10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

or

o 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 incorporation or organization)	(I.R.S. Employer Identification No.)
One Hardinge Drive Elmira, NY	14902
(Address of principal executive offices)	(Zip Code)

(607) 734-2281

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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.                                      ýYes  oNo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                      ýYes  oNo

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

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o  (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     oYes  ýNo

As of April 29, 2016 there were 12,869,771 shares of Common Stock of the registrant outstanding.

HARDINGE INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		PAGE
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited).
	Consolidated Balance Sheets at March 31, 2016 and December 31, 2015 (Audited)	3
	Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015	4
	Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2016 and 2015	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	23
Item 4.	Controls and Procedures.	23
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings.	24
Item 1A.	Risk Factors.	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	24
Item 3.	Defaults Upon Senior Securities.	24
Item 4.	Mine Safety Disclosures.	24
Item 5.	Other Information.	24
Item 6.	Exhibits.	25
SIGNATURES		26
Certifications

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

HARDINGE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	March 31, 2016			December 31, 2015
	(Unaudited)
Assets
Cash and cash equivalents	$	29,285		$	32,774
Restricted cash	2,163			2,192
Accounts receivable, net	49,940			56,945
Inventories, net	117,131			110,232
Other current assets	10,496			9,314
Total current assets	209,015			211,457
Property, plant and equipment, net	62,312			62,025
Goodwill	6,619			6,620
Other intangible assets, net	27,892			28,018
Other non-current assets	3,672			3,015
Total non-current assets	100,495			99,678
Total assets	$	309,510		$	311,135
Liabilities and shareholders’ equity
Notes payable to bank	$	3,177		$	—
Accounts payable	24,523			24,696
Accrued expenses	24,032			27,964
Customer deposits	17,932			19,845
Accrued income taxes	1,489			1,919
Deferred income taxes	2,385			2,164
Current portion of long-term debt	5,456			5,621
Total current liabilities	78,994			82,209
Long-term debt	5,376			5,985
Pension and postretirement liabilities	56,811			57,322
Deferred income taxes	1,225			1,121
Other liabilities	3,476			3,393
Total non-current liabilities	66,888			67,821
Commitments and contingencies (see Note 10)
Common stock ($0.01 par value, 20,000,000 authorized; 12,861,674 issued and outstanding as of March 31, 2016, and 12,856,716 issued and 12,838,227 outstanding as of December 31, 2015)	128			128
Additional paid-in capital	120,539			120,524
Retained earnings	87,866			89,368
Treasury shares (at cost, none as of March 31, 2016, and 18,489 as of December 31, 2015)	—			(202		)
Accumulated other comprehensive loss	(44,905		)	(48,713		)
Total shareholders’ equity	163,628			161,105
Total liabilities and shareholders’ equity	$	309,510		$	311,135

See accompanying notes to the unaudited consolidated financial statements.

3

HARDINGE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended   March 31,
	2016			2015
	(Unaudited)
Sales	$	67,822		$	69,128
Cost of sales	45,078			47,273
Gross profit	22,744			21,855
Selling, general and administrative expenses	20,593			19,600
Research & development	3,287			3,607
Restructuring	200			—
Other (income) expense, net	(91		)	65
Loss from operations	(1,245		)	(1,417		)
Interest expense	153			157
Interest income	(67		)	(17		)
Loss before income taxes	(1,331		)	(1,557		)
Income taxes	(86		)	(149		)
Net loss	$	(1,245	)	$	(1,408	)
Per share data:
Basic loss per share:	$	(0.10	)	$	(0.11	)
Diluted loss per share:	$	(0.10	)	$	(0.11	)
Cash dividends declared per share:	$	0.02		$	0.02

See accompanying notes to the unaudited consolidated financial statements.

4

HARDINGE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

	Three Months Ended   March 31,
	2016			2015
	(Unaudited)
Net loss	$	(1,245	)	$	(1,408	)
Other comprehensive income:
Foreign currency translation adjustments	3,739			1,332
Retirement plans related adjustments	(273		)	511
Unrealized gain on cash flow hedges	165			375
Other comprehensive income before tax	3,631			2,218
Income tax (benefit) expense	(177		)	1,164
Other comprehensive income, net of tax	3,808			1,054
Total comprehensive income (loss)	$	2,563		$	(354	)

See accompanying notes to the unaudited consolidated financial statements.

5

HARDINGE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended   March 31,
	2016			2015
	(Unaudited)
Operating activities
Net loss	$	(1,245	)	$	(1,408	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	2,017			2,338
Debt issuance costs amortization	32			34
Deferred income taxes	(255		)	(64		)
(Gain) loss on sale of assets	(13		)	8
Unrealized foreign currency transaction (gain) loss	(225		)	1,309
Changes in operating assets and liabilities:
Accounts receivable	7,613			6,640
Inventories	(4,851		)	(4,821		)
Other assets	(595		)	(2,629		)
Accounts payable	(514		)	2,083
Customer deposits	(2,170		)	3,378
Accrued expenses	(5,177		)	(3,021		)
Accrued pension and postretirement liabilities	(20		)	(34		)
Net cash (used in) provided by operating activities	(5,403		)	3,813
Investing activities
Capital expenditures	(436		)	(699		)
Proceeds from sales of assets	32			—
Net cash used in investing activities	(404		)	(699		)
Financing activities
Proceeds from short-term notes payable to bank	18,172			10,212
Repayments of short-term notes payable to bank	(14,995		)	(10,088		)
Repayments of long-term debt	(1,010		)	(1,458		)
Dividends paid	(274		)	(255		)
Net cash provided by (used in) financing activities	1,893			(1,589		)
Effect of exchange rate changes on cash	425			482
Net (decrease) increase in cash	(3,489		)	2,007
Cash and cash equivalents at beginning of period	32,774			16,293
Cash and cash equivalents at end of period	$	29,285		$	18,300

See accompanying notes to the unaudited consolidated financial statements.

6

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016

NOTE 1.  BASIS OF PRESENTATION

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

The Company operates through two reportable segments, Metalcutting Machine Solutions (“MMS”) and Aftermarket Tooling and Accessories (“ATA”). The MMS segment includes high precision computer controlled metalcutting turning machines, vertical machining centers, horizontal machining centers, grinding machines, and repair parts related to those machines. The ATA segment includes products, primarily collets and chucks that are purchased by manufacturers throughout the lives of their Hardinge or other branded machines.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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. GAAP for complete financial statements and, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as amended. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the timing and amount of assets, liabilities, equity, revenue, and expenses reported and disclosed. Actual amounts could differ from these estimates. All adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods have been presented and recorded. Due to differing business conditions and some seasonality, operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected in subsequent quarters or for the full year ended December 31, 2016.

In the first quarter of 2015, the Company recorded an out of period adjustment to correct finished goods inventory in the amount of $0.7 million that is related to periods beginning in 2013. This adjustment, which was in the Aftermarket Tooling and Accessories Segment, was to correct for costs that were not properly released from inventory as the product was sold. The Company assessed the impact of this adjustment and concluded that it is not material to previously reported financial statements. The Company also determined that the adjustment was not expected to be material to the full year in 2015, but was material to the first quarter. 

Certain amounts in the 2015 consolidated financial statements have been reclassified to conform to the current presentation. In order to provide greater clarity on investments in research and development, these expenses have been reclassified from Cost of Sales to Operating Expenses where the costs are identified as Research and development, a separate line item.

NOTE 2.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The inputs to the valuation techniques used to measure fair value are classified into the following categories:

Level 1 — Quoted prices in active markets for identical assets and liabilities.

Level 2 — Observable inputs other than quoted prices in active markets for similar assets and liabilities.

Level 3 — Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require.

7

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

The following table presents the carrying amount, fair values, and classification level within the fair value hierarchy of financial instruments measured or disclosed at fair value on a recurring basis (in thousands):

	March 31, 2016				December 31, 2015				Level of Fair Value Hierarchy
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	29,285	$	29,285	$	32,774	$	32,774	Level 1
Restricted cash	2,163		2,163		2,192		2,192		Level 1
Foreign currency forward contracts	454		454		163		163		Level 2
Liabilities:
Notes payable to bank	3,177		3,177		—		—		Level 2
Variable interest rate debt	10,832		10,832		11,606		11,606		Level 2
Foreign currency forward contracts	592		592		418		418		Level 2

The fair value of cash and cash equivalents and restricted cash are based on the fair values of identical assets in active markets. Due to the short period to maturity or the nature of the underlying liability, the fair value of notes payable to bank and variable interest rate debt approximates their respective carrying amounts. The fair value of foreign currency forward contracts is measured using internal models based on observable market inputs such as spot and forward rates. Based on the Company’s continued ability to enter into forward contracts, the markets for the fair value instruments are considered to be active. As of March 31, 2016 and December 31, 2015, there were no significant transfers in and/or out of Level 1 and Level 2.

NOTE 3.  INVENTORIES

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

Net inventories consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Raw materials and purchased components	$	35,075	$	34,438
Work-in-process	35,965		33,682
Finished products	46,091		42,112
Inventories, net	$	117,131	$	110,232

NOTE 4.  DERIVATIVE FINANCIAL INSTRUMENTS

Foreign currency forward contracts are utilized to mitigate the impact of currency fluctuations on assets and liabilities denominated in foreign currencies as well as on forecasted transactions denominated in foreign currencies. These contracts are considered derivative instruments and are recognized as either assets or liabilities and measured at fair value. For contracts that are designated and qualify as cash flow hedges, the gain or loss on the contracts is reported as a component of other comprehensive income (“OCI”) and reclassified from accumulated other comprehensive income (“AOCI”) into the “Sales” or “Cost of sales” line item on the Consolidated Statements of Operations when the underlying hedged transaction affects earnings, or “Other (income) expense, net” when the hedging relationship is deemed to be ineffective. As of March 31, 2016 and December 31, 2015, the notional amounts of the derivative financial instruments designated to qualify for cash flow hedges were $35.2 million and $27.4 million, respectively. The Company expects that approximately $0.05 million of expense, net of income tax effect, to be reclassified from AOCI to earnings within the next 12 months. 

As of March 31, 2016 and December 31, 2015, the notional amounts of the derivative financial instruments not qualifying or otherwise designated as hedges were $31.8 million and $38.5 million, respectively. For the three months ended March 31, 2016 and 2015, losses of $0.4 million and gains of $1.4 million, respectively, were recorded related to this type of

8

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

derivative financial instrument. For contracts that are not designated as hedges, the gain or loss on the contract is recognized in current earnings in the “Other (income) expense, net” line item on the Consolidated Statements of Operations.

The following table presents the fair value on the Consolidated Balance Sheets of the foreign currency forward contracts (in thousands):

	March 31, 2016			December 31, 2015
Foreign currency forwards designated as hedges:
Other current assets	$	215		$	49
Accrued expenses	(249		)	(222		)
Foreign currency forwards not designated as hedges:
Other current assets	239			114
Accrued expenses	(343		)	(196		)
Foreign currency forwards, net	$	(138	)	$	(255	)

NOTE 5.  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in thousands): 

	March 31, 2016			December 31, 2015
Land, buildings and improvements	$	84,159		$	82,201
Machinery, equipment and fixtures	79,274			79,176
Office furniture, equipment and vehicles	22,787			22,689
Construction in progress	201			238
	186,421			184,304
Accumulated depreciation	(124,109		)	(122,279		)
Property, plant and equipment, net	$	62,312		$	62,025

NOTE 6.  GOODWILL AND INTANGIBLE ASSETS

Detail and activity of goodwill by segment is presented below (in thousands):

	MMS			ATA			Total
Goodwill	$	32,434		$	6,620		$	39,054
Accumulated impairment losses	(32,434		)	—			(32,434		)
Balance at December 31, 2015	—			6,620			6,620
Goodwill	32,434			6,620			39,054
Currency translation adjustments	—			(1		)	(1		)
Accumulated impairment losses	(32,434		)	—			(32,434		)
Balance at March 31, 2016	$	—		$	6,619		$	6,619

9

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

The major components of intangible assets other than goodwill are as follows (in thousands):

	March 31, 2016			December 31, 2015
Gross amortizable intangible assets:
Technical know-how	$	12,959		$	12,956
Customer lists	9,009			9,011
Land rights	2,690			2,672
Patents, trade names, drawings, and other	4,353			4,393
Total gross amortizable intangible assets	29,011			29,032
Accumulated amortization:
Technical know-how	(6,988		)	(6,833		)
Customer lists	(1,424		)	(1,315		)
Land rights	(287		)	(271		)
Patents, trade names, drawings, and other	(3,389		)	(3,406		)
Total accumulated amortization	(12,088		)	(11,825		)
Amortizable intangible assets, net	16,923			17,207
Indefinite lived intangible assets:
Trade names	10,969			10,811
Intangible assets other than goodwill, net	$	27,892		$	28,018

Amortization expense related to the definite-lived intangible assets are as follows (in thousands):

	Three Months Ended   March 31,
	2016		2015
Amortization expense	$	320	$	451

NOTE 7.  WARRANTIES

A reconciliation of the changes in the product warranty accrual, which is included in "Accrued expenses" in the Consolidated Balance Sheets, is as follows (in thousands):

	Three Months Ended   March 31,
	2016			2015
Balance at the beginning of period	$	3,802		$	3,891
Warranties issued	373			969
Warranty settlement costs	(590		)	(1,002		)
Changes in accruals for pre-existing warranties	2			(13		)
Currency translation adjustments	(66		)	19
Balance at the end of period	$	3,521		$	3,864

10

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

NOTE 8.  RESTRUCTURING CHARGES

On August 4, 2015, the Company's Board of Directors approved a strategic restructuring program (the "Program")with the goals of streamlining the Company's cost structure, increasing operational efficiencies and improving shareholder returns. This Program consists of the consolidation of certain facilities and restructuring of certain business units and is expected to generate annual pre-tax savings in the range of approximately $4.5 million once the Program is fully implemented. Virtually all of the costs are expected to result in cash expenditures. The Program is expected to be substantially completed during the first half of 2016.

