0001558370-24-009007 | 10-Q | XBRL Viewer

ACCOUNTS RECEIVABLE (Details) $ in Millions	Apr. 30, 2024 USD ($)
ACCOUNTS RECEIVABLE
Allowance for Doubtful Accounts Receivable	$ 1.5

Insider Trading Arrangements	6 Months Ended
Insider Trading Arrangements	Apr. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Apr. 30, 2024

FINANCIAL INSTRUMENTS

Schedule of fair value hierarchy for financial assets and liabilities measured at fair value

In accordance with this guidance, the following table represents the fair value hierarchy for our financial assets and liabilities measured at fair value as of April 30, 2024 and October 31, 2023 (in thousands):



	Assets				Liabilities
	April 30, 2024		October 31, 2023		April 30, 2024		October 31, 2023
Level 1
Mutual Funds	$	2,648	$	2,217	$	—	$	—

Level 2
Derivatives	$	365	$	740	$	2,578	$	1,821

FINANCIAL INSTRUMENTS - Additional Information (Details) - USD ($) $ in Millions	Apr. 30, 2024	Oct. 31, 2023
FINANCIAL INSTRUMENTS
Notional amount of contracts	$ 90.0	$ 97.8

SEGMENT INFORMATION (Tables)

6 Months Ended

Apr. 30, 2024

SEGMENT INFORMATION

Schedule of Net Sales and Service Fees by Product Category

The following table sets forth sales and service fees by product group and services for the three and six months ended April 30, 2024 and 2023 (in thousands):


	Three Months Ended April 30,				Six Months Ended April 30,
	2024		2023		2024		2023
Computerized Machine Tools	$	35,213	$	43,929	$	70,985	$	89,346
Computer Control Systems and Software ^†		586		614		1,169		1,138
Service Parts		7,211		7,244		13,854		13,935
Service Fees		2,162		2,032		4,223		4,082
Total	$	45,172	$	53,819	$	90,231	$	108,501

^† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine tools.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss [Member]	Total
Balances at Oct. 31, 2022	$ 657	$ 63,635	$ 179,877	$ (21,525)	$ 222,644
Balances (in shares) at Oct. 31, 2022	6,566,994
Net Income (Loss)			1,707		1,707
Other comprehensive income				8,516	8,516
Exercise of common stock options	$ 1	269			270
Exercise of common stock options (in shares)	11,559
Stock-based compensation expense, net of taxes withheld for vested restricted shares	$ 5	1,206			1,211
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares)	49,874
Stock repurchases, net of excise tax payable	$ (17)	(4,592)			(4,609)
Stock repurchases, net of excise tax payable (in shares)	(166,289)
Dividends paid			(2,034)		(2,034)
Balances at Apr. 30, 2023	$ 646	60,518	179,550	(13,009)	227,705
Balances (in shares) at Apr. 30, 2023	6,462,138
Balances at Jan. 31, 2023	$ 659	63,621	180,212	(11,642)	232,850
Balances (in shares) at Jan. 31, 2023	6,587,694
Net Income (Loss)			377		377
Other comprehensive income				(1,367)	(1,367)
Stock-based compensation expense, net of taxes withheld for vested restricted shares	$ 1	749			750
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares)	13,914
Stock repurchases, net of excise tax payable	$ (14)	(3,852)			(3,866)
Stock repurchases, net of excise tax payable (in shares)	(139,470)
Dividends paid			(1,039)		(1,039)
Balances at Apr. 30, 2023	$ 646	60,518	179,550	(13,009)	227,705
Balances (in shares) at Apr. 30, 2023	6,462,138
Balances at Oct. 31, 2023	$ 646	61,665	180,124	(20,204)	222,231
Balances (in shares) at Oct. 31, 2023	6,462,138
Net Income (Loss)			(5,570)		(5,570)
Other comprehensive income				513	513
Stock-based compensation expense, net of taxes withheld for vested restricted shares	$ 6	490			496
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares)	61,121
Dividends paid			(2,093)		(2,093)
Balances at Apr. 30, 2024	$ 652	62,155	172,461	(19,691)	215,577
Balances (in shares) at Apr. 30, 2024	6,523,259
Balances at Jan. 31, 2024	$ 651	61,936	177,444	(15,474)	224,557
Balances (in shares) at Jan. 31, 2024	6,506,033
Net Income (Loss)			(3,922)		(3,922)
Other comprehensive income				(4,217)	(4,217)
Stock-based compensation expense, net of taxes withheld for vested restricted shares	$ 1	219			220
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares)	17,226
Dividends paid			(1,061)		(1,061)
Balances at Apr. 30, 2024	$ 652	$ 62,155	$ 172,461	$ (19,691)	$ 215,577
Balances (in shares) at Apr. 30, 2024	6,523,259

LEASES (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
LEASES (Details) - USD ($) $ in Millions	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
LEASES
Operating lease expense	$ 1.5	$ 1.3	$ 2.8	$ 2.6
Weighted-average remaining term	4 years 3 months 18 days		4 years 3 months 18 days
Weighted-average discount rate	3.50%		3.50%
Capitalized lease costs	$ 0.0		$ 0.0
Minimum
LEASES
Lease term (in years)	2 years		2 years
Maximum
LEASES
Lease term (in years)	5 years		5 years

GENERAL

6 Months Ended

Apr. 30, 2024

BUSINESS OPERATIONS

GENERAL

1. GENERAL

The unaudited Condensed Consolidated Financial Statements include the accounts of Hurco Companies, Inc. and its consolidated subsidiaries. As used in this report, the words “we”, “us”, “our”, “Hurco” and the “Company” refer to Hurco Companies, Inc. and its consolidated subsidiaries.

We design, manufacture, and sell computerized (i.e., Computer Numeric Control (“CNC”)) machine tools, consisting primarily of vertical machining centers (mills) and turning centers (lathes), to companies in the metal cutting industry through a worldwide sales, service, and distribution network. Although most of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, automation integration equipment and solutions for job shops, software options, control upgrades, accessories and replacement parts for our products, as well as customer service, training, and applications support.

The condensed consolidated financial information as of April 30, 2024 and for the three and six months ended April 30, 2024 and April 30, 2023 is unaudited. However, in our opinion, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, results of operations, changes in shareholders’ equity and cash flows for and at the end of the interim periods. We suggest that you read these Condensed Consolidated Financial Statements in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended October 31, 2023.

EARNINGS PER SHARE (Tables)

6 Months Ended

Apr. 30, 2024

EARNINGS PER SHARE

Schedule of computation of basic and diluted net income (loss) per share


	Three Months Ended								Six Months Ended
	April 30,								April 30,
	2024				2023				2024				2023
	Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic		Diluted
Net (loss) income	$	(3,922)	$	(3,922)	$	377	$	377	$	(5,570)	$	(5,570)	$	1,707	$	1,707
Undistributed earnings allocated to participating shares		—		—		(5)		(5)		—		—		(24)		(24)
Net (loss) income applicable to common shareholders	$	(3,922)	$	(3,922)	$	372	$	372	$	(5,570)	$	(5,570)	$	1,683	$	1,683

Weighted average shares outstanding		6,518		6,518		6,486		6,486		6,500		6,500		6,536		6,536
Stock options and contingently issuable securities		—		—		—		30		—		—		—		34
		6,518		6,518		6,486		6,516		6,500		6,500		6,536		6,570
(Loss) income per share	$	(0.61)	$	(0.61)	$	0.06	$	0.06	$	(0.86)	$	(0.86)	$	0.26	$	0.26

FINANCIAL INSTRUMENTS - Fair value hierarchy (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Apr. 30, 2024	Oct. 31, 2023
Fair Value, Inputs, Level 1
Assets
Mutual Funds	$ 2,648	$ 2,217
Liabilities
Mutual Funds	0	0
Fair Value, Inputs, Level 2
Assets
Derivatives	365	740
Liabilities
Derivatives	$ 2,578	$ 1,821

