<PAGE>
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 March 31, 2000
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 March 31, 2000 there were 8,919,571 shares of Common Sock of
the Registrant outstanding.
1
<PAGE>
HARDINGE INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
INDEX
Part I Financial Information Page
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 2000 and
December 31, 1999. 3
Consolidated Statements of Income and Retained Earnings
for the three months ended March 31, 2000 and 1999. 5
Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 2000 and 1999. 6
Notes to Consolidated Financial Statements. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 9
Item 3. Quantitative and Qualitative Disclosures About
Market Risks 12
Part II Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Default upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
2
<PAGE>
PART I, ITEM 1
HARDINGE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, Dec. 31,
2000 1999
---------------------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash $ 1,426 $ 1,156
Accounts receivable 46,885 46,218
Notes receivable 8,718 7,594
Inventories 85,110 85,640
Deferred income taxes 4,207 4,207
Prepaid expenses 4,026 3,367
---------------------------
Total current assets 150,372 148,182
Property, plant and equipment:
Property, plant and equipment 144,552 144,421
Less accumulated depreciation 74,019 72,156
---------------------------
70,533 72,265
Other assets:
Notes receivable 17,931 15,014
Goodwill 3,758 3,794
Other 2,202 2,202
---------------------------
23,891 21,010
---------------------------
Total assets $244,796 $241,457
===========================
</TABLE>
See accompanying notes.
3
<PAGE>
HARDINGE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--CONTINUED
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, Dec. 31,
2000 1999
----------------------------
(Unaudited)
<S> <C> <C>
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 11,284 $ 14,460
Notes payable to bank 5,895 663
Accrued expenses 11,363 9,292
Accrued income taxes 2,483 2,667
Deferred income taxes 2,375 2,122
Current portion long-term debt 3,550 3,550
----------------------------
Total current liabilities 36,950 32,754
Other liabilities:
Long-term debt 25,802 23,380
Accrued pension plan expense 4,971 4,971
Deferred income taxes 2,055 2,055
Accrued postretirement benefits 5,649 5,620
----------------------------
38,477 36,026
Equity of minority interest 888 963
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 - 9,919,992 at March 31, 2000
and December 31, 1999 99 99
Additional paid-in capital 61,583 61,760
Retained earnings 129,224 128,325
Treasury shares (13,586) (10,199)
Accumulated other comprehensive income -
Foreign currency translation adjustments (4,793) (4,143)
Deferred employee benefits (4,046) (4,128)
----------------------------
Total shareholders' equity 168,481 171,714
----------------------------
Total liabilities and shareholders' equity $244,796 $241,457
============================
</TABLE>
See accompanying notes.
4
<PAGE>
HARDINGE INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three months ended
March 31,
2000 1999
-------------------------
<S> <C> <C>
Net Sales $47,836 $46,194
Cost of sales 32,134 30,646
-------------------------
Gross profit 15,702 15,548
Selling, general and
administrative expenses 11,921 12,133
-------------------------
Income from operations 3,781 3,415
Interest expense 354 489
Interest (income) (111) (157)
Income before income taxes and minority interest -------------------------
in loss of consolidated subsidiary 3,538 3,083
Income taxes 1,451 1,039
Minority interest in loss of consolidated subsidiary 75 38
-------------------------
Net income 2,162 2,082
Retained earnings at beginning of period 128,325 127,526
Less dividends declared 1,263 1,378
-------------------------
Retained earnings at end of period $129,224 $128,230
=========================
Per share data:
Basic earnings per share $ .24 $ .22
=========================
Weighted average number
of common shares outstanding 8,852 9,460
=========================
Diluted earnings per share $ .24 $ .22
=========================
Weighted average number
of common shares outstanding 8,934 9,431
=========================
Cash Dividends Declared $ .14 $ .14
=========================
</TABLE>
See accompanying notes.
