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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Commission file number: 000-15760

Hardinge Inc.

(Exact name of Registrant as specified in its charter)

(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  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 in the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined by Exchange Act Rule 12b-2).  Yes  o  No x

As of June 30, 2008 there were 11,443,224 shares of Common Stock of the Registrant outstanding.

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HARDINGE INC. AND SUBSIDIARIES

INDEX

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PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HARDINGE INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In Thousands)

See accompanying notes.

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HARDINGE INC. AND SUBSIDIARIES

Consolidated Balance Sheets - Continued

(In Thousands, Except Share Data)

See accompanying notes.

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HARDINGE INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

See accompanying notes.

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HARDINGE INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In Thousands)

See accompanying notes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2008

NOTE A—BASIS OF PRESENTATION

In these notes, the terms “Hardinge,” “Company,” “we,” “us,” or “our” mean Hardinge Inc. and its predecessors together with its subsidiaries.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. 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 U.S. 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 and six month period ended June 30, 2008, are not necessarily indicative of the results that may be expected for the year ended December 31, 2008.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2007.  We operate in only one business segment – industrial machine tools.

The consolidated balance sheet at December 31, 2007 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Certain amounts in the December 31, 2007 consolidated financial statements have been reclassified to conform with the June 30, 2008 presentation.

NOTE B – SIGNIFICANT RECENT EVENTS

On June 13, 2008, we entered into a new five-year $100.0 million multi-currency secured credit facility.  The new multi-currency credit facility replaced a $70.0 million revolving credit facility, a term loan agreement which was due to mature January 2011 as well as several other credit facilities in place in our foreign subsidiaries. This new facility is secured by substantially all of the Company’s and its domestic subsidiaries’ assets, other than real estate, and a pledge of (i) 100% of the Company’s investments in its domestic subsidiaries and (ii) 66 and 2/3% of the Company’s investment in Hardinge Holdings GmbH.  In addition, if certain conditions are met, Hardinge Holdings GmbH may be required to pledge its investment in certain of its material foreign subsidiaries.  The obligations of the Company and Hardinge Holdings GmbH are also guaranteed by all of the Company’s domestic subsidiaries and, under certain conditions, by certain of the Company’s material foreign subsidiaries. The new facility will allow the Company and its newly-formed, wholly owned Swiss subsidiary, Hardinge Holdings GmbH, to borrow in a variety of currencies and jurisdictions managing worldwide cash flow more efficiently.  Interest charged on this debt is based on London Interbank Offered Rates plus a spread which varies depending on the Company’s debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio.  A variable commitment fee of 0.20% to 0.375%, based on the Company’s debt to EBITDA ratio, is payable on the unused portion of the revolving loan facility.  We have the option, subject to certain conditions, to increase the facility by $50.0 million. At June 30, 2008, borrowings under this agreement were $21.5 million with an average interest rate of 3.95%.  The credit agreement contains certain financial covenants that are tested quarterly relating to leverage and fixed charge coverage. The Company was in compliance with the covenants at June 30, 2008.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2008

NOTE C—STOCK-BASED COMPENSATION

 On January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based Payment” (SFAS 123R), which requires all equity-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on the grant date fair value of the award. This was adopted using the modified perspective method.

We did not issue any new stock options during 2008 or 2007. All previously awarded stock option grants were fully vested at the date of the adoption of SFAS 123R, thus, we did not recognize any share-based compensation expense in 2008 or 2007, related to stock options.

The Company does recognize share-based compensation expense in relation to restricted stock awards issued.  A summary of the restricted stock activity under the Incentive Stock Plan is as follows:

The value of the restricted stock awarded in the six months ended June 30, 2008 and 2007 was $0.5 million and $0.9 million, respectively. We amortize compensation expense for restricted stock over the vesting period of the grant. Total share-based compensation expense for the three months and six months ended June 30, 2008 was $0.1 million and $0.2 million, respectively, relating to restricted stock. Total share-based compensation expense for the three months and six months ended June 30, 2007 was $0.1 million and $0.1 million, respectively.   At June 30, 2008, the compensation cost not yet recognized on these shares was $1.5 million, which will be amortized over a weighted average term of 3.1 years.

