SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended January 31, 1998 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 12, 1998 was 6,578,011.
<PAGE>
HURCO COMPANIES, INC.
January 1998 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, 1998 and 1997........... 3
Condensed Consolidated Balance Sheet -
As of January 31, 1998 and October 31, 1997............ 4
Condensed Consolidated Statement of Cash Flows -
Three months ended January 31, 1998 and 1997........... 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
<PAGE>
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,
1998 1997
- ------------------------------------------------------------------------------
(Unaudited)
Sales and service fees........................$ 22,120 $ 22,278
Cost of sales and service..................... 15,997 15,796
---------- ----------
Gross profit............................. 6,123 6,482
Selling, general and administrative expenses.. 5,024 5,046
---------- ----------
Operating income......................... 1,099 1,436
License fee income, net....................... 1,494 143
Interest expense.............................. 274 522
Other income (expense), net................... 23 (23)
---------- ----------
Income before income taxes............... 2,342 1,034
Provision for foreign income taxes............ 156 18
---------- ----------
Net Income....................................$ 2,186 $1,016
========== ======
Earnings per common share
Basic....................................$ .33 $ .16
========= ==========
Diluted..................................$ .32 $ .15
========= ==========
Weighted average common shares outstanding
Basic.................................... 6,553 6,533
========== ==========
Diluted.................................. 6,749 6,680
========== ==========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
January 31, October 31,
1998 1997
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents................ $ 2,481 $ 3,371
Accounts receivable...................... 16,917 15,687
Inventories.............................. 19,624 21,752
Other.................................... 2,108 1,412
---------- ---------
Total current assets................. 41,130 42,222
---------- ---------
Long-term license fee receivables............. 1,135 1,178
---------- ---------
Property and equipment:
Land ................................. 761 761
Building................................. 7,067 7,067
Machinery and equipment.................. 11,540 11,463
Leasehold improvements................... 1,120 1,121
Less accumulated depreciation and
amortization.................. (11,365) (11,218)
---------- ----------
9,123 9,194
---------- ---------
Software development costs, less amortization 4,339 4,447
Other assets ................................. 1,973 1,707
--------------- ---------------
$ 57,700 $ 58,748
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable......................... $ 8,772 $ 9,246
Accrued expenses......................... 6,942 8,338
Current portion of long-term debt........ 1,786 1,786
---------- ---------
Total current liabilities............ 17,500 19,370
---------- ---------
Non-current liabilities
Long-term debt........................... 7,168 8,257
Deferred credits and other obligations... 1,379 1,345
---------- ---------
Total non-current liabilities..... 8,547 9,602
---------- ----------
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; and
6,559,311 and 6,544,831 shares issued ,
respectively ..................... 656 654
Additional paid-in capital.................. 50,381 50,349
Accumulated deficit.........................(14,218) (16,404)
Foreign currency translation adjustment..... (5,166) (4,823)
---------- ---------
Total shareholders' equity............ 31,653 29,776
---------- ---------
$57,700 $58,748
======= ==========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Three Months Ended January 31,
1998 1997
(Unaudited)
Cash flows from operating activities:
Net income.............................. $ 2,186 $ 1,016
Adjustments to reconcile net
income to net
cash provided by (used for) operating
activities:
Depreciation and amortization......... 522 549
Change in assets and liabilities:
(Increase) decrease in accounts
receivable......................... (1,450) 2,016
(Increase) decrease in license
fee receivables.................... (835) --
(Increase) decrease in inventories... 1,902 (2,656)
Increase (decrease) in accounts
payable............................. (443) (117)
Increase (decrease) in accrued
expenses............................ (1,293) (1,235)
Other............................... (37) 44
----------- ----------
Net cash provided by (used for)
operating activities................ 552 (383)
---------- ----------
Cash flows from investing activities:
Proceeds from sale of equipment......... 2 76
Purchases of property and equipment..... (192) (226)
Software development costs.............. (163) (374)
Other................................... (139) --
---------- ----------
Net cash provided by (used for)
investing activities................ (492) (524)
---------- ----------
Cash flows from financing activities:
Advances on bank credit facilities...... 6,000 8,928
Repayment on bank credit facilities..... (5,292) (6,727)
Repayments of term debt................. (1,786) (1,786)
Proceeds from exercise of common stock options 34 --
---------- ----------
Net cash provided by (used for)
financing activities................ (1,044) 415
--------- ----------
Effect of exchange rate changes on cash...... 94 (147)
---------- -----------
Net increase (decrease) in cash..... (890) (639)
Cash and cash equivalents at beginning of period 3,371 1,877
Cash and cash equivalents at end of period... $ 2,481 $ 1,238
========= ==========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
The condensed financial information as of January 31, 1998 and 1997 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, 1997.
