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, 1999 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 February
17, 1999 was 6,595,611.
<PAGE>
HURCO COMPANIES, INC.
January 1999 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, 1999 and 1998......... 3
Condensed Consolidated Balance Sheet -
As of January 31, 1999 and October 31, 1998.......... 4
Condensed Consolidated Statement of Cash Flows -
Three months ended January 31, 1999 and 1998......... 5
Consolidated Statements of Changes in Shareholders Equity
Three months ended January 31, 1999 and 1998......... 6
Notes to Condensed Consolidated Financial Statements..... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 9
Part II - Other Information
Item 1. Legal Proceedings........................................ 11
Item 6. Exhibits and Reports on Form 8-K......................... 11
Signatures............................................................. 12
<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,
1999 1998
- ------------------------------------------------------------------------------
(Unaudited)
Sales and service fees.......................... $ 21,147 $ 22,120
Cost of sales and service....................... 15,143 15,997
-------- --------
Gross profit............................... 6,004 6,123
Selling, general and administrative expenses.... 5,335 5,024
-------- --------
Operating income........................... 669 1,099
License fee income, net......................... 83 1,494
Interest expense................................ 300 274
Other income (expense), net..................... (38) 23
-------- --------
Income before income taxes................. 414 2,342
Provision for income taxes...................... 239 156
-------- --------
Net Income...................................... $ 175 $ 2,186
======== ========
Earnings per common share
Basic...................................... $ .03 $ .33
======== ========
Diluted.................................... $ .03 $ .32
======== ========
Weighted average common shares outstanding
Basic...................................... 6,074 6,553
======== ========
Diluted.................................... 6,172 6,749
======== ========
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, 1999 October 31, 1998
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents................ $ 2,614 $ 3,276
Accounts receivable...................... 15,666 18,896
Inventories.............................. 32,605 30,817
Other.................................... 1,668 2,154
-------- --------
Total current assets................. 52,553 55,143
-------- --------
Long-term license fees receivable............. 797 797
-------- --------
Property and equipment:
Land ................................. 761 761
Building................................. 7,067 7,067
Machinery and equipment.................. 11,101 11,184
Leasehold improvements................... 1,123 1,107
Less accumulated depreciation and
amortization......................... (11,122) (11,037)
-------- --------
8,930 9,082
-------- --------
Software development costs, less amortization 4,267 4,231
Other assets ................................. 2,718 2,443
-------- --------
$ 69,265 $ 71,696
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable......................... $ 11,691 $ 15,791
Accrued expenses......................... 7,073 8,217
Current portion of long-term debt........ 1,786 1,786
-------- --------
Total current liabilities............ 20,550 25,794
-------- --------
Non-current liabilities:
Long-term debt........................... 11,926 6,572
Deferred credits and other obligations... 1,641 1,590
-------- --------
Total non-current liabilities..... 13,567 8,162
-------- --------
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; 5,945,359
and 6,340,111 shares issued, respectively 595 634
Additional paid-in capital................ 46,324 48,662
Accumulated deficit....................... (6,975) (7,150)
Foreign currency translation adjustment... (4,796) (4,406)
-------- --------
Total shareholders' equity............ 35,148 37,740
-------- --------
$ 69,265 $ 71,696
======== ========
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,
1999 1998
(Unaudited)
Cash flows from operating activities:
Net income................................. $ 175 $ 2,186
Adjustments to reconcile net income to net
cash provided by (used for) operating
activities:
Depreciation and amortization............ 534 522
Change in assets and liabilities:
(Increase) decrease in accounts
receivable............................ 2,969 (1,450)
(Increase) decrease in license fee
receivables........................... -- (835)
(Increase) decrease in inventories..... (2,007) 1,902