Restructuring charges are included in the "Restructuring " line item in the Consolidated Statements of Operations. The table below presents the total costs expected to be incurred in connection with the Program, the amount of costs that have been recognized during the three months ended March 31, 2016 and the cumulative costs recognized to date by the Program (in thousands):

	Total Costs Expected to be Incurred		Cost Recognized for Three Months Ended March 31, 2016		Cumulative Costs Recognized to Date
MMS Segment:
Employee termination costs	$	255	$	—	$	255
Total MMS Segment	255		—		255
ATA Segment:
Employee termination costs	3,358		200		3,245
Facility exit costs	605		—		—
Other related costs	274		—		258
Total ATA Segment	4,237		200		3,503
Total:
Employee termination costs	3,613		200		3,500
Facility exit costs	605		—		—
Other related costs	274		—		258
Total Company	$	4,492	$	200	$	3,758

The amounts accrued associated with the Program are included in "Accrued expenses" and "Pension and postretirement liabilities" in the Consolidated Balance Sheets. A rollforward of the accrued restructuring costs is presented below (in thousands):

	Segment						Total
	MMS			ATA
Balance at December 31, 2015	$	167		$	1,242		$	1,409
Restructuring charges:
Employee termination costs	—			200			200
Total restructuring charges	—			200			200
Cash expenditures	(5		)	(831		)	(836		)
Foreign currency translation adjustment	—			43			43
Balance at March 31, 2016	$	162		$	654		$	816

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HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

NOTE 9.  INCOME TAXES

A valuation allowance is recorded against all or a portion of the deferred tax assets in the U.S., Canada, U.K., Germany, and the Netherlands.

Each quarter, a full year tax rate is estimated for jurisdictions not subject to valuation allowances based upon the most recent forecast of full year anticipated results and the year-to-date tax expense is adjusted to reflect the full year anticipated tax rate. The rate is an estimate based upon projected results for the year, estimated annual permanent differences, the statutory tax rates in the various jurisdictions in which the Company operates, and the non-recognition of tax benefits for entities with full valuation allowances. The overall effective tax rate was 6.5% for the three months ended March 31, 2016.

The tax years 2010 through 2015 remain open to examination by the U.S. state taxing authorities. For other major jurisdictions (Switzerland, U.K., Taiwan, France, Germany, Netherlands, China and India), the tax years between 2008 and 2015 generally remain open to routine examination by foreign taxing authorities, depending on the jurisdiction.

At March 31, 2016, a liability of $2.1 million is recorded with respect to uncertain income tax positions, which includes related interest of $0.1 million. If recognized, essentially all of the uncertain tax positions and related interest at March 31, 2016 would be recorded as a benefit to income tax expense on the Consolidated Statements of Operations. It is reasonably possible that some of the uncertain tax positions pertaining to foreign operations may change within the next 12 months due to audit settlements and statute of limitations expirations. The change in uncertain tax positions for these items is estimated to be up to $1.3 million.

NOTE 10.  COMMITMENTS AND CONTINGENCIES

The Company is a defendant in various lawsuits as a result of normal operations and in the ordinary course of business. Management believes the outcome of these lawsuits will not have a material effect on the financial position or results of operations.

The Company’s operations are subject to extensive federal, state, local and foreign laws and regulations 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. Hazardous substances and adverse environmental effects have been identified with respect to real property owned by the Company, and on adjacent parcels of real property.

In particular, the Elmira, NY 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 (the “Site”) encompasses an area which includes sections of the Town of Horseheads and the Village of Elmira Heights in Chemung County, NY. In February 2006, the Company received a Special Notice Concerning a Remedial Investigation/Feasibility Study (“RI/FS”) for the Koppers Pond (the “Pond”) portion of the Site. The EPA documented the release and threatened release of hazardous substances into the environment at the 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.

Until receipt of this Special Notice in February 2006, the Company had never been named as a potentially responsible party (“PRP”) at the Site nor had the Company received any requests for information from the EPA concerning the Site. Environmental sampling on the Company’s property within this Site under supervision of regulatory authorities had identified off-site sources for such groundwater contamination and sediment contamination in the Pond, and found no evidence that the Company’s operations or property have contributed or are contributing to the contamination. All appropriate insurance carriers have been notified, and the Company is actively cooperating with them, but whether coverage will be available has not yet been determined and possible insurance recovery cannot be estimated with any degree of certainty at this time.

A substantial portion of the Pond is located on the Company’s property. The Company, along with Beazer East, Inc., the Village of Horseheads, the Town of Horseheads, the County of Chemung, CBS Corporation and Toshiba America, Inc., (collectively, the "PRPs"), agreed to voluntarily participate in the RI/FS by signing an Administrative Settlement Agreement

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HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

and Order of Consent on September 29, 2006. On September 29, 2006, the Director of Emergency and Remedial Response Division of the EPA, Region II, approved and executed the Agreement on behalf of the EPA. The PRPs also signed a PRP Member Agreement, agreeing to share the costs associated with the RI/FS study on a per capita basis.

The EPA approved the RI/FS Work Plan in May of 2008. In July of 2012 the PRPs submitted a Remedial Investigation (RI) to respond to EPA issues raised in the initial draft RI. In January 2016, the PRPs submitted a draft Feasibility Study (FS), also to respond to issues raised by the EPA about previous drafts of the FS.

The recent draft FS identified alternative remedial actions with estimated life-cycle costs ranging from $0.9 million to $5.0 million. The Company’s portion of the potential costs is estimated to range from $0.1 million to $0.7 million. Based on the current estimated costs of the various remedial alternatives now under consideration by the EPA, a reserve of $0.3 million has been recorded for the Company’s share of remediation expenses at the Pond as of March 31, 2016. This reserve is reported as an Accrued expenses on the Consolidated Balance Sheets.

Based upon information currently available, except as described in the preceding paragraphs, the Company does not have material liabilities for environmental remediation. Though the foregoing reflects the Company’s current assessment as it relates to environmental remediation obligations, it is possible that future remedial requirements or changes in the enforcement of existing laws and regulations, which are subject to extensive regulatory discretion, will result in material liabilities to the Company.

NOTE 11.  PENSION AND POSTRETIREMENT PLANS

A summary of the components of net periodic pension and postretirement benefit costs for the three months ended March 31, 2016 and 2015 is presented below (in thousands):

	Pension Benefits						Postretirement Benefits
	Three Months Ended   March 31,						Three Months Ended   March 31,
	2016			2015			2016			2015
Service cost	$	559		$	493		$	3		$	3
Interest cost	1,672			1,673			19			19
Expected return on plan assets	(2,309		)	(2,400		)	—			—
Amortization of prior service credit	(63		)	(80		)	—			—
Amortization of transition asset	(77		)	(21		)	—			—
Amortization of actuarial loss (gain)	943			778			(14		)	(13		)
Net periodic cost	$	725		$	443		$	8		$	9

NOTE 12.  STOCK BASED COMPENSATION

All stock based compensation to employees is recorded as "Selling, general and administrative expenses" in the Consolidated Statements of Operations based on the fair value at the grant date of the award. These non-cash compensation costs are included in the depreciation and amortization amounts in the Consolidated Statements of Cash Flows.

A summary of stock based compensation expense is as follows (in thousands):

	Three Months Ended   March 31,
	2016		2015
Restricted stock/unit awards (“RSA”)	$	65	$	111

There were no RSAs granted during the three months ended March 31, 2016, and 2015, respectively. The deferred compensation is being amortized on a straight-line basis over the specified service period. There were no Performance Share Incentives ("PSIs") granted during the three months ended March 31, 2016 and 2015, respectively. The deferred compensation

13

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

with respect to the PSIs is being recognized into earnings based on the passage of time and achievement of performance targets. All outstanding RSAs and PSIs are unvested.

Unrecognized compensation and the expected weighted-average recognition periods with respect to the outstanding RSAs and PSIs as of March 31, 2016 and December 31, 2015, are as follows:

	March 31, 2016				December 31, 2015
	RSAs		PSIs		RSAs		PSIs
Unrecognized compensation cost (in thousands)	$	275	$	563	$	349	$	1,192
Expected weighted-average recognition period for unrecognized compensation    cost (in years)	1.12		1.84		1.20		1.16

NOTE 13.  CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in AOCI by component for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

	Three Months Ended March 31, 2016
	Foreign currency translation adjustments			Retirement plans related adjustments			Unrealized gain (loss) on cash flow hedges			Accumulated other comprehensive loss
Beginning balance, net of tax	$	20,529		$	(69,100	)	$	(142	)	$	(48,713	)
Other comprehensive income before reclassifications	3,739			(1,062		)	212			2,889
Less (loss) income reclassified from AOCI	—			(789		)	47			(742		)
Net other comprehensive income	3,739			(273		)	165			3,631
Income taxes	(44		)	(152		)	19			(177		)
Ending balance, net of tax	$	24,312		$	(69,221	)	$	4		$	(44,905	)

14

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

	Three Months Ended March 31, 2015
	Foreign currency translation adjustments		Retirement plans related adjustments			Unrealized gain (loss) on cash flow hedges			Accumulated other comprehensive loss
Beginning balance, net of tax	$	25,913	$	(64,570	)	$	(144	)	$	(38,801	)
Other comprehensive (loss) income before reclassifications	1,332		(153		)	493			1,672
Less income (loss) reclassified from AOCI	—		(664		)	118			(546		)
Net other comprehensive (loss) income	1,332		511			375			2,218
Income taxes	1,155		(45		)	54			1,164
Ending balance, net of tax	$	26,090	$	(64,014	)	$	177		$	(37,747	)

Details about reclassification out of AOCI for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

	Three Months Ended   March 31,						Affected line item on the Consolidated Statements of Operations
Details of AOCI components	2016			2015
Unrealized (loss) gain on cash flow hedges:
	$	76		$	129		Sales
	(29		)	(11		)	Other (income) expense, net
	47			118			Total before tax
	7			21			Income taxes
	$	54		$	139		Net of tax
Retirement plans related adjustments:
Amortization of prior service credit	$	63		$	80		(a)
Amortization of transition asset	77			21			(a)
Amortization of actuarial loss	(929		)	(765		)	(a)
	(789		)	(664		)	Total before tax
	83			48			Income taxes
	$	(706	)	$	(616	)	Net of tax

____________________

(a)  These AOCI components are included in the computation of net periodic pension and post retirement costs. See Note 11. "Pension and Postretirement Plans" for details.

NOTE 14.  EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period. In periods of earnings, the weighted average number of shares used in the diluted calculation includes common stock equivalents related to stock options and restricted stock. The following table presents the basis of the loss per share computation (in thousands):

15

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

	Three Months Ended   March 31,
	2016			2015
Numerator for basic and diluted loss per share:
Net loss applicable to common shareholders	$	(1,245	)	$	(1,408	)
Denominator for basic and diluted loss per share:
Denominator for basic and diluted loss per share — weighted average shares	12,797			12,742

There is no dilutive effect of the restricted stock and stock options for both the three months ended March 31, 2016 and 2015 due to the net loss in these periods. There would have been 100,365 and 126,004 of these shares included in the diluted calculation for the three months ended March 31, 2016 and 2015, respectively, had there been earnings in these periods. Common stock equivalents of certain stock-based awards totaling 16,746 were excluded from the calculation of diluted loss per share for the three months ended March 31,2015 as they were anti-dilutive.

NOTE 15. SEGMENT INFORMATION

Segment (loss) income is measured for internal reporting purposes by excluding corporate expenses, impairment charges, interest income, interest expense, and income taxes. Corporate expenses consist primarily of executive employment costs, certain professional fees, and costs associated with the Company’s global headquarters. Financial results for each reportable segment are as follows (in thousands):

	Three Months Ended March 31, 2016
	MMS			ATA		Inter-Segment Eliminations			Total
Sales	$	52,272		$	15,620	$	(70	)	$	67,822
Depreciation and amortization	1,427			538					1,965
Segment (loss) income	(1,156		)	1,854					698
Capital expenditures	291			145					436
Segment assets(1)	225,987			49,732					275,719

	Three Months Ended March 31, 2015
	MMS			ATA		Inter-Segment Eliminations			Total
Sales	$	52,976		$	16,227	$	(75	)	$	69,128
Depreciation and amortization	1,624			600					2,224
Segment (loss) income	(909		)	1,197					288
Capital expenditures	306			393					699
Segment assets(1)	236,762			53,612					290,374

____________________

⁽¹⁾  Segment assets primarily consist of restricted cash, accounts receivable, inventories, prepaid and other assets, property, plant and equipment, and intangible assets. Unallocated assets primarily include, cash and cash equivalents, corporate property, plant and equipment, deferred income taxes, and other non-current assets.

