UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File
January 31, 1995 No. 0-9143
HURCO COMPANIES, INC.
State of Incorporation IRS Employer ID
Indiana No. 35-1150732
Address of Principal Office:
One Technology Way
Indianapolis, Indiana 46268
Telephone: (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 at least the past 90 days:
Yes X No
---- -----
Shares of common stock outstanding as of February 26, 1995: 5,415,682
Total pages: 9
<PAGE>
HURCO COMPANIES, INC.
January 1995 Form 10-Q Quarterly Report
Table of Contents
Part I - Financial Information
Page
Item 1. Condensed Financial Statements
Consolidated Statement of Operations -
Three months ended January 31, 1995 and 1994........... 3
Consolidated Balance Sheets -
As of January 31, 1995 and October 31, 1994............ 4
Consolidated Statements of Cash Flows -
Three months ended January 31, 1995 and 1994........... 5
Notes to Consolidated Financial Statements................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 7
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K........................... 9
Signatures............................................................... 9
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
HURCO COMPANIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per-share data)
Three Months Ended January 31,
1995 1994
(Unaudited)
Sales and service fees ........................ $18,872 $18,579
Cost of sales and service ..................... 14,214 15,135
------- -------
Gross profit ................................. 4,658 3,444
Selling, general and administrative expenses . 4,246 4,745
------ ------
Operating income (loss) ...................... 412 (1,301)
Interest expense ............................. (904) (830)
Other, net ................................... 19 (37)
------ ------
Income (loss) before income taxes ...... (473) (2,168)
Income tax expense (benefit) ................. -- --
------- ------
Net Income (loss) ............................ $ (473) $(2,168)
======= =======
Earnings (loss) per common share............... $ (.09) $ (.40)
======= =======
Weighted average common shares outstanding..........5,415 5,434
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
HURCO COMPANIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
January 31, October 31,
1995 1994
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents ................... $ 1,039 $ 1,101
Accounts receivable ......................... 14,555 14,555
Inventories ................................. 27,077 26,341
Other ....................................... 1,247 1,099
-------- --------
Total current assets .................... 43,918 43,096
-------- --------
Property and equipment ........................... 11,449 11,887
Other assets ..................................... 4,483 4,575
-------- --------
$ 59,850 $ 59,558
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................. $ 7,293 $ 8,438
Accrued expenses .................................. 7,633 8,403
Current portion of long-term debt ................. 1,039 144
------- -------
Total current liabilities ..................... 15,965 16,985
------- -------
Non-current liabilities
Long-term debt .................................... 36,523 34,669
Other long-term obligations ....................... 556 576
------- -------
37,079 35,245
------- -------
Shareholders' equity:
Common stock: no par value; $.10 stated value per
share; 7,500,000 shares authorized; and 5,415,682
and 5,413,682 shares issued , respectively ...... 542 541
Additional paid-in capital ........................ 45,549 45,546
Accumulated deficit ............................... (35,148) (34,676)
Foreign currency translation adjustment ........... (4,137) (4,083)
------- -------
Total shareholders' equity .................... 6,806 7,328
------- -------
$ 59,850 $ 59,558
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
HURCO COMPANIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Three Months Ended January 31,
1995 1994
(Unaudited)
Cash flows from operating activities:
Net income (loss) ................................ $ (473) $(2,168)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization .................. 643 777
Change in assets and liabilities:
(Increase) decrease in accounts receivable ... (114) (1,581)
(Increase) decrease in inventories ........... (922) 4,317
Increase (decrease) in accounts payable ...... (1,141) (1,074)
Increase (decrease) in accrued expenses ...... (688) (820)
Other ........................................ 107 (508)
------- -------
Net cash provided by (used for) operating
activities (2,588) (1,057)
------- -------
Cash flows from investing activities:
Proceeds from sale of equipment .................. -- 97
Purchases of property and equipment .............. (84) (125)
Software development costs ....................... (223) (157)
Other ............................................ 12 --
------- -------
Net cash provided by (used for) investing
activities............................ (295) (185)
------- -------
Cash flows from financing activities:
Net short-term (repayment) borrowings ............ -- 383
Proceeds from long-term borrowings ............... 13,328 2,413
Repayment of long-term borrowings ................ (10,539) (973)
Proceeds from issuance of common stock under options 4 --
------- -------
Net cash provided by (used for) financing
activities................................... 2,793 1,823
------- ------
Effect of exchange rate changes on cash............ 28 30
------ -------
Net increase (decrease) in cash........... (62) 611
Cash and cash equivalents at beginning of year..... 1,101 1,486
------- -------
Cash and cash equivalents at end of year........... $ 1,039 $ 2,097
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The condensed financial information as of January 31, 1995 and 1994 is unaudited
but includes all adjustments that the Company considers necessary for a fair
presentation of financial position, results of operations and cash flows. 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, 1994.
2. EARNINGS PER SHARE
Earnings per share of common stock are based on the weighted average number of
common shares outstanding. No effect has been given to options outstanding under
the Company's Stock Option Plan as no dilution would result from their exercise.