2. LICENSE FEE INCOME, NET
From time to time, the Company's wholly-owned subsidiary, IMS Technology, Inc.
("IMS") enters into agreements for the licensing of its interactive computer
numerical control (CNC) patents. License fees received or receivable under a
fully paid-up license, for which there are no future performance requirements or
contingencies, are recognized in income, net of legal fees and expenses, if any,
at the time the license agreement is executed. License fees received in periodic
installments that are contingent upon the continuing validity of a licensed
patent are recognized in income, net of legal fees and expenses, if any, over
the life of the licensed patent.
During the first quarter ended January 31, 1998, the Company's wholly-owned
subsidiary, IMS Technology, Inc. (IMS), entered into license agreements with a
number of manufacturers and end-users of interactive CNCs, including machine
tool manufacturers who incorporate interactive CNCs in their products, some of
which were defendants in patent infringement actions brought by IMS. These
agreements resulted in additional license fee income of approximately $1.4
million, net of expenses and foreign withholding taxes, of which $591,000 was
received during the first quarter. In addition, one of the agreements was with a
supplier to the Company and provides for discounts of up to $600,000 in the
aggregate on future purchases by the Company from that supplier through December
31, 2001.
3. HEDGING
The Company seeks to hedge its exposure to fluctuations in foreign currency
exchange rates through the use of foreign currency forward exchange contracts.
The U.S. dollar equivalent notional amount of outstanding foreign currency
forward exchange contracts was approximately $17.4 million as of January 31,
1998 ($17.1 million related to firm intercompany sales commitments) and $12.5
million as of January 31, 1997 ($9.8 related to firm intercompany sales
commitments). Deferred gains related to hedges of future sales transactions were
approximately $58,000 and $316,000 as of January 31, 1998 and 1997,
respectively. Contracts outstanding at January 31, 1998 mature at various times
through July 28, 1998. All contracts are for the sale of currency. The Company
does not enter into these contracts for trading purposes.
<PAGE>
4. EARNINGS PER SHARE
Basic and diluted earnings per common share are based on the weighted average
number of common shares outstanding. Diluted earnings per common share give
effect to outstanding stock options using the treasury method. Common stock
equivalents totaled 196,000 shares for the first quarter of fiscal 1998.
5. ACCOUNTS RECEIVABLE
The allowance for doubtful accounts was $778,000 as of January 31, 1998 and
$757,000 as of October 31, 1997.
6. INVENTORIES
Inventories, priced at the lower of cost (first-in, first-out method) or market
are summarized below (in thousands):
January 31, 1998 October 31, 1997
---------------- ----------------
Purchased parts and
sub-assemblies $ 9,326 $ 9,749
Work-in-Process 1,173 1,578
Finished Goods 9,125 10,425
---------- --------
$ 19,624 $ 21,752
========= ========
7. SUBSEQUENT EVENT
In February 1998, the Company's wholly-owned subsidiary, IMS Technology, Inc.
(IMS), entered into patent license agreements with Okuma Machinery Works, Okuma
America Corporation and Cincinnati Incorporated, that provide for one-time cash
payments to IMS. As a result of those agreements, the Company expects to
recognize additional license fee income of approximately $1.3 million,
net of foreign withholding taxes and expenses, in its second fiscal quarter
ended April 30, 1998.
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, 1997.
