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 January 31, 1997 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
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (317) 293-5309
--------------
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
The number of shares of the Registrant's common stock outstanding as of March
14, 1997 was 6,535,371.
HURCO COMPANIES, INC.
January 1997 Form 10-Q Quarterly Report
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
Item 1.Condensed Financial Statements
Condensed Consolidated Statement of Operations -
Three months ended January 31, 1997 and 1996..........................3
Condensed Consolidated Balance Sheet -
As of January 31, 1997 and October 31, 1996...........................4
Condensed Consolidated Statement of Cash Flows -
Three months ended January 31, 1997 and 1996..........................5
Notes to Condensed Consolidated Financial Statements...................6
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................7
PART II - OTHER INFORMATION
Item 1.Legal Proceedings..............................................10
Item 6.Exhibits and Reports on Form 8-K...............................10
Signatures............................................................11
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per-share data)
Three Months Ended January 31,
1997 1996
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(Unaudited)
SALES AND SERVICE FEES........................ $22,278 $ 23,224
Cost of sales and service..................... 15,796 16,749
---------- ----------
GROSS PROFIT............................. 6,482 6,475
Selling, general and administrative expenses.. 5,046 5,049
---------- ----------
OPERATING INCOME......................... 1,436 1,426
Interest expense.............................. 522 1,130
License fee (income).......................... (143) (295)
Other (income) expense, net.................. 23 19
---------- ----------
Income before income taxes............. 1,034 572
Provision for income taxes.................. 18 --
---------- ----------
NET INCOME.................................. $ 1,016 $ 572
========== ==========
EARNINGS PER COMMON SHARE................... $ .15 $ .10
========= ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING.. 6,680 5,579
========== ==========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
January 31, October 31,
1997 1996
ASSETS (Unaudited) (Audited)
CURRENT ASSETS:
Cash and cash equivalents..................$ 1,238 $ 1,877
Accounts receivable........................ 14,909 17,162
Inventories................................ 26,634 24,215
Other...................................... 1,026 854
---------- ---------
Total current assets................... 43,807 44,108
---------- ---------
LONG-TERM LICENSE FEE RECEIVABLES............... 1,086 1,040
---------- ---------
PROPERTY AND EQUIPMENT:
Land ................................... 761 761
Building................................... 7,091 7,095
Machinery and equipment.................... 12,729 12,662
Leasehold improvements..................... 1,010 1,002
Less accumulated depreciation and amortization(11,894) (11,714)
---------- ---------
9,697 9,806
---------- ---------
SOFTWARE DEVELOPMENT COSTS, LESS AMORTIZATION... 3,963 3,792
OTHER ASSETS ................................... 1,204 1,004
--------------- ---------------
$ 59,757 $ 59,750
LIABILITIES AND SHAREHOLDERS' EQUITY ========== =========
CURRENT LIABILITIES:
Accounts payable.......................... $ 11,261 $ 11,407
Accrued expenses.......................... 6,031 7,454
Accrued warranty expenses................. 1,501 1,425
Current portion of long-term debt......... 3,036 3,050
---------- ---------
Total current liabilities............. 21,829 23,336
---------- ---------
NON-CURRENT LIABILITIES
Long-term debt............................ 19,434 19,060
Deferred credits and other obligations.... 1,476 1,213
---------- ---------
Total non-current liabilities...... 20,910 20,273
SHAREHOLDERS' EQUITY: ---------- ---------
Preferred stock: $100 par value per share; 40,000
shares authorized; no shares issued..... -- --
Common stock: no par value; $.10 stated value per
share; 7,500,000 shares authorized; and 6,534,171
and 6,531,871 shares issued , respectively 653 653
Additional paid-in capital................. 50,312 50,312
Accumulated deficit........................ (29,192) (30,208)
Foreign currency translation adjustment.... (4,755) (4,616)
---------- ---------
Total shareholders' equity............. 17,018 16,141
---------- ---------
$59,757 $59,750
======= =========
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 January 31,
1997 1996
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................... $ 1,016 $ 572
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization.......... 549 780
Change in assets and liabilities:
(Increase) decrease in accounts receivable 2,016 418
(Increase) decrease in inventories... (2,656) (1,267)
Increase (decrease) in accounts payable (117) (521)
Increase (decrease) in accrued expenses (1,235) (1,778)
Other............................... 44 519
----------- ---------
NET CASH PROVIDED BY (USED FOR) OPERATING
ACTIVITIES................................... (383) (1,277)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment......... 76 2
Purchases of property and equipment..... (226) (101)
Software development costs.............. (374) (284)
Other................................... - 37
---------- ----------
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES............... (524) (346)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances on bank credit facilities...... 8,928 20,661
Repayment on bank credit facilities..... (6,727) (18,397)
Repayments of term debt................. (1,786) (1,786)
---------- ----------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES............... 415 478
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH...... (147) (10)
---------- ----------
NET INCREASE (DECREASE) IN CASH..... (639) (1,155)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,877 2,072
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD... $ 1,238 $ 917
========= ==========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
The condensed financial information as of January 31, 1997 and 1996 is unaudited
but includes all adjustments which the Company considers necessary for a fair
presentation of financial position at those dates and its results of operations
and cash flows for the three months then ended. It is suggested that those
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended October 31, 1996.
