SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. ___)
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
[
] Preliminary
Proxy Statement
[
] Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive
Proxy Statement
[
] Definitive
Additional Materials
[
] Soliciting
Material Pursuant to §240.14a-12.
Hurco
Companies, Inc.
(Name
of
Registrant as Specified in Its Charter)
(Name
of
Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
|
[x]
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No
fee required
|
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[
]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
1) Title
of
each class of securities to which transaction applies:
.......................................................................................
2) Aggregate
number of securities to which transaction applies:
.......................................................................................
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3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was
determined):
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.......................................................................................
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4) Proposed
maximum aggregate value of transaction:
.......................................................................................
5) Total
fee
paid:
.......................................................................................
|
[
]
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Fee
paid previously with preliminary
materials.
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[
]
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its
filing.
|
1) Amount
Previously
Paid...............................................................................
2) Form
Schedule or Registration Statement
No...............................................
3) Filing
Party...................................................................................................
4) Date
Filed.....................................................................................................
HURCO
COMPANIES, INC.
ONE
TECHNOLOGY WAY
P.O.
BOX
68180
INDIANAPOLIS,
INDIANA 46268
(317)
293-5309
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be
Held March 14, 2007
To
Our
Shareholders:
The
2007
Annual Meeting of Shareholders of Hurco Companies, Inc., will be held at the
corporate headquarters of Hurco Companies, Inc., One Technology Way,
Indianapolis, Indiana, 46268 at 10:00 a.m. EST on Wednesday, March 14, 2007,
for
the following purposes:
1. To
elect
seven directors to serve until the next Annual Meeting or until their successors
are duly elected and qualified.
2. To
transact such other business as may properly come before the Annual Meeting
or
any adjournments thereof.
If
you do
not expect to attend the Annual Meeting, please mark, sign and date the enclosed
proxy and return it in the enclosed return envelope which requires no postage
if
mailed in the United States.
Only
shareholders of record as of the close of business on January 12, 2007 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for approval of one or
more
of the above matters at the time of the Annual Meeting, the Annual Meeting
may
be adjourned in order to permit further solicitation of proxies.
By
order
of the Board of Directors,
John
G.
Oblazney, Secretary
Indianapolis,
Indiana
February
1, 2007
YOUR
VOTE IS IMPORTANT
Even
if
you plan to attend the meeting,
we
urge
you to mark, sign and date the
enclosed
proxy and return it promptly
in
the
enclosed envelope.
HURCO
COMPANIES, INC.
One
Technology Way
P.
O. Box 68180
Indianapolis,
Indiana 46268
Annual
Meeting of Shareholders
March
14, 2007
______________________________________________________________________________
PROXY
STATEMENT
SOLICITATION,
VOTING AND REVOCABILITY OF PROXIES
This
Proxy Statement is furnished to the holders (the "Shareholders") of common
stock
of Hurco Companies, Inc., ("Hurco" or the "Company") in connection with the
solicitation of proxies by the Board of Directors for the 2007 Annual Meeting
of
Shareholders to be held at 10:00 a.m. EST on Wednesday, March 14, 2007, at
the
corporate headquarters of Hurco Companies, Inc., One Technology Way,
Indianapolis, Indiana, and at any adjournments thereof. This Proxy Statement
and
the accompanying form of proxy are being mailed to Shareholders on or about
February 1, 2007. Proxies are being solicited principally by mail. Directors,
officers and regular employees of Hurco may also solicit proxies personally
by
telephone, electronic mail or otherwise. All expenses incident to the
preparation and mailing of this Proxy Statement and form of proxy will be paid
by Hurco.
Shareholders
of record as of the close of business on January 12, 2007, are entitled to
notice of and vote at the Annual Meeting or any adjournments thereof. On such
record date, Hurco had 6,380,520 shares
of
common stock outstanding and entitled to vote. Each share will be entitled
to
one vote with respect to each matter submitted to a vote. The presence in person
or by proxy of the holders of a majority of the outstanding shares entitled
to
vote at the Annual Meeting is necessary to constitute a quorum for the
transaction of business.
If
the
enclosed form of proxy is executed and returned, it may be revoked at any time
before it is voted by giving written notice to the Secretary of the Company.
If
a Shareholder executes more than one proxy, the proxy having the latest date
will revoke any earlier proxies. Shareholders who attend the Annual Meeting
may
revoke their proxies and vote in person.
A
proxy,
if returned properly executed and not subsequently revoked, will be voted in
accordance with the instructions of the Shareholder in the proxy. If no
instructions are given, the proxy will be voted for the election to the Board
of
Directors of the nominees named in this Proxy Statement. Directors will be
elected by a plurality of the votes cast. A proxy may indicate that all or
a
portion of the shares represented by such proxy are not being voted with respect
to a specific proposal. This could occur, for example, when a broker is not
permitted to vote shares held in street name on certain proposals in the absence
of instructions from the beneficial owners. Shares that are not voted with
respect to a specific proposal will be considered present for purposes of
determining a quorum and voting on other proposals. Abstentions on a specific
proposal will be considered as present, but not as voting in favor of such
proposal. Neither the non-voting of shares nor abstentions will affect the
matters to be voted on at the Annual Meeting.
ELECTION
OF DIRECTORS
The
Board
of Directors currently consists of eight members, but will be reduced to seven
members on the date of the Annual Meeting. The Company’s Corporate Governance
Principles provide that no one may be nominated or stand for re-election as
a
Director of the Company who is over the age of 72 as of the day of his or her
election. Each director will serve for a term of one year, which expires at
the
next Annual Meeting of Shareholders of the Company, when his successor has
been
elected. The seven nominees are: Stephen H. Cooper, Robert W. Cruickshank,
Michael Doar, Michael P. Mazza, Richard T. Niner, O. Curtis Noel, and Charlie
Rentschler. A majority of the director nominees are “independent directors” as
defined by the listing standards for Nasdaq companies and the Board of Directors
has affirmatively determined that such independent directors have no
relationship with the Company that would impair their independence. The
independent director nominees are Messrs. Cooper, Cruickshank, Mazza, Niner,
Noel, and Rentschler. Unless authority is specifically withheld, the shares
represented by the enclosed form of proxy will be voted in favor of these
nominees.