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended January 31, 1998 Compared to Three Months Ended January 31,
1997
Sales and service fees for the first quarter of fiscal 1998 were approximately
3.4% higher than those recorded in the 1997 period before the effect of foreign
currency rate changes when converting foreign revenues into U.S. dollars for
financial reporting purposes. However, as a result of a strengthened U.S.
dollar, sales and service fees after the effect of such conversion approximated
the amount reported during the first quarter of fiscal 1997. Sales of
computerized machine systems increased $1.7 million, or 12.9%, net of currency
translation effects, as a result of strong demand, primarily in Germany, for the
Company's new line of 30-inch and 40-inch machining systems that incorporated
its Ultimax(R) interactive control software. Sales of computer numerical control
(CNC) systems, consisting primarily of the Company's Autobend(R) and Delta(TM)
series products, declined approximately $1.4 million, or 28.6%, from the 1997
first quarter level, reflecting reduced demand from OEM and retrofit customers
and the Company's repositioning of these products for inclusion as
fully-integrated components of computerized machine systems. Sales of service
parts and service fees decreased by $321,000, or 9.3%, compared to the first
quarter of fiscal 1997, due principally to improvements in the quality of the
Company's products as well as the transfer to the Company's U.S. distributors of
responsibility for certain service activities.
New order bookings were $22.1 million, an increase of 3.9% from the $21.2
million reported for the first quarter of fiscal 1997, net of currency
translation effects. When measured at constant exchange rates, however, new
orders were approximately 8.2% above the fiscal 1997 level. Orders for
computerized machine systems, at constant exchange rates, increased
approximately 27% over the first quarter of fiscal 1997. Orders for CNC systems
declined by 28%, paralleling the decline in shipments of these products.
Backlog was $7.6 million at January 31, 1998 compared to $7.5 million at October
31, 1997.
As a percentage of sales, gross profit decreased to 27.7% compared to 29.1% for
the first quarter of fiscal 1997. The reduction was primarily attributable to
the net effects of a stronger U.S. dollar relative to foreign currencies, as
well as the reduced sales of CNC systems and service parts, which historically
have been associated with higher margins.
The substantial increase in net income was attributable primarily to fees under
patent license agreements entered into during the quarter. License fees, net of
expenses and foreign withholding taxes, aggregated $1.4 million in the 1998
first quarter compared to $143,000 in the 1997 period. Net income also was
favorably effected by a 48% decline in interest expense as a result of the
substantial reduction in outstanding debt since the end of the 1997 first
quarter.
<PAGE>
Subsequent License Agreements
The Company expects to recognize additional license fee income of
approximately $1.3 million, net of foreign withholding taxes and expenses,
in its second fiscal quarter ending April 30, 1998 as a result of agreements
entered into in February 1998. Through its subsidiary, IMS Technology, Inc.,
the Company is continuing to seek opportunities to license its patent rights
while actively pursuing its on-going patent infringement litigation against
several other manufacturers of interactive CNC products. However, there can be
no assurance that IMS will enter into additional license agreements in the
future nor can the Company predict the ultimate outcome of such litigation.
Also, excluding those CNC Users that are defendants in the patent infringement
actions, there are a limited number of remaining CNC Users that IMS has
identified as potential licensees for the Patent. Accordingly, management
believes it is unlikely that license fee income in fiscal 1998 from such other
potential licensees would equal that recorded in fiscal 1997.
Foreign Currency Risk Management
The Company seeks to manage 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 endeavors to moderate 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 1998.
See Note 3 to the Condensed Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1998, the Company had cash and cash equivalents of $2.5 million
compared to $3.4 million at October 31, 1997. Cash provided by operations
totaled $552,000 in the first quarter of fiscal 1998, compared to $383,000 used
for operations in the same period of fiscal 1997. Cash flow from operations
included approximately $591,000 of license fees, net of expenses and taxes,
received during the 1998 first quarter.