A reconciliation of segment income to consolidated loss from operations before income taxes for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

16

HARDINGE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2016

	Three Months Ended   March 31,
	2016			2015
Segment income	$	698		$	288
Unallocated corporate expense	(1,943		)	(1,704		)
Interest expense, net	(86		)	(140		)
Other unallocated expense	—			(1		)
Loss before income taxes	$	(1,331	)	$	(1,557	)

A reconciliation of segment assets to consolidated total assets follows (in thousands):

	March 31, 2016		December 31, 2015
Total segment assets	$	275,719	$	274,334
Unallocated assets	33,791		36,801
Total assets	$	309,510	$	311,135

Unallocated assets include cash of $29.3 million and $32.8 million at March 31, 2016 and December 31, 2015, respectively.

NOTE 16.  NEW ACCOUNTING STANDARDS

In April 2015, the Financial Accounting Standards Board (“FASB”) issued an amended guidance on the balance sheet presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts while the recognition and measurement guidance for debt issuance costs is not affected. In August 2015, FASB subsequently issued an amended guidance to clarify debt issuance costs associated with a line-of-credit arrangement, which allow an entity to defer and present debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The amendments are required to be applied retrospectively to all prior periods.

In January 2016, the Company adopted the guidance. As a result, the Company reclassified $0.07 million and $0.09 million debt issuance cost as of December 31, 2015 into Current portion of long-term debt and Long-term debt respectively to reduce the carrying amount of debt liability, from Other current assets and Other non-current assets on the Consolidated Balance Sheets. Debt issuance costs associated with line-of-credit arrangements remained in the Other current assets and Other non-current assets on the Consolidated Balance Sheets. Unamortized debt issuance costs of $0.06 million and $0.08 million are recorded as Other current assets and Other non-current assets respectively, and $0.07 million and $0.08 million were recorded as Current portion of long-term debt and Long-term debt respectively to reduce the carrying amount of debt liability, on the balance sheet at March 31, 2016. The Company's debt issuance cost amortization was not affected by the adoption of the new guidance.

In March 2016, the FASB issued an amended guidance on improvements to employee share-based payment accounting. The guidance includes multiple provisions to simplify various aspects of the accounting for share-based payments. These amendments are expected to impact net income, EPS, and the statement of cash flows. In particular, the tax effects of all stock compensation awards will be included in income. The guidance is effective for public companies in annual periods beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted in any interim period, with all adjustments applied as of the beginning of the fiscal year of adoption. The Company is assessing the impact and method of adoption.

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview.  The following Management’s Discussion and Analysis (“MD&A”) contains information that the Company believes is necessary to attain an understanding of the Company’s financial condition and associated matters, including the Company’s liquidity, capital resources and results of operations. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited financial statements, the accompanying notes to the financial statements (“Notes”) appearing elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2015, as amended.

We supply high precision computer controlled metalcutting turning machines, grinding machines, vertical machining centers, and repair parts related to those machines. The Company also engineers and supplies high precision, standard and specialty workholding devices, and other machine tool accessories. We believe our products are known for accuracy, reliability, durability and value. We are geographically diversified with manufacturing facilities in China, France, Germany, India, Switzerland, Taiwan, the United States (“U.S.”), and the United Kingdom (“U.K.”), with sales to most industrialized countries. Approximately 66% of our 2015 sales were to customers outside of North America, 70% of our 2015 products sold were manufactured outside of North America, and 69% of our employees as of December 31, 2015 were employed outside of North America.

Metrics on machine tool market activity monitored by our management include world machine tool shipments, as reported annually by Gardner Publications in the Metalworking Insiders Report, and metal-cutting machine orders, as reported by the Association of Manufacturing Technology, 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 are prospective customers for our products. One such measurement is the Purchasing Managers Index, as reported by the Institute for Supply Management. Another measurement is capacity utilization of U.S. manufacturing plants, as reported by the Federal Reserve Board. Similar information regarding machine tool shipments and economic indicators in foreign countries is published by trade associations, government agencies, and economic services in those countries.

Non-machine sales, which include collets, chucks, accessories, repair parts and service revenue, accounted for approximately 35% of overall sales through the first quarter of 2016 and are an important part of our business due to an installed base of thousands of machines, and the growing needs demanded by specialty workholding applications. In the past, sales of these products and services have not fluctuated on a year-to-year basis as significantly as the sales of our machines have from time to time, but demand for these products and services typically track the direction of the related machine metrics.

Other key performance indicators are geographic distribution of net sales (“sales”) and net orders (“orders”), gross profit as a percent of sales, 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.

We are exposed to financial market risk resulting from changes in interest and foreign currency rates. Global economic conditions and related disruptions within the financial markets have also increased our exposure to the possible liquidity and credit risks of our counterparties. We believe we have sufficient liquidity to fund our foreseeable business needs, including cash and cash equivalents, cash flows from operations, our bank financing arrangements, and equity financing arrangements.

We monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on safety of principal. Our cash and cash equivalents are diversified among counterparties to minimize exposure to any one of these entities.

We are subject to credit risks relating to the ability of counterparties of hedging transactions to meet their contractual payment obligations. The risks related to creditworthiness and non-performance has been considered in the fair value measurements of our foreign currency forward exchange contracts.

We expect that some of our customers and vendors may experience difficulty in maintaining the liquidity required to buy inventory or raw materials. We continue to monitor our customers’ financial condition in order to mitigate the risk associated with our ability to collect on our accounts receivable.

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Foreign currency exchange rate changes can be significant to reported results for several reasons. Our primary competitors, particularly for the most technologically advanced products, are now largely manufacturers in Japan, Germany, Switzerland, Korea, and Taiwan, which causes the worldwide valuation of their respective currencies to be central to competitive pricing in all of our markets. The major functional currencies of our subsidiaries are the British Pound Sterling (“GBP”), Chinese Renminbi (“CNY”), Euro (“EUR”), New Taiwanese Dollar (“TWD”), and Swiss Franc (“CHF”). Under U.S. generally accepted accounting principles, results of foreign subsidiaries are translated into U.S. Dollars (“USD”) at the average exchange rate during the periods presented. Period-to-period changes in the exchange rate between their local currency and the USD may affect comparative data significantly. We also purchase computer controls and other components from suppliers throughout the world, with purchase costs reflecting currency changes.

For the three months ended March 31, 2016, foreign currency fluctuations resulted in unfavorable currency translation impact of approximately $1.9 million on sales when compared to the same period in 2015.

Results of Operations

Presented below is summarized selected financial data for the three months ended March 31, 2016 and 2015 (in thousands): 

	Three Months Ended   March 31,						$ Change				% Change
	2016			2015
Sales	$	67,822		$	69,128		$	(1,306	)		(2	)%
Gross profit	22,744			21,855			889				4	%
% of sales	33.5		%	31.6		%	1.9			pts.
Selling, general and administrative expenses	20,593			19,600			993				5	%
% of sales	30.4		%	28.4		%	2.0			pts.
Research & development	3,287			3,607			(320		)		(9	)%
Restructuring	200			—			200				NM
Other (income) expense, net	(91		)	65			(156		)		(240	)%
Loss from operations	(1,245		)	(1,417		)	172				(12	)%
% of sales	(1.8		)%	(2.0		)%	0.2			pts.
Interest expense, net	86			140			(54		)		(39	)%
Loss before income taxes	(1,331		)	(1,557		)	226				(15	)%
Income taxes	(86		)	(149		)	63				(42	)%
Net loss	$	(1,245	)	$	(1,408	)	$	163			(12	)%
% of sales	(1.8		)%	(2.0		)%	0.2			pts.

NM--not meaningful

Sales.  The table below summarizes sales by each corresponding geographical region for the three months ended March 31, 2016 compared to the same period in 2015 (in thousands): 

	Three Months Ended   March 31,
	2016		2015		$ Change			% Change
Sales to customers in:
North America	$	17,450	$	26,305	$	(8,855	)	(34	)%
Europe	23,843		22,929		914			4	%
Asia and other	26,529		19,894		6,635			33	%
Total	$	67,822	$	69,128	$	(1,306	)	(2	)%

Sales for the three months ended March 31, 2016 were $67.8 million, which remained relatively flat when compared with the same period in 2015 after considering the impact of unfavorable foreign currency translation adjustments of approximately $1.9 million.

19

North America sales were $17.5 million during the three months ended March 31, 2016, a decrease of $8.9 million, or 34%, when compared to the same period in 2015. The decrease in sales was mainly the result of lower sales from the Metalcutting Machine Solutions segment as compared to the prior year due to lower demand for capital goods in that market, as also exhibited in industry published data.

Europe sales were $23.8 million during the three months ended March 31, 2016, an increase of $0.9 million, or 4%, when compared to the same period in 2015. Foreign currency translation adjustments resulted in an unfavorable impact of approximately of $0.8 million to sales, Excluding the foreign exchange impact, sales growth was $1.7 million or 7.4%. Virtually all of the increase was in the Metalcutting Machine Solutions segment.

Asia and other sales were $26.5 million during the three months ended March 31, 2016, an increase of $6.6 million, or 33%, when compared to the same period in 2015. Increased shipments for our turning and milling machines were responsible for the overall increase in sales, and was partially offset by the unfavorable translation impact from currency exchange rate fluctuations of $1.1 million. Demand from customers in China is the key driver of the performance of the machine tool industry, and while recent machine tool industry data from China has continued to be subdued, Hardinge has been able to perform better in the market based upon targeting customer segments that provide better opportunities for growth.

Sales of machines accounted for approximately 65% of the consolidated sales for the three months ended March 31, 2016, compared to 63% for the same period in 2015. Sales of non-machine products and services, primarily consisting of collets, chucks, accessories, repair parts, and service revenue, accounted for 35% of the consolidated sales for the three months ended March 31, 2016, compared to 37% for the same period in 2015. 

Gross Profit.  Gross profit was $22.7 million, or 33.5% of sales for the three months ended March 31, 2016, compared to $21.9 million, or 31.6% of sales for the same period in 2015. Gross profit and margin for the three months ended March 31, 2016 impacted by unfavorable product mix, partially offset by $0.2 million in savings from the Company’s 2015 restructuring actions, as well as the non-recurrence of an out of period inventory adjustment of $0.7 million recorded in the first quarter of 2015 at one of our European subsidiaries to correct for costs that were not properly released from inventory as the product was sold.

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses were $20.6 million, or 30.4% of net sales for the three months ended March 31, 2016, an increase of $1.0 million or 5%, compared to $19.6 million, or 28.4% of net sales for the three months ended March 31, 2015. The increase in SG&A expenses for the three months ended March 31, 2016 was driven by $1.2 million in increased commission expense based upon the mix of sales, in addition to $0.7 million associated with professional fees related to the Company’s strategic review process. Partially offsetting this increase was $0.6 million of favorable foreign currency translation impact, and $0.4 million in restructuring savings. 

Research and Development Expenses.  Research and Development expenses were $3.3 million, or 4.8% of sales for the three months ended March 31, 2016, a decrease of 0.3 million or 8.9% compared to $3.6 million, or 5.2% of net sales for the three months ended March 31, 2015. $0.2 million of savings was a result of restructuring actions.

Other (Income)Expense, Net. (Income)/ Expense improved by $0.2 million to $0.1 million income for the three months ended March 31, 2016 primarily as a result of fluctuations in foreign currency exchange rates during the period as compared to the same period in 2015.

Loss from Operations Before Income Taxes.  As a result of the foregoing, loss from operations before income taxes was $1.3 million for the three months ended March 31, 2016, compared to a loss of $1.6 million for the same period in 2015.

Income Taxes.  The income tax benefit was $0.1 million for the three months ended March 31, 2016, compared to compared to an income tax benefit of $0.1 million for the same period in 2015. The effective tax rate was 6.5% for the three months ended March 31, 2016, compared to 9.6% for the same period in 2015, which differs from the U.S. statutory rate primarily due to the mix of earnings by country and by the non-recognition of tax benefits for certain entities in a loss position for which a full valuation allowance has been recorded.

Each quarter, an estimate of the full year tax rate is developed based upon anticipated annual results and an adjustment is made, if required, to the year-to-date income tax expense to reflect the full year anticipated effective tax rate.

We continue to maintain a valuation allowance on all or a portion of the tax benefits of our U.S., Canada, U.K., Germany, and the Netherlands 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 is sustained in the respective jurisdiction.

20

Net Loss.  As a result of the foregoing, net loss for the three months ended March 31, 2016 was $1.2 million, or 1.8% of net sales, compared to $1.4 million, or 2.0% of net sales, for the same period in 2015. Both basic and diluted loss per share for the three months ended March 31, 2016 was $0.10, compared to $0.11 for the same period in 2015.

Business Segment Information — Comparison of the three months ended March 31, 2016 and 2015

Metalcutting Machine Solutions Segment ("MMS") (in thousands):

	Three Months Ended   March 31,
	2016			2015			$ Change			% Change
Sales	$	52,272		$	52,976		$	(704	)	(1	)%
Segment loss	(1,156		)	(909		)	(247		)	27	%

MMS sales were $52.3 million for the three months ended March 31, 2016, which remained relatively flat when compared with the same period in 2015 after considering the unfavorable impact of foreign currency translation adjustments. Sales of grinding machines increased as compared to the prior year, primarily offset by declines in turning and milling machine sales, combined with the aforementioned foreign currency impact.