NOTE D—WARRANTIES

We offer warranties for our products.  The specific terms and conditions of those warranties vary depending upon the product sold and the country in which we sold the product.  We generally provide a basic limited warranty, including parts and labor for a period of one year.  We estimate the costs that may be incurred under its basic limited warranty, based largely upon actual warranty repair cost history, and record a liability for such costs in the month that product revenue is recognized. The resulting accrual balance is reviewed during the year. Factors that affect our warranty liability include the number of installed units, historical and anticipated rates of warranty claims, and cost per claim.

We also sell extended warranties for some of our products.  These extended warranties usually cover a 12-24 month period that begins 0-12 months after time of sale.  Revenues for these extended warranties are recognized monthly as a portion of the warranty expires.

These liabilities are reported as accrued expenses on our consolidated balance sheet.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2008

NOTE D—WARRANTIES (Continued)

A reconciliation of the changes in our product warranty accrual during the three month and six month periods ended June 30, 2008 and 2007 is as follows:

NOTE E—INVENTORIES

Inventories are stated at the lower of cost (computed in accordance with the first-in, first-out method) or market.  Elements of cost include materials, labor and overhead and are as follows:

NOTE F—INCOME TAXES

We continue to maintain a full valuation allowance on the tax benefits of our U.S. net deferred tax assets and we expect to continue to record a full valuation allowance on future tax benefits until an appropriate level of profitability in the U.S. is sustained. We also maintain a valuation allowance on our U.K. deferred tax asset for minimum pension liabilities and maintain a valuation allowance on our Canadian and China deferred tax asset for net operating loss carryforwards.

Each quarter, we estimate our full year tax rate for jurisdictions not subject to valuation allowances based upon our most recent forecast of full year anticipated results and adjust year to date tax expense to reflect our full year anticipated tax rate.  The effective tax rate was 78.5% and 122.0% for the three months and six months ended June 30, 2008.  The anticipated full year tax rate has been affected by the non-recognition of tax benefits for certain entities in a loss position for which a full valuation allowance has been recorded, and the following discrete period items: in the first quarter of 2008, by the recognition of the accumulated tax effects of a settled derivative contract as described below, and in the second quarter of 2008, by increases to the reserves for uncertain tax benefits of $0.3 million, including interest thereon.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2008

NOTE F—INCOME TAXES (Continued)

The tax years 2004 to 2007 remain open to examination by United States taxing authorities, and for our other major jurisdictions (Switzerland, UK, Taiwan, Germany, Canada, and China), the tax years 2002 to 2007 generally remain open to routine examination by foreign taxing authorities.

                At June 30, 2008, we had a $1.4 million liability recorded for uncertain income tax positions, which included interest and penalties of $.6 million. We had a $1.1 million liability recorded for uncertain income tax positions at December 31, 2007, which included interest and penalties of $.5 million.  If recognized, the liability with related penalties and interest at June 30, 2008 and December 31, 2007 would be recorded as a benefit to income tax expense on the Consolidated Statement of Operations.

We report interest and penalties related to tax reserves as income tax expense. If recognized, essentially all of the uncertain tax benefits, and related penalties and interest at June 30, 2008 and December 31, 2007 would be recorded as a benefit to income tax expense on the Consolidated Statement of Operations.

During the quarter ended March 31, 2008, one of our derivatives, a qualifying hedge, was settled.  The accumulated tax effect related to the contract, a benefit of $0.6 million that had previously been recognized in Other Comprehensive Income, was recognized through earnings in the current quarter.  This tax effect typically is recognized through earnings over the duration and effectiveness of the hedge, but due to our valuation allowance in the U.S., no tax benefit could be recognized through earnings until final settlement of the contact.

NOTE G— DERIVATIVE FINANCIAL INSTRUMENTS

We account for derivative financial instruments in accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities.  The statement requires the Company to recognize all its derivative instruments on the balance sheet at fair value.  Derivatives that are not qualifying hedges must be adjusted to fair value through income.  If the derivative is a qualifying hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings.  The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings.

We operate in many foreign countries and are exposed to movements in foreign currency exchange rates.  On June 27, 2008, we entered into a non-deliverable forward contract through August 27, 2008 with a notional amount of $25.0 million to hedge 94% of our net U.S. Dollar denominated receivables and payables in our Hardinge Taiwan subsidiary. This derivative is being accounted for as a fair value hedge and the change in the fair value at June 30, 2008 was not material.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2008

NOTE H—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 (SFAS 128).   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 stock options and restricted stock.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share computations required by SFAS  128:

There is no dilutive effect of the restrictive stock and stock options for the six months ended June 30, 2008 since the impact would be anti-dilutive.