If
any of
these nominees becomes unable to accept election, the persons named in the
proxy
will exercise their voting power in favor of such person or persons as the
Board
may recommend. All of the nominees have consented to being named in this Proxy
Statement and to serve if elected. The Board of Directors knows of no reason
why
any of the nominees would be unable to accept election.
The
following information sets forth the name of each director, his age, tenure
as a
director, principal occupation and business experience for the last five
years:
|
Name
|
Age
|
Served
as a
Director
since
|
||
|
Stephen
H. Cooper (2)
|
67
|
2005
|
||
|
Robert
W. Cruickshank (1,2,3)
|
61
|
2000
|
||
|
Michael
Doar
|
51
|
2000
|
||
|
Michael
P. Mazza (2)
|
42
|
2006
|
||
|
Richard
T. Niner (1)
|
67
|
1986
|
||
|
O.
Curtis Noel (3)
|
71
|
1993
|
||
|
Charlie
Rentschler (1)
|
67
|
1986
|
(1) Member
of
Nominating and Governance Committee
(2) Member
of
Audit Committee
(3) Member
of
Compensation Committee
Stephen
H. Cooper has been a practicing attorney and member of the bar of the State
of
New York since December 1965. Until his retirement in December 2004, Mr. Cooper
was for more than thirty years a partner in the international law firm Weil,
Gotshal & Manges LLP, based in New York, where he specialized in corporate
finance and securities law. Since August 2002, he has also served as an Adjunct
Professor of Law at New York Law School and, more recently, at Pace University
Law School, where he teaches courses on federal securities regulation and
corporate law. For the past twenty years, Mr. Cooper has been an active member
of the senior leadership of the Committee on the Federal Regulation of
Securities of the American Bar Association.
Robert
W.
Cruickshank since 1981 has been a consultant providing private clients with
financial advice. Mr. Cruickshank also is a director of Calgon Carbon
Corporation, a producer of products and services for the purification,
reparation and concentration of liquids and gases.
Michael
Doar was elected Chairman of the Board of Directors and Chief Executive Officer
on November 14, 2001. Previously, Mr. Doar served as Vice President of Sales
and
Marketing of Ingersoll Contract Manufacturing Company, a subsidiary of Ingersoll
International, an international engineering and machine tool systems business.
Mr. Doar had held various management positions with Ingersoll International
since 1989.
Michael
P. Mazza is an attorney and has been principal of Michael P. Mazza, LLC since
2003. Previously he was a partner with the nationally recognized intellectual
property law firm of Niro, Scavone, Haller & Niro of Chicago for nearly
fourteen years.
Richard
T. Niner’s principal occupation since 1998 has been serving as a general partner
of Wind River Associates. Mr. Niner also is a director of Arrow International,
Inc., a cardiac and critical care products business.
O.
Curtis
Noel has been an independent business consultant for more than ten years
specializing in market and industry studies, competitive analysis and corporate
development programs, with clients in the U.S. and abroad.
Charlie
Rentschler is Vice President of Wall Street Access, a registered broker dealer
in New York. From 2003 to 2006, he was the Director, Industrial Research, of
Foresight Research Solutions, an independent research firm. From 2001 to 2003,
Mr. Rentschler was an independent business consultant providing service to
the
foundry industry. From 1985 to 2001, Mr. Rentschler served as president and
CEO
of The Hamilton Foundry & Machine Co., Harrison, OH. He is also a director
of Accuride Corporation, a manufacturer of commercial vehicle components located
in Evansville, IN.
The
Board of Directors recommends a vote FOR each of the nominees listed
above.
Board
Meetings and Committees
During
the last fiscal year, the Board of Directors held four meetings. All of the
current directors attended at least 75% of the aggregate number of meetings
of
the Board and the committees on which they served during the last fiscal year.
Directors are expected to attend Board meetings and meetings of committees
on
which they serve, and to spend the time needed and meet as frequently as
necessary to properly discharge their responsibilities. The directors who are
independent as defined by the Nasdaq listing standards held four executive
sessions during fiscal 2006.
The
Board
has an Audit Committee that held eleven meetings during the last fiscal year.
The Audit Committee has the authority to oversee the Company's accounting and
financial reporting activities, and meets with the Company's independent
registered public accounting firm and the Chief Financial Officer to review
the
scope, cost and results of the annual audit and to review the Company’s internal
accounting controls, policies and procedures. The report of the Audit Committee
is included on page 8 of this Proxy Statement. The Audit Committee selects
Hurco’s independent registered public accounting firm. See “Independent
Registered Public Accounting Firm” on page 11.
The
Board
has a Compensation Committee that held one meeting during the last fiscal year.
The Compensation Committee reviews and recommends to the Board the compensation
of the officers and managers of Hurco and guidelines for the general wage
structure of the entire workforce. The Compensation Committee also oversees
the
administration of the Company's employee benefit plans. The report of the
Compensation Committee regarding executive compensation is included on page
7 of
this Proxy Statement.
The
Nominating and Corporate Governance Committee has a formal written charter,
which specifies the scope and purpose of the Committee. Pursuant to its charter,
the Committee is to (1) assist the Board by identifying individuals
qualified to become Board members, and to recommend to the Board the director
nominees for re-election or appointment at the Annual Meeting of Shareholders;
(2) develop and recommend to the Board Corporate Governance Principles and
a Code of Business Conduct and Ethics; (3) lead the Board in an annual
self-evaluation; (4) recommend members and chairs for each standing
committee; and (5) determine and evaluate succession plans for the Chief
Executive Officer. The Nominating and Governance Committee also reviews the
Company’s Corporate Governance Principles regularly and updates them as
appropriate. The Nominating and Corporate Governance Committee held one meeting
during the last fiscal year.
