Company's common shares to be paid in the form of a 50
percent stock dividend. As a result of the split, 3,281,351 additional shares
were issued on May 29, 1998 to shareholders of record on May 8, 1998 and
retained earnings were reduced by $32,813. Any fractional shares resulting from
the split were paid in cash. All references in the accompanying consolidated
financial statements to common shares outstanding and earnings per share have
been restated to reflect this stock split.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 1998
NOTE E--EARNINGS PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING
Earnings per share are computed using the weighted average number of
shares of common stock outstanding during the period. For diluted earnings per
share, the weighted average number of shares includes common stock equivalents
related primarily to restricted stock. In 1997, Statement of Financial
Accounting Standards No. 128 "Earnings per Share" was issued. Statement 128
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. All earnings per share amounts have been
restated to conform to the requirements of Statement 128. All earnings per share
amounts and shares outstanding have been restated to reflect the stock split
mentioned above.
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations required by Statement No. 128.
The table sets forth the computation of basic and diluted earnings per share:
Three months ended Nine months ended
September 30, September 30,
--------------------------------------------------------
1998 1997 1998 1997
--------------------------------------------------------
(in thousands)
Numerator:
Net income $ 4,531 $ 3,985 $ 15,394 $12,332
Numerator for basic earnings per share 4,531 3,985 15,394 12,332
Numerator for diluted earnings per share 4,531 3,985 15,394 12,332
Denominator:
Denominator for basic earnings per share
-weighted average shares 9,426 9,380 9,419 9,339
Effect of diluted securities:
Restricted stock and stock options 42 33 33 80
Denominator for diluted earnings per share
-adjusted weighted average shares 9,468 9,413 9,452 9,419
Basic earnings per share $ .48 $ .42 $ 1.63 $ 1.32
========================= ==========================
Diluted earnings per share $ .48 $ .42 $ 1.63 $ 1.31
========================= ==========================
NOTE F--DIVIDENDS DECLARED
Dividends declared per share have been restated to reflect the
additional shares issued in the stock split mentioned above.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 1998
NOTE G--REPORTING COMPREHENSIVE INCOME
As of January 1, 1998 the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." Statement 130
establishes new rules for the reporting and display of comprehensive income and
its components. However, the adoption of this Statement had no impact on the
Company's net income or shareholders' equity. Statement 130 requires that
foreign currency translation adjustments, which prior to adoption were reported
separately in shareholders' equity, be included in shareholders' equity as other
comprehensive income. Prior year financial statements were reclassified to
conform to the requirements of Statement 130.
During the three months and nine months ended September 30, 1998 and
1997, the components of total comprehensive income consisted of the following
(dollars in thousands):
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
--------- --------- --------- ----------
Net Income $ 4,531 $ 3,985 $ 15,394 $ 12,332
Foreign currency
translation adjustments 814 (96) 510 (1,880)
--------- --------- --------- ----------
Comprehensive Income $ 5,345 $ 3,889 $ 15,904 10,452
========= ========= ========= ==========
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following are management's comments relating to significant changes
in the results of operations for the three month and nine month periods ended
September 30, 1998 and 1997 and in the Company's financial condition during the
nine month period ended September 30, 1998.
Results of Operations
Net Sales. Net sales for the quarter ended September 30, 1998
totaled $62,041,000 compared to $56,772,000 during the same 1997 quarter, an in-
crease of 9.3%. Year to date sales of $192,891,000 for the first nine months of
1998 represent an increase of 6.9% over 1997's nine month total of $180,496,000.
Sales of machines accounted for $42,112,000 of net sales for the
third quarter of 1998, while sales of non-machine products and services
contributed the remaining $19,929,000. Compared to the prior year's third
quarter, machine sales increased by 14.8% while other products experienced a
slight decline of 0.9%. This difference in rates of change was due in part to
shipment of a particularly large machine order to an automotive customer during
this year's third quarter. For the nine months ended September 30, 1998 machine
revenues were $133,679,000 or 69.3% of total volume with the remaining
$59,212,000 or 30.7% coming from other products. This compares to the first nine
months of 1997 where machine revenues totaled $121,789,000 or 67.5%, and other
revenues totaled $58,707,000 or 32.5%. The increase in the relative percentage
of machine sales throughout these periods reflects the Company's continued
aggressive introduction of new machine products and strategic acquisitions.
