Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Jan. 31, 2014 | Mar. 03, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Jan-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Entity Registrant Name | 'HURCO COMPANIES INC | ' |
Entity Central Index Key | '0000315374 | ' |
Current Fiscal Year End Date | '--10-31 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 6,482,344 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME [Abstract] | ' | ' |
Sales and service fees | $50,970 | $44,085 |
Cost of sales and service | 37,051 | 31,169 |
Gross profit | 13,919 | 12,916 |
Selling, general and administrative expenses | 10,600 | 8,920 |
Operating income | 3,319 | 3,996 |
Interest expense | 77 | 65 |
Interest income | 16 | 16 |
Investment income | 31 | 11 |
Other expense, net | 16 | 259 |
Income before taxes | 3,273 | 3,699 |
Provision for income taxes | 904 | 1,445 |
Net income | $2,369 | $2,254 |
Income per common share | ' | ' |
Basic | $0.36 | $0.35 |
Diluted | $0.36 | $0.34 |
Weighted average common shares outstanding | ' | ' |
Basic | 6,477 | 6,447 |
Diluted | 6,514 | 6,484 |
Dividends paid per share | $0.05 | $0 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ' | ' |
Net income | $2,369 | $2,254 |
Other comprehensive income (loss): | ' | ' |
Translation of foreign currency financial statements | -713 | 860 |
(Gain) / loss on derivative instruments reclassified into operations, net of tax $147 and $(346), respectively | 256 | -607 |
Gain / (loss) on derivative instruments, net of tax $(254) and $(560), respectively | -441 | -984 |
Total other comprehensive income (loss) | -898 | -731 |
Comprehensive income | $1,471 | $1,523 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ' | ' |
Realized loss (gains) on derivative instruments reclassified into operations, tax | $147 | ($346) |
Unrealized (loss) gains on derivative instruments, tax | ($254) | ($560) |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $47,993 | $42,804 |
Accounts receivable, net | 34,579 | 36,139 |
Refundable taxes | 3 | 6 |
Inventories, net | 93,708 | 95,260 |
Deferred income taxes | 2,218 | 2,080 |
Derivative assets | 736 | 699 |
Other | 9,089 | 8,014 |
Total current assets | 188,326 | 185,002 |
Property and equipment: | ' | ' |
Land | 782 | 782 |
Building | 7,326 | 7,326 |
Machinery and equipment | 18,870 | 19,059 |
Leasehold improvements | 3,577 | 3,634 |
Property and equipment, gross | 30,555 | 30,801 |
Less accumulated depreciation and amortization | -18,609 | -18,502 |
Property and equipment, net | 11,946 | 12,299 |
Software development costs, less accumulated amortization | 3,697 | 3,714 |
Goodwill | 2,789 | 2,807 |
Intangible assets, net | 2,041 | 2,155 |
Investments and other assets, net | 5,445 | 5,258 |
Total assets | 214,244 | 211,235 |
Current liabilities: | ' | ' |
Accounts payable | 39,093 | 35,527 |
Accrued expenses and other | 11,660 | 13,504 |
Accrued warranty expenses | 1,735 | 1,778 |
Derivative liabilities | 1,447 | 1,212 |
Short-term debt | 3,301 | 3,665 |
Total current liabilities | 57,236 | 55,686 |
Non-current liabilities: | ' | ' |
Deferred income taxes | 744 | 743 |
Accrued tax liability | 1,135 | 1,103 |
Deferred credits and other | 2,245 | 2,212 |
Total liabilities | 61,360 | 59,744 |
Shareholders' equity: | ' | ' |
Preferred stock: no par value per share, 1,000,000 shares authorized, no shares issued | ' | ' |
Common stock: no par value, $.10 stated value per share, 12,500,000 shares authorized, 6,571,986 and 6,533,510 shares issued; and 6,482,344 and 6,465,054 shares outstanding, as of January 31, 2014 and October 31, 2013, respectively | 648 | 647 |
Additional paid-in capital | 54,943 | 54,698 |
Retained earnings | 100,175 | 98,130 |
Accumulated other comprehensive loss | -2,882 | -1,984 |
Total shareholders' equity | 152,884 | 151,491 |
Total liabilities and stockholders' equity | $214,244 | $211,235 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ' | ' |
Preferred stock, no par value | $0 | $0 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, stated value per share | $0.10 | $0.10 |
Common stock, shares authorized | 12,500,000 | 12,500,000 |
Common stock, shares issued | 6,571,986 | 6,533,510 |
Common stock, shares outstanding | 6,482,344 | 6,465,054 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $2,369 | $2,254 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ' | ' |
Provision for doubtful accounts | -82 | -43 |
Deferred income taxes | 3 | -316 |
Equity in income of affiliates | -84 | -56 |
Depreciation and amortization | 735 | 917 |
Foreign currency (gain) loss | 735 | -1,897 |
Unrealized (gain) loss on derivatives | 138 | 939 |
Stock-based compensation | 246 | 248 |
Change in assets and liabilities: | ' | ' |
(Increase) decrease in accounts receivable and refundable taxes | 1,496 | 4,147 |
(Increase) decrease in inventories | 666 | 428 |
Increase (decrease) in accounts payable | 4,195 | 33 |
Increase (decrease) in accrued expenses | -1,669 | -2,848 |
Net change in derivative assets and liabilities | 411 | -233 |
Other | -2,382 | 516 |
Net cash provided by (used for) operating activities | 6,777 | 4,089 |
Cash flows from investing activities: | ' | ' |
Purchase of property and equipment | -336 | -531 |
Software development costs | -183 | -305 |
Other investments | -205 | -30 |
Proceeds from sale of equipment | 126 | ' |
Net cash provided by (used for) investing activities | -598 | -866 |
Cash flows from financing activities: | ' | ' |
Dividends paid | -324 | ' |
Repayment of short-term debt | -384 | ' |
Net cash provided by (used for) financing activities | -708 | ' |
Effect of exchange rate changes on cash | -282 | 115 |
Net increase (decrease) in cash and cash equivalents | 5,189 | 3,338 |
Cash and cash equivalents at beginning of period | 42,804 | 35,770 |
Cash and cash equivalents at end of period | $47,993 | $39,108 |
CONDENSED_CONSOLIDATED_STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
In Thousands, except Share data | |||||
Balances at Oct. 31, 2012 | $143,793 | $645 | $53,415 | $90,586 | ($853) |
Balances, shares at Oct. 31, 2012 | ' | 6,447,210 | ' | ' | ' |
Net income | 2,254 | ' | ' | 2,254 | ' |
Other comprehensive loss | -731 | ' | ' | ' | -731 |
Stock-based compensation | 248 | ' | 248 | ' | ' |
Dividends paid | ' | ' | ' | ' | ' |
Balances at Jan. 31, 2013 | 145,564 | 645 | 53,663 | 92,840 | -1,584 |
Balances, shares at Jan. 31, 2013 | ' | 6,447,210 | ' | ' | ' |
Balances at Oct. 31, 2013 | 151,491 | 647 | 54,698 | 98,130 | -1,984 |
Balances, shares at Oct. 31, 2013 | ' | 6,465,054 | ' | ' | ' |
Net income | 2,369 | ' | ' | 2,369 | ' |
Other comprehensive loss | -898 | ' | ' | ' | -898 |
Stock-based compensation | 245 | 1 | 245 | ' | ' |
Stock-based compensation, shares | ' | 17,290 | ' | ' | ' |
Dividends paid | -324 | ' | ' | -324 | ' |
Balances at Jan. 31, 2014 | $152,884 | $648 | $54,943 | $100,175 | ($2,882) |
Balances, shares at Jan. 31, 2014 | ' | 6,482,344 | ' | ' | ' |
GENERAL
GENERAL | 3 Months Ended | |
Jan. 31, 2014 | ||
GENERAL [Abstract] | ' | |
GENERAL | ' | |
1 | GENERAL | |
The unaudited Condensed Consolidated Financial Statements include the accounts of Hurco Companies, Inc. and its consolidated subsidiaries. As used in this report, unless the context indicates otherwise, the terms "we", "us", "our" and similar language refer to Hurco Companies, Inc. and its consolidated subsidiaries as a whole. | ||
We design and produce computerized machine tools, interactive computer control systems, machine tool components, and software for sale through our distribution network to the worldwide metal cutting market. We also provide software options, computer control upgrades, accessories and replacement parts for our products, as well as customer service and training support. | ||
