Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2016 | Dec. 12, 2016 | Apr. 29, 2016 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Oct. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | HURCO COMPANIES INC | ||
Entity Central Index Key | 315,374 | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 212,837,000 | ||
Trading Symbol | HURC | ||
Entity Common Stock, Shares Outstanding | 6,573,103 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Sales and service fees | $ 227,289 | $ 219,383 | $ 222,303 |
Cost of sales and service | 156,849 | 150,292 | 153,691 |
Gross profit | 70,440 | 69,091 | 68,612 |
Selling, general and administrative expenses | 50,824 | 45,287 | 46,615 |
Operating income | 19,616 | 23,804 | 21,997 |
Interest expense | 72 | 198 | 264 |
Interest income | 40 | 76 | 78 |
Investment income | 149 | 78 | 42 |
Income from equity investments | 466 | 474 | 444 |
Other expense, net | 1,314 | 681 | 936 |
Income before income taxes | 18,885 | 23,553 | 21,361 |
Provision for income taxes | 5,593 | 7,339 | 6,218 |
Net income | $ 13,292 | $ 16,214 | $ 15,143 |
Income per common share - basic | $ 2.01 | $ 2.46 | $ 2.31 |
Weighted average common shares outstanding - basic | 6,569 | 6,543 | 6,497 |
Income per common share - diluted | $ 1.99 | $ 2.44 | $ 2.30 |
Weighted average common shares outstanding - diluted | 6,642 | 6,602 | 6,538 |
Dividends paid per share | $ 0.35 | $ 0.31 | $ 0.26 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Net Income | $ 13,292 | $ 16,214 | $ 15,143 |
Other comprehensive income (loss): | |||
Translation gain (loss) of foreign currency financial statements | (1,441) | (6,333) | (3,535) |
(Gain) / loss on derivative instruments reclassified into operations, net of tax of $(906), $(431), and $621, respectively | (1,647) | (784) | 1,129 |
Gain / (loss) on derivative instruments, net of tax of $787, $712, and $458, respectively | 1,431 | 1,291 | 830 |
Total other comprehensive income (loss) | (1,657) | (5,826) | (1,576) |
Comprehensive income | $ 11,635 | $ 10,388 | $ 13,567 |
CONSOLIDATED STATEMENTS OF COM4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Realized loss (gains) on derivative instruments reclassified into operations, tax | $ (906) | $ (431) | $ 621 |
Unrealized (loss) gains on derivative instruments, tax | $ 787 | $ 712 | $ 458 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 41,217 | $ 55,237 |
Accounts receivable, less allowance for doubtful accounts of $664 in 2016 and $739 in 2015 | 48,631 | 41,766 |
Inventories, net | 117,025 | 106,308 |
Derivative assets | 1,725 | 1,228 |
Prepaid assets | 8,207 | 9,769 |
Other | 1,576 | 1,804 |
Total current assets | 218,381 | 216,112 |
Property and equipment: | ||
Land | 841 | 841 |
Building | 7,352 | 7,314 |
Machinery and equipment | 23,515 | 24,026 |
Leasehold improvements | 3,487 | 3,323 |
Property and equipment, gross | 35,195 | 35,504 |
Less accumulated depreciation and amortization | (22,898) | (22,362) |
Total property and equipment, net | 12,297 | 13,142 |
Non-current assets: | ||
Software development costs, less accumulated amortization | 4,926 | 3,905 |
Goodwill | 2,314 | 2,319 |
Intangible assets, net | 1,150 | 1,289 |
Deferred income taxes | 6,138 | 4,721 |
Investments and other assets, net | 6,743 | 7,089 |
Total non-current assets | 21,271 | 19,323 |
Total assets | 251,949 | 248,577 |
Current liabilities: | ||
Accounts payable | 35,210 | 41,678 |
Accounts payable-related parties | 1,990 | 1,780 |
Accrued expenses and other | 17,231 | 16,788 |
Accrued warranty expenses | 1,523 | 2,186 |
Derivative liabilities | 538 | 1,071 |
Short-term debt | 1,476 | 1,583 |
Total current liabilities | 57,968 | 65,086 |
Non-current liabilities: | ||
Deferred income taxes | 4,294 | 3,998 |
Accrued tax liability | 963 | 953 |
Deferred credits and other | 3,249 | 3,972 |
Total non-current liabilities | 8,506 | 8,923 |
Shareholders' equity: | ||
Preferred stock: no par value per share, 1,000,000 shares authorized, no shares issued | 0 | 0 |
Common stock: no par value, $.10 stated value per share, 12,500,000 shares authorized, 6,720,453 and 6,650,517 shares issued; and 6,573,103 and 6,551,718 shares outstanding, as of October 31, 2016 and October 31, 2015, respectively | 657 | 655 |
Additional paid-in capital | 59,119 | 57,539 |
Retained earnings | 136,742 | 125,760 |
Accumulated other comprehensive loss | (11,043) | (9,386) |
Total shareholders' equity | 185,475 | 174,568 |
Total liabilities and shareholders' equity | $ 251,949 | $ 248,577 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Accounts receivable, allowance for doubtful accounts | $ 664 | $ 739 |
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 | 6,720,453 | 6,650,517 |
Common stock, shares outstanding | 6,573,103 | 6,551,718 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Cash flows from operating activities: | |||
Net income | $ 13,292 | $ 16,214 | $ 15,143 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities, net of acquisitions: | |||
Provision for doubtful accounts | (75) | (139) | 338 |
Deferred income taxes | (225) | (1,013) | (874) |
Equity in income of affiliates | (466) | (474) | (444) |
Foreign currency (gain) loss | 1,850 | 3,223 | 2,260 |
Unrealized (gain) loss on derivatives | 393 | 147 | 208 |
Depreciation and amortization | 3,868 | 3,222 | 3,309 |
Stock-based compensation | 1,607 | 1,193 | 921 |
Change in assets and liabilities, net of acquisitions: | |||
(Increase) decrease in accounts receivable | (8,141) | 3,666 | (11,653) |
(Increase) decrease in inventories | (13,881) | 2,852 | (4,971) |
(Increase) decrease in prepaid expenses | 809 | 383 | (4,646) |
Increase (decrease) in accounts payable | (6,001) | (1,028) | 8,642 |
Increase (decrease) in accrued expenses | (90) | (962) | 5,257 |
Net change in derivative assets and liabilities | (245) | 1,081 | 2,842 |
Other | 442 | 179 | 3 |
Net cash provided by (used for) operating activities | (6,863) | 28,544 | 16,335 |
Cash flows from investing activities: | |||
Proceeds from sale of property and equipment | 264 | 62 | 125 |
Purchase of property and equipment | (1,972) | (3,127) | (1,680) |
Software development costs | (2,205) | (1,406) | (955) |
Other investments | 0 | 308 | (76) |
Acquisition of business, net of cash acquired | 0 | (17,650) | 0 |
Net cash provided by (used for) investing activities | (3,913) | (21,813) | (2,586) |
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | 0 | 257 | 359 |
Dividends paid | (2,310) | (2,034) | (1,693) |
Tax benefit from exercise of stock options | 0 | 119 | 0 |
Repayment of short-term debt | 0 | (1,605) | (379) |
Net cash provided by (used for) financing activities | (2,310) | (3,263) | (1,713) |
Effect of exchange rate changes on cash and cash equivalents | (934) | (2,077) | (994) |
Net increase (decrease) in cash and cash equivalents | (14,020) | 1,391 | 11,042 |
Cash and cash equivalents at beginning of year | 55,237 | 53,846 | 42,804 |
Cash and cash equivalents at end of year | 41,217 | 55,237 | 53,846 |
Cash paid for: | |||
Interest | 56 | 156 | 167 |
Income taxes, net | $ 4,328 | $ 9,890 | $ 5,782 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Balances, Beginning at Oct. 31, 2013 | $ 151,491 | $ 647 | $ 54,698 | $ 98,130 | $ (1,984) |
Balances, Beginning (Shares) at Oct. 31, 2013 | 6,465,054 | ||||
Net income | 15,143 | $ 0 | 0 | 15,143 | 0 |
Other comprehensive income (loss) | (1,576) | 0 | 0 | 0 | (1,576) |
Exercise of common stock options | $ 359 | $ 2 | 357 | 0 | 0 |
Exercise of common stock options (Shares) | 20,306 | 20,306 | |||
Stock-based compensation expense | $ 921 | $ 2 | 919 | 0 | 0 |
Stock-based compensation expense (Shares) | 23,520 | ||||
Dividends paid | (1,693) | $ 0 | 0 | (1,693) | 0 |
Balances, Ending at Oct. 31, 2014 | 164,645 | $ 651 | 55,974 | 111,580 | (3,560) |
Balances, Ending (Shares) at Oct. 31, 2014 | 6,508,880 | ||||
Net income | 16,214 | $ 0 | 0 | 16,214 | 0 |
Other comprehensive income (loss) | (5,826) | 0 | 0 | 0 | (5,826) |
Exercise of common stock options | $ 257 | $ 1 | 256 | 0 | 0 |
Exercise of common stock options (Shares) | 15,300 | 15,300 | |||
Stock-based compensation expense | $ 1,193 | $ 3 | 1,190 | 0 | 0 |
Stock-based compensation expense (Shares) | 27,538 | ||||
Tax benefit (expense) from stock option activities | 119 | $ 0 | 119 | 0 | 0 |
Dividends paid | (2,034) | 0 | 0 | (2,034) | 0 |
Balances, Ending at Oct. 31, 2015 | 174,568 | $ 655 | 57,539 | 125,760 | (9,386) |
Balances, Ending (Shares) at Oct. 31, 2015 | 6,551,718 | ||||
Net income | 13,292 | $ 0 | 0 | 13,292 | 0 |
Other comprehensive income (loss) | $ (1,657) | 0 | 0 | 0 | (1,657) |
Exercise of common stock options (Shares) | 0 | ||||
Stock-based compensation expense | $ 1,607 | $ 2 | 1,605 | 0 | 0 |
Stock-based compensation expense (Shares) | 21,385 | ||||
Tax benefit (expense) from stock option activities | (25) | $ 0 | (25) | 0 | 0 |
Dividends paid | (2,310) | 0 | 0 | (2,310) | 0 |
Balances, Ending at Oct. 31, 2016 | $ 185,475 | $ 657 | $ 59,119 | $ 136,742 | $ (11,043) |
Balances, Ending (Shares) at Oct. 31, 2016 | 6,573,103 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . The consolidated financial statements include the accounts of Hurco Companies, Inc. (an Indiana corporation) and its wholly-owned subsidiaries. We have a 35 3.6 3.0 . We consider all highly liquid investments with a stated maturity at the date of purchase of three months or less to be cash equivalents. Cash flows from hedges are classified consistent with the items being hedged. . All balance sheet accounts of non-U.S. subsidiaries are translated at the exchange rate as of the end of the year and translation adjustments of foreign currency balance sheets are recorded as a component of Accumulated other comprehensive loss in shareholders' equity. Income and expenses are translated at the average exchange rates during the year. Cumulative foreign currency translation adjustments, net of gains related to our net investment hedges, as of October 31, 2016 were a net loss of $ 12.3 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. We operate on a global basis and are exposed to the risk that our financial condition, results of operations and cash flows could be adversely affected by changes in foreign currency exchange rates. To reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, and the gross profit and net earnings of certain of our foreign subsidiaries, we enter into derivative financial instruments in the form of foreign exchange forward contracts with a major financial institution. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Indian Rupee, South African Rand, Singapore Dollars, Chinese Yuan, Polish Zloty, and New Taiwan Dollars. We account for derivative instruments as either assets or liabilities and carry them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments designated as a fair value hedge, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributed to the risk being hedged. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of Accumulated other comprehensive loss in shareholders’ equity and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion of the gain or loss is reported in earnings immediately. For derivative instruments that are not designated as accounting hedges under the Derivatives and Hedging Topic of the Financial Accounting Standards Board (FASB guidance), changes in fair value are recognized in earnings in the period of change. We do not hold or issue derivative financial instruments for speculative trading purposes. We only enter into derivatives with one counterparty, which is among one of the largest U.S. banks (ranked by assets), in order to minimize credit risk and, to date, that counterparty has not failed to meet its financial obligations under such contracts. 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 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 October 31, 2016, in Euros, Pounds Sterling and New Taiwan Dollars with set maturity dates ranging from November 2016 through October 2017 27.6 6.1 21.8 1.3 1.0 We are exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we entered into a forward contract with a notional amount of € 3.0 803,000 39,000 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 FASB guidance and, as a result, changes in their fair value are reported currently as Other expense, net in the Consolidated Statements of Income consistent with the transaction gain or loss on the related receivables and payables denominated in foreign currencies. We had forward contracts outstanding as of October 31, 2016, in Euros, Pounds Sterling, South African Rand and New Taiwan Dollars with set maturity dates ranging from November 2016 through April 2017 39.5 26.6 Fair Value of Derivative Instruments We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Consolidated Balance Sheets. 2016 2015 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 1,721 Derivative assets $ 1,079 Foreign exchange forward contracts Derivative liabilities $ 173 Derivative liabilities $ 1,027 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 4 Derivative assets $ 149 Foreign exchange forward contracts Derivative liabilities $ 365 Derivative liabilities $ 44 Effect of Derivative Instruments on the Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity and Statements of Income Location of Gain Amount of Gain (Loss) (Loss) Reclassified Amount of Gain (Loss) Recognized in Other from Other Reclassified from Other Comprehensive Income Comprehensive Comprehensive Income Derivatives (Loss) Income (Loss) (Loss) 2016 2015 2016 2015 Designated as Hedging Instruments: Foreign exchange forward contracts Intercompany sales/purchases $ 1,431 $ 1,291 Cost of sales and service $ 1,647 $ 784 Foreign exchange forward contract Net Investment $ 28 $ 304 We recognized a gain of $ 18,000 14,000 Location of Gain (Loss) Amount of Gain (Loss) Derivatives Recognized in Operations Recognized in Operations 2016 2015 (in thousands) Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ 536 $ 2,571 Foreign Currency Cash Flow Total Balance, October 31, 2014 (4,551) 991 (3,560) Other comprehensive income (loss) before reclassifications (6,333) 1,291 (5,042) Reclassifications (784) (784) Balance, October 31, 2015 $ (10,884) $ 1,498 $ (9,386) Other comprehensive income (loss) before reclassifications (1,441) 1,431 (10) Reclassifications (1,647) (1,647) Balance, October 31, 2016 $ (12,325) $ 1,282 $ (11,043) Inventories . Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method. Provisions are made to reduce excess or obsolete inventories to their estimated realizable value. . Property and equipment are carried at cost. Number of Years Land Indefinite Building 40 Machines 7 10 Shop and office equipment 3 7 Leasehold improvements 3 40 Total depreciation and amortization expense recognized for property and equipment for the fiscal years ended October 31, 2016, 2015 and 2014 was $ 2.5 2.2 2.2 We recognize revenue from sales of our machine tool systems upon delivery of the product to the customer, which is normally at the time of shipment, because persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed and determinable and collectability is reasonably assured. Our computerized machine tools are general-purpose computer controlled machine tools that are typically used in stand-alone operations. Transfer of ownership and risk of loss are not contingent upon contractual customer acceptance. Prior to shipment, we test each machine to ensure the machine’s compliance with standard operating specifications. Depending upon geographic location, after shipment, a machine may be installed at the customer’s facilities by a distributor, independent contractor or by one of our service technicians. In most instances where a machine is sold through a distributor, we have no installation involvement. If sales are direct or through sales agents, we will typically complete the machine installation, which consists of the reassembly of certain parts that were removed for shipping and the re-testing of the machine to ensure that it is performing within the standard specifications. We consider the machine installation process to be inconsequential and perfunctory. Service fees from maintenance contracts are deferred and recognized in earnings on a pro rata basis over the term of the contract. Sales related to software products are recognized when shipped in conformity with U.S. Generally Accepted Accounting Principles as promulgated by FASB guidance related to software revenue recognition that requires at the time of shipment, persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed and determinable and collectability is reasonably assured. The software does not require production, modification or customization. . The allowance for doubtful accounts is based on our best estimate of probable credit issues and historical experience. We perform credit evaluations of the financial condition of our customers. No collateral is required for sales made on open account terms. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising our customer base and their dispersion across many geographic areas. We consider trade accounts receivable to be past due when payment is not made by the due date as specified on the customer invoice, and charge off uncollectible balances when all reasonable collection efforts have been exhausted. . Expected future product warranty claims are recorded to expense when the product is sold. Product warranty estimates are established using historical information about the nature, frequency, and average cost of warranty claims. Warranty claims are influenced by factors such as new product introductions, technological developments, the competitive environment, and the costs of component parts. Actual payments for warranty claims could differ from the amounts estimated requiring adjustments to the liabilities in future periods. See Note 12 of Notes to Consolidated Financial Statements for further discussion of warranties. The costs associated with research and development programs for new products and significant product improvements, other than software development costs which are eligible for capitalization per FASB guidance, are expensed as incurred and are included in Selling, general and administrative expenses. Research and development expenses totaled $ 4.9 3.9 3.4 Costs incurred to develop computer software products and significant enhancements to software features of existing products to be sold or otherwise marketed are capitalized, after technological feasibility is established. Software development costs are amortized on a straight-line basis over the estimated product life of the related software, which ranges from three to five years. We capitalized costs of $ 2.2 1.4 1.0 1.2 1.0 1.2 16.5 15.3 Amortization Fiscal Year Expense 2017 $ 1,200 2018 1,275 2019 750 2020 700 2021 625 Goodwill and other separately recognized intangible assets with indefinite lives are not subject to amortization. At least once annually or when indicators of impairment exist, we perform an impairment test for goodwill. Goodwill is allocated to various reporting units. We use a qualitative approach to test goodwill and indefinite-lived assets for impairment. Intangible assets that are determined to have a finite life are amortized over their estimated useful lives and are also subject to review for impairment, if indicators of impairment are identified. For fiscal years 2016 and 2015, using the qualitative approach to test for impairment, we concluded that goodwill and other intangible assets were not impaired. Weighted Average Gross Net Amortization Intangible Accumulated Intangible Period Assets Amortization Assets Tradenames and trademarks 13 years $ 231 $ (59) $ 172 Tradenames and trademarks indefinite 60 60 Customer relationships 15 years 254 (114) 140 Technology 13 years 672 (172) 500 Patents 6 years 2,972 (2,741) 231 Other 8 years 373 (326) 47 Total $ 4,562 $ (3,412) $ 1,150 As of October 31, 2015, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks 13 years $ 231 $ (41) $ 190 Tradenames and trademarks indefinite 60 60 Customer relationships 15 years 254 (97) 157 Technology 13 years 674 (121) 553 Patents 6 years 2,972 (2,717) 255 Other 8 years 373 (299) 74 Total $ 4,564 $ (3,275) $ 1,289 Intangible asset amortization expense was $ 137,000 207,000 412,000 115,000 We periodically evaluate the carrying value of long-lived assets to be held and used, including property and equipment, software development costs and intangible assets, including goodwill, when events or circumstances warrant such a review. The carrying value of a long-lived asset (or group of assets) to be held and used is considered impaired when the anticipated separately identifiable undiscounted cash flows from such an asset (or group of assets) are less than the carrying value of the asset (or group of assets) in accordance with FASB guidance related to accounting for the impairment or disposal of long-lived assets. Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares actually outstanding during the period. Diluted earnings per share assumes the issuance of additional shares of common stock upon exercise of all outstanding stock options and contingently issuable securities if the effect is dilutive, in accordance with the treasury stock method discussed in FASB guidance on “Earnings Per Share”. Fiscal Year Ended October 31, 2016 2015 2014 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income $ 13,292 $ 13,292 $ 16,214 $ 16,214 $ 15,143 $ 15,143 Undistributed earnings allocated to participating shares (76) (76) (93) (93) (121) (121) Net income applicable to common shareholders $ 13,216 $ 13,216 $ 16,121 $ 16,121 $ 15,022 $ 15,022 Weighted average shares outstanding 6,569 6,569 6,543 6,543 6,497 6,497 Stock options and contingently issuable securities 73 59 41 6,569 6,642 6,543 6,602 6,497 6,538 Income per share $ 2.01 $ 1.99 $ 2.46 $ 2.44 $ 2.31 $ 2.30 We account for income taxes and the related accounts under the asset and liability method. Deferred tax assets and liabilities are measured using enacted income tax rates in each jurisdiction in effect for the year in which the temporary differences are expected to be recovered or settled. These deferred tax assets are reduced by a valuation allowance, which is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our judgment regarding the realization of deferred tax assets may change due to future profitability and market conditions, changes in U.S. or foreign tax laws and other factors. These changes, if any, may require material adjustments to these deferred tax assets and an accompanying reduction or increase in net income in the period when such determinations are made. The determination of our provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision for income taxes reflects a combination of income earned and taxed at the federal and state level in the U.S., as well as in various foreign jurisdictions. We have not provided for any U.S. income taxes on the undistributed earnings of our foreign subsidiaries based upon our determination that such earnings will be indefinitely reinvested abroad. Undistributed earnings of our wholly-owned foreign subsidiaries at October 31, 2016 were approximately $ 79.7 In addition to the risks to the effective tax rate described above, the future effective tax rate reflected in forward-looking statements is based on currently effective tax laws. Significant changes in those laws could materially affect these estimates. We recognize uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We account for share-based compensation according to FASB guidance relating to share-based payments, which requires the measurement and recognition of compensation expense for all share-based awards made to employees and directors based on estimated fair values on the grant date. This guidance requires that we estimate the fair value of share-based awards on the date of grant and recognize as expense the value of the portion of the award that is ultimately expected to vest over the requisite service period. The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires us to make estimates and assumptions that affect the reported amounts presented and disclosed in our consolidated financial statements. Significant estimates and assumptions in these consolidated financial statements require the exercise of judgment and are used for, but not limited to, allowance for doubtful accounts, estimates of future cash flows and other assumptions associated with goodwill, intangible and long-lived asset impairment tests, useful lives for depreciation and amortization, warranty programs, stock compensation, income taxes and deferred tax valuation allowances, and contingencies. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates. |
BUSINESS OPERATIONS
BUSINESS OPERATIONS | 12 Months Ended |
Oct. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS OPERATIONS | 2. BUSINESS OPERATIONS Nature of Business . We design, manufacture and sell computerized CNC machine tools, computer control systems and software products, machine tool components, software options, control upgrades, accessories and replacement parts for our products, as well as customer service and training support, to companies in the metal cutting industry through a worldwide sales, service and distribution network. The machine tool industry is highly cyclical and changes in demand can occur abruptly in the geographic markets we serve. As a result of this cyclicality, we have experienced significant fluctuations in our sales, which, in periods of reduced demand, have adversely affected our results of operations and financial condition. The end market for our products consists primarily of precision tool, die and mold manufacturers, independent job shops, and specialized short-run production applications within large manufacturing operations. Industries served include: aerospace, defense, medical equipment, energy, automotive/transportation, electronics and computer industries. Our products are sold through more than 195 independent agents and distributors throughout the Americas, Europe and Asia. We also have our own direct sales and service organizations in China, France, Germany, India, Italy, Poland, Singapore, South Africa, Taiwan, the United Kingdom, and certain areas of the United States. Credit Risk . We sell products to customers located throughout the world. We perform ongoing credit evaluations of customers and generally do not require collateral. Allowances are maintained for potential credit losses. Concentration of credit risk with respect to trade accounts receivable is limited due to the large number of customers and their dispersion across many geographic areas. Although a significant amount of trade receivables are with distributors primarily located in the United States, no single distributor or region represents a significant concentration of credit risk. Manufacturing Risk. At present, our wholly-owned subsidiaries, Hurco Manufacturing Limited (“HML”), Ningbo Hurco Manufacturing Limited (“NHML”) and Milltronics USA, Inc. (“Milltronics”) produce the vast majority of our machine tools for all three brands, Hurco, Milltronics and Takumi. In addition, we manufacture electro-mechanical components and accessories for machine tools through our wholly-owned subsidiary, LCM Precision Technology S.r.l. (“LCM”). HML, NHML, Milltronics and LCM manufacture their products in Taiwan, China, the U.S. and Italy, respectively. Any interruption in manufacturing at any of these locations would have an adverse effect on our financial operating results. Interruption in manufacturing at one of these locations could result from a change in the political environment or a natural disaster, such as an earthquake, typhoon, or tsunami. Any interruption with one of our key suppliers may also have an adverse effect on our operating results and our financial condition. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Oct. 31, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 3. INVENTORIES 2016 2015 Purchased parts and sub-assemblies $ 25,661 $ 25,914 Work-in-process 17,724 20,575 Finished goods 73,640 59,819 $ 117,025 $ 106,308 Finished goods inventory consigned to our distributors and agents throughout the Americas, Europe and Asia was $ 11.6 6.9 |