5
<PAGE>
HARDINGE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
-------------------------------
<S> <C> <C>
Net cash (used in) provided by operating activities ($1,685) $ 13,125
Investing activities:
Capital expenditures (787) (2,501)
-------------------------------
Net cash (used in) investing activities (787) (2,501)
Financing activities:
Increase (decrease) in short-term notes payable to bank 5,258 (1,403)
Increase (decrease) in long-term debt 2,642 (7,032)
(Purchase) of treasury stock (3,880) (818)
Dividends paid (1,264) (1,378)
-------------------------------
Net cash provided by (used in) financing activities 2,756 (10,631)
Effect of exchange rate changes on cash (14) (53)
-------------------------------
Net increase (decrease) in cash $270 ($60)
===============================
</TABLE>
See accompanying notes
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
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 month period ended March 31,
2000, are not necessarily indicative of the results that may be expected for the
year ended December 31, 2000. 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, 1999.
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):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-----------------------------------------
<S> <C> <C>
Finished products $ 37,972 $ 37,361
Work-in-process 25,848 25,572
Raw materials and purchased components 21,290 22,707
---------------- --------------------
$ 85,110 $ 85,640
================ ====================
</TABLE>
NOTE C--COMPANY STOCK REPURCHASE PROGRAM
On April 9, 1999 Hardinge announced a stock repurchase program. The
Board of Directors has authorized the repurchase of up to 1.0 million shares of
the Company's common stock, or approximately 10% of the total shares
outstanding. The Company has purchased 878,651 shares under the program as of
March 31, 2000.
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
NOTE D--EARNINGS PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING
Earnings per share are computed in accordance with Statement of
Financial Accounting Standards No. 128 "Earnings per Share." Basic 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.
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:
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------------
2000 1999
------------------------------
<S> <C> <C>
Numerator:
Net income $ 2,162 $ 2,082
Numerator for basic earnings per share 2,162 2,082
Numerator for diluted earnings per share 2,162 2,082
Denominator:
Denominator for basic earnings per
share-weighted average shares 8,852 9,460
Effect of diluted securities:
Restricted stock and stock options 82 (29)
Denominator for diluted earnings per
share-adjusted weighted average shares 8,934 9,431
Basic earnings per share $ .24 $ .22
==============================
Diluted earnings per share $ .24 $ .22
==============================
</TABLE>
8
<PAGE>
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 periods ended March 31, 2000
and 1999 and in the Company's financial condition during the three month period
ended March 31, 2000.
RESULTS OF OPERATIONS
NET SALES. Net sales for the quarter ended March 31, 2000 were
$47,836,000 compared to $46,194,000 for the quarter ended March 31, 1999, an
increase of $1,642,000 or 3.6%. Sales to customers in the United States rose by
$3,358,000 or 11.4%, from $29,375,000 for 1999's first quarter to $32,733,000
for the current quarter. U.S. sales during the first quarter of 2000 included
billings totaling $7,029,000 to a single customer for partial completion of a
large order recorded during the second quarter of 1999. Shipments to European
customers declined from $13,718,000 during 1999's first quarter to $10,204,000
during 2000's first quarter, while sales to all other areas of the world
increased from $3,101,000 to $4,899,000 for the same periods.
Sales of machines accounted for $30,537,000 during the first quarter of
2000 compared to $28,567,000 for the same 1999 period, an increase of $1,970,000
or 6.9%. Sales of non-machine products and services of $17,299,000 represented a
reduction of $328,000 or 1.9% from the same quarter last year.
The Company's order backlog at March 31, 2000 increased by 9.0% from a
year earlier, and by 2.4% from December 31, 1999, despite shipment of the large
second quarter 1999 order mentioned above. The Company's order rate for the
first quarter of 2000 was 18% higher than the fourth quarter of 1999, and
approximately equal to the first quarter of 1999 after removing the impacts of
foreign currency translations.
GROSS PROFIT. Gross margin, as a percentage of sales, was 32.8% in the
first quarter of 2000, compared to 33.7% for the same period in 1999. This
reduction is the result of continuing significant price discounting among
machine tool suppliers competing for a low level of customer demand, combined
with a somewhat lower portion of total sales attributable to non-machine
products and services where margins are relatively higher.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses during the first quarter of 2000 were
$11,921,000 compared to $12,133,000 for the same quarter of 1999. The Company
continued its expense reduction efforts during the first quarter of 2000 as a
means of alleviating the continuing impact of reduced demand for machine tools.