2. LICENSE FEES
Fully paid-up license fees are recognized in income at the time the agreement is
consummated, net of legal fees and expenses, when the Company has no future
obligation related to the agreement. License fees related to agreements in which
payments are received over future periods and contingent on the patents
remaining valid are recognized in income, net of legal fees and expenses,
over the life of the respective patent.
3. HEDGING
The U.S. dollar equivalent notional amount of outstanding foreign currency
forward exchange contracts was approximately $12,484,000 as of January 31, 1997
(of which $9,841,400 related to hedges of firm intercompany sales commitments)
and $12,645,000 as of October 31, 1996. Deferred gains related to hedges of
intercompany sales commitments were approximately $316,000 as of January 31,
1997. Contracts outstanding at January 31, 1997 mature at various times through
June 30, 1997.
4. EARNINGS PER SHARE
Earnings per share of common stock are based on the weighted average number of
common shares outstanding, which includes, for the first quarter of fiscal 1997
and 1996, common stock equivalents related to outstanding stock options computed
using the treasury method. Such common stock equivalents totaled 157,000 shares.
Fully diluted earnings per share are the same as primary earnings per share for
this period.
5. ACCOUNTS RECEIVABLE
The allowance for doubtful accounts was $753,000 as of January 31, 1997 and
$785,000 as of October 31, 1996.
6. INVENTORIES
Inventories, priced at the lower of cost (first-in, first-out method) or market
are summarized below (in thousands):
January 31, 1997 October 31, 1996
---------------- ----------------
Purchased parts and sub-assemblies $ 11,778 $ 12,354
Work-in-Process 2,666 1,942
Finished Goods 12,190 9,919
---------- --------
$ 26,634 $ 24,215
========== =========
7. SUBSEQUENT EVENT
In March 1997, the Company's wholly owned subsidiary, IMS Technology, Inc.
(IMS), entered into a settlement with Fanuc, Ltd., a major
manufacturer of machine tools and computer numerical control (CNC) systems
concerning an IMS patent for certain interactive CNC technology originally
developed by the Company. Under the settlement, IMS licensed its patent to Fanuc
and Fanuc made a one-time payment to IMS. The Company expects to recognize
income of approximately $5 million after foreign withholding taxes and expenses
as a result of this settlement in its second fiscal quarter ended April 30,
1997.
As reported under Item 1. "Legal Proceedings", the IMS patent is the
subject of a number of pending legal actions.
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." For a description of risks and uncertainties related to forward-
looking statements, see the Company's Annual Report on Form 10-K for the year
ended October 31, 1996.
RESULTS OF OPERATIONS
Three Months Ended January 31, 1997 Compared to Three Months Ended January 31,
1996
Total sales and service fees for the first quarter of fiscal 1997 decreased
$946,000, or 4.1%, from the first quarter of fiscal 1996. Of the total decrease,
$287,000 reflected the effects of weaker European currencies when converting
foreign currency revenues into U.S. dollars for financial reporting purposes.
Notwithstanding the decline in revenues, net income increased by $444,000, or
approximately 77.6%, primarily as a result of a substantial reduction in
interest expense.
Sales of CNC-operated machine tools, which totaled $13.6 in the first quarter of
fiscal 1997, were 12.3% below the unusually high level of $15.5 million
recorded during the corresponding fiscal 1996 period. The decrease was
experienced both domestically, with a decline of $352,000, or 5.6%, and in
Europe, with a decline (inclusive of currency translation effects) of $1.5
million, or 17.3%. The first quarter of fiscal 1996 was marked by an unusually
high level of shipments, as an increasing availability of products from the
Company's contract manufacturers permitted an accelerated reduction of the
high backlog that had resulted from the combined effects of a strengtening
machine tool market, the introduction of the Company's Advantage series product
line and capacity constraints on the part of the Company's contract
manufacturers during fiscal 1995. Sales of CNC systems and software
(which do not include systemsand software that are sold as an integral part
of a machine tool) increased during the first quarter of fiscal 1997 by
$893,000, or 20.8%, primarily due to increased shipments of Autobend control
products in response to improved worldwide market conditions and domestic
promotional programs.