ACQUISITIONS OF BUSINESSES
ACQUISITIONS OF BUSINESSES | 12 Months Ended |
Oct. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS OF BUSINESSES | 4. ACQUISITIONS OF BUSINESSES On July 14, 2015, we acquired the assets of the machine tool business of Milltronics Manufacturing Company, Inc., a U.S.-based manufacturer of CNC mills, lathes, and vertical and horizontal machining centers. We are operating this U.S. business as a product line through our wholly-owned subsidiary, Milltronics. Also, on July 28, 2015, we acquired the assets of the machine tool business of Takumi Machinery Co., Ltd. (“Takumi”), a Taiwan-based designer and manufacturer of CNC vertical machining centers, double column machining centers, high speed bridge machines and other machine tools equipped with industrial controls. We are operating this Taiwan business as a product line through our wholly-owned subsidiary, HML. These product lines contribute to our efforts to expand our consolidated product range, customer base and global platform, and accelerate emerging market penetration, particularly in strategic markets such as China and South America. The Hurco, Milltronics and Takumi product lines represent a comprehensive product portfolio with more than 150 different models. The combined machine tool product lines also provide benefits from the development of product enhancements, technologies and models due to leverage of shared resources and cross-utilization of proven engineering designs, allowing us to achieve manufacturing cost reductions from economies of scale and manufacturing efficiencies. The acquisitions were accounted for in accordance with Accounting Standards Condification (“ASC”) Topic 805, Business Combinations. Accordingly, the total purchase price was initially allocated on a provisional basis to assets acquired and net liabilities assumed in connection with the acquisitions based on their estimated fair values as of the completion of the acquisitions. These allocations reflected various provisional estimates that were available at the time and were subject to change during the purchase price allocation period as valuations were finalized. All valuations are now final. The total fair value of the net assets acquired was approximately $ 17.6 12.5 5.1 |
CREDIT AGREEMENTS AND BORROWING
CREDIT AGREEMENTS AND BORROWINGS | 12 Months Ended |
Oct. 31, 2016 | |
Debt Disclosure [Abstract] | |
CREDIT AGREEMENTS AND BORROWINGS | 5. CREDIT AGREEMENTS AND BORROWINGS On December 7, 2012, we entered into an agreement (the “U.S. credit agreement”) with a financial institution that provided us with a $ 12.5 3.0 3.0 5.0 On June 5, 2014, we amended our U.S. credit agreement to increase the cash dividend allowance from $ 1.0 3.0 3.0 4.0 December 7, 2016 On December 6, 2016, we amended our U.S. credit agreement, among other things, to increase the unsecured revolving credit facility from $ 12.5 15.0 4.0 5.0 December 31, 2018 90.0 105.0 120.0 125.0 Borrowings under the U.S. credit agreement bear interest either at a LIBOR-based rate or a floating rate, in each case with an interest rate floor of 0.00 The floating rate equals 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, (c) the prevailing prime rate, and (d) 0.00%. 0.05 The U.S. credit agreement contains customary financial covenants, including covenants (1) restricting us from making certain investments, loans, advances and acquisitions (but permitting us to make investments in subsidiaries of up to $ 5.0 105.0 125.0 We have a £ 1.0 1.5 100.0 May 12, 2015 40.0 5.9 February 16, 2017 All of our credit facilities are unsecured. At October 31, 2016, we had $ 1.5 4.6 At October 31, 2015, we had $ 1.6 19.8 |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Oct. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FINANCIAL INSTRUMENTS | 6. FINANCIAL INSTRUMENTS Estimated Fair Value of Financial Instruments FASB fair value 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. The carrying amounts for cash and cash equivalents approximate their fair values due to the short maturity of these instruments, and such instruments meet the Level 1 criteria of the three-tier fair value hierarchy discussed below. The carrying amount of short-term debt approximates fair value due to the variable rate of the interest and the short term nature of the instrument. The fair value of Level 2 is based on an internally developed model using current interest rate data for similar issues as there is no active market for this type of instrument. Assets Liabilities October 31, October 31, October 31, October 31, 2016 2015 2016 2015 Level 1 Deferred compensation $ 1,363 $ 1,310 $ - $ - Level 2 Derivatives $ 1,725 $ 1,228 $ 538 $ 1,071 Recurring Fair Value Measurements 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 market prices which are readily available. 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 1 of Notes to Consolidated Financial Statements in which the U.S. Dollar equivalent notional amount of these contracts was $ 125.6 109.6 1.7 1.2 0.5 1.1 The fair value of the 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 contract 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. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 7. INCOME TAXES Year Ended October 31, 2016 2015 2014 Current: U.S. taxes $ 1,362 $ 4,600 $ 3,498 Foreign taxes 4,456 3,752 3,594 5,818 8,352 7,092 Deferred: U.S. taxes (176) (896) (709) Foreign taxes (49) (117) (165) (225) (1,013) (874) $ 5,593 $ 7,339 $ 6,218 Year Ended October 31, 2016 2015 2014 Income before income taxes: Domestic $ 2,703 $ 10,806 $ 9,190 Foreign 16,182 12,747 12,171 Earnings (Loss) before taxes on income $ 18,885 $ 23,553 $ 21,361 Tax rates: U.S. statutory rate 34 % 35 % 35 % Effect of tax rate of international jurisdictions different than U.S. statutory rates (7) % (5) % (4) % Valuation allowance 3 % 1 % 0 % State taxes 0 % 1 % 0 % Tax Credits (2) % (1) % (1) % Effect of Tax Rate Changes 4 % 0 % 0 % Other (2) % 0 % (1) % Effective tax rate 30 % 31 % 29 % We have not made any provision for 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. Undistributed earnings of our wholly-owned foreign subsidiaries at October 31, 2016 were approximately $ 79.7 Deferred income taxes are determined based on the difference between the amounts used for financial reporting purposes and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred taxes are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. As of October 31, 2016, we had deferred tax assets established for accumulated net operating loss carryforwards of $ 1.6 0.5 2.1 1.5 October 31, 2016 2015 Deferred Tax Assets: Accrued inventory reserves 1,824 1,304 Accrued warranty expenses 312 441 Compensation related expenses 2,664 1,891 Unrealized exchange gain/loss 370 186 Other accrued expenses 194 237 Net operating loss carryforwards 1,616 1,275 Other credit carryforwards 474 287 Other 331 170 7,785 5,791 Less: Valuation allowance on net operating loss carryforwards (1,593) (1,300) Valuation allowance on other credit carryforwards (474) (185) (2,067) (1,485) Deferred tax assets 5,718 4,306 Deferred Tax Liabilities: Net derivative instruments (701) (811) Property and equipment and capitalized software development costs (2,717) (2,369) Other (456) (403) Net deferred tax assets $ 1,844 $ 723 As of October 31, 2016, we had net operating losses carryforwards for international and U.S. income tax purposes of $ 7.9 6.5 5 1.4 5 20 719,000 10 20 A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding the related accrual for interest or penalties, is as follows (in thousands): 2016 2015 2014 Balance, beginning of year $ 1,034 $ 1,196 $ 1,284 Additions based on tax positions related to the current year 52 17 5 Additions (reductions) related to prior year tax positions 19 (51) (4) Reductions due to statute expiration Other (3) (128) (89) Balance, end of year $ 1,102 $ 1,034 $ 1,196 The entire balance of the unrecognized tax benefits and related interest at October 31, 2016, if recognized, would favorably affect the effective tax rate in future periods. We recognize accrued interest and penalties related to unrecognized tax benefits as components of our income tax provision. As of October 31, 2016, the gross amount of interest accrued, reported in other liabilities, was approximately $ 53,000 expire between July 2017 and July 2019. Due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of future audits may result in liabilities that could be different from this estimate. In such case, we would record additional tax expense or tax benefit in the tax provision (benefit) or reclassify amounts on the consolidated balance sheets in the period in which the matter is effectively settled with the taxing authority. We file income tax returns in the U.S. federal jurisdiction and various states, local, and non-U.S. jurisdictions. There are currently no open audits in any jurisdictions. United States federal Fiscal 2013 through the current period Germany¹ Fiscal 2013 through the current period Taiwan Fiscal 2013 through the current period ¹ Includes federal as well as state, provincial or similar local jurisdictions, as applicable. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Oct. 31, 2016 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
EMPLOYEE BENEFITS | 8. EMPLOYEE BENEFITS We have defined contribution plans that include a majority of our employees, under which our matching contributions are primarily discretionary. The purpose of these plans is generally to provide additional financial security during retirement by providing employees with an incentive to save throughout their employment. Our contributions and related expense totaled $ 1.1 933,000 884,000 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Oct. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | 9. STOCK-BASED COMPENSATION In March 2016, we adopted the Hurco Companies, Inc. 2016 Equity Incentive Plan (the “2016 Equity Plan”), which allows us to grant awards of stock options, stock appreciation rights (“SARs”), restricted stock, stock units and other stock-based awards. The 2016 Equity Plan replaced the 2008 Equity Incentive Plan (the “2008 Plan”) and is the only active plan under which equity awards may be made to our employees and non-employee directors. No further awards will be made under our 2008 Plan. The total number of shares of our common stock that may be issued pursuant to awards under the 2016 Equity Plan is 856,048 386,048 The Compensation Committee of the Board of Directors has the 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 restricted shares under the 2016 Equity Plan which are currently outstanding, and we have granted stock options, restricted shares and performance shares under the 2008 Plan which are currently 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 market value of a share of our common stock, for purposes of the 2016 Equity 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. During fiscal 2016, we recorded approximately $ 1.6 1.2 921,000 2.0 On March 10, 2016, the Compensation Committee granted a total of 9,170 30.52 On January 4, 2016, 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 75 On that date, the Compensation Committee granted a total of 17,684 26.04 On January 4, 2016, the Compensation Committee also granted a total target number of 24,023 40 50 200 30.67 On January 4, 2016, the Compensation Committee also granted a total target number of 24,759 35 50 200 26.04 On March 12, 2015, the Compensation Committee granted a total of 9,086 30.80 On January 6, 2015, 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 75 On that date, the Compensation Committee granted a total of 11,174 32.22 On January 6, 2015, the Compensation Committee also granted a total target number of 16,740 40 50 200 34.41 On January 6, 2015, the Compensation Committee also granted a total target number of 15,643 35 50 200 32.22 On March 13, 2014, the Compensation Committee granted a total of 11,235 24.92 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 75 On that date, the Compensation Committee granted a total 12,182 24.01 On January 10, 2014, the Compensation Committee also granted a total target number of 16,948 40 50 200 26.43 On January 10, 2014, the Compensation Committee also granted a total target number of 17,056 35 50 200 24.01 Weighted Average Number of Grant Date Shares Fair Value Unvested at October 31, 2015 98,799 $ 28.89 Shares granted 75,636 28.05 Shares vested (21,385) 27.63 Shares withheld (5,700) 25.29 Unvested at October 31, 2016 147,350 $ 28.79 Weighted Shares Under Exercise Price Option Per Share Balance October 31, 2013 168,712 $ 20.73 Granted Cancelled (20,217) 25.59 Expired Exercised (20,306) 17.67 Balance October 31, 2014 128,189 $ 20.45 Granted Cancelled (5,000) 35.83 Expired Exercised (15,300) 16.81 Balance October 31, 2015 107,889 $ 20.25 Granted Cancelled Expired Exercised Balance October 31, 2016 107,889 $ 20.25 The total intrinsic value of stock options exercised during the twelve months ended October 31, 2016, 2015 and 2014 was approximately $ 0 154,000 424,000 As of October 31, 2016, the total intrinsic value of outstanding stock options already vested and expected to vest and the intrinsic value of options that are outstanding and exercisable was $ 690,000 Weighted Weighted Average Range of Exercise Shares Under Average Exercise Remaining Contractual Prices Per Share Option Price Per Share Life in Years Outstanding $ 14.82 24,000 $ 14.82 3.1 14.88 4,200 14.88 2.5 18.13 16,000 18.13 3.5 21.45 37,841 21.45 5.1 23.30 20,848 23.30 6.1 35.83 5,000 35.83 1.6 $ 14.82 35.83 107,889 $ 20.25 4.4 Exercisable $ 14.82 24,000 $ 14.82 3.1 14.88 4,200 14.88 2.5 18.13 16,000 18.13 3.5 21.45 37,841 21.45 5.1 23.30 20,848 23.30 6.1 35.83 5,000 35.83 1.6 $ 14.82 35.83 107,889 $ 20.25 4.4 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 10. RELATED PARTY TRANSACTIONS As of October 31, 2016, we owned approximately 35 3.6 3.0 9.9 8.9 9.3 623,000 723,000 1.4 2.0 1.8 94,000 55,000 2016 2015 2014 Net Sales $ 13,948 $ 12,852 $ 12,063 Gross Profit 2,240 2,041 1,759 Operating Income 952 665 468 Net Income 1,323 1,546 1,264 Current Assets $ 10,238 $ 10,262 $ 10,469 Non-current Assets 3,733 3,087 3,065 Current Liabilities 2,572 3,472 3,637 |