The condensed financial information as of January 31, 2014 and for the three months ended January 31, 2014 and January 31, 2013 is unaudited. However, in our opinion, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, results of operations, changes in shareholders' equity and cash flows at the end of the interim periods. We suggest that you read these condensed consolidated financial statements 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, 2013. | ||
DERIVATIVE_INSTRUMENTS_AND_HED
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended | ||||||||||||||||||
Jan. 31, 2014 | |||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES [Abstract] | ' | ||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | ' | ||||||||||||||||||
2 | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | ||||||||||||||||||
We are exposed to certain market risks relating to our ongoing business operations, including foreign currency risk, interest rate risk and credit risk. We manage our exposure to these and other market risks through regular operating and financing activities. Currently, the only risk that we manage through the use of derivative instruments is foreign currency risk in which we enter into derivative instruments in the form of foreign currency forward exchange contracts with a major financial institution. | |||||||||||||||||||
These forward exchange contracts are entered into to reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, to reduce the impact on gross profit and net earnings from sales and purchases denominated in foreign currencies, and to reduce the impact on our net earnings of foreign currency fluctuations on receivables and payables denominated in foreign currencies which are different than the subsidiaries functional currency. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Canadian Dollars, South African Rand, Singapore Dollars, Indian Rupee, Chinese Yuan, South Korean Won, Polish Zloty, and New Taiwan Dollars. We record all derivative instruments as assets or liabilities at fair value. | |||||||||||||||||||
Derivatives Designated as Hedging Instruments | |||||||||||||||||||
We enter into foreign currency forward exchange contracts periodically to hedge certain forecasted inter-company sales and purchases denominated in foreign currencies (the Pound Sterling, Euro and New Taiwan Dollar). The purpose of these instruments is to mitigate the risk that the U.S. Dollar net cash inflows and outflows resulting from sales and purchases denominated in foreign currencies will be adversely affected by changes in exchange rates. These forward contracts have been designated as cash flow hedge instruments, and are recorded in the Condensed Consolidated Balance Sheets at fair value in Derivative assets and Derivative liabilities. The effective portion of the gains and losses resulting from the changes in the fair value of these hedge contracts are deferred in Accumulated other comprehensive loss and recognized as an adjustment to Cost of sales and service in the period that the corresponding inventory sold that is the subject of the related hedge contract is recognized, thereby providing an offsetting economic impact against the corresponding change in the U.S. Dollar value of the inter-company sale or purchase being hedged. The ineffective portion of gains and losses resulting from the changes in the fair value of these hedge contracts is reported in Other (income) expense, net immediately. We perform quarterly assessments of hedge effectiveness by verifying and documenting the critical terms of the hedge instrument and determining that forecasted transactions have not changed significantly. We also assess on a quarterly basis whether there have been adverse developments regarding the risk of a counterparty default. | |||||||||||||||||||
We had forward contracts outstanding as of January 31, 2014, denominated in Euros, Pounds Sterling and New Taiwan Dollars with set maturity dates ranging from February 2014 through January 2015. The contract amounts, expressed at forward rates in U.S. Dollars at January 31, 2014, were $31.7 million for Euros, $10.9 million for Pounds Sterling and $21.4 million for New Taiwan Dollars. At January 31, 2014, we had approximately $1.2 million of losses, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Included in this amount were $640,000 of unrealized losses, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred losses will be recorded as an adjustment to Cost of sales and service in periods through January 2015, when the corresponding inventory that is the subject of the related hedge contracts are sold, as described above. | |||||||||||||||||||
We are also exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we have maintained a forward contract with a notional amount of €3.0 million. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under Financial Accounting Standards Board, or FASB, guidance related to the accounting for derivatives instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment in Accumulated other comprehensive loss, net of tax, in the same manner as the underlying hedged net assets. This forward contract matures in November 2014. At January 31, 2014, we had $235,000 of realized gains and $8,000 of unrealized gains, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss related to these forward contracts. | |||||||||||||||||||
Derivatives Not Designated as Hedging Instruments | |||||||||||||||||||
We enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on receivables and payables denominated in foreign currencies. These derivative instruments are not designated as hedges under the FASB guidance and, as a result, changes in their fair value are reported currently as Other expense, net in the Condensed Consolidated Statements of Operations consistent with the transaction gain or loss on the related receivables and payables denominated in foreign currencies. | |||||||||||||||||||
We had forward contracts outstanding as of January 31, 2014, in Euros, Pounds Sterling, Canadian Dollars, the South African Rand, and the New Taiwan Dollar with set maturity dates ranging from February 2014 through April 2014. The contract amounts at forward rates in U.S. Dollars at January 31, 2014 totaled $47.0 million. | |||||||||||||||||||
Fair Value of Derivative Instruments | |||||||||||||||||||
We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Condensed Consolidated Balance Sheets. As of January 31, 2014 and October 31, 2013, all derivative instruments were recorded at fair value on the balance sheets as follows (in thousands): | |||||||||||||||||||
January 31, 2014 | October 31, 2013 | ||||||||||||||||||
Balance sheet | Fair | Balance sheet | Fair | ||||||||||||||||
Derivatives | Location | value | location | value | |||||||||||||||
Designated as hedging instruments: | |||||||||||||||||||
Foreign exchange forward contracts | Derivative assets | $ | 195 | Derivative assets | $ | 244 | |||||||||||||
Foreign exchange forward contracts | Derivative liabilities | $ | 1,191 | Derivative liabilities | $ | 1,158 | |||||||||||||
Not designated as hedging instruments: | |||||||||||||||||||
Foreign exchange forward contracts | Derivative assets | $ | 541 | Derivative assets | $ | 455 | |||||||||||||
Foreign exchange forward contracts | Derivative liabilities | $ | 256 | Derivative liabilities | $ | 54 | |||||||||||||
Effect of Derivative Instruments on the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders' Equity and Condensed Consolidated Statements of Income | |||||||||||||||||||
Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders' Equity and Condensed Consolidated Statements of Income during the three months ended January 31, 2014 and 2013 (in thousands): | |||||||||||||||||||
