2005 ANNUAL REPORT - Hardinge Inc.

to $15.6 million from $12.5 million, a 25%improvement, and our net income for 2005 was$7.0 million or $0.80 per basic share and $0.79per diluted share compared to $4.4 million or$0.50 per basic and diluted sharein 2004, a 59% improvement.“ Our mission is to be the We sustained our backlog,finishing 2005 at $67 million.leading worldwide supplierof material-cutting solutionsfor turning,Strategic Initiativesmilling,Our mission is to be the leadingworldwide supplier of material-cuttingsolutions for turning,grinding, and workholdingof small- and medium-sized milling, grinding, and workholdingof small- and medium-sized industrialproducts. During 2005 weindustrial products.”made significant progress towardmeeting this objective by increasing our productoffering and expanding the geographic reach of oursales, manufacturing, and engineering capabilities.In the last ten years we have successfully assembleda comprehensive range of products which areamong the most well-known and well-respectedbrands available in the market today. Hardingeproducts are recognized as among the best forturning and workholding; Bridgeport for milling;and Kellenberger, Hauser, Tripet and Tschudinproducts for grinding. With strong brands in eachproduct category, our 2005 revenues are welldiversified between turning products, milling products,grinding products, and workholding / industrialproducts. This diverse range of products, withstrong brand recognition, positions Hardinge Inc.to remain a leading worldwide supplier of materialcuttingsolutions.Along with investing in a greatly expanded productline, we have built a strong and diversified internationalmanufacturing and sales presence. Alongwith our historical North American presence,we are well established in Europe and Asia, andwe distribute machines in all major industrializedcountries of the world. The effects of our investmentin market diversification are evident in our2005 results with 40% of revenue coming fromEurope, another 37% from North America andthe remaining 23% from China and other markets.This is a very healthy distribution of sales acrossthe world.We manufacture products in five locations aroundthe world, in plants totaling over 950,000 squarefeet. These plants are located in Elmira, New York;St. Gallen, Switzerland; Biel, Switzerland; Shanghai,China; and Nan Tou City, Taiwan. Of the productswe sold in 2005, 39% were produced in the U.S.,28% were produced in Europe and 33% were producedin Asia. Clearly, we have built Hardinge Inc.into a diversified international Company in termsof both sales and manufacturing.OperationsOur 2004 acquisition of certain assets and theintellectual property of Bridgeport Machine Ltd.was a pivotal transaction that firmly establishedHardinge as a player in the vertical and horizontalmachining center market. A major challenge during2005 was to ensure that Bridgeport was integratedinto Hardinge, successfully consolidating twodifferent operations, each with its own culture andprocesses. Because of the diligent efforts of many