SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended July 31, 2003 or
Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to _________.
Commission File No. 0-9143
HURCO COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1150732
- -------------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
One Technology Way
Indianapolis, Indiana 46268
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (317) 293-5309
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to the filing
requirements for the past 90 days:
Yes X No
--- ---
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes No X
--- ---
The number of shares of the Registrant's common stock outstanding as of
September 10, 2003 was 5,575,987.
HURCO COMPANIES, INC.
July 2003 Form 10-Q Quarterly Report
Table of Contents
Part I - Financial Information
Item 1. Condensed Financial Statements
Condensed Consolidated Statement of Operations -
Three months and nine months ended July 31, 2003 and 2002................................... 3
Condensed Consolidated Balance Sheet -
As of July 31, 2003 and October 31, 2002.................................................... 4
Condensed Consolidated Statement of Cash Flows -
Three months and nine months ended July 31, 2003 and 2002................................... 5
Condensed Consolidated Statement of Changes in Shareholders' Equity -
Nine months ended July 31, 2003 and 2002.................................................... 6
Notes to Condensed Consolidated Financial Statements............................................ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk...................................... 17
Item 4. Controls and Procedures......................................................................... 19
Part II - Other Information
Item 1. Legal Proceedings............................................................................... 20
Item 6. Exhibits and Reports on Form 8-K................................................................ 20
Signatures.................................................................................................... 21
PART I - FINANCIAL INFORMATION
Item 1. CONDENSED FINANCIAL STATEMENTS
- ------ ------------------------------
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
July 31 July 31
------------------------------ ---------------------------------
2003 2002 2003 2002
- ------------------------------------------------------- ------------ -------------- -------------- --------------
(unaudited) (unaudited)
Sales and service fees............................. $ 18,354 $ 18,204 $ 51,760 $ 51,719
Cost of sales and service.......................... 13,280 13,823 37,564 40,369
Cost of sales - restructuring...................... -- -- -- 1,083
------------ -------------- -------------- --------------
Gross profit 5,074 4,381 14,196 10,267
Selling, general and administrative expenses....... 4,332 4,672 13,323 14,421
Restructuring and other expense, net............... -- -- -- 1,751
------------ -------------- -------------- --------------
Operating income (loss) 742 (291) 873 (5,905)
Interest expense................................... 167 159 476 469
Other income (expense), net........................ (43) (47) 5 153
------------ -------------- -------------- --------------
Income (loss) before taxes.................... 532 (497) 402 (6,221)
Provision for income taxes......................... 201 154 514 282
------------ -------------- -------------- --------------
Net income (loss).................................. $ 331 $ (651) $ (112) $ (6,503)
============ ============== ============== ==============
Earnings (loss) per common share
Basic......................................... $ 0.06 $ (0.12) $ (0.02) $ (1.16)
============ ============== ============== ==============
Diluted....................................... $ 0.06 $ (0.12) $ (0.02) $ (1.16)
============ ============== ============== ==============
Weighted average common shares outstanding
Basic......................................... 5,583 5,583 5,583 5,583
============ ============== ============== ==============
Diluted....................................... 5,630 5,583 5,583 5,583
============ ============== ============== ==============
The accompanying notes are an integral part of the condensed consolidated financial statements.
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
July 31, 2003 October 31, 2002
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 3,227 $ 4,358
Cash - restricted.............................................................. 521 --
Accounts receivable............................................................ 11,545 13,425
Inventories.................................................................... 26,018 22,548
Other.......................................................................... 1,851 1,204
-------------- ----------------
Total current assets....................................................... 43,162 41,535
Property and equipment:
Land........................................................................... 761 761
Building....................................................................... 7,221 7,203
Machinery and equipment........................................................ 10,469 10,144
Leasehold improvements......................................................... 503 396
-------------- ----------------
18,954 18,504
Less accumulated depreciation and amortization............................. (10,494) (9,696)
-------------- ----------------
8,460 8,808
-------------- ----------------
Software development costs, less amortization....................................... 1,787 1,604
Investments and other assets........................................................ 5,071 5,205
-------------- ----------------
$ 58,480 $ 57,152
============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................... $ 11,318 $ 9,856
Accrued expenses............................................................... 8,396 10,016
Bank debt...................................................................... 2,200 --
Current portion of long-term debt.............................................. 981 1,313
-------------- ----------------
Total current liabilities.................................................. 22,895 21,185
Non-current liabilities:
Long-term debt................................................................. 7,153 7,572
Deferred credits and other obligations......................................... 446 378
-------------- ----------------
Total non-current liabilities.............................................. 7,599 7,950
Shareholders' equity:
Preferred stock: no par value per share; 1,000,000 shares.....................
authorized; no shares issued............................................... -- --
Common stock: no par value; $.10 stated value per share;
12,500,000 shares authorized, and 5,583,158
shares issued............................................................. 558 558
Additional paid-in capital..................................................... 44,717 44,717
Accumulated deficit............................................................ (10,285) (10,173)
Accumulated other comprehensive income......................................... (7,004) (7,085)
-------------- ----------------
Total shareholders' equity................................................. 27,986 28,017
-------------- ----------------
$ 58,480 $ 57,152
============== ================
The accompanying notes are an integral part of the condensed consolidated financial statements.
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Three Months Ended Nine Months Ended
July 31 July 31
2003 2002 2003 2002
------------ ------------- ----------- -------------
Cash flows from operating activities:
Net income (loss) $ 331 $ (651) $ (112) $ (6,503)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:...
Restructuring and other expense...................... -- (173) -- 2,346
Equity in (income) loss of affiliates................ (11) (11) (156) --
Depreciation and amortization........................ 358 485 1,073 1,475
Change in assets and liabilities:
(Increase) decrease in accounts receivable........ (69) (372) 2,751 3,197
(Increase) decrease in inventories................ (178) 1,638 (2,608) 6,391
Increase (decrease) in accounts payable........... (854) 1,404 1,287 (430)
Increase (decrease) in accrued expenses........... (1,036) 447 (3,061) (568)
Other............................................. (352) (647) (399) (613)
------------ ------------- ----------- -------------
Net cash provided by (used for)
operating activities.............................. (1,811) 2,120 (1,225) 5,295
------------ ------------- ----------- -------------
Cash flows from investing activities:
Proceeds from sale of equipment........................ -- 26 -- 71
Purchase of property and equipment..................... (86) (480) (381) (1,096)
Software development costs............................. (252) (132) (454) (417)
Change in restricted cash.............................. 629 -- (521) --
Other investments...................................... 6 155 (20) 1,046
------------ ------------- ----------- -------------
Net cash provided by (used for) investing activities. 297 (431) (1,376) (396)
------------ ------------- ----------- -------------
Cash flows from financing activities:
Advances on bank credit facilities..................... 17,952 6,450 38,631 19,025
Repayment on bank credit facilities.................... (15,867) (8,350) (36,757) (28,925)
Proceeds from first mortgage........................... -- -- -- 4,500
Repayment on first mortgage............................ (27) (15) (76) (15)
Repayment of term debt................................. (336) -- (673) --
Proceeds from exercise of common stock options......... -- -- -- 4
------------ ------------- ----------- -------------
Net cash provided by (used for)
financing activities................................. 1,722 (1,915) 1,125 (5,411)
------------ ------------- ----------- -------------
Effect of exchange rate changes on cash................... 71 170 345 151
------------ ------------- ----------- -------------
Net increase (decrease in cash and cash equivalents....... 279 (56) (1,131) (361)
Cash and cash equivalents at begining of period........... 2,948 3,218 4,358 3,523
------------ ------------- ----------- -------------
Cash and cash equivalents at end of period................ $ 3,227 $ 3,162 $ 3,227 $ 3,162
============ ============= =========== =============
The accompanying notes are an integral part of the condensed consolidated financial statements.
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the nine months ended July 31, 2003 and 2002
Common Stock
--------------------------
Accumulated
Shares Additional Other
Issued & Paid-In Accumulated Comprehensive
Outstanding Amount Capital Deficit Income (loss) Total
------------- --------- ------------ ------------- --------------- -----------
(Dollars in thousands)
Balances, October 31, 2001 5,580,658 $ 558 $ 44,714 $ (1,910) $ (7,894) $ 35,468
- ---------------------------------------- ------------- --------- ------------ ------------- --------------- -----------
Net loss............................ -- -- -- (6,503) -- (6,503)
Translation of foreign currency
financial statements............. -- -- -- -- 870 870
Unrealized loss on derivative
instruments...................... -- -- -- -- (215) (215)
-----------
Comprehensive loss.................. -- -- -- -- -- (5,848)
Exercise of common stock options.... 2,500 -- 3 -- -- 3
------------- --------- ------------ ------------- ------------- -----------
Balances, July 31, 2002 5,583,158 $ 558 $ 44,717 $ (8,413) $ (7,239) $ 29,623
- ---------------------------------------- ============= ========= ============ ============= ============= ===========
Common Stock
--------------------------
Accumulated
Shares Additional Other
Issued & Paid-In Accumulated Comprehensive
Outstanding Amount Capital Deficit Income (loss) Total
------------- --------- ------------ ------------- --------------- -----------
(Dollars in thousands)
Balances, October 31, 2002 5,583,158 $ 558 $ 44,717 $ (10,173) $ (7,085) $ 28,017
- ---------------------------------------- ------------- --------- ------------ ------------- ------------- -----------
Net loss............................ -- -- -- (112) -- (112)
Translation of foreign currency
financial statements............. -- -- -- -- 1,032 1,032
Unrealized loss on derivative
instruments...................... -- -- -- -- (951) (951)
----------
Comprehensive loss.................. -- -- -- -- -- (31)
Exercise of common stock options.... -- -- -- -- -- --
------------- --------- ------------ ------------- ------------- ----------
Balances, July 31, 2003 5,583,158 $ 558 $ 44,717 $ (10,285) $ (7,004) $ 27,986
- ---------------------------------------- ============= ========= ============ ============= ============= ==========
The accompanying notes are an integral part of the condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
The unaudited Condensed Consolidated Financial Statements include the accounts
of Hurco Companies, Inc. and its consolidated subsidiaries. We design and
produce interactive computer control systems and software and computerized
machine tools for sale through our distribution network to the worldwide metal
working market. We also provide software options, computer control upgrades,
accessories and replacement parts for our products, as well as customer service
and training support.
The condensed financial information as of July 31, 2003 and for the three and
nine months ended July 31, 2003 and July 31, 2002 is unaudited; however, in our
opinion, the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results and
financial position for 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, 2002.
2. HEDGING
We enter into foreign currency forward exchange contracts periodically to hedge
certain forecast inter-company sales and forecast inter-company and third-party
purchases of product denominated in foreign currencies (primarily 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 the 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 Sheet at fair value in Other Current Assets and Accrued
Expenses. Gains and losses resulting from changes in the fair value of these
hedge contracts are deferred in Accumulated Other Comprehensive Income and
recognized as an adjustment to cost of sales in the period that the sale of the
related hedged item 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 item being hedged.
At July 31, 2003, we had $1,596,000 of losses related to cash flow hedges
deferred in Accumulated Other Comprehensive Income. Of this amount, $635,000
represents unrealized losses related to future cash flow hedge instruments that
remain subject to currency fluctuation risk. These deferred losses will be
recorded as an adjustment to cost of sales in the periods through October 31,
2004, in which the sale of the related hedged item is recognized, as described
above. Net losses on cash flow hedge contracts which we reclassified from Other
Comprehensive Income to Cost of Sales in the quarters ended July 31, 2003 and
2002 were $336,000 and $47,000, respectively.
We also enter into foreign currency forward exchange contracts to protect
against the effects of foreign currency fluctuations on receivables and payables
denominated in foreign currencies. These derivative instruments are not
designated as hedges under Statement of Financial Accounting Standards No. 133,
"Accounting Standards for Derivative Instruments and Hedging Activities" (SFAS
133), and, as a result, changes in fair value are reported currently as Other
Income, Net in the Consolidated Statement of Operations consistent with the
transaction gain or loss on the related foreign denominated receivable or
payable. Such net transaction losses were $48,000 and $52,000 for the quarters
ended July 31, 2003 and 2002, respectively.
3. STOCK OPTIONS
At July 31, 2003, we had two stock-based compensation plans for employees and
non-employee directors, which is described more fully in the notes to the
consolidated financial statements included in our 2002 annual report on Form
10-K. We account for those plans under the recognition and measurement
principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees,"
and related Interpretations. No stock based compensation cost is reflected in
net earnings related to those plans, as all stock options granted had exercise
prices equal to the market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net earnings and earnings
per share if the Company had applied the fair value recognition provisions of
SFAS No. 123, "Accounting for Stock Based Compensation," to the above plans.
3 Months Ended July 31 9 Months Ended July 31
--------------------------- --------------------------------
2003 2002 2003 2002
----------- ----------- ------------- --------------
Net income, as reported............................. $ 331 $ (651) $ (112) $ (6,503)
Deduct: Total stock-based employee compensation
expense determined under fair value based method for
all awards, net of related tax effects.............. (49) (91) (148) (273)
----------- ----------- ------------- --------------
Pro forma net income (loss)......................... $ 282 $ (742) $ (260) $ (6,776)
=========== =========== ============= ==============
Earnings per share:
Basic as reported.............................. $ 0.06 $ (0.12) $ (0.02) $ (1.16)
Basic pro forma................................ 0.05 (0.13) (0.05) (1.21)
Diluted as reported............................ $ 0.06 (0.12) $ (0.02) $ (1.16)
Diluted pro forma.............................. 0.05 (0.13) (0.05) (1.21)
4. EARNINGS PER SHARE
Basic and diluted earnings per common share are based on the weighted average
number of our shares of common stock outstanding. Diluted earnings per common
share give effect to outstanding stock options using the treasury method. The
impact of stock options for the three months ended July 31, 2003 was 47,000,
while the impact for the nine months ended July 31, 2003 was excluded from the
computation of diluted earnings per share because their effect would be
anti-dilutive.
5. ACCOUNTS RECEIVABLE
The allowance for doubtful accounts was $785,000 as of July 31, 2003 and
$689,000 as of October 31, 2002.
6. INVENTORIES
Inventories, priced at the lower of cost (first-in, first-out method) or market,
are summarized below (in thousands):
July 31, 2003 October 31, 2002
------------- ----------------
Purchased parts and sub-assemblies $ 6,764 $ 6,677
Work-in-process 2,366 2,251
Finished goods 16,888 13,620
------ ------
$ 26,018 $ 22,548
====== ======
7. SEGMENT INFORMATION
We operate in a single segment: industrial automation systems. We design and
produce interactive computer control systems and software and computerized
machine tools for sale through our distribution network to the worldwide metal
working market. We also provide software options, computer control upgrades,
accessories and replacement parts for our products, as well as customer service
and training support.
8. RESTRUCTURING EXPENSE AND OTHER EXPENSE, NET
During fiscal 2002, we discontinued several under-performing product lines, sold
the related assets and discontinued a software development project, to enable us
to focus our resources and technology development on our core products, which
consist primarily of general purpose computerized machine tools for the metal
cutting industry (vertical machining centers) into which our proprietary
Ultimax(R) software and computer control systems have been fully integrated. At
July 31, 2003, we had $23,000 accrued for costs related to employees that will
be paid severance in future periods and $1.2 million for potential expenditures
related to a disputed claim in the United Kingdom regarding a terminated
facility lease (See Note 9). These expenses are summarized below (in thousands):
Balance Charges to Balance
Description 10/31/02 Provision Accrual Translation 7/31/03
----------- -------- --------- ------- ----------- -------
Severance $ 264 $ -- $ (241) $ -- $ 23
Foreign lease termination liability 1,113 -- -- 97 1,210
----------- ---------- ------------ -------------- ------------
Total $ 1,377 $ -- $ (241) 97 $ 1,233
9. DEBT AGREEMENTS
During the past several quarters, we have been in discussions with several
lenders to replace our existing long-term credit facility, which matures and,
unless extended, will expire on December 15, 2003. We are currently in
negotiations regarding proposed terms of a replacement domestic facility, and we
believe, but cannot assure you, that we will be able to obtain a replacement
domestic facility under acceptable terms. Failure to obtain a replacement
facility or extension of our current facility would have a material adverse
effect on our business and financial condition. Effective September 1, 2003, we
modified our European credit facility, extending its maturity date to August 31,
2004. Outstanding borrowings under this facility of $2.5 million are classified
as long-term debt at July 31, 2003.
We were in compliance with all loan covenants at July 31, 2003, and had an
unused credit availability of $4.9 million.
10. LEASEHOLD REPAIRS CONTINGENCY
We previously occupied a facility located in England under a lease that expired
in April 2002. The lease required that, following expiration of the lease, we
make certain repairs to the facility resulting from deterioration of the
facility during the lease term. We are in settlement negotiations with the
lessor. We continue to believe that our reserve of $1.2 million for this
contingency is appropriate.
11. GUARANTEES
During the period ending January 31, 2003, we adopted Financial Accounting
Standards Board Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, an interpretation of FASB Statements No. 5, 57 and 107
and Rescission of FASB Interpretation No. 34." FIN 45 clarifies the requirements
of FASB Statement No. 5, Accounting for Contingencies, relating to the
guarantor's accounting for, and disclosure of, the issuance of certain types of
guarantees.
From time to time, our German subsidiary guarantees third party lease financing
residuals in connection with the sale of certain machines in Europe. At July 31,
2003 there were 27 third party guarantees totaling approximately $1.4 million. A
retention of title clause allows us to obtain the machine should the customer
default on the payment terms to the financing company. If default occurs, the
proceeds obtained from liquidation of the machine would, we believe, cover any
payments required under the guarantee.
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):
Warranty Reserve
---------------------
Balance at October 31, 2002 $ 1,003
Provision for warranties during the period 1,023
Charges to the accrual (1,242)
Impact of foreign currency translation 63
---------------------
Balance at July 31, 2003 $ 847
=====================
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- ------ -----------------------------------------------------------------------
The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes thereto appearing elsewhere herein.
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. These
factors include, among others, changes in general economic and business
conditions that affect market demand for machines tools and related computer
control systems, software products, and replacement parts, changes in
manufacturing markets, adverse currency movements, innovations by competitors,
quality and delivery performance by our contract manufacturers and governmental
actions and initiatives including import and export restrictions and tariffs.
RESULTS OF OPERATIONS
Three Months Ended July 31, 2003 Compared to Three Months Ended July 31, 2002
Hurco's operating results for the third quarter of fiscal 2003 were favorably
impacted to a significant extent by changes in foreign currency exchange rates,
particularly the Euro, in relation to the U.S. Dollar, when translating sales
and operating expenses of foreign subsidiaries to U.S. Dollars for financial
reporting purposes. As noted in the following table, approximately 61.2% of
Hurco's net sales and service fees in the third quarter of 2003 were derived
from European markets. The weighted average exchange rate for the Euro during
the most recent fiscal quarter was $1.14, as compared to $.96 for the comparable
prior year period, an increase of 19%.
Net Sales and Service Fees by Geographic Region
The following table sets forth net sales and service fees by geographic region
for the third quarter ending July 31, 2003 and 2002 (in thousands):
July 31,
--------------------------------------------------------
2003 2002
-------------------------- ---------------------------
Americas $ 6,146 33.5% $ 6,789 37.3%
Europe 11,226 61.2% 10,767 59.1%
Asia Pacific 982 5.3% 648 3.6%
------------ ---------- ------------- -----------
Total $ 18,354 100.0% $ 18,204 100.0%
============ ========== ============= ===========
Total sales and service fees on a worldwide basis were $18.4 million in the
third quarter of fiscal 2003, a $150,000, or 0.8%, increase compared to the
prior year period. In the Americas, sales and service fees from continuing
products and services increased $940,000, or 18%, fueled by the successful
introduction of a new lower priced vertical machining center model in late
fiscal 2002. This increase was more than offset by a decrease of $1.6 million in
sales of discontinued products. The liquidation of discontinued products is now
substantially complete. In Europe, sales and service fees benefited by $1.6
million from the favorable effect of stronger European currencies when
translating sales and service fees to U.S. dollars for financial reporting
purposes. However, when measured at constant exchange rates, sales and service
fees in Europe decreased $1.1 million, or 10%, reflecting the continuing
weakness in industrial equipment spending and reduced consumption of machine
tools by many manufacturing companies, particularly in Germany. Sales and
service fees in Asia Pacific were not significantly affected by currency rates,
but reflect improved activity in Asian markets.
Net Sales and Service Fees by Product Category
The following table sets forth net sales and service fees by product category
for the third quarter ending July 31, 2003 and 2002 (in thousands):
July 31,
---------------------------------------------------------
2003 2002
-------------------------- ---------------------------
Continuing Products and Services
Computerized Machine Tools $ 14,740 80.3% $ 12,967 71.2%
Computer Control Systems and Software 741 4.0% 776 4.3%
Service Parts 1,940 10.6% 2,006 11.0%
Service Fees 899 4.9% 840 4.6%
---------- ---------- ------------- ----------
Total 18,320 99.8% 16,589 91.1%
Discontinued Products * 34 0.2% 1,615 8.9%
------------ ---------- ------------- ----------
Total $ 18,354 100.0% $ 18,204 100.0%
============ ========== ============= ==========
* Discontinued product sales were made solely in the United States.
Sales of continuing machine tool models increased $1.8 million, or 14%, of which
$1.4 million was attributable to the favorable effects of foreign currency
translation. Unit shipments of continuing machine tool models increased 31% due
to the introduction of a new lower priced vertical machining center model in
late fiscal 2002. The average net selling price per continuing unit decreased
13% due to the product mix shifting to the lower priced vertical machining
center, along with some discounting, the effects of which were partially offset
by the effects of currency translation. When measured in constant exchange
rates, the average net selling price per continuing machine unit decreased 22%.
Revenues from continuing non-machine sales and service fees approximated that of
the prior year period.
New order bookings for the third quarter of fiscal 2003 were $18.9 million, an
increase of 7% as compared to $17.6 million recorded in the prior year period.
This increase was influenced by three factors: (1) at constant exchange rates,
new order bookings for continuing products and services increased $1.0 million,
or 6%; (2) orders for discontinued products decreased $1.6 million; and (3) the
effect of the weaker U.S. dollar, when translating orders booked in foreign
currencies, increased new orders booked by $1.9 million. The $1.0 million
increase in orders for continuing products in constant U.S. dollars was
attributable almost entirely to orders for the new lower priced vertical
machining center model. Backlog was $7.3 million at July 31, 2003, compared to
$5.3 million at October 31, 2002 and $6.8 million at April 30, 2003.
Gross profit margin increased in the third quarter of fiscal 2003 to 27.6% from
24.1% in the same period a year ago, due in large part to strengthening European
currencies, particularly the Euro, as well as to previously reported cost
reductions. The favorable effect of changes in currency rates on gross profit
margin for the period was partially offset by losses on forward hedge contracts
related to product shipped in the period, as described in Note 2.
Selling, general and administrative ("SG&A") expenses for the third quarter of
fiscal 2003 of $4.3 million were $340,000, or 7% lower than the same period in
the prior year. SG&A expenses increased approximately $271,000 due to the
effects of a weaker U.S. Dollar when translating expenses incurred outside the
United States for financial reporting purposes. However, when measured at
constant exchange rates, SG&A expenses decreased $611,000, or 13%, from the
prior year period, as a result of previously reported employee cost reductions,
lower research and development expenses, and reduced sales and marketing
expenditures.
The provision for income taxes is related to the earnings of two foreign
subsidiaries. In the United States and certain other foreign jurisdictions, we
have net operating loss carryforwards for which we have a 100% valuation reserve
at July 31, 2003.
Nine Months Ended July 31, 2003 Compared to Nine Months Ended July 31, 2002
Similar to the third quarter, Hurco's operating results for the nine months
ended July 31, 2003 were favorably impacted to a significant extent by changes
in foreign currency exchange rates, particularly the Euro, in relation to the
U.S. Dollar, when translating sales and operating expenses of foreign
subsidiaries to U.S. Dollars for financial reporting purposes. As noted in the
following table, approximately 62.5% of Hurco's net sales and service fees in
the third quarter of 2003 were derived from European markets. The weighted
average exchange rate for the Euro during the first nine months of fiscal 2003
was $1.09, as compared to $.91 for the comparable prior year period, an increase
of 19%.
Net Sales and Service Fees by Geographic Region
The following table sets forth net sales and service fees by geographic region
for the nine months ended July 31, 2003 and 2002 (in thousands):
July 31,
---------------------------------------------------------
2003 2002
-------------------------- ---------------------------
Americas $ 17,411 33.6% $ 18,020 34.8%
Europe 32,387 62.5% 32,204 62.3%
Asia Pacific 1,962 3.9% 1,495 2.9%
------------ ---------- ------------ ----------
Total $ 51,760 100.0% $ 51,719 100.0%
============ ========== ============ ==========
Total sales and service fees on a worldwide basis were $51.8 million in the
first nine months of fiscal 2003, approximating that of the prior year period.
In the Americas, sales and service fees from continuing products and services
increased $3.8 million, or 29%, due primarily to the successful introduction of
a new lower priced vertical machining center model in late fiscal 2002. This
increase was more than offset by a decrease of $4.4 million in sales of
discontinued products. The liquidation of discontinued products is now
substantially complete. In Europe, sales and service fees benefited by $4.8
million from the favorable effect of stronger European currencies when
translating sales and service fees to U.S. dollars for financial reporting
purposes. However, when measured at constant exchange rates, sales and service
fees in Europe decreased $4.6 million, or 14%, reflecting the continuing
weakness in industrial equipment spending and reduced consumption of machine
tools by many manufacturing companies, particularly in Germany. Sales and
service fees in Asia Pacific were not significantly affected by currency rates,
but reflect improved activity in Asian markets.
Net Sales and Service Fees by Product Category
The following table sets forth net sales and service fees by product category
for the nine months ended July 31, 2003 and 2002 (in thousands):
July 31,
---------------------------------------------------------
2003 2002
-------------------------- --------------------------
Continuing Products and Services
Computerized Machine Tools $ 41,178 79.6% $ 36,820 71.2%
Computer Control Systems and Software 2,244 4.3% 2,471 4.8%
Service Parts 5,238 10.1% 5,239 10.1%
Service Fees 2,633 5.1% 2,352 4.5%
------------ ---------- ------------ ----------
Total 51,293 99.1% 46,882 90.6%
Discontinued Products * 467 0.9% 4,837 9.4%
------------ ---------- ------------ ----------
Total $ 51,760 100.0% $ 51,719 100.0%
============ ========== ============ ==========
* Discontinued product sales were made solely in the United States.
Sales of continuing machine tool products increased $4.4 million, or 12%, of
which $4.3 million was attributable to the favorable effects of foreign currency
translation, resulting in almost no change in total sales and service fees in
constant U.S. Dollars. Unit shipments of continuing machine tool models
increased 22%, as sales of the new lower priced vertical machining center model
introduced in late fiscal 2002 more than offset a decline in the balance of the
product line. The average net selling price per unit of continuing machine tool
models decreased approximately 8% due to product mix and discounting, the
effects of which were partially offset by the favorable effects of currency
translation. When measured at constant exchange rates, the average net selling
price per continuing unit declined approximately 18%. Revenues from continuing
non-machine sales and service fees approximated that of the prior year period.
New order bookings for the first nine months of fiscal 2003 were $53.3 million,
an increase of 8% as compared to $49.6 million recorded in the comparable prior
year period. New order bookings for continuing products and services increased
$3.1 million, or 7%, when measured at constant exchange rates; orders for
discontinued products decreased $4.4 million; and the translation effect of the
weaker U.S. Dollar contributed $5.0 million to reported new orders, all as
compared to the prior year period. The $3.1 million increase in orders for
continuing products in constant U.S. Dollars was attributable to orders for the
new low cost vertical machining center model, which more than offset the effect
of weak order rates in the first fiscal quarter of 2003 related to the balance
of the product line.
Gross profit margin increased in the first nine months of fiscal 2003 to 27.4%
from 19.9% (21.9% excluding a $1.1 million restructuring charge) in the same
period a year ago, due in large part to strengthening European currencies,
particularly the Euro in relation to the U.S. dollar, as well as previously
reported employee cost reductions. The favorable effect of changes in currency
rates on gross profit margin for the period was partially offset by losses on
forward hedge contracts related to product shipped in the period, as described
in Note 2.
Selling, general and administrative ("SG&A") expenses for the first nine months
of fiscal 2003 of $13.3 million were $1.1 million, or 8%, below those of the
corresponding 2002 period. SG&A expenses increased approximately $853,000, due
to the effects of a weaker U.S. Dollar when translating expenses incurred
outside the United States for financial reporting purposes. When measured at
constant exchange rates, SG&A expenses decreased $1.9 million or 13%, from the
prior year period, as a result of previously reported employee cost reductions,
lower research and development expenses, and reduced sales and marketing
expenditures.
The provision for income taxes is related to the earnings of two foreign
subsidiaries. In the United States and certain other foreign jurisdictions, we
have net operating loss carryforwards for which we have a 100% valuation reserve
at July 31, 2003.
FOREIGN CURRENCY RISK MANAGEMENT
We manage our foreign currency exposure through the use of foreign currency
forward exchange contracts. We do not speculate in the financial markets and,
therefore, do not enter into these contracts for trading purposes. We also
moderate our currency risk related to significant purchase commitments with
certain foreign vendors through price adjustment agreements that provide for a
sharing of, or otherwise limit, the potential adverse effect of currency
fluctuations on the costs of purchased products. See Item 3 below and Note 2 to
the Condensed Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
We had unrestricted cash and cash equivalents of $3.2 and $4.4 million at July
31, 2003 and October 31, 2002, respectively. We had $521,000 of restricted cash
at July 31, 2003 resulting from hedging arrangements that require cash to be on
deposit with the institution based on open positions. Cash used by operations
totaled $1.2 million in the first nine months of fiscal 2003 compared to $5.3
million of cash provided by operations in the prior year period.
Net working capital, excluding short-term debt, was $23.4 million at July 31,
2003 compared to $21.7 million at October 31, 2002, an increase of $1.7 million,
which was due entirely to the effects of stronger European currencies. When
measured at average exchange rates during the period, net working capital
increased $1.6 million due to a $3.1 million reduction in accrued expenses,
related primarily to the timing of payments for income taxes, warranty expenses
and other accrued items by our European subsidiaries, offset in part by an
increase of $1.3 million in vendor payables related to manufacturing activities.
Capital investments for the first nine months of fiscal 2003 consisted
principally of expenditures for software development projects and purchases of
equipment. Cash used for investing activities during the first nine months of
fiscal 2003 was funded by available cash and borrowings under bank credit
facilities.
At July 31, 2003, outstanding borrowings of $2.2 million under our domestic bank
credit facility were classified as a current liability because the facility
matures on December 15, 2003. Effective September 1, 2003, we modified our
European credit facility, extending its maturity date to August 31, 2004.
Outstanding borrowings under this facility of $2.5 million were classified as
long-term debt at July 31, 2003. Total debt at July 31, 2003 was $10.3 million
representing 27% of total capitalization, compared to $8.9 million, or 24%, of
total capitalization at October 31, 2002. We were in compliance with all loan
covenants at July 31, 2003 and had unused credit availability of $4.9 million.
Based on our business plan and financial projections for fiscal 2003, we believe
that cash flow from operations and borrowings available to us under our credit
facilities will be sufficient to meet our anticipated cash requirements for the
balance of fiscal 2003. Although we believe that the assumptions underlying our
2003 business plan are reasonable and achievable, there are risks related to
further declines in market demand and reduced sales in the U.S. and Europe and
adverse currency movements that could cause our actual results to differ from
our business plan. During the past several quarters, we have been in discussions
with several lenders to replace our existing long-term credit facility. We are
currently in negotiations regarding proposed terms of a replacement domestic
facility, and we believe, but cannot assure you, that we will be able to obtain
a replacement domestic facility under acceptable terms. Failure to obtain a
replacement facility or extension of our current facility would have a material
adverse effect on our business and financial condition.
ODD-LOT TENDER OFFER
On June 3, 2003, we commenced a tender offer for the purchase, at a price of
$3.35 per share, of all shares of our common stock held by persons owning
ninety-nine (99) or fewer shares as of the close of business on June 2, 2003.
The offer expired at 5:00 p.m. New York City time on Tuesday, September 2, 2003.
Pursuant to the tender offer, we purchased 7,171 shares of common stock. Upon
the expiration of the tender offer, we continued to have more than 300
stockholders of record.
NEW ACCOUNTING PRONOUCEMENTS
In December 2002, the Financial Accounting Standards Board issued Statement No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an
amendment of SFAS No. 123, Accounting for Stock-Based Compensation" (SFAS 148).
The Standard provides for (1) alternative methods of transition for an entity
that voluntarily changes to the fair-value method of accounting for stock-based
compensation; (2) requires more prominent disclosure of the effects of an
entity's accounting policy decisions with respect to stock-based compensation on
reported income; and (3) amends APB Opinion No. 28, "Interim Financial
Reporting", to require disclosure of those effects in interim financial
information. SFAS No. 148 is effective for fiscal years ending after December
15, 2002, and for financial reports containing condensed financial statements
for interim periods beginning after December 15, 2002. We do not expect the
adoption of SFAS 148 to have a material impact on our Condensed Consolidated
Financial Statements.
CRITICAL ACCOUNTING POLICIES
Our accounting policies require our management to make significant estimates and
assumptions using information available at the time the estimates are made. Such
estimates and assumptions significantly affect various reported amounts of
assets, liabilities, revenues and expenses. If our future experience differs
materially from these estimates and assumptions, our results of operations and
financial condition could be affected. There have been no material changes to
our critical accounting policies, which are described in our Annual Report on
Form 10-K for the fiscal year ended October 31, 2002.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
There have been no material changes from the information provided in our Annual
Report on Form 10-K for the fiscal year ended October 31, 2002.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------ ----------------------------------------------------------
Interest Rate Risk
Interest on our bank borrowings is affected by changes in prevailing U.S. and
European interest rates. At July 31, 2003, outstanding borrowings under our bank
credit facilities were $4.7 million and our total indebtedness was $10.3
million.
Foreign Currency Exchange Risk
In the third quarter of fiscal 2003, approximately 67% of our sales and service
fees were derived from foreign markets. All of our computerized machine tools
and computer numerical control systems, as well as certain proprietary service
parts, are sourced by our U.S.-based engineering and manufacturing division and
re-invoiced to our foreign sales and service subsidiaries, primarily in their
functional currencies.
Our products are sourced from foreign suppliers or built to our specifications
by either our wholly owned subsidiary in Taiwan, or contract manufacturers
overseas. These purchases are predominantly in foreign currencies and in many
cases our arrangements with these suppliers include foreign currency risk
sharing agreements, which reduce (but do not eliminate) the effects of currency
fluctuations on product costs. The predominant portion of our exchange rate risk
associated with product purchases relates to the New Taiwan Dollar.
We enter into forward foreign exchange contracts from time to time to hedge the
cash flow risk related to forecast inter-company sales, and forecast
inter-company and third-party purchases denominated in, or based on, foreign
currencies. We also enter into foreign currency forward exchange contracts to
provide a natural hedge against the effects of foreign currency fluctuations on
receivables and payables denominated in foreign currencies. We do not speculate
in the financial markets and, therefore, do not enter into these contracts for
trading purposes.
Forward contracts for the sale or purchase of foreign currencies as of July 31,
2003 which are designated as cash flow hedges under SFAS No. 133 were as
follows:
Contract Amount at Forward
Weighted Rates in U.S. Dollars
Notional Amount Avg. ---------------------------
Forward in Foreign Forward At Date of July 31,
Contracts Currency Rate Contract 2003 Maturity Dates
---------- ----------------- ------- ---------- --------- -----------------
Sale Contracts:
Euro 16,800,000 1.0790 18,127,200 18,784,313 August 2003 - October 2004
Sterling 1,290,000 1.6045 2,069,805 2,055,335 August 2003 - June 2004
Purchase Contracts:
New Taiwan Dollar 70,000,000 34.50* 2,028,986 2,036,375 August 2003 - September 2003
* per U. S. Dollars
Forward contracts for the sale of foreign currencies as of July 31, 2003, which
were entered into to protect against the effects of foreign currency
fluctuations on receivables and payables denominated in foreign currencies were
as follows:
Contract Amount at Forward
Weighted Rates in U.S. Dollars
Notional Amount Avg. ---------------------------
Forward in Foreign Forward At Date of July 31,
Contracts Currency Rate Contract 2003 Maturity Dates
---------- ----------------- ------- ---------- --------- -----------------
Sale Contracts:
Euro 4,628,051 1.1412 5,281,532 5,196,080 August 2003 - September 2003
Singapore Dollar 2,261,873 1.7466* 1,295,015 1,286,249 August 2003 - November 2003
Sterling 510,633 1.6246 829,574 820,357 August 2003 - September 2003
Purchase Contracts:
New Taiwan Dollar 26,000,000 34.32* 757,575 756,400 August 2003 - September 2003
* per U.S. Dollars
Item 4. CONTROLS AND PROCEDURES
- ------ -----------------------
We carried out an evaluation under the supervision and with participation of
management, including the Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures as of July 31, 2003 pursuant to Rule 13a-15(b) under the Securities
Exchange Act of 1934, as amended. Based upon that evaluation, our management,
including the Chief Executive Officer and Chief Financial Officer, concluded
that our disclosure controls and procedures were effective as of the evaluation
date.
There have been no changes in our internal controls over financial reporting
that occurred during the quarter ended July 31, 2003 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
We are involved in various claims and lawsuits arising in the normal course of
business. We believe it is remote that any of these claims will have a material
adverse effect on our consolidated financial position or results of operations.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) Exhibits:
11 Statement re: Computation of Per Share Earnings
31.1 Certification by the Chief Executive Officer, pursuant to
Rule 13a-14(a) under the Securities and Exchange Act of
1934, as amended.
31.2 Certification by the Chief Financial Officer, pursuant to
Rule 13a-14(a) under the Securities and Exchange Act of
1934, as amended. ,
32.1 Certification by the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification by the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
Report filed on June 23, 2003 furnishing items under Item 5, Other
Events.
Report filed on July 2, 2003 furnishing items under Item 5, Other
Events.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HURCO COMPANIES, INC.
By: /s/ Roger J. Wolf
------------------
Roger J. Wolf
Senior Vice President and
Chief Financial Officer
By: /s/ Stephen J. Alesia
--------------------------
Stephen J. Alesia
Corporate Controller and
Principal Accounting Officer
September 11, 2003
Exhibit 11
Statement Re: Computation of Per Share Earnings
Three Months Ended Nine months Ended
July 31, July 31,
---------------------------------------------------------------------------------------------
2003 2002 2003 2002
---------------------------------------------------------------------------------------------
(in thousands, except per share data)
Basic Diluted Basic Diluted Basic Diluted Basic Diluted
---------------------------------------------------------------------------------------------
Net income (loss)................... $ 331 $ 331 $ (651) $ (651) $ (112) $ (112) $ (6,503)$ (6,503)
Weighted average shares
outstanding.................... 5,583 5,583 5,583 5,583 5,583 5,583 5,583 5,583
Dilutive effect of stock options.... -- 47 -- -- -- -- -- --
---------------------------------------------------------------------------------------------
5,583 5,630 5,583 5,583 5,583 5,583 5,583 5,583
Earnings (loss) per common share..... $ 0.06 $ 0.06 $ (0.12) $ (0.12) $ (0.02) $ (0.02) $ (1.16)$ (1.16)
=============================================================================================
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Michael Doar, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hurco
Companies, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
/s/ Michael Doar
Michael Doar
Chairman & Chief Executive Officer
September 10, 2003
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Roger J. Wolf, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hurco
Companies, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report
is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
/s/ Roger J. Wolf
Roger J. Wolf
Senior Vice President & Chief Financial Officer
September 10, 2003
Exhibit 32.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Hurco Companies, Inc. (the "Company")
on Form 10-Q for the period ending July 31, 2003 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), the undersigned
hereby certifies, pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and (2) The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Michael Doar
Michael Doar
Chairman & Chief Executive Officer
September 10, 2003
Exhibit 32.2
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Hurco Companies, Inc. (the "Company")
on Form 10-Q for the period ending July 31, 2003 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), the undersigned
hereby certifies, pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and (2) The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Roger J. Wolf
Roger J. Wolf
Senior Vice President & Chief Financial Officer
September 10, 2003