The
Nominating and Governance Committee will consider candidates for director
recommended by shareholders. A shareholder who wishes to recommend a director
candidate for consideration by the Nominating and Governance Committee should
send such recommendation to the Secretary of the Company, One Technology Way,
Indianapolis, Indiana 46268, who will forward it to the Committee. Any such
recommendation should include a description of the candidate’s qualifications
for Board service; the candidate’s written consent to be considered for
nomination and to serve if nominated and elected, and addresses and telephone
numbers for contacting the shareholder and the candidate for more information.
A
shareholder, who wishes to nominate an individual to the Nominating and
Governance Committee as a nominee, must comply with the advanced notice
requirements set forth in the Company’s By-Laws which are more fully explained
later in this proxy statement under “Shareholder Proposals.”
The
Nominating and Governance Committee is responsible for identifying potential
Board members. Nominees will be evaluated on the basis of their experience,
areas of expertise, judgment, integrity, ability to make independent inquiries
and willingness to devote adequate time to Board duties.
The
members of these Committees are identified in the table on page 2.
Compensation
of Directors
During
fiscal 2006, each director who is not an employee of the Company received a
fee
of $5,000 per fiscal quarter and $1,500 for each meeting of the Board of
Directors attended. Directors also received reimbursement for travel and other
expenses incurred in attending such meetings. Mr. Niner received additional
annual compensation of $36,000 for his services as Presiding Independent
Director and Mr. Roch received an additional $36,000 for consulting
services.
Effective
for fiscal 2007, director compensation of $5,000 per fiscal quarter will remain
unchanged. The Audit Committee Chairman will receive an additional $5,000 per
quarter and all other Committee Chairmen and Audit Committee Members will
receive $2,500 per quarter. Mr. Niner will no longer receive the additional
compensation for his services as Presiding Independent Director. In November
2006, 5,000 Stock Options were granted to each of the two newest directors,
Mr.
Stephen H. Cooper and Mr. Michael P. Mazza.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the
Company's directors and executive officers, and persons who own more than 10%
of
the Company's common stock, to file reports of ownership with the Securities
and
Exchange Commission (the “SEC”) and Nasdaq. Such persons are also required to
furnish the Company with copies of all Section 16(a) forms they
file.
Based
solely on the Company’s review of the copies of such forms received by it, or
written representations from certain reporting persons that they were not
required to file a Form 5 to report previously unreported ownership or changes
in ownership, the Company believes that, during its fiscal year ending October
31, 2006, its officers, directors and greater than 10% beneficial owners
complied with all filing requirements under Section 16(a).
Code
of Business Conduct and Ethics
Pursuant
to Section 406 of the Sarbanes-Oxley Act of 2002 and Nasdaq listing
requirements, the Company has adopted a Code of Business Conduct and Ethics,
which applies to all Company’s directors, officers and employees, including its
principal executive officer, principal financial officer and principal
accounting officer. If the Company makes any substantive amendment of, or grants
any waiver to, the Code of Business Conduct and Ethics, the Company will
disclose the nature of such amendment of waiver in a current report of Form
8-K.
A copy of the Code of Business Conduct and Ethics is available on our website
at
www.hurco.com.
EXECUTIVE
COMPENSATION
Summary
Compensation
The
following table sets forth the cash compensation, as well as certain other
compensation, paid or accrued by the Company in each of the past three fiscal
years to the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company (the “Named Executive
Officers”).
Summary
Compensation Table
|
Name
and
Principal
Position
|
Fiscal
Year
|
Annual
Compensation
|
|||||
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Compensation
($)
(1)
|
All
Other
Compensation
($)
(2)
|
||||
|
Michael
Doar
|
2006
|
295,192
|
425,000
|
757,000
|
27,428
|
||
|
Chairman
and CEO
|
2005
|
271,154
|
300,000
|
314,555
|
23,835
|
||
|
2004
|
253,080
|
125,000
|
68,925
|
10,821
|
|||
|
James
D. Fabris
|
2006
|
266,154
|
400,000
|
474,855
|
25,136
|
||
|
President
and
|
2005
|
248,077
|
275,000
|
199,540
|
52,706
|
||
|
Chief
Operating Officer
|
2004
|
237,115
|
100,000
|
122,965
|
6,363
|
||
|
Stephen
J. Alesia(3)
|
2006
|
128,827
|
50,000
|
95,715
|
6,854
|
||
|
VP,
Secretary,
|
2005
|
119,485
|
75,000
|
50,362
|
9,629
|
||
|
Treasurer
and CFO
|
2004
|
112,665
|
34,160
|
108,252
|
2,342
|
||
|
John
G. Oblazney(3)
|
2006
|
28,558
|
80,000
|
--
|
571
|
||
|
VP,
Secretary,
|
|||||||
|
Treasurer
and CFO
|
|||||||
|
David
E. Platts(4)
|
2006
|
140,000
|
--
|
536,170
|
6,646
|
||
|
Vice
President -
|
2005
|
137,885
|
25,000
|
219,725
|
36,657
|
||
|
Technology
|
2004
|
130,000
|
24,000
|
114,850
|
3,150
|
||
|
Sonja
K. McClelland
|
2006
|
96,308
|
85,000
|
13,725
|
4,005
|
||
|
Corporate
Controller,
|
2005
|
89,352
|
50,000
|
12,883
|
282
|
||
|
Assistant
Secretary
|
2004
|
80,976
|
15,000
|
48,947
|
2,977
|
||
| (1) |
Represents
income realized as a result of the exercise of stock
options.
|
| (2) |
Represents
contributions to defined contribution plans and life insurance premiums
paid by the Company. Fiscal 2005 includes payments received by Mr.
Fabris,
Mr. Alesia and Mr. Platts for the cash surrender value of split dollar
life insurance policies that were purchased from the employees by
the
Company.
|
| (3) |
John
G. Oblazney
succeeded Stephen J. Alesia as the Chief Financial Officer effective
September 2, 2006 and therefore served at the end of 2006. On an
annualized basis, he would have been one of the four most highly
compensated executive officers.
|
| (4) |
David
E. Platts, who joined Hurco in 1982, was elected Vice President,
Technology, in May 2000 and served in that position until December
2006, having previously served as Vice President of Research and
Development for eleven years. The position of Vice President,
Technology was eliminated in December 2006, and the responsibilities
associated with that position have been assumed by the Executive
Vice
President, Software and
Development.
|
Stock
Options
No
options were granted in fiscal 2006.
|
Aggregated
Option Exercises in Fiscal 2006 and Year-End Option
Values
|
|||||||||||
|
Shares
Acquired
On
Exercise
|
Value
Realized
|
Number
of Securities
Underlying
Unexercised Options
At
FY End (#)
|
Value
of Unexercised
In-the-Money
Options
At
FY End ($) (1)
|
||||||||
|
(#)
|
($)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
||||||
|
Michael
Doar
|
25,000
|
53,750
|
29,500
|
--
|
705,345
|
--
|
|||||
|
James
D. Fabris
|
20,000
|
105,945
|
50,000
|
--
|
1,140,555
|
--
|
|||||
|
Stephen
J. Alesia
|
15,000
|
83,755
|
--
|
--
|
--
|
--
|
|||||
|
John
G. Oblazney
|
--
|
--
|
--
|
--
|
--
|
--
|
|||||
|
David
E. Platts
|
20,000
|
95,630
|
--
|
--
|
--
|
--
|
|||||
|
Sonja
K. McClelland
|
500
|
1,075
|
--
|
500
|
--
|
11,955
|
|||||
| (1) |
Value
is calculated based on the closing market price of the common stock
on
October 31, 2006 ($26.06) less the option exercise
price.
|
Compensation
Committee Interlocks and Insider Participation
The
members of the Compensation Committee are O. Curtis Noel and Robert W.
Cruickshank. Neither of the Compensation Committee members are involved in
a
relationship requiring disclosure as an interlocking executive officer/director
or under Item 404 of Regulation S-K or is a former officer or employee of the
Company or any of its subsidiaries.
Employment
Contracts
Michael
Doar entered into an employment contract effective November 13, 2001. The
contract term is unspecified. Mr. Doar’s salary and bonus arrangements are set
annually by the Compensation Committee of the Board of Directors. Other
compensation, such as stock option grants, is awarded periodically at the
discretion of the Compensation Committee. Mr. Doar is entitled to thirty days
notice and twelve months salary and benefits if he is removed as Chairman and
Chief Executive Officer by action of the Board of Directors.
James
D.
Fabris entered into an employment contract on November 18, 1997. The contract
term is unspecified. Mr. Fabris's salary and bonus arrangement are set annually
by the Compensation Committee of the Board of Directors. Other compensation,
such as stock option grants, is awarded periodically at the discretion of the
Compensation Committee. As part of the contract, Mr. Fabris is entitled to
12
months’ salary if Hurco terminates his employment for any reason other than
gross misconduct.
John
G.
Oblazney entered into an employment contract on January 12, 2007. The contract
term is unspecified. Mr.
Oblazney’s
salary and bonus arrangements are set annually by the Compensation Committee
of
the Board of Directors. Other compensation, such as stock option grants, is
awarded periodically at the discretion of the Compensation Committee. Mr.
Oblazney is
entitled to 12 months’ salary if Hurco terminates his employment for any reason
other than gross misconduct.
COMPENSATION
COMMITTEE
REPORT
ON EXECUTIVE COMPENSATION
The
Company’s Compensation Committee is comprised of the two Directors named below.
The Compensation Committee establishes policies relating to the compensation
arrangements of the Chief Executive Officer and all other executive
officers.
Compensation
Policy
The
goal
of the Company’s executive compensation policy is to ensure that an appropriate
relationship exists between executive pay and the creation of shareholder value,
while at the same time motivating and retaining key employees. To achieve this
goal, the Company’s executive compensation policy integrates annual base
compensation and bonus opportunities tied to corporate performance and
individual initiatives and performance. Measurement of corporate performance
is
primarily based on Company goals and industry performance levels. Accordingly,
in years in which performance goals and industry levels are achieved or
exceeded, executive compensation tends to be higher than in years in which
performance is below expectations. Annual cash compensation, together with
stock
option incentives, are designed to attract and retain qualified executives
and
to ensure that such executives have a continuing stake in the long-term success
of the Company.
Stock
options are granted from time to time to key employees, based primarily on
such
person’s potential contribution to the Company’s growth and profitability. No
stock options were granted in the last three fiscal years, however, stock
options were granted to key employees and the two newest members of the Board
of
Directors in fiscal 2007 as the Compensation Committee feels that stock options
are an effective incentive for managers to create value for shareholders since
the value of an option bears a direct relationship to the Company’s stock price.
The Compensation Committee believes that linking compensation for the Chief
Executive Officer and all other executive officers to corporate performance
results in a better alignment of compensation with corporate goals and
shareholder interest. As performance goals are met or exceeded, resulting in
increased value to shareholders, executives are rewarded commensurately.
Fiscal
2006 Executive Compensation
For
fiscal 2006, the Company’s compensation program for the Chief Executive Officer
and all other executive officers consisted of base salary and bonus awards
described above. No stock options were granted in fiscal 2006. During fiscal
year 2006, the annual compensation of the Chief Executive Officer consisted
of
base salary and a performance bonus. In evaluating 2006 performance, the
Committee considered the Company’s financial performance in relation to its
business plan and other corporate performance criteria and determined that
bonuses would be awarded to the Chief Executive Officer and other corporate
executive officers. The Committee believes that compensation levels for the
Chief Executive Officer and all other executive officers and key employees
during fiscal 2006 adequately reflect the Company’s compensation goals and
policies.
O.
Curtis
Noel, Chairman
Robert
W.
Cruickshank
REPORT
OF AUDIT COMMITTEE
The
Company’s Audit Committee is comprised of the three Directors named below. The
Board of Directors and the Audit Committee believe that the Audit Committee’s
current composition satisfies the Nasdaq listing requirements that govern audit
committee composition, including the requirement that audit committee members
all be “independent directors” as defined by Nasdaq listing requirements. The
Board of Directors annually reviews the independence of the audit committee
members in view of the Nasdaq listing requirements and the SEC’s definition of
independence for audit committee members and the audit committee independence
requirements in our Corporate Governance Principles (a copy of which is on
our
website at www.hurco.com). The Board has determined that Robert W. Cruickshank
meets the SEC’s definition of an “audit committee financial
expert.”
The
primary function of the Audit Committee is to assist the Board in fulfilling
its
oversight responsibilities by reviewing the financial information, which will
be
provided to the shareholders and others, the system of internal controls which
management has established, and the audit process. In doing so, it is the
responsibility of the Audit Committee to provide an open avenue of communication
between the Board of Directors, management, and the independent
auditors.
The
Audit
Committee has adopted a formal, written charter, which specifies the scope
of
the Audit Committee’s responsibilities and how it should carry out those
responsibilities. The Audit Committee reviews and reassesses the adequacy of
the
charter on an annual basis. A copy of the charter as currently in effect is
attached as Appendix A to this proxy statement.
The
Audit
Committee has reviewed and discussed the audited financial statements of the
Company for the fiscal year ended October 31, 2006, with the Company’s
management. The Audit Committee has discussed with Crowe Chizek and Company
LLC,
the Company’s independent registered public accounting firm, the matters
required to be discussed by Statement on Auditing Standards No. 61, as amended
(Communication with Audit Committees). The Audit Committee has also received
the
written disclosures and the letter from Crowe Chizek and Company LLC required
by
Independence Standards Board Standard No. 1 (Independence Discussion with Audit
Committees) and the Audit Committee has discussed the independence of Crowe
Chizek and Company LLC with that firm.
The
members of the Audit Committee have also confirmed that there have been no
new
circumstances or developments since their appointment to the Committee that
would impair any member’s ability to act independently.
Based
on
the review and discussions with the Company’s independent registered public
accounting firm for the fiscal year ended October 31, 2006, the Audit Committee
recommended to the Board of Directors that the financial statements be included
in the Company’s Annual Report on Form 10-K for filing with the SEC.
Robert
W.
Cruickshank, Chairman
Stephen
H. Cooper
Michael
P. Mazza
PERFORMANCE
GRAPH *
The
following graph illustrates the cumulative total shareholder return on Hurco
common stock for the five-year period ended October 31, 2006, as compared to
the
Russell 2000 and a peer group consisting of traded securities for U.S. companies
in the same three digit SIC group as Hurco (SIC 3540-3549 - Metal Working
Machinery and Equipment). The comparisons in this table are required by the
SEC
and are not intended to forecast or be indicative of possible future performance
of Hurco common stock.
*$100
invested on 10/31/01 in stock or index- including reinvestment of
dividends.
FISCAL
YEARS ENDING OCTOBER 31.
|
10/01
|
10/02
|
10/03
|
10/04
|
10/05
|
10/06
|
|
|
Hurco
Companies, Inc.
|
100.00
|
72.43
|
120.09
|
669.63
|
833.18
|
1217.76
|
|
Russell
2000
|
100.00
|
88.43
|
126.78
|
141.65
|
158.76
|
190.48
|
|
Peer
Group
|
100.00
|
124.85
|
135.68
|
217.93
|
232.25
|
241.69
|
INCORPORATION
BY REFERENCE
Notwithstanding
anything to the contrary set forth in any of the Company’s previous filings
under the Securities Act of 1933, as amended, or the Exchange Act, as amended,
that may incorporate future filings (including this Proxy Statement, in whole
or
in part), the preceding Report of the Audit Committee, Compensation Committee
Report on Executive Compensation and the stock price Performance Graph shall
not
be incorporated by reference in any such filings.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth information as of January 12, 2007, regarding
beneficial ownership of the Company’s common stock by each director and Named
Executive Officer, by all directors and executive officers as a group, and
by
beneficial owners of more than 5% of the common stock. Each such person has
sole
voting and investment power with respect to such securities, except as otherwise
noted.
|
Shares
Beneficially Owned
|
||||
|
Name
and Address
|
Number
|
Percent
|
||
|
Directors
and Executive
Officers
|
||||
|
Richard
T. Niner
|
731,812
|
11.4%
|
||
|
Robert
W. Cruickshank
|
5,000
|
*
|
||
|
Michael
Doar
|
71,150
|
(1)
|
1.1%
|
|
|
Charlie
Rentschler
|
1,000
|
*
|
||
|
Gerald
V. Roch
|
1,012
|
*
|
||
|
O.
Curtis Noel
|
--
|
--
|
||
|
Stephen
H. Cooper
|
5,000
|
(2)
|
*
|
|
|
Michael
P. Mazza
|
5,000
|
(2)
|
*
|
|
|
James
D. Fabris
|
35,000
|
(3)
|
*
|
|
|
David
E. Platts
|
20,700
|
*
|
||
|
Stephen
J. Alesia
|
--
|
--
|
||
|
John
G. Oblazney
|
--
|
--
|
||
|
Sonja
K. McClelland
|
500
|
(4)
|
*
|
|
|
Executive
officers and directors as a group (12 persons)
|
876,174
|
(5)
|
13.6%
|
|
|
Other
Beneficial Owners
|
||||
|
Royce
& Associates, Inc.
1414
Avenue of the Americas
New
York, NY 10019
|
710,450
|
(6)
|
11.1%
|
|
|
Systematic
Financial Management LP
Glenpointe
East 7th
Floor
Teaneck,
NJ 07666
|
437,700
|
(7)
|
6.9%
|
|
*
Less
than one (1) percent.
| (1) |
Includes
29,500 shares subject to options that are exercisable within 60
days.
|
| (2) |
Includes
5,000 shares subject to options that are exercisable, granted in
fiscal
2007.
|
| (3) |
Includes
20,000 shares subject to options that are exercisable within 60
days.
|
| (4) |
Includes
500 shares subject to options that are exercisable within 60
days.
|
| (5) |
Includes
75,000 shares subject to options that are exercisable within 60
days.
|
| (6) |
This
is based solely on the information supplied by Royce and Associates,
Inc.
on Schedule 13G filed with the SEC on August 7,
2006.
|
| (7) |
This
is based solely on the information supplied by Systematic Financial
Management LP on Schedule 13G filed with the SEC on February 14,
2006.
|
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Crowe
Chizek and Company LLC (“Crowe Chizek”) and PricewaterhouseCoopers LLP (“PwC”)
served as the Company’s independent registered public accounting firm for fiscal
2006 and 2005, respectively. Representatives of Crowe Chizek are expected to
be
present at the Annual Meeting and will have the opportunity to make a statement
if desired and such representatives are expected to be available to respond
to
appropriate questions.
PwC
was
dismissed as the Company’s independent registered public accounting firm on
January 26, 2006. This decision was made by the Audit Committee of the Board
of
Directors.
The
reports of PwC on the Company’s financial statements for the fiscal years ended
October 31, 2005 and 2004, did not contain an adverse opinion or disclaimer
of
opinion, nor were they qualified or modified as to uncertainty, audit scope
or
accounting principle.
During
the fiscal years ended October 31, 2005 and 2004, and through January 26, 2006,
there were no disagreements between the Company and PwC on any matter of
accounting principle or practices, financial statement disclosure or auditing
scope of procedure which, if not resolved to PwC’s satisfaction, would have
caused PwC to make reference thereto in its report on the Company’s consolidated
financial statements for such years; nor were there any reportable events as
defined in Item 304(a)(1)(v) of Regulation S-K.
Audit
and Non-Audit Fees
The
following table sets forth fees paid to Crowe Chizek and PwC for services
provided during fiscal years 2006 and 2005:
|
2006
|
2005
|
|||
|
Audit
Fees1
|
$363,377
|
$405,200
|
||
|
Audit
Related Fees2
|
110,296
|
--
|
||
|
Tax
Fees3
|
75,323
|
44,940
|
||
|
All
Other Fees4
|
16,000
|
--
|
||
|
TOTAL
|
$564,996
|
$450,140
|
| 1. |
Represents
fees for professional services provided in connection with the audit
of
annual financial statements and review of quarterly financial
statements.
|
| 2. |
Represents
fees for professional services provided in connection with the audit
of
internal controls over financial reporting for compliance with the
requirements of Section 404 of The Sarbanes-Oxley Act of 2002 which
applied to the Company in fiscal
2006.
|
| 3. |
Represents
fees for services provided in connection with tax compliance, tax
advice
and tax planning, including services provided in connection with
assistance in the preparation and filing of tax
returns.
|
| 4. |
Represents
fees for all other permissible services that do not meet the above
category descriptions.
|
Pre-approval
Policy
The
Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by the independent registered public accounting firm. These
services may include audit services, audit-related services, tax services and
other services. Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The independent registered public
accounting firm and management are required to periodically report to the Audit
Committee regarding the extent of services provided by the independent auditor
in accordance with this pre-approval, and the fees for the services performed
to
date. The Audit Committee may also pre-approve particular services on a
case-by-case basis. For fiscal 2006 pre-approved non-audit services included
only those services described above for “Audit Related Fees,” “Tax Fees,” and
“All Other Fees.”
SHAREHOLDER
PROPOSALS AND OTHER COMMUNICATIONS
The
date
by which shareholder proposals must be received by the Company for inclusion
in
proxy materials relating to the 2008 Annual Meeting of Shareholders is September
28, 2007.
In
order
to be considered at the 2008 Annual Meeting, shareholder proposals, including
shareholder nominations for director, must comply with the advance notice and
eligibility requirements contained in the Company’s By-Laws. The Company’s
By-Laws provide that shareholders are required to give advance notice to the
Company of any business to be brought by a shareholder before an annual
shareholders’ meeting. For business to be properly brought before an Annual
Meeting by a shareholder, the shareholder must give timely written notice
thereof to the Secretary of the Company. In order to be timely, a shareholder’s
notice must be delivered to or mailed and received at the principal executive
offices of the Company not less than 60 days prior to the meeting. In the event
that less than 70 days’ notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder must be
received not later than the close of business on the tenth day following the
day
on which notice of the date of the meeting was mailed or public disclosure
was
made. The notice must contain specified information about the proposed business
or nominee, as the case may be, and the shareholder making the proposal. A
copy
of the Company’s By-Laws is available upon request. Such requests and any
shareholder proposals should be sent to John G. Oblazney, Secretary, Hurco
Companies, Inc., One Technology Way, P.O. Box 68180, Indianapolis, Indiana,
46268, the principal executive offices of the Company. These procedures apply
to
any matter that a shareholder wishes to raise at the 2007 Annual Meeting,
including those matters raised other than pursuant to 17 C.F.R. §240.14a-8 of
the rules and regulations of the SEC. A shareholder proposal that does not
meet
the above requirements will be considered untimely, and any proxy solicited
by
the Company may confer discretionary authority to vote on such proposal.
The
Board
of Directors of the Company has implemented a process whereby shareholders
may
send communications to the Board’s attention. The process for communicating with
the Board is set forth in the Company’s Corporate Governance Principles which
are available on our website at www.hurco.com.
ANNUAL
REPORT ON FORM 10-K
The
Company filed its Annual Report on Form 10-K for the fiscal year ended October
31, 2006, with the SEC. Shareholders may obtain a copy of the Form 10-K by
writing to John G. Oblazney, Vice-President and Chief Financial Officer, Hurco
Companies, Inc., One Technology Way, P. O. Box 68180, Indianapolis, Indiana
46268. A copy of the 10-K can also be obtained at www.hurco.com or
www.sec.gov.
OTHER
BUSINESS
The
Board
of Directors knows of no other matters that may be presented at the Annual
Meeting. If any other matters should properly come before the Annual Meeting,
the persons named in the enclosed form of proxy will vote in accordance with
their business judgment on such matter.
APPENDIX
A
CHARTER
OF THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS OF
HURCO
COMPANIES, INC.
Purpose
The
Audit
Committee of the Board of Directors of Hurco Companies, Inc. (the"Company")
is
appointed by the Board to assist the Board in monitoring (1) the accounting
and
financial reporting processes of the Company and the audits of the financial
statements of the Company, (2) the independent auditor's qualifications and
independence, (3) the performance of the Company's independent auditor, and
(4)
the Company's compliance with legal and regulatory
requirements.
The
Audit
Committee is also responsible for producing the annual Audit Committee report
required by the rules of the SEC to be included in the Company's Proxy
Statement.
Committee
Membership
The
Audit
Committee shall consist of at least three directors. The members of the Audit
Committee shall meet the independence and experience requirements of the Nasdaq
Stock Market, Section 10A(m)(3) of the Exchange Act, as amended and SEC rules
and regulations.
The
members and the Chair of the Audit Committee shall be appointed by the Board.
Audit Committee members may be replaced by the Board.
Meetings
The
Audit
Committee shall meet as often as it determines, but not less frequently than
quarterly. The Audit Committee shall meet periodically with management and
the
independent auditor in separate executive sessions. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditor to attend a meeting of the Committee or to meet with
any
members of, or advisors to, the Committee.
Committee
Authority and Responsibilities
The
Audit
Committee shall be directly responsible for the appointment, determination
of
compensation, retention and oversight of the work of the independent auditor,
including resolution of disagreements between management and the independent
auditor regarding financial reporting, as required by Section 10A(m)(2) of
the
Exchange Act. The Audit Committee shall pre-approve all auditing services and
permitted non-audit services, including the fees and terms thereof. The
independent auditor shall report directly to the Audit Committee.
The
Audit
Committee shall have the authority, to the extent it deems necessary or
appropriate and without seeking Board approval, to retain independent legal,
accounting or other advisors. The Company shall provide for appropriate funding,
as determined by the Audit Committee, for payment of compensation to the
independent auditor for the purpose of rendering or issuing an audit report,
to
any advisors employed by the Audit Committee and for ordinary administrative
expenses of the Audit Committee that are necessary or appropriate in carrying
out its duties.
The
Audit
Committee may form and delegate authority to subcommittees consisting of one
or
more members when appropriate, including the authority to grant pre-approvals
of
audit and permitted non-audit services, provided that decisions of such
subcommittee to grant pre-approvals shall be presented to the Audit Committee
at
its next scheduled meeting.
The
Audit
Committee shall make regular reports to the Board. The Audit Committee shall
review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval. The Audit Committee, to the extent
it deems necessary or appropriate, shall:
Financial
Statement and Disclosure Matters
1.
Review
and discuss with management and the independent auditor the annual audited
financial statements, including disclosures made in management's discussion
and
analysis, and recommend to the Board whether the audited financial statements
should be included in the Company's Form 10-K.
2.
Review
and discuss with management and the independent auditor the Company's quarterly
financial statements prior to the filing of its Form 10-Q, including the results
of the independent auditor's reviews of the quarterly financial
statements.
3.
In
connection with such quarterly reviews and annual audit, discuss with management
and the independent auditor major issues regarding accounting principles and
financial statement presentations, including any significant changes in the
Company's selection or application of accounting principles, any major issues
as
to the adequacy of the Company's internal controls and any special audit steps
adopted in light of material control deficiencies.
4.
Discuss with the independent auditor the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended relating to the conduct
of
the audit, including any difficulties encountered in the course of the audit
work, any restrictions on the scope of activities or access to requested
information, and any significant disagreements with management.
5.
Review
and discuss quarterly reports from the independent auditor on:
a.
changes in critical accounting policies and practices used;
b.
all
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management, ramifications
of
the use of such alternative disclosures and treatments, and the treatment
preferred by the independent auditor;
c.
management's disposition of significant audit adjustments as identified by
the
external auditor;
d.
any
proposed changes by regulatory authorities in accounting standards or financial
disclosures that could materially affect the Company's financial statements;
and
e.
other
material written communications between the independent auditor and management,
such as any management letter with respect to internal control
deficiencies.
6.
Discuss with management and the independent auditor, the Company's earnings
press releases prior to issuance, including the use of any "pro forma" or
"adjusted" non-Generally Accepted Accounting Principal’s
information.
7.
Discuss with management and the independent auditor the effect of any material
off-balance sheet structures on the Company's financial statements.
8.
Discuss with management at least annually the Company's major financial risk
exposures and the steps management has taken to monitor and control such
exposures, including the Company's risk assessment and risk management
policies.
9.
Review
disclosures made to the Audit Committee by the Company's CEO and CFO during
their certification process for the Form 10-K and Forms 10-Q about any
significant deficiencies in the design or operation of disclosure controls
and
internal controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in the company's
disclosure controls and internal controls.
10.
Review and approve all related-party transactions, i.e. with Directors,
Executive Officers, significant shareholders or affiliated entities in which
such persons have material interests of the Company.
Oversight
of the Company's Relationship with the Independent Auditor
11.
Review and evaluate the lead partner of the independent auditor
team.
12.
Obtain annually, to the extent made available, and review a report from the
independent auditor regarding:
a.
the
independent auditor's internal quality-control procedures,
b.
any
material issues raised by the most recent internal quality-control review,
or
peer review, of the firm, or by any inquiry or investigation by governmental
or
professional authorities within the preceding five years respecting one or
more
independent audits carried out by the firm, and
c.
any
steps taken to deal with any such issues.
13.
Ensure receipt from the independent auditor of a formal written statement
delineating all relationships between the independent auditor and the company,
consistent with Independence Standards Board Standard No. 1, and actively engage
in a dialogue with the independent auditor with respect to any disclosed
relationships or services that may impact the objectivity and independence
of
the independent auditor. The Audit Committee shall take, or recommend that
the
full Board take, appropriate action to oversee the independence of the
independent auditor.
14.
Ensure the rotation of the lead (or coordinating) audit partner having primary
responsibility for the audit and the audit partner responsible for reviewing
the
audit every five years or as otherwise required by Section 10A(j) of the
Exchange Act.
15.
Ensure that the Company's Chief Executive Officer, Chief Financial Officer,
Corporate Controller or other principal accounting officer did not participate
in the audit of the Company in any capacity as an employee of the independent
auditing firm within one year preceding the appointment of such firm for any
audit.
16.
Meet
with the independent auditor prior to the audit to discuss the planning, scope
and staffing of the audit.
Compliance
Oversight Responsibilities
17.
Obtain from the independent auditor assurance that any reportable events under
the provisions of Section l0A(b) of the Exchange Act respecting the detection
and reporting of illegal acts, of which they are aware, have been communicated
to the Committee.
18.
Establish and maintain procedures for the receipt, retention and treatment
of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters and the confidential, anonymous submission by
Company employees of concerns regarding questionable accounting or auditing
matters.
19.
Discuss with management and the independent auditor any correspondence with
regulators or governmental agencies and any published reports which raise
material issues regarding the Company's financial statements or accounting
policies.
20.
Discuss, as deemed necessary, with the Company's outside counsel, legal matters
that may have a material impact on the financial statements or the Company's
compliance policies.
Limitation
of Audit Committee's Role
While
the
Audit Committee has the responsibilities and powers set forth in this Charter,
it is not the duty of the Audit Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are complete
and accurate and are in accordance with generally accepted accounting principles
and applicable rules and regulations. These are the responsibilities of
management and the independent auditor.
-FRONT-
Using
a
black
ink
pen,
mark your votes with an X
as shown in
This
example. Please do not write outside the designated areas x
Annual
Meeting Proxy Card
A
Election
of Directors - The Board of Directors recommends a votw FOR all the nominees
listed.
| 1. |
To
elect seven directors to serve until the next Annual Meeting or until
their successors are duly elected and
qualified.
|
For
Withhold
For
Withhold
01
-
Stephen H.
Cooper
[
]
[
]
02 - Robert W. Cruickshank [
]
[ ]
03
-
Michael
Doar
[
]
[
]
04 - Michael P.
Mazza
[
]
[ ]
05
-
Richard T.
Niner
[
]
[
] 06
- O. Curtis
Noel
[
] [
]
07
-
Charlie
Rentschler
[
]
[ ]
B
Non-Voting
Items
Change
of Address - Please
print your new address below. Meeting
Attendance
60;
Mark
the
box to the right [ ]
___________________________________________________
if
you
plan to attend the
Annual Meeting.
___________________________________________________
___________________________________________________
C
Authorized
Signatures - This section must be completed for your vote to be counted.
- Date
and Sign Below
Please
sign exactly as name(s) appear hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title.
Signature
1 - Please keep signature within the
box
Signature 2 - Please keep signature within the
box
Date (mm/dd/yyyy)
________________________________________ ______________________________________
__________________
-BACK-
HURCO
COMPANIES, INC.
One
Technology Way, Indianapolis, Indiana 46268
PROXY
FOR
ANNUAL MEETING OF SHAREHOLDERS – March 14, 2007
Solicited
on Behalf of the Board of Directors
The
undersigned
hereby appoints as proxies Michael Doar and Richard T. Niner, or either
of them,
with full power of substitution, to vote all shares of common stock which
the
undersigned is entitled to vote at the Annual Meeting of Shareholders of
Hurco
Companies, Inc., to be held at Hurco’s Corporate Office, One Technology Way,
Indianapolis, Indiana at 10:00 a.m. (EST) on Wednesday, March 14, 2007
and any
adjournments thereof, upon the matters on the reverse side and, in their
judgement and discretion, upon such other business as may properly come
before
the meeting.
Only
shareholders
of record as of the close of business on January 12, 2007, are entitled
to
notice of and to vote at the Annual Meeting or any adjournments thereof.
In the event there are not sufficient votes for approval of one or more
of
the matters listed on the reverse side at the time of the Annual
Meeting, the Annual Meeting may be adjourned in order to permit further
solicitation of proxies. If you do not expect to attend the Annual
Meeting, please mark, sign and date the enclosed proxy and return it in
the
enclosed return envelope which requires no postage if mailed in the United
States.
The
shares
represented by the Proxy, unless otherwise specified, shall be voted FOR
each
nominee listed on the reserve side.
PLEASE
VOTE, DATE AND SIGN ON RESERVE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.