INCOME TAXES (Details) - USD ($)	3 Months Ended		6 Months Ended
INCOME TAXES (Details) - USD ($)	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023	Oct. 31, 2023
INCOME TAXES
(Benefit) provision for income taxes	$ 40,000	$ 291,000	$ (561,000)	$ 901,000
Effective tax rate			9.00%	35.00%
Unrecognized tax benefits	189,000		$ 189,000		$ 182,000
Unrecognized tax benefits, interest accrued	$ 51,000		$ 51,000

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

EARNINGS PER SHARE

6 Months Ended

Apr. 30, 2024

EARNINGS PER SHARE

EARNINGS PER SHARE

5. EARNINGS PER SHARE

Per share results have been computed based on the average number of common shares outstanding over the period in question. The computation of basic and diluted net income (loss) per share is determined using net income (loss) applicable to common shareholders as the numerator and the number of shares outstanding as the denominator as follows (in thousands, except per share amounts):


	Three Months Ended								Six Months Ended
	April 30,								April 30,
	2024				2023				2024				2023
	Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic		Diluted
Net (loss) income	$	(3,922)	$	(3,922)	$	377	$	377	$	(5,570)	$	(5,570)	$	1,707	$	1,707
Undistributed earnings allocated to participating shares		—		—		(5)		(5)		—		—		(24)		(24)
Net (loss) income applicable to common shareholders	$	(3,922)	$	(3,922)	$	372	$	372	$	(5,570)	$	(5,570)	$	1,683	$	1,683

Weighted average shares outstanding		6,518		6,518		6,486		6,486		6,500		6,500		6,536		6,536
Stock options and contingently issuable securities		—		—		—		30		—		—		—		34
		6,518		6,518		6,486		6,516		6,500		6,500		6,536		6,570
(Loss) income per share	$	(0.61)	$	(0.61)	$	0.06	$	0.06	$	(0.86)	$	(0.86)	$	0.26	$	0.26

LEASES - Maturities of undiscounted cash flows of lease commitments (Details) $ in Thousands	Apr. 30, 2024 USD ($)
LEASES
Remainder of 2024	$ 2,239
2025	3,272
2026	2,409
2027	1,916
2028	1,637
2029 and thereafter	1,319
Total	12,792
Less: Imputed interest	(945)
Present value of operating lease liabilities	$ 11,847

SEGMENT INFORMATION (Narrative) (Details)	6 Months Ended
SEGMENT INFORMATION (Narrative) (Details)	Apr. 30, 2024 segment
SEGMENT INFORMATION
Number of operating segments	1

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Fair value of derivative instruments (Details) - USD ($) $ in Thousands	Apr. 30, 2024	Oct. 31, 2023
Derivatives, Fair Value [Line Items]
Derivative assets	$ 365	$ 740
Derivative liabilities	2,578	1,821
Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Derivative assets	186	363
Derivative liabilities	955	1,232
Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Derivative assets	179	377
Derivative liabilities	$ 1,623	$ 589

ACCOUNTS RECEIVABLE

6 Months Ended

Apr. 30, 2024

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE

6. ACCOUNTS RECEIVABLE

Accounts receivable is net of provision for credit losses of $1.5 million as of each of April 30, 2024 and October 31, 2023.

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Apr. 30, 2024	Oct. 31, 2023
CONSOLIDATED BALANCE SHEETS
Preferred stock, no par value	$ 0	$ 0
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common Stock, No Par Value	$ 0	$ 0
Common stock, stated value per share	$ 0.10	$ 0.10
Common stock, shares authorized	12,500,000	12,500,000
Common stock, shares issued	6,636,473	6,553,673
Common stock, shares outstanding	6,523,259	6,462,138

INVENTORIES

6 Months Ended

Apr. 30, 2024

INVENTORIES

INVENTORIES

7. INVENTORIES

Inventories, priced at the lower of cost (first-in, first-out method) or net realizable value, are summarized below (in thousands):


	April 30,		October 31,
	2024		2023
Purchased parts and sub–assemblies, net	$	38,778	$	37,161
Work–in–process		15,628		16,217
Finished goods		109,400		104,574
Inventories, net	$	163,806	$	157,952

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023	Oct. 31, 2023
Derivative financial instruments:
Notional principal of foreign exchange contracts	$ 90,000		$ 90,000		$ 97,800
Gains or (losses) from hedges deemed ineffective			0	$ 0
Gains or (losses) from hedges deemed ineffective	0	$ 0
Designated as Hedging Instrument
Derivative financial instruments:
Unrealized gain (loss), net of tax, to be reclassified in next 12 months	600		600
Forward Contracts
Derivative financial instruments:
Gain (loss), net of tax, related to cash flow hedged	600		600
Forward Contracts \| Designated as Hedging Instrument
Derivative financial instruments:
Notional principal of foreign exchange contracts	3,000		3,000
Realized gain, net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss	1,200		1,200
Forward Contracts \| Not Designated as Hedging Instrument
Derivative financial instruments:
Notional principal of foreign exchange contracts	54,100		54,100
Euros \| Designated as Hedging Instrument
Derivative financial instruments:
Notional principal of foreign exchange contracts	8,700		8,700
Pounds Sterling \| Designated as Hedging Instrument
Derivative financial instruments:
Notional principal of foreign exchange contracts	4,400		4,400
New Taiwan Dollars [Member] \| Designated as Hedging Instrument
Derivative financial instruments:
Notional principal of foreign exchange contracts	$ 16,800		$ 16,800

REVENUE RECOGNITION

6 Months Ended

Apr. 30, 2024

REVENUE RECOGNITION

REVENUE RECOGNITION

2. REVENUE RECOGNITION

We design, manufacture, and sell computerized machine tools. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, automation integration equipment and solutions for job shops, software options, control upgrades, accessories and replacement parts for our products, as well as customer service, training, and applications support.

We recognize revenues from the sale of machine tools, components and accessories, and services and reflect the consideration to which we expect to be entitled. We record revenues based on a five-step model in accordance with Financial Accounting Standards Board (“FASB”) guidance codified in Accounting Standard Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). In accordance with ASC 606, we have defined contracts as agreements with our customers and distributors in the form of purchase orders, packing or shipping documents, invoices, and, periodically, verbal requests for components and accessories. For each contract, we identify our performance obligations, which are delivering goods or services, determine the transaction price, allocate the contract transaction price to each of the performance obligations (when applicable), and recognize the revenue when (or as) the performance obligation to the customer is fulfilled.

A good or service is transferred when the customer obtains control of that good or service. Our computerized machine tools are general purpose computer-controlled machine tools that are typically used in stand-alone operations. Prior to shipment, we test each machine to ensure the machine’s compliance with standard operating specifications. We deem that the customer obtains control upon delivery of the product and that obtaining control is not contingent upon contractual customer acceptance. Therefore, we recognize revenue from sales of our machine tool systems upon delivery of the product to the customer or distributor, which is normally at the time of shipment.

Depending upon geographic location, after shipment, a machine may be installed at the customer’s facility by a distributor, independent contractor, or by one of our service technicians. In most instances, where a machine is sold through a distributor, we have no installation involvement. If sales are direct or through sales agents, we will typically complete the machine installation, which consists of the reassembly of certain parts that were removed for shipping and the re-testing of the machine to ensure that it is performing within the standard operating specifications. We consider the machine installation process for our three-axis machines to be inconsequential and immaterial within the context of the contract. For our five-axis machines and automation systems that we install, we estimate the fair value of the installation performance obligation and recognize that installation revenue over the period of the installation process.