NOTE I—REPORTING COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive income (loss), net of tax, for the three months and six months ended June 30, 2008 and 2007 consisted of the following:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2008

NOTE I—REPORTING COMPREHENSIVE INCOME (LOSS) (Continued)

Accumulated balances of the components of other comprehensive income consisted of the following at June 30, 2008 and December 31, 2007:

NOTE  J—GOODWILL AND OTHER INTANGIBLE ASSETS

The Company accounts for goodwill and intangibles in accordance with Statements of Financial Accounting Standards No. 141 (SFAS 141), Business Combinations, and No. 142 (SFAS 142), Goodwill and Other Intangible Assets.  SFAS 142 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. The statement requires that these assets be reviewed for impairment at least annually. Intangible assets with finite lives are amortized over their estimated useful lives.

The total carrying amount of goodwill was $25.0 million as of June 30, 2008 and $22.8 million as of December 31, 2007.  The majority of this asset resulted from the acquisition of HTT Hauser Tripet Tschudin AG in 2000.  The acquisition of the European sales and service operations of Bridgeport in 2004 added $0.5 million to goodwill.  Canadian Hardinge Machine Tools purchased a Canadian entity in 2007 and recorded $2.1 million in goodwill.  The asset value of the goodwill decreased by $0.6 million during the three months ended June 30, 2008, due to the decreased dollar value of the functional currency of the Company’s subsidiaries whose balance sheets include the goodwill. The asset value of the goodwill increased by $2.2 million during the six months ended June 30, 2008 due to the increased dollar value of the functional currency of the Company’s subsidiaries whose balance sheets include the goodwill.

Other intangible assets include $6.6 million representing the value of the name, trademarks and copyrights associated with the former worldwide operations of Bridgeport, which were acquired in 2004.  The Company uses this recognized brand name on all of its machining center lines, and therefore, the asset has been determined to have an indefinite useful life. These assets are reviewed annually for impairment under the provisions of SFAS 142.

Amortizable intangible assets of $4.9 million include the Bridgeport technical information, patents, distribution agreements, customer lists and other items. The estimated useful lives of these intangible assets range from five to ten years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2008

NOTE  K—PENSION AND POST RETIREMENT PLANS

The Company accounts for the pension plans and postretirement benefits in accordance with Statements of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of SFAS No. 87, 106 and 132(R).

A summary of the components of net periodic pension costs for the consolidated company for the three and six months ended June 30, 2008 and 2007 is presented below:

          A summary of the components of net postretirement benefits costs for the consolidated company for the three and six months ended June 30, 2008 and 2007 is presented below:

The expected contributions to be paid during the year ending December 31, 2008 to the domestic defined benefit plan are $6.0 million.  Contributions to the domestic plan as of June 30, 2008 and 2007 were $1.9 million and $0.5 million, respectively.  The Company also provides defined benefit pension plans or defined contribution pension plans for some of its foreign subsidiaries.  The expected contributions to be paid during the year ending December 31, 2008 to the foreign defined benefit plans are $3.5 million.  For each of the Company’s foreign plans, contributions are made on a monthly basis and are determined by applicable governmental regulations.  As of June 30, 2008 and 2007, $2.4 million and $1.2 million of contributions have been made to the foreign plans, respectively. Also, each of the foreign plans requires employee and employer contributions, except for Taiwan, which has only employer contributions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2008

NOTE  L—COMMITMENTS AND CONTINGENCIES

The Company’s operations are subject to extensive federal and state legislation and regulation relating to environmental matters.

Certain environmental laws can impose joint and several liability for releases or threatened releases of hazardous substances upon certain statutorily defined parties regardless of fault or the lawfulness of the original activity or disposal.  Activities at properties we own or previously owned and on adjacent areas have resulted in environmental impacts.