Working capital was $23.6 million at January 31, 1998, compared to $22.9 million
at October 31, 1997. The increase was attributable primarily to approximately
$835,000 of net license fees receivable included in other current assets as of
January 31, 1998. During the first quarter of fiscal 1998, accounts receivable
increased by $1.5 million, while inventories decreased by $1.9 million. Accounts
payable and accrued expenses decreased during the 1998 first quarter by $1.7
million, primarily because of seasonal payments related to fiscal 1997
operations. The ratio of current assets to current liabilities was 2.4 to 1 at
January 31, 1998 and 2.2 to 1 at October 31, 1997.
Cash used for investing activities during the quarter was funded by cash flow
from operations. As of January 31, 1998, the Company has a commitment to invest
approximately $370,000 in its Taiwan affiliate, Hurco Automation Ltd., through
fiscal 1999.
<PAGE>
Cash used for financing activities was funded by operations and by existing cash
on hand. During the first quarter of fiscal 1998, payment of an annual
installment of approximately $1.8 million on the Company's Senior Notes was
partially funded by borrowings under the Company's revolving credit facilities.
As of January 31, 1998, the Company had unutilized availability of $12.8 million
under its credit facilities. The Company was in compliance with all loan
covenants at January 31, 1998.
Management believes that anticipated cash flow from operations and available
borrowings under the credit facilities will be sufficient to meet its
anticipated cash requirements in the foreseeable future.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As previously reported, IMS and the Company are parties to litigation against
various defendants for alleged pending patent infringement. In a recent
settlement with Okuma Machinery Works, and its affiliate, Okuma America
Corporation, IMS granted licenses to each of these companies in exchange for a
lump sum cash payment and litigation between these entities and IMS was
discontinued.
On January 29, 1998, IMS commenced an infringement action against Marshall
Machinery, Inc., ADK Machine, Inc., Precise Machine & Fabrication, Western
Branch Metals, Inc., American Gasket & Seal Technology, Inc., Classic Machine,
Kosmo Machine, Inc., and Cincinnati Incorporated. In February 1998, concurrent
with the execution by Cincinnati Incorporated of a license agreement providing
for payment of a lump-sum cash fee, the action against Cincinnati
Incorporated was discontinued.
There have been no other material developments in the IMS infringement
litigation except as described in the Company's Annual Report on Form 10-K for
the year ended October 31, 1997.
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:
10.15 Employment agreement between the Registrant and James D. Fabris dated
November 18, 1997.
10.16 Employment agreement between the Registrant and Richard Blake dated
January 1, 1998.
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule (electronic filing only).
(b) Reports on Form 8-K: None
<PAGE>
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 16, 1998
Exhibit 10.15
Employment Agreement between the Registrant and James D. Fabris
Dated November 18, 1997
November 18, 1997
Mr. James D. Fabris
13633 Elgin Drive
Carmel, IN 46032
Dear Jim:
I am pleased to offer you the position of Executive Vice President of Operations
for Hurco Companies, Inc. effective January 1, 1998 reporting to myself.
Your responsibilities in this new position include: management of all machine
tool and controls manufacturing, engineering, material control, and quality
assurance for the cor-poration.
In addition you are responsible for the sales, marketing, and service for all
the Company's products in the Asia Pacific Region and the sales, marketing, and
service of ATI and ICP product lines.
COMPENSATION
Your base salary is increased to $160,000 per year effective January 1, 1998.
Salary reviews are held in January of each year in accordance with the
Compensation Committee of the Board of Directors review cycle.
The Corporate Performance Annual Bonus Plan is based upon the financial
performance of the Corporation and annual accomplishments subject to the
approval of the Compen-sation Committee of the Board of Directors.
We will finalize your 1998 objectives and 1998 bonus plan by January 15, 1998.
STOCK OPTIONS
As a key employee in the management of the Corporation's performance and future
stra-tegic direction, you will be awarded stock options in accordance with the
Corporation's Stock Option Plan and as approved by the Board of Directors.
<PAGE>
Mr. James D. Fabris
Page 2
November 18, 1997
EMPLOYEE FRINGE BENEFITS
In addition to the Corporation's standard benefit package, key executives are
provided additional fringe benefits including split dollar life insurance
coverage, an opportunity to participate in the Deferred Compensation Plan and
additional short term and long term disability insurance.