Derivatives | Amount of Gain (Loss) | Location of Gain | Amount of Gain (Loss) | ||||||||||||||||
Recognized in Other | (Loss) Reclassified | Reclassified from Other | |||||||||||||||||
Comprehensive Income | from Other | Comprehensive Income | |||||||||||||||||
Comprehensive Income | |||||||||||||||||||
Three months ended | Three months ended | ||||||||||||||||||
January 31, | January 31, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Designated as hedging instruments: | |||||||||||||||||||
(Effective portion) | |||||||||||||||||||
Foreign exchange forward contracts - Intercompany sales/purchases | $ | (695 | ) | $ | (1,544 | ) | Cost of sales and service | $ | (403 | ) | $ | 953 | |||||||
Foreign exchange forward contract - Net investment | $ | 31 | $ | (173 | ) | ||||||||||||||
We recognized a loss of $19,000 for the three months ended January 31, 2014, and a loss of $64,000 for the three months ended January 31, 2013 as a result of contracts closed early that were deemed ineffective for financial reporting purposes and did not qualify as cash flow hedges. We recognized the following gains and losses in our Condensed Consolidated Statements of Income during the three months ended January 31, 2014 and 2013 (in thousands) on derivative instruments not designated as hedging instruments: | |||||||||||||||||||
Derivatives | Location of gain | Amount of gain (loss) | |||||||||||||||||
(loss) recognized in | Recognized in operations | ||||||||||||||||||
operations | |||||||||||||||||||
Three months ended January 31, | |||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Not designated as hedging instruments: | |||||||||||||||||||
Foreign exchange forward contracts | Other (income) expense, net | $ | (38 | ) | $ | (1,088 | ) | ||||||||||||
The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended January 31, 2014 (in thousands): | |||||||||||||||||||
Foreign | Cash Flow | Total | |||||||||||||||||
Currency | Hedges | ||||||||||||||||||
Translation | |||||||||||||||||||
Balance, October 31, 2013 | $ | (1,016 | ) | $ | (968 | ) | $ | (1,984 | ) | ||||||||||
Other comprehensive income (loss) before reclassifications | (713 | ) | (441 | ) | (1,154 | ) | |||||||||||||
Reclassifications | - | 256 | 256 | ||||||||||||||||
Balance, January 31, 2014 | $ | (1,729 | ) | $ | (1,153 | ) | $ | (2,882 | ) | ||||||||||
EQUITY_INCENTIVE_PLAN
EQUITY INCENTIVE PLAN | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
EQUITY INCENTIVE PLAN [Abstract] | ' | ||||||||
EQUITY INCENTIVE PLAN | ' | ||||||||
3 | EQUITY INCENTIVE PLAN | ||||||||
In March 2008, we adopted the Hurco Companies, Inc. 2008 Equity Incentive Plan, or the 2008 Plan, which allows us to grant awards of stock options, Stock Appreciation Rights settled in stock (SARs), restricted shares, performance shares and performance units. The 2008 Plan replaced the 1997 Stock Option and Incentive Plan, which expired in March 2007. The Compensation Committee of the Board of Directors has authority to determine the officers, directors and key employees who will be granted awards; designate the number of shares subject to each award; determine the terms and conditions upon which awards will be granted; and prescribe the form and terms of award agreements. We have granted stock options under both plans which are currently outstanding and restricted shares under the 2008 Plan which are outstanding. No stock option may be exercised more than ten years after the date of grant or such shorter period as the Compensation Committee may determine at the date of grant. The total number of shares of our common stock that may be issued as awards under the 2008 Plan is 750,000. The market value of a share of our common stock, for purposes of the 2008 Plan, is the closing sale price as reported by the Nasdaq Global Select Market on the date in question or, if not a trading day, on the last preceding trading date. | |||||||||
A summary of stock option activity for the three-month period ended January 31, 2014, is as follows: | |||||||||
Weighted | |||||||||
Average | |||||||||
Stock | Exercise | ||||||||
Options | Price | ||||||||
Outstanding at October 31, 2013 | 168,712 | $ | 20.73 | ||||||
Options granted | - | - | |||||||
Options exercised | - | - | |||||||
Options cancelled | - | - | |||||||
Outstanding at January 31, 2014 | 168,712 | $ | 20.73 | ||||||
Summarized information about outstanding stock options as of January 31, 2014, that have already vested and those that are expected to vest, as well as stock options that are currently exercisable, are as follows: | |||||||||
Options already | Options currently | ||||||||
vested and expected | exercisable | ||||||||
to vest | |||||||||
Number of outstanding options | 168,712 | 129,983 | |||||||
Weighted average remaining contractual life (years) | 6.41 | 4.81 | |||||||
Weighted average exercise price per share | $ | 20.73 | $ | 20.63 | |||||
Intrinsic value of outstanding options | $ | 988,000 | $ | 800,000 | |||||
The intrinsic value of an outstanding stock option is calculated as the difference between the stock price as of January 31, 2014 and the exercise price of the option. | |||||||||
On January 10, 2014, the Compensation Committee approved a long-term incentive compensation arrangement for our executive officers in the form of restricted shares and performance shares awarded under the 2008 Plan. The awards were 25% time-based vesting and 75% performance-based vesting. The three-year performance period will be fiscal 2014 through fiscal 2016. | |||||||||
The Compensation Committee granted a total of 12,182 shares of time-based restricted shares to our executive officers. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant. | |||||||||
The Compensation Committee also granted a total of 16,948 performance shares to our executive officers designated as "Performance Shares - TSR". The shares were weighted as 40% of the overall long-term incentive compensation arrangement and will vest and be paid based upon our total shareholder return over a three-year period, relative to the total shareholder return over that period of the companies in a specified peer group. Participants will have the ability to earn between 50% of the target number of shares for achieving threshold performance and 200% of the target number of shares for achieving maximum performance. The fair value of the market-based performance shares is calculated using the Monte Carlo approach. | |||||||||
The Compensation Committee also granted a total of 17,056 performance shares to our executive officers designated as "Performance Shares - ROIC". These shares were weighted as 35% of the overall long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average return on invested capital over the three-year period. Participants will have the ability to earn between 50% of the target number of shares for achieving threshold performance and 200% of the target number of shares for achieving maximum performance. The grant date fair value of the ROIC performance shares was based on the closing sales price of our common stock on the grant date. | |||||||||
A reconciliation of the activity relating to outstanding restricted share awards made under the 2008 Plan and related information is as follows: | |||||||||
Number of | Weighted Average | ||||||||
Shares | Grant Date | ||||||||
Fair Value | |||||||||
Unvested at October 31, 2013 | 68,456 | $ | 23.01 | ||||||
Shares granted | 46,186 | 24.9 | |||||||
Shares vested | (17,290 | ) | (23.10 | ) | |||||
Shares withheld | (7,710 | ) | (23.10 | ) | |||||
Unvested at January 31, 2014 | 89,642 | $ | 23.96 | ||||||