3. ACCOUNTS RECEIVABLE
The allowance for doubtful accounts was $1,029,000 as of January 31, 1995 and
$1,046,000 as of October 31, 1994.
4. INVENTORIES
Inventories, priced at the lower of cost (first-in, first-out method), or market
are summarized below (in thousands):
January 31, October 31,
1995 1994
----------- -----------
Purchased parts and sub-assemblies $ 17,657 $ 15,252
Work-in-Process 3,656 3,929
Finished Goods 5,764 7,160
----------- ----------
$ 27,077 $ 26,341
=========== ==========
5. DEBT AGREEMENTS
In fiscal 1994, the Company entered into (1) a new bank credit facility to
replace the Company's previous bank credit facilities, amendments to its bank
term loan and amendments to its foreign credit authorization and (2) an amended
and restated agreement governing the Company's senior notes.
Effective January 31, 1995, the bank and senior note agreements were amended to
change the maturity date of the credit facilities and the due date of
installment payments required for the term loan and senior notes from January
31, 1996 to February 1, 1996. Accordingly, this debt is classified as long-term
in the accompanying balance sheet.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Quarter Ended January 31, 1995 Compared to First Quarter Ended January 31,
1994:
Sales for the first quarter of fiscal 1995 were slightly above those for the
corresponding quarter of fiscal 1994. European revenues, which accounted for 37%
of total sales in the first quarter of fiscal 1995, increased $2.2 million over
those in the 1994 period, principally due to increased shipments in Germany.
Domestic revenues declined $1.9 million during the 1995 first quarter from the
level reported for the corresponding period of 1994, due to the discontinuance
of the Company's older line of machine tool products and the limited
availability for shipment of finished quantities of its new machine tool line
(which was introduced domestically in the fourth quarter of 1994). However,
strong demand for the Company's new family of machine tools, controls and
related software products resulted in a 50% increase in domestic machine tool
orders, which, along with an improved economic environment in Europe, resulted
in a 33% increase in total worldwide bookings during the 1995 first quarter as
compared with the corresponding 1994 period. As a result, the Company's backlog
at January 31, 1995 was $10.7 million, an increase of 52.1% from the $7.0
million backlog at October 31, 1994.
Cost of sales and services for the first quarter of 1995 were $921,000 (6%)
below those for the first quarter of 1994, resulting in a gross profit margin of
24.7% in the 1995 period compared to 18.5% for the 1994 period. The improving
gross profit margins reflect cost reductions achieved through the Company's
two-year restructuring program, as well as the transition to higher margin
products.
Selling, general and administrative expenses for the first quarter of 1995
decreased $499,000 (10.5%) from those for the comparable 1994 period as a result
of previously implemented reductions in facilities and personnel.
As a result of improvements in gross margins, and the reduction in selling,
general and administrative expenses, the Company had operating income of
$412,000 for the first quarter of fiscal 1995 as contrasted with an operating
loss of $1.3 million in the comparable 1994 period and an operating profit of
$266,000 during the fourth quarter of fiscal 1994.
Interest expense for the first quarter of fiscal 1995 increased 8.9% over that
reported for the first quarter of fiscal 1994, despite a decrease of
approximately $2.0 million in average borrowings, due to increases in the rates
and amortization of the fees paid under the Company's amended credit agreements
as well as increases in the reference rate used to calculate interest charges on
its revolving credit facilities.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company used net cash of $2.6 million for operating activities for the
quarter ended January 31, 1995 primarily because of an increase in inventories
and an anticipated seasonal reduction in accounts payable and accrued expenses.
The increase in inventories of $736,000 was due to a temporary build up of
machine tool controls and other components in connection with the Company's
continuing transition to subcontracting of manufacturing operations and its
conversion to a new hardware platform for its CNC controls. Inventory levels are
expected to decrease during the remainder of fiscal 1995. The resulting working
capital increase was funded by $2.8 million of net borrowings over the period
from October 31, 1994 to January 31, 1995.
As of January 31, 1994, the Company had unutilized credit facilities of $2.4
million available for either direct borrowings or commercial letters of credit.
Management believes that available borrowings under the credit facilities, along
with net cash provided from future operations, will be sufficient to maintain
adequate liquidity during fiscal 1995.
As of January 31, 1995, the Company had long-term debt of $37.6 million. Under
the terms of the Company's agreements with its lenders, substantially all of the
debt will be payable on February 1, 1996. It is management's goal to refinance
this indebtedness prior to its scheduled maturity, but there is no assurance
that such a refinancing can be accomplished or that the terms thereof would be
acceptable to the Company.
8
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None.
(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/ Thomas L. Brown
------------------------
Thomas L. Brown
Corporate Controller and
Principal Accounting Officer
March 10, 1994
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT FORM 10-Q FOR THE PERIOD ENDED JANUARY 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000315374
<NAME> DAWN HIATT
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