COMPANY CAR
The Corporation will provide you with a company car and pay for normal operating
expenses, subject to the standard IRS regulations.
SEVERANCE
I have included the following employment severance agreement. In the event Hurco
ter-minates your employment as Executive Vice President, for reasons other than
gross mis-conduct, Hurco shall pay you twelve (12) months severance, at the then
present base salary rate, from the date you are relieved of your
responsibilities which would be thirty (30) days following a written notice.
Health and life insurance benefits will be maintained during the twelve month
severance period or until you have obtained alternate employment, if earlier.
The Corporation will also provide you with the services of a professional
outplacement firm.
In the event you resign prior to the termination of your employment, Hurco will
not be obligated to continue making salary payments after your last day of
employment.
Congratulations Jim on this well deserved promotion. Please acknowledge
acceptance of this offer by signing where indicated and returning the original
copy to me.
Very truly yours,
/s/ Brian D. McLaughlin
Brian D. McLaughlin
Chief Executive Officer
ACKNOWLEDGED AND ACCEPTED:
/s/ James D. Fabris December 15, 1997
- -------------------------------------------------- ---------------------------
James D. Fabris Date
Exhibit 10.16
Employment Agreement between the Registrant and Richard Blake
Dated January 1, 1998
Transfer Agreement
The Transfer Agreement is effective as of the 1st day of January, 1998 and is
between Hurco Companies, Inc. ("Employer") and Richard Blake ("Employee").
Recitals
A. Employer is an Indiana corporation engaged in the business of manufacturing
and selling industrial machine tool products.
B. Hurco Europe LTD. ("HEL") is a wholly-owned subsidiary of Employer which is
engaged in the business of marketing Employer's products in the United
Kingdom, continental Europe and certain other international markets.
C. Employer desires to transfer Employee to Hurco Companies, Inc., and
Employee desires to accept such transfer with Employer, upon the terms and
conditions contained in this Agreement.
Now, therefore, Employer and Employee agree as follows:
1. Employment. Employer hereby transfers Employee to render services on behalf
of Hurco Companies, Inc. Employee will, however, for all purposes, remain
an Employee of Hurco Europe, LTD with the same general rights and
obligations of HEL, except as specifically set forth herein to the
contrary.
Employee's position shall be President, Machine Tool Products Division
of Hurco Companies, Inc.
Employee may also perform other such services related thereto as may be
designated from time to time by Employer.
During the term of this Agreement, Employee will be a resident in the
United States. As a part of his regular duties, Employee may be
required from time to time to attend business and educational
meetings and activities, including return visits to the United
Kingdom, for training and other business purposes.
Employee shall expend his entire time and best efforts performing his
duties under this agreement.
2. Term. This agreement shall, except as hereinafter provided, be for a term
of thirty six (36) months, beginning on the effective date hereof.
It is intended that Employee will have an option to return to the United
Kingdom at the end of this term to resume employment with Hurco Europe,
LTD. In the event the Employee does not do so at the end of the thirty six
(36) month period, then this Agreement shall continue from month-to-month
thereafter until terminated as provided in Section 7.
<PAGE>
If the employee exercises the option to return after the thirty six (36)
months, the Employer does not guarantee a lateral or promotional
opportunity for employment. If no opportunity for employment exists, the
Employer will pay Employee severance pay equal to twelve (12) months base
salary.
It is mutually understood that the Employer may exercise an option to have
the Employee return to the United Kingdom at any time due to the business
needs of the Company under the terms and conditions of this contract .
Notice of such action will be given as much in advance as is feasible,
dependent upon the existing circumstances that time.
3. Compensation. As his entire compensation for all services rendered during
the term of this Agreement, Employee shall have and receive, subject to
withholding and other applicable United States and foreign employment
taxes, a base income of $125,000 per year during the initial term of this
Agreement, and thereafter in an amount to be determined.