During the first three months of fiscal 2014 and 2013, we recorded $246,000 and $248,000, respectively, as stock-based compensation expense attributable to grants of stock options and shares of restricted stock. As of January 31, 2014, there was $1.8 million of total unrecognized stock-based compensation expense that we expect to recognize by the end of the first quarter of fiscal 2017. | |||||||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 3 Months Ended | ||||||||||||||||
Jan. 31, 2014 | |||||||||||||||||
EARNINGS PER SHARE [Abstract] | ' | ||||||||||||||||
EARNINGS PER SHARE | ' | ||||||||||||||||
4 | EARNINGS PER SHARE | ||||||||||||||||
Per share results have been computed based on the average number of common shares outstanding. The computation of basic and diluted net income per share is determined using net income applicable to common shareholders as the numerator and the number of shares outstanding as the denominator as follows (in thousands, except per share amounts): | |||||||||||||||||
Three months ended | |||||||||||||||||
January 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Basic | Diluted | Basic | Diluted | ||||||||||||||
Net income | $ | 2,369 | $ | 2,369 | $ | 2,254 | $ | 2,254 | |||||||||
Undistributed earnings allocated to participating shares | (20 | ) | (20 | ) | (24 | ) | (24 | ) | |||||||||
Net income applicable to common shareholders | $ | 2,349 | $ | 2,349 | $ | 2,230 | $ | 2,230 | |||||||||
Weighted average shares outstanding | 6,477 | 6,477 | 6,447 | 6,447 | |||||||||||||
Stock options | - | 37 | - | 37 | |||||||||||||
6,477 | 6,514 | 6,447 | 6,484 | ||||||||||||||
Income per share | $ | 0.36 | $ | 0.36 | $ | 0.35 | $ | 0.34 | |||||||||
ACCOUNTS_RECEIVABLE
ACCOUNTS RECEIVABLE | 3 Months Ended | |
Jan. 31, 2014 | ||
ACCOUNTS RECEIVABLE [Abstract] | ' | |
ACCOUNTS RECEIVABLE | ' | |
5 | ACCOUNTS RECEIVABLE | |
Accounts receivable are net of allowances for doubtful accounts of $458,000 as of January 31, 2014 and $540,000 as of October 31, 2013. | ||
INVENTORIES
INVENTORIES | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
INVENTORIES [Abstract] | ' | ||||||||
INVENTORIES | ' | ||||||||
6 | INVENTORIES | ||||||||
Inventories, priced at the lower of cost (first-in, first-out method) or market, are summarized below (in thousands): | |||||||||
31-Jan-14 | 31-Oct-13 | ||||||||
Purchased parts and sub-assemblies | $ | 22,185 | $ | 21,647 | |||||
Work-in-process | 15,322 | 15,996 | |||||||
Finished goods | 56,201 | 57,617 | |||||||
$ | 93,708 | $ | 95,260 | ||||||
ACQUISITION_OF_BUSINESS
ACQUISITION OF BUSINESS | 3 Months Ended | ||||||
Jan. 31, 2014 | |||||||
ACQUISITION OF BUSINESS [Abstract] | ' | ||||||
ACQUISITION OF BUSINESS | ' | ||||||
7 | ACQUISITION OF BUSINESS | ||||||
On July 1, 2013, we acquired the machine tool component business of an Italian designer and manufacturer of electro-mechanical components and accessories for machine tools. We are operating this business through our wholly-owned Italian subsidiary, LCM Precision Technologies, or LCM. The purchase price was allocated to the assets acquired and the liabilities assumed based on their fair values. The purchase price for the acquired assets and the assumed liabilities was $5.0 million. The allocation of the opening balance sheet of LCM as of July 1, 2013 is as follows (in thousands): | |||||||
Current assets | $ | 6,723 | |||||
Property plant and equipment | 933 | ||||||
Intangibles | 1,437 | ||||||
Goodwill | 2,477 | ||||||
Total assets | $ | 11,570 | |||||
Current liabilities | $ | 4,821 | |||||
Short term debt | 4,643 | ||||||
Non-current liabilities | 1,726 | ||||||
Total Liabilities | $ | 11,190 | |||||
Cash expended, net of cash acquired | 380 | ||||||
Indebtedness assumed | 4,643 | ||||||
Total purchase price | $ | 5,023 | |||||
Intangible assets of $1.4 million were recorded as a result of the transaction. The fair value of the intangible assets was based upon a discounted cash flow method that involves inputs that are not observable in the market (Level 3). Intangible assets are amortized primarily using a straight-line methodology. The intangible assets preliminarily consisted of the following (in thousands): | |||||||
Remaining | |||||||
Economic | |||||||
Useful Life | |||||||
Trademark/name | $ | 274 | 13 years | ||||
Technology and manufacturing know how | 1,111 | 13 years | |||||
Customer relationships | 52 | 16 years | |||||
$ | 1,437 | ||||||
The excess purchase price over the fair value of the assets acquired and the liabilities assumed was recorded as goodwill in the amount of $2.5 million. Goodwill recognized in the acquisition relates primarily to advancing our machine tool technology and expanding our current product offering. We expect the amount recorded as goodwill to be fully deductible for tax purposes. | |||||||
The results of operations of LCM have been included in our consolidated financial statements since July 1, 2013, the date we acquired the business. | |||||||
SEGMENT_INFORMATION
SEGMENT INFORMATION | 3 Months Ended | ||
Jan. 31, 2014 | |||
SEGMENT INFORMATION [Abstract] | ' | ||
SEGMENT INFORMATION | ' | ||
8 | SEGMENT INFORMATION | ||
We operate in a single segment: industrial automation systems. We design and produce interactive computer control systems and software, computerized machine tools and machine tool components for sale through our own distribution network to the worldwide metal-working market. We also provide software options, control upgrades, accessories and replacement parts for our products, as well as customer service and training support. The results of our subsidiary LCM, are included within the industrial automation systems segment. | |||
GUARANTEES_AND_WARRANTIES
GUARANTEES AND WARRANTIES | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
GUARANTEES AND WARRANTIES [Abstract] | ' | ||||||||
GUARANTEES AND WARRANTIES | ' | ||||||||
9 | GUARANTEES AND PRODUCT WARRANTIES | ||||||||
We follow FASB guidance for accounting for contingencies relating to the guarantor's accounting for, and disclosures of, the issuance of certain types of guarantees. | |||||||||
From time to time, our subsidiaries guarantee third party payment obligations in connection with the sale of machines to customers that use financing. As of January 31, 2014, we had 18 outstanding third party payment guarantees totaling approximately $1.4 million. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer has the risk of ownership. The customer does not obtain title, however, until it has paid for the machine. A retention of title clause allows us to recover the machine if the customer defaults on the financing. We accrue for potential liabilities under these guarantees when we believe a loss is probable and can be estimated. | |||||||||
We provide warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year for machines and certain components and shorter periods for service parts. We recognize a reserve with respect to this obligation at the time of product sale, with subsequent warranty claims recorded against the reserve. The amount of the warranty reserve is determined based on historical trend experience and any known warranty issues that could cause future warranty costs to differ from historical experience. A reconciliation of the changes in our warranty reserve is as follows (in thousands): | |||||||||
Three months ended | |||||||||
31-Jan-14 | 31-Jan-13 | ||||||||
Balance, beginning of period | $ | 1,778 | $ | 1,623 | |||||
Provision for warranties during the period | 938 | 596 | |||||||
Charges to the reserve | (971 | ) | (619 | ) | |||||
Impact of foreign currency translation | (10 | ) | 8 | ||||||
Balance, end of period | $ | 1,735 | $ | 1,608 | |||||