CONTINGENCIES AND LITIGATION
CONTINGENCIES AND LITIGATION | 12 Months Ended |
Oct. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES AND LITIGATION | 11. CONTINGENCIES AND LITIGATION We are involved in various claims and lawsuits arising in the normal course of business. Pursuant to applicable accounting rules, we accrue the minimum liability for each known claim when the estimated outcome is a range of possible loss and no one amount within that range is more likely than another. We maintain insurance policies for such matters, and we record insurance recoveries when we determine such recovery to be probable. 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. We believe that the ultimate resolution of claims for any losses will not exceed our insurance policy coverages. |
GUARANTEES AND PRODUCT WARRANTI
GUARANTEES AND PRODUCT WARRANTIES | 12 Months Ended |
Oct. 31, 2016 | |
Standard Product Warranty Disclosure [Abstract] | |
GUARANTEES AND PRODUCT WARRANTIES | 12. GUARANTEES AND PRODUCT WARRANTIES From time to time, our subsidiaries guarantee third party payment obligations in connection with the sale of machines to customers that use financing. We follow FASB guidance for accounting for guarantees (codified in ASC 460). As of October 31, 2016, we had 26 1.2 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 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. 2016 2015 2014 Balance, beginning of year $ 2,186 $ 2,048 $ 1,778 Provision for warranties during the year 2,715 3,736 3,846 Charges to the accrual (3,349) (3,495) (3,529) Impact of foreign currency translation (29) (103) (47) Balance, end of year $ 1,523 $ 2,186 $ 2,048 The decrease in our warranty reserve in fiscal 2016 compared to 2015 was primarily due to a reduction in unit sales volume, as well as 241,000 |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Oct. 31, 2016 | |
Leases, Operating [Abstract] | |
OPERATING LEASES | 13. OPERATING LEASES We lease facilities, certain equipment and vehicles under operating leases that expire at various dates through 2024. 2017 $ 2,929 2018 1,573 2019 911 2020 377 2021 and thereafter 556 Total $ 6,346 Lease expense for the fiscal years ended October 31, 2016, 2015, and 2014 was $ 4.5 3.8 4.0 |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION | 12 Months Ended |
Oct. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL INFORMATION | 14. QUARTERLY FINANCIAL INFORMATION (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter 2016 (In thousands, except per share data) Sales and service fees $ 56,503 $ 52,029 $ 52,403 $ 66,354 Gross profit 17,698 16,610 16,135 19,997 Gross profit margin 31 % 32 % 31 % 30 % Selling, general and administrative expenses 11,961 11,943 12,042 14,878 Operating income 5,737 4,667 4,093 5,119 Provision for income taxes 1,709 1,225 1,120 1,539 Net income 3,895 3,674 2,720 3,003 Income per common share basic $ 0.59 $ 0.56 $ 0.41 $ 0.45 Income per common share diluted $ 0.58 $ 0.56 $ 0.40 $ 0.45 First Second Third Fourth Quarter Quarter Quarter Quarter 2015 (In thousands, except per share data) Sales and service fees $ 50,972 $ 50,183 $ 52,535 $ 65,693 Gross profit 16,547 16,559 16,630 19,355 Gross profit margin 32 % 33 % 32 % 29 % Selling, general and administrative expenses 10,454 10,850 11,351 12,632 Operating income 6,093 5,709 5,279 6,723 Provision for income taxes 2,037 1,878 1,573 1,851 Net income 3,766 3,961 3,683 4,804 Income per common share basic $ 0.57 $ 0.60 $ 0.56 $ 0.73 Income per common share diluted $ 0.57 $ 0.60 $ 0.55 $ 0.72 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Oct. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION We operate in a single segment: industrial automation equipment. We design, manufacture and sell computerized (i.e., Computer Numeric Control) machine tools, consisting primarily of vertical machining centers (mills) and turning centers (lathes), to companies in the metal cutting industry through a worldwide sales, service and distribution network. Although the majority of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, software options, control upgrades, accessories and replacement parts for our products, as well as customer service and training support. We sell our products through more than 195 independent agents and distributors throughout the Americas, Europe and Asia. Our line is the primary line for the majority of our distributors globally even though some may carry competitive products. We also have our own direct sales and service organizations in China, France, Germany, India, Italy, Poland, Singapore, South Africa, Taiwan, the United Kingdom, and certain areas of the United States, which are among the world's principal machine tool consuming countries. During fiscal 2016, no distributor accounted for more than 5% of our sales and service fees. In fiscal 2016, approximately 69% of our revenues were from customers located outside of the U.S. and no single end-user of our products accounted for more than 5% of our total sales and service fees. Net Sales and Service Fees by Product Category Year ended October 31, 2016 2015 2014 Computerized Machine Tools * $ 195,618 $ 189,712 $ 193,937 Computer Control Systems and Software 2,078 3,085 3,407 Service Parts 21,908 19,375 17,391 Service Fees 7,685 7,211 7,568 Total $ 227,289 $ 219,383 $ 222,303 * Amounts shown include sales of Milltronics and Takumi computerized machine tools to third parties since the respective dates of acquisitions. Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine systems. Revenues by Geographic Area Year Ended October 31, 2016 2015 2014 United States of America $ 70,630 $ 66,781 $ 59,414 Canada 3,881 3,114 2,434 South America 1,950 1,930 450 Total Americas 76,461 71,825 62,298 Germany 44,411 43,727 51,581 United Kingdom 25,313 30,235 34,288 Italy 12,947 11,768 13,456 France 13,787 13,162 9,972 Other Europe 27,150 26,598 24,728 Total Europe 123,608 125,490 134,025 Asia Pacific 25,633 20,265 23,766 Other Foreign 1,587 1,803 2,214 Total Europe, Asia Pacific and Other Foreign 150,828 147,558 160,005 $ 227,289 $ 219,383 $ 222,303 As of October 31, 2016 2015 United States of America $ 7,846 $ 8,658 Foreign countries 5,911 5,893 $ 13,757 $ 14,551 Net assets by geographic area were (in thousands): As of October 31, 2016 2015 Americas $ 84,040 $ 83,236 Europe 60,861 59,468 Asia Pacific 40,574 31,864 $ 185,475 $ 174,568 |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Oct. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | 16. NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncement: In November 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-17, Balance Sheet Classification of Deferred Taxes, 2.0 4.7 2.7 New Accounting Pronouncements: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date Principal versus Agent Considerations (Reporting Revenue Gross versus Net), Identifying Performance Obligations and Licensing, Narrow-Scope Improvements and Practical Expedients In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In January 2016, the FASB issued ASU No. 2016-01 Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) a Consensus of the FASB’s Emerging Issues Task Force In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory There have been no other significant changes in the Company’s critical accounting policies and estimates during the fiscal year ended October 31, 2016. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2016 | |
Accounting Policies [Abstract] | |
Consolidation | Consolidation . The consolidated financial statements include the accounts of Hurco Companies, Inc. (an Indiana corporation) and its wholly-owned subsidiaries. We have a 35 3.6 3.0 |
Statements of Cash Flows | Statements of Cash Flows . We consider all highly liquid investments with a stated maturity at the date of purchase of three months or less to be cash equivalents. Cash flows from hedges are classified consistent with the items being hedged. |
Translation of Foreign Currencies | Translation of Foreign Currencies . All balance sheet accounts of non-U.S. subsidiaries are translated at the exchange rate as of the end of the year and translation adjustments of foreign currency balance sheets are recorded as a component of Accumulated other comprehensive loss in shareholders' equity. Income and expenses are translated at the average exchange rates during the year. Cumulative foreign currency translation adjustments, net of gains related to our net investment hedges, as of October 31, 2016 were a net loss of $ 12.3 |
Hedging | Hedging. 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. We operate on a global basis and are exposed to the risk that our financial condition, results of operations and cash flows could be adversely affected by changes in foreign currency exchange rates. To reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, and the gross profit and net earnings of certain of our foreign subsidiaries, we enter into derivative financial instruments in the form of foreign exchange forward contracts with a major financial institution. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Indian Rupee, South African Rand, Singapore Dollars, Chinese Yuan, Polish Zloty, and New Taiwan Dollars. We account for derivative instruments as either assets or liabilities and carry them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments designated as a fair value hedge, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributed to the risk being hedged. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of Accumulated other comprehensive loss in shareholders’ equity and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion of the gain or loss is reported in earnings immediately. For derivative instruments that are not designated as accounting hedges under the Derivatives and Hedging Topic of the Financial Accounting Standards Board (FASB guidance), changes in fair value are recognized in earnings in the period of change. We do not hold or issue derivative financial instruments for speculative trading purposes. We only enter into derivatives with one counterparty, which is among one of the largest U.S. banks (ranked by assets), in order to minimize credit risk and, to date, that counterparty has not failed to meet its financial obligations under such contracts. 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 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 October 31, 2016, in Euros, Pounds Sterling and New Taiwan Dollars with set maturity dates ranging from November 2016 through October 2017 27.6 6.1 21.8 1.3 1.0 We are exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we entered into a forward contract with a notional amount of € 3.0 803,000 39,000 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 FASB guidance and, as a result, changes in their fair value are reported currently as Other expense, net in the Consolidated Statements of Income consistent with the transaction gain or loss on the related receivables and payables denominated in foreign currencies. We had forward contracts outstanding as of October 31, 2016, in Euros, Pounds Sterling, South African Rand and New Taiwan Dollars with set maturity dates ranging from November 2016 through April 2017 39.5 26.6 Fair Value of Derivative Instruments We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Consolidated Balance Sheets. 2016 2015 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 1,721 Derivative assets $ 1,079 Foreign exchange forward contracts Derivative liabilities $ 173 Derivative liabilities $ 1,027 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 4 Derivative assets $ 149 Foreign exchange forward contracts Derivative liabilities $ 365 Derivative liabilities $ 44 Effect of Derivative Instruments on the Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity and Statements of Income Location of Gain Amount of Gain (Loss) (Loss) Reclassified Amount of Gain (Loss) Recognized in Other from Other Reclassified from Other Comprehensive Income Comprehensive Comprehensive Income Derivatives (Loss) Income (Loss) (Loss) 2016 2015 2016 2015 Designated as Hedging Instruments: Foreign exchange forward contracts Intercompany sales/purchases $ 1,431 $ 1,291 Cost of sales and service $ 1,647 $ 784 Foreign exchange forward contract Net Investment $ 28 $ 304 We recognized a gain of $ 18,000 14,000 Location of Gain (Loss) Amount of Gain (Loss) Derivatives Recognized in Operations Recognized in Operations 2016 2015 (in thousands) Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ 536 $ 2,571 Foreign Currency Cash Flow Total Balance, October 31, 2014 (4,551) 991 (3,560) Other comprehensive income (loss) before reclassifications (6,333) 1,291 (5,042) Reclassifications (784) (784) Balance, October 31, 2015 $ (10,884) $ 1,498 $ (9,386) Other comprehensive income (loss) before reclassifications (1,441) 1,431 (10) Reclassifications (1,647) (1,647) Balance, October 31, 2016 $ (12,325) $ 1,282 $ (11,043) |