From time to time, and depending upon geographic location, we may provide training or freight services. We consider these services to be immaterial within the context of the contract, as the value of these services typically does not rise to a material level as a component of the total contract value. Service fees from maintenance contracts are deferred and recognized in earnings over the term of the contract and are generally sold on a stand-alone basis. Customer discounts and estimated product returns are considered variable consideration and are recorded as a reduction of revenue in the same period that the related sales are recorded. We have reviewed the overall sales transactions for variable consideration and have determined that these amounts are not significant.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Section 50
-Paragraph 12
-Subparagraph (b)
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-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

INVENTORIES (Details) - USD ($) $ in Thousands	Apr. 30, 2024	Oct. 31, 2023
INVENTORIES
Purchased parts and sub-assemblies	$ 38,778	$ 37,161
Work-in-process	15,628	16,217
Finished goods	109,400	104,574
Inventories, net	$ 163,806	$ 157,952

GUARANTEES AND PRODUCT WARRANTIES - Reconciliation of the changes in warranty reserve (Details) - USD ($) $ in Thousands	6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023
GUARANTEES AND PRODUCT WARRANTIES
Balance, beginning of period	$ 1,294	$ 1,426
Provision for warranties during the period	1,165	1,417
Charges to the reserve	(1,342)	(1,475)
Impact of foreign currency translation	4	67
Balance, end of period	$ 1,121	$ 1,435

EQUITY INCENTIVE PLAN (Tables)

6 Months Ended

Apr. 30, 2024

STOCK-BASED COMPENSATION

Schedule of reconciliation of our restricted stock, performance share and PSU activity and related information

A reconciliation of our restricted stock and PSU activity and related information for the six-month period ended April 30, 2024 is as follows:


		Weighted Average Grant
	Number of Shares	Date Fair Value
Unvested at October 31, 2023	318,317	$	28.27
Shares or units granted	185,850		21.31
Shares or units vested	(61,121)		27.90
Shares or units cancelled	(50,375)		27.97
Shares withheld	(14,579)		27.77
Unvested at April 30, 2024	378,092	$	24.97

CONTINGENCIES AND LITIGATION

6 Months Ended

Apr. 30, 2024

CONTINGENCIES AND LITIGATION

CONTINGENCIES AND LITIGATION

14. CONTINGENCIES AND LITIGATION

From time to time, we are involved in various claims and lawsuits arising in the normal course of business. Pursuant to applicable accounting rules, we accrue the minimum liability for each known claim when the estimated outcome is a range of possible loss and no one amount within that range is more likely than another. We maintain insurance policies for such matters, and we record insurance recoveries when we determine such recovery to be probable. We do not expect any of these claims, individually or in the aggregate, to have a material adverse effect on our consolidated financial position or results of operations. We believe that the ultimate resolution of claims for any losses will not exceed our insurance policy coverages.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Changes in components of accumulated other comprehensive loss (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
Derivative [Line Items]
Beginning Balance	$ (15,474)		$ (20,204)
Other comprehensive income (loss) before reclassifications	(4,624)		(106)
Reclassifications	407	$ (50)	619	$ (132)
Ending Balance	(19,691)		(19,691)
Foreign Currency Translation
Derivative [Line Items]
Beginning Balance	(13,485)		(17,985)
Other comprehensive income (loss) before reclassifications	(3,984)		516
Ending Balance	(17,469)		(17,469)
Cash Flow Hedging
Derivative [Line Items]
Beginning Balance	(1,989)		(2,219)
Other comprehensive income (loss) before reclassifications	(640)		(622)
Reclassifications	407		619
Ending Balance	$ (2,222)		$ (2,222)

- Definition

Amount, after tax, of accumulated increase (decrease) in equity from transaction and other event and circumstance from nonowner source.

+ References + Details

EQUITY INCENTIVE PLAN

6 Months Ended

Apr. 30, 2024

STOCK-BASED COMPENSATION

EQUITY INCENTIVE PLAN

4. EQUITY INCENTIVE PLAN

In March 2016, we adopted the Hurco Companies, Inc. 2016 Equity Incentive Plan (as amended, the “2016 Equity Plan”), which allows us to grant awards of stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards. The 2016 Equity Plan replaced the Hurco Companies, Inc. 2008 Equity Incentive Plan (the “2008 Equity Plan”) and is the only active plan under which equity awards may be made by us to our employees and non-employee directors. No further awards will be made under our 2008 Equity Plan. The total number of shares of our common stock that may be issued pursuant to awards under the 2016 Equity Plan was initially 856,048, which included 386,048 shares that remained available for future grants under the 2008 Equity Plan as of March 10, 2016, the date our shareholders approved the 2016 Equity Plan. On March 10, 2022, our shareholders approved the Amended and Restated Hurco Companies, Inc. 2016 Equity Incentive Plan, which, among other items, increased the aggregate number of shares that may be issued under the 2016 Equity Plan by 850,000 shares.

The Compensation Committee of our Board of Directors has the authority to determine the officers, directors, and key employees who will be granted awards under the 2016 Equity Plan; designate the number of shares subject to each award; determine the terms and conditions upon which awards will be granted; and prescribe the form and terms of award agreements. We have granted restricted shares and performance stock units under the 2016 Equity Plan that are currently outstanding. We previously granted stock options under the 2008 Equity Plan. No stock options remained outstanding as of April 30, 2024. The market value of a share of our common stock, for purposes of the 2016 Equity Plan, is the closing sale price as reported by the Nasdaq Global Select Market on the date in question or, if not a trading day, on the last preceding trading date.

On March 14, 2024, the Compensation Committee granted a total of 22,878 shares of time-based restricted stock to our non-employee directors. The restricted shares vest in full one year from the date of grant provided the recipient remains on the board of directors through that date. The grant date fair value of the restricted shares was based on the closing sales price of our common stock on the grant date, which was $20.98 per share.

On January 4, 2024, the Compensation Committee approved a long-term incentive compensation arrangement for our executive officers in the form of time-based restricted shares and performance stock units (“PSUs”) under the 2016 Equity Plan, which will be payable in shares of our common stock if earned and vested. The awards were approximately 25% time-based vesting and approximately 75% performance-based vesting. The three-year performance period for the PSUs is fiscal year 2024 through fiscal year 2026.

On that date, the Compensation Committee granted a total of 36,574 shares of time-based restricted stock to our executive officers. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $21.53 per share.

On January 4, 2024, the Compensation Committee also granted a total target number of 58,520 PSUs to our executive officers designated as “PSU – NI”. These PSUs were weighted as approximately 40% of the overall 2024 executive long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average net income over the three-year period of fiscal 2024-2026. Participants will have the ability to earn between 50% of the target number of the PSUs – NI for achieving threshold performance and 200% of the target number of the PSUs – NI for achieving maximum performance. The grant date fair value of the PSUs – NI was based on the closing sales price of our common stock on the grant date, which was $21.53 per PSU.

On January 4, 2024, the Compensation Committee also granted a total target number of 51,205 PSUs to our executive officers designated as “PSU –FCF”. These PSUs were weighted as approximately 35% of the overall 2024 executive long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average free cash flow over the three-year period of fiscal 2024-2026. Participants will have the ability to earn between 50% of the target number of the PSUs – FCF for achieving threshold performance and 200% of the target number of the PSUs – FCF for achieving maximum performance. The grant date fair value of the PSUs – FCF was based on the closing sales price of our common stock on the grant date, which was $21.53 per PSU.

On November 8, 2023, the Compensation Committee granted a total of 16,673 shares of time-based restricted stock to our non-executive employees. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $19.78 per share.

A reconciliation of our restricted stock and PSU activity and related information for the six-month period ended April 30, 2024 is as follows:


		Weighted Average Grant
	Number of Shares	Date Fair Value
Unvested at October 31, 2023	318,317	$	28.27
Shares or units granted	185,850		21.31
Shares or units vested	(61,121)		27.90
Shares or units cancelled	(50,375)		27.97
Shares withheld	(14,579)		27.77
Unvested at April 30, 2024	378,092	$	24.97

During the first six months of fiscal 2024 and 2023, we recorded approximately $0.8 million and $1.5 million, respectively, of stock-based compensation expense, related to grants under the 2016 Equity Plan. As of April 30, 2024, there was an estimated $3.7 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal year 2027.