In particular, the Company’s New York manufacturing facility is located within the Kentucky Avenue Wellfield on the National Priorities List of hazardous waste sites designated for cleanup by the United States Environmental Protection Agency (“EPA”) because of groundwater contamination.  The Kentucky Avenue Wellfield site encompasses an area of approximately three square miles which includes sections of the Town of Horseheads and the Village of Elmira Heights in Chemung County, New York. In February 2006, we received a Special Notice Concerning a Remedial Investigation/Feasibility Study for the Koppers Pond (“the Pond”) portion of the Kentucky Avenue Wellfield site.  The EPA has documented the release and threatened release of hazardous substances into the environment at the Kentucky Avenue Well Field Superfund site, including releases into and in the vicinity of the Pond.  The hazardous substances, including metals and polychlorinated biphenyls, have been detected in sediments in the Pond.

A substantial portion of the Pond is located on our property.  We, along with Beazer East, Inc., the Village of Horseheads, the Town of Horseheads, the County of Chemung, CBS Corporation, and Toshiba America, Inc., the Potentially Responsible Parties (the “PRPs”) have agreed to voluntarily participate in the Remedial Investigation and Feasibility Study (“RI/FS”) by signing an Administrative Settlement Agreement and Order of Consent on September 29, 2006.  On September 29, 2006, the Director of Emergency and Remedial Response Division of the U.S. Environmental Protection Agency, Region II, approved and executed the Agreement on behalf of the EPA.  The PRPs also signed a PRP Member Agreement, agreeing to share the cost of the RI/FS study on a per capita basis.  The cost of the RI/FS has been estimated to be between $0.6 million and $0.8 million.  We currently estimate our portion of the study to be $0.1 million for which a reserve was established.  As of June 30, 2008 we have incurred expenses of $0.06 million. The PRPs developed a Draft RI/FS with their consultant and, following EPA comments, submitted a Revised RI/FS on December 6, 2007. In April 2008, the PRPs were notified that the EPA approved the RI/FS Work Plan which now includes the PRPs’ responses to EPA’s comments on their December 6th submission. The PRPs completed the field investigations in June 2008; the analyses of the data and site characterization are ongoing.

Until receipt of this notice, we had never been named as a potentially responsible party at the site or received any requests for information from EPA concerning the site.  Environmental sampling on our property within this site under supervision of regulatory authorities has identified off-site sources for such groundwater contamination and sediment contamination in the Pond and has found no evidence that our property is contributing to the contamination. Since the RI/FS has not commenced, we have not established, other than as described above, a reserve for any potential costs relating to this site, as it is too early in the process to determine our responsibility as well as to estimate any potential costs to remediate. We have notified all appropriate insurance carriers and are actively cooperating with them, but whether coverage will be available has not yet been determined and possible insurance recovery cannot now be estimated with any degree of certainty.

On May 22, 2008 President and CEO, J. Patrick Ervin resigned from Hardinge Inc.  In conjunction with Mr. Ervin’s departure we recognized $1.6 million in severance related expenses.  Additionally, in June 2007 we recorded $0.3 million in severance related expenses associated with organizational changes in the UK.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2008

NOTE  M—NEW ACCOUNTING STANDARDS

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157).  SFAS 157 defines fair value, establishes a framework for measuring fair value in applying generally accepted accounting principles, and expands disclosures about fair value measurements.  This statement applies under other accounting pronouncements that require or permit fair value measurements.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The adoption of SFAS 157 did not impact our consolidated financial statements for the three month and six month period ended June 30, 2008.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of FASB Statement No. 115 (SFAS 159). This Statement allows all entities a one-time election to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value (the “fair value option”). SFAS 159 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 159 did not impact our consolidated financial statements for the three month and six month period ended June 30, 2008.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (revised - 2007) (SFAS 141(R)). SFAS 141(R) is a revision to previously existing guidance on accounting for business combinations. The statement retains the fundamental concept of the purchase method of accounting, and introduces new requirements for the recognition and measurement of assets acquired, liabilities assumed, and noncontrolling interests. The statement is effective for fiscal years beginning after December 15, 2008 and impacts business combinations after that date.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. This Statement is effective for financial statements issued for periods beginning after November 15, 2008, with early application encouraged. This statement amends and expands the disclosure requirements in SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and other related literature. We believe that the updated disclosures will not have a material impact on our consolidated financial statements.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets.” This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS 142). The objective of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R), and other U.S. Generally Accepted Accounting Principles (GAAP). This FSP applies to all intangible assets, whether acquired in a business combination or otherwise and shall be effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years and applied prospectively to intangible assets acquired after the effective date. Early adoption is prohibited. We do not believe the new statement will have a material impact on our financial statements.