These cost reductions were partially offset by higher promotional expenses
attributable to the upcoming biannual International Manufacturing Technology
Show (IMTS) in September. This event is a major promotional commitment for the
Company. The show is anticipated to attract an audience of 150,000 machine
buyers, both domestic and international.
INCOME FROM OPERATIONS. Income from operations as a percentage of net
sales increased in the three month period ended March 31, 2000 to 7.9% from 7.3%
earned for the same period in 1999. Although the gross margin percentage was
slightly lower in this year's first quarter as indicated, the Company's efforts
at controlling its SG&A expenses resulted in this improvement in the operating
margin percentage.
9
<PAGE>
INTEREST EXPENSE AND INCOME. Interest expense decreased from $489,000
in the first quarter of 1999 to $354,000 for the first quarter of 2000, despite
several recent increases in market interest rates. The reduced expense was made
possible by 20% lower average outstanding debt for this year's first quarter,
compared to a year ago. Interest income, earned primarily on customer notes,
also declined, from $157,000 during last year's first quarter to $111,000 for
the quarter ended March 31, 2000. The reduced income reflects the impact of
bargain interest rates which were offered to customers as a sales incentive
throughout much of 1999 and into 2000.
INCOME TAXES. The provision for income taxes as a percentage of net
income was 41.0% for the first quarter of 2000 compared to 33.7% a year earlier.
1999's first quarter benefited from a high utilization of U.S. income tax
credits which did not repeat in 2000. Additionally, consolidated income was
reduced in 2000's first quarter by foreign losses against which no income taxes
were recoverable resulting in a slight increase in the consolidated rate.
NET INCOME. Net income for the first quarter of 2000 was $2,162,000 or
$.24 diluted earnings per share compared to $2,082,000 or $.22 diluted earnings
per share for the first quarter of 1999.
EARNINGS PER SHARE. All earnings per share and weighted average share
amounts are presented to conform with Financial Accounting Standards Board
Statement No. 128, EARNINGS PER SHARE.
QUARTERLY INFORMATION
The following table sets forth certain quarterly financial data for
each of the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
Mar. 31, June 30, Sept. 30, Dec. 31,
2000 2000 2000 2000
----------------------------------------------------------
(in thousands, except per share data)
----------------------------------------------------------
<S> <C>
Net Sales $ 47,836
Gross Profit 15,702
Income from operations 3,781
Net income 2,162
Diluted earnings per share .24
Weighted average shares outstanding 8,934
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
Mar. 31, June 30, Sept. 30, Dec. 31,
1999 1999 1999 1999
----------------------------------------------------------
(in thousands, except per share data)
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 46,194 $ 45,881 $ 42,399 $ 44,059
Gross Profit 15,548 14,381 13,418 13,811
Income from operations 3,415 2,346 1,468 2,388
Net income 2,082 1,458 980 1,521
Diluted earnings per share .22 .16 .11 .17
Weighted average shares outstanding 9,431 9,342 9,265 9,035
</TABLE>
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the first three months of 2000, operating activities used
$1,685,000 of cash compared to generating $13,125,000 for the same period during
1999. This net use of funds totaling $14,810,000 between the two periods
resulted primarily from three causes. Operating funds were used to support an
increase in accounts receivable for the first quarter of 2000 compared to being
generated by a reduction in receivables for the same quarter of 1999, for a
total use of $8,305,000. Likewise, a similar change in inventory levels resulted
in a net use of funds totaling $2,917,000. Both of these changes reflect the
growing need for working capital typically present during periods of increasing
business activity. Additionally, net reductions in accounts payable and accrued
expenses during the first quarter of 2000 relative to changes in these same
items during the first quarter of 1999 used additional funds of $2,275,000.