Inventories | . Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method. Provisions are made to reduce excess or obsolete inventories to their estimated realizable value. |
Property and Equipment | Property and Equipment . Property and equipment are carried at cost. Number of Years Land Indefinite Building 40 Machines 7 10 Shop and office equipment 3 7 Leasehold improvements 3 40 Total depreciation and amortization expense recognized for property and equipment for the fiscal years ended October 31, 2016, 2015 and 2014 was $ 2.5 2.2 2.2 |
Revenue Recognition | Revenue Recognition. We recognize revenue from sales of our machine tool systems upon delivery of the product to the customer, which is normally at the time of shipment, because persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed and determinable and collectability is reasonably assured. Our computerized machine tools are general-purpose computer controlled machine tools that are typically used in stand-alone operations. Transfer of ownership and risk of loss are not contingent upon contractual customer acceptance. Prior to shipment, we test each machine to ensure the machine’s compliance with standard operating specifications. Depending upon geographic location, after shipment, a machine may be installed at the customer’s facilities by a distributor, independent contractor or by one of our service technicians. In most instances where a machine is sold through a distributor, we have no installation involvement. If sales are direct or through sales agents, we will typically complete the machine installation, which consists of the reassembly of certain parts that were removed for shipping and the re-testing of the machine to ensure that it is performing within the standard specifications. We consider the machine installation process to be inconsequential and perfunctory. Service fees from maintenance contracts are deferred and recognized in earnings on a pro rata basis over the term of the contract. Sales related to software products are recognized when shipped in conformity with U.S. Generally Accepted Accounting Principles as promulgated by FASB guidance related to software revenue recognition that requires at the time of shipment, persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed and determinable and collectability is reasonably assured. The software does not require production, modification or customization. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts . The allowance for doubtful accounts is based on our best estimate of probable credit issues and historical experience. We perform credit evaluations of the financial condition of our customers. No collateral is required for sales made on open account terms. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising our customer base and their dispersion across many geographic areas. We consider trade accounts receivable to be past due when payment is not made by the due date as specified on the customer invoice, and charge off uncollectible balances when all reasonable collection efforts have been exhausted. |
Product Warranty | Product Warranty . Expected future product warranty claims are recorded to expense when the product is sold. Product warranty estimates are established using historical information about the nature, frequency, and average cost of warranty claims. Warranty claims are influenced by factors such as new product introductions, technological developments, the competitive environment, and the costs of component parts. Actual payments for warranty claims could differ from the amounts estimated requiring adjustments to the liabilities in future periods. See Note 12 of Notes to Consolidated Financial Statements for further discussion of warranties. |
Research and Development Costs | Research and Development Costs. The costs associated with research and development programs for new products and significant product improvements, other than software development costs which are eligible for capitalization per FASB guidance, are expensed as incurred and are included in Selling, general and administrative expenses. Research and development expenses totaled $ 4.9 3.9 3.4 |
Software Development Costs | Software Development Costs. Costs incurred to develop computer software products and significant enhancements to software features of existing products to be sold or otherwise marketed are capitalized, after technological feasibility is established. Software development costs are amortized on a straight-line basis over the estimated product life of the related software, which ranges from three to five years. We capitalized costs of $ 2.2 1.4 1.0 1.2 1.0 1.2 16.5 15.3 Amortization Fiscal Year Expense 2017 $ 1,200 2018 1,275 2019 750 2020 700 2021 625 |
Goodwill and Intangible Assets | Goodwill and Intangible Assets. Goodwill and other separately recognized intangible assets with indefinite lives are not subject to amortization. At least once annually or when indicators of impairment exist, we perform an impairment test for goodwill. Goodwill is allocated to various reporting units. We use a qualitative approach to test goodwill and indefinite-lived assets for impairment. Intangible assets that are determined to have a finite life are amortized over their estimated useful lives and are also subject to review for impairment, if indicators of impairment are identified. For fiscal years 2016 and 2015, using the qualitative approach to test for impairment, we concluded that goodwill and other intangible assets were not impaired. Weighted Average Gross Net Amortization Intangible Accumulated Intangible Period Assets Amortization Assets Tradenames and trademarks 13 years $ 231 $ (59) $ 172 Tradenames and trademarks indefinite 60 60 Customer relationships 15 years 254 (114) 140 Technology 13 years 672 (172) 500 Patents 6 years 2,972 (2,741) 231 Other 8 years 373 (326) 47 Total $ 4,562 $ (3,412) $ 1,150 As of October 31, 2015, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks 13 years $ 231 $ (41) $ 190 Tradenames and trademarks indefinite 60 60 Customer relationships 15 years 254 (97) 157 Technology 13 years 674 (121) 553 Patents 6 years 2,972 (2,717) 255 Other 8 years 373 (299) 74 Total $ 4,564 $ (3,275) $ 1,289 Intangible asset amortization expense was $ 137,000 207,000 412,000 115,000 |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets. We periodically evaluate the carrying value of long-lived assets to be held and used, including property and equipment, software development costs and intangible assets, including goodwill, when events or circumstances warrant such a review. The carrying value of a long-lived asset (or group of assets) to be held and used is considered impaired when the anticipated separately identifiable undiscounted cash flows from such an asset (or group of assets) are less than the carrying value of the asset (or group of assets) in accordance with FASB guidance related to accounting for the impairment or disposal of long-lived assets. |
Earnings Per Share | Earnings Per Share. Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares actually outstanding during the period. Diluted earnings per share assumes the issuance of additional shares of common stock upon exercise of all outstanding stock options and contingently issuable securities if the effect is dilutive, in accordance with the treasury stock method discussed in FASB guidance on “Earnings Per Share”. Fiscal Year Ended October 31, 2016 2015 2014 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income $ 13,292 $ 13,292 $ 16,214 $ 16,214 $ 15,143 $ 15,143 Undistributed earnings allocated to participating shares (76) (76) (93) (93) (121) (121) Net income applicable to common shareholders $ 13,216 $ 13,216 $ 16,121 $ 16,121 $ 15,022 $ 15,022 Weighted average shares outstanding 6,569 6,569 6,543 6,543 6,497 6,497 Stock options and contingently issuable securities 73 59 41 6,569 6,642 6,543 6,602 6,497 6,538 Income per share $ 2.01 $ 1.99 $ 2.46 $ 2.44 $ 2.31 $ 2.30 |
Income Taxes | Income Taxes. We account for income taxes and the related accounts under the asset and liability method. Deferred tax assets and liabilities are measured using enacted income tax rates in each jurisdiction in effect for the year in which the temporary differences are expected to be recovered or settled. These deferred tax assets are reduced by a valuation allowance, which is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our judgment regarding the realization of deferred tax assets may change due to future profitability and market conditions, changes in U.S. or foreign tax laws and other factors. These changes, if any, may require material adjustments to these deferred tax assets and an accompanying reduction or increase in net income in the period when such determinations are made. The determination of our provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision for income taxes reflects a combination of income earned and taxed at the federal and state level in the U.S., as well as in various foreign jurisdictions. We have not provided for any U.S. income taxes on the undistributed earnings of our foreign subsidiaries based upon our determination that such earnings will be indefinitely reinvested abroad. Undistributed earnings of our wholly-owned foreign subsidiaries at October 31, 2016 were approximately $ 79.7 In addition to the risks to the effective tax rate described above, the future effective tax rate reflected in forward-looking statements is based on currently effective tax laws. Significant changes in those laws could materially affect these estimates. We recognize uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. |
Stock Compensation | Stock Compensation. We account for share-based compensation according to FASB guidance relating to share-based payments, which requires the measurement and recognition of compensation expense for all share-based awards made to employees and directors based on estimated fair values on the grant date. This guidance requires that we estimate the fair value of share-based awards on the date of grant and recognize as expense the value of the portion of the award that is ultimately expected to vest over the requisite service period. |
Estimates | Estimates. The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires us to make estimates and assumptions that affect the reported amounts presented and disclosed in our consolidated financial statements. Significant estimates and assumptions in these consolidated financial statements require the exercise of judgment and are used for, but not limited to, allowance for doubtful accounts, estimates of future cash flows and other assumptions associated with goodwill, intangible and long-lived asset impairment tests, useful lives for depreciation and amortization, warranty programs, stock compensation, income taxes and deferred tax valuation allowances, and contingencies. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value of Derivative Instruments | As of October 31, 2016 and October 31, 2015, all derivative instruments were recorded at fair value on the balance sheets as follows (in thousands): 2016 2015 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 1,721 Derivative assets $ 1,079 Foreign exchange forward contracts Derivative liabilities $ 173 Derivative liabilities $ 1,027 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 4 Derivative assets $ 149 Foreign exchange forward contracts Derivative liabilities $ 365 Derivative liabilities $ 44 |
Schedule of Effect of Derivative Instruments on the Consolidated Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations | Location of Gain Amount of Gain (Loss) (Loss) Reclassified Amount of Gain (Loss) Recognized in Other from Other Reclassified from Other Comprehensive Income Comprehensive Comprehensive Income Derivatives (Loss) Income (Loss) (Loss) 2016 2015 2016 2015 Designated as Hedging Instruments: Foreign exchange forward contracts Intercompany sales/purchases $ 1,431 $ 1,291 Cost of sales and service $ 1,647 $ 784 Foreign exchange forward contract Net Investment $ 28 $ 304 Location of Gain (Loss) Amount of Gain (Loss) Derivatives Recognized in Operations Recognized in Operations 2016 2015 (in thousands) Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ 536 $ 2,571 |
Schedule of Accumulated Other Comprehensive Loss | The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the fiscal years ended October 31, 2016 and 2015 (in thousands): Foreign Currency Cash Flow Total Balance, October 31, 2014 (4,551) 991 (3,560) Other comprehensive income (loss) before reclassifications (6,333) 1,291 (5,042) Reclassifications (784) (784) Balance, October 31, 2015 $ (10,884) $ 1,498 $ (9,386) Other comprehensive income (loss) before reclassifications (1,441) 1,431 (10) Reclassifications (1,647) (1,647) Balance, October 31, 2016 $ (12,325) $ 1,282 $ (11,043) |