The warranty accrual increased slightly year-over-year as actual claims for specific warranties accrued were higher than in prior year resulting in an adjustment to the provision for warranties during the year. | |||||||||
DEBT_AGREEMENTS
DEBT AGREEMENTS | 3 Months Ended | ||
Jan. 31, 2014 | |||
DEBT AGREEMENTS [Abstract] | ' | ||
DEBT AGREEMENTS | ' | ||
10 | DEBT AGREEMENTS | ||
On December 7, 2012, we entered into a credit agreement with a financial institution that provided us with a $12.5 million unsecured revolving credit and letter of credit facility, with a $3.0 million maximum amount for outstanding letters of credit. Borrowings under the credit agreement bear interest at a LIBOR-based rate or a floating rate of 1% above the prevailing prime rate. The floating rate will not be less than the greatest of (a) a one month LIBOR-based rate plus 1.00% per annum, (b) the federal funds effective rate plus 0.50% per annum, and (c) the prevailing prime rate. The rate we must pay for that portion of the credit agreement which is not utilized is 0.05% per annum. The credit agreement permits us to pay cash dividends in an amount not to exceed $1.0 million per calendar year so long as we are not in default before and after giving effect to such dividends. | |||
We also have a £1.0 million revolving credit facility in the United Kingdom and a €1.5 million revolving credit facility in Germany. As of December 30, 2013, the uncommitted 100.0 million New Taiwan Dollar credit facility that was previously available to us expired and to date we have not renewed this credit facility. | |||
We have an uncommitted credit facility in China in the amount of 40.0 million Chinese Yuan (approximately $6.6 million) that was renewed on February 24, 2014 with an expiration date of February 24, 2015. | |||
All of our credit facilities are unsecured. | |||
At both January 31, 2014 and October 31, 2013, we had $3.3 million of borrowings outstanding under our credit facility in China. We had no other debt or borrowings under any of our other credit facilities. At January 31, 2014 we were in compliance with all covenants contained in our credit agreements and, as of that date, we had total unutilized credit facilities of approximately $19.5 million. | |||
INCOME_TAXES
INCOME TAXES | 3 Months Ended | |
Jan. 31, 2014 | ||
INCOME TAXES [Abstract] | ' | |
INCOME TAXES | ' | |
11 | INCOME TAXES | |
Our effective tax rate for the first three months of fiscal 2014 was 28% in comparison to 39% for the same period in fiscal 2013. The decrease in the effective income tax rate was primarily due to changes in the geographic mix of income or loss between tax jurisdictions. We recorded income tax expense during the first three months of fiscal 2014 of $904,000 compared to $1.4 million for the same period in fiscal 2013, primarily as a result of the reduction in pre-tax income period-over-period. We have not provided any U.S. income taxes on the undistributed earnings of our wholly-owned foreign subsidiaries based upon our determination that such earnings will be indefinitely reinvested. In the event these earnings are later distributed to our U.S. operations, such distributions would likely result in additional U.S. tax that may be offset, at least in part by associated foreign tax credits. | ||
Our unrecognized tax benefits were $1.3 million as of January 31, 2014 and as of October 31, 2013, and in each case included accrued interest. | ||
We recognize accrued interest and penalties related to unrecognized tax benefits as components of income tax expense. As of January 31, 2014, the gross amount of interest accrued, reported in Accrued expenses and other, was approximately $8,000, which did not include the federal tax benefit of interest deductions. | ||
We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. The statutes of limitations with respect to unrecognized tax benefits will expire between July 2015 and July 2018. | ||
FINANCIAL_INSTRUMENTS
FINANCIAL INSTRUMENTS | 3 Months Ended | ||||||||||||||||
Jan. 31, 2014 | |||||||||||||||||
FINANCIAL INSTRUMENTS [Abstract] | ' | ||||||||||||||||
FINANCIAL INSTRUMENTS | ' | ||||||||||||||||
12 | FINANCIAL INSTRUMENTS | ||||||||||||||||
Fair Value Measurements of Financial Instruments | |||||||||||||||||
FASB guidance establishes a three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exist, therefore requiring an entity to develop its own assumptions. | |||||||||||||||||
In accordance with this guidance, the following table represents the fair value hierarchy for our financial assets and liabilities measured at fair value as of January 31, 2014 and October 31, 2013 (in thousands): | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
January 31, | October 31, | January 31, | October 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Level 1 | |||||||||||||||||
Deferred Compensation | $ | 1,109 | $ | 1,073 | $ | - | $ | - | |||||||||
Level 2 | |||||||||||||||||
Derivatives | $ | 736 | $ | 699 | $ | 1,447 | $ | 1,212 | |||||||||
Included in Level 1 assets are mutual fund investments under a nonqualified deferred compensation plan. We estimate the fair value of these investments on a recurring basis using readily available market prices. | |||||||||||||||||
Included as Level 2 fair value measurements are derivative assets and liabilities related to gains and losses on foreign currency forward exchange contracts entered into with a third party. We estimate the fair value of these derivatives on a recurring basis using foreign currency exchange rates obtained from active markets. Derivative instruments are reported in the accompanying consolidated financial statements at fair value. We have derivative financial instruments in the form of foreign currency forward exchange contracts as described in Note 2 of Notes to the Condensed Consolidated Financial Statements in which the U.S. Dollar equivalent notional amounts of these contracts was $115.8 million and $105.0 million at January 31, 2014 and October 31, 2013, respectively. The fair value of Derivative assets recorded on our Condensed Consolidated Balance Sheets was $736,000 at January 31, 2014 and $699,000 at October 31, 2013. The fair value of Derivative liabilities recorded on our Condensed Consolidated Balance Sheets was $1.4 million at January 31, 2014 and $1.2 million at October 31, 2013. | |||||||||||||||||
The fair value of our foreign currency forward exchange contracts and the related currency positions are subject to offsetting market risk resulting from foreign currency exchange rate volatility. The counterparty to the forward exchange contracts is a substantial and creditworthy financial institution. We do not consider either the risk of counterparty non-performance or the economic consequences of counterparty non-performance as material risks. | |||||||||||||||||
CONTINGENCIES_AND_LITIGATION
CONTINGENCIES AND LITIGATION | 3 Months Ended | ||
Jan. 31, 2014 | |||
CONTINGENCIES AND LITIGATION [Abstract] | ' | ||
CONTINGENCIES AND LITIGATION | ' | ||
13 | CONTINGENCIES AND LITIGATION | ||
We are involved in various claims and lawsuits arising in the normal course of business. We do not expect any of these claims, individually or in the aggregate, to have a material adverse effect on our consolidated financial position or results of operations. | |||
NEW_ACCOUNTING_PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended | |
Jan. 31, 2014 | ||
NEW ACCOUNTING PRONOUNCEMENTS [Abstract] | ' | |
NEW ACCOUNTING PRONOUNCEMENTS | ' | |
14 | NEW ACCOUNTING PRONOUNCEMENTS | |
In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, providing guidance on the presentation of unrecognized tax benefits, reflecting the manner in which an entity would settle, at the reporting date, any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. We do not expect that the adoption of this accounting standard update will have a material effect on our consolidated financial statements. | ||