SEGMENT INFORMATION (Schedule of Net Sales and Service Fees by Product Category) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
Revenue from External Customer [Line Items]
Net Sales and Service Fees	$ 45,172	$ 53,819	$ 90,231	$ 108,501
Computerized Machine Tools
Revenue from External Customer [Line Items]
Net Sales and Service Fees	35,213	43,929	70,985	89,346
Computer Control Systems and Software
Revenue from External Customer [Line Items]
Net Sales and Service Fees	586	614	1,169	1,138
Service Parts
Revenue from External Customer [Line Items]
Net Sales and Service Fees	7,211	7,244	13,854	13,935
Service Fees
Revenue from External Customer [Line Items]
Net Sales and Service Fees	$ 2,162	$ 2,032	$ 4,223	$ 4,082

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

+ References

+ Details

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Gain) / loss on derivative instruments reclassified into operations, tax	$ 121	$ (15)	$ 185	$ (40)
Loss on derivative instruments, tax	$ (192)	$ (255)	$ (187)	$ (303)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

6 Months Ended

Apr. 30, 2024

Schedule of Fair Value of Derivative Instruments


	April 30, 2024			October 31, 2023
	Balance Sheet	Fair		Balance Sheet	Fair
Derivatives	Location	Value		Location	Value
Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	186	Derivative assets	$	363
Foreign exchange forward contracts	Derivative liabilities	$	955	Derivative liabilities	$	1,232

Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	179	Derivative assets	$	377
Foreign exchange forward contracts	Derivative liabilities	$	1,623	Derivative liabilities	$	589

Schedule of Effect of Derivative Instruments on the Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations

Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity, and Condensed Consolidated Statements of Operations, net of tax, during the three months ended April 30, 2024 and 2023 (in thousands):


					Location of Gain	Amount of Gain
	Amount of Gain (Loss)				(Loss) Reclassified	(Loss) Reclassified
	Recognized in Other				from Other	from Other
	Comprehensive				Comprehensive	Comprehensive
Derivatives	Income (Loss)				Income (Loss)	Income (Loss)
	Three Months Ended					Three Months Ended
	April 30,					April 30,
	2024		2023			2024		2023
Designated as Hedging Instruments:
(Effective portion)
Foreign exchange forward contracts – Intercompany sales/purchases	$	(640)	$	(847)	Cost of sales and service	$	(407)	$	50
Foreign exchange forward contract – Net investment	$	46	$	(25)

Schedule of derivative instruments not designated as hedging instruments


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Three Months Ended
		April 30,
		2024		2023
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other (expense) income, net	$	(1,854)	$	(1,109)

Schedule of changes in the components of Accumulated other comprehensive loss, net of tax

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended April 30, 2024 (in thousands):


	Foreign Currency		Cash Flow
	Translation		Hedges		Total
Balance, January 31, 2024	$	(13,485)	$	(1,989)	$	(15,474)
Other comprehensive income (loss) before reclassifications		(3,984)		(640)		(4,624)
Reclassifications		—		407		407
Balance, April 30, 2024	$	(17,469)	$	(2,222)	$	(19,691)

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the six months ended April 30, 2024 (in thousands):


	Foreign		Cash
	Currency		Flow
	Translation		Hedges		Total
Balance, October 31, 2023	$	(17,985)	$	(2,219)	$	(20,204)
Other comprehensive income (loss) before reclassifications		516		(622)		(106)
Reclassifications		—		619		619
Balance, April 30, 2024	$	(17,469)	$	(2,222)	$	(19,691)

Not Designated as Hedging Instrument

Schedule of derivative instruments not designated as hedging instruments


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Six Months Ended
		April 30,
Derivatives		2024		2023
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other (expense) income, net	$	(1,410)	$	(1,464)

FINANCIAL INSTRUMENTS

6 Months Ended

Apr. 30, 2024

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

13. FINANCIAL INSTRUMENTS

FASB fair value guidance establishes a three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exist, therefore requiring an entity to develop its own assumptions.

The carrying amounts for cash and cash equivalents approximate their fair values due to the short maturity of these instruments, and such instruments meet the Level 1 criteria of the three–tier fair value hierarchy discussed above. The carrying amount of short-term debt approximates fair value due to the variable rate of the interest and the short-term nature of the instrument.



	Assets				Liabilities
	April 30, 2024		October 31, 2023		April 30, 2024		October 31, 2023
Level 1
Mutual Funds	$	2,648	$	2,217	$	—	$	—

Level 2
Derivatives	$	365	$	740	$	2,578	$	1,821

Included in Level 1 assets are mutual fund investments under a nonqualified deferred compensation plan. We estimate the fair value of these investments on a recurring basis using market prices that are readily available.

Included in Level 2 fair value measurements are derivative assets and liabilities related to gains and losses on foreign currency forward exchange contracts entered into with a third party. We estimate the fair value of these derivatives on a recurring basis using foreign currency exchange rates obtained from active markets. Derivative instruments are reported in the accompanying Condensed Consolidated Financial Statements at fair value. We have derivative financial instruments in the form of foreign currency forward exchange contracts as described in Note 3 of Notes to the Condensed Consolidated Financial Statements. The U.S. dollar equivalent notional amounts of these contracts were $90.0 million and $97.8 million at April 30, 2024 and October 31, 2023, respectively.

The fair value of our foreign currency forward exchange contracts and the related currency positions are subject to offsetting market risk resulting from foreign currency exchange rate volatility. The counterparties to the forward exchange contracts are substantial and creditworthy financial institutions. We do not consider either the risk of counterparties’ non-performance or the economic consequences of counterparties’ non-performance to be material risks.

LEASES - Supplemental cash flow information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
LEASES
Cash paid for amounts included in the measurement of lease liabilities	$ 1,079	$ 1,271	$ 2,298	$ 2,511
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 737	$ 673	$ 2,602	$ 2,372

EQUITY INCENTIVE PLAN - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions				2 Months Ended	6 Months Ended
	Mar. 14, 2024	Jan. 04, 2024	Nov. 08, 2023	Apr. 30, 2024	Apr. 30, 2024	Apr. 30, 2023	Oct. 31, 2023	Mar. 10, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Stock-based compensation expense				$ 3.7	$ 3.7
Restricted stock granted					185,850
Restricted stock vested					61,121
Grant date fair value of restricted stock				$ 24.97	$ 24.97		$ 28.27
Performance period					3 years
Stock-based compensation expense					$ 0.8	$ 1.5
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding				0	0
2016 Equity Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total number of shares of common stock that may be issued as awards under 2016 Plan				850,000	850,000			856,048
2008 Equity Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Available for Grant under the 2008 Plan								386,048
Restricted stock granted					0
PSU TSR \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target number of shares to be earned		50.00%
PSU ROIC \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target number of shares to be earned		200.00%
PSU ROIC \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target number of shares to be earned		50.00%
Time Based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted		36,574	16,673
Grant date fair value of restricted stock		$ 21.53	$ 19.78
Percentage of incentive compensation arrangement		25.00%
Performance period					3 years
Time Based \| Non-employee Directors and Non-Executive Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	22,878
Restricted stock vested	20.98
Performance period				1 year
Performance Based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of incentive compensation arrangement		75.00%
Performance period					3 years
Performance Based \| PSU TSR
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted		58,520
Grant date fair value of restricted stock		$ 21.53
Percentage of incentive compensation arrangement		40.00%
Performance Based \| PSU TSR \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target number of shares to be earned		200.00%
Performance Based \| PSU ROIC
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted		51,205
Grant date fair value of restricted stock		$ 21.53
Percentage of incentive compensation arrangement		35.00%
Performance period					3 years

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

6 Months Ended

Apr. 30, 2024

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to certain market risks relating to our ongoing business operations, including foreign currency risk, interest rate risk and credit risk. We manage our exposure to these and other market risks through regular operating and financing activities. Currently, the only risk that we manage through the use of derivative instruments is foreign currency risk, for which we enter into derivative instruments in the form of foreign currency forward exchange contracts with a major financial institution.

We enter into these forward exchange contracts to reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, to reduce the impact on gross profit and net earnings from sales and purchases denominated in foreign currencies, and to reduce the impact on our net earnings of foreign currency fluctuations on receivables and payables denominated in foreign currencies that are different than the subsidiaries’ functional currency. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Indian Rupee, Singapore Dollars, Chinese Yuan, Polish Zloty, and New Taiwan Dollars. We record all derivative instruments as assets or liabilities at fair value.

Derivatives Designated as Hedging Instruments

We enter into foreign currency forward exchange contracts periodically to hedge certain forecasted inter-company sales and purchases denominated in the following foreign currencies: the Pound Sterling, Euro and New Taiwan Dollar. The purpose of these instruments is to mitigate the risk that the U.S. dollar net cash inflows and outflows resulting from sales and purchases denominated in foreign currencies will be adversely affected by changes in exchange rates. These forward contracts have been designated as cash flow hedge instruments and are recorded in the Condensed Consolidated Balance Sheets at fair value in Derivative assets and Derivative liabilities. The effective portion of the gains and losses resulting from the changes in the fair value of these hedge contracts is deferred in Accumulated other comprehensive income (loss) and recognized as an adjustment to Cost of sales and service in the period that the corresponding inventory sold that is the subject of the related hedge contract is recognized, thereby providing an offsetting economic impact against the corresponding change in the U.S. dollar value of the inter-company sale or purchase being hedged. The ineffective portion of gains and losses resulting from the changes in the fair value of these hedge contracts is immediately reported in Other income (expense), net. We perform quarterly assessments of hedge effectiveness by verifying and documenting the critical terms of the hedge instrument and determining that forecasted transactions have not changed significantly. We also assess on a quarterly basis whether there have been adverse developments regarding the risk of a counterparty default.

We had forward contracts outstanding as of April 30, 2024, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from May 2024 through April 2025. The contract amounts, expressed at forward rates in U.S. dollars at April 30, 2024, were $8.7 million for Euros, $4.4 million for Pounds Sterling, and $16.8 million for New Taiwan Dollars. At April 30, 2024, we had $0.6 million of loss, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive income (loss). Included in this amount was $0.6 million of unrealized loss, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred gains will be recorded as an adjustment to Cost of sales and service in periods through April 2025, when the corresponding inventory that is the subject of the related hedge contracts is sold, as described above.

We are also exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we entered into a forward contract with a notional amount of €3.0 million in November 2023. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under FASB guidance related to the accounting for derivative instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment in Accumulated other comprehensive income (loss), net of tax, in the same manner as the underlying hedged net assets. This forward contract matures in November 2024. As of April 30, 2024, we had a realized gain of $1.2 million and an immaterial amount of unrealized gain, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss related to this forward contract.

Derivatives Not Designated as Hedging Instruments

We also enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on inter-company receivables, payables and loans denominated in foreign currencies. These derivative instruments are not designated as hedges under FASB guidance and, as a result, changes in their fair value are reported currently in Other (expense) income, net in the Condensed Consolidated Statements of Operations consistent with the transaction gain or loss on the related receivables and payables denominated in foreign currencies.

We had forward contracts outstanding as of April 30, 2024, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from May 2024 through October 2024. The contract amounts, expressed at forward rates in U.S. dollars at April 30, 2024, totaled $54.1 million.

Fair Value of Derivative Instruments

We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Condensed Consolidated Balance Sheets. As of April 30, 2024 and October 31, 2023, all derivative instruments were recorded at fair value on our Condensed Consolidated Balance Sheets as follows (in thousands):


	April 30, 2024			October 31, 2023
	Balance Sheet	Fair		Balance Sheet	Fair
Derivatives	Location	Value		Location	Value
Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	186	Derivative assets	$	363
Foreign exchange forward contracts	Derivative liabilities	$	955	Derivative liabilities	$	1,232

Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	179	Derivative assets	$	377
Foreign exchange forward contracts	Derivative liabilities	$	1,623	Derivative liabilities	$	589

Effect of Derivative Instruments on the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Operations


					Location of Gain	Amount of Gain
	Amount of Gain (Loss)				(Loss) Reclassified	(Loss) Reclassified
	Recognized in Other				from Other	from Other
	Comprehensive				Comprehensive	Comprehensive
Derivatives	Income (Loss)				Income (Loss)	Income (Loss)
	Three Months Ended					Three Months Ended
	April 30,					April 30,
	2024		2023			2024		2023
Designated as Hedging Instruments:
(Effective portion)
Foreign exchange forward contracts – Intercompany sales/purchases	$	(640)	$	(847)	Cost of sales and service	$	(407)	$	50
Foreign exchange forward contract – Net investment	$	46	$	(25)

We did not recognize any gains or losses as a result of hedges deemed ineffective for either of the three months ended April 30, 2024 or 2023. We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the three months ended April 30, 2024 and 2023 on derivative instruments not designated as hedging instruments (in thousands):


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Three Months Ended
		April 30,
		2024		2023
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other (expense) income, net	$	(1,854)	$	(1,109)

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended April 30, 2024 (in thousands):


	Foreign Currency		Cash Flow
	Translation		Hedges		Total
Balance, January 31, 2024	$	(13,485)	$	(1,989)	$	(15,474)
Other comprehensive income (loss) before reclassifications		(3,984)		(640)		(4,624)
Reclassifications		—		407		407
Balance, April 30, 2024	$	(17,469)	$	(2,222)	$	(19,691)

Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity, and Condensed Consolidated Statements of Operations, net of tax, during the six months ended April 30, 2024 and 2023 (in thousands):


					Location of Gain	Amount of Gain
	Amount of Gain (Loss)				(Loss) Reclassified	(Loss) Reclassified
	Recognized in Other				from Other	from Other
	Comprehensive				Comprehensive	Comprehensive
	Income (Loss)				Income (Loss)	Income (Loss)
	Six Months Ended					Six Months Ended
	April 30,					April 30,
Derivatives	2024		2023			2024		2023
Designated as Hedging Instruments:
(Effective Portion)
Foreign exchange forward contracts – Intercompany sales/purchases	$	(622)	$	(1,013)	Cost of sales and service	$	(619)	$	132
Foreign exchange forward contract – Net investment	$	(9)	$	(224)

We did not recognize any gains or losses as a result of hedges deemed ineffective for either of the six months ended April 30, 2024 or 2023. We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the six months ended April 30, 2024 and 2023 on derivative instruments not designated as hedging instruments (in thousands):


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Six Months Ended
		April 30,
Derivatives		2024		2023
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other (expense) income, net	$	(1,410)	$	(1,464)

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the six months ended April 30, 2024 (in thousands):


	Foreign		Cash
	Currency		Flow
	Translation		Hedges		Total
Balance, October 31, 2023	$	(17,985)	$	(2,219)	$	(20,204)
Other comprehensive income (loss) before reclassifications		516		(622)		(106)
Reclassifications		—		619		619
Balance, April 30, 2024	$	(17,469)	$	(2,222)	$	(19,691)

GUARANTEES AND PRODUCT WARRANTIES (Tables)

6 Months Ended

Apr. 30, 2024

GUARANTEES AND PRODUCT WARRANTIES

Schedule of reconciliation of the changes in warranty reserve

A reconciliation of the changes in our warranty reserve is as follows (in thousands):


	Six Months Ended
	April 30,
	2024		2023
Balance, beginning of period	$	1,294	$	1,426
Provision for warranties during the period		1,165		1,417
Charges to the reserve		(1,342)		(1,475)
Impact of foreign currency translation		4		67
Balance, end of period	$	1,121	$	1,435

DEBT AGREEMENTS

6 Months Ended

Apr. 30, 2024

DEBT AGREEMENTS

DEBT AGREEMENTS

11. DEBT AGREEMENTS

On December 31, 2018, we and our subsidiary Hurco B.V. entered into a credit agreement with Bank of America, N.A., as the lender, which was subsequently amended on each of March 13, 2020, December 23, 2020, December 17, 2021, January 4, 2023, and December 19, 2023 (as amended, the “2018 Credit Agreement”). The 2018 Credit Agreement provides for an unsecured revolving credit and letter of credit facility in a maximum aggregate amount of $40.0 million. The 2018 Credit Agreement provides that the maximum amount of outstanding letters of credit at any one time may not exceed $10.0 million, the maximum amount of outstanding loans made to our subsidiary Hurco B.V. at any one time may not exceed $20.0 million, and the maximum amount of all outstanding loans denominated in alternative currencies at any one time may not exceed $20.0 million. Under the 2018 Credit Agreement, we and Hurco B.V. are borrowers, and certain of our other subsidiaries are guarantors. The scheduled maturity date of the 2018 Credit Agreement is December 31, 2025.

Borrowings under the 2018 Credit Agreement bear interest at floating rates based on, at our option, either (i) a rate based upon the secured overnight financing rate (“SOFR”), the Sterling Overnight Index Average Reference Rate, the Euro Interbank Offering Rate, or another alternative currency-based rate approved by the lender, depending on the term of the loan and the currency in which such loan is denominated, plus 1.00% per annum, or (ii) a base rate (which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) the one month SOFR-based rate plus 1.00%), plus 0.00% per annum. Outstanding letters of credit will carry an annual rate of 1.00%.

The 2018 Credit Agreement contains customary affirmative and negative covenants and events of default, including covenants (1) restricting us from making certain investments, loans, advances and acquisitions (but permitting us to make investments in subsidiaries of up to $10.0 million); (2) restricting us from making certain payments, including (a) cash dividends, except that we may pay cash dividends as long as immediately before and after giving effect to such payment, the sum of the unused amount of the commitments under the 2018 Credit Agreement plus our cash on hand is not less than $10.0 million, and as long as we are not in default before and after giving effect to such dividend payments and (b) payments made to repurchase shares of our common stock, except that we may repurchase shares of our common stock as long as we are not in default before and after giving effect to such repurchases and the aggregate amount of payments made by us for all such repurchases during any fiscal year does not exceed $25.0 million; (3) requiring that we maintain a minimum working capital of $125.0 million; and (4) requiring that we maintain a minimum tangible net worth of $176.5 million. We may use the proceeds from advances under the 2018 Credit Agreement for general corporate purposes.

In March 2019, our wholly-owned subsidiaries in Taiwan (Hurco Manufacturing Limited (“HML”)) and China (Ningbo Hurco Machine Tool, Ltd. (“NHML”)) closed on uncommitted revolving credit facilities with maximum aggregate amounts of 150 million New Taiwan Dollars and 32.5 million Chinese Yuan, respectively. As uncommitted facilities, both the Taiwan and China credit facilities are subject to review and termination by the respective underlying lending institution from time to time. In February and December 2023, NHML and HML, respectively, renewed the above-referenced credit facilities on substantially similar terms and identical maximum aggregate limits.

As of April 30, 2024, our existing credit facilities consisted of a €1.5 million revolving credit facility in Germany, the 150 million New Taiwan Dollars Taiwan credit facility, the 32.5 million Chinese Yuan China credit facility, and the $40.0 million revolving credit facility under the 2018 Credit Agreement.

As of April 30, 2024, there were no borrowings under any of our credit facilities and there was approximately $50.7 million of available borrowing capacity thereunder. There were also no borrowings under any of our credit facilities as of October 31, 2023.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
CONSOLIDATED STATEMENTS OF OPERATIONS
Sales and service fees	$ 45,172	$ 53,819	$ 90,231	$ 108,501
Cost of sales and service	37,153	41,236	72,517	83,200
Gross profit	8,019	12,583	17,714	25,301
Selling, general and administrative expenses	11,461	11,592	22,976	23,076
Operating (loss) income	(3,442)	991	(5,262)	2,225
Interest expense	136	55	267	71
Interest income	164	85	320	137
Investment income	8	7	67	36
Other (expense) income, net	(476)	(360)	(989)	281
(Loss) income before income taxes	(3,882)	668	(6,131)	2,608
(Benefit) provision for income taxes	40	291	(561)	901
Net (loss) income	$ (3,922)	$ 377	$ (5,570)	$ 1,707
(Loss) income per common share - basic	$ (0.61)	$ 0.06	$ (0.86)	$ 0.26
(Loss) income per common share - diluted	$ (0.61)	$ 0.06	$ (0.86)	$ 0.26
Weighted average common shares outstanding - basic	6,518	6,486	6,500	6,536
Weighted average common shares outstanding - diluted	6,518	6,516	6,500	6,570
Dividends paid per share	$ 0.16	$ 0.16	$ 0.32	$ 0.31

INCOME TAXES

6 Months Ended

Apr. 30, 2024

INCOME TAXES

INCOME TAXES

12. INCOME TAXES

Our provision for income taxes and effective tax rate is affected by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates, and other events that are not consistent from period to period, such as changes in income tax laws.

We recorded an income tax benefit during the first six months of fiscal 2024 of $0.6 million compared to income tax expense of $0.9 million for the same period in 2023. Our effective tax rate for the first six months of fiscal 2024 was 9%, compared to 35% in the corresponding prior year period. The year-over-year decrease in the effective tax rate was primarily due to changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, a discrete item related to stock compensation, and the impact of valuation allowances on an overall lower level of income before taxes.

Our unrecognized tax benefits were $189,000 as of April 30, 2024 and $182,000 as of October 31, 2023, and in each case included accrued interest.

We recognize accrued interest and penalties related to unrecognized tax benefits as components of income tax expense. As of April 30, 2024, the gross amount of interest accrued, reported in Accrued expenses, was approximately $51,000, which did not include the federal tax benefit of interest deductions.

We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. The statutes of limitations with respect to unrecognized tax benefits will expire between August 2024 and August 2025.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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+ Details

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 30, 2024	Oct. 31, 2023
Current assets:
Cash and cash equivalents	$ 37,542	$ 41,784
Accounts receivable, net	27,052	39,965
Inventories, net	163,806	157,952
Derivative assets	365	740
Prepaid assets	10,209	7,789
Total current assets	238,974	248,230
Property and equipment:
Land	1,046	1,046
Building	7,387	7,387
Machinery and equipment	25,843	26,779
Leasehold improvements	4,523	4,473
Property and equipment, gross	38,799	39,685
Less accumulated depreciation and amortization	(31,453)	(30,826)
Total property and equipment, net	7,346	8,859
Non-current assets:
Software development costs, less accumulated amortization	6,985	7,030
Intangible assets, net	860	994
Operating lease - right of use assets, net	11,490	10,971
Deferred income taxes	4,880	4,749
Investments and other assets	10,291	9,756
Total non-current assets	34,506	33,500
Total assets	280,826	290,589
Current liabilities:
Accounts payable	27,356	29,661
Customer deposits	3,244	2,827
Derivative liabilities	2,578	1,821
Operating lease liabilities	3,658	3,712
Accrued payroll and employee benefits	7,592	9,853
Accrued income taxes	1,190	1,713
Accrued expenses	4,660	4,092
Accrued warranty expenses	1,121	1,294
Total current liabilities	51,399	54,973
Non-current liabilities:
Deferred income taxes	61	83
Accrued tax liability	698	1,293
Operating lease liabilities	8,189	7,606
Deferred credits and other	4,902	4,403
Total non-current liabilities	13,850	13,385
Shareholders' equity:
Preferred stock: no par value per share, 1,000,000 shares authorized; no shares issued	0	0
Common stock: no par value, $.10 stated value per share, 12,500,000 shares authorized; 6,636,473 and 6,553,673 shares issued and 6,523,259 and 6,462,138 shares outstanding, as of April 30, 2024 and October 31, 2023, respectively	652	646
Additional paid-in capital	62,155	61,665
Retained earnings	172,461	180,124
Accumulated other comprehensive loss	(19,691)	(20,204)
Total shareholders' equity	215,577	222,231
Total liabilities and shareholders' equity	$ 280,826	$ 290,589

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Apr. 30, 2024	May 31, 2024
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Apr. 30, 2024
Entity File Number	0-9143
Entity Registrant Name	HURCO COMPANIES, INC.
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-1150732
Entity Address, Address Line One	One Technology Way
Entity Address, City or Town	Indianapolis
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46268
City Area Code	317
Local Phone Number	293-5309
Title of 12(b) Security	Common Stock, no par value
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,523,259
Entity Central Index Key	0000315374
Current Fiscal Year End Date	--10-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Amendment Flag	false
Trading Symbol	HURC

DEBT AGREEMENTS (Narrative) (Details) $ in Thousands, € in Millions, ¥ in Millions, $ in Millions	6 Months Ended
	Apr. 30, 2024 USD ($)	Apr. 30, 2024 CNY (¥)	Apr. 30, 2024 TWD ($)	Apr. 30, 2024 EUR (€)	Oct. 31, 2023 USD ($)	Mar. 31, 2019 CNY (¥)	Mar. 31, 2019 TWD ($)
Line of Credit Facility [Line Items]
Line of credit amount outstanding	$ 0				$ 0
Line Of Credit Agreement 2018 [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	40,000
Line of credit, maximum borrowing capacity in alternative currencies	$ 20,000
Variable interest rate	0.00%
Minimum working capital requirement	$ 125,000
Minimum tangible net worth requirement	$ 176,500
Line of credit, maturity date	Dec. 31, 2025
Allowable investments in alternative investments	$ 10,000
Borrowings available under credit facility	50,700
Line of Credit, covenant, minimum cash on hand before dividends are paid	10,000
Line of Credit, covenant, maximum annual share repurchase	25,000
Hurco BV [Member] \| Line Of Credit Agreement 2018 [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 20,000
Federal funds \| Line Of Credit Agreement 2018 [Member]
Line of Credit Facility [Line Items]
Variable interest rate	0.50%
SOFR \| Line Of Credit Agreement 2018 [Member]
Line of Credit Facility [Line Items]
Variable interest rate	1.00%
Letter of Credit [Member] \| Line Of Credit Agreement 2018 [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 10,000
Stated interest rate	1.00%	1.00%	1.00%	1.00%
Revolving Credit Facility [Member] \| Line Of Credit Agreement 2018 [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 40,000
Revolving Credit Facility [Member] \| Germany [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity \| €				€ 1.5
Taiwan credit facility [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity			$ 150				$ 150
China credit facility [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity \| ¥		¥ 32.5				¥ 32.5

LEASES (Tables)

6 Months Ended

Apr. 30, 2024

LEASES

Schedule of supplemental cash flow information and non-cash activity related to operating leases

The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for the three and six months ended April 30, 2024 and 2023 (in thousands):


		Three Months Ended				Six Months Ended
		April 30,				April 30,
		2024		2023		2024		2023
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	1,079	$	1,271	$	2,298	$	2,511
Non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	737	$	673	$	2,602	$	2,372

Schedule of maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability

The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of April 30, 2024 (in thousands):


Remainder of 2024	$	2,239
2025		3,272
2026		2,409
2027		1,916
2028		1,637
2029 and thereafter		1,319
Total		12,792
Less: Imputed interest		(945)
Present value of operating lease liabilities	$	11,847

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (3,922)	$ 377	$ (5,570)	$ 1,707

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

GUARANTEES AND PRODUCT WARRANTIES - Additional Information (Details) $ in Millions	6 Months Ended
	Apr. 30, 2024 USD ($)
GUARANTEES AND PRODUCT WARRANTIES
Number Of Guarantees	9
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 0.9
Term of Product Warranty	1 year

GUARANTEES AND PRODUCT WARRANTIES

6 Months Ended

Apr. 30, 2024

GUARANTEES AND PRODUCT WARRANTIES

GUARANTEES AND PRODUCT WARRANTIES

10. GUARANTEES AND PRODUCT WARRANTIES

From time to time, our subsidiaries guarantee third party payment obligations in connection with the sale of machines to customers that use financing. We follow FASB guidance for accounting for guarantees (codified in ASC 460, Guarantees). As of April 30, 2024, we had nine outstanding third party payment guarantees totaling approximately $0.9 million. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer assumes the risk of ownership. The customer does not obtain title, however, until it has paid for the machine. A retention of title clause allows us to recover the machine if the customer defaults on the financing. We accrue liabilities under these guarantees at fair value, which amounts are insignificant.

We provide warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year for machines and shorter periods for service parts. We recognize a reserve with respect to this obligation at the time of product sale, with subsequent warranty claims recorded against the reserve. The amount of the warranty reserve is determined based on historical trend experience and any known warranty issues that could cause future warranty costs to differ from historical experience.

A reconciliation of the changes in our warranty reserve is as follows (in thousands):


	Six Months Ended
	April 30,
	2024		2023
Balance, beginning of period	$	1,294	$	1,426
Provision for warranties during the period		1,165		1,417
Charges to the reserve		(1,342)		(1,475)
Impact of foreign currency translation		4		67
Balance, end of period	$	1,121	$	1,435

The year-over-year decrease in our warranty reserve was primarily due to a lower volume of machines subject to warranty as machine sales levels decreased.

NEW ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Apr. 30, 2024

NEW ACCOUNTING PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS

15. NEW ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncements:

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to income tax disclosures, which aims to improve disclosures and presentation requirements to the transparency of the income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments will be effective for our fiscal year 2026, with the option to early adopt at any time prior to the effective date. We are currently assessing the impact this new accounting guidance will have on our consolidated financial statements and disclosures.

There have been no other significant changes in the Company’s critical accounting policies and estimates during the six months ended April 30, 2024.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

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+ Details

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Effect of derivative instruments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)	$ (640)	$ (847)	$ (622)	$ (1,013)
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss)	(407)	50	(619)	132
Designated as Hedging Instrument \| Foreign Exchange Forward
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)	(640)	(847)
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss)	(407)	50
Designated as Hedging Instrument \| Foreign Exchange Forward \| Intercompany sales/purchases [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)			(622)	(1,013)
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss)			(619)	132
Designated as Hedging Instrument \| Foreign Exchange Forward \| Net Investment Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)	46	(25)	(9)	(224)
Not Designated as Hedging Instrument \| Foreign Exchange Forward \| Other Income And Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Operations	$ (1,854)	$ (1,109)	$ (1,410)	$ (1,464)

INVENTORIES (Tables)

6 Months Ended

Apr. 30, 2024

INVENTORIES

Schedule of inventories

Inventories, priced at the lower of cost (first-in, first-out method) or net realizable value, are summarized below (in thousands):


	April 30,		October 31,
	2024		2023
Purchased parts and sub–assemblies, net	$	38,778	$	37,161
Work–in–process		15,628		16,217
Finished goods		109,400		104,574
Inventories, net	$	163,806	$	157,952

SEGMENT INFORMATION

6 Months Ended

Apr. 30, 2024

SEGMENT INFORMATION

SEGMENT INFORMATION

9. SEGMENT INFORMATION

We operate in a single segment: industrial automation equipment. We design, manufacture, and sell computerized (i.e., CNC) machine tools, consisting primarily of vertical machining centers (mills) and turning centers (lathes), to companies in the metal cutting industry through a worldwide sales, service, and distribution network. Although most of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, automation integration equipment and solutions for job shops, software options, control upgrades, accessories and replacement parts for our products, as well as customer service, training, and applications support.

The following table sets forth sales and service fees by product group and services for the three and six months ended April 30, 2024 and 2023 (in thousands):


	Three Months Ended April 30,				Six Months Ended April 30,
	2024		2023		2024		2023
Computerized Machine Tools	$	35,213	$	43,929	$	70,985	$	89,346
Computer Control Systems and Software ^†		586		614		1,169		1,138
Service Parts		7,211		7,244		13,854		13,935
Service Fees		2,162		2,032		4,223		4,082
Total	$	45,172	$	53,819	$	90,231	$	108,501

^† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine tools.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

EQUITY INCENTIVE PLAN - Reconciliation of restricted stock activity (Details)	6 Months Ended
	Apr. 30, 2024 $ / shares shares
Number of Shares
Unvested at beginning of period \| shares	318,317
Shares or units granted \| shares	185,850
Shares or units vested \| shares	(61,121)
Shares or units cancelled \| shares	(50,375)
Shares or units withheld \| shares	(14,579)
Unvested at end of period \| shares	378,092
Weighted Average Grant Date Fair Value
Unvested at beginning of period \| $ / shares	$ 28.27
Shares or units granted \| $ / shares	21.31
Shares or units vested \| $ / shares	27.90
Shares or units cancelled \| $ / shares	27.97
Shares or units withheld \| $ / shares	27.77
Unvested at end of period \| $ / shares	$ 24.97

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net Income (Loss)	$ (3,922)	$ 377	$ (5,570)	$ 1,707
Other comprehensive income (loss):
Translation gain of foreign currency financial statements	(3,984)	(470)	516	9,661
(Gain) / loss on derivative instruments reclassified into operations, net of tax (expense) / benefit of $121, $(15), $185, and $(40), respectively	407	(50)	619	(132)
Gain / (loss) on derivative instruments, net of tax expense / (benefit) of $(192), $(255), $(187) and $(303), respectively	(640)	(847)	(622)	(1,013)
Total other comprehensive income	(4,217)	(1,367)	513	8,516
Comprehensive income	$ (8,139)	$ (990)	$ (5,057)	$ 10,223

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
Cash flows from operating activities:
Net Income (Loss)	$ (3,922)	$ 377	$ (5,570)	$ 1,707
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision for doubtful accounts	11	(22)	(60)	62
Deferred income taxes	(49)	149	(141)	301
Equity in (income) loss of affiliates	(109)	(232)	(87)	(222)
Foreign currency (gain) loss	(1,118)	(656)	(606)	(2,243)
Unrealized (gain) loss on derivatives	1,895	438	1,239	50
Depreciation and amortization	882	1,050	1,790	2,104
Stock-based compensation	220	750	811	1,524
Change in assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable	5,708	203	13,236	5,954
(Increase) decrease in inventories	(1,247)	(7,487)	(3,743)	(10,471)
(Increase) decrease in prepaid expenses	(24)	548	(2,412)	(2,656)
Increase (decrease) in accounts payable	183	7,450	(2,336)	2,206
Increase (decrease) in customer deposits	(628)	(102)	393	713
Increase (decrease) in accrued expenses	988	(111)	481	(1,927)
Increase (decrease) in accrued payroll and employee benefits	91	504	(2,258)	(2,804)
Net change in deferred tax assets and liabilities	(368)	(1,381)	(544)	(980)
Increase (decrease) in accrued tax liability	(598)		(595)
Net change in derivative assets and liabilities	(48)	47	(106)	600
Other	12	(574)	(182)	(953)
Net cash provided by (used for) operating activities	1,879	951	(690)	(7,035)
Cash flows from investing activities:
Proceeds from sale of property and equipment	10	1	25	1
Purchase of property and equipment	(130)	(443)	(574)	(657)
Software development costs	(349)	(364)	(737)	(749)
Other investments	117	273	117	273
Net cash provided by (used for) investing activities	(352)	(533)	(1,169)	(1,132)
Cash flows from financing activities:
Proceeds from exercise of common stock options				270
Dividends paid	(1,061)	(1,039)	(2,093)	(2,034)
Taxes paid related to net settlement of restricted shares			(315)	(313)
Stock repurchases		(3,866)		(4,609)
Net cash provided by (used for) financing activities	(1,061)	(4,905)	(2,408)	(6,686)
Effect of exchange rate changes on cash and cash equivalents	(860)	(246)	25	3,086
Net decrease in cash and cash equivalents	(394)	(4,733)	(4,242)	(11,767)
Cash and cash equivalents at beginning of period	37,936	56,888	41,784	63,922
Cash and cash equivalents at end of period	$ 37,542	$ 52,155	$ 37,542	$ 52,155

LEASES

6 Months Ended

Apr. 30, 2024

LEASES

LEASES

8. LEASES

Our lease portfolio includes leased production and assembly facilities, warehouses and distribution centers, office space, vehicles, material handling equipment utilized in our production and assembly facilities, laptops and other information technology equipment, as well as other miscellaneous leased equipment. Most of the leased production and assembly facilities have lease terms ranging from two to five years, although the terms and conditions of our leases can vary significantly from lease to lease. We have assessed the specific terms and conditions of each lease to determine the amount of the lease payments and the length of the lease term, which includes the minimum period over which lease payments are required plus any renewal options that are both within our control to exercise and reasonably certain of being exercised upon lease commencement. In determining whether or not a renewal option is reasonably certain of being exercised, we assessed all relevant factors to determine if sufficient incentives exist as of lease commencement to conclude renewal is reasonably certain. There are no material residual value guarantees provided by us, nor any restrictions or covenants imposed by the leases to which we are a party. In determining the lease liability, we utilize our incremental borrowing rate to discount the future lease payments over the lease term to present value.

We record a right-of-use asset and lease liability on our Condensed Consolidated Balance Sheets for all leases that, at the commencement date, have a lease term of more than 12 months and are classified as operating leases.

We recorded total operating lease expenses of $1.5 million and $1.3 million for the three months ended April 30, 2024 and 2023, respectively and $2.8 million and $2.6 million for the six months ended April 30, 2024 and 2023, respectively, which are classified within Cost of sales and service and Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations. Operating lease expense includes short-term leases and variable lease payments that are immaterial. There have been no lease costs capitalized on the Condensed Consolidated Balance Sheets as of April 30, 2024.

The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for the three and six months ended April 30, 2024 and 2023 (in thousands):


		Three Months Ended				Six Months Ended
		April 30,				April 30,
		2024		2023		2024		2023
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	1,079	$	1,271	$	2,298	$	2,511
Non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	737	$	673	$	2,602	$	2,372

The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of April 30, 2024 (in thousands):


Remainder of 2024	$	2,239
2025		3,272
2026		2,409
2027		1,916
2028		1,637
2029 and thereafter		1,319
Total		12,792
Less: Imputed interest		(945)
Present value of operating lease liabilities	$	11,847

As of April 30, 2024, the weighted-average remaining term of our lease portfolio was approximately 4.3 years and the weighted-average discount rate was approximately 3.5%.

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2024	Apr. 30, 2023	Apr. 30, 2024	Apr. 30, 2023
Basic
Net Income (Loss)	$ (3,922)	$ 377	$ (5,570)	$ 1,707
Undistributed earnings (loss) allocated to participating shares		(5)		(24)
Net income (loss) applicable to common shareholders	$ (3,922)	$ 372	$ (5,570)	$ 1,683
Weighted average shares outstanding	6,518	6,486	6,500	6,536
Income (loss) per share	$ (0.61)	$ 0.06	$ (0.86)	$ 0.26
Diluted
Net Income (Loss)	$ (3,922)	$ 377	$ (5,570)	$ 1,707
Undistributed earnings (loss) allocated to participating shares		(5)		(24)
Net income (loss) applicable to common shareholders	$ (3,922)	$ 372	$ (5,570)	$ 1,683
Weighted average shares outstanding prior to dilution effect	6,518	6,486	6,500	6,536
Stock options and contingently issuable shares		30		34
Weighted average shares outstanding	6,518	6,516	6,500	6,570
Income (loss) per share	$ (0.61)	$ 0.06	$ (0.86)	$ 0.26