International sales were approximately 43.8% of total revenues during the first
quarter of fiscal 1997, down slightly from 45.8% of total revenues during
the first quarter of fiscal 1996.
New order bookings during the first quarter of fiscal 1997 were $21.2 million,
an increase of approximately 6% from the $20.0 million reported for the
corresponding period of fiscal 1996. The increase was primarily attributable to
international business, which represented approximately 47% of the new orders
for the first quarter of 1997 compared to approximately 44% for the 1996 period.
Backlog at January 31, 1997 was $7.3 million compared to $9.0 million at October
31, 1996 primarily as a result of the increased availability of products for
shipment.
Gross profit improved during the first quarter of fiscal 1997, despite the
decline in sales, as a result of improved margins on domestic machine tool
sales. As a percentage of sales, gross profit increased to 29.1% compared to
27.9 % for the corresponding period in fiscal 1996. The improvement in margins
is attributable to the combined effects of a price increase in the first quarter
of fiscal 1996, increased sales of software options, an increased percentage of
higher-margin products in the total sales mix, and reduced operating costs of
the Company's domestic service organization.
Interest expense for the first quarter of fiscal 1997 decreased approximately
$608,000, or 53.8%, from the amount reported for the corresponding period in
fiscal 1996, primarily due to a substantial reduction in outstanding borrowings
and the inclusion in the 1996 period of $240,000 of nonrecurring fees to the
Company's lenders.
The Company manages its foreign currency exposure through the use of foreign
currency forward exchange contracts. The Company does not speculate in the
financial markets and, therefore, does not enter into these contracts for
trading purposes. The Company also moderates its 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. The results of these programs achieved management's objectives for the
first quarter of fiscal 1997 and fiscal 1996. See Note 2 to the Condensed
Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1997, the Company had cash and cash equivalents of $1.2 million
compared to $1.9 million at October 31, 1996. Cash used for operations totaled
$383,000 in the first quarter of fiscal 1997 compared to $1.3 million in the
same period of fiscal 1996. During the first quarter of fiscal 1997, accounts
receivable decreased by $2.0 million, or 13.1%, reflecting the lower level of
sales in the quarter, while inventories increased by $2.7 million, or 10.0% due
in part to increased availability of finished machine tools products from the
company's contract manufacturers. Accounts payable and accrued expenses
decreased during the 1997 first quarter by $1.4 million, or 7.4%, primarily
because of seasonal payments related to fiscal 1996 operations.
Working capital was $22.0 million at January 31, 1997, compared to $20.8 million
at October 31, 1996. During the first quarter of fiscal 1997, borrowings under
the Company's revolving credit facilities increased by $360,000. As of January
31, 1997, the Company had unutilized credit facilities of $5.1 million available
for either direct borrowings or commercial letters of credit.
Under the terms of the Company's agreements with its lenders, which were amended
and restated effective January 22, 1997, $3.0 million of term loan payments are
due and payable over the next twelve months. Management believes that
anticipated cash flow from operations and available borrowings under the
Company's bank credit facilities will be sufficient to enable the Company to
meet its anticipated cash requirements during that period.
The Company expects to recognize income of approximately $5 million after
foreign withholding taxes and expenses in its second quarter ended April 30,
1997 as a result of a settlement between the Company's wholly-owned subsidiary,
IMS Technology, Inc. (IMS) and Fanuc, Ltd., a major manufacturer of machine
tools and CNC control systems. Although IMS is actively pursuing a program to
license the use of its patent to other CNC manufacturers and has entered into
three license agreements since January 1996, there can be no assurance that IMS
will enter into addtional license agreements in the future or that the terms
of any such future license agreements will be similar to those previously
entered into.
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As previously reported, IMS and the Company are parties to a number of pending
legal proceedings involving patent infringement and other claims in connection
with an IMS patent for certain interactive CNC technology originally developed
by the Company (the IMS actions). In connection with a settlement with Fanuc,
Ltd., a major manufacturer of machine tools and CNC systems, the terms of which
are discussed elsewhere herein, IMS and Fanuc have agreed to dismiss all claims
against each other in the IMS actions. Other than the settlement with Fanuc,
there have been no other material developments in the IMS actions since those
described in the Company's annual report on Form 10-K for the year ended October
31, 1996.
The Company is involved in various other claims and lawsuits arising in the
ordinary course of business, none of which, in the opinion of management, is
expected to have a material adverse effect on its consolidated financial
position or results of operations.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.20.29 Second Amendment to Amended and Restated Credit Agreement and Term Loan
Agreement, dated January 22, 1997, between the Registrant and NBD Bank.
10.20.30 Sixth Amendment to Letter Agreement (European Facility), dated
January 22, 1997, between the Registrant's foreign subsidiaries
and NBD Bank.
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule (electronic filing only).
(b) Reports on Form 8-K: None
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
March 17, 1997
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Exhibit 10.20.29
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
AND TERM LOAN AGREEMENT
dated January 22, 1997, between the Registrant and
NBD Bank
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- -------------------------------------------------------------------------------
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
AND TERM LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND TERM
LOAN AGREEMENT dated as of _________, 1997 (this "Amendment") between HURCO
COMPANIES, INC., an Indiana corporation (the "Company") and NBD BANK, a Michigan
banking corporation (the "Bank").
RECITALS
A. The parties hereto have entered into an Amended and Restated Credit
Agreement and Amendment to Term Loan Agreement dated as of January 26, 1996 , as
amended by the First Amendment to Restated Credit Agreement and Term Loan
Agreement dated as of July 1, 1996 (collectively, the "Credit Agreement"), which
is in full force and effect.
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
B. The Company desires to amend the Credit Agreement as herein
provided, and the Bank is willing to so amend the Credit Agreement
on the terms and conditions set forth herein.
AGREEMENT
Based upon these recitals, the parties agree as follows:
1. Amendment. Upon the Company satisfying the condition set forth
in paragraph 4 (the date that this occurs being called the "effective date"),
the Credit Agreement shall be amended as follows:
(a) The following definitions of the terms "Eurodollar
Business Day", "Eurodollar Interest Period", "Eurodollar Rate", "Eurodollar Rate
Loan", and "Floating Rate Loan" are added to Section 1.1 in alphabetical order:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
"Eurodollar Business Day" means, with respect to any Eurodollar Rate
Loan, a day which is both a Business Day and a day on which dealings in
Dollar deposits are carried out in the London interbank market.
"Eurodollar Interest Period" means, with respect to any Eurodollar Rate
Loan, the period commencing on the day such Eurodollar Rate Loan is
made or converted to a Eurodollar Rate Loan and ending on the day which
is one, two or three months thereafter, as the Company may elect under
Section 3.1(a) or 3.5, and each subsequent period commencing on the
last day of the immediately preceding Eurodollar Interest Period and
ending on the day which is one, two or three months thereafter, as the
Company may elect under Section 3.1(a) or 3.5, provided, however, that
(a) any Eurodollar Interest Period which commences on the last
Eurodollar Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Eurodollar Business Day of the
appropriate subsequent calendar month, (b) each Eurodollar Interest
Period which would otherwise end on a day which is not a Eurodollar
Business Day shall end on the next succeeding Eurodollar Business Day
or, if such next succeeding Eurodollar Business Day falls in the next
succeeding calendar month, on the next preceding Eurodollar Business
Day, and (c) no Eurodollar Interest Period which would end after the
Termination Date shall be permitted.
"Eurodollar Rate" means, with respect to any Eurodollar Rate Loan and
the related Eurodollar Interest Period, the per annum rate that is
equal to the sum of:
(a) two percent (2%) per annum, plus
(b) the rate per annum obtained by dividing (i) the per annum
rate of interest at which deposits in Dollars for such
Eurodollar Interest Period and in an aggregate amount
comparable to the amount of such Eurodollar Rate Loan are
offered to NBD by other prime banks in the London interbank
market at approximately 11:00 a.m. London time on the second
Eurodollar Business Day prior to the first day of such
Eurodollar Interest Period by (ii) an amount equal to one minus
the stated maximum rate (expressed as a decimal) of all
reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves)
that are specified on the first day of such Eurodollar Interest
Period by the Board of Governors of the Federal
Reserve System (or any successor agency thereto) for
determining the maximum reserve requirement with respect to
eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board)
maintained by a member bank of such System;
all as conclusively determined by NBD, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one
percent (1/100 of 1%).
"Eurodollar Rate Loan" means any New Facility Loan or other loan
outstanding under the Outstanding Facilities, or portion thereof, that
bears interest at the Eurodollar Rate.
"Floating Rate Loan" means any New Facility Loan or other loan
outstanding under the Outstanding Facilities, or portion thereof, that
bears interest at the Floating Rate.
(b) The definitions of the terms "Automatic Termination Date",
"Interest Payment," and "Overdue Rate" in Section 1.1 are amended to read in
full as follows:
"Automatic Termination Date" means May 1, 1998.
"Interest Payment Date" means (a) with respect to any Eurodollar Rate
Loan, the last day of each Eurodollar Interest Period with respect to
such Loan and, in the case of any Eurodollar Interest Period exceeding
one month, those days that occur during that Eurodollar Interest Period
at intervals of one month after the first day of the Eurodollar
Interest Period, and (b) in all other cases, the last Business Day of
each month, commencing with the first such day after the Effective
Date.
"Overdue Rate" means (a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of three percent (3%)
per annum plus the Floating Rate, (b) in respect of principal of
Eurodollar Rate Loans, a rate per annum that is equal to the sum of
three percent (3%) per annum plus the per annum rate in effect thereon
until the end of the then-current Eurodollar Interest Period for such
Eurodollar Rate Loan and, thereafter, a rate per annum that is equal to
the sum of three percent (3%) per annum plus the Floating Rate, and (c)
in respect of other amounts payable by the Company hereunder (other
than interest), a per annum rate that is equal to the sum of three
percent (3%) per annum plus the Floating Rate.
(c) The second sentence of Section 2.5(a) is amended to read in full
as follows:
Unless such payment shall have been made on such day, upon
each such payment, NBD shall be deemed to have disbursed to the
Company, and the Company shall be deemed to have elected to satisfy its
reimbursement obligation by, a New Facility Loan made on such day
bearing interest at the Floating Rate in an amount equal to the amount
so paid under the Letter of Credit.
(d) Section 3.1(a)(i) is amended to read in full as follows:
(a)(i) The Company shall give NBD notice of its request for
each New Facility Advance prior to 12:00 p.m. Noon Detroit time (i) in
the case of any Eurodollar Rate Loan, three Eurodollar Business Days
prior to the date such Eurodollar Rate Loan is requested to be made,
(ii) in the case of any Floating Rate Loan, on the date such Floating
Rate Loan is requested to be made, and (iii) in the case of any New
Facility Letter of Credit Advance, five Business Days prior to the date
such advance is requested to be made, which notice shall be
substantially in the form of Exhibit B attached hereto. The notice
shall specify whether a Eurodollar Rate Loan, Floating Rate Loan, or
New Facility Letter of Credit Advance is requested and, in the case of
each requested Eurodollar Rate Loan, the Eurodollar Interest Period to
be initially applicable to such Eurodollar Rate Loan, and, in the case
of each New Facility Letter of Credit Advance, shall include such
information as may be necessary for its issuance by NBD and shall be
accompanied by a fully completed standby letter of credit application
in NBD's customary form. Subject to the terms of this Agreement, the
proceeds of each requested New Facility Advance shall be made available
to the Company by depositing the proceeds thereof, in immediately
available funds, in an account maintained and designated by the Company
at NBD's principal office.
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(e) Section 3.4 is amended to read in full as follows:
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3.4 Minimum Amounts; Limitation on Number of Loans; Etc.
Except for New Facility Loans which exhaust the entire remaining amount
of the New Facility Commitment, each loan hereunder, each continuation
or conversion pursuant to Section 3.5, and each prepayment thereof
shall be in a minimum amount of $200,000 and in an integral multiple of
$10,000. Each New Facility Letter of Credit Advance shall be in a
minimum face value of the Dollar Equivalent of $100,000. The aggregate
number of Eurodollar Rate Loans outstanding at any one time may not
exceed four.
(f) The third sentence of Section 4.2(b) is amended to read as follows:
The NBD Term Loan Agreement is further modified to provide
that, notwithstanding any provisions therein to the contrary, on and
after the Effective Date, interest shall accrue on the Term Loan at the
Floating Rate or at the Eurodollar Rate, as the Company may request
from time to time in accordance with the procedures established under
this Agreement, and be payable on each Interest Payment Date (each
capitalized term to be used as defined in this Agreement).
(g) The last sentence of Section 4.3(a) is amended to read as follows:
Prior to such due date, the Company shall pay interest on the
reimbursement amount at the Floating Rate or at the Eurodollar Rate, as
the Company may request from time to time in accordance with the
procedures established under the Credit Agreement, on each Interest
Payment Date (each capitalized term to be used as defined in the Credit
Agreement)."
(h) Sections 3.5 and 3.6 are added as follows:
3.5 Subsequent Elections as to Loans. The Company may elect
(a) to continue a Eurodollar Rate Loan, or a portion thereof, as a
Eurodollar Rate Loan, or (b) to convert a Eurodollar Rate Loan, or a
portion thereof, to a Floating Rate Loan, or (c) to convert a Floating
Rate Loan, or a portion thereof, to a Eurodollar Rate Loan, in each
case by giving notice thereof to the Bank in substantially the form of
Exhibit I hereto not later than 12:00 p.m. Noon Detroit time three
Eurodollar Business Days prior to the date any such continuation of or
conversion to a Eurodollar Rate Loan is to be effective and not later
than 12:00 p.m. Noon Detroit time one Business Day prior to the date
such continuation or conversion is to be effective in all other cases,
provided that an outstanding Eurodollar Rate Loan may only be converted
on the last day of the then-current Eurodollar Interest Period with
respect to such Loan, and provided, further, if a continuation of a
Loan as, or a conversion of a Loan to, a Eurodollar Rate Loan is
requested, such notice shall also specify the Eurodollar Interest
Period requested to be applicable thereto upon such continuation or
conversion. If the Company does not timely deliver such a notice with
respect to any outstanding Eurodollar Rate Loan, the Company shall be
deemed to have elected to convert such Eurodollar Rate Loan to a
Floating Rate Loan on the last day of the then-current Eurodollar
Interest Period with respect to such Loan.
3.6 Limitation of Requests and Elections. Notwithstanding any
other provision of this Agreement to the contrary, if, upon receiving a
request for a Eurodollar Rate Loan pursuant to Section 3.1(a), or a
request for a continuation of a Eurodollar Rate Loan, or a request for
a conversion of a Floating Rate Loan to a Eurodollar Rate Loan,
pursuant to Section 3.5, (a) in the case of any Eurodollar Rate Loan,
deposits in Dollars for periods comparable to the Eurodollar Interest
Period elected by the Company are not available to NBD in the London
interbank market, or (b) the Eurodollar Rate will not adequately and
fairly reflect the cost to NBD of making, funding or maintaining the
related Eurodollar Rate Loan, or (c) by reason of national or
international financial, political or economic conditions or by reason
of any applicable law, treaty or other international agreement, rule or
regulation (whether domestic or foreign) now or hereafter in effect, or
the interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by the Bank with any guideline, request or directive of such
authority (whether or not having the force of law), including without
limitation exchange controls, it is impracticable, unlawful or
impossible for, or shall limit or impair the ability of, NBD to make or
fund the relevant Loan or to continue such Loan or to convert a Loan to
such a Loan, then the Company shall not be entitled, so long as such
circumstances continue, to request a Loan of the affected type pursuant
to Section 3.1(a) or a continuation of or conversion to a Loan of the
affected type pursuant to Section 3.5. In the event that such
circumstances no longer exist, NBD shall again consider requests for
Loans of the affected type pursuant to Section 3.1(a), and requests for
continuations of and conversions to Loans of the affected type pursuant
to Section 3.5.
(i) Section 5.2 is amended to read in full as follows:
5.2 Permitted Principal Payments. The Company may at any time
and from time to time prepay all or a portion of the New Facility Loans
in accordance with Section 3.1(b), without premium or penalty, provided
that (i) the Company shall have notified NBD not later than 12:00 p.m.
Noon Detroit time on the Business Day a prepayment is to be made, (ii)
the Company may not prepay any portion of any New Facility Loan as to
which an election for a continuation of or a conversion to a Eurodollar
Rate Loan is pending pursuant to Section 3.5, and (iii) unless earlier
payment is required under this Agreement, any Eurodollar Rate Loan may
only be prepaid on the last day of the then-current Eurodollar Interest
Period with respect to such Eurodollar Rate Loan.
(j) Clauses (a) and (b) of Section 5.6 are amended to read in full as
follows:
(a) New Facility. The Company shall pay interest to NBD
on the unpaid principal amount of the New Facility,
from the date hereof until the New Facility is paid
in full, on each Interest Payment Date and on the
Termination Date, and thereafter on demand, at the
Eurodollar Rate, if the loan is a Eurodollar Rate
Loan, and at the Floating Rate, if the loan is a
Floating Rate Loan.
(b) NBD Term Note. The Company shall pay interest to NBD
on the unpaid principal amount of the Amended Term
Note, from the date hereof until the Amended Term
Note is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by
acceleration, or otherwise), and thereafter on
demand, at the Eurodollar Rate, if the loan is a
Eurodollar Rate Loan, and at the Floating Rate, if
the loan is a Floating Rate Loan.
(k) Sections 5.11 and 5.12 are added, to read as follows:
5.11 Illegality and Impossibility. In the event that any
applicable law, treaty or other international
agreement, rule or regulation (whether domestic or
foreign) now or hereafter in effect and whether or
not presently applicable to NBD, or any
interpretation or administration thereof by any
governmental authority charged with the
interpretation or administration thereof, or
compliance by NBD with any guideline, request or
directive of such authority (whether or not having
the force of law), including without limitation
exchange controls, shall make it unlawful or
impossible for NBD to maintain any Eurodollar Rate
Loan under this Agreement, the Company shall, upon
receiving notice thereof from NBD, repay in full,
either directly or through converting the relevant
Eurodollar Rate Loan to a Floating Rate Loan, the
then-outstanding principal amount of each Eurodollar
Rate Loan so affected, together with all accrued
interest thereon to the date of payment and all
amounts owing to the Bank under Section 5.12, (a) on
the last day of the then-current Eurodollar Interest
Period applicable to such loan if NBD may lawfully
continue to maintain such loan to that day, or (b)
immediately if NBD may not continue to maintain such
loan to that day.
5.12 Indemnification. If the Company makes any payment of
principal with respect to any Eurodollar Rate Loan on
any other date than the last day of a Eurodollar
Interest Period applicable thereto (whether pursuant
to Section 5.1, Section 5.4, Section 8.2, or
otherwise), or if the Company fails to borrow any
Eurodollar Rate Loan after notice has been given to
NBD in accordance with Section 3.1(a), or if the
Company fails to make any payment of principal or
interest in respect of a Eurodollar Rate Loan when
due on any other date than the last day of a
Eurodollar Interest Period, the Company shall
reimburse NBD on demand for any resulting loss or
expense incurred by NBD, including without limitation
any loss incurred in obtaining, liquidating or
employing deposits from third parties, whether or not
NBD shall have funded or committed to fund such loan.
A statement as to the amount of such loss or expense,
prepared in good faith and in reasonable detail by
NBD and submitted by NBD to the Company, shall be
conclusive and binding for all purposes absent
manifest error in computation. Calculation of all
amounts payable to NBD under this Section 5.12 shall
be made as though NBD shall have actually funded or
committed to fund the relevant Eurodollar Rate Loan
through the purchase of an underlying deposit in an
amount equal to the amount of such loan in the
relevant market and having a maturity comparable to
the related Eurodollar Interest Period and, in the
case of any Eurodollar Rate Loan, through the
transfer of such deposit to a domestic office of NBD
in the United States; provided, however, that NBD may
fund any Eurodollar Rate Loan in any manner it sees
fit and the foregoing assumption shall be utilized
only for the purpose of calculating amounts payable
under this Section 5.12.
(l) Exhibit B attached to this Amendment is substituted for
Exhibit B attached to the Credit Agreement.
(m) Exhibit I attached to this Amendment is added as Exhibit I to the
Credit Agreement.
2. References to Credit Agreement. From and after the effective date of
this Amendment, references to the Credit Agreement in the Credit Agreement and
all other documents issued under or with respect thereto (as each of the
foregoing is amended hereby or pursuant hereto) shall be deemed to be references
to the Credit Agreement as amended hereby.
3. Representations and Warranties. The Company represents and warrants
to the Bank that:
(a) (i) The execution, delivery and performance of this
Amendment and all agreements and documents delivered pursuant hereto by the
Company have been duly authorized by all necessary corporate action and do not
and will not violate any provision of any law, rule, regulation, order,
judgment, injunction, or award presently in effect applying to it, or of its
articles of incorporation or bylaws, or result in a breach of or constitute a
default under any material agreement, lease or instrument to which the Company
is a party or by which it or its properties may be bound or affected; (ii) no
authorization, consent, approval, license, exemption or filing of a registration
with any court or governmental department, agency or instrumentality is or will
be necessary to the valid execution, delivery or performance by the Company of
this Amendment and all agreements and documents delivered pursuant hereto; and
(iii) this Amendment and all agreements and documents delivered pursuant hereto
by the Company are the legal, valid and binding obligations of the Company,
enforceable against it in accordance with the terms thereof.
(b) After giving effect to the amendments contained herein,
the representations and warranties contained in Article VI (other than Section
6.5) of the Credit Agreement are true and correct on and as of the effective
date hereof with the same force and effect as if made on and as of such
effective date.
(c) No Event of Default has occurred and is continuing or will
exist under the Credit Agreement as of the effective date hereof.
4. Conditions to Effectiveness. This Amendment shall not become
effective until the Bank has received the following documents and the
following conditions have been satisfied, each in form and substance
satisfactory to the Bank:
(a) Copies, certified as of the effective date hereof, of such
corporate documents of the Company and the Guarantor as the Bank may request,
including articles of incorporation, bylaws (or certifying as to the continued
accuracy of the articles of incorporation and by-laws previously delivered to
the Bank), and incumbency certificates, and such documents evidencing necessary
corporate action by the Company and the Guarantor with respect to this Amendment
and all other agreements or documents delivered pursuant hereto as the Bank may
request;
(b) A Consent under Intercreditor, Agency, and Sharing
Agreement of even date herewith among the Company, the Bank, Principal Mutual
Life Insurance Company ("PML"), and the Bank as Agent for the Bank and PML, in
form and substance satisfactory to the Bank;
(c) A letter agreement regarding the Sixth Amendment to
European Facility of even date herewith among Hurco Europe, Hurco GmbH, and the
Bank, in form and sustance satisfactory to the Bank; and
(d)Such additional agreements and documents, fully
executed by the Company, as are reasonably requested by the Bank.