DERIVATIVE_INSTRUMENTS_AND_HED1
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended | ||||||||||||||||||
Jan. 31, 2014 | |||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES [Abstract] | ' | ||||||||||||||||||
Schedule of Fair Value of Derivative Instruments | ' | ||||||||||||||||||
January 31, 2014 | October 31, 2013 | ||||||||||||||||||
Balance sheet | Fair | Balance sheet | Fair | ||||||||||||||||
Derivatives | Location | value | location | value | |||||||||||||||
Designated as hedging instruments: | |||||||||||||||||||
Foreign exchange forward contracts | Derivative assets | $ | 195 | Derivative assets | $ | 244 | |||||||||||||
Foreign exchange forward contracts | Derivative liabilities | $ | 1,191 | Derivative liabilities | $ | 1,158 | |||||||||||||
Not designated as hedging instruments: | |||||||||||||||||||
Foreign exchange forward contracts | Derivative assets | $ | 541 | Derivative assets | $ | 455 | |||||||||||||
Foreign exchange forward contracts | Derivative liabilities | $ | 256 | Derivative liabilities | $ | 54 | |||||||||||||
Schedule of Effect of Derivative Instruments on the Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations | ' | ||||||||||||||||||
Effect of Derivative Instruments on the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders' Equity and Condensed Consolidated Statements of Income | |||||||||||||||||||
Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders' Equity and Condensed Consolidated Statements of Income during the three months ended January 31, 2014 and 2013 (in thousands): | |||||||||||||||||||
Derivatives | Amount of Gain (Loss) | Location of Gain | Amount of Gain (Loss) | ||||||||||||||||
Recognized in Other | (Loss) Reclassified | Reclassified from Other | |||||||||||||||||
Comprehensive Income | from Other | Comprehensive Income | |||||||||||||||||
Comprehensive Income | |||||||||||||||||||
Three months ended | Three months ended | ||||||||||||||||||
January 31, | January 31, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Designated as hedging instruments: | |||||||||||||||||||
(Effective portion) | |||||||||||||||||||
Foreign exchange forward contracts - Intercompany sales/purchases | $ | (695 | ) | $ | (1,544 | ) | Cost of sales and service | $ | (403 | ) | $ | 953 | |||||||
Foreign exchange forward contract - Net investment | $ | 31 | $ | (173 | ) | ||||||||||||||
We recognized a loss of $19,000 for the three months ended January 31, 2014, and a loss of $64,000 for the three months ended January 31, 2013 as a result of contracts closed early that were deemed ineffective for financial reporting purposes and did not qualify as cash flow hedges. We recognized the following gains and losses in our Condensed Consolidated Statements of Income during the three months ended January 31, 2014 and 2013 (in thousands) on derivative instruments not designated as hedging instruments: | |||||||||||||||||||
Derivatives | Location of gain | Amount of gain (loss) | |||||||||||||||||
(loss) recognized in | Recognized in operations | ||||||||||||||||||
operations | |||||||||||||||||||
Three months ended January 31, | |||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Not designated as hedging instruments: | |||||||||||||||||||
Foreign exchange forward contracts | Other (income) expense, net | $ | (38 | ) | $ | (1,088 | ) | ||||||||||||
Schedule of Changes in Components of Accumulated Other Comprehensive Loss | ' | ||||||||||||||||||
Foreign | Cash Flow | Total | |||||||||||||||||
Currency | Hedges | ||||||||||||||||||
Translation | |||||||||||||||||||
Balance, October 31, 2013 | $ | (1,016 | ) | $ | (968 | ) | $ | (1,984 | ) | ||||||||||
Other comprehensive income (loss) before reclassifications | (713 | ) | (441 | ) | (1,154 | ) | |||||||||||||
Reclassifications | - | 256 | 256 | ||||||||||||||||
Balance, January 31, 2014 | $ | (1,729 | ) | $ | (1,153 | ) | $ | (2,882 | ) | ||||||||||
EQUITY_INCENTIVE_PLAN_Tables
EQUITY INCENTIVE PLAN (Tables) | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
EQUITY INCENTIVE PLAN [Abstract] | ' | ||||||||
Summary of Stock Option Activity | ' | ||||||||
Weighted | |||||||||
Average | |||||||||
Stock | Exercise | ||||||||
Options | Price | ||||||||
Outstanding at October 31, 2013 | 168,712 | $ | 20.73 | ||||||
Options granted | - | - | |||||||
Options exercised | - | - | |||||||
Options cancelled | - | - | |||||||
Outstanding at January 31, 2014 | 168,712 | $ | 20.73 | ||||||
Schedule of Information about Outstanding Stock Options that have Already Vested and those that are Expected to Vest | ' | ||||||||
Options already | Options currently | ||||||||
vested and expected | exercisable | ||||||||
to vest | |||||||||
Number of outstanding options | 168,712 | 129,983 | |||||||
Weighted average remaining contractual life (years) | 6.41 | 4.81 | |||||||
Weighted average exercise price per share | $ | 20.73 | $ | 20.63 | |||||
Intrinsic value of outstanding options | $ | 988,000 | $ | 800,000 | |||||
Reconciliation of Restricted Stock Activity and Related Information | ' | ||||||||
Number of | Weighted Average | ||||||||
Shares | Grant Date | ||||||||
Fair Value | |||||||||
Unvested at October 31, 2013 | 68,456 | $ | 23.01 | ||||||
Shares granted | 46,186 | 24.9 | |||||||
Shares vested | (17,290 | ) | (23.10 | ) | |||||
Shares withheld | (7,710 | ) | (23.10 | ) | |||||
Unvested at January 31, 2014 | 89,642 | $ | 23.96 | ||||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 3 Months Ended | ||||||||||||||||
Jan. 31, 2014 | |||||||||||||||||
EARNINGS PER SHARE [Abstract] | ' | ||||||||||||||||
Reconciliation of Basic and Diluted Earnings Per Share | ' | ||||||||||||||||
Three months ended | |||||||||||||||||
January 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Basic | Diluted | Basic | Diluted | ||||||||||||||
Net income | $ | 2,369 | $ | 2,369 | $ | 2,254 | $ | 2,254 | |||||||||
Undistributed earnings allocated to participating shares | (20 | ) | (20 | ) | (24 | ) | (24 | ) | |||||||||
Net income applicable to common shareholders | $ | 2,349 | $ | 2,349 | $ | 2,230 | $ | 2,230 | |||||||||
Weighted average shares outstanding | 6,477 | 6,477 | 6,447 | 6,447 | |||||||||||||
Stock options | - | 37 | - | 37 | |||||||||||||
6,477 | 6,514 | 6,447 | 6,484 | ||||||||||||||
Income per share | $ | 0.36 | $ | 0.36 | $ | 0.35 | $ | 0.34 | |||||||||
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
INVENTORIES [Abstract] | ' | ||||||||
Schedule of Inventories | ' | ||||||||
31-Jan-14 | 31-Oct-13 | ||||||||
Purchased parts and sub-assemblies | $ | 22,185 | $ | 21,647 | |||||
Work-in-process | 15,322 | 15,996 | |||||||
Finished goods | 56,201 | 57,617 | |||||||
$ | 93,708 | $ | 95,260 | ||||||
ACQUISITION_OF_BUSINESS_Tables
ACQUISITION OF BUSINESS (Tables) | 3 Months Ended | ||||||
Jan. 31, 2014 | |||||||
ACQUISITION OF BUSINESS [Abstract] | ' | ||||||
Schedule of Opening Balance Sheet | ' | ||||||
Current assets | $ | 6,723 | |||||
Property plant and equipment | 933 | ||||||
Intangibles | 1,437 | ||||||
Goodwill | 2,477 | ||||||
Total assets | $ | 11,570 | |||||
Current liabilities | $ | 4,821 | |||||
Short term debt | 4,643 | ||||||
Non-current liabilities | 1,726 | ||||||
Total Liabilities | $ | 11,190 | |||||
Cash expended, net of cash acquired | 380 | ||||||
Indebtedness assumed | 4,643 | ||||||
Total purchase price | $ | 5,023 | |||||
Schedule of Intangible Assets | ' | ||||||
Remaining | |||||||
Economic | |||||||
Useful Life | |||||||
Trademark/name | $ | 274 | 13 years | ||||
Technology and manufacturing know how | 1,111 | 13 years | |||||
