Hirsch International Corp. Reports 2008 Third Quarter Results

  
    
  
  
    
      Hirsch International Corp. (NASDAQ: HRSH, http://www.hirschinternational.com) 
      today announced financial results for the third quarter ended September 
      30, 2008.
    
    
      For the third quarter of 2008, net sales were $10.6 million, compared to 
      $11.9 million in the third quarter of 2007. Net loss in the third 
      quarter of 2008 was $2.0 million, or $0.21 per diluted share, compared 
      to a net loss of $119,000, or $0.01 per diluted share, in the prior year.
    
    
      Gross profit for the third quarter of 2008 was $3.2 million, or 30% of 
      net sales, compared to $4.5 million, or 38% of net sales, in the third 
      quarter of 2007 and operating expenses were $5.2 million versus $4.7 
      million in the prior year period.
    
    
      For the nine-month period ended September 30, 2008, net sales were $32.4 
      million, compared to $38.1 million in the prior year period. The Company 
      reported a net loss of $3.6 million, or $0.38 per diluted share, for the 
      first nine months of 2008, compared to net income for the first nine 
      months of 2007 of $1.5 million, or $0.15 per diluted share. The three 
      month and nine month results include sales of U.S. Screen of $1.4 
      million with a net loss of $0.6 million or $0.07 per diluted share. U.S. 
      Screen was acquired on August 4, 2008.
    
    
      Management Comment
    
    
      Paul Gallagher, President and CEO of the Company, stated, "Overall 
      economic conditions continued to negatively affect demand for our 
      products for the first three quarters of 2008. The weakness was most 
      evident in core embroidery product sales which decreased $8 million this 
      year. This decrease was partially offset by continued market penetration 
      of screen and digital print products. In addition to the market 
      weakness, we have seen severe price and margin pressure resulting from 
      the continued weakness in the US dollar as compared to the Japanese Yen. 
      Year-to-date, 44% of our gross margin dollar deterioration was due to 
      lower overall margins resulting from the increased cost of products and 
      severe competitive sales price pressure. The remaining reduction 
      resulted from lower sales volume.”
    
    
      Mr. Gallagher added, "As a response to the continued weakness in the 
      economy and our customer’s reluctance to buy 
      equipment, in September, we completed an overall restructuring and staff 
      reduction that has lowered our annualized level of operating expense by 
      just over $2.5 million while maintaining our high level customer support 
      and market position. Today our people are more experienced, better 
      trained and managed, and with recent investments in systems and 
      technology, well equipped to service the marketplace and support our 
      broad customer base. We expect to benefit later this year and into 2009 
      from both our continued growth in non-embroidery products and the 
      reduced overhead resulting from the restructuring. Meanwhile, we believe 
      that our strong balance sheet puts us in a good position to get through 
      the current economic crisis. However, we are unable to predict the 
      severity or length of the current economic conditions or their impact on 
      our customers.”
    
    
      Mr. Gallagher concluded, "The overall decorated and graphic apparel 
      marketplace appears to be weathering the storm reasonably well with only 
      modest reductions in overall market volume. However, the uncertainties 
      in the economy have influenced both existing and prospective customers 
      to delay their purchases of new decorated apparel equipment. In the face 
      of these continued market pressures, we remain committed to provide the 
      industry with the most innovative and highest quality products, and the 
      most advanced customer education and support systems, while taking 
      whatever steps necessary to maintain our market leadership. And although 
      we cannot predict the timing of a return to normal business conditions, 
      we believe we are today in a much better position to get through today's 
      challenges and to take advantage of an eventual upturn in our markets."
    
    
      
        
          Income Summary
        
      
      
        
          (Unaudited)
        
      
      
        
          (in thousands, except EPS)
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
          Three Months Ended
        
        
          Nine Months Ended
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          September 30, 2008
        
        
        
        
          September 30, 2007
        
        
        
        
          September 30, 2008
        
        
        
        
          September 30, 2007
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenues
        
        
        
        
          $
        
        
          10,554
        
        
        
        
          $
        
        
          11,909
        
        
        
        
          $
        
        
          32,434
        
        
        
        
          $
        
        
          38,143
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Gross Profit
        
        
        
        
        
        
          3,206
        
        
        
        
        
        
          4,527
        
        
        
        
        
        
          10,546
        
        
        
        
        
        
          14,434
        
      
      
        
          % of Revenues
        
        
        
        
        
        
          30%
        
        
        
        
        
        
          38%
        
        
        
        
        
        
          33%
        
        
        
        
        
        
          38%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating Expenses
        
        
        
        
        
        
          5,200
        
        
        
        
        
        
          4,731
        
        
        
        
        
        
          14,323
        
        
        
        
        
        
          13,095
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating (Loss) Income
        
        
        
        
        
        
          (1,994)
        
        
        
        
        
        
          (204)
        
        
        
        
        
        
          (3,777)
        
        
        
        
        
        
          1,339
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other Expense (Income)
        