Schedule of Property and Equipment Estimated Useful Lives | Depreciation and amortization of assets are provided primarily under the straight-line method over the shorter of the estimated useful lives or the lease terms as follows: Number of Years Land Indefinite Building 40 Machines 7 10 Shop and office equipment 3 7 Leasehold improvements 3 40 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for the remaining unamortized software development costs for the fiscal years ending October 31, is as follows (in thousands): Amortization Fiscal Year Expense 2017 $ 1,200 2018 1,275 2019 750 2020 700 2021 625 |
Schedule of Intangible Assets | As of October 31, 2016, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Net Amortization Intangible Accumulated Intangible Period Assets Amortization Assets Tradenames and trademarks 13 years $ 231 $ (59) $ 172 Tradenames and trademarks indefinite 60 60 Customer relationships 15 years 254 (114) 140 Technology 13 years 672 (172) 500 Patents 6 years 2,972 (2,741) 231 Other 8 years 373 (326) 47 Total $ 4,562 $ (3,412) $ 1,150 As of October 31, 2015, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks 13 years $ 231 $ (41) $ 190 Tradenames and trademarks indefinite 60 60 Customer relationships 15 years 254 (97) 157 Technology 13 years 674 (121) 553 Patents 6 years 2,972 (2,717) 255 Other 8 years 373 (299) 74 Total $ 4,564 $ (3,275) $ 1,289 |
Reconciliation of Basic and Diluted Earnings Per Share | The following table presents a reconciliation of our basic and diluted earnings per share computation: Fiscal Year Ended October 31, 2016 2015 2014 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income $ 13,292 $ 13,292 $ 16,214 $ 16,214 $ 15,143 $ 15,143 Undistributed earnings allocated to participating shares (76) (76) (93) (93) (121) (121) Net income applicable to common shareholders $ 13,216 $ 13,216 $ 16,121 $ 16,121 $ 15,022 $ 15,022 Weighted average shares outstanding 6,569 6,569 6,543 6,543 6,497 6,497 Stock options and contingently issuable securities 73 59 41 6,569 6,642 6,543 6,602 6,497 6,538 Income per share $ 2.01 $ 1.99 $ 2.46 $ 2.44 $ 2.31 $ 2.30 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories as of October 31, 2016 and 2015 are summarized below (in thousands): 2016 2015 Purchased parts and sub-assemblies $ 25,661 $ 25,914 Work-in-process 17,724 20,575 Finished goods 73,640 59,819 $ 117,025 $ 106,308 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Fair Value | 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 October 31, 2016 and 2015 (in thousands): Assets Liabilities October 31, October 31, October 31, October 31, 2016 2015 2016 2015 Level 1 Deferred compensation $ 1,363 $ 1,310 $ - $ - Level 2 Derivatives $ 1,725 $ 1,228 $ 538 $ 1,071 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Taxes Provision (Benefit) | In the fiscal years set forth below, the provision for income taxes consisted of the following (in thousands): Year Ended October 31, 2016 2015 2014 Current: U.S. taxes $ 1,362 $ 4,600 $ 3,498 Foreign taxes 4,456 3,752 3,594 5,818 8,352 7,092 Deferred: U.S. taxes (176) (896) (709) Foreign taxes (49) (117) (165) (225) (1,013) (874) $ 5,593 $ 7,339 $ 6,218 |
Schedule of Reconciliation of Statutory Tax Rate to Effective Tax Rate | A comparison of income tax expense at the U.S. statutory rate to the Company’s effective tax rate is as follows (dollars in thousands): Year Ended October 31, 2016 2015 2014 Income before income taxes: Domestic $ 2,703 $ 10,806 $ 9,190 Foreign 16,182 12,747 12,171 Earnings (Loss) before taxes on income $ 18,885 $ 23,553 $ 21,361 Tax rates: U.S. statutory rate 34 % 35 % 35 % Effect of tax rate of international jurisdictions different than U.S. statutory rates (7) % (5) % (4) % Valuation allowance 3 % 1 % 0 % State taxes 0 % 1 % 0 % Tax Credits (2) % (1) % (1) % Effect of Tax Rate Changes 4 % 0 % 0 % Other (2) % 0 % (1) % Effective tax rate 30 % 31 % 29 % |
Schedule of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets and liabilities at October 31, 2016 and 2015 were as follows (in thousands): October 31, 2016 2015 Deferred Tax Assets: Accrued inventory reserves 1,824 1,304 Accrued warranty expenses 312 441 Compensation related expenses 2,664 1,891 Unrealized exchange gain/loss 370 186 Other accrued expenses 194 237 Net operating loss carryforwards 1,616 1,275 Other credit carryforwards 474 287 Other 331 170 7,785 5,791 Less: Valuation allowance on net operating loss carryforwards (1,593) (1,300) Valuation allowance on other credit carryforwards (474) (185) (2,067) (1,485) Deferred tax assets 5,718 4,306 Deferred Tax Liabilities: Net derivative instruments (701) (811) Property and equipment and capitalized software development costs (2,717) (2,369) Other (456) (403) Net deferred tax assets $ 1,844 $ 723 |
Schedule of Income Tax Expense | A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding the related accrual for interest or penalties, is as follows (in thousands): 2016 2015 2014 Balance, beginning of year $ 1,034 $ 1,196 $ 1,284 Additions based on tax positions related to the current year 52 17 5 Additions (reductions) related to prior year tax positions 19 (51) (4) Reductions due to statute expiration Other (3) (128) (89) Balance, end of year $ 1,102 $ 1,034 $ 1,196 |
Summary of open tax years by major jurisdiction | A summary of open tax years by major jurisdiction is presented below: United States federal Fiscal 2013 through the current period Germany¹ Fiscal 2013 through the current period Taiwan Fiscal 2013 through the current period ¹ Includes federal as well as state, provincial or similar local jurisdictions, as applicable. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Restricted Stock Activity | A reconciliation of the Company’s restricted stock activity and related information is as follows: Weighted Average Number of Grant Date Shares Fair Value Unvested at October 31, 2015 98,799 $ 28.89 Shares granted 75,636 28.05 Shares vested (21,385) 27.63 Shares withheld (5,700) 25.29 Unvested at October 31, 2016 147,350 $ 28.79 |
Summary of Stock Option Activity | A summary of the status of the options as of October 31, 2016, 2015 and 2014 and the related activity for the year is as follows: Weighted Shares Under Exercise Price Option Per Share Balance October 31, 2013 168,712 $ 20.73 Granted Cancelled (20,217) 25.59 Expired Exercised (20,306) 17.67 Balance October 31, 2014 128,189 $ 20.45 Granted Cancelled (5,000) 35.83 Expired Exercised (15,300) 16.81 Balance October 31, 2015 107,889 $ 20.25 Granted Cancelled Expired Exercised Balance October 31, 2016 107,889 $ 20.25 |
Schedule of Stock Options Outstanding and Exercisable | Stock options outstanding and exercisable on October 31, 2016, are as follows: Weighted Weighted Average Range of Exercise Shares Under Average Exercise Remaining Contractual Prices Per Share Option Price Per Share Life in Years Outstanding $ 14.82 24,000 $ 14.82 3.1 14.88 4,200 14.88 2.5 18.13 16,000 18.13 3.5 21.45 37,841 21.45 5.1 23.30 20,848 23.30 6.1 35.83 5,000 35.83 1.6 $ 14.82 35.83 107,889 $ 20.25 4.4 Exercisable $ 14.82 24,000 $ 14.82 3.1 14.88 4,200 14.88 2.5 18.13 16,000 18.13 3.5 21.45 37,841 21.45 5.1 23.30 20,848 23.30 6.1 35.83 5,000 35.83 1.6 $ 14.82 35.83 107,889 $ 20.25 4.4 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Financial Information | Summary unaudited financial information for HAL’s operations and financial condition is as follows (in thousands): 2016 2015 2014 Net Sales $ 13,948 $ 12,852 $ 12,063 Gross Profit 2,240 2,041 1,759 Operating Income 952 665 468 Net Income 1,323 1,546 1,264 Current Assets $ 10,238 $ 10,262 $ 10,469 Non-current Assets 3,733 3,087 3,065 Current Liabilities 2,572 3,472 3,637 |
GUARANTEES AND PRODUCT WARRAN32
GUARANTEES AND PRODUCT WARRANTIES (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Standard Product Warranty Disclosure [Abstract] | |
Reconciliation of Warranty Reserve | A reconciliation of the changes in our warranty reserve is as follows (in thousands): 2016 2015 2014 Balance, beginning of year $ 2,186 $ 2,048 $ 1,778 Provision for warranties during the year 2,715 3,736 3,846 Charges to the accrual (3,349) (3,495) (3,529) Impact of foreign currency translation (29) (103) (47) Balance, end of year $ 1,523 $ 2,186 $ 2,048 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Leases, Operating [Abstract] | |
Schedule of Future Minimum Payments under Operating Leases | Future payments required under operating leases as of October 31, 2016, are summarized as follows (in thousands): 2017 $ 2,929 2018 1,573 2019 911 2020 377 2021 and thereafter 556 Total $ 6,346 |
QUARTERLY FINANCIAL INFORMATI34
QUARTERLY FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Selected Quarterly Financial Information | First Second Third Fourth Quarter Quarter Quarter Quarter 2016 (In thousands, except per share data) Sales and service fees $ 56,503 $ 52,029 $ 52,403 $ 66,354 Gross profit 17,698 16,610 16,135 19,997 Gross profit margin 31 % 32 % 31 % 30 % Selling, general and administrative expenses 11,961 11,943 12,042 14,878 Operating income 5,737 4,667 4,093 5,119 Provision for income taxes 1,709 1,225 1,120 1,539 Net income 3,895 3,674 2,720 3,003 Income per common share basic $ 0.59 $ 0.56 $ 0.41 $ 0.45 Income per common share diluted $ 0.58 $ 0.56 $ 0.40 $ 0.45 First Second Third Fourth Quarter Quarter Quarter Quarter 2015 (In thousands, except per share data) Sales and service fees $ 50,972 $ 50,183 $ 52,535 $ 65,693 Gross profit 16,547 16,559 16,630 19,355 Gross profit margin 32 % 33 % 32 % 29 % Selling, general and administrative expenses 10,454 10,850 11,351 12,632 Operating income 6,093 5,709 5,279 6,723 Provision for income taxes 2,037 1,878 1,573 1,851 Net income 3,766 3,961 3,683 4,804 Income per common share basic $ 0.57 $ 0.60 $ 0.56 $ 0.73 Income per common share diluted $ 0.57 $ 0.60 $ 0.55 $ 0.72 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Net Sales and Service Fees by Product Category | The following table sets forth the contribution of each of our product groups to our total sales and service fees during each of the past three fiscal years (in thousands): Net Sales and Service Fees by Product Category Year ended October 31, 2016 2015 2014 Computerized Machine Tools * $ 195,618 $ 189,712 $ 193,937 Computer Control Systems and Software 2,078 3,085 3,407 Service Parts 21,908 19,375 17,391 Service Fees 7,685 7,211 7,568 Total $ 227,289 $ 219,383 $ 222,303 * Amounts shown include sales of Milltronics and Takumi computerized machine tools to third parties since the respective dates of acquisitions. Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine systems. |
Schedule of Revenues by Geographic Area | The following table sets forth revenues by geographic area, based on customer location, for each of the past three fiscal years (in thousands): Revenues by Geographic Area Year Ended October 31, 2016 2015 2014 United States of America $ 70,630 $ 66,781 $ 59,414 Canada 3,881 3,114 2,434 South America 1,950 1,930 450 Total Americas 76,461 71,825 62,298 Germany 44,411 43,727 51,581 United Kingdom 25,313 30,235 34,288 Italy 12,947 11,768 13,456 France 13,787 13,162 9,972 Other Europe 27,150 26,598 24,728 Total Europe 123,608 125,490 134,025 Asia Pacific 25,633 20,265 23,766 Other Foreign 1,587 1,803 2,214 Total Europe, Asia Pacific and Other Foreign 150,828 147,558 160,005 $ 227,289 $ 219,383 $ 222,303 |
Schedule of Assets by Geographic Area | Long-lived tangible assets, net by geographic area, were (in thousands): As of October 31, 2016 2015 United States of America $ 7,846 $ 8,658 Foreign countries 5,911 5,893 $ 13,757 $ 14,551 Net assets by geographic area were (in thousands): As of October 31, 2016 2015 Americas $ 84,040 $ 83,236 Europe 60,861 59,468 Asia Pacific 40,574 31,864 $ 185,475 $ 174,568 |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 1,725 | $ 1,228 |
Derivative liabilities | 538 | 1,071 |
Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 1,721 | 1,079 |
Derivative liabilities | 173 | 1,027 |
Foreign Exchange Forward [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 4 | 149 |
Derivative liabilities | $ 365 | $ 44 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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 ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Designated as Hedging Instrument [Member] | Intercompany sales/purchases [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | $ 1,431 | $ 1,291 |
Designated as Hedging Instrument [Member] | Cost of Sales [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) | 1,647 | 784 |
Designated as Hedging Instrument [Member] | Net Investment Hedging [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | 28 | 304 |
Not Designated as Hedging Instrument [Member] | Other Income And Expense [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Operations | $ 536 | $ 2,571 |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Changes in Components of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Derivative [Line Items] | |||
Beginning Balance | $ (9,386) | $ (3,560) | |
Other comprehensive income (loss) before reclassifications | (10) | (5,042) | |
Reclassifications | (1,647) | (784) | $ 1,129 |
Ending Balance | (11,043) | (9,386) | (3,560) |
Foreign Currency Translation [Member] | |||
Derivative [Line Items] | |||
Beginning Balance | (10,884) | (4,551) | |
Other comprehensive income (loss) before reclassifications | (1,441) | (6,333) | |
Reclassifications | 0 | 0 | |
Ending Balance | (12,325) | (10,884) | (4,551) |
Cash Flow Hedges [Member] | |||
Derivative [Line Items] | |||
Beginning Balance | 1,498 | 991 | |
Other comprehensive income (loss) before reclassifications | 1,431 | 1,291 | |
Reclassifications | (1,647) | (784) | |