Customer relationships | 52 | 16 years | |||||
$ | 1,437 | ||||||
GUARANTEES_AND_WARRANTIES_Tabl
GUARANTEES AND WARRANTIES (Tables) | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
GUARANTEES AND WARRANTIES [Abstract] | ' | ||||||||
Reconciliation of Changes in Warranty Reserve | ' | ||||||||
Three months ended | |||||||||
31-Jan-14 | 31-Jan-13 | ||||||||
Balance, beginning of period | $ | 1,778 | $ | 1,623 | |||||
Provision for warranties during the period | 938 | 596 | |||||||
Charges to the reserve | (971 | ) | (619 | ) | |||||
Impact of foreign currency translation | (10 | ) | 8 | ||||||
Balance, end of period | $ | 1,735 | $ | 1,608 | |||||
FINANCIAL_INSTRUMENTS_Tables
FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | ||||||||||||||||
Jan. 31, 2014 | |||||||||||||||||
FINANCIAL INSTRUMENTS [Abstract] | ' | ||||||||||||||||
Schedule of Assets and Liabilities Fair Value | ' | ||||||||||||||||
Assets | Liabilities | ||||||||||||||||
January 31, | October 31, | January 31, | October 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Level 1 | |||||||||||||||||
Deferred Compensation | $ | 1,109 | $ | 1,073 | $ | - | $ | - | |||||||||
Level 2 | |||||||||||||||||
Derivatives | $ | 736 | $ | 699 | $ | 1,447 | $ | 1,212 | |||||||||
DERIVATIVE_INSTRUMENTS_AND_HED2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Narrative) (Details) | 3 Months Ended | 3 Months Ended | 3 Months Ended | ||||||||||
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 | Oct. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 |
USD ($) | USD ($) | USD ($) | Forward Contracts [Member] | Forward Contracts [Member] | Forward Contracts [Member] | Forward Contracts [Member] | Forward Contracts [Member] | Forward Contracts [Member] | Forward Contracts [Member] | Euros [Member] | Pounds Sterling [Member] | New Taiwan Dollars [Member] | |
Designated As Hedging Instrument [Member] | Designated As Hedging Instrument [Member] | Not Designated as Hedging Instrument [Member] | Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | Designated As Hedging Instrument [Member] | Designated As Hedging Instrument [Member] | Designated As Hedging Instrument [Member] | ||||
USD ($) | EUR (€) | USD ($) | Designated As Hedging Instrument [Member] | Not Designated as Hedging Instrument [Member] | Designated As Hedging Instrument [Member] | Not Designated as Hedging Instrument [Member] | USD ($) | USD ($) | USD ($) | ||||
Derivative [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative maturity date | ' | ' | ' | 30-Nov-14 | ' | ' | 28-Feb-14 | 28-Feb-14 | 31-Jan-15 | 30-Apr-14 | ' | ' | ' |
Notional amount | $115,800 | ' | $105,000 | ' | € 3,000 | $47,000 | ' | ' | ' | ' | $31,700 | $10,900 | $21,400 |
Losses related to cash flow hedges deferred in accumulated other comprehensive loss net of tax | -1,200 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrealized losses to be reclassified in next 12 months net of tax | -640 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Realized gain on net investment hedge | ' | ' | ' | 235 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrealized gains, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss | ' | ' | ' | 8 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gain (loss) on hedge ineffectiveness | ($19) | ($64) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DERIVATIVE_INSTRUMENTS_AND_HED3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Fair Value of Derivative Instruments) (Details) (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | ||
Derivatives Fair Value [Line Items] | ' | ' |
Derivative assets | $736 | $699 |
Derivative liabilities | 1,447 | 1,212 |
Foreign Exchange Forward [Member] | Designated As Hedging Instrument [Member] | ' | ' |
Derivatives Fair Value [Line Items] | ' | ' |
Derivative assets | 195 | 244 |
Derivative liabilities | 1,191 | 1,158 |
Foreign Exchange Forward [Member] | Not Designated as Hedging Instrument [Member] | ' | ' |
Derivatives Fair Value [Line Items] | ' | ' |
Derivative assets | 541 | 455 |
Derivative liabilities | $256 | $54 |
DERIVATIVE_INSTRUMENTS_AND_HED4
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Effect of Derivative Instruments on Consolidated Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations) (Details) (Foreign Exchange Forward [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
Designated As Hedging Instrument [Member] | Intercompany [Member] | ' | ' |
Derivative Instruments Gain Loss [Line Items] | ' | ' |
Amount of gain (loss) recognized in Other comprehensive loss | ($695) | ($1,544) |
Designated As Hedging Instrument [Member] | Net Investment Hedging [Member] | ' | ' |
Derivative Instruments Gain Loss [Line Items] | ' | ' |
Amount of gain (loss) recognized in Other comprehensive loss | 31 | -173 |
Designated As Hedging Instrument [Member] | Cost Of Sales [Member] | ' | ' |
Derivative Instruments Gain Loss [Line Items] | ' | ' |
Amount of gain (loss) reclassified from Other comprehensive loss | -403 | 953 |
Not Designated as Hedging Instrument [Member] | Other (Income) Expense, Net [Member] | ' | ' |
Derivative Instruments Gain Loss [Line Items] | ' | ' |
Amount of gain (loss) recognized in operations | ($38) | ($1,088) |
DERIVATIVE_INSTRUMENTS_AND_HED5
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Changes in Components of Accumulated Other Comprehensive Loss) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
Derivative [Line Items] | ' | ' |
Beginning balance | ($1,984) | ' |
Other comprehensive income (loss) before reclassifications | -1,154 | ' |
Reclassifications | 256 | -607 |
Ending balance | -2,882 | ' |
Foreign Currency Translation [Member] | ' | ' |
Derivative [Line Items] | ' | ' |
Beginning balance | -1,016 | ' |
Other comprehensive income (loss) before reclassifications | -713 | ' |
Reclassifications | ' | ' |
Ending balance | -1,729 | ' |
Cash Flow Hedges [Member] | ' | ' |
Derivative [Line Items] | ' | ' |
Beginning balance | -968 | ' |
Other comprehensive income (loss) before reclassifications | -441 | ' |
Reclassifications | 256 | ' |
Ending balance | ($1,153) | ' |
EQUITY_INCENTIVE_PLAN_Narrativ
EQUITY INCENTIVE PLAN (Narrative) (Details) (USD $) | 3 Months Ended | 1 Months Ended | ||||||||
In Thousands, except Share data, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 10, 2014 | Jan. 10, 2014 | Jan. 10, 2014 | Jan. 10, 2014 | Jan. 10, 2014 | Jan. 10, 2014 | Jan. 10, 2014 | Jan. 10, 2014 |
Time Based [Member] | Performance Based [Member] | Performance Shares TSR [Member] | Performance Shares TSR [Member] | Performance Shares TSR [Member] | Performance Shares ROIC [Member] | Performance Shares ROIC [Member] | Performance Shares ROIC [Member] | |||
Performance Based [Member] | Performance Based [Member] | Performance Based [Member] | Performance Based [Member] | Performance Based [Member] | Performance Based [Member] | |||||
Minimum [Member] | Maximum [Member] | Minimum [Member] | Maximum [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expiration period of options granted | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total number of shares of common stock that may be issued as awards under 2008 Plan | 750,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting percentage | ' | ' | 25.00% | 75.00% | ' | ' | ' | ' | ' | ' |
Stock-based compensation expense | $246 | $248 | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized Stock-based compensation expense | $1,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted stock granted | 46,186 | ' | 12,182 | ' | 16,948 | ' | ' | 17,056 | ' | ' |
Vesting period | ' | ' | '3 years | ' | '3 years | ' | ' | '3 years | ' | ' |
Percentage of incentive compensation arrangement | ' | ' | ' | ' | 40.00% | ' | ' | 35.00% | ' | ' |