Sales to customers in the United States for the quarter ended
September 30, 1998 increased by $1,687,000 or 4.1% over the same 1997 quarter.
Sales to European customers increased by $876,000 or 7.6%, while sales to all
other parts of the world increased by $2,706,000, an increase of 68.4%. For the
nine months ended September 30, the 1998 sales apportionment among the US,
Europe, and all other areas was 69.6%, 21.2%, and 9.2%, respectively, compared
to 72.0%, 18.7%, and 9.3% during 1997.
Gross Profit. As in both previous quarters this year, the
Company's gross margin continued to increase during the third quarter. Gross
margin, as a percentage of sales, was 36.4% in the third quarter of 1998
compared to 33.8% for the same 1997 quarter. Gross margin percentages for the
nine month periods ended September 30, 1998 and 1997 were 35.8% and 33.6%,
respectively. The improved margins reported throughout the year are the result
of a more profitable mix of machine sales and better factory utilization.
Selling, General,and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses as a percentage of sales for the quarter ended
September 30 were 24.0% in 1998 compared to 21.8% during 1997. The same upward
trend is true for the nine month periods ended September 30, 1998 and 1997, at
22.3% and 20.6%, respectively. The additional expense during the first nine
months of 1998 is a result of several factors. The implementation of the
Company's strategy to provide better service to our growing marketplace has
resulted in the addition of both sales and service personnel, and the opening of
new regional technical centers in Ohio and Texas. The Company has just completed
participation in the International Manufacturing Technology Show in Chicago. The
show, held every two years, is the premier showcase for Hardinge products. The
Company's presence at this year's show was broadly expanded to accommodate its
growing product lines. Finally, 1997's year-to-date SG&A expenses include only
two quarters of Hansvedt Industries costs as a result of the Hansvedt
acquisition having taken place in April, 1997.
Income from Operations. Operating income for the quarter ended
September 30, 1998 was $7,720,000 (12.4% of sales) compared to $6,800,000
(12.0%) during the same quarter last year. Income from operations for the nine
months ended September 30, 1998 was $25,970,000, or 13.5% of sales, compared to
1997's $23,533,000, or 13.0%, as calculated prior to the non-recurring charge
related to acquisition efforts which was reported during 1997's first quarter.
With this non-recurring charge taken into consideration, operating income for
the nine months ended September 30, 1997 was $21,573,000, or 12.0% of sales. The
increases in sales volume and gross margin rates described earlier have more
than offset the additional SG&A costs during 1998, resulting in these
improvements.
Interest Expense. Interest expense for the quarter ended September 30,
1998 was $572,000, compared to $531,000 a year earlier, resulting from slightly
higher average borrowing at slightly lower rates. For the nine month periods
ended September 30, 1998 and 1997, interest expense totaled $1,743,000 and
$1,896,000, respectively.
Interest Income. Interest income is derived mainly from financing of
customer purchases. A program of reduced interest rates as a sales incentive
during 1998 is responsible for the reduced interest income of $120,000 and
$379,000 for the quarter and nine months ended September 30, 1998 compared to
$176,000 and $530,000 for the same periods a year earlier.
Income Taxes. The provision for income taxes as a percentage of pre-tax
income was 37.7% and 37.4%, for the third quarter and first nine months of 1998,
respectively, compared to 38.2% and 39.0% for the same 1997 periods. The rate
reductions are a reflection of higher utilization of US income tax credits.
Net Income. Net income for the third quarter of 1998 was $4,531,000, or
$.48 per share, an increase of $546,000 or 13.7% from 1997's income of
$3,985,000 or $.42 per share which was restated for the Company's May 1998
3-for-2 stock split. Year to date 1998 net income was $15,394,000, or $1.63 per
share, compared to $12,332,000, or $1.31 per share for the same 1997 period
after restatement. As previously reported, 1997's net income has been reduced by
$1,200,000, or $.13 per share (after restatement), resulting from a
non-recurring charge related to first quarter 1997 acquisition efforts.