Increase (decrease) in accounts payable (4,071) (443)
Increase (decrease) in accrued expenses (1,046) (1,293)
Other.................................. 436 (37)
------- -------
Net cash provided by (used for)
operating activities................. (3,010) 552
------- -------
Cash flows from investing activities:
Proceeds from sale of equipment............ 17 2
Purchases of property and equipment........ (250) (192)
Software development costs................. (226) (163)
Other...................................... (162) (139)
------- -------
Net cash provided by (used for)
investing activities................. (621) (492)
------- -------
Cash flows from financing activities:
Advances on bank credit facilities......... 15,451 6,000
Repayment on bank credit facilities........ (8,300) (5,292)
Repayments of term debt.................... (1,786) (1,786)
Purchase of Common Stock................... (2,379) --
Proceeds from exercise of common stock
options.................................. 2 34
------- -------
Net cash provided by (used for)
financing activities................. 2,988 (1,044)
------- -------
Effect of exchange rate changes on cash......... (19) 94
------- -------
Net increase (decrease) in cash........ (662) (890)
Cash and cash equivalents at beginning of period 3,276 3,371
------- -------
Cash and cash equivalents at end of period...... $ 2,614 $ 2,481
======= =======
The accompanying notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
HURCO COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Three Months ended January 31, 1999 and 1998
Accumulated
Other
Comprehensive
Common Stock Income:
------------------- Foreign
Shares Additional Currency
Issued & Paid-In Accumulated Translation
Outstanding Amount Capital Deficit Adjustment Total
(Dollars in thousands)
Balances,
October 31,
1997 6,544,831 $654 $50,349 (16,404) $(4,823) $29,776
- ----------- -------
Net income -- -- -- 2,186 -- 2,186
Translation of
foreign currency
financial statements -- -- -- -- (343) (343)
-------
Comprehensive income: 1,843
-------
Exercise of Common
Stock Options 14,480 2 32 -- -- 34
--------- ---- ------ ------ ------- -------
Balances,
January 31,
1998 6,559,311 $656 $50,381 $(14,218) $(5,166) $31,653
- ----------- ========= ==== ======= ========= ======== =======
Balances,
October 31,
1998 6,340,111 $634 $48,662 (7,150) $(4,406) $37,740
- ----------- -------
Net income -- -- -- 175 -- 175
Translation of
foreign currency
financial statements -- -- -- -- (390) (390)
-------
Comprehensive income (loss) -- (215)
-------
Exercise of Common
Stock Options 1,000 -- 2 -- -- 2
Purchase of
Common Stock (395,752) (39) (2,340) -- -- (2,379)
-------- ---- ------ -------- ------- -------
Balances,
January 31,
1999 5,945,359 $595 $46,324 $ (6,975) $(4,796) $35,148
- ----------- ========= ==== ======= ======== ======== =======
The accompanying notes are an integral part of the
Consolidated Financial Statements.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
The unaudited Condensed Consolidated Financial Statements include the accounts
of Hurco Companies, Inc. and its consolidated subsidiaries. We are an industrial
automation company that designs and produces interactive computer controls,
software and computerized machine systems for the worldwide metal cutting and
metal forming industries.
The condensed financial information as of January 31, 1999 and 1998 is unaudited
but includes all adjustments which we consider necessary for a fair presentation
of our financial position at those dates and our results of operations and cash
flows for the three months then ended. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes thereto included in our Annual Report on Form 10-K for the year ended
October 31, 1998.
2. LICENSE FEE INCOME, NET
From time to time, our 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 receivable 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.
3. HEDGING
We seek to hedge our exposure to fluctuations in foreign currency exchange rates
through the use of foreign currency forward exchange contracts, all of which are
for the sale of currency. We do not enter into these contracts for trading
purposes. The U.S. dollar equivalent notional amount of our outstanding foreign
currency forward exchange contracts was approximately $10.9 million as of
January 31, 1999 ($8.6 million related to firm intercompany sales commitments)
and $13.5 million as of October 31, 1998 ($8.7 million related to firm
intercompany sales commitments). Deferred losses related to hedges of future
sales transactions were approximately $297,000 and $434,000 as of January 31,
1999 and October 31, 1998, respectively. Contracts outstanding at January 31,
1999 mature at various times through March, 1999.