Segment loss for the three months ended March 31, 2016 was $1.2 million, or 27% below prior year. The key driver was lower volume, and a leaner mix of grinding products.

Aftermarket Tooling and Accessories Segment ("ATA")(in thousands):

	Three Months Ended   March 31,
	2016		2015		$ Change			% Change
Sales	$	15,620	$	16,227	$	(607	)	(4	)%
Segment income	1,854		1,197		657			55	%

ATA sales for the three months ended March 31, 2016 were $15.6 million, a decrease of $0.6 million, or 4%, when compared to the corresponding period in 2015. The primary driver of the decline in sales was unfavorable foreign currency translation adjustments when compared to the same period in 2015.

Segment income for the three months ended March 31, 2016 was $1.9 million, a 55% increase from the prior year. The ATA segment experienced increased profitability as a result of $0.4 million in net savings from the restructuring programs, as well as improved product mix when compared to the same quarter in 2015, which was more than offset by an out of period inventory adjustment of $0.7 million at one of our European subsidiaries to correct for costs that were not properly released from inventory as the product was sold in 2015.

Segment Summary For the Three Months Ended March 31, 2016 and 2015(in thousands):

	Three Months Ended March 31, 2016											Three Months Ended March 31, 2015
	MMS			ATA		Inter-Segment Eliminations			Total			MMS			ATA		Inter-Segment Eliminations			Total
Sales	$	52,272		$	15,620	$	(70	)	$	67,822		$	52,976		$	16,227	$	(75	)	$	69,128
Segment (loss) income	(1,156		)	1,854					698			(909		)	1,197					288
Unallocated corporate    expense									(1,943		)									(1,704		)
Interest expense, net									(86		)									(140		)
Other unallocated    expense									—											(1		)
Loss before    income taxes									$	(1,331	)									$	(1,557	)

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Summary of Cash Flows for the Three Months EndedMarch 31, 2016 and 2015:

	Three Months Ended   March 31,
	2016			2015
Net cash (used in) provided by operating activities	$	(5,403	)	$	3,813
Net cash used in investing activities	$	(404	)	$	(699	)
Net cash provided by (used in) financing activities	$	1,893		$	(1,589	)

During the three months ended March 31, 2016, we used $5.4 million net cash from operating activities. The net cash used was driven by a net loss (as adjusted for depreciation and amortization expense as well as the impact of unrealized foreign currency transaction loss), a decrease in customer receivables due to the timing of sales and collection activity, and a decrease in accounts payable due to timing of purchases and payment activity and an increase in other assets related to advanced vendor payments for inventory. These cash inflows were partially offset by an increase in inventories based on orders and associated production levels, decrease in customer deposits due to timing of shipments and new orders received, a decrease in accrued expenses, primarily as a result of payment of annual bonuses as well as the payment of the annual Company contribution to the 401(k) Plan.

During the three months ended March 31, 2015, we generated $3.8 million net cash from operating activities. The net cash generated was driven by a net loss (as adjusted for depreciation and amortization expense as well as the impact of unrealized foreign currency transaction loss), a decrease in customer receivables due to the timing of sales and collection activity, an increase in customer deposits due to timing of shipments and new orders received, and an increase in accounts payable due to timing of purchases and payment activity. These cash inflows were partially offset by an increase in inventories based on orders and associated production levels, a decrease in accrued expenses, primarily as a result of payment of annual bonuses as well as the payment of the annual Company contribution to the 401(k) Plan, and an increase in other assets related to advanced vendor payments for inventory.

Net cash used in investing activities was $0.4 million for the three months ended March 31, 2016. The primary use of cash was for capital expenditures during the period, which were made primarily for maintenance capital purchases.

Net cash used in investing activities was $0.7 million for the three months ended March 31, 2015. The primary use of cash was for capital expenditures, which were made primarily for maintenance capital purchases.

Net cash flow generated by financing activities was $1.9 million for the three months ended March 31, 2016. Cash generated was primarily attributable to $3.2 million of short-term borrows offset by $1.0 million of payments on long-term debt due to normal scheduled payment activity and year-to-date dividends paid of $0.3 million.

Net cash flow used by financing activities was $1.6 million for the three months ended March 31, 2015. Cash used by financing activities was primarily driven by $1.5 million of payments on long-term debt due to normal scheduled payment activity and year-to-date dividends paid of $0.3 million.

Liquidity and Capital Resources

We maintain financing arrangements with several financial institutions. These financing arrangements are in the form of long term loans, credit facilities, and lines of credit. The credit facilities allow us to borrow up to $78.3 million at March 31, 2016 and $77.2 million at December 31, 2015, of which $54.5 million and $54.1 million, respectively, can be borrowed for working capital needs. As of March 31, 2016 and December 31, 2015, $66.5 million and $69.8 million was available for borrowing under these respective arrangements, of which $48.7 million and $53.2 million, respectively, was available for working capital needs. Total consolidated borrowings outstanding were $14.0 million and $11.6 million at March 31, 2016 and December 31, 2015, respectively.

Our financing arrangements contain certain debt covenant requirements, including financial covenants, representations, affirmative and negative covenants, prepayment provisions and events of default. As of March 31, 2016, we were in compliance with all of our debt covenants.

Our liquidity requirements primarily include funding for operations, including working capital requirements, and funding for capital investments and acquisitions. We expect to meet these requirements in the long term through cash provided

22

by operating activities and availability under various credit facilities and other financing arrangements. Cash flows from operating activities are primarily driven by earnings before noncash charges and change in working capital needs. During the three months ended March 31, 2016, cash flows from operating activities and available cash were sufficient to fund our normal investment activities, primarily capital expenditures for property, plant and equipment and other productive assets.

We assess on an ongoing basis our portfolio of operations, as well as our financial and capital structures, to ensure we have sufficient capital and liquidity to meet our strategic objectives. As part of this process, from time to time we evaluate and pursue acquisition opportunities that we believe will enhance our strategic position.

Accounting Guidance Not Yet Adopted

We are currently assessing the financial impact to our consolidated financial statements of accounting guidance not yet adopted. For further information on accounting guidance not yet adopted, refer to Note 16. "New Accounting Standards" of the Consolidated Financial Statements.

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Accordingly, there can be no assurance that our expectations will be realized. 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.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to our market risk exposures during the first three months of 2016. For a discussion of our exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risks, contained in our 2015 Annual Report on Form 10-K, as amended.

Item 4.  Controls and Procedures.

Management of the Company, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2016, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, and determined that these controls and procedures were effective.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2016 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.

23

PART II — OTHER INFORMATION

Item 1.Legal Proceedings.

None.

Item 1A.Risk Factors.

There is no change to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as amended.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.Defaults Upon Senior Securities.

None.

Item 4.Mine Safety Disclosures.

Not Applicable.

Item 5.Other Information.

None.

24

Item 6.	Exhibits.
3.1	Restated Certificate of Incorporation of Hardinge Inc. (incorporated by reference to Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2015 (File No. 001-34639))
3.2	Certificate of Amendment of the Restated Certificate of Incorporation of Hardinge Inc. (incorporated by reference to Exhibit 3.2 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2015 (File No. 001-34639)).
3.3	Amended and Restated By-Laws of Hardinge Inc. (incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-34639)).
3.4	Amendment to Amended and Restated By-Laws of Hardinge Inc. (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 11, 2016 (File No. 001-34639)).
4.1	Specimen of certificate for shares of Common Stock, par value $.01 per share, of Hardinge Inc. (incorporated by reference to Exhibit 3 to Registrant’s Registration Statement on Form 8-A, filed with the Securities and Exchange Commission on May 19, 1995 (File No. 000-15760)).
31.1	Chief Executive Officer Certification pursuant to Rule 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer Certification pursuant to Rule 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

25

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.
		Registrant
May 10, 2016	By:	/s/ Richard L. Simons
Date		Richard L. Simons
		President and Chief Executive Officer
		(Principal Executive Officer)
May 10, 2016	By:	/s/ Douglas J. Malone
Date		Douglas J. Malone
		Vice President and Chief Financial Officer
		(Principal Financial Officer)
May 10, 2016	By:	/s/ Edward J. Gaio
Date		Edward J. Gaio
		Corporate Controller
		(Principal Accounting Officer)

26

EX-31.1

EXHIBIT 31.1

HARDINGE INC.

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard L. Simons, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Hardinge Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 10, 2016	/s/ Richard L. Simons
		Richard L. Simons
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

HARDINGE INC.

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Douglas J. Malone, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Hardinge Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 10, 2016	/s/ Douglas J. Malone
		Douglas J. Malone
		Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32

EXHIBIT 32

HARDINGE INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hardinge Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard L. Simons, Chairman, President and Chief Executive Officer of the Company and I, Douglas J. Malone, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Richard L. Simons

Richard L. Simons

President and Chief Executive Officer

May 10, 2016

/s/ Douglas J. Malone

Douglas J. Malone

Vice President and Chief Financial Officer

(Principal Financial Officer)

May 10, 2016

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to Hardinge Inc. and will be retained by Hardinge Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 29, 2016
Document and Entity Information
Entity Registrant Name	HARDINGE INC.
Entity Central Index Key	0000313716
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		12,869,771
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Assets
Cash and cash equivalents	$ 29,285	$ 32,774
Restricted cash	2,163	2,192
Accounts receivable, net	49,940	56,945
Inventories, net	117,131	110,232
Other current assets	10,496	9,314
Total current assets	209,015	211,457
Property, plant and equipment, net	62,312	62,025
Goodwill	6,619	6,620
Other intangible assets, net	27,892	28,018
Other non-current assets	3,672	3,015
Total non-current assets	100,495	99,678
Total assets	309,510	311,135
Liabilities and shareholders’ equity
Notes payable to bank	3,177	0
Accounts payable	24,523	24,696
Accrued expenses	24,032	27,964
Customer deposits	17,932	19,845
Accrued income taxes	1,489	1,919
Deferred income taxes	2,385	2,164
Current portion of long-term debt	5,456	5,621
Total current liabilities	78,994	82,209
Long-term debt	5,376	5,985
Pension and postretirement liabilities	56,811	57,322
Deferred income taxes	1,225	1,121
Other liabilities	3,476	3,393
Total non-current liabilities	$ 66,888	$ 67,821
Commitments and contingencies (see Note 10)
Common stock ($0.01 par value, 20,000,000 authorized; 12,861,674 issued and outstanding as of March 31, 2016, and 12,856,716 issued and 12,838,227 outstanding as of December 31, 2015)	$ 128	$ 128
Additional paid-in capital	120,539	120,524
Retained earnings	87,866	89,368
Treasury shares (at cost, none as of March 31, 2016, and 18,489 as of December 31, 2015)	0	(202)
Accumulated other comprehensive loss	(44,905)	(48,713)
Total shareholders’ equity	163,628	161,105
Total liabilities and shareholders’ equity	$ 309,510	$ 311,135

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, issued (in shares)	12,861,674	12,856,716
Common stock, outstanding (in shares)	12,861,674	12,838,227
Treasury shares (in shares)	0	18,489

XML

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Sales	$ 67,822	$ 69,128
Cost of sales	45,078	47,273
Gross profit	22,744	21,855
Selling, general and administrative expenses	20,593	19,600
Research & development	3,287	3,607
Restructuring	200	0
Other (income) expense, net	(91)	65
Loss from operations	(1,245)	(1,417)
Interest expense	153	157
Interest income	(67)	(17)
Loss before income taxes	(1,331)	(1,557)
Income taxes	(86)	(149)
Net loss	$ (1,245)	$ (1,408)
Per share data:
Loss per share (in dollars per share)	$ (0.10)	$ (0.11)
Diluted loss per share (in dollars per share)	(0.10)	(0.11)
Cash dividends declared per share: (in dollars per share)	$ 0.02	$ 0.02

XML

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (1,245)	$ (1,408)
Other comprehensive income:
Foreign currency translation adjustments	3,739	1,332
Retirement plans related adjustments	(273)	511
Unrealized gain on cash flow hedges	165	375
Other comprehensive income before tax	3,631	2,218
Income tax (benefit) expense	(177)	1,164
Other comprehensive income, net of tax	3,808	1,054
Total comprehensive income (loss)	$ 2,563	$ (354)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities
Net loss	$ (1,245)	$ (1,408)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	2,017	2,338
Debt issuance costs amortization	32	34
Deferred income taxes	(255)	(64)
(Gain) loss on sale of assets	(13)	8
Unrealized foreign currency transaction (gain) loss	(225)	1,309
Changes in operating assets and liabilities:
Accounts receivable	7,613	6,640
Inventories	(4,851)	(4,821)
Other assets	(595)	(2,629)
Accounts payable	(514)	2,083
Customer deposits	(2,170)	3,378
Accrued expenses	(5,177)	(3,021)
Accrued pension and postretirement liabilities	(20)	(34)
Net cash (used in) provided by operating activities	(5,403)	3,813
Investing activities
Capital expenditures	(436)	(699)
Proceeds from sales of assets	32	0
Net cash used in investing activities	(404)	(699)
Financing activities
Proceeds from short-term notes payable to bank	18,172	10,212
Repayments of short-term notes payable to bank	(14,995)	(10,088)
Repayments of long-term debt	(1,010)	(1,458)
Dividends paid	(274)	(255)
Net cash provided by (used in) financing activities	1,893	(1,589)
Effect of exchange rate changes on cash	425	482
Net (decrease) increase in cash	(3,489)	2,007
Cash and cash equivalents at beginning of period	32,774	16,293
Cash and cash equivalents at end of period	$ 29,285	$ 18,300

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

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

The Company operates through two reportable segments, Metalcutting Machine Solutions (“MMS”) and Aftermarket Tooling and Accessories (“ATA”). The MMS segment includes high precision computer controlled metalcutting turning machines, vertical machining centers, horizontal machining centers, grinding machines, and repair parts related to those machines. The ATA segment includes products, primarily collets and chucks that are purchased by manufacturers throughout the lives of their Hardinge or other branded machines.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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. GAAP for complete financial statements and, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as amended. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the timing and amount of assets, liabilities, equity, revenue, and expenses reported and disclosed. Actual amounts could differ from these estimates. All adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods have been presented and recorded. Due to differing business conditions and some seasonality, operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected in subsequent quarters or for the full year ended December 31, 2016.