Percentage of target number of shares to be earned | ' | ' | ' | ' | ' | 50.00% | 200.00% | ' | 50.00% | 200.00% |
EQUITY_INCENTIVE_PLAN_Summary_
EQUITY INCENTIVE PLAN (Summary of Stock Option Activity) (Details) (USD $) | 3 Months Ended |
Jan. 31, 2014 | |
Stock Options | ' |
Outstanding at October 31, 2013 | 168,712 |
Options granted | ' |
Options exercised | ' |
Options cancelled | ' |
Outstanding at January 31, 2014 | 168,712 |
Weighted Average Exercise Price | ' |
Outstanding at October 31, 2013 | $20.73 |
Options granted | $0 |
Options exercised | $0 |
Options cancelled | $0 |
Outstanding at January 31, 2014 | $20.73 |
EQUITY_INCENTIVE_PLAN_Schedule
EQUITY INCENTIVE PLAN (Schedule of Information about Outstanding Stock Options Vested and Expected to Vest) (Details) (USD $) | 3 Months Ended |
In Thousands, except Share data, unless otherwise specified | Jan. 31, 2014 |
Options already vested and expected to vest | ' |
Number of outstanding options | 168,712 |
Weighted average remaining contractual life (years) | '6 years 4 months 28 days |
Weighted average exercise price per share | $20.73 |
Intrinsic value of outstanding options | $988 |
Options currently exercisable | ' |
Number of outstanding options | 129,983 |
Weighted average remaining contractual life (years) | '4 years 9 months 22 days |
Weighted average exercise price per share | $20.63 |
Intrinsic value of outstanding options | $800 |
EQUITY_INCENTIVE_PLAN_Reconcil
EQUITY INCENTIVE PLAN (Reconciliation of Restricted Stock Activity and Related Information) (Details) (USD $) | 3 Months Ended |
Jan. 31, 2014 | |
Number of Shares | ' |
Unvested at October 31, 2013 | 68,456 |
Shares granted | 46,186 |
Shares vested | -17,290 |
Shares withheld | -7,710 |
Unvested at January 31, 2014 | 89,642 |
Weighted Average Grant Date Fair Value | ' |
Unvested at October 31, 2013 | $23.01 |
Shares granted | $24.90 |
Shares vested | ($23.10) |
Shares withheld | ($23.10) |
Unvested at January 31, 2014 | $23.96 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
EARNINGS PER SHARE [Abstract] | ' | ' |
Net income | $2,369 | $2,254 |
Allocated to participating Shares | -20 | -24 |
Net income applicable to common shareholders | $2,349 | $2,230 |
Weighted average shares Outstanding | 6,477 | 6,447 |
Stock options | 37 | 37 |
Diluted | 6,514 | 6,484 |
Income per share | $0.36 | $0.35 |
Income per share | $0.36 | $0.34 |
ACCOUNTS_RECEIVABLE_Details
ACCOUNTS RECEIVABLE (Details) (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | ||
ACCOUNTS RECEIVABLE [Abstract] | ' | ' |
Allowances for doubtful accounts | $458 | $540 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory, Net [Abstract] | ' | ' |
Purchased parts and sub-assemblies | $22,185 | $21,647 |
Work-in-process | 15,322 | 15,996 |
Finished goods | 56,201 | 57,617 |
Inventories, net | $93,708 | $95,260 |
ACQUISITION_OF_BUSINESS_Narrat
ACQUISITION OF BUSINESS (Narrative) (Details) (USD $) | 1 Months Ended |
In Thousands, unless otherwise specified | Jul. 01, 2013 |
ACQUISITION OF BUSINESS [Abstract] | ' |
Total purchase price | $5,023 |
Intangibles | 1,437 |
Goodwill | $2,477 |
ACQUISITION_OF_BUSINESS_Schedu
ACQUISITION OF BUSINESS (Schedule of Opening Balance Sheet) (Details) (USD $) | 1 Months Ended |
In Thousands, unless otherwise specified | Jul. 01, 2013 |
ACQUISITION OF BUSINESS [Abstract] | ' |
Current assets | $6,723 |
Property plant and equipment | 933 |
Intangibles | 1,437 |
Goodwill | 2,477 |
Total assets | 11,570 |
Current liabilities | 4,821 |
Short term debt | 4,643 |
Non-current liabilities | 1,726 |
Total Liabilities | 11,190 |
Cash expended, net of cash acquired | 380 |
Indebtedness assumed | 4,643 |
Total purchase price | $5,023 |
ACQUISITION_OF_BUSINESS_Schedu1
ACQUISITION OF BUSINESS (Schedule of Intangible Assets) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jul. 01, 2013 |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangibles | ' | $1,437 |
Trademark/name [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangibles | ' | 274 |
Remaining Economic Useful Life | '13 years | ' |
Technology and manufacturing know how [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangibles | ' | 1,111 |
Remaining Economic Useful Life | '13 years | ' |
Customer relationships [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangibles | ' | $52 |
Remaining Economic Useful Life | '16 years | ' |
GUARANTEES_AND_PRODUCT_WARRANT
GUARANTEES AND PRODUCT WARRANTIES (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
GUARANTEES AND WARRANTIES [Abstract] | ' | ' |
Number of outstanding third party payment guarantees | 18 | ' |
Outstanding third party payment guarantees amount | $1,400 | ' |
Terms of warranties | '1 year | ' |
Reconciliation of the changes in our warranty reserve: | ' | ' |
Balance, beginning of period | 1,778 | 1,623 |
Provision for warranties during the period | 938 | 596 |
Charges to the reserve | -971 | -619 |
Impact of foreign currency translation | -10 | 8 |
Balance, end of period | $1,735 | $1,608 |
DEBT_AGREEMENTS_Details
DEBT AGREEMENTS (Details) | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | USD ($) | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Letter Of Credit [Member] | Uncommitted Credit Facility [Member] | Uncommitted Credit Facility [Member] | Uncommitted Credit Facility [Member] | Uncommitted Credit Facility [Member] | Uncommitted Credit Facility [Member] | Uncommitted Credit Facility [Member] |
USD ($) | LIBOR [Member] | Federal Funds Rate [Member] | USD ($) | Taiwan [Member] | United Kingdom [Member] | Germany [Member] | China [Member] | China [Member] | China [Member] | ||
TWD | GBP (£) | EUR (€) | USD ($) | CNY | USD ($) | ||||||
Line of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit, maximum borrowing capacity | ' | $12,500 | ' | ' | $3,000 | 100,000 | £ 1,000 | € 1,500 | $6,600 | 40,000 | ' |
Line of credit, maturity date | ' | ' | ' | ' | ' | 30-Dec-13 | ' | ' | 24-Feb-15 | 24-Feb-15 | ' |
Interest rate spread | ' | 1.00% | 1.00% | 0.50% | ' | ' | ' | ' | ' | ' | ' |
Percentage fee on portion that is not utilized | ' | 0.05% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit amount outstanding | ' | ' | ' | ' | ' | ' | ' | ' | 3,300 | ' | 3,300 |
Borrowings available under credit facility | 19,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum dividends allowable | ' | $1,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 | Oct. 31, 2013 |
INCOME TAXES [Abstract] | ' | ' | ' |
Effective tax rate | 28.00% | 39.00% | ' |
Provision for income taxes | $904 | $1,445 | ' |
Unrecognized tax benefits | 1,300 | ' | 1,300 |
Accrued interest and penalties related to unrecognized tax benefits | $8 | ' | ' |
Minimum [Member] | ' | ' | ' |
Income Tax Contingency [Line Items] | ' | ' | ' |
Statutes of limitations with respect to unrecognized tax benefits | 1-Jul-15 | ' | ' |
Maximum [Member] | ' | ' | ' |
Income Tax Contingency [Line Items] | ' | ' | ' |
Statutes of limitations with respect to unrecognized tax benefits | 1-Jul-18 | ' | ' |
FINANCIAL_INSTRUMENTS_Details
FINANCIAL INSTRUMENTS (Details) (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | ||
FINANCIAL INSTRUMENTS [Abstract] | ' | ' |
Notional amount of forward hedge contracts | $115,800 | $105,000 |
Assets | ' | ' |
Derivatives | 736 | 699 |
Liabilities | ' | ' |
Derivatives | 1,447 | 1,212 |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 1 [Member] | ' | ' |
Assets | ' | ' |
Deferred compensation | 1,109 | 1,073 |
Liabilities | ' | ' |
Deferred compensation | ' | ' |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 2 [Member] | ' | ' |
Assets | ' | ' |
Derivatives | 736 | 699 |
Liabilities | ' | ' |
Derivatives | $1,447 | $1,212 |