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8-K - HURCO COMPANIES INC | v207936_8k.htm |
FOR
IMMEDIATE RELEASE
WEDNESDAY,
JANUARY 12, 2011
HURCO
REPORTS FOURTH QUARTER AND FULL-YEAR RESULTS
INDIANAPOLIS, INDIANA, — January 12,
2011, Hurco Companies, Inc., (Nasdaq, Global Select Market: HURC) today
reported results for the fourth quarter and fiscal year ended October 31,
2010. For the fourth quarter Hurco recorded a net loss of $1,162,000,
or $0.18 per diluted share, as compared to a net loss of $1,163,000, or $0.18
per diluted share, from the corresponding period in fiscal 2009. The
results for the last quarter included severance costs of $358,000, which had the
effect of $0.04 per diluted share, and a non-cash charge of $733,000, or $0.11
per diluted share, due to a valuation allowance for certain deferred tax
assets. For the full fiscal year 2010, Hurco recorded a net loss of
$5,744,000, or $0.89 per diluted share, as compared to a net loss of $2,321,000,
or $0.36 per diluted share, for fiscal 2009. The results for fiscal
2009 reflected the benefit of net realized gains of $2,028,000 from cash flow
hedges of forecasted inter-company sales and purchases that became ineffective
as we reduced production levels during that year.
Sales and
service fees for the fourth quarter of fiscal 2010 were $34,715,000, an increase
of $11,534,000, or 50%, from the prior year period. The effect of a
stronger U.S. Dollar when translating foreign sales to U.S. Dollars for
financial reporting purposes had an unfavorable impact of approximately 4%, or
$1,068,000, on the fourth quarter period-to-period
comparison. Sales and service fees for the full fiscal year
totaled $105,893,000, an increase of $14,877,000, or 16%, from fiscal
2009. There was no impact due to foreign currency translation on the
year over year increase in sales.
The
following table sets forth net sales and service fees by geographic region for
the three and twelve month periods ended October 31, 2010 and 2009 (in
thousands), respectively:
Net Sales and Service Fees by Geographic Region
|
||||||||||||||||||||||||
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||||||||||
October 31,
|
October 31,
|
|||||||||||||||||||||||
%
|
%
|
|||||||||||||||||||||||
2010
|
2009
|
Change
|
2010
|
2009
|
Change
|
|||||||||||||||||||
North
America
|
$ | 8,705 | $ | 4,034 | 116 | % | $ | 27,818 | $ | 25,652 | 8 | % | ||||||||||||
Europe
|
22,425 | 17,253 | 30 | % | 65,678 | 60,132 | 9 | % | ||||||||||||||||
Asia
Pacific
|
3,585 | 1,894 | 89 | % | 12,397 | 5,232 | 137 | % | ||||||||||||||||
Total
|
$ | 34,715 | $ | 23,181 | 50 | % | $ | 105,893 | $ | 91,016 | 16 | % |
The
fourth quarter increase in sales was primarily driven by higher demand for
vertical machining centers in all sales regions, with the largest percentage
increase in the North American and Asia Pacific regions. The sales
increase in North America reflected increased customer demand. The
increase in the Asia Pacific region was primarily the result of increased market
penetration in the India market and continued growing demand in the other Asia
Pacific territories. Compared to the fourth quarter of fiscal 2009,
unit shipments for the fourth quarter of fiscal 2010 increased in North America
by 162%, in Europe by 33%, and in the Asia Pacific sales region by
77%. For the full fiscal year sales increased in all regions,
with the largest percentage increase in the Asia Pacific region. The full year
increase in the Asia Pacific region was primarily the result of increased market
penetration in China and India, and strong demand for our entry-level,
lower-priced machines, as well as continued growing demand in the other Asia
Pacific territories. Unit shipments for the full year decreased in
North America by 5%, increased in Europe by 10% and increased in the Asia
Pacific sales region by 157% compared to fiscal 2009.
New order
bookings for the fourth quarter of fiscal 2010 totaled $36,106,000, an increase
of $16,066,000, or 80%, from the corresponding period in fiscal
2009. New order bookings increased in North America by $5,970,000, or
141%, in Europe by $7,776,000, or 53%, and in the Asia Pacific region by
$2,320,000, or 218%. New order bookings for the full year were
$115,315,000, an increase of $34,710,000, or 43%, over fiscal
2009. The full fiscal year orders increased in North America by
$8,915,000, or 38%, in Europe by $14,780,000, or 28%, and in the Asia Pacific
region by, $11,015,000, or 288%. The impact of currency translation
on new orders booked in the fourth quarter and full fiscal year was consistent
with the impact on sales.
Hurco’s
gross profit for fiscal 2010 was 21%, compared to 28% for fiscal
2009. Gross profit for the fourth quarter of fiscal 2010 was 24%,
compared to 29% for the prior year period. The decrease in profit as
a percentage of sales reflected higher production costs per machine as machines
sold during the period were produced at a time of lower production
levels. Also contributing to the decrease was a product mix that
included a greater amount of our entry-level machines that were in high demand
in the Asia Pacific region where competitive price pressure is a strong
factor. Gross profit for the fourth quarter of fiscal 2010 was 24%,
compared to 19% for the first nine months of the year due primarily to increased
sales in Europe of our high performance VMX machines. In addition,
our increased production levels served to reduce our allocated fixed cost per
machine.