Ending Balance | $ 1,282 | $ 1,498 | $ 991 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Estimated Useful Lives) (Details) | 12 Months Ended |
Oct. 31, 2016 | |
Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
Machines [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Machines [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Shop and Office Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Shop and Office Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Leasehold Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Leasehold Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Estimated Amortization Expense) (Details) $ in Thousands | Oct. 31, 2016USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
2,017 | $ 1,200 |
2,018 | 1,275 |
2,019 | 750 |
2,020 | 700 |
2,021 | $ 625 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 4,562 | $ 4,564 |
Accumulated Amortization | (3,412) | (3,275) |
Net Intangible Assets | 1,150 | 1,289 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | 254 | 254 |
Accumulated Amortization | (114) | (97) |
Net Intangible Assets | $ 140 | $ 157 |
Weighted Average Amortization Period | 15 years | 15 years |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 672 | $ 674 |
Accumulated Amortization | (172) | (121) |
Net Intangible Assets | $ 500 | $ 553 |
Weighted Average Amortization Period | 13 years | 13 years |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 2,972 | $ 2,972 |
Accumulated Amortization | (2,741) | (2,717) |
Net Intangible Assets | $ 231 | $ 255 |
Weighted Average Amortization Period | 6 years | 6 years |
Other [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 373 | $ 373 |
Accumulated Amortization | (326) | (299) |
Net Intangible Assets | $ 47 | $ 74 |
Weighted Average Amortization Period | 8 years | 8 years |
Tradenames and trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 231 | $ 231 |
Accumulated Amortization | (59) | (41) |
Net Intangible Assets | 172 | 190 |
Indefinite tradenames and trademarks | $ 60 | $ 60 |
Weighted Average Amortization Period | 13 years | 13 years |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Reconciliation of Basic and Diluted Earnings (Loss) Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jan. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Net income | $ 3,003 | $ 2,720 | $ 3,674 | $ 3,895 | $ 4,804 | $ 3,683 | $ 3,961 | $ 3,766 | $ 13,292 | $ 16,214 | $ 15,143 |
Undistributed earnings allocated to participating shares - Basic | (76) | (93) | (121) | ||||||||
Undistributed earnings allocated to participating shares - Diluted | (76) | (93) | (121) | ||||||||
Net income applicable to common shareholders - Basic | 13,216 | 16,121 | 15,022 | ||||||||
Net income applicable to common shareholders - Diluted | $ 13,216 | $ 16,121 | $ 15,022 | ||||||||
Weighted average shares outstanding - Basic | 6,569 | 6,543 | 6,497 | ||||||||
Weighted average shares outstanding -Diluted | 6,642 | 6,602 | 6,538 | ||||||||
Stock options and contingently issuable securities | 73 | 59 | 41 | ||||||||
Income per share -Basic | $ 0.45 | $ 0.41 | $ 0.56 | $ 0.59 | $ 0.73 | $ 0.56 | $ 0.60 | $ 0.57 | $ 2.01 | $ 2.46 | $ 2.31 |
Income per share - Diluted | $ 0.45 | $ 0.40 | $ 0.56 | $ 0.58 | $ 0.72 | $ 0.55 | $ 0.60 | $ 0.57 | $ 1.99 | $ 2.44 | $ 2.30 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) € in Millions | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2015EUR (€) | Oct. 31, 2016USD ($) | Oct. 31, 2015USD ($) | Oct. 31, 2014USD ($) | |
Translation of Foreign Currencies | ||||
Cumulative foreign currency translation adjustments | $ 12,300,000 | |||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | 125,600,000 | $ 109,600,000 | ||
(Losses) gains, net of tax, related to cash flow hedges deferred in Accumulated Other Comprehensive Loss | 1,300,000 | |||
Unrealized gain (loss), net of tax, to be reclassified in next 12 months | 1,000,000 | |||
Gain (loss) on hedge ineffectiveness | 18,000 | 14,000 | ||
Property and Equipment | ||||
Depreciation and amortization expense | 2,500,000 | 2,200,000 | $ 2,200,000 | |
Research and Development Costs | ||||
Research and development expenses | 4,900,000 | 3,900,000 | 3,400,000 | |
Software Development Costs | ||||
Capitalized costs | 2,200,000 | 1,400,000 | 1,000,000 | |
Accumulated amortization | 16,500,000 | 15,300,000 | ||
Capitalized Computer Software, Amortization | 1,200,000 | 1,000,000 | 1,200,000 | |
Goodwill and Intangible Assets | ||||
Intangible assets amortization expense | 137,000 | 207,000 | $ 412,000 | |
Expected future amortization expense, 2017 | 115,000 | |||
Expected future amortization expense, 2018 | 115,000 | |||
Expected future amortization expense, 2019 | 115,000 | |||
Expected future amortization expense, 2020 | 115,000 | |||
Expected future amortization expense, 2021 | 115,000 | |||
Undistributed Earnings of Foreign Subsidiaries | 79,700,000 | |||
Forward Contracts [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Realized gain on net investment hedge | 803,000 | |||
Notional amount of derivatives designated as net investment hedge | € | € 3 | |||
Unrealized gain (loss), net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss | $ (39,000) | |||
Derivative maturity date | November 2016 through October 2017 | |||
Forward Contracts [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Derivative maturity date | November 2016 through April 2017 | |||
Euros [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | $ 27,600,000 | |||
Pounds Sterling [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | 6,100,000 | |||
New Taiwan Dollars [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | 21,800,000 | |||
New Taiwan Dollars [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | 26,600,000 | |||
Forward Contracts Denominated In Euros Pounds Sterling and South African Rand [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | $ 39,500,000 | |||
Hurco Automation Ltd [Member] | ||||
Consolidation | ||||
Ownership interest | 35.00% | |||
Equity investment in affiliate | $ 3,600,000 | $ 3,000,000 |
INVENTORIES (Schedule Of Invent
INVENTORIES (Schedule Of Inventory Current) (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Inventory [Line Items] | ||
Purchased parts and sub-assemblies | $ 25,661 | $ 25,914 |
Work-in-process | 17,724 | 20,575 |
Finished goods | 73,640 | 59,819 |
Inventories | $ 117,025 | $ 106,308 |
INVENTORIES (Narrative) (Detail
INVENTORIES (Narrative) (Details) - USD ($) $ in Millions | Oct. 31, 2016 | Oct. 31, 2015 |
Inventory [Line Items] | ||
Finished goods inventory consigned to distributors and agents | $ 11.6 | $ 6.9 |
ACQUISITIONS OF BUSINESSES (Nar
ACQUISITIONS OF BUSINESSES (Narrative) (Details) - USD ($) $ in Millions | Jul. 14, 2015 | Jul. 28, 2015 |
Business Acquisition [Line Items] | ||
Acquired assets and assumed liabilities | $ 17.6 | |
Milltronics Manufacturing Company [Member] | ||
Business Acquisition [Line Items] | ||
Total purchase price | $ 12.5 | |
Takumi Machinery [Member] | ||
Business Acquisition [Line Items] | ||
Total purchase price | $ 5.1 |
CREDIT AGREEMENTS AND BORROWI47
CREDIT AGREEMENTS AND BORROWINGS (Narrative) (Details) € in Millions, ¥ in Millions, £ in Millions, TWD in Millions, $ in Millions | Dec. 06, 2016USD ($) | May 12, 2015 | Oct. 31, 2016USD ($) | Dec. 05, 2016USD ($) | Oct. 31, 2016EUR (€) | Oct. 31, 2016GBP (£) | Oct. 31, 2016CNY (¥) | Oct. 31, 2015USD ($) | Dec. 05, 2014USD ($) | Dec. 04, 2014USD ($) | Jun. 05, 2014USD ($) | Jun. 04, 2014USD ($) | May 12, 2014TWD | May 09, 2014USD ($) | May 08, 2014USD ($) | Dec. 07, 2012USD ($) |
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maturity date | Dec. 7, 2016 | |||||||||||||||
Borrowings available under credit facility | $ 19.8 | |||||||||||||||
Revolving Credit Facility [Member] | United Kingdom [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maximum borrowing capacity | £ | £ 1 | |||||||||||||||
Revolving Credit Facility [Member] | Germany [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maximum borrowing capacity | € | € 1.5 | |||||||||||||||
Revolving Credit Facility [Member] | Taiwan [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maximum borrowing capacity | TWD | TWD 100 | |||||||||||||||
Line of credit, maturity date | May 12, 2015 | |||||||||||||||
Revolving Credit Facility [Member] | China [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maximum borrowing capacity | $ 5.9 | ¥ 40 | ||||||||||||||
Line of credit, maturity date | Feb. 16, 2017 | |||||||||||||||
Line of credit amount outstanding | $ 1.5 | $ 1.6 | ||||||||||||||
Interest rate | 4.60% | 4.60% | 4.60% | 4.60% | ||||||||||||
Prior Credit Facility [Member] | Letter of Credit [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maximum borrowing capacity | $ 3 | |||||||||||||||
New Credit Facility [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of Credit, interest rate description | The floating rate equals 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, (c) the prevailing prime rate, and (d) 0.00%. | |||||||||||||||
New Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Interest rate spread | 0.00% | |||||||||||||||
New Credit Facility [Member] | Letter of Credit [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maximum borrowing capacity | $ 5 | $ 3 | ||||||||||||||
New Credit Facility [Member] | Revolving Credit Facility [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maximum borrowing capacity | $ 12.5 | |||||||||||||||
Maximum dividends allowable | $ 4 | $ 4 | $ 4 | $ 3 | $ 3 | $ 1 | ||||||||||
Minimum working capital requirement | 90 | |||||||||||||||
Minimum tangible net worth requirement | $ 120 | |||||||||||||||
Percentage fee on portion that is not utilized | 0.05% | |||||||||||||||
Allowable investments in subsidiaries | $ 5 | |||||||||||||||
New Credit Facility [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member] | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Line of credit, maximum borrowing capacity | $ 15 | $ 12.5 | ||||||||||||||
Maximum dividends allowable | 5 | $ 4 | ||||||||||||||
Minimum working capital requirement | 105 | |||||||||||||||
Minimum tangible net worth requirement | $ 125 | |||||||||||||||
Line of credit, maturity date | Dec. 31, 2018 |
FINANCIAL INSTRUMENTS (Fair val
FINANCIAL INSTRUMENTS (Fair value hierarchy) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Level 1 [Member] | ||
Assets | ||
Deferred Compensation | $ 1,363 | $ 1,310 |
Liabilities | ||
Deferred Compensation | 0 | 0 |
Level 2 [Member] | ||
Assets | ||
Derivatives | 1,725 | 1,228 |
Liabilities | ||
Derivatives | $ 538 | $ 1,071 |
FINANCIAL INSTRUMENTS (Narrativ
FINANCIAL INSTRUMENTS (Narrative) (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notional amount of contracts | $ 125,600 | $ 109,600 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Assets | ||
Derivatives | 1,725 | 1,228 |
Liabilities | ||
Derivatives | $ 538 | $ 1,071 |
INCOME TAXES (Schedule of Provi
INCOME TAXES (Schedule of Provision for Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jan. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Current: | |||||||||||
U.S. taxes | $ 1,362 | $ 4,600 | $ 3,498 | ||||||||
Foreign taxes | 4,456 | 3,752 | 3,594 | ||||||||
Current provision for income taxes | 5,818 | 8,352 | 7,092 | ||||||||
Deferred: | |||||||||||
U.S. taxes | (176) | (896) | (709) | ||||||||
Foreign taxes | (49) | (117) | (165) | ||||||||
Deferred provision for income taxes | (225) | (1,013) | (874) | ||||||||
Provision for income taxes | $ 1,539 | $ 1,120 | $ 1,225 | $ 1,709 | $ 1,851 | $ 1,573 | $ 1,878 | $ 2,037 | $ 5,593 | $ 7,339 | $ 6,218 |
INCOME TAXES (Schedule of Compa
INCOME TAXES (Schedule of Comparison of Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Income before income taxes: | |||
Domestic | $ 2,703 | $ 10,806 | $ 9,190 |
Foreign | 16,182 | 12,747 | 12,171 |
Earnings (Loss) before taxes on income | $ 18,885 | $ 23,553 | $ 21,361 |
Tax rates: | |||
U.S. statutory rate | 34.00% | 35.00% | 35.00% |
Effect of tax rate of international jurisdictions different than U.S. statutory rates | (7.00%) | (5.00%) | (4.00%) |
Valuation allowance | 3.00% | 1.00% | 0.00% |
State taxes | 0.00% | 1.00% | 0.00% |
Tax Credits | (2.00%) | (1.00%) | (1.00%) |
Effect of Tax Rate Changes | 4.00% | 0.00% | 0.00% |
Other | (2.00%) | 0.00% | (1.00%) |
Effective tax rate | 30.00% | 31.00% | 29.00% |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Deferred Tax Assets: | ||
Accrued inventory reserves | $ 1,824 | $ 1,304 |
Accrued warranty expenses | 312 | 441 |
Compensation related expenses | 2,664 | 1,891 |
Unrealized exchange gain/loss | 370 | 186 |
Other accrued expenses | 194 | 237 |
Net operating loss carryforwards | 1,616 | 1,275 |
Other credit carryforwards | 474 | 287 |
Other | 331 | 170 |
Deferred tax assets, gross | 7,785 | 5,791 |
Less: Valuation allowance on net operating loss carryforwards | (1,593) | (1,300) |
Valuation allowance on other credit carryforwards | (474) | (185) |
Deferred Tax Assets, Valuation Allowance | (2,067) | (1,485) |
Deferred tax assets | 5,718 | 4,306 |
Deferred Tax Liabilities: | ||
Net derivative instruments | (701) | (811) |
Property and equipment and capitalized software development costs | (2,717) | (2,369) |
Other | (456) | (403) |
Net deferred tax assets | $ 1,844 | $ 723 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Balance, beginning of year | $ 1,034 | $ 1,196 | $ 1,284 |
Additions based on tax positions related to the current year | 52 | 17 | 5 |
Additions (reductions) related to prior year tax positions | 19 | (51) | (4) |
Reductions due to statute expiration | 0 | 0 | 0 |
Other | (3) | (128) | (89) |