Excluding that charge, net income for the first nine months of 1997 was
$13,532,000, or $1.44 per share as restated. The net income gain is attributable
to the accumulation of factors already discussed.
Earnings Per Share. All earnings per share and weighted average share
amounts are presented, and where appropriate, restated as diluted to conform
with Financial Accounting Standards Board Statement No. 128, Earnings Per Share.
Additionally, to provide comparability between periods, prior periods' data have
also been restated to give effect to the Company's 3-for-2 stock split which
took place in May, 1998.
Quarterly Information
The following table sets forth certain quarterly financial data for
each of the periods indicated.
Three Months Ended
Mar. 31, June 30, Sept. 30, Dec. 31,
1997 1997 1997 1997
---------------------------------------------------
(in thousands, except per share data)
---------------------------------------------------
Net Sales $ 60,056 $ 63,668 $ 56,772 $66,083
Gross Profit 20,178 21,334 19,193 21,713
Income from operations 6,414 8,359 6,800 8,926
Net income 3,514 4,833 3,985 5,608
Diluted earnings per share .38 .52 .42 .59
Weighted average shares
outstanding 9,328 9,356 9,413 9,443
Three Months Ended
Mar. 31, June 30, Sept. 30,
1998 1998 1998
---------------------------------------------------
(in thousands, except per share data)
---------------------------------------------------
Net Sales $ 65,779 $ 65,071 $ 62,041
Gross Profit 22,853 23,600 22,606
Income from operations 9,182 9,068 7,720
Net income 5,454 5,409 4,531
Diluted earnings per share .58 .57 .48
Weighted average shares
outstanding 9,441 9,468 9,468
Liquidity and Capital Resources
Hardinge's operating activities for the nine months ended September 30,
1998 provided funds totaling $20,659,000 compared to $ 32,042,000 for the same
period a year earlier. The 1998 and 1997 nine month periods generated
$22,509,000 and $18,813,000, respectively, from net income plus depreciation and
amortization. However, funds were used to increase inventory by $2,031,000
during the nine months ended September 30, 1998. During the nine months ended
September 30, 1997, funds were generated by an inventory reduction of
$11,804,000 as inventory levels, which had been increased during 1996 for new
product introductions and large auto business orders, were reduced. These
significant changes in inventory levels were largely responsible for the overall
difference in funds provided by operations between the two nine month periods.
Throughout the nine months ended September 30, 1998, total debt
remained nearly level. However, during the same 1997 period the Company repaid
short and long-term borrowings totaling $16,101,000. Capital expenditures and
acquisition activities required $15,263,000 and $10,782,000 in funds for the
nine month periods ended September 30, 1998 and 1997, respectively. 1998's
capital expenditures include a number of very large items of manufacturing
equipment purchased to machine larger part sizes and to increase productivity of
our manufacturing operations in both the U.S. and Switzerland. The net result of
all operating, financing, and investing activities was an increase in cash of
$1,605,000 for the nine months ended September 30, 1998 compared to $1,481,000
during the same period of the previous year.
Hardinge's current ratio at September 30, 1998 was 4.22:1, compared to
3.82:1 at December 31, 1997.
Hardinge provides long-term financing for the purchase of its equipment
by qualified customers. We periodically sell portfolios of our customer notes to
financial institutions in order to reduce debt and finance current operations.
Our customer financing program has an impact on our month-to-month borrowings,
but it has had little long-term impact on our working capital because of the
ability to sell the underlying notes. We sold $30,455,000 of customer notes in
the first nine months of 1998, compared to $25,400,000 during the same period of
1997.
At September 30, 1998 Hardinge maintained revolving loan agreements
with several U.S. banks providing for unsecured borrowing up to $70,000,000 on a
revolving basis, $20,000,000 through November 1, 1999 and $50,000,000 through
August 1, 2002. Any amounts outstanding on the $20,000,000 line expiring
November 1, 1999 convert, at the Company's option, to term loans payable
quarterly over four years through 2003. These facilities, along with other short
term credit agreements, provide for immediate access of up to $77,000,000. At
September 30, 1998, outstanding borrowings under these arrangements totaled
$23,684,000.