5. Miscellaneous. The terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement. Except as
expressly amended hereby, the Credit Agreement and all other documents issued
under or with respect thereto are hereby ratified and confirmed by the Bank and
the Company and shall remain in full force and effect, and the Company hereby
acknowledges that it has no defense, offset or counterclaim with respect
thereto.
6.Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by
signing any such counterpart.
7. Expenses. The Company agrees to pay and save the Bank harmless from
liability for all costs and expenses of the Bank arising in respect of this
Amendment, including the reasonable fees and expenses of Dickinson, Wright,
Moon, Van Dusen & Freeman, counsel to the Bank, in connection with preparing and
reviewing this Amendment and any related agreements and documents.
8. Governing Law. This Amendment is a contract made under, and shall be
governed by and construed in accordance with, the laws of the State of Michigan
applicable to contracts made and to be performed entirely within such state and
without giving effect to the choice law principles of such state.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.
HURCO COMPANIES, INC. NBD BANK
By:_________________________ By: ________________________
Its: _____________________ Its: __________________
W:\mrh\00007\3031\AMD CR 2D 197.doc
Exhibit 10.20.30
SIXTH AMENDMENT TO LETTER AGREEMENT (EUROPEAN FACILITY)
dated January 22, 1997, between the Registrant's foreign
and NBD Bank
- -------------------------------------------------------------------------------
NBD BANK
- --------------------------------------------------------------------------------
611 Woodward Avenue
Detroit, Michigan 48226
Dated as of January __, 1997
Hurco Europe Limited
Hurco GmbH Werkzeugmaschinen
CIM-Bausteine Vertrieb und Service
Re: Sixth Amendment to European Facility
Ladies and Gentlemen:
This letter amends the letter agreement with you dated June 17, 1993,
as previously amended by the letter agreements dated March 24, 1994, as of
January 31, 1995, as of May 31, 1995, as of August 1, 1995, and as of January
16, 1996 (as amended, the "European Facility"), and is being entered into in
conjunction with the Second Amendment to Amended and Restated Credit Agreement
and Term Loan Agreement of even date herewith with your parent, Hurco Companies,
Inc. (the "Amendment ").
The definition of "Expiration Date" in the European Facility is amended
to read as follows:
"Expiration Date" means the earlier to occur of (a)
May 1, 1998, and (b) the date on which NBD declares under
paragraph 13 all principal and interest on indebtedness to NBD
provided under this agreement to be immediately due and
payable.
Should the foregoing be agreeable to you, as it is to us, please
indicate your agreement and acceptance by executing and returning the enclosed
copy of this letter, whereupon the European Facility shall be amended as herein
provided, and references to the European Facility shall be to the European
Facility as so amended. Except as amended hereby, the European Facility shall
remain in full force and effect.
Very truly yours,
NBD Bank
By: _________________________
Its: Vice President
Agreed and accepted:
HURCO EUROPE LIMITED
By: ________________________
Roger J. Wolf
Its: Director
Dated as of January __, 1997
HURCO GmbH WERKZEUGMASCHINEN
CIM-BAUSTEINE VERTRIEB UND
SERVICE
By: ________________________
Its: General Manager
Dated as of January __, 1997
W:\mrh\00007\3031\AMD EURO LTR AGR-6 197.doc
Exhibit 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Exhibit 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended January 31,
1997 1996
-----------------------------
(in thousands, except per share Fully Fully
amount) Primary Diluted Primary Diluted
Net Income................................ $1,016 $1,016 $572 $572
Weighted Average Common Shares Outstanding. 6,532 6,532 5,426 5,426
Assumed Issuances Under Stock Option Plans. 148 157 153 153
------ ------ ----- -----
6,680 6,689 5,579 5,579
====== ====== ===== =====
Earnings(loss) per common share........... $.15 $.15 $.10 $.10
====== ====== ===== =====
5
0000315374
SONJA BUCKLES
1,000
US DOLLARS
3-MOS
OCT-31-1997
NOV-1-1996
JAN-31-1997
1
1,238
0
15,662
753
26,634
43,807
21,591
11,894
59,757
21,829
0
0
0
653
16,365
59,757
22,278
22,278
15,796
15,796
(120)
0
522
1,034
18
1,016
0
0
0
1,016
.15
.15