Balance, end of year | $ 1,102 | $ 1,034 | $ 1,196 |
INCOME TAXES (Summary of Open T
INCOME TAXES (Summary of Open Tax Years) (Details) | 12 Months Ended | |
Oct. 31, 2016 | ||
United States federal [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2013 through the current period | |
Germany [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2013 through the current period | [1] |
Taiwan [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2013 through the current period | |
[1] | Includes federal as well as state, provincial or similar local jurisdictions, as applicable. |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Income Tax Contingency [Line Items] | ||
Undistributed Earnings of Foreign Subsidiaries | $ 79,700,000 | |
Deferred Tax Assets, Operating Loss Carryforwards, Total | 1,616,000 | $ 1,275,000 |
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | 7,900,000 | |
Unrecognized tax benefits, interest accrued | $ 53,000 | |
Unrecognized Tax Benefits Expiration Term | expire between July 2017 and July 2019. | |
Deferred Tax Assets, Valuation Allowance | $ 2,067,000 | 1,485,000 |
Deferred Tax Assets for Research and Development Tax Credits | (474,000) | $ (185,000) |
Expirations Within Five Years [Member] | ||
Income Tax Contingency [Line Items] | ||
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | $ 6,500,000 | |
Operating Loss Carryforwards Expiration Term Maximum | 5 years | |
Expirations After Six Years [Member] | ||
Income Tax Contingency [Line Items] | ||
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | $ 1,400,000 | |
Operating Loss Carryforwards Expiration Term Minimum | 5 years | |
Operating Loss Carryforwards Expiration Term Maximum | 20 years | |
Tax Credits [Member] | ||
Income Tax Contingency [Line Items] | ||
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | $ 719,000 | |
Operating Loss Carryforwards Expiration Term Minimum | 10 years | |
Operating Loss Carryforwards Expiration Term Maximum | 20 years |
EMPLOYEE BENEFITS (Narrative) (
EMPLOYEE BENEFITS (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Contributions to defined contribution plans | $ 1,100,000 | $ 933,000 | $ 884,000 |
STOCK-BASED COMPENSATION (Recon
STOCK-BASED COMPENSATION (Reconciliation of Restricted Stock Activity and Related Information) (Details) | 12 Months Ended |
Oct. 31, 2016$ / sharesshares | |
Number of Shares | |
Unvested at October 31, 2015 | shares | 98,799 |
Shares granted | shares | 75,636 |
Shares vested | shares | (21,385) |
Shares withheld | shares | (5,700) |
Unvested at October 31, 2016 | shares | 147,350 |
Weighted Average Grant Date Fair Value | |
Unvested at October 31, 2015 | $ / shares | $ 28.89 |
Shares granted | $ / shares | 28.05 |
Shares vested | $ / shares | 27.63 |
Shares withheld | $ / shares | 25.29 |
Unvested at October 31, 2016 | $ / shares | $ 28.79 |
STOCK-BASED COMPENSATION (Summa
STOCK-BASED COMPENSATION (Summary of Stock Option Activity and Related Information) (Details) - $ / shares | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Shares Under Option | |||
Outstanding | 107,889 | 128,189 | 168,712 |
Options granted | 0 | 0 | 0 |
Options cancelled | 0 | (5,000) | (20,217) |
Options Expired | 0 | 0 | 0 |
Options exercised | 0 | (15,300) | (20,306) |
Outstanding | 107,889 | 107,889 | 128,189 |
Weighted Average Exercise Price | |||
Outstanding | $ 20.25 | $ 20.45 | $ 20.73 |
Options granted | 0 | 0 | 0 |
Options cancelled | 0 | 35.83 | 25.59 |
Options Expired | 0 | 0 | 0 |
Options exercised | 0 | 16.81 | 17.67 |
Outstanding | $ 20.25 | $ 20.25 | $ 20.45 |
STOCK-BASED COMPENSATION (Sched
STOCK-BASED COMPENSATION (Schedule of Options Outstanding and Exercisable) (Details) | 12 Months Ended |
Oct. 31, 2016$ / sharesshares | |
Outstanding | |
Shares Under Option | shares | 107,889 |
Weighted Average Exercise Price Per Share | $ 20.25 |
Weighted Average Remaining Contractual Life in Years | 4 years 4 months 24 days |
Exercisable | |
Shares Under Option | shares | 107,889 |
Weighted Average Exercise Price Per Share | $ 20.25 |
Weighted Average Remaining Contractual Life in Years | 4 years 4 months 24 days |
Exercise price, minimum | $ 14.82 |
Exercise price, maximum | $ 35.83 |
$ 14.82 [Member] | |
Outstanding | |
Shares Under Option | shares | 24,000 |
Weighted Average Exercise Price Per Share | $ 14.82 |
Weighted Average Remaining Contractual Life in Years | 3 years 1 month 6 days |
Exercisable | |
Shares Under Option | shares | 24,000 |
Weighted Average Exercise Price Per Share | $ 14.82 |
Weighted Average Remaining Contractual Life in Years | 3 years 1 month 6 days |
$ 14.88 [Member] | |
Outstanding | |
Shares Under Option | shares | 4,200 |
Weighted Average Exercise Price Per Share | $ 14.88 |
Weighted Average Remaining Contractual Life in Years | 2 years 6 months |
Exercisable | |
Shares Under Option | shares | 4,200 |
Weighted Average Exercise Price Per Share | $ 14.88 |
Weighted Average Remaining Contractual Life in Years | 2 years 6 months |
$ 18.13 [Member] | |
Outstanding | |
Shares Under Option | shares | 16,000 |
Weighted Average Exercise Price Per Share | $ 18.13 |
Weighted Average Remaining Contractual Life in Years | 3 years 6 months |
Exercisable | |
Shares Under Option | shares | 16,000 |
Weighted Average Exercise Price Per Share | $ 18.13 |
Weighted Average Remaining Contractual Life in Years | 3 years 6 months |
$ 21.45 [Member] | |
Outstanding | |
Shares Under Option | shares | 37,841 |
Weighted Average Exercise Price Per Share | $ 21.45 |
Weighted Average Remaining Contractual Life in Years | 5 years 1 month 6 days |
Exercisable | |
Shares Under Option | shares | 37,841 |
Weighted Average Exercise Price Per Share | $ 21.45 |
Weighted Average Remaining Contractual Life in Years | 5 years 1 month 6 days |
$ 23.30 [Member] | |
Outstanding | |
Shares Under Option | shares | 20,848 |
Weighted Average Exercise Price Per Share | $ 23.30 |
Weighted Average Remaining Contractual Life in Years | 6 years 1 month 6 days |
Exercisable | |
Shares Under Option | shares | 20,848 |
Weighted Average Exercise Price Per Share | $ 23.30 |
Weighted Average Remaining Contractual Life in Years | 6 years 1 month 6 days |
$ 35.83 [Member] | |
Outstanding | |
Shares Under Option | shares | 5,000 |
Weighted Average Exercise Price Per Share | $ 35.83 |
Weighted Average Remaining Contractual Life in Years | 1 year 7 months 6 days |
Exercisable | |
Shares Under Option | shares | 5,000 |
Weighted Average Exercise Price Per Share | $ 35.83 |
Weighted Average Remaining Contractual Life in Years | 1 year 7 months 6 days |
STOCK-BASED COMPENSATION (Narra
STOCK-BASED COMPENSATION (Narrative) (Details) - USD ($) | Mar. 10, 2016 | Jan. 04, 2016 | Mar. 12, 2015 | Jan. 06, 2015 | Mar. 13, 2014 | Jan. 10, 2014 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | $ 1,600,000 | $ 1,200,000 | $ 921,000 | ||||||
Unrecognized Stock-based compensation expense | $ 2,000,000 | ||||||||
Restricted stock granted | 75,636 | ||||||||
Grant date fair value of restricted stock | $ 28.79 | $ 28.89 | |||||||
Total intrinsic value of stock options exercised | $ 0 | $ 154,000 | $ 424,000 | ||||||
Total intrinsic value of outstanding stock options vested and expected to vest and intrinsic value of options outstanding and exercisable | $ 690,000 | ||||||||
2016 Equity Plan [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 2016 Plan | 856,048 | ||||||||
2008 Equity Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 386,048 | ||||||||
Time Based [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Restricted stock granted | 17,684 | 9,086 | 11,174 | 11,235 | 12,182 | ||||
Grant date fair value of restricted stock | $ 26.04 | $ 30.80 | $ 32.22 | $ 24.92 | $ 24.01 | ||||
Vesting period | 3 years | 1 year | 3 years | 1 year | 3 years | ||||
Percentage of incentive compensation arrangement | 25.00% | 25.00% | 25.00% | ||||||
Time Based [Member] | 2016 Equity Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Restricted stock granted | 9,170 | ||||||||
Grant date fair value of restricted stock | $ 30.52 | ||||||||
Vesting period | 1 year | ||||||||
Performance Based [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period | 3 years | 3 years | 3 years | ||||||
Percentage of incentive compensation arrangement | 75.00% | 75.00% | 75.00% | ||||||
Performance Based [Member] | Performance Shares TSR [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Restricted stock granted | 24,023 | 16,740 | 16,948 | ||||||
Grant date fair value of restricted stock | $ 30.67 | $ 34.41 | $ 26.43 | ||||||
Percentage of incentive compensation arrangement | 40.00% | 40.00% | 40.00% | ||||||
Performance Based [Member] | Performance Shares TSR [Member] | Maximum [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Percentage of target number of shares to be earned | 200.00% | 200.00% | 200.00% | ||||||
Performance Based [Member] | Performance Shares TSR [Member] | Minimum [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Percentage of target number of shares to be earned | 50.00% | 50.00% | 50.00% | ||||||
Performance Based [Member] | Performance Shares ROIC [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Restricted stock granted | 24,759 | 15,643 | 17,056 | ||||||
Grant date fair value of restricted stock | $ 26.04 | $ 32.22 | $ 24.01 | ||||||
Percentage of incentive compensation arrangement | 35.00% | 35.00% | 35.00% | ||||||
Performance Based [Member] | Performance Shares ROIC [Member] | Maximum [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Percentage of target number of shares to be earned | 200.00% | 200.00% | 200.00% | ||||||
Performance Based [Member] | Performance Shares ROIC [Member] | Minimum [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Percentage of target number of shares to be earned | 50.00% | 50.00% | 50.00% |
RELATED PARTY TRANSACTIONS (Sch
RELATED PARTY TRANSACTIONS (Schedule of unaudited financial information for HAL's operations and financial conditions ) (Details) - Hurco Automation Ltd [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Related Party Transaction [Line Items] | |||
Net Sales | $ 13,948 | $ 12,852 | $ 12,063 |
Gross Profit | 2,240 | 2,041 | 1,759 |
Operating Income | 952 | 665 | 468 |
Net Income | 1,323 | 1,546 | 1,264 |
Current Assets | 10,238 | 10,262 | 10,469 |
Non-current Assets | 3,733 | 3,087 | 3,065 |
Current Liabilities | $ 2,572 | $ 3,472 | $ 3,637 |
RELATED PARTY TRANSACTIONS (Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Related Party Transaction [Line Items] | |||
Accounts Payable, Related Parties, Current | $ 1,990,000 | $ 1,780,000 | |
Hurco Automation Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Equity Method Investment, Ownership Percentage | 35.00% | ||
Equity Method Investments | $ 3,600,000 | 3,000,000 | |
Related Party Transaction, Purchases from Related Party | 9,900,000 | 8,900,000 | $ 9,300,000 |
Revenue from Related Parties | 623,000 | 723,000 | $ 1,400,000 |
Accounts Payable, Related Parties, Current | 2,000,000 | 1,800,000 | |
Accounts Receivable, Related Parties, Current | $ 94,000 | $ 55,000 |
GUARANTEES AND PRODUCT WARRAN63
GUARANTEES AND PRODUCT WARRANTIES (Reconciliation of the changes in our warranty reserve) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Product Warranty Liability [Line Items] | |||
Balance, beginning of year | $ 2,186 | $ 2,048 | $ 1,778 |
Provision for warranties during the year | 2,715 | 3,736 | 3,846 |
Charges to the accrual | (3,349) | (3,495) | (3,529) |
Impact of foreign currency translation | (29) | (103) | (47) |
Balance, end of year | $ 1,523 | $ 2,186 | $ 2,048 |
GUARANTEES AND PRODUCT WARRAN64
GUARANTEES AND PRODUCT WARRANTIES (Narrative) (Details) | 12 Months Ended | |
Oct. 31, 2016USD ($) | Oct. 31, 2015USD ($) | |
Product Warranty Liability [Line Items] | ||
Number Of Guarantees | 26 | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 1,200,000 | |
Term of Product Warranty | 1 year | |
Product Warranty Accrual, Additions from Business Acquisition | $ 241,000 |
OPERATING LEASES (Schedule of f
OPERATING LEASES (Schedule of future payments required under operating leases) (Details) $ in Thousands | Oct. 31, 2016USD ($) |
2,017 | $ 2,929 |
2,018 | 1,573 |
2,019 | 911 |
2,020 | 377 |
2021 and thereafter | 556 |
Total | $ 6,346 |
OPERATING LEASES (Narrative) (D
OPERATING LEASES (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Lease expense | $ 4.5 | $ 3.8 | $ 4 |
QUARTERLY FINANCIAL INFORMATI67
QUARTERLY FINANCIAL INFORMATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jan. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Sales and service fees | $ 66,354 | $ 52,403 | $ 52,029 | $ 56,503 | $ 65,693 | $ 52,535 | $ 50,183 | $ 50,972 | $ 227,289 | $ 219,383 | $ 222,303 |
Gross profit | $ 19,997 | $ 16,135 | $ 16,610 | $ 17,698 | $ 19,355 | $ 16,630 | $ 16,559 | $ 16,547 | 70,440 | 69,091 | 68,612 |
Gross profit margin | 30.00% | 31.00% | 32.00% | 31.00% | 29.00% | 32.00% | 33.00% | 32.00% | |||
Selling, general and administrative expenses | $ 14,878 | $ 12,042 | $ 11,943 | $ 11,961 | $ 12,632 | $ 11,351 | $ 10,850 | $ 10,454 | 50,824 | 45,287 | 46,615 |
Operating income | 5,119 | 4,093 | 4,667 | 5,737 | 6,723 | 5,279 | 5,709 | 6,093 | 19,616 | 23,804 | 21,997 |
Provision for income taxes | 1,539 | 1,120 | 1,225 | 1,709 | 1,851 | 1,573 | 1,878 | 2,037 | 5,593 | 7,339 | 6,218 |
Net income | $ 3,003 | $ 2,720 | $ 3,674 | $ 3,895 | $ 4,804 | $ 3,683 | $ 3,961 | $ 3,766 | $ 13,292 | $ 16,214 | $ 15,143 |
Income per common share - basic (in dollars per share) | $ 0.45 | $ 0.41 | $ 0.56 | $ 0.59 | $ 0.73 | $ 0.56 | $ 0.60 | $ 0.57 | $ 2.01 | $ 2.46 | $ 2.31 |
Income per common share - diluted (in dollars per share) | $ 0.45 | $ 0.40 | $ 0.56 | $ 0.58 | $ 0.72 | $ 0.55