In the first quarter of 2015, the Company recorded an out of period adjustment to correct finished goods inventory in the amount of $0.7 million that is related to periods beginning in 2013. This adjustment, which was in the Aftermarket Tooling and Accessories Segment, was to correct for costs that were not properly released from inventory as the product was sold. The Company assessed the impact of this adjustment and concluded that it is not material to previously reported financial statements. The Company also determined that the adjustment was not expected to be material to the full year in 2015, but was material to the first quarter. 

Certain amounts in the 2015 consolidated financial statements have been reclassified to conform to the current presentation. In order to provide greater clarity on investments in research and development, these expenses have been reclassified from Cost of Sales to Operating Expenses where the costs are identified as Research and development, a separate line item.

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2016

FAIR VALUE AND DERIVATIVE INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

The inputs to the valuation techniques used to measure fair value are classified into the following categories:

Level 1 — Quoted prices in active markets for identical assets and liabilities.

Level 2 — Observable inputs other than quoted prices in active markets for similar assets and liabilities.

Level 3 — Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require.

The following table presents the carrying amount, fair values, and classification level within the fair value hierarchy of financial instruments measured or disclosed at fair value on a recurring basis (in thousands):

	March 31, 2016				December 31, 2015				Level of Fair Value Hierarchy
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	29,285	$	29,285	$	32,774	$	32,774	Level 1
Restricted cash	2,163		2,163		2,192		2,192		Level 1
Foreign currency forward contracts	454		454		163		163		Level 2
Liabilities:
Notes payable to bank	3,177		3,177		—		—		Level 2
Variable interest rate debt	10,832		10,832		11,606		11,606		Level 2
Foreign currency forward contracts	592		592		418		418		Level 2

The fair value of cash and cash equivalents and restricted cash are based on the fair values of identical assets in active markets. Due to the short period to maturity or the nature of the underlying liability, the fair value of notes payable to bank and variable interest rate debt approximates their respective carrying amounts. The fair value of foreign currency forward contracts is measured using internal models based on observable market inputs such as spot and forward rates. Based on the Company’s continued ability to enter into forward contracts, the markets for the fair value instruments are considered to be active. As of March 31, 2016 and December 31, 2015, there were no significant transfers in and/or out of Level 1 and Level 2.

XML

INVENTORIES

3 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

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

Net inventories consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Raw materials and purchased components	$	35,075	$	34,438
Work-in-process	35,965		33,682
Finished products	46,091		42,112
Inventories, net	$	117,131	$	110,232

XML

DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

Foreign currency forward contracts are utilized to mitigate the impact of currency fluctuations on assets and liabilities denominated in foreign currencies as well as on forecasted transactions denominated in foreign currencies. These contracts are considered derivative instruments and are recognized as either assets or liabilities and measured at fair value. For contracts that are designated and qualify as cash flow hedges, the gain or loss on the contracts is reported as a component of other comprehensive income (“OCI”) and reclassified from accumulated other comprehensive income (“AOCI”) into the “Sales” or “Cost of sales” line item on the Consolidated Statements of Operations when the underlying hedged transaction affects earnings, or “Other (income) expense, net” when the hedging relationship is deemed to be ineffective. As of March 31, 2016 and December 31, 2015, the notional amounts of the derivative financial instruments designated to qualify for cash flow hedges were $35.2 million and $27.4 million, respectively. The Company expects that approximately $0.05 million of expense, net of income tax effect, to be reclassified from AOCI to earnings within the next 12 months. 

As of March 31, 2016 and December 31, 2015, the notional amounts of the derivative financial instruments not qualifying or otherwise designated as hedges were $31.8 million and $38.5 million, respectively. For the three months ended March 31, 2016 and 2015, losses of $0.4 million and gains of $1.4 million, respectively, were recorded related to this type of derivative financial instrument. For contracts that are not designated as hedges, the gain or loss on the contract is recognized in current earnings in the “Other (income) expense, net” line item on the Consolidated Statements of Operations.

The following table presents the fair value on the Consolidated Balance Sheets of the foreign currency forward contracts (in thousands):

	March 31, 2016			December 31, 2015
Foreign currency forwards designated as hedges:
Other current assets	$	215		$	49
Accrued expenses	(249		)	(222		)
Foreign currency forwards not designated as hedges:
Other current assets	239			114
Accrued expenses	(343		)	(196		)
Foreign currency forwards, net	$	(138	)	$	(255	)

XML

PROPERTY, PLANT AND EQUIPMENT

3 Months Ended

Mar. 31, 2016

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in thousands): 

	March 31, 2016			December 31, 2015
Land, buildings and improvements	$	84,159		$	82,201
Machinery, equipment and fixtures	79,274			79,176
Office furniture, equipment and vehicles	22,787			22,689
Construction in progress	201			238
	186,421			184,304
Accumulated depreciation	(124,109		)	(122,279		)
Property, plant and equipment, net	$	62,312		$	62,025

XML

GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

Detail and activity of goodwill by segment is presented below (in thousands):

	MMS			ATA			Total
Goodwill	$	32,434		$	6,620		$	39,054
Accumulated impairment losses	(32,434		)	—			(32,434		)
Balance at December 31, 2015	—			6,620			6,620
Goodwill	32,434			6,620			39,054
Currency translation adjustments	—			(1		)	(1		)
Accumulated impairment losses	(32,434		)	—			(32,434		)
Balance at March 31, 2016	$	—		$	6,619		$	6,619

The major components of intangible assets other than goodwill are as follows (in thousands):

	March 31, 2016			December 31, 2015
Gross amortizable intangible assets:
Technical know-how	$	12,959		$	12,956
Customer lists	9,009			9,011
Land rights	2,690			2,672
Patents, trade names, drawings, and other	4,353			4,393
Total gross amortizable intangible assets	29,011			29,032
Accumulated amortization:
Technical know-how	(6,988		)	(6,833		)
Customer lists	(1,424		)	(1,315		)
Land rights	(287		)	(271		)
Patents, trade names, drawings, and other	(3,389		)	(3,406		)
Total accumulated amortization	(12,088		)	(11,825		)
Amortizable intangible assets, net	16,923			17,207
Indefinite lived intangible assets:
Trade names	10,969			10,811
Intangible assets other than goodwill, net	$	27,892		$	28,018

Amortization expense related to the definite-lived intangible assets are as follows (in thousands):

	Three Months Ended   March 31,
	2016		2015
Amortization expense	$	320	$	451

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WARRANTIES

3 Months Ended

Mar. 31, 2016

Product Warranties Disclosures [Abstract]

WARRANTIES

WARRANTIES

A reconciliation of the changes in the product warranty accrual, which is included in "Accrued expenses" in the Consolidated Balance Sheets, is as follows (in thousands):

	Three Months Ended   March 31,
	2016			2015
Balance at the beginning of period	$	3,802		$	3,891
Warranties issued	373			969
Warranty settlement costs	(590		)	(1,002		)
Changes in accruals for pre-existing warranties	2			(13		)
Currency translation adjustments	(66		)	19
Balance at the end of period	$	3,521		$	3,864

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RESTRUCTURING CHARGES

3 Months Ended

Mar. 31, 2016

Restructuring and Related Activities [Abstract]

Restructuring Charges

RESTRUCTURING CHARGES

On August 4, 2015, the Company's Board of Directors approved a strategic restructuring program (the "Program")with the goals of streamlining the Company's cost structure, increasing operational efficiencies and improving shareholder returns. This Program consists of the consolidation of certain facilities and restructuring of certain business units and is expected to generate annual pre-tax savings in the range of approximately $4.5 million once the Program is fully implemented. Virtually all of the costs are expected to result in cash expenditures. The Program is expected to be substantially completed during the first half of 2016.

Restructuring charges are included in the "Restructuring " line item in the Consolidated Statements of Operations. The table below presents the total costs expected to be incurred in connection with the Program, the amount of costs that have been recognized during the three months ended March 31, 2016 and the cumulative costs recognized to date by the Program (in thousands):

	Total Costs Expected to be Incurred		Cost Recognized for Three Months Ended March 31, 2016		Cumulative Costs Recognized to Date
MMS Segment:
Employee termination costs	$	255	$	—	$	255
Total MMS Segment	255		—		255
ATA Segment:
Employee termination costs	3,358		200		3,245
Facility exit costs	605		—		—
Other related costs	274		—		258
Total ATA Segment	4,237		200		3,503
Total:
Employee termination costs	3,613		200		3,500
Facility exit costs	605		—		—
Other related costs	274		—		258
Total Company	$	4,492	$	200	$	3,758

The amounts accrued associated with the Program are included in "Accrued expenses" and "Pension and postretirement liabilities" in the Consolidated Balance Sheets. A rollforward of the accrued restructuring costs is presented below (in thousands):

	Segment						Total
	MMS			ATA
Balance at December 31, 2015	$	167		$	1,242		$	1,409
Restructuring charges:
Employee termination costs	—			200			200
Total restructuring charges	—			200			200
Cash expenditures	(5		)	(831		)	(836		)
Foreign currency translation adjustment	—			43			43
Balance at March 31, 2016	$	162		$	654		$	816

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INCOME TAXES

3 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

A valuation allowance is recorded against all or a portion of the deferred tax assets in the U.S., Canada, U.K., Germany, and the Netherlands.

Each quarter, a full year tax rate is estimated for jurisdictions not subject to valuation allowances based upon the most recent forecast of full year anticipated results and the year-to-date tax expense is adjusted to reflect the full year anticipated tax rate. The rate is an estimate based upon projected results for the year, estimated annual permanent differences, the statutory tax rates in the various jurisdictions in which the Company operates, and the non-recognition of tax benefits for entities with full valuation allowances. The overall effective tax rate was 6.5% for the three months ended March 31, 2016.

The tax years 2010 through 2015 remain open to examination by the U.S. state taxing authorities. For other major jurisdictions (Switzerland, U.K., Taiwan, France, Germany, Netherlands, China and India), the tax years between 2008 and 2015 generally remain open to routine examination by foreign taxing authorities, depending on the jurisdiction.

At March 31, 2016, a liability of $2.1 million is recorded with respect to uncertain income tax positions, which includes related interest of $0.1 million. If recognized, essentially all of the uncertain tax positions and related interest at March 31, 2016 would be recorded as a benefit to income tax expense on the Consolidated Statements of Operations. It is reasonably possible that some of the uncertain tax positions pertaining to foreign operations may change within the next 12 months due to audit settlements and statute of limitations expirations. The change in uncertain tax positions for these items is estimated to be up to $1.3 million.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

The Company is a defendant in various lawsuits as a result of normal operations and in the ordinary course of business. Management believes the outcome of these lawsuits will not have a material effect on the financial position or results of operations.

The Company’s operations are subject to extensive federal, state, local and foreign laws and regulations 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. Hazardous substances and adverse environmental effects have been identified with respect to real property owned by the Company, and on adjacent parcels of real property.

In particular, the Elmira, NY 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 (the “Site”) encompasses an area which includes sections of the Town of Horseheads and the Village of Elmira Heights in Chemung County, NY. In February 2006, the Company received a Special Notice Concerning a Remedial Investigation/Feasibility Study (“RI/FS”) for the Koppers Pond (the “Pond”) portion of the Site. The EPA documented the release and threatened release of hazardous substances into the environment at the 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.

Until receipt of this Special Notice in February 2006, the Company had never been named as a potentially responsible party (“PRP”) at the Site nor had the Company received any requests for information from the EPA concerning the Site. Environmental sampling on the Company’s property within this Site under supervision of regulatory authorities had identified off-site sources for such groundwater contamination and sediment contamination in the Pond, and found no evidence that the Company’s operations or property have contributed or are contributing to the contamination. All appropriate insurance carriers have been notified, and the Company is actively cooperating with them, but whether coverage will be available has not yet been determined and possible insurance recovery cannot be estimated with any degree of certainty at this time.

A substantial portion of the Pond is located on the Company’s property. The Company, along with Beazer East, Inc., the Village of Horseheads, the Town of Horseheads, the County of Chemung, CBS Corporation and Toshiba America, Inc., (collectively, the "PRPs"), agreed to voluntarily participate in the 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 EPA, Region II, approved and executed the Agreement on behalf of the EPA. The PRPs also signed a PRP Member Agreement, agreeing to share the costs associated with the RI/FS study on a per capita basis.

