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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

 

Date of report (Date of earliest event reported): June 6, 2014

 

Hurco Companies, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Indiana

(State or Other Jurisdiction of Incorporation)

 

0-9143   35-1150732
(Commission File Number)   (IRS Employer Identification No.)
     
One Technology Way    
Indianapolis, Indiana   46268
(Address of Principal Executive Offices)   (Zip Code)

 

(317) 293-5309

(Registrant's Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

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

 

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

 

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

 

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

 

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

 

 
 

 

 

Item 2.02 Results of Operations and Financial Condition

 

On June 6, 2014, Hurco Companies, Inc. (the "Registrant") reported its results of operations for the second quarter ended April 30, 2014. The Registrant's earnings release for the period is attached as Exhibit 99.1 and the information set forth therein is incorporated herein by reference and constitutes a part of this report. The attached Exhibit 99.1 is furnished pursuant to Item 2.02 of Form 8-K.

 

Item 7.01 Regulation FD Disclosure

 

The Registrant’s press release issued on June 6, 2014 announced the payment of a cash dividend of $0.07 per share of common stock.

 

A copy of the press release is attached as Exhibit 99.1 to this report and is incorporated by reference herein.

  

 
 

 

Item 9.01Financial Statements and Exhibits

 

99.1Press Release of Hurco Companies, Inc. dated June 6, 2014

  

 
 

 

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 hereunto duly authorized.

 

  Dated: June 6, 2014
     
  HURCO COMPANIES, INC.
   
     
  By: /s/ Sonja K. McClelland
    Sonja K. McClelland, Vice President, Secretary,
Treasurer and Chief Financial Officer

 

 
 

 

EXHIBIT INDEX 

 

99.1Press Release of Hurco Companies, Inc. dated June 6, 2014

  

 

 

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

Friday, June 6, 2014

HURCO REPORTS SECOND QUARTER RESULTS AND ANNOUNCES QUARTERLY CASH DIVIDEND

  

INDIANAPOLIS, INDIANA, — June 6, 2014, Hurco Companies, Inc. (Nasdaq, Global Select Market: HURC) today reported net income of $3,536,000, or $0.54 per diluted share, for its second fiscal quarter ended April 30, 2014, compared to $3,183,000, or $0.48 per diluted share, for the corresponding period in fiscal 2013. For the first six months of fiscal 2014, Hurco reported net income of $5,905,000, or $0.90 per diluted share, compared to $5,437,000, or $0.83 per diluted share, for the corresponding period in fiscal 2013.

 

Sales and service fees for the second quarter of fiscal 2014 totaled $53,731,000, an increase of $4,112,000, or 8%, compared to the second quarter of fiscal 2013. Sales and service fees for the six months ended April 30, 2014, totaled $104,701,000, an increase of $10,997,000, or 12%, compared to the corresponding period in fiscal 2013. The year-over-year increases in sales and service fees for the second quarter and the first six months included a favorable currency impact of approximately $1,700,000 for the quarter and $2,301,000 for the six month period, respectively, when translating foreign sales to U.S. Dollars for financial reporting purposes.

 

The following table sets forth net sales and service fees by geographic region for the second quarter and first six months of fiscal 2014 and 2013, respectively (in thousands):

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
              $    %              $    % 
    2014    2013    Change    Change    2014    2013    Change    Change 
North America  $12,287   $13,080   $(793)   -6%  $28,580   $29,332   $(752)   -3%
Europe   35,037    31,896    3,141    10%   64,271    56,566    7,705    14%
Asia Pacific   6,407    4,643    1,764    38%   11,850    7,806    4,044    52%
 Total  $53,731   $49,619   $4,112    8%  $104,701   $93,704   $10,997    12%

 

Sales in North America decreased during the second quarter of fiscal 2014 compared to the corresponding prior year period. The softening of sales in North America is not unusual in the months prior to the International Manufacturing Technology Show which is held in September of even-numbered years. European sales and service fees for the second quarter and the first six months of fiscal 2014 included $2,127,000 and $3,803,000, respectively, from sales of electro-mechanical components and accessories manufactured by Hurco’s Italian-based subsidiary LCM Precision Technologies (LCM). Hurco acquired the LCM machine tool component business on July 1, 2013. In addition, the increase in European sales and service fees for the second quarter and first six months of fiscal 2014 included a favorable currency impact of approximately $1,823,000 for the quarter and $2,515,000 for the six month period, respectively, due primarily to a stronger Euro when translating foreign sales to U.S. Dollars for financial reporting purposes. The year-over-year increase in Asia Pacific sales and service fees was primarily attributable to increased shipments in China.

