Hirsch International Corp. (NASDAQ: HRSH, http://www.hirschinternational.com) today announced financial results for the third quarter ended September 30, 2008.

For the third quarter of 2008, net sales were $10.6 million, compared to $11.9 million in the third quarter of 2007. Net loss in the third quarter of 2008 was $2.0 million, or $0.21 per diluted share, compared to a net loss of $119,000, or $0.01 per diluted share, in the prior year.

Gross profit for the third quarter of 2008 was $3.2 million, or 30% of net sales, compared to $4.5 million, or 38% of net sales, in the third quarter of 2007 and operating expenses were $5.2 million versus $4.7 million in the prior year period.

For the nine-month period ended September 30, 2008, net sales were $32.4 million, compared to $38.1 million in the prior year period. The Company reported a net loss of $3.6 million, or $0.38 per diluted share, for the first nine months of 2008, compared to net income for the first nine months of 2007 of $1.5 million, or $0.15 per diluted share. The three month and nine month results include sales of U.S. Screen of $1.4 million with a net loss of $0.6 million or $0.07 per diluted share. U.S. Screen was acquired on August 4, 2008.

Management Comment

Paul Gallagher, President and CEO of the Company, stated, "Overall economic conditions continued to negatively affect demand for our products for the first three quarters of 2008. The weakness was most evident in core embroidery product sales which decreased $8 million this year. This decrease was partially offset by continued market penetration of screen and digital print products. In addition to the market weakness, we have seen severe price and margin pressure resulting from the continued weakness in the US dollar as compared to the Japanese Yen. Year-to-date, 44% of our gross margin dollar deterioration was due to lower overall margins resulting from the increased cost of products and severe competitive sales price pressure. The remaining reduction resulted from lower sales volume.”

Mr. Gallagher added, "As a response to the continued weakness in the economy and our customer’s reluctance to buy equipment, in September, we completed an overall restructuring and staff reduction that has lowered our annualized level of operating expense by just over $2.5 million while maintaining our high level customer support and market position. Today our people are more experienced, better trained and managed, and with recent investments in systems and technology, well equipped to service the marketplace and support our broad customer base. We expect to benefit later this year and into 2009 from both our continued growth in non-embroidery products and the reduced overhead resulting from the restructuring. Meanwhile, we believe that our strong balance sheet puts us in a good position to get through the current economic crisis. However, we are unable to predict the severity or length of the current economic conditions or their impact on our customers.”

Mr. Gallagher concluded, "The overall decorated and graphic apparel marketplace appears to be weathering the storm reasonably well with only modest reductions in overall market volume. However, the uncertainties in the economy have influenced both existing and prospective customers to delay their purchases of new decorated apparel equipment. In the face of these continued market pressures, we remain committed to provide the industry with the most innovative and highest quality products, and the most advanced customer education and support systems, while taking whatever steps necessary to maintain our market leadership. And although we cannot predict the timing of a return to normal business conditions, we believe we are today in a much better position to get through today's challenges and to take advantage of an eventual upturn in our markets."

About Hirsch International Corp.

Hirsch is a leading provider of equipment and education and support services to the graphic and decorated apparel industry. The Company exclusively represents the decorated apparel industry’s leading brands including Tajima embroidery equipment, MHM screen printing equipment, SEIT textile bridge lasers, Pulse Microsystems digitizing and design software and now Kornit and Mimaki digital garment printers, and through it’s US Screen and Inkjet Technologies subsidiary; T-Jet digital garment printers and the full line of screenprint and digital print support products. Hirsch’s and US Screen’s customer groups include: a wide range of contract manufacturers that outsource their embellishment requirements; manufacturers who use embroidery, screenprinting, laser etching or digital printing to embellish their apparel and fashion accessories; promotional products, uniform, and sportswear companies; retail stores; and graphic and decorated apparel entrepreneurs servicing the athletic apparel, corporate logo-wear, and advertising specialties markets.

The Company is led by a strong and experienced management team focused on continuing to grow its core business through sound acquisitions of products and processes, as well as through related business ventures in which the Company can build and maximize stockholder value. The Company was founded in 1968 and is headquartered in Hauppauge, N.Y.

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