4. EARNINGS PER SHARE
Basic and diluted earnings per common share are based on the weighted average
number of our shares of common stock outstanding. Diluted earnings per common
share give effect to outstanding stock options using the treasury method. Common
stock equivalents totaled 98,000 shares for the first quarter of fiscal 1999. As
of January 31, 1999, we had purchased 650,252 shares of our common stock under a
previously-announced stock purchase program.
5. ACCOUNTS RECEIVABLE
The allowance for doubtful accounts was $837,000 as of January 31, 1999 and
$769,000 as of October 31, 1998.
<PAGE>
6. INVENTORIES
Inventories, priced at the lower of cost (first-in, first-out method) or market
are summarized below (in thousands):
January 31, 1999 October 31, 1998
Purchased parts and sub-assemblies $ 11,655 $ 11,749
Work-in-process 2,195 1,774
Finished goods 18,755 17,294
-------- --------
$ 32,605 $ 30,817
======== ========
7. TAX CONTINGENCY
A German tax examiner has contested our transfer of net operating losses between
two of our German subsidiaries that merged in fiscal 1996. The contingent tax
liability associated with this issue is approximately $1.4 million. We have
protested this matter and the German tax authorities are expected to rule on the
tax examiner's finding in the first half of fiscal 1999. If an unfavorable
ruling is received from the German tax authorities, we intend to appeal to the
German Federal Tax Court. No provision for the contingency has been recorded.
<PAGE>
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 our Annual Report on Form 10-K for the year
ended October 31, 1998.
RESULTS OF OPERATIONS
Three Months Ended January 31, 1999 Compared to Three Months Ended
January 31, 1998
Our sales and service fees for the first quarter of fiscal 1999 were
approximately 4.4% lower than those recorded in the 1998 period, notwithstanding
a slight benefit from a weaker U.S. dollar when converting foreign sales and
service fees into U.S. dollars for financial reporting purposes. Our sales of
computerized machine systems increased approximately $192,000, or 1.3%. A
significant decline in market consumption in the United States and the United
Kingdom resulted in a 28% decrease in our sales of computerized machine systems
in those markets. However, the effect of this decline was offset by a 35%
increase in sales of computerized machine systems in continental Europe,
primarily Germany and France. The decrease in our total sales was due primarily
to shipments of stand-alone computer control systems, consisting primarily of
our Autobend(R) and Delta(TM) series products, which was reflected in a sales
decrease of approximately $1.0 million, or 32%, from the 1998 first quarter
level. As previously announced, we are repositioning these products for
inclusion as fully-integrated components of computerized machine systems.
New order bookings were $24.8 million in the 1999 first quarter, an increase of
12.3% from the $22.1 million reported for the first quarter of fiscal 1998.
Orders for our computerized machine systems increased approximately $3.0
million, or 20%, as a result of strong demand, primarily in Germany and France.
These order levels, which were fueled in part by initial customer demand for our
new products introduced in late fiscal 1998, were achieved in spite of 20% lower
order rates in the United States and the United Kingdom, where weak market
conditions prevailed. Orders for our stand-alone computer control systems
declined by approximately $400,000, or 14%, reflecting our repositioning of
these products. Backlog was $11.0 million at January 31, 1999 compared to $7.5
million at October 31, 1998, an increase of $3.5 million, due principally to
limited availability of our new products for shipment in the first fiscal
quarter. These products are expected to become available for shipment late in
the second fiscal quarter.
The improvement in gross margin percentage was attributable primarily to the
combined effects of an increased percentage of higher-margin European
shipments in the total sales mix and a weaker U.S. dollar in the current
fiscal quarter relative to Euro-related currencies. Also contributing
to the improved margin were lower product costs resulting from a weaker
New Taiwan dollar relative to the U.S. dollar.
Operating expenses in the first quarter of fiscal 1999 increased $311,000, or
6.2%, over the comparable prior year period. The first quarter included planned
incremental expenditures for development of new products and enhanced
information technology and management systems.
<PAGE>
License fee income, net of expenses and foreign withholding taxes, totaled
$83,000 and $1.4 million in the first quarter of fiscal 1999 and 1998,
respectively. This decline, which was anticipated, reflected the fact that most
of the existing licenses for our patented interactive control technology have
involved one-time lump-sum payments and the number of remaining potential
licensees is limited.