        
        
        
          
             
          
        
        
          
            3
          
        
        
        
        
        
        
          (94)
        
        
        
        
        
        
          (141)
        
        
        
        
        
        
          (204)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net (Loss) Income Before Taxes
        
        
        
        
        
        
          (1,997)
        
        
        
        
        
        
          (110)
        
        
        
        
        
        
          (3,636)
        
        
        
        
        
        
          1,543
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income Tax Provision
        
        
        
        
          
             
          
        
        
          
            2
          
        
        
        
        
          
             
          
        
        
          
            9
          
        
        
        
        
        
        
          11
        
        
        
        
        
        
          84
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net (Loss) Income
        
        
        
        
          $
        
        
          (1,999)
        
        
        
        
          $
        
        
          (119)
        
        
        
        
          $
        
        
          (3,647)
        
        
        
        
          $
        
        
          1,459
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (Loss) Income Per Share:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic
        
        
        
        
          $
        
        
          (0.21)
        
        
        
        
          $
        
        
          (0.01)
        
        
        
        
          $
        
        
          (0.38)
        
        
        
        
          $
        
        
          0.16
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted
        
        
        
        
          $
        
        
          (0.21)
        
        
        
        
          $
        
        
          (0.01)
        
        
        
        
          $
        
        
          (0.38)
        
        
        
        
          $
        
        
          0.15
        
      
    
    
      
        
          Balance Sheet

          
            (Unaudited)
          
          
            (in thousands)
          
        
        
        
        
           
        
        
        
      
      
        
        
        
          September 30, 2008
        
        
        
        
          December 31, 2007
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Cash (including restricted cash)
        
        
          $4,815
        
        
        
        
          $16,706
        
      
      
        
          Accounts Receivable, net
        
        
          6,171
        
        
        
        
          5,798
        
      
      
        
          Inventories, net
        
        
          10,420
        
        
        
        
          5,725
        
      
      
        
          Other Current Assets
        
        
          1,013
        
        
        
        
          518
        
      
      
        
          Property, Plant & Equipment, net
        
        
          1,776
        
        
        
        
          512
        
      
      
        
          Other Assets
        
        
          835
        
        
        
        
          41
        
      
      
        
          Total Assets
        
        
          $25,030
        
        
        
        
          $29,300
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Accounts Payable & Accrued Expenses
        
        
          $7,510
        
        
        
        
          $8,962
        
      
      
        
          Customer Deposits
        
        
          1,222
        
        
        
        
          621
        
      
      
        
          Other Liabilities
        
        
          66
        
        
        
        
          111
        
      
      
        
          Total Liabilities
        
        
          8,798
        
        
        
        
          9,694
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders’ Equity
        
        
          16,232
        
        
        
        
          19,606
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Total Liabilities and Stockholders’ Equity
        
        
          $25,030
        
        
        
        
          $29,300
        
      
    
    
      About Hirsch International Corp.
    
    
      Hirsch is a leading provider of equipment and education and support 
      services to the graphic and decorated apparel industry. The Company 
      exclusively represents the decorated apparel industry’s 
      leading brands including Tajima embroidery equipment, MHM screen 
      printing equipment, SEIT textile bridge lasers, Pulse Microsystems 
      digitizing and design software and now Kornit and Mimaki digital garment 
      printers, and through it’s US Screen and 
      Inkjet Technologies subsidiary; T-Jet digital garment printers and the 
      full line of screenprint and digital print support products. Hirsch’s 
      and US Screen’s customer groups include: a 
      wide range of contract manufacturers that outsource their embellishment 
      requirements; manufacturers who use embroidery, screenprinting, laser 
      etching or digital printing to embellish their apparel and fashion 
      accessories; promotional products, uniform, and sportswear companies; 
      retail stores; and graphic and decorated apparel entrepreneurs servicing 
      the athletic apparel, corporate logo-wear, and advertising specialties 
      markets.
    
    
      The Company is led by a strong and experienced management team focused 
      on continuing to grow its core business through sound acquisitions of 
      products and processes, as well as through related business ventures in 
      which the Company can build and maximize stockholder value. The Company 
      was founded in 1968 and is headquartered in Hauppauge, N.Y.
    
    
      Safe Harbor Statement
    
    
      This press release contains forward-looking statements which are made 
      pursuant to the safe harbor provisions set within the meaning of the 
      Private Securities Litigation Reform Act of 1995. Except for 
      historical information contained herein, the matters set forth in this 
      news release are forward-looking statements. Readers should note 
      that forward-looking statements set forth above involve a number of 
      risks and uncertainties that could cause actual results to differ 
      materially from any such statement, including, without limitation, the 
      risks and uncertainties discussed under the caption “Risk 
      Factors” in the Company’s 
      Form 10-K for calendar 2007, which may be updated by our subsequent 
      periodic reports, which discussion is incorporated herein by reference. 
      Readers are also urged to read the periodic filings and current reports 
      on Form 8-K of the Company.