Employer will pay Employee a foreign assignment premium during the
transfer period of $10,000 per year payable biweekly in salary payroll.
Employee shall also be entitled to all other regular compensation
elements as may be provided from time to time in the Company policies
as prepared and issued by the Employer.
Employer will provide a monthly housing allowance of $1500.00. Employer
agrees to pay the customary deposits necessary to obtain a residence in
the U.S.
4. Employee Benefits. Employee shall be permitted to participate in and be
provided for all employee benefits which may be provided from time to time
by Employer at its expense including disability insurance, group life
insurance, 401(k) plan, profit sharing plan, split dollar life insurance
plan, health insurance and deferred compensation plan and other benefits
which Employer may from time to time adopt.
5. Holidays and Vacations. Employee will follow the Hurco Companies, Inc.
holiday schedule and will be eligible for vacation days as if Employee were
a Hurco Companies, Inc. employee. All vacation days shall be taken in
the manner most convenient to the business of Employer and Hurco Europe,
LTD. Plans for vacation should be submitted to Employer in advance
for approval.Unused days of vacation may not be carried over to future
years.
6. Death or Disability During Employment. If Employee dies or becomes totally
and permanently disabled during the term of his employment, Employer shall
pay to the estate of the Employee the salary which would otherwise be
payable to Employee if he had performed services until the end of the month
in which his death/disability occurs. Employer shall have no further
financial obligations to Employee or to his estate, except for the regular
employee benefits provided by the Employer.
<PAGE>
7. Termination. This Agreement may be terminated by either Employer or
Employee upon the giving of one (1) month's notice to the other. This
Agreement shall terminate automatically, without notice, upon the death or
disability of Employee; upon either party engaging in any activity which
constitutes a serious crime, or by mutual agreement. If this agreement is
terminated as a result of the Company engaging in any activity which
constitutes a serious crime, or the Employee is terminated by mutual
agreement, or upon the Employee's death or disability, Employer will
pay for the return of Employee and immediate family to the United
Kingdom including coach air fare and air freight for 1,000 pounds of
baggage. If this agreement is terminated as a result of the Employee
being terminated for cause other than gross misconduct, Employer will
pay to Employee severance pay equal to twelve months base salary at the
then current base salary rate. If Employee voluntarily resigns employment,
Employer will pay Employee through the last date of active employment.
8. Other.
A. Vehicle. Employer will provide an automobile and reimburse
reasonable expenses incurred in connection with the business
operation thereof. Fuel for personal mileage is not included. Size
and model will be of the kind customarily provided to persons of
comparable position in the United States.
B. Family Moving Expenses. Employer will pay all reasonable expenses
incurred by Employee and Employee's family in connection with such
moves to and from the United States in accordance with the
Company's standard "Relocation and Move Policy for Current
Employees" including all packing, moving and unpacking of
household furnishings, all reasonable travel, meal and lodging
expenses incurred by Employee and his family during such move; and
any other reasonable costs or expenses incurred in connection with
such move including insurance on personal possessions during such
move.
C. Transfer Allowance. It is recognized that there are many other
expenses connection with an international move which are not
covered by normal moving expense reimbursements. These expenses
include replacement of personal electrical appliances, home
cleaning expenses, etc. To reimburse the employee for these and
similar expenses a transfer allowance of $3,000, less appropriate
taxes, will be paid both upon move to and return from the United
States.
D. Trips Home. Once annually at a time of Employee's choice,
Employer will pay coach fare for air flights for Employee and
members of his immediate family for a personal visit home to the
United Kingdom and return to the United States.
E. Tax Consultant. Compensation will be taxable during this
assignment. Employer will make available a tax consultant to
assist with tax report preparation. If actual taxes owed by
Employee on compensation during the term of this Agreement exceed
taxes that would have been owed if Employee was working in the
United Kingdom, Employer will reimburse employee for the
difference as evidenced by a qualified tax consultant.
<PAGE>
D. Confidentiality. Employee recognizes and acknowledges that the
information concerning the Employer's customers and suppliers
as they may exist from time to time and Employer's technical and
manufacturing processes are unique assets of the Employer.