The increased provision for income taxes in the first quarter of fiscal 1999 is
primarily attributable to a foreign subsidiary that no longer has the benefit of
net operating loss carryforwards to offset its taxable income.
The decline in first quarter net income to $175,000 in fiscal 1999 from $2.2
million in fiscal 1998 resulted from the significant reduction in patent license
fees, the decrease in shipments of stand-alone computer control systems, the
incremental expenditures for development of new products and enhanced
information systems, along with the increased taxes payable by our foreign
subsidiary, all of which are discussed above.
Foreign Currency Risk Management
We seek to manage our foreign currency exposure through the use of foreign
currency forward exchange contracts. We do not speculate in the financial
markets and, therefore, do not enter into these contracts for trading purposes.
We also endeavor to moderate our 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 our objectives for the first quarter of fiscal 1999. See
Note 3 to the Condensed Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1999, we had cash and cash equivalents of $2.6 million compared
to $3.3 million at October 31, 1998. Cash used for operations totaled $3.0
million in the first quarter of fiscal 1999, compared to $552,000 provided by
operations in the same period of fiscal 1998. Cash flow from operations included
approximately $185,000 of license fees, net of expenses and taxes, received
during the 1999 first quarter compared to $591,000 received in the 1998 period.
Net working capital was $32.0 million at January 31, 1999, compared to $29.3
million at October 31, 1998. The increase is attributable to an increase in
inventory of $2.0 million, a decrease in accounts payable of $4.0 million and a
$1.0 million decrease in accrued expenses, offset by a $3.0 million decrease in
accounts receivable.
The increase in inventories relates primarily to finished products available for
shipment along with components to support current production schedules. The
increase is attributable to planned increases in production by our contract
manufacturers during the latter half of fiscal 1998, combined with lower than
expected demand in the first quarter of fiscal 1999. We anticipate an additional
increase in finished product inventory during the second quarter of fiscal 1999,
which is expected to be absorbed during the second half of the fiscal year as
reduced supplier delivery schedules take effect.
<PAGE>
The decrease in accounts payable relates to payments made to our contract
manufacturers for inventory purchases that occurred in late fiscal 1998 under
terms that generally range from 60 to 120 days. Accounts payable at October 31,
1998 reflected a higher-than-average level of shipments from our contract
manufacturers in the fourth fiscal quarter. The decrease in accrued expenses is
primarily the result of seasonal payments related to 1998 operations. The
decrease in accounts receivable is attributed to decreased shipments in the
first quarter of 1999 compared to the higher level of shipments at the end of
fiscal 1998 for which payments were received in the first quarter of 1999.
Capital investments for the first fiscal quarter ended January 31, 1999
consisted principally of expenditures for software development projects and
purchases of equipment. Cash used for investing activities during the quarter
were funded by cash flow from operations and bank credit facilities.
We repurchased 395,752 shares of our common stock during the first quarter of
fiscal 1999 under our previously announced stock repurchase program. These
shares are reflected as a reduction of common stock outstanding in calculating
basic and diluted earnings per common share.
Our bank credit agreement was amended on December 19, 1998 to permit borrowings
at any one time outstanding, of up to $25.0 million (inclusive of letter of
credits of $15.0 million). All other terms under the agreement remained
unchanged. We were in compliance with all loan covenants at January 31, 1999. We
believe that anticipated cash flow from operations and available borrowings
under credit facilities will be sufficient to meet our anticipated cash
requirements in the foreseeable future.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There have been no material developments in the IMS infringement litigation
except as described in our Annual Report on Form 10-K for the year ended October
31, 1998.