We believe that the currently available funds and credit facilities,
along with internally generated funds, will provide sufficient financial
resources for ongoing operations.
Year 2000 Issue
The Year 2000 issue arises from the use of two-digit date fields in
certain computer programs which may cause problems as the year changes from
1999 to 2000. If the Company's computer systems do not correctly recognize date
information, there could be a material adverse effect on the Company's
operations. The Company has identified risk associated with the Year 2000
problem in the following areas: (i) systems used by the Company to operate its
business; (ii) systems used by the Company's critical suppliers; and (iii)
warranty or other potential claims from the Company's customers. The Company has
evaluated its risks in these areas and is in the process of implementing a
program to minimize any potential impact on operations arising out of the Year
2000 problem. The Company's efforts have been directed by a Steering Committee
consisting of executive officers and other appropriate personnel. Costs
associated with the program are not expected to be significant and are being
expensed as incurred with funding through operating cash flows.
With respect to IT (Information Technology) systems, the Company has
reviewed, tested and corrected, where necessary, all internally-generated
software for the ability to recognize the year 2000. Where the Company relies on
outside software vendors, the Company has received written assurance of, and
tested for, such software's ability to properly perform beyond December 31,
1999.
Non-information technology ("Non-IT") systems include plant floor
machinery and systems with embedded technology such as microprocessors or
microcontrollers which operate such facility related items as phone systems,
access controls and heating, ventilation and air conditioning systems. The
Company has identified, tested where possible and received when available
written confirmation that its facility-related Non-IT equipment is Year 2000
compliant and has requested written assurance from its key equipment suppliers
that their internal operations and products are and will be Year 2000 compliant.
Currently, a majority of suppliers have provided the requested assurance and the
Company anticipates concluding this analysis, including equipment testing, in
early 1999.
The Company believes that its past and current products are Year 2000
compliant and therefore exposure to warranty and other potential claims is not
expected to be outside the ordinary course of business. With respect to the
computerized control systems in place on the Company's machines sold in prior
years, the Company's primary supplier of these controls has provided written
assurance that both their previously-supplied and current controls are Year 2000
compliant.
As part of its Year 2000 compliance program, the Company has developed
a contingency plan to address what it views as the most likely worst-case
scenario resulting from one or more of the above-identified risks being
realized. At this time, the Company believes that the failure of a third-party's
system to perform as represented poses the greatest risk to the Company's
operations. The contingency plan identifies alternative suppliers and addresses
other potential third-party failures. While the Company believes it has
addressed all critical Year 2000 issues, there is no guarantee against internal,
external and third-party system failures related to the Year 2000 problem. Such
failures could have a material adverse effect on the Company's results of
operations, liquidity and financial condition.
Euro Conversion
The Company conducts operations in several European countries which
will begin conversion in 1999 to the new common currency (the Euro) to be used
by members of the European Union. The Company does not anticipate any
significant risk to its operations as a result of the conversion.
This report contains statements, including those relating to the year
2000 issue, 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.
PART I. ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
10.1 Swap Transaction Agreement effective June 1, 1998 between
Hardinge Inc. and The Chase Manhattan Bank.
10.2 Employment Agreement with Richard C. Amadril, dated August
August 3, 1998.
27.1 Financial Data Schedule
27.2 Restated Finacial Data Scedule
B. Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Hardinge Inc.
November 12, 1998 By:_/s/ Robert E. Agan____________________
Date Robert E. Agan
Chairman of the Board, President /CEO
November 12, 1998 By:_/s/ J. Patrick Ervin__________________
Date J. Patrick Ervin
Executive Vice President
November 12, 1998 By:_/s/ Malcolm L Gibson__________________
Date Malcolm L. Gibson
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
November 12, 1998 By:_/s/ Richard L. Simons_________________
Date Richard L. Simons
Vice President - Finance
(Principal Accounting Officer)