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) December 11, 2008
|
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):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02. Results
of Operation and Financial Condition
On
December 11, 2008, Hurco Companies, Inc. (the "Registrant") reported its results
of operations for the fourth quarter ended October 31, 2008. 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.
|
|
99
|
Press
Release dated December 11, 2008
|
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: December
11, 2008
|
|
|
HURCO
COMPANIES, INC
|
|
|
By: /s/ John G. Oblazney
|
|
|
Vice
President and
|
|
|
Chief
Financial Officer
|
EXHIBIT
INDEX
Exhibit
99 Press
Release of Hurco Companies, Inc. dated December 11, 2008
FOR
IMMEDIATE RELEASE
THURSDAY,
DECEMBER 11, 2008
HURCO
REPORTS STRONG FULL YEAR RESULTS DESPITE GLOBAL ECONOMIC DOWNTURN IN THE FOURTH
QUARTER.
INDIANAPOLIS, INDIANA, — December 11,
2008, Hurco Companies, Inc., (Nasdaq, Global Select Market: HURC) today
reported for its fiscal year ending October 31, 2008, net income of $22,520,000,
or $3.49 per diluted share, which is an increase of 8% over fiscal 2007 net
income of $20,889,000, or $3.24 per diluted share. For the fourth
quarter of fiscal 2008, Hurco recorded net income of $3,422,000, or $0.53 per
diluted share, which is a decrease of 40% from $5,651,000, or $0.88 per diluted
share, for the corresponding period in fiscal 2007.
Sales and
service fees for fiscal 2008 totaled $223,994,000, an increase of $35,947,000,
or 19%, over fiscal 2007. Sales and service fees for the fourth
quarter of fiscal 2008 were $47,468,000, a decrease of $2,652,000, or 5%, from
the prior year period. Translating foreign sales to US Dollars for
financial reporting purposes had a favorable impact on the year over year sales
comparison of approximately 7%, or $13,178,000, reflecting a decrease in the
value of the US Dollar relative to the Euro and Pound Sterling, and an
unfavorable impact on the quarter to quarter sales comparison of 3%, or
$1,728,000, reflecting an increase in the value of the US Dollar relative to
those currencies during the 2008 fourth quarter.
The
following table sets forth net sales and service fees by geographic region for
the three and twelve month periods ended October 31, 2008 and 2007 (in
thousands), respectively:
Net Sales and Service
Fees by Geographic Region
Three Months
Ended
Twelve Months Ended
October
31,
October 31,
|
2008
|
2007
|
%
Change
|
2008
|
2007
|
%
Change
|
|||||||||||||||||||
|
North
America
|
$ | 12,946 | $ | 14,242 | -9 | % | $ | 48,373 | $ | 52,133 | -7 | % | ||||||||||||
|
Europe
|
33,031 | 32,215 | 3 | % | 163,807 | 125,446 | 31 | % | ||||||||||||||||
|
Asia
Pacific
|
1,491 | 3,663 | -59 | % | 11,814 | 10,468 | 13 | % | ||||||||||||||||
|
Total
|
$ | 47,468 | $ | 50,120 | -5 | % | $ | 223,994 | $ | 188,047 | 19 | % | ||||||||||||
Sales
growth was primarily driven by strong customer demand in European markets during
the first nine months of the fiscal year, particularly for our higher end VMX
product line. Translating foreign sales to US Dollars for financial
reporting purposes had a favorable impact of approximately 10% on the European
sales comparison for fiscal 2008 but it had an unfavorable impact of 5% for the
fourth quarter of 2008. Sales for the fourth quarter were negatively
affected in all regions as a result of the rapidly deteriorating global economy
and resulted in a net reduction in backlog of approximately 42% during the
quarter, of which 14% was attributable to currency translation
effects.