We are 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 our consolidated financial position or results
of operations.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 The second amendment to the amended and restated credit agreement
and amendment to reimbursement agreement among Hurco
Companies, Inc. and NBD Bank N.A. dated December 19, 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
February 22, 1999
Exhibit 10.1
The Second Amendment to the Amended and Restated Credit Agreement and
Amendment to Reimbursement Agreement Among
Hurco Companies, Inc. and NBD Bank N.A.
dated December 19, 1998
<PAGE>
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
AND AMENDMENT TO REIMBURSEMENT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND
AMENDMENT TO REIMBURSEMENT AGREEMENT dated as of December 19, 1998 (this
"Amendment"), among HURCO COMPANIES, INC., an Indiana corporation (the
"Company"), NBD BANK, N.A., a national banking association ("NBD"), and NBD
BANK, a Michigan banking corporation ("NBD Michigan" and, collectively with NBD,
the "Banks").
RECITALS
A. The parties hereto have entered into an Amended and Restated Credit
Agreement and Amendment to Reimbursement Agreement dated as of September 8,
1997, as amended, which is in full force and effect.
B. The Company desires to further 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 definition of the term "Commitment" is amended and
restated, to read as follows:
"Commitment" means the commitment of the Bank to make
Revolving Credit Loans and Letters of Credit Advances pursuant to
Section 2.1, in amounts not exceeding an aggregate principal amount
outstanding of $25,000,000, as such amount may be reduced from time to
time pursuant to Section 2.2.
(b) Section 2.1(c) is amended and restated, to read as follows:
(c) Limitation on Amount of Revolving Credit Advances.
Notwithstanding anything in this Agreement to the contrary, (i) the
aggregate principal amount of the Revolving Credit Advances made by the
Bank at any time outstanding shall not exceed the amount of the
Commitment as of the date any such Advance is made, provided, however,
that the aggregate principal amount of Letter of Credit Advances
outstanding at any time shall not exceed $15,000,000; and (ii) the
aggregate principal amount of the Revolving Credit Advances, plus the
principal amount of loans made to Hurco Europe and Hurco GmbH under the
European Facility, outstanding at any time shall not exceed the amount
of $25,000,000.
<PAGE>
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 Banks 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 (including
without limitation any credit facility with Principal Mutual Life Insurance
Company); (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 IV (other than Section
4.6) 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 the 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 Banks have received the following documents and the
following conditions have been satisfied, each in form and substance
satisfactory to the Banks:
(a) Copies, certified as of the effective date hereof, of such
corporate documents of the Company and the Guarantors as the Banks 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 Banks), and incumbency certificates, and such documents evidencing necessary
corporate action by the Company and the Guarantors with respect to this
Amendment and all other agreements or documents delivered pursuant hereto as the
Banks may request;
(b) A letter agreement regarding the Second Amendment to
European Facility of even date herewith among Hurco Europe, Hurco GmbH, and The
First National Bank of Chicago ("First Chicago"), in form and substance
satisfactory to the Banks;
<PAGE>
(c) A Confirmation of Subsidiary Guaranty of even date
herewith executed by the Guarantors in favor of the Banks and First Chicago, in
form and substance satisfactory to the Banks; and
(d) Such additional agreements and documents, fully
executed by the Company, as are reasonably requested by the Banks.
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 Banks 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 Banks harmless from
liability for all costs and expenses of the Banks arising in respect of this
Amendment, including the reasonable fees and expenses of Dickinson Wright PLLC,
counsel to the Banks, 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 Indiana
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, N.A.
By: ________________________ By: __________________________
Its: ___________________ Its: __________________
NBD BANK
By: ________________________
Its: ___________________
Exhibit 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<PAGE>
Exhibit 11
Statement Re: Computation of Per Share Earnings
Three Months Ended
January 31,
-----------------------------------------
1999 1998
------------------ ------------------
(in thousands, except per share
amount)
Basic Diluted Basic Diluted
------------------ ------------------
Net income $175 $175 $2,186 $2,186
Weighted average shares
outstanding 6,074 6,074 6,553 6,553
Assumed issuances under
stock options plans - 98 - 196
------------------- ------------------
6,074 6,172 6,553 6,749
Earnings per common share $0.03 $0.03 $0.33 $0.32
=================== ==================
<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, 1999 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-31-1999
<PERIOD-START> NOV-1-1998
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