 

 
 

 

Orders for the second quarter of fiscal 2014 were $53,680,000, an increase of $4,909,000, or 10%, from the corresponding period in fiscal 2013 and included $2,670,000 of orders for LCM products. Orders for the first six months of fiscal 2014 were $110,774,000, an increase of $10,901,000, or 11%, from the corresponding period in fiscal 2013 and included $6,027,000 of orders for LCM products. The impact of currency translation on orders booked in the second quarter and first six months of fiscal 2014 was consistent with the impact on sales in those periods.

 

The following table sets forth new orders booked by geographic region for the second quarter and first six months of fiscal 2014 and 2013, respectively:

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
              $    %              $    % 
    2014    2013    Change    Change    2014    2013    Change    Change 
North America  $11,429   $13,035   $(1,606)   -12%  $26,001   $27,649   $(1,648)   -6%
Europe   37,819    30,756    7,063    23%   74,330    61,452    12,878    21%
Asia Pacific   4,432    4,980    (548)   -11%   10,443    10,772    (329)   -3%
 Total  $53,680   $48,771   $4,909    10%  $110,774   $99,873   $10,901    11%

 

Hurco’s gross profit for the second quarter of fiscal 2014 was $16,629,000, or 31% of sales, compared to $15,283,000, or 31% of sales, for the corresponding prior year period. Gross profit for the first six months of fiscal 2014 was $30,548,000, or 29% of sales, compared to $28,199,000, or 30% of sales, for the corresponding prior year period. The increases in gross profit were attributable to increased sales, which included LCM products, and increased cost efficiencies realized from higher production levels during fiscal 2014.

 

Selling, general and administrative expenses for the second quarter of fiscal 2014 were $11,206,000, or 21% of sales, compared to $10,679,000, or 22% of sales, in the corresponding quarter of fiscal 2013. Selling, general and administrative expenses for the first six months of fiscal 2014 were $21,806,000, or 21% of sales, compared to $19,599,000, or 21% of sales, for the corresponding prior year period. The year-over-year increases in selling, general and administrative expenses were primarily due to incremental operating expenses associated with the acquisition of the LCM business.

 

The effective tax rate for the second quarter of fiscal 2014 was 31%, compared to 29% for the corresponding prior year period. The effective tax rate for the first six months of fiscal 2014 was 30%, compared to 34% for the corresponding prior year period. The changes in effective tax rates in the year-over-year comparisons reflected the shift in geographic mix of income or loss among tax jurisdictions.

 

Cash and cash equivalents totaled $46,674,000 at April 30, 2014, compared to $42,804,000 at October 31, 2013.

 

Hurco also announced today that its Board of Directors approved the payment of a cash dividend of $0.07 per share.  The dividend will be paid on July 7, 2014, to shareholders of record as of the close of business on June 17, 2014.  Future declarations of dividends are subject to approval of the Board of Directors and may be adjusted as business needs or market conditions change.

 

Michael Doar, Chief Executive Officer, stated, “Overall, I am pleased with our financial results, with marked improvement in Asia where we are targeting customers involved in complex manufacturing since those businesses realize the most benefit from our advanced control technology. Europe continues to show signs of recovery from its recession. As for North America, a comparison to the results in 2012 is a better indicator than a comparison to the 2013 results since the largest manufacturing show, the International Manufacturing Technology Show, is held in September during even-numbered years. Typically, we see activity slow in the months leading up to the show as customers delay purchases so they can evaluate new offerings at the show. Hurco will be highlighting new technologies at IMTS, such as AdaptiPathTM and our 3D printing capability. In addition, we will be previewing the next generation console for our control, which includes more than 80 new features that were suggested by customers who participated in usability testing. We will also be showcasing one of our largest machines taken to IMTS, the HBMX55i horizontal boring mill.”

 

 
 

 

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

 

This news release contains forward looking statements which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the cyclical nature of the machine tool industry, changes in general economic and business conditions that affect demand for our products, the risks of our international operations, changes in manufacturing markets, innovations by competitors, the ability to protect our intellectual property, fluctuations in foreign currency exchange rates, increases in prices of raw materials, quality and delivery performance by our vendors, changes in operations due to acquisitions or loss of key personnel, uncertainty concerning our ability to use tax loss carryforwards and governmental actions and initiatives including import and export restrictions and tariffs.