1
New order
bookings in fiscal 2008, were $212,530,000, an increase of $13,555,000, or 7%,
over the prior year. This increase was driven by European orders,
which were up $20,707,000, or 15%, while North America and Asia Pacific orders
declined 12% and 6%, respectively. Fourth quarter new order bookings
totaled $40,016,000, a decrease of $14,766,000, or 27%, over the corresponding
2007 period. Orders declined in all regions as our customers,
consisting primarily of small job shops, reacted to the sudden downturn in the
markets they serve. North America orders declined by $2,325,000, or
15%, Europe $10,440,000, or 29%, and Asia $2,000,000, or 62%. The
impact of currency translation on new orders booked for the year and the fourth
quarter was consistent with the impact on sales comparisons for those
periods.
Hurco’s
gross margin for fiscal 2008 was 37%, compared to 38% for the prior year, and
for the fourth quarter of fiscal 2008, gross margin was 35%, compared to 38% for
the prior year period. The decreases in margin rates were primarily
attributable to higher material costs. While some material costs have
recently declined, our production cycle extends for approximately six months and
reflects material costs from the time a purchase order is
accepted. Selling, general and administrative expenses were
$46,811,000 for fiscal 2008, an increase of $6,687,000 over the amount for
fiscal 2007, and $10,930,000 for the fourth quarter of fiscal 2008, a reduction
of $311,000 from the fourth quarter of fiscal 2007. The increase for
the full year was primarily attributable to the unfavorable impact of foreign
currency translation and increased selling expenses to support global sales
growth initiatives and market expansion. Fourth quarter expenses were
lower than in the prior year, despite the increased costs related to the
International Manufacturing Technology Show (IMTS) in Chicago, as efforts were
made to reduce spending due to the economic downturn.
The
decrease in other income for the full year was primarily due to $2,342,000 of
currency exchange losses on inter-company receivables and payables denominated
in foreign currencies, net of gains or losses on forward exchange
contracts. Included in this decrease was approximately $220,000 of
net losses related to cash flow hedges of forecasted inter-company sales and
purchases that became ineffective as production levels steeply declined in the
fourth quarter of fiscal 2008. Additionally, fiscal 2007 included
income from our equity investment in a Taiwan contract manufacturer, which was
sold during the fourth quarter of that year.
Hurco’s
effective tax rate for fiscal 2008 was 34%, compared to 36% for the same period
in the prior year. The effective tax rate for the fourth quarter for
fiscal 2008 was 25%, compared to 30% for the same period in the prior
year. The reduction in the effective tax rate in the fourth quarter and
for the year was primarily due to the utilization of tax credits.
Cash and
cash equivalents totaled $26,394,000 as of October 31, 2008, compared to
$29,760,000 as of October 31, 2007. Working capital, excluding cash
and short-term debt, was $73,789,000 as of October 31, 2008, compared to
$46,290,000 as of October 31, 2007. The increase in working capital
from the prior year reflects increased net derivative assets related to
unrealized gains on forward exchange contracts, increased accounts receivable,
increased inventory at our production facility due to the recent decline in
demand, and a reduction in accounts payable as a result of the cutback in
production volume.
2
Michael
Doar, Chief Executive Officer, stated, "We are pleased that, even with the
sudden sharp decline in sales during the fourth quarter, our results for fiscal
2008 set another record for Hurco, with revenues growing 19% to
$223,994,000 and earnings growing 8% to $22,520,000 compared to the prior
year. We significantly expanded our product line in 2008 with the
introduction of 14 new models at IMTS in September. We believe that
these products will allow us to gain a larger share of the machine tool market
and extend our customer base when global economic conditions begin to
improve.
There is
no question that we are significantly impacted by the worsening global economic
crisis, as evidenced by the 27% decline in global orders during the fourth
quarter. However, we believe that we are well positioned to weather
the downturn due to our broad product line and strong financial
position. At the end of the year we had cash, cash equivalents and
investments of $33,068,000 and no outstanding debt. In addition, we
have already taken steps to reduce expenses and inventory levels to reflect
lower demand. Our customers are facing significant challenges as the
financial crisis has spread to the manufacturing sector. We will
continue to focus on the three key areas that have been our emphasis since
2001: customers, profitability and core competencies, which include
software automation, efficient manufacturing and global sales
distribution.”