Selling,
general and administrative expenses for the fourth quarter of fiscal 2010 were
$9,080,000, an increase of $953,000, 12%, from the corresponding period in 2009
due to higher sales and marketing expenses, primarily related to the
International Manufacturing Technology Show in Chicago, and commissions as a
result of higher sales. Selling, general and administrative expenses
were $29,837,000 for fiscal 2010, a decrease of $1,037,000, or 3%, from fiscal
2009 and $16,974,000, or 36%, from fiscal 2008. These reductions
reflect the benefit of cost reduction initiatives that began at the start of
fiscal 2009.
The
$1,932,000 decrease in other income for fiscal 2010 in comparison to fiscal 2009
was primarily due to net realized gains in fiscal 2009 of $2,028,000 from cash
flow hedges of forecasted inter-company sales and purchases that became
ineffective as we reduced production levels during that period.
The
effective tax rate for the fourth quarter of fiscal 2010 was a provision of 18%,
compared to a benefit of 44% for the same period in the prior year primarily due
to the establishment of valuation allowances on certain deferred tax assets in
the fourth quarter of fiscal 2010. The effective tax rate for fiscal
2010 was a benefit of 35%, compared to a benefit of 39% for the same period in
the prior year. The reduction in the effective tax rate for the year
was primarily due to the net impact of recording a valuation allowance on our
state net operating loss carryforwards and the reversal of tax reserves for
uncertain tax positions taken in previous years now expiring due to statutes of
limitations.
Cash and
cash equivalents totaled $48,255,000 as of October 31, 2010, compared to
$28,782,000 as of October 31, 2009. This increase in cash was
primarily the result of reducing our finished goods inventory by $15,189,000, or
36%. The reduction in inventory was due to both lower production
levels and increased sales. In response to an increase in orders
during the second half of fiscal 2010, we increased production to better align
with those order levels. We continuously seek to adjust production
levels to reflect changes in customer demand. Working capital,
excluding cash, was $45,713,000 as of October 31, 2010, compared to $68,675,000
at October 31, 2009. The 33% reduction in working capital, excluding
cash, was primarily due to a decrease in finished goods inventory and an
increase in accounts payable.
Michael
Doar, President and Chief Executive Officer, stated, “I am encouraged that order
levels for the fourth quarter of fiscal 2010 are approaching levels we
experienced before the economic downturn that began in
2008. Most importantly, we are seeing a strengthening in Europe, our
largest and most profitable sales region. In response, our factory is
currently operating at a near pre-recession production level and we are starting
fiscal 2011 with a healthy backlog of orders. If these economic
indicators continue, Hurco will be on the path to achieving the same levels of
performance that we experienced before the downturn, as customers around the
world begin to invest in technology that will make their businesses more
profitable. As the global economy recovers, we expect to emerge as a
stronger organization with a broader and more advanced product offering due to
our investments in technology during this difficult economic
cycle.”
Hurco
Companies, Inc. is an industrial technology company that designs and produces
interactive computer controls, software and computerized machine tools for the
worldwide metal cutting and metal forming industry. The end market for the
Company's products consists primarily of independent job shops and short-run
manufacturing operations within large corporations in industries such as
aerospace, defense, medical equipment, energy, transportation and computer
equipment. The Company is based in Indianapolis, Indiana, with manufacturing
operations in Taiwan and China, and sells its products through direct and
indirect sales forces throughout North America, Europe, and Asia. The company
has sales, application engineering support and service subsidiaries in Canada,
China, England, France, Germany, India, Italy, Poland, Singapore, South Africa,
South Korea 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 ongoing impact
of the recent global economic recession, other changes in general economic and
business conditions that affect demand for computerized machine systems,
computer numerical control systems and software products, changes in
manufacturing markets, innovations by competitors, our ability to protect our
intellectual property, fluctuations in exchange rates, fluctuations in prices of
raw materials, changes in market demands, quality and delivery performance by
our vendors, uncertainty concerning our ability to use tax loss carryforwards
and governmental actions and initiatives including import and export
restrictions and tariffs.