 

 

Contact: Sonja K. McClelland

Vice President, Secretary, Treasurer & Chief Financial Officer

317-293-5309

 

 
 

 

Hurco Companies, Inc.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per-share data)

 

   Three Months Ended April 30,   Six Months Ended April 30, 
   2014   2013   2014   2013 
   (unaudited)   (unaudited) 
Sales and service fees  $53,731   $49,619   $104,701   $93,704 
                     
Cost of sales and service   37,102    34,336    74,153    65,505 
Gross profit   16,629    15,283    30,548    28,199 
                     
Selling, general and administrative expenses   11,206    10,679    21,806    19,599 
Operating income   5,423    4,604    8,742    8,600 
                     
Interest expense   54    55    131    120 
                     
Interest income   16    31    32    47 
                     
Investment income (expense)   5    4    36    15 
                     
Other (income)  expense, net   269    72    285    331 
                     
Income before taxes   5,121    4,512    8,394    8,211 
                     
Provision for income taxes   1,585    1,329    2,489    2,774 
                     
Net income  $3,536   $3,183   $5,905   $5,437 
                     
Income per common share                    
                     
Basic  $0.54   $0.49   $0.90   $0.83 
Diluted  $0.54   $0.48   $0.90   $0.83 
                     
Weighted average common shares outstanding                    
Basic   6,498    6,452    6,487    6,449 
Diluted   6,531    6,496    6,520    6,489 

 

OTHER CONSOLIDATED FINANCIAL DATA  Three Months Ended April 30,   Six Months Ended April 30, 
Operating Data:  2014   2013   2014   2013 
   (unaudited)   (unaudited) 
Gross margin   31%   31%   29%   30%
                     
SG&A expense as a percentage of sales   21%   22%   21%   21%
                     
Operating income as a percentage of sales   10%   9%   8%   9%
                     
Pre-tax income as a percentage of sales   10%   9%   8%   9%
                     
Effective tax rate   31%   29%   30%   34%
                     
Depreciation and amortization   816    798    1,551    1,715 
                     
Capital expenditures   855    453    1,374    1,289 

 

         
Balance Sheet Data:  4/30/2014   10/31/2013 
   (unaudited)     
Working capital (excluding cash)  $88,604   $86,512 
           
Days sales outstanding (unaudited)   47    45 
           
Inventory turns (unaudited)   1.5    1.4 
           
Capitalization          
Total debt  $3,195   $3,665 
Shareholders' equity   157,092    151,491 
Total  $160,287   $155,156 

 

 
 

 

Hurco Companies, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)

 

   April 30,   October 31, 
   2014   2013 
   (Unaudited)   (Audited) 
ASSETS          
Current assets:          
Cash and cash equivalents  $46,674   $42,804 
Accounts receivable, net   37,739    36,139 
Refundable taxes   3    6 
Inventories, net   95,599    95,260 
Deferred income taxes   2,594    2,080 
Derivative assets   53    699 
Other   9,176    8,014 
Total current assets   191,838    185,002 
           
Property and equipment:          
Land   782    782 
Building   7,314    7,326 
Machinery and equipment   19,419    19,059 
Leasehold improvements   3,577    3,634 
    31,092    30,801 
Less accumulated depreciation and amortization   (19,045)   (18,502)
    12,047    12,299 
           
Non-current assets:          
       Software development costs, less accumulated amortization   3,638    3,714 
       Goodwill   2,861    2,807 
       Intangible assets, net   1,958    2,155 
       Other assets   5,586    5,258 
   $217,928   $211,235 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable  $36,964   $35,527 
Derivative liabilities   1,737    1,212 
Accrued expenses   14,664    15,282 
Short-term debt   3,195    3,665 
Total current liabilities   56,560    55,686 
           
Non-current liabilities:          
Deferred income taxes   747    743 
Accrued tax liability   1,167    1,103 
Deferred credits and other obligations   2,362    2,212 
Total liabilities   60,836    59,744 
           
Shareholders' equity:          
Preferred stock:  no par value per share; 1,000,000 shares   -    - 
authorized; no shares issued          
Common stock:  no par value; $.10 stated value per share; 12,500,000 shares authorized;          
6,585,918 and 6,533,510 shares; and 6,504,880 and 6,465,054 shares outstanding,          
as of April 30, 2014 and October 31, 2013, respectively   651    647 
Additional paid-in capital   55,386    54,698 
Retained earnings   103,255    98,130 
Accumulated other comprehensive loss   (2,200)   (1,984)
Total shareholders' equity   157,092    151,491 
   $217,928   $211,235