Employee agrees to keep confidential and will not disclose,
during or after the term of this assignment, such information
or processes to any person, firm, corporation or partnership.
9. Miscellaneous. The terms and conditions of the Employer's policies, as
from time to time are in effect, are incorporated herein and shall be
a part of this agreement. Except as stated in the immediately preceding
sentence, this Agreement contains the entire Agreement between Employer
and Employee and supersedes all prior agreements between them, whether oral
or written.
The affairs of Employer and Hurco Europe, LTD., and the contents of this
agreement are confidential and are not to be disclosed or discussed with any
unauthorized person irrespective of whether such person is an Employee of
Employer or Hurco Europe LTD.
This Agreement and the obligations hereunder shall be interpreted, construed
and enforced in accordance with the laws of the State of Indiana.
No waiver or any breach of this Agreement shall be deemed or construed as a
waiver of any other breach.
More than one copy of this Agreement may be executed each of which shall
constitute an executed original. Any amendment of this Agreement shall be
effective only if in writing and signed by both Employer and Employee.
If any provision of this Agreement shall be held invalid under applicable
law, such provision shall be ineffective only to the extent of such
invalidity, without invalidity to the remaining provisions of this
Agreement.
10. Notices. Any notices or other communications required or permitted
to be given under the provisions of this Agreement shall be in
writing. All such notices or communications shall be deemed to have
been properly given or served by hand delivery or by depositing same
in the United States mail addressed to the appropriate party, postage
prepaid and registered or certified with return receipt requested at the
following address:
To: Hurco Companies, Inc.
One Technology Way
Indianapolis, IN 46268
Attention: Brian D. McLaughlin
To: Richard Blake
One Technology Way
Indianapolis, IN 46268
Either party has the right to change the above address by giving thirty
(30) days notice thereof to the other party.
<PAGE>
ACCEPTANCE:
Acceptance of this Agreement should be indicated where provided below and
this letter returned to Brian D. McLaughlin, Chief Executive Officer.
HURCO COMPANIES, INC.
By: /s/ Brian D. McLaughlin
Brian D. McLaughlin
Chief Executive Officer
The undersigned hereby accepts the foregoing Agreement made by the
undersigned and Hurco Companies, Inc. this 1st day of December, 1997, but
effective as therein set forth in this Agreement.
By: /s/ Richard Blake
Richard Blake
Exhibit 11
Statement Re: Computation of Per Share Earnings
Three Months Ended
January 31, 1998
----------------------------
1998 1997
---- ----
Basic Fully Basic Fully
Diluted Diluted
(in thousands, except per share amount)
Net income......................... $2,186 $2,186 $1,016 $1,016
Weighted average shares outstanding 6,553 6,553 6,532 6,533
Assumed issuances under stock options 196 148
plans............................
------ ------ ------ ------
6,553 6,749 6,532 6,681
------ ------ ------ ------
Earnings per common share $.33 $.32 $.16 $.15
====== ====== ====== ======
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT 10-Q FOR THE PERIOD ENDED JANUARY 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000315374
<NAME> SONJA BUCKLES
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-1-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,481
<SECURITIES> 0
<RECEIVABLES> 17,695
<ALLOWANCES> 778
<INVENTORY> 19,624
<CURRENT-ASSETS> 41,130
<PP&E> 20,488
<DEPRECIATION> 11,365
<TOTAL-ASSETS> 57,700
<CURRENT-LIABILITIES> 17,500
<BONDS> 0
0
0
<COMMON> 656
<OTHER-SE> 30,997
<TOTAL-LIABILITY-AND-EQUITY> 57,700
<SALES> 22,120
<TOTAL-REVENUES> 22,120
<CGS> 15,997
<TOTAL-COSTS> 15,997
<OTHER-EXPENSES> (1,511)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 274
<INCOME-PRETAX> 2,342
<INCOME-TAX> 156
<INCOME-CONTINUING> 2,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,186
<EPS-PRIMARY> .33
<EPS-DILUTED> .32
</TABLE>