Contact:
John G. Oblazney
Vice President & Chief Financial Officer
317-293-5309
Hurco
Companies, Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per-share data)
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
October 31,
|
October 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Sales
and service fees
|
$ | 34,715 | $ | 23,181 | $ | 105,893 | $ | 91,016 | ||||||||
Cost
of sales and service
|
26,235 | 16,366 | 84,097 | 65,188 | ||||||||||||
Gross
profit
|
8,480 | 6,815 | 21,796 | 25,828 | ||||||||||||
Selling,
general and administrative expenses
|
9,080 | 8,127 | 29,837 | 30,874 | ||||||||||||
Operating
loss
|
(600 | ) | (1,312 | ) | (8,041 | ) | (5,046 | ) | ||||||||
Interest
expense
|
6 | 2 | 49 | 35 | ||||||||||||
Interest
income
|
37 | 5 | 86 | 190 | ||||||||||||
Investment
income
|
2 | (16 | ) | 14 | 16 | |||||||||||
Other
(income) expense, net
|
421 | 765 | 869 | (1,063 | ) | |||||||||||
Loss
before taxes
|
(988 | ) | (2,090 | ) | (8,859 | ) | (3,812 | ) | ||||||||
Provision
(benefit) for income taxes
|
174 | (927 | ) | (3,115 | ) | (1,491 | ) | |||||||||
Net
loss
|
$ | (1,162 | ) | $ | (1,163 | ) | $ | (5,744 | ) | $ | (2,321 | ) | ||||
Losses
per common share
|
||||||||||||||||
Basic
|
$ | (0.18 | ) | $ | (0.18 | ) | $ | (0.89 | ) | $ | (0.36 | ) | ||||
Diluted
|
$ | (0.18 | ) | $ | (0.18 | ) | $ | (0.89 | ) | $ | (0.36 | ) | ||||
Weighted
average common shares outstanding
|
||||||||||||||||
Basic
|
6,441 | 6,441 | 6,441 | 6,429 | ||||||||||||
Diluted
|
6,441 | 6,441 | 6,441 | 6,429 |
OTHER CONSOLIDATED FINANCIAL DATA |
Twelve Months Ended
|
Twelve Months Ended
|
||||||||||||||
October 31,
|
October 31,
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|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Operating
Data:
|
||||||||||||||||
Gross
margin
|
24.4 | % | 29.4 | % | 20.6 | % | 28.4 | % | ||||||||
SG&A
expense as a percentage of sales
|
26.2 | % | 35.1 | % | 28.2 | % | 33.9 | % | ||||||||
Operating
loss as a percentage of sales
|
-1.7 | % | -5.7 | % | -7.6 | % | -5.5 | % | ||||||||
Pre-tax
loss as a percentage of sales
|
-2.8 | % | -9.0 | % | -8.4 | % | -4.2 | % | ||||||||
Effective
tax rate
|
-17.6 | % | 44.4 | % | 35.2 | % | 39.1 | % | ||||||||
Depreciation
and Amortization
|
993 | 844 | 3,804 | 3,295 | ||||||||||||
Capital
expenditures
|
606 | 739 | 1,848 | 3,699 | ||||||||||||
Balance
Sheet Data:
|
10/31/2010
|
10/31/2009
|
||||||||||||||
Working
capital (excluding cash)
|
$ | 45,713 | $ | 68,675 | ||||||||||||
Days
sales outstanding
|
33 | 39 | ||||||||||||||
Inventory
turns
|
1.5 | 1.0 | ||||||||||||||
Capitalization
|
||||||||||||||||
Total
debt
|
$ | - | $ | - | ||||||||||||
Shareholders'
equity
|
114,740 | 120,376 | ||||||||||||||
Total
|
$ | 114,740 | $ | 120,376 |
Hurco
Companies, Inc.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands, except share and per-share data)
October 31,
|
October 31,
|
|||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 48,255 | $ | 28,782 | ||||
Accounts
receivable, net
|
20,114 | 13,988 | ||||||
Refundable
taxes
|
5,093 | 7,121 | ||||||
Inventories,
net
|
55,866 | 60,281 | ||||||
Deferred
income taxes, net
|
2,467 | 2,670 | ||||||
Derivative
assets
|
905 | 376 | ||||||
Other
|
3,508 | 5,046 | ||||||
Total
current assets
|
136,208 | 118,264 | ||||||
Property
and equipment:
|
||||||||
Land
|
782 | 782 | ||||||
Building
|
7,116 | 7,116 | ||||||
Machinery
and equipment
|
15,095 | 14,995 | ||||||
Leasehold
improvements
|
2,183 | 2,021 | ||||||
25,176 | 24,914 | |||||||
Less
accumulated depreciation and amortization
|
(13,424 | ) | (11,802 | ) | ||||
11,752 | 13,112 | |||||||
Non-current
assets:
|
||||||||
Software development costs, less accumulated amortization
|
6,042 | 6,503 | ||||||
Other assets
|
6,344 | 6,864 | ||||||
$ | 160,346 | $ | 144,743 | |||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 30,394 | $ | 8,262 | ||||
Derivative
liabilities
|
2,123 | 2,234 | ||||||
Accrued
expenses
|
9,723 | 10,311 | ||||||
Total
current liabilities
|
42,240 | 20,807 | ||||||
Non-current
liabilities:
|
||||||||
Deferred
income taxes, net
|
2,335 | 2,570 | ||||||
Deferred
credits and other
|
1,031 | 990 | ||||||
Total
liabilities
|
45,606 | 24,367 | ||||||
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; 13,250,000
shares authorized; and 6,440,851 shares issued and
outstanding
|
644 | 644 | ||||||
Additional
paid-in capital
|
52,144 | 52,003 | ||||||
Retained
earnings
|
63,824 | 69,568 | ||||||
Accumulated
other comprehensive loss
|
(1,872 | ) | (1,839 | ) | ||||
Total
shareholders' equity
|
114,740 | 120,376 | ||||||
$ | 160,346 | $ | 144,743 |