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PART I - ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview.    The following Management’s Discussion and Analysis (“MD&A”) is written to help the reader understand our company. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited condensed financial statements, the accompanying condensed financial statement notes (“Notes”) appearing elsewhere in this report and our annual report on Form 10-K for the year ended December 31, 2007.

Our primary business is designing, manufacturing and distributing high precision computer controlled material-cutting turning, grinding and milling machines and related accessories. We are geographically diversified with manufacturing facilities in the U.S., Switzerland, Taiwan, and China, with sales to most industrialized countries. Approximately 66% of our 2007 sales were to customers outside North America, 70% of our 2007 products were manufactured outside of North America and approximately 58% of our employees are located outside of North America.

Our machine products are considered to be capital goods and are part of what has historically been a highly cyclical industry. Our management believes that a key performance indicator is our order level compared to industry measures of market activity levels.

The U.S. market activity metric most closely watched by our management has been metal-cutting machine orders as reported by the Association of Manufacturing Technology (AMT), the primary industry group for U.S. machine tool manufacturers. Other closely followed U.S. market indicators are tracked to determine activity levels in U.S. manufacturing plants that might purchase our products. One such measurement is the PMI (formerly called the Purchasing Manager’s Index), as reported by the Institute for Supply Management. Another is capacity utilization of U.S manufacturing plants, as reported by the Federal Reserve Board. Similar information regarding machine tool consumption in foreign countries is published in various trade journals

Other key performance indicators are geographic distribution of sales and orders, income from operations, working capital changes and debt level trends.  In an industry where constant product technology development has led to an average model life of three to five years, effectiveness of technological innovation and development of new products are also key performance indicators.

Foreign currency exchange rate changes can be significant to our reported financial results for several reasons. Our primary competitors, particularly for the most technologically advanced products are now largely manufacturers in Japan, Germany, and Switzerland, which causes the worldwide valuation of the Japanese Yen, Euro, and Swiss Franc to be central to competitive pricing in all of our markets. Also, we translate the financial results of our Swiss, Taiwanese, Chinese, English, German and Canadian subsidiaries into U.S. Dollars for consolidation and financial reporting purposes. Period to period changes in the exchange rate between their local currency and the U.S. Dollar may affect comparative data significantly. We also purchase computer controls and other components from suppliers throughout the world, with purchase costs reflecting currency changes.

On April 25, 2007, the Company completed a public offering of 2,553,000 shares of common stock, including a 330,000 share over-allotment option exercised in full by the underwriters, with net proceeds of approximately $55.9 million after deducting underwriting discounts and commissions, and offering expenses. We used these funds to repay indebtedness under our U.S. overdraft and revolving line of credit facilities. On June 30, 2008 and 2007, we had 11,443,224 and 11,449,137 shares of common stock outstanding, respectively.

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On May 16, 2008 Hardinge Holdings GmbH, a Swiss limited liability company, was formed as a direct subsidiary of the U.S. parent company.  In conjunction with the formation of Hardinge Holdings GmbH our subsidiaries in the UK, Germany, Switzerland, Hong Kong, and China were subsequently contributed to the capital of this entity.  The purpose of the formation and operation of the Swiss limited liability company is for the holding of foreign subsidiaries, operations, and future investments as well as the effective and centralized management of intercompany loans and other related treasury functions.  The formation of the holding company was structured to be a tax-free reorganization, and its operation is intended to carry out our objectives in a tax-efficient basis.

On June 13, 2008, Hardinge Inc. entered into a new five-year $100 million multi-currency secured credit facility.  This credit facility replaced a $70 million revolving credit facility, a term loan agreement which was due to mature January 2011, as well as several other credit facilities in place in our foreign subsidiaries. The new facility will allow the Company and its newly-formed, wholly owned Swiss subsidiary, Hardinge Holdings GmbH, to borrow in a variety of currencies and jurisdictions to manage worldwide cash flow more efficiently.  We have the option, subject to certain conditions, to increase the facility by $50.0 million.  As of June 30, 2008, the Company had borrowed $21.5 million against this new facility.

Results of Operations

Summarized selected financial data for the three and six months ended June 30, 2008 and 2007: