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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported) June 8, 2012

 

Hurco Companies, Inc.
(Exact Name of Registrant as Specified in Its Charter

 

Indiana
(State or Other Jurisdiction of Incorporation

 

0-9143   35-1150732
(Commission File Number)   (I.R.S. Employer Identification Number)
     
One Technology Way    
Indianapolis, Indiana   46268
(Address of principal executive offices)   (Zip code)

 

(317) 293-5309
(Registrant’s Telephone Number, Including Area Code

 

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

Item 2.02. Results of Operations and Financial Condition.

 

On June 8, 2012, Hurco Companies, Inc. (the "Registrant") reported its results of operations for the second quarter ended April 30, 2012. The Registrant's earnings release for the period is attached as Exhibit 99 and the information set forth therein is incorporated herein by reference and constitutes a part of this report. The attached Exhibit is furnished pursuant to Item 2.02 of Form 8-K.

 

Item 9.01 Financial Statements and Exhibits.

 

99Press Release dated June 8, 2012.

 

 
 

 

SIGNATURE

 

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 hereunto duly authorized.

 

  Dated:  June 8, 2012
     
  HURCO COMPANIES, INC
     
  By: /s/John G. Oblazney
    John G. Oblazney,
    Vice President and
    Chief Financial Officer

 

 
 

 

EXHIBIT INDEX

 

Exhibit 99 Press Release of Hurco Companies, Inc. dated June 8, 2012.

 

 

 

 

FOR IMMEDIATE RELEASE

Friday, June 8, 2012

 

HURCO REPORTS SECOND QUARTER RESULTS

 

INDIANAPOLIS, INDIANA, — June 8, 2012, Hurco Companies, Inc., (Nasdaq, Global Select Market: HURC) today reported net income of $2,962,000, or $0.45 per diluted share, for its second fiscal quarter ended April 30, 2012, compared to $2,349,000, or $0.36 per diluted share, for the corresponding period in fiscal 2011. For the first six months of fiscal 2012, Hurco reported net income of $7,595,000, or $1.16 per diluted share, compared to $3,895,000, or $0.60 per diluted share, for the corresponding period in fiscal 2011.

 

Sales and service fees for the second quarter of fiscal 2012 totaled $45,965,000, an increase of $4,389,000, or 11%, compared to the second quarter of fiscal 2011. The year-over-year increase in sales includes the adverse effect of a weaker Euro in 2012 when translating foreign sales to U.S. Dollars for financial reporting purposes of approximately $1,426,000, or 3%. Sales and service fees for the six months ended April 30, 2012 totaled $97,091,000, an increase of $15,835,000, or 19%, over the corresponding period in 2011. The unfavorable impact of currency translation on the year-over-year six-month comparison was $1,811,000, or 2%.

 

The following table sets forth net sales and service fees by geographic region for the second quarter and first six months of fiscal 2012 and 2011, respectively:

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
           %           % 
   2012   2011   Change   2012   2011   Change 
North America  $11,996   $9,137    31%  $27,322   $22,599    21%
Europe   26,646    27,297    -2%   56,565    48,576    16%
Asia Pacific   7,323    5,142    42%   13,204    10,081    31%
Total  $45,965   $41,576    11%  $97,091   $81,256    19%

 

The increase in sales during the second quarter of fiscal 2012 compared to the fiscal 2011 period was driven primarily by strong demand in North America and the Asia Pacific region. The European sales region was down slightly compared to the prior year period due to growing economic uncertainty surrounding the European debt crisis and the adverse effect of a weaker Euro. During the second quarter of fiscal 2012, unit shipments increased over the corresponding quarter in fiscal 2011 by 16% in North America and 45% in the Asia Pacific sales region, but decreased by 7% in Europe. Unit shipments in the first six months of fiscal 2012 increased over the prior year period by 9% in North America, 7% in Europe, and 36% in the Asia Pacific sales region.

 
 

 

The following table sets forth new orders booked by geographic region for the second quarter and first six months of fiscal 2012 and 2011, respectively:

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
           %           % 
   2012   2011   Change   2012   2011   Change 
North America  $14,042   $14,032    0%  $28,425   $27,577    3%
Europe   30,391    50,572    -40%   59,648    76,043    -22%
Asia Pacific   6,647    8,008    -17%   11,902    13,254    -10%
Total  $51,080   $72,612    -30%  $99,975   $116,874    -14%

 

Orders for the second quarter of fiscal 2012 were $51,080,000, a decrease of $21,532,000, or 30%, from the corresponding period in fiscal 2011. Unit orders for the second quarter of fiscal 2012 decreased 20% in North America, 42% in Europe and 14% in the Asia Pacific region compared to the prior year period. Orders in the second quarter of fiscal 2011 were unusually high due to a surge of customer orders that were placed during the quarter in advance of an announced price increase that went into effect at the end of that quarter. This impact was seen across all regions, but was most notable in Europe, where orders of $50,572,000 for the second quarter of fiscal 2011 represented 42% of total European orders for the entire fiscal year. When compared to the first quarter of fiscal 2012, orders for the second quarter increased by $2,185,000, or 4%. The impact of currency translation on orders was consistent with the impact on sales.  Orders for the first six months of fiscal 2012 were $99,975,000, a decrease of $16,899,000, or 14%, from the corresponding period in fiscal 2011. Unit orders for the first six months of fiscal 2012 decreased by 9% in North America, 28% in Europe and 14% in the Asia Pacific region compared to the prior year period.

 

Gross profit for the second quarter of fiscal 2012 was $13,393,000, or 29% of sales, compared to $12,651,000, or 30% of sales, for the prior year period, due primarily to the impact of increased sales in North America and Asia. Gross profit as a percentage of sales decreased in the quarter as a result of a lower percentage of sales attributable to Europe, which is the primary market for our larger, higher performance machines. Gross profit for the first six months of fiscal 2012 was $29,877,000 or 31% of sales, compared to $24,342,000 or 30% of sales for the same period in 2011 due primarily to the result of increased sales and the effects of leveraging fixed costs over those increased sales.

 

Selling, general and administrative expenses in the second quarter of fiscal 2012 were $9,288,000 and remained relatively unchanged from the fiscal 2011 period. Selling, general and administrative expenses were $19,018,000 for the first six months of fiscal 2012 compared to $18,084,000 for the first six months of fiscal 2011 and reflected global sales and marketing initiatives implemented to promote growth in all regions. Selling, general and administrative expenses were 20% of sales and service fees during the second quarter and first half of fiscal 2012 compared to 22% of sales for the second quarter and first half of fiscal 2011 because of the effects of leveraging fixed costs across increased sales.

 

 
 

 

Cash and cash equivalents totaled $40,113,000 as of April 30, 2012, compared to $44,961,000 as of October 31, 2011. During the first six months of fiscal 2012 inventory levels were increased to support the growth in customer demand and we funded the increase in production primarily with cash on hand and $1,991,000 of borrowings from our China credit facility.

 

Working capital, excluding cash, was $77,454,000 as of April 30, 2012, compared to $61,885,000 as of October 31, 2011. The increase in working capital, excluding cash, was primarily due to an increase in inventory of $11,762,000 to meet anticipated demand in all sales regions. Increased capital expenditures during the first six months of fiscal 2012 were primarily for the purchase of factory equipment for a new production facility in Taiwan, capital improvements in existing facilities, implementation of operating systems, and software development costs. We funded these expenditures with cash on hand.

 

Michael Doar, Chairman, Chief Executive Officer and President, stated, “I am pleased to report the Asia Pacific region broke its previous sales record by exceeding $7 million this quarter, which I attribute to the investment we have made in the infrastructure of our sales channels throughout China. We continue to monitor activity in Europe related to the ongoing debt situation. However, we reported a record number of visitors at MACH 2012 in the U.K., the most recent show in the region.”

 

Hurco Companies, Inc. is an industrial technology company that designs and produces interactive computer controls, software and computerized machine tools for the worldwide metal cutting and metal forming industry. The end market for the Company's products consists primarily of independent job shops and short-run manufacturing operations within large corporations in industries such as aerospace, defense, medical equipment, energy, transportation and computer equipment. The Company is based in Indianapolis, Indiana, with manufacturing operations in Taiwan and China, and sells its products through direct and indirect sales forces throughout North America, Europe, and Asia. The Company has sales, application engineering support and service subsidiaries in Canada, China, England, France, Germany, India, Italy, Poland, Singapore, South Africa and the United States of America.  Web Site: www.hurco.com

 

This news release contains forward looking statements which 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, the cyclical nature of the machine tool industry, changes in general economic and business conditions that affect demand for our products, the risks of our international operations, changes in manufacturing markets, innovations by competitors, the ability to protect our intellectual property, fluctuations in foreign currency exchange rates, increases in prices of raw materials, quality and delivery performance by our vendors, changes in operations due to acquisitions or loss of key personnel, uncertainty concerning our ability to use tax loss carryforwards and governmental actions and initiatives including import and export restrictions and tariffs.

 

Contact: John G. Oblazney
  Vice President & Chief Financial Officer
  317-293-5309

 

 
 

 

Hurco Companies, Inc.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(In thousands, except per-share data)

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
   2012   2011   2012   2011 
   (unaudited)   (unaudited) 
Sales and service fees  $45,965   $41,576   $97,091   $81,256 
                     
Cost of sales and service   32,572    28,925    67,214    56,914 
Gross profit   13,393    12,651    29,877    24,342 
                     
Selling, general and administrative expenses   9,288    9,254    19,018    18,084 
Operating income   4,105    3,397    10,859    6,258 
                     
Interest expense   38    9    62    14 
                     
Interest income   19    32    41    72 
                     
Investment income (expense)   (4)   2    2    7 
                     
Other expense (income), net   17    23    (121)   479 
                     
Income before taxes   4,065    3,399    10,961    5,844 
                     
Provision for income taxes   1,103    1,050    3,366    1,949 
                     
Net income  $2,962   $2,349   $7,595   $3,895 
                     
Earnings per common share                    
                     
Basic  $0.46   $0.36   $1.17   $0.60 
Diluted  $0.45   $0.36   $1.16   $0.60 
                     
Weighted average common shares outstanding                    
Basic   6,443    6,441    6,442    6,441 
Diluted   6,479    6,489    6,473    6,476 

 

OTHER CONSOLIDATED FINANCIAL DATA  Three Months Ended   Six Months Ended 
   April 30,   April 30, 
Operating Data:  2012   2011   2012   2011 
   (unaudited)   (unaudited) 
Gross margin   29%   30%   31%   30%
                     
SG&A expense as a percentage of sales   20%   22%   20%   22%
                     
Operating income as a percentage of sales   9%   8%   11%   8%
                     
Pre-tax income as a percentage of sales   9%   8%   11%   7%
                     
Effective Tax Rate   27%   31%   31%   33%
                     
Depreciation and amortization   1,153    1,079    2,240    2,146 
                     
Capital expenditures   766    486    1,310    1,027 
                     
Balance Sheet Data:   4/30/2012    10/31/2011           
    (unaudited)                
Working capital (excluding cash)  $77,454   $61,885           
                     
Days sales outstanding (unaudited)   44    37           
                     
Inventory turns (unaudited)   1.5    1.6           
                     
Capitalization                    
Total debt  $1,991   $865           
Shareholders' equity   135,950    126,212           
Total  $137,941   $127,077           

 

 
 

 

Hurco Companies, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share data)

 

   April 30,   October 31, 
   2012   2011 
   (Unaudited)   (Audited) 
ASSETS          
Current assets:          
Cash and cash equivalents  $40,113   $44,961 
Accounts receivable, net   29,841    27,057 
Refundable taxes   1,264    1,442 
Inventories, net   92,889    81,127 
Deferred income taxes   1,394    2,692 
Derivative assets   1,734    1,197 
Other   8,808    5,598 
Total current assets   176,043    164,074 
           
Property and equipment:          
Land   782    782 
Building   7,116    7,116 
Machinery and equipment   16,873    16,336 
Leasehold improvements   2,821    2,508 
    27,592    26,742 
Less accumulated depreciation and amortization   (16,188)   (15,198)
    11,404    11,544 
           
Non-current assets:          
Software development costs, less accumulated amortization   4,166    4,928 
Other assets   6,002    5,999 
   $197,615   $186,545 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable  $43,184   $39,046 
Derivative liabilities   575    1,609 
Accrued expenses   12,726    15,708 
Short-term debt   1,991    865 
Total current liabilities   58,476    57,228 
           
Non-current liabilities:          
Deferred income taxes   1,977    1,982 
Deferred credits and other obligations   1,212    1,123 
Total liabilities   61,665    60,333 
           
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; 6,502,928 and 6,471,710 shares issued; and 6,447,210 and 6,440,851 shares outstanding, as of April 30, 2012 and October 31, 2011, respectively   645    644 
Additional paid-in capital   53,036    52,614 
Retained earnings   82,543    74,948 
Accumulated other comprehensive loss   (274)   (1,994)
Total shareholders' equity   135,950    126,212 
   $197,615   $186,545