The EPA approved the RI/FS Work Plan in May of 2008. In July of 2012 the PRPs submitted a Remedial Investigation (RI) to respond to EPA issues raised in the initial draft RI. In January 2016, the PRPs submitted a draft Feasibility Study (FS), also to respond to issues raised by the EPA about previous drafts of the FS.

The recent draft FS identified alternative remedial actions with estimated life-cycle costs ranging from $0.9 million to $5.0 million. The Company’s portion of the potential costs is estimated to range from $0.1 million to $0.7 million. Based on the current estimated costs of the various remedial alternatives now under consideration by the EPA, a reserve of $0.3 million has been recorded for the Company’s share of remediation expenses at the Pond as of March 31, 2016. This reserve is reported as an Accrued expenses on the Consolidated Balance Sheets.

Based upon information currently available, except as described in the preceding paragraphs, the Company does not have material liabilities for environmental remediation. Though the foregoing reflects the Company’s current assessment as it relates to environmental remediation obligations, it is possible that future remedial requirements or changes in the enforcement of existing laws and regulations, which are subject to extensive regulatory discretion, will result in material liabilities to the Company.

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PENSION AND POSTRETIREMENT PLANS

3 Months Ended

Mar. 31, 2016

Pension and Other Postretirement Benefit Expense [Abstract]

PENSION AND POSTRETIREMENT PLANS

PENSION AND POSTRETIREMENT PLANS

A summary of the components of net periodic pension and postretirement benefit costs for the three months ended March 31, 2016 and 2015 is presented below (in thousands):

	Pension Benefits						Postretirement Benefits
	Three Months Ended   March 31,						Three Months Ended   March 31,
	2016			2015			2016			2015
Service cost	$	559		$	493		$	3		$	3
Interest cost	1,672			1,673			19			19
Expected return on plan assets	(2,309		)	(2,400		)	—			—
Amortization of prior service credit	(63		)	(80		)	—			—
Amortization of transition asset	(77		)	(21		)	—			—
Amortization of actuarial loss (gain)	943			778			(14		)	(13		)
Net periodic cost	$	725		$	443		$	8		$	9

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STOCK BASED COMPENSATION

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

All stock based compensation to employees is recorded as "Selling, general and administrative expenses" in the Consolidated Statements of Operations based on the fair value at the grant date of the award. These non-cash compensation costs are included in the depreciation and amortization amounts in the Consolidated Statements of Cash Flows.

A summary of stock based compensation expense is as follows (in thousands):

	Three Months Ended   March 31,
	2016		2015
Restricted stock/unit awards (“RSA”)	$	65	$	111

There were no RSAs granted during the three months ended March 31, 2016, and 2015, respectively. The deferred compensation is being amortized on a straight-line basis over the specified service period. There were no Performance Share Incentives ("PSIs") granted during the three months ended March 31, 2016 and 2015, respectively. The deferred compensation with respect to the PSIs is being recognized into earnings based on the passage of time and achievement of performance targets. All outstanding RSAs and PSIs are unvested.

Unrecognized compensation and the expected weighted-average recognition periods with respect to the outstanding RSAs and PSIs as of March 31, 2016 and December 31, 2015, are as follows:

	March 31, 2016				December 31, 2015
	RSAs		PSIs		RSAs		PSIs
Unrecognized compensation cost (in thousands)	$	275	$	563	$	349	$	1,192
Expected weighted-average recognition period for unrecognized compensation    cost (in years)	1.12		1.84		1.20		1.16

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

3 Months Ended

Mar. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in AOCI by component for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

	Three Months Ended March 31, 2016
	Foreign currency translation adjustments			Retirement plans related adjustments			Unrealized gain (loss) on cash flow hedges			Accumulated other comprehensive loss
Beginning balance, net of tax	$	20,529		$	(69,100	)	$	(142	)	$	(48,713	)
Other comprehensive income before reclassifications	3,739			(1,062		)	212			2,889
Less (loss) income reclassified from AOCI	—			(789		)	47			(742		)
Net other comprehensive income	3,739			(273		)	165			3,631
Income taxes	(44		)	(152		)	19			(177		)
Ending balance, net of tax	$	24,312		$	(69,221	)	$	4		$	(44,905	)

	Three Months Ended March 31, 2015
	Foreign currency translation adjustments		Retirement plans related adjustments			Unrealized gain (loss) on cash flow hedges			Accumulated other comprehensive loss
Beginning balance, net of tax	$	25,913	$	(64,570	)	$	(144	)	$	(38,801	)
Other comprehensive (loss) income before reclassifications	1,332		(153		)	493			1,672
Less income (loss) reclassified from AOCI	—		(664		)	118			(546		)
Net other comprehensive (loss) income	1,332		511			375			2,218
Income taxes	1,155		(45		)	54			1,164
Ending balance, net of tax	$	26,090	$	(64,014	)	$	177		$	(37,747	)

Details about reclassification out of AOCI for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

	Three Months Ended   March 31,						Affected line item on the Consolidated Statements of Operations
Details of AOCI components	2016			2015
Unrealized (loss) gain on cash flow hedges:
	$	76		$	129		Sales
	(29		)	(11		)	Other (income) expense, net
	47			118			Total before tax
	7			21			Income taxes
	$	54		$	139		Net of tax
Retirement plans related adjustments:
Amortization of prior service credit	$	63		$	80		(a)
Amortization of transition asset	77			21			(a)
Amortization of actuarial loss	(929		)	(765		)	(a)
	(789		)	(664		)	Total before tax
	83			48			Income taxes
	$	(706	)	$	(616	)	Net of tax

____________________

(a)  These AOCI components are included in the computation of net periodic pension and post retirement costs. See Note 11. "Pension and Postretirement Plans" for details.

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EARNINGS (LOSS) PER SHARE

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period. In periods of earnings, the weighted average number of shares used in the diluted calculation includes common stock equivalents related to stock options and restricted stock. The following table presents the basis of the loss per share computation (in thousands):

	Three Months Ended   March 31,
	2016			2015
Numerator for basic and diluted loss per share:
Net loss applicable to common shareholders	$	(1,245	)	$	(1,408	)
Denominator for basic and diluted loss per share:
Denominator for basic and diluted loss per share — weighted average shares	12,797			12,742

There is no dilutive effect of the restricted stock and stock options for both the three months ended March 31, 2016 and 2015 due to the net loss in these periods. There would have been 100,365 and 126,004 of these shares included in the diluted calculation for the three months ended March 31, 2016 and 2015, respectively, had there been earnings in these periods. Common stock equivalents of certain stock-based awards totaling 16,746 were excluded from the calculation of diluted loss per share for the three months ended March 31,2015 as they were anti-dilutive.

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Segment (loss) income is measured for internal reporting purposes by excluding corporate expenses, impairment charges, interest income, interest expense, and income taxes. Corporate expenses consist primarily of executive employment costs, certain professional fees, and costs associated with the Company’s global headquarters. Financial results for each reportable segment are as follows (in thousands):

	Three Months Ended March 31, 2016
	MMS			ATA		Inter-Segment Eliminations			Total
Sales	$	52,272		$	15,620	$	(70	)	$	67,822
Depreciation and amortization	1,427			538					1,965
Segment (loss) income	(1,156		)	1,854					698
Capital expenditures	291			145					436
Segment assets(1)	225,987			49,732					275,719

	Three Months Ended March 31, 2015
	MMS			ATA		Inter-Segment Eliminations			Total
Sales	$	52,976		$	16,227	$	(75	)	$	69,128
Depreciation and amortization	1,624			600					2,224
Segment (loss) income	(909		)	1,197					288
Capital expenditures	306			393					699
Segment assets(1)	236,762			53,612					290,374

____________________

⁽¹⁾  Segment assets primarily consist of restricted cash, accounts receivable, inventories, prepaid and other assets, property, plant and equipment, and intangible assets. Unallocated assets primarily include, cash and cash equivalents, corporate property, plant and equipment, deferred income taxes, and other non-current assets.

A reconciliation of segment income to consolidated loss from operations before income taxes for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

	Three Months Ended   March 31,
	2016			2015
Segment income	$	698		$	288
Unallocated corporate expense	(1,943		)	(1,704		)
Interest expense, net	(86		)	(140		)
Other unallocated expense	—			(1		)
Loss before income taxes	$	(1,331	)	$	(1,557	)

A reconciliation of segment assets to consolidated total assets follows (in thousands):

	March 31, 2016		December 31, 2015
Total segment assets	$	275,719	$	274,334
Unallocated assets	33,791		36,801
Total assets	$	309,510	$	311,135

Unallocated assets include cash of $29.3 million and $32.8 million at March 31, 2016 and December 31, 2015, respectively.

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NEW ACCOUNTING STANDARDS

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

NEW ACCOUNTING STANDARDS

NEW ACCOUNTING STANDARDS

In April 2015, the Financial Accounting Standards Board (“FASB”) issued an amended guidance on the balance sheet presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts while the recognition and measurement guidance for debt issuance costs is not affected. In August 2015, FASB subsequently issued an amended guidance to clarify debt issuance costs associated with a line-of-credit arrangement, which allow an entity to defer and present debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The amendments are required to be applied retrospectively to all prior periods.

In January 2016, the Company adopted the guidance. As a result, the Company reclassified $0.07 million and $0.09 million debt issuance cost as of December 31, 2015 into Current portion of long-term debt and Long-term debt respectively to reduce the carrying amount of debt liability, from Other current assets and Other non-current assets on the Consolidated Balance Sheets. Debt issuance costs associated with line-of-credit arrangements remained in the Other current assets and Other non-current assets on the Consolidated Balance Sheets. Unamortized debt issuance costs of $0.06 million and $0.08 million are recorded as Other current assets and Other non-current assets respectively, and $0.07 million and $0.08 million were recorded as Current portion of long-term debt and Long-term debt respectively to reduce the carrying amount of debt liability, on the balance sheet at March 31, 2016. The Company's debt issuance cost amortization was not affected by the adoption of the new guidance.

In March 2016, the FASB issued an amended guidance on improvements to employee share-based payment accounting. The guidance includes multiple provisions to simplify various aspects of the accounting for share-based payments. These amendments are expected to impact net income, EPS, and the statement of cash flows. In particular, the tax effects of all stock compensation awards will be included in income. The guidance is effective for public companies in annual periods beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted in any interim period, with all adjustments applied as of the beginning of the fiscal year of adoption. The Company is assessing the impact and method of adoption.

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BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

New Accounting Standards

In April 2015, the Financial Accounting Standards Board (“FASB”) issued an amended guidance on the balance sheet presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts while the recognition and measurement guidance for debt issuance costs is not affected. In August 2015, FASB subsequently issued an amended guidance to clarify debt issuance costs associated with a line-of-credit arrangement, which allow an entity to defer and present debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The amendments are required to be applied retrospectively to all prior periods.

In January 2016, the Company adopted the guidance. As a result, the Company reclassified $0.07 million and $0.09 million debt issuance cost as of December 31, 2015 into Current portion of long-term debt and Long-term debt respectively to reduce the carrying amount of debt liability, from Other current assets and Other non-current assets on the Consolidated Balance Sheets. Debt issuance costs associated with line-of-credit arrangements remained in the Other current assets and Other non-current assets on the Consolidated Balance Sheets. Unamortized debt issuance costs of $0.06 million and $0.08 million are recorded as Other current assets and Other non-current assets respectively, and $0.07 million and $0.08 million were recorded as Current portion of long-term debt and Long-term debt respectively to reduce the carrying amount of debt liability, on the balance sheet at March 31, 2016. The Company's debt issuance cost amortization was not affected by the adoption of the new guidance.

In March 2016, the FASB issued an amended guidance on improvements to employee share-based payment accounting. The guidance includes multiple provisions to simplify various aspects of the accounting for share-based payments. These amendments are expected to impact net income, EPS, and the statement of cash flows. In particular, the tax effects of all stock compensation awards will be included in income. The guidance is effective for public companies in annual periods beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted in any interim period, with all adjustments applied as of the beginning of the fiscal year of adoption. The Company is assessing the impact and method of adoption.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2016

FAIR VALUE AND DERIVATIVE INSTRUMENTS

Schedule of carrying amount, fair values and classification of financial instruments measured or disclosed at fair value on a recurring basis

The following table presents the carrying amount, fair values, and classification level within the fair value hierarchy of financial instruments measured or disclosed at fair value on a recurring basis (in thousands):

	March 31, 2016				December 31, 2015				Level of Fair Value Hierarchy
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	29,285	$	29,285	$	32,774	$	32,774	Level 1
Restricted cash	2,163		2,163		2,192		2,192		Level 1
Foreign currency forward contracts	454		454		163		163		Level 2
Liabilities:
Notes payable to bank	3,177		3,177		—		—		Level 2
Variable interest rate debt	10,832		10,832		11,606		11,606		Level 2
Foreign currency forward contracts	592		592		418		418		Level 2

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INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

Schedule of net inventories

Net inventories consist of the following (in thousands):

	March 31, 2016		December 31, 2015
Raw materials and purchased components	$	35,075	$	34,438
Work-in-process	35,965		33,682
Finished products	46,091		42,112
Inventories, net	$	117,131	$	110,232

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair value on the Consolidated Balance Sheets of the foreign currency forward contracts

The following table presents the fair value on the Consolidated Balance Sheets of the foreign currency forward contracts (in thousands):

	March 31, 2016			December 31, 2015
Foreign currency forwards designated as hedges:
Other current assets	$	215		$	49
Accrued expenses	(249		)	(222		)
Foreign currency forwards not designated as hedges:
Other current assets	239			114
Accrued expenses	(343		)	(196		)
Foreign currency forwards, net	$	(138	)	$	(255	)

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PROPERTY, PLANT AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2016

Property, Plant and Equipment [Abstract]

Schedule of components of property, plant and equipment, net

Property, plant and equipment consists of the following (in thousands): 

	March 31, 2016			December 31, 2015
Land, buildings and improvements	$	84,159		$	82,201
Machinery, equipment and fixtures	79,274			79,176
Office furniture, equipment and vehicles	22,787			22,689
Construction in progress	201			238
	186,421			184,304
Accumulated depreciation	(124,109		)	(122,279		)
Property, plant and equipment, net	$	62,312		$	62,025

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GOODWILL AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of detail and activity of goodwill by segment

Detail and activity of goodwill by segment is presented below (in thousands):

	MMS			ATA			Total
Goodwill	$	32,434		$	6,620		$	39,054
Accumulated impairment losses	(32,434		)	—			(32,434		)
Balance at December 31, 2015	—			6,620			6,620
Goodwill	32,434			6,620			39,054
Currency translation adjustments	—			(1		)	(1		)
Accumulated impairment losses	(32,434		)	—			(32,434		)
Balance at March 31, 2016	$	—		$	6,619		$	6,619

Summary of the major components of intangible assets other than goodwill

The major components of intangible assets other than goodwill are as follows (in thousands):

	March 31, 2016			December 31, 2015
Gross amortizable intangible assets:
Technical know-how	$	12,959		$	12,956
Customer lists	9,009			9,011
Land rights	2,690			2,672
Patents, trade names, drawings, and other	4,353			4,393
Total gross amortizable intangible assets	29,011			29,032
Accumulated amortization:
Technical know-how	(6,988		)	(6,833		)
Customer lists	(1,424		)	(1,315		)
Land rights	(287		)	(271		)
Patents, trade names, drawings, and other	(3,389		)	(3,406		)
Total accumulated amortization	(12,088		)	(11,825		)
Amortizable intangible assets, net	16,923			17,207
Indefinite lived intangible assets:
Trade names	10,969			10,811
Intangible assets other than goodwill, net	$	27,892		$	28,018

Finite-lived Intangible Assets Amortization Expense [Table Text Block]

Amortization expense related to the definite-lived intangible assets are as follows (in thousands):

	Three Months Ended   March 31,
	2016		2015
Amortization expense	$	320	$	451

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WARRANTIES (Tables)

3 Months Ended

Mar. 31, 2016

Product Warranties Disclosures [Abstract]

Schedule of reconciliation of changes in product warranty accrual included in accrued expenses

A reconciliation of the changes in the product warranty accrual, which is included in "Accrued expenses" in the Consolidated Balance Sheets, is as follows (in thousands):

	Three Months Ended   March 31,
	2016			2015
Balance at the beginning of period	$	3,802		$	3,891
Warranties issued	373			969
Warranty settlement costs	(590		)	(1,002		)
Changes in accruals for pre-existing warranties	2			(13		)
Currency translation adjustments	(66		)	19
Balance at the end of period	$	3,521		$	3,864

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RESTRUCTURING CHARGES (Tables)

3 Months Ended

Mar. 31, 2016

Restructuring and Related Activities [Abstract]

Summary of Cost Incurred and Expected to be Incurred and the Restructuring Reserve

Restructuring charges are included in the "Restructuring " line item in the Consolidated Statements of Operations. The table below presents the total costs expected to be incurred in connection with the Program, the amount of costs that have been recognized during the three months ended March 31, 2016 and the cumulative costs recognized to date by the Program (in thousands):

	Total Costs Expected to be Incurred		Cost Recognized for Three Months Ended March 31, 2016		Cumulative Costs Recognized to Date
MMS Segment:
Employee termination costs	$	255	$	—	$	255
Total MMS Segment	255		—		255
ATA Segment:
Employee termination costs	3,358		200		3,245
Facility exit costs	605		—		—
Other related costs	274		—		258
Total ATA Segment	4,237		200		3,503
Total:
Employee termination costs	3,613		200		3,500
Facility exit costs	605		—		—
Other related costs	274		—		258
Total Company	$	4,492	$	200	$	3,758

The amounts accrued associated with the Program are included in "Accrued expenses" and "Pension and postretirement liabilities" in the Consolidated Balance Sheets. A rollforward of the accrued restructuring costs is presented below (in thousands):

	Segment						Total
	MMS			ATA
Balance at December 31, 2015	$	167		$	1,242		$	1,409
Restructuring charges:
Employee termination costs	—			200			200
Total restructuring charges	—			200			200
Cash expenditures	(5		)	(831		)	(836		)
Foreign currency translation adjustment	—			43			43
Balance at March 31, 2016	$	162		$	654		$	816

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PENSION AND POSTRETIREMENT PLANS (Tables)

3 Months Ended

Mar. 31, 2016

Pension and Other Postretirement Benefit Expense [Abstract]

Summary of the components of net periodic pension benefit costs

A summary of the components of net periodic pension and postretirement benefit costs for the three months ended March 31, 2016 and 2015 is presented below (in thousands):

	Pension Benefits						Postretirement Benefits
	Three Months Ended   March 31,						Three Months Ended   March 31,
	2016			2015			2016			2015
Service cost	$	559		$	493		$	3		$	3
Interest cost	1,672			1,673			19			19
Expected return on plan assets	(2,309		)	(2,400		)	—			—
Amortization of prior service credit	(63		)	(80		)	—			—
Amortization of transition asset	(77		)	(21		)	—			—
Amortization of actuarial loss (gain)	943			778			(14		)	(13		)
Net periodic cost	$	725		$	443		$	8		$	9

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STOCK BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock based compensation expense

A summary of stock based compensation expense is as follows (in thousands):

	Three Months Ended   March 31,
	2016		2015
Restricted stock/unit awards (“RSA”)	$	65	$	111

Schedule of unrecognized compensation and the expected weighted-average recognition periods with respect to the outstanding RSAs

Unrecognized compensation and the expected weighted-average recognition periods with respect to the outstanding RSAs and PSIs as of March 31, 2016 and December 31, 2015, are as follows:

	March 31, 2016				December 31, 2015
	RSAs		PSIs		RSAs		PSIs
Unrecognized compensation cost (in thousands)	$	275	$	563	$	349	$	1,192
Expected weighted-average recognition period for unrecognized compensation    cost (in years)	1.12		1.84		1.20		1.16

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

3 Months Ended

Mar. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of changes in accumulated other comprehensive income (loss) (AOCI) by component

Changes in AOCI by component for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

	Three Months Ended March 31, 2016
	Foreign currency translation adjustments			Retirement plans related adjustments			Unrealized gain (loss) on cash flow hedges			Accumulated other comprehensive loss
Beginning balance, net of tax	$	20,529		$	(69,100	)	$	(142	)	$	(48,713	)
Other comprehensive income before reclassifications	3,739			(1,062		)	212			2,889
Less (loss) income reclassified from AOCI	—			(789		)	47			(742		)
Net other comprehensive income	3,739			(273		)	165			3,631
Income taxes	(44		)	(152		)	19			(177		)
Ending balance, net of tax	$	24,312		$	(69,221	)	$	4		$	(44,905	)

	Three Months Ended March 31, 2015
	Foreign currency translation adjustments		Retirement plans related adjustments			Unrealized gain (loss) on cash flow hedges			Accumulated other comprehensive loss
Beginning balance, net of tax	$	25,913	$	(64,570	)	$	(144	)	$	(38,801	)
Other comprehensive (loss) income before reclassifications	1,332		(153		)	493			1,672
Less income (loss) reclassified from AOCI	—		(664		)	118			(546		)
Net other comprehensive (loss) income	1,332		511			375			2,218
Income taxes	1,155		(45		)	54			1,164
Ending balance, net of tax	$	26,090	$	(64,014	)	$	177		$	(37,747	)

Schedule of reclassification out of AOCI

Details about reclassification out of AOCI for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

	Three Months Ended   March 31,						Affected line item on the Consolidated Statements of Operations
Details of AOCI components	2016			2015
Unrealized (loss) gain on cash flow hedges:
	$	76		$	129		Sales
	(29		)	(11		)	Other (income) expense, net
	47			118			Total before tax
	7			21			Income taxes
	$	54		$	139		Net of tax
Retirement plans related adjustments:
Amortization of prior service credit	$	63		$	80		(a)
Amortization of transition asset	77			21			(a)
Amortization of actuarial loss	(929		)	(765		)	(a)
	(789		)	(664		)	Total before tax
	83			48			Income taxes
	$	(706	)	$	(616	)	Net of tax

____________________

(a)  These AOCI components are included in the computation of net periodic pension and post retirement costs. See Note 11. "Pension and Postretirement Plans" for details.

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EARNINGS (LOSS) PER SHARE (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Schedule of the basis of the earnings per share computation

The following table presents the basis of the loss per share computation (in thousands):

	Three Months Ended   March 31,
	2016			2015
Numerator for basic and diluted loss per share:
Net loss applicable to common shareholders	$	(1,245	)	$	(1,408	)
Denominator for basic and diluted loss per share:
Denominator for basic and diluted loss per share — weighted average shares	12,797			12,742

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Schedule of financial results of reportable segments

Financial results for each reportable segment are as follows (in thousands):

	Three Months Ended March 31, 2016
	MMS			ATA		Inter-Segment Eliminations			Total
Sales	$	52,272		$	15,620	$	(70	)	$	67,822
Depreciation and amortization	1,427			538					1,965
Segment (loss) income	(1,156		)	1,854					698
Capital expenditures	291			145					436
Segment assets(1)	225,987			49,732					275,719

	Three Months Ended March 31, 2015
	MMS			ATA		Inter-Segment Eliminations			Total
Sales	$	52,976		$	16,227	$	(75	)	$	69,128
Depreciation and amortization	1,624			600					2,224
Segment (loss) income	(909		)	1,197					288
Capital expenditures	306			393					699
Segment assets(1)	236,762			53,612					290,374

____________________

⁽¹⁾  Segment assets primarily consist of restricted cash, accounts receivable, inventories, prepaid and other assets, property, plant and equipment, and intangible assets. Unallocated assets primarily include, cash and cash equivalents, corporate property, plant and equipment, deferred income taxes, and other non-current assets.

Schedule of reconciliation of segment income to consolidated income from operations before income taxes

A reconciliation of segment income to consolidated loss from operations before income taxes for the three months ended March 31, 2016 and 2015 are as follows (in thousands):

	Three Months Ended   March 31,
	2016			2015
Segment income	$	698		$	288
Unallocated corporate expense	(1,943		)	(1,704		)
Interest expense, net	(86		)	(140		)
Other unallocated expense	—			(1		)
Loss before income taxes	$	(1,331	)	$	(1,557	)

Schedule of reconciliation of segment assets to consolidated total assets

A reconciliation of segment assets to consolidated total assets follows (in thousands):

	March 31, 2016		December 31, 2015
Total segment assets	$	275,719	$	274,334
Unallocated assets	33,791		36,801
Total assets	$	309,510	$	311,135

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BASIS OF PRESENTATION (Details) $ in Millions	3 Months Ended
	Mar. 31, 2016 reportable_segment	Mar. 31, 2015 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable business segments | reportable_segment	2
Inventory valuation adjustment | $		$ 0.7

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Financial instruments
Cash and cash equivalents	$ 29,285	$ 32,774	$ 18,300	$ 16,293
Restricted cash	2,163	2,192
Notes payable	3,177	0
Notes payable, fair value	3,177	0
Foreign currency forward contracts, liabilities	138	255
Recurring | Level 1
Financial instruments
Cash and cash equivalents	29,285	32,774
Cash and cash equivalents, fair value	29,285	32,774
Restricted cash	2,163	2,192
Restricted cash, fair value	2,163	2,192
Recurring | Level 2
Financial instruments
Foreign currency forward contracts, assets	454	163
Variable interest rate debt	10,832	11,606
Variable interest rate debt, fair value	10,832	11,606
Foreign currency forward contracts, liabilities	$ 592	$ 418

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INVENTORIES (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials and purchased components	$ 35,075	$ 34,438
Work-in-process	35,965	33,682
Finished products	46,091	42,112
Inventories, net	$ 117,131	$ 110,232

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DERIVATIVE FINANCIAL INSTRUMENTS (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Derivative [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	$ (400)	$ 1,400
Foreign Exchange Contract [Member] | Cash flow hedges
Derivative [Line Items]
Price Risk Cash Flow Hedge Unrealized Gain (Loss) to be Reclassified During Next 12 Months	(50)
Notional Amount	35,200		$ 27,400
Not Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member]
Derivative [Line Items]
Notional Amount	$ 31,800		$ 38,500

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Foreign currency forwards designated as hedges - Other current assets	$ 215	$ 49
Foreign currency forwards designated as hedges - Accrued expenses	(249)	(222)
Foreign currency forwards not designated as hedges - Other current assets	239	114
Foreign currency forwards not designated as hedges - Accrued expenses	(343)	(196)
Foreign currency forward contracts, liabilities	$ (138)	$ (255)