Investing activities for the quarter ended March 31, 2000, at $787,000,
used $1,714,000 less than the same quarter of last year. At the same time,
financing activities generated $2,756,000 during the first quarter of 2000,
while using funds totaling $10,631,000 during the same 1999 quarter, for a net
additional source of funds of $13,387,000 between the two periods. This
additional cash generation resulted primarily from two factors. First, increases
in short and long-term borrowing during 2000 compared to significant debt
repayment during the first quarter of 1999, generated net additional funds of
$16,335,000. Partially offsetting this, the Company's purchases of treasury
stock under its stock repurchase plan in place during both periods required the
use of $3,880,000 in cash during the first quarter of 2000, compared to $818,000
during the same quarter of 1999.
Hardinge's current ratio at March 31, 2000 was 4.07:1 compared to
4.52:1 at December 31, 1999.
Hardinge provides long-term financing for the purchase of its
equipment by qualified customers. The Company periodically sells portfolios
of customer notes to financial institutions in order to reduce debt and
finance current operations. The customer financing program has an impact on
Hardinge's month-to-month borrowings, but it has had little long-term impact
on its working capital because of the ability to sell the underlying notes.
No notes were sold during the first quarter of either 2000 or 1999 as a
result of the lower sales levels previously discussed coupled with the fact
that a considerably lower than typical portion of total sales were recorded
on contracts during both quarters.
Hardinge maintains a revolving loan agreement with several U.S. banks
providing for unsecured borrowing up to $50,000,000 on a revolving basis through
August 1, 2002. This facility, together with other short term credit agreements,
provides for immediate access of up to $64,000,000. At March 31, 2000,
outstanding borrowings under these arrangements totaled $24,596,000.
We believe that currently available funds and credit facilities, along
with internally generated funds, will provide sufficient financial resources for
ongoing operations.
THIS REPORT 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 MARKET ,
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,
11
<PAGE>
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
None
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
4.1 Amendment to the By-Laws of Hardinge Inc. dated
February 22, 2000.
10.1 $8,000,000 Master Note among Hardinge Inc. and
Chemung Canal Trust Company.
27.1 Financial Data Schedule
B. Reports on Form 8-K
None
12
<PAGE>
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.
May 12, 2000 By: /s/ Robert E. Agan
- ------------------------- ---------------------------------
Date Robert E. Agan
Chairman of the Board /CEO
May 12, 2000 By: /s/ J. Patrick Ervin
- ------------------------- ---------------------------------
Date J. Patrick Ervin
President/COO
May 12, 2000 By: /s/ Richard L. Simons
- ------------------------- ---------------------------------
Date Richard L. Simons
Executive Vice President/CFO
(Principal Financial Officer)
13
<PAGE>
Exhibit 4.1
AMENDMENT TO THE BY-LAWS OF HARDINGE INC.
DATED FEBRUARY 22, 2000
Effective April 1, 2000, the first sentence of Article III, Section 3, of
the By-Laws of Hardinge Inc. was amended to read:
"THE NUMBER OF DIRECTORS CONSTITUTING THE ENTIRE BOARD SHALL BE EIGHT (8)."
<PAGE>
Exhibit 10.1
CHEMUNG CANAL TRUST COMPANY
MASTER NOTE
$8,000,000.00 ELMIRA, NEW YORK
DECEMBER 24, 1999
For value received, the undersigned, HARDINGE, INC. ("Borrower") promises to
pay to the order of CHEMUNG CANAL TRUST COMPANY ("Lender"), on demand or when
due as provided herein, at its office at One Chemung Canal Plaza, Elmira, New
York, or at any other office designated by Lender, the principal sum of
EIGHT MILLION and NO/100 ($8,000,000.00) Dollars, or so much thereof as shall
equal the unpaid principal amount of all advances made by Lender to Borrower,
plus interest on the principal amount outstanding from time to time.
This Note shall be evidence of indebtedness and shall constitute the terms
of payment by the Borrower to the Lender of principal which may be borrowed,
repaid and reborrowed from time to time, it being understood that the Lender
may, in its sole discretion, decline in whole or in part to make any advance
requested by Borrower, the excess of borrowing over repayments shall be the
principal balance due hereunder from time to time and at any time.
