Hirsch International Corporation (NASDAQ: HRSH), the single source provider to the embroidery industry, today announced disappointing results for the second quarter, with a net loss of £1.7m.

Revenues were $18.5m compared to $20.4m in the second quarter of the prior year. The net loss for the quarter was $1.7m or $0.19 per diluted share versus a net loss of $1.4m or $0.15 per diluted share for the same period last year.

For the six month period, revenues were $37.3m compared to $45.8m in the first half of fiscal 2000. The net loss for the six month period was $2.7m or $0.29 per diluted share, versus net loss of $4.3m or $0.45 per diluted share for the same period last year, as adjusted for the effect of an accounting change.

The decline in revenue reflects continuing lower demand for embroidery machines and software in the US domestic market, and tighter credit controls at HAPL Leasing.

"Obviously, we are impatient with the pace of our turnaround efforts," said Henry Arnberg, chairman and chief executive officer of Hirsch. "However, we are beginning to see evidence of progress. Our software division, Pulse Microsystems, is developing a steady stream of new products that are gaining market acceptance, and its sales outside the USA continue to increase. Our Building Blocks division is seeing high levels of interest in our proprietary hoopless clamp product line.

"We also are pleased with the continued progress of our Hometown Threads division. During the quarter we opened one new location and closed one old location in Wal*Mart stores, fine tuning the turnkey business concept. We are optimistic about the future of this concept, as well as potential franchising opportunities.

"In our core business, we are addressing the decline in revenues head on. For example, by year end we will begin marketing new, quieter, and faster Tajima embroidery machines. We expect this new generation of machines to generate significant customer interest."

CFO Richard Richer explained: "We have made very significant progress in reducing inventory levels, which have decreased by more than 30 per cent since January 31. As a result, cash flow from operations for the first half of the fiscal year is $7.6m versus $0.9m in the prior year. We continue to move ahead with our efforts to streamline operations and return the corporation to profitability."

About Hirsch International
Hirsch International Corp is the leading single source provider to the embroidery industry. The company supplies electronic computer-controlled embroidery machinery and related products and services. Hirsch offers a line of single-head and multi-head embroidery machines, application software, embroidery supplies and accessories, and flexible financing options.