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PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Property, plant and equipment
Property, plant and equipment, gross	$ 186,421	$ 184,304
Accumulated depreciation	(124,109)	(122,279)
Property, plant and equipment, net	62,312	62,025
Land, buildings and improvements
Property, plant and equipment
Property, plant and equipment, gross	84,159	82,201
Machinery, equipment and fixtures
Property, plant and equipment
Property, plant and equipment, gross	79,274	79,176
Office furniture, equipment and vehicles
Property, plant and equipment
Property, plant and equipment, gross	22,787	22,689
Construction in progress
Property, plant and equipment
Property, plant and equipment, gross	$ 201	$ 238

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GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Summary of goodwill amount
Goodwill	$ 39,054	$ 39,054
Accumulated impairment losses	(32,434)	(32,434)
Balance at December 31, 2015	6,620
Accumulated impairment losses	(1)
Balance at March 31, 2016	6,619
MMS
Summary of goodwill amount
Goodwill	32,434	32,434
Accumulated impairment losses	(32,434)	(32,434)
Balance at December 31, 2015	0
Accumulated impairment losses	0
Balance at March 31, 2016	0
ATA
Summary of goodwill amount
Goodwill	6,620	6,620
Accumulated impairment losses	0	$ 0
Balance at December 31, 2015	6,620
Accumulated impairment losses	(1)
Balance at March 31, 2016	$ 6,619

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GOODWILL AND INTANGIBLE ASSETS (Details 2) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 29,011	$ 29,032
Finite-Lived Intangible Assets, Accumulated Amortization	(12,088)	(11,825)
Finite-Lived Intangible Assets, Net	16,923	17,207
Other intangible assets, net	27,892	28,018
Technical Know How [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	12,959	12,956
Finite-Lived Intangible Assets, Accumulated Amortization	(6,988)	(6,833)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	9,009	9,011
Finite-Lived Intangible Assets, Accumulated Amortization	(1,424)	(1,315)
Land Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	2,690	2,672
Finite-Lived Intangible Assets, Accumulated Amortization	(287)	(271)
Patents, trade names, drawings, and other [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	4,353	4,393
Finite-Lived Intangible Assets, Accumulated Amortization	(3,389)	(3,406)
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	$ 10,969	$ 10,811

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GOODWILL AND INTANGIBLE ASSETS (Details 3) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of Intangible Assets	$ 320	$ 451

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WARRANTIES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Changes in product warranty accrual
Balance at the beginning of period	$ 3,802	$ 3,891
Warranties issued	373	969
Warranty settlement costs	(590)	(1,002)
Changes in accruals for pre-existing warranties	2	(13)
Currency translation adjustments	(66)	19
Balance at the end of period	$ 3,521	$ 3,864

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RESTRUCTURING CHARGES (Details)	3 Months Ended
	Mar. 31, 2016 USD ($)
Restructuring and Related Activities [Abstract]
Annual pre-tax savings, generated from restructuring	$ 4,500,000.0

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RESTRUCTURING CHARGES (Cost Incurred and Expected to be Incurred) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	$ 4,492
Restructuring	200	$ 0
Cumulative Costs Incurred to Date	3,758
Employee termination costs
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	3,613
Restructuring	200
Cumulative Costs Incurred to Date	3,500
Facility exit costs
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	605
Restructuring	0
Cumulative Costs Incurred to Date	0
Other related costs
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	274
Restructuring	0
Cumulative Costs Incurred to Date	258
Operating segment | MMS
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	255
Restructuring	0
Cumulative Costs Incurred to Date	255
Operating segment | MMS | Employee termination costs
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	255
Restructuring	0
Cumulative Costs Incurred to Date	255
Operating segment | ATA
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	4,237
Restructuring	200
Cumulative Costs Incurred to Date	3,503
Operating segment | ATA | Employee termination costs
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	3,358
Restructuring	200
Cumulative Costs Incurred to Date	3,245
Operating segment | ATA | Facility exit costs
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	605
Restructuring	0
Cumulative Costs Incurred to Date	0
Operating segment | ATA | Other related costs
Restructuring Cost and Reserve [Line Items]
Total Costs Expected to be Incurred	274
Restructuring	0
Cumulative Costs Incurred to Date	$ 258

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RESTRUCTURING CHARGES (Restructuring Reserve) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Restructuring Reserve [Roll Forward]
Balance at December 31, 2015	$ 1,409
Restructuring	200	$ 0
Cash expenditures	(836)
Foreign currency translation adjustment	43
Balance at March 31, 2016	816
Employee termination costs
Restructuring Reserve [Roll Forward]
Restructuring	200
Other related costs
Restructuring Reserve [Roll Forward]
Restructuring	0
Operating segment | MMS
Restructuring Reserve [Roll Forward]
Balance at December 31, 2015	167
Restructuring	0
Cash expenditures	(5)
Foreign currency translation adjustment	0
Balance at March 31, 2016	162
Operating segment | MMS | Employee termination costs
Restructuring Reserve [Roll Forward]
Restructuring	0
Operating segment | ATA
Restructuring Reserve [Roll Forward]
Balance at December 31, 2015	1,242
Restructuring	200
Cash expenditures	(831)
Foreign currency translation adjustment	43
Balance at March 31, 2016	654
Operating segment | ATA | Employee termination costs
Restructuring Reserve [Roll Forward]
Restructuring	200
Operating segment | ATA | Other related costs
Restructuring Reserve [Roll Forward]
Restructuring	$ 0

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INCOME TAXES (Details) $ in Millions	3 Months Ended
	Mar. 31, 2016 USD ($)
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	6.50%
Uncertain income tax position	$ 2.1
Interest and penalties included in uncertain income tax position	0.1
Significant (Increase) Decrease in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change, Upper Bound (Deprecated 2015-01-31)	$ 1.3

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions	Mar. 31, 2016	Jan. 30, 2015
Commitments and Contingencies
Estimated life-cycle costs, minimum		$ 0.9
Estimated life-cycle costs, maximum		$ 5.0
Reserve for estimated life-cycle costs	$ 0.3
Minimum
Commitments and Contingencies
Loss contingency, entity portion of potential cost	0.1
Maximum
Commitments and Contingencies
Loss contingency, entity portion of potential cost	$ 0.7

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PENSION AND POSTRETIREMENT PLANS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Pension Benefits
Components of net periodic benefit cost (credit)
Service cost	$ 559	$ 493
Interest cost	1,672	1,673
Expected return on plan assets	(2,309)	(2,400)
Amortization of prior service credit	(63)	(80)
Amortization of transition asset	(77)	(21)
Amortization of loss (gain)	943	778
Net periodic cost	725	443
Postretirement Benefits
Components of net periodic benefit cost (credit)
Service cost	3	3
Interest cost	19	19
Expected return on plan assets	0	0
Amortization of prior service credit	0	0
Amortization of transition asset	0	0
Amortization of loss (gain)	(14)	(13)
Net periodic cost	$ 8	$ 9

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STOCK BASED COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Restricted stock/units awards
Stock-based compensation
Stock based compensation expenses	$ 65	$ 111
Unrecognized compensation and expected weighted-average recognition period
Unrecognized compensation cost	$ 275	$ 349
Expected weighted-average recognition period for unrecognized compensation cost (in years)	1 year 1 month 14 days	1 year 2 months 13 days
Performance share incentives
Unrecognized compensation and expected weighted-average recognition period
Unrecognized compensation cost	$ 563	$ 1,192
Expected weighted-average recognition period for unrecognized compensation cost (in years)	1 year 10 months 4 days	1 year 1 month 28 days

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Changes in AOCI by component
Beginning balance, net of tax	$ (48,713)	$ (38,801)
Other comprehensive (loss) income before reclassifications	2,889	1,672
Less income reclassified from AOCI	(742)	(546)
Net other comprehensive (loss) income	3,631	2,218
Income taxes	177	(1,164)
Ending balance, net of tax	(44,905)	(37,747)
Foreign currency translation adjustments
Changes in AOCI by component
Beginning balance, net of tax	20,529	25,913
Other comprehensive (loss) income before reclassifications	3,739	1,332
Less income reclassified from AOCI	0	0
Net other comprehensive (loss) income	3,739	1,332
Income taxes	(44)	1,155
Ending balance, net of tax	24,312	26,090
Retirement plans related adjustments
Changes in AOCI by component
Beginning balance, net of tax	(69,100)	(64,570)
Other comprehensive (loss) income before reclassifications	(1,062)	(153)
Less income reclassified from AOCI	(789)	(664)
Net other comprehensive (loss) income	(273)	511
Income taxes	(152)	(45)
Ending balance, net of tax	(69,221)	(64,014)
Unrealized gain (loss) on cash flow hedges
Changes in AOCI by component
Beginning balance, net of tax	(142)	(144)
Other comprehensive (loss) income before reclassifications	212	493
Less income reclassified from AOCI	47	118
Net other comprehensive (loss) income	165	375
Income taxes	19	54
Ending balance, net of tax	$ 4	$ 177

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Reclassification out of AOCI
Sales		$ 67,822	$ 69,128
Other expense, net		91	(65)
Income from continuing operations before income taxes		(1,331)	(1,557)
Income taxes		86	149
Net loss applicable to common shareholders		(1,245)	(1,408)
Unrealized gain (loss) on cash flow hedges | Amount reclassified from AOCI
Reclassification out of AOCI
Sales		76	129
Other expense, net		(29)	(11)
Income from continuing operations before income taxes		47	118
Income taxes		7	21
Net loss applicable to common shareholders		54	139
Retirement plans related adjustments | Amount reclassified from AOCI
Reclassification out of AOCI
Amortization of prior service credit	[1]	63	80
Amortization of transition asset	[1]	77	21
Amortization of actuarial loss	[1]	(929)	(765)
Income from continuing operations before income taxes		(789)	(664)
Income taxes		83	48
Net loss applicable to common shareholders		$ (706)	$ (616)

[1] These AOCI components are included in the computation of net periodic pension and post retirement costs. See Note 11. "Pension and Postretirement Plans" for details.

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EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Earnings per share
Net loss applicable to common shareholders	$ (1,245)	$ (1,408)
Denominator for basic and diluted loss per share:
Denominator for basic (loss) earnings per share - weighted average shares (in shares)	12,797,000	12,742,000
Stock Options and Restricted Stock
Denominator for basic and diluted loss per share:
Anti-dilutive stock-based awards excluded from calculation of diluted earnings per share (in shares)	100,365	126,004
Stock Compensation Plan
Denominator for basic and diluted loss per share:
Anti-dilutive stock-based awards excluded from calculation of diluted earnings per share (in shares)		16,746

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SEGMENT INFORMATION (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016		Mar. 31, 2015		Dec. 31, 2015
Financial results of reportable segments
Sales		$ 67,822		$ 69,128
Depreciation and amortization		2,017		2,338
Segment (loss) income		(1,245)		(1,417)
Capital expenditures		436		699
Segment assets		309,510				$ 311,135
Reconciliation of segment income to consolidated income before income taxes
Loss before income taxes		(1,331)		(1,557)
Operating segment
Financial results of reportable segments
Sales		67,822		69,128
Depreciation and amortization		1,965		2,224
Segment (loss) income		698		288
Capital expenditures		436		699
Segment assets		275,719	[1]	290,374	[1]	274,334
Reconciliation of segment income to consolidated income before income taxes
Unallocated corporate expense		(1,943)		(1,704)
Interest expense, net		86		140
Other unallocated income (expense)		0		(1)
Loss before income taxes		(1,331)		(1,557)
Operating segment | MMS
Financial results of reportable segments
Sales		52,272		52,976
Depreciation and amortization		1,427		1,624
Segment (loss) income		(1,156)		(909)
Capital expenditures		291		306
Segment assets	[1]	225,987		236,762
Operating segment | ATA
Financial results of reportable segments
Sales		15,620		16,227
Depreciation and amortization		538		600
Segment (loss) income		1,854		1,197
Capital expenditures		145		393
Segment assets	[1]	49,732		53,612
Inter-Segment Eliminations
Financial results of reportable segments
Sales		(70)		$ (75)
Unallocated assets
Financial results of reportable segments
Segment assets		33,791				36,801
Reconciliation of segment income to consolidated income before income taxes
Cash		$ 29,300				$ 32,800

[1] Segment assets primarily consist of restricted cash, accounts receivable, inventories, prepaid and other assets, property, plant and equipment, and intangible assets. Unallocated assets primarily include, cash and cash equivalents, corporate property, plant and equipment, deferred income taxes, and other non-current assets.

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NEW ACCOUNTING STANDARDS NEW ACCOUNTING STANDARDS (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Long-term Debt, Current Maturities
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net	$ 70
Long-term Debt, Excluding Current Maturities
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net		$ 80
Other Current Assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net	60
Other Noncurrent Assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net	$ 80
Accounting Standards Update 2015-03 | Long-term Debt, Current Maturities
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net		70
Accounting Standards Update 2015-03 | Long-term Debt, Excluding Current Maturities
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net		90
Accounting Standards Update 2015-03 | Other Current Assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net		(70)
Accounting Standards Update 2015-03 | Other Noncurrent Assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net		$ (90)