The Lender may, in its sole discretion, make an advance to the Borrower upon
oral request. Each oral request shall be conclusively presumed to have been
made by a person authorized by Borrower to do so, and any credit by the Lender
of any advance to or for the account of the Borrower shall establish the
Borrower's obligation to repay the same in accordance with the terms of this
Note. The Lender shall incur no liability to any party by reason of making an
advance upon an oral request. The Lender will endeavor (but shall be under no
obligation) to send to the Borrower written confirmation of the date and
amount of such advance, but its failure to do so will not relieve the Borrower
of its obligations hereunder, including its obligation to repay the advance
when due.
Each advance made to Borrower shall be deposited in Borrower's account at
Chemung Canal Trust Company, identified below. Any advance made hereunder
shall be in an amount of not less that $2,500.00.
Interest shall accrue at a rate equal to the sum of (I) the Prime Rate in
effect from time to time plus (ii) 1/2% per annum. Prime Rate, as used
herein, shall mean the annual rate of interest announced by the Wall Street
Journal, as the Wall Street Journal Prime Rate. The rate of interest payable
hereunder shall change on each date on which a change in the Prime Rate
becomes effective. Interest will be calculated for the actual number of days
on a 360-day basis.
Advances in excess of $500,000.00 shall accrue interest at a rate equal to
the sum of the one month London Interbank Offered Rate (LIBOR) in effect from
time to time plus .50% per annum. The LIBOR rate as used herein shall mean
the annual rate of interest announced in the Wall Street Journal. All
advances will carry the LIBOR rate fixed for one month. All advances under
$500,000.00 and any advance paid prior to the one month maturity will have
its interest rate revert to the Wall Street Journal Prime Rate. All interest
will be calculated for the actual number of days on a 360-day basis.
Lender may, at its sole option, declare the entire balance of principal and
accrued interest due and payable at any time, and in that event, the Borrower
will immediately pay the entire balance in full.
All or any part of the indebtedness evidenced by this Note may be paid
without penalty at any time.
Any payment not received within ten (10) business days after it becomes due
may, at the option of the Lender, be subject to a late charge equal to 2%
thereof or $25, whichever is greater.
All payments shall be in lawful money of the United States in immediately
available funds.
If the Lender demands and accepts partial payments, such demand or acceptance
shall not be construed as a waiver of the right to demand the entire unpaid
balance due hereunder at any time in accordance with the terms hereof. Any
delay by the Lender in exercising any rights hereunder shall not operate as a
waiver of such rights.
<PAGE>
The provisions of any separate Security Agreement or mortgage executed by the
Borrower shall become a part of the terms of this Master Note.
If this item is checked, ____ notwithstanding any other provision of this
Note, the Borrower agrees that for a period of ____ consecutive days during
each of Borrower's fiscal years, there shall be no principal balance and
accrued interest outstanding under this Master Note.
Borrower, and endorsers and guarantors hereof, waive any demand, presentment
for payment, protest and notice of protest for non-payment of this Note. This
Note shall be governed by the laws of the State of New York.
Borrower agrees to pay all reasonable costs and expenses, including
attorneys' fees and disbursements incurred by Lender in enforcing this Note.
HARDINGE INC.
ONE HARDINGE DRIVE
ELMIRA, NEW YORK 14902-1507
BY: /s/ Robert E. Agan
-------------------------
ROBERT E. AGAN
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,426
<SECURITIES> 0
<RECEIVABLES> 73,534
<ALLOWANCES> 0
<INVENTORY> 85,110
<CURRENT-ASSETS> 150,372
<PP&E> 144,552
<DEPRECIATION> 74,019
<TOTAL-ASSETS> 244,796
<CURRENT-LIABILITIES> 36,950
<BONDS> 25,802
0
0
<COMMON> 99
<OTHER-SE> 168,382
<TOTAL-LIABILITY-AND-EQUITY> 244,796
<SALES> 47,836
<TOTAL-REVENUES> 47,836
<CGS> 32,134
<TOTAL-COSTS> 11,921
<OTHER-EXPENSES> (75)<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 354
<INCOME-PRETAX> 3,538
<INCOME-TAX> 1,451
<INCOME-CONTINUING> 2,162
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,162
<EPS-BASIC> .24
<EPS-DILUTED> .24
<FN>
<F1>Minority interest in loss of consolidated subsidiary.
</FN>
</TABLE>