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 the aerospace, defense, medical equipment, energy, transportation and
computer equipment. The Company is based in Indianapolis, Indiana,
and has sales, application engineering and service subsidiaries in High Wycombe,
England; Munich, Germany; Paris, France; Milan, Italy; Shanghai, China;
Mississauga, Canada; Chennai, India and Singapore, along with manufacturing
operations in Taiwan and China. Products are sold through independent
agents and distributors in North America, Europe and Asia. The
Company also has direct sales forces in the United Kingdom, Germany, France,
Italy, Canada, and Asia.
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 impact of the
current economic crisis, other changes in general economic and business
conditions that affect demand for computerized machine systems, computer
numerical control systems and software products, changes in manufacturing
markets, innovations by competitors, our ability to protect our intellectual
property, fluctuations in exchange rates, fluctuations in prices of raw
materials, changes in market demands, quality and delivery performance by our
contract manufacturers and governmental actions and initiatives including import
and export restrictions and tariffs.
Contact: John
Oblazney
Vice President & Chief
Financial Officer
317-293-5309
3
|
Hurco
Companies, Inc.
|
||||||||||||||||
|
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
|
||||||||||||||||
|
(In
thousands, except per-share data)
|
||||||||||||||||
|
Three
Months Ended
October
31,
|
Twelve
Months Ended
October
31,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||||||
|
Sales
and service fees
|
$ | 47,468 | $ | 50,120 | $ | 223,994 | $ | 188,047 | ||||||||
|
Cost
of sales and service
|
30,918 | 31,128 | 141,377 | 116,965 | ||||||||||||
|
Gross
profit
|
16,550 | 18,992 | 82,617 | 71,082 | ||||||||||||
|
Selling,
general and administrative expenses
|
10,930 | 11,241 | 46,811 | 40,124 | ||||||||||||
|
Operating
income
|
5,620 | 7,751 | 35,806 | 30,958 | ||||||||||||
|
Interest
expense
|
17 | 36 | 63 | 201 | ||||||||||||
|
Interest
Income
|
106 | 138 | 542 | 699 | ||||||||||||
|
Investment
Income
|
102 | 148 | 465 | 339 | ||||||||||||
|
Other
(income) expense, net
|
1,273 | (105 | ) | 2,584 | (970 | ) | ||||||||||
|
Income
before taxes
|
4,538 | 8,106 | 34,166 | 32,765 | ||||||||||||
|
Provision
for income taxes
|
1,116 | 2,455 | 11,646 | 11,876 | ||||||||||||
|
Net
income
|
$ | 3,422 | $ | 5,651 | $ | 22,520 | $ | 20,889 | ||||||||
|
Earnings
per common share
|
||||||||||||||||
|
Basic
|
$ | 0.53 | $ | 0.89 | $ | 3.51 | $ | 3.27 | ||||||||
|
Diluted
|
$ | 0.53 | $ | 0.88 | $ | 3.49 | $ | 3.24 | ||||||||
|
Weighted
average common shares outstanding
|
||||||||||||||||
|
Basic
|
6,415 | 6,382 | 6,415 | 6,382 | ||||||||||||
|
Diluted
|
6,436 | 6,445 | 6,444 | 6,440 | ||||||||||||
|
OTHER
CONSOLIDATED FINANCIAL DATA
|
Three
Months Ended
October
31,
|
Twelve
Months Ended
October
31,
|
||||||||||||||
|
Operating
Data:
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||||||
|
Gross
margin
|
34.9 | % | 37.9 | % | 36.9 | % | 37.8 | % | ||||||||
|
SG&A
expense as a percentage of sales
|
23.0 | % | 22.4 | % | 20.9 | % | 21.3 | % | ||||||||
|
Operating
income as a percentage of sales
|
11.8 | % | 15.5 | % | 16.0 | % | 16.5 | % | ||||||||
|
Pre-tax
income as a percentage of sales
|
9.6 | % | 16.2 | % | 15.3 | % | 17.4 | % | ||||||||
|
Effective
Tax Rate
|
24.6 | % | 30.3 | % | 34.1 | % | 36.2 | % | ||||||||
|
Depreciation
|
834 | 730 | 3,024 | 2,106 | ||||||||||||
|
Capital
expenditures
|
2,059 | 2,212 | 5,515 | 4,510 | ||||||||||||
|
Balance
Sheet Data:
|
10/31/2008
|
10/31/2007
|
||||||||||||||
|
Working
capital (excluding cash and short term debt)
|
$ | 73,789 | $ | 46,290 | ||||||||||||
|
Days
sales outstanding
|
39 | 33 | ||||||||||||||
|
Inventory
turns
|
2.0 | 2.0 | ||||||||||||||
|
Capitalization
|
||||||||||||||||
|
Total
debt
|
$ | - | $ | - | ||||||||||||
|
Shareholders'
equity
|
123,477 | 97,603 | ||||||||||||||
|
Total
|
$ | 123,477 | $ | 97,603 | ||||||||||||
4
|
HURCO
COMPANIES, INC.
|
||||||||
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
||||||||
|
(In
thousands, except per-share data)
|
||||||||
|
October
31,
|
October
31,
|
|||||||
|
2008
|
2007
|
|||||||
|
(unaudited)
|
(audited)
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 26,394 | $ | 29,760 | ||||
|
Short-term
investments
|
6,674 | 10,000 | ||||||
|
Accounts
receivable, net
|
31,952 | 25,645 | ||||||
|
Inventories,
net
|
66,368 | 61,121 | ||||||
|
Deferred
tax assets, net
|
5,444 | 8,258 | ||||||
|
Derivative
asset
|
12,463 | 485 | ||||||
|
Other
|
2,017 | 3,996 | ||||||
|
Total
current assets
|
151,312 | 139,265 | ||||||
|
Property
and equipment:
|
||||||||
|
Land
|
782 | 776 | ||||||
|
Building
|
7,127 | 7,135 | ||||||
|
Machinery
and equipment
|
14,885 | 13,629 | ||||||
|
Leasehold
improvements
|
1,765 | 1,473 | ||||||
| 24,559 | 23,013 | |||||||
|
Less
accumulated depreciation and amortization
|
(10,961 | ) | (11,617 | ) | ||||
| 13,598 | 11,396 | |||||||
|
Non-current
assets:
|
||||||||
|
Software
development costs, less amortization
|
5,711 | 5,960 | ||||||
|
Long-term
investments
|
- | - | ||||||
|
Other
assets
|
6,823 | 7,160 | ||||||
| $ | 177,444 | $ | 163,781 | |||||
|
LIABILITIES
AND SHAREHOLDER'S EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 28,303 | $ | 35,486 | ||||
|
Derivative
liability
|
2,692 | 3,722 | ||||||
|
Accrued
expenses
|
20,134 | 24,007 | ||||||
|
Total
current liabilities
|
51,129 | 63,215 | ||||||
|
Non-current
liabilities:
|
||||||||
|
Deferred
tax liability, net
|
2,056 | 1,956 | ||||||
|
Deferred
credits and other obligations
|
782 | 1,007 | ||||||
|
Total
liabilities
|
53,967 | 66,178 | ||||||
|
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 6,420,851 and
|
||||||||
|
6,392,220
shares issued, respectively
|
642 | 639 | ||||||
|
Additional
paid-in capital
|
51,690 | 50,971 | ||||||
|
Retained
earnings
|
71,889 | 49,369 | ||||||
|
Accumulated
other comprehensive income
|
(744 | ) | (3,376 | ) | ||||
|
Total
shareholders' equity
|
123,477 | 97,603 | ||||||
| $ | 177,444 | $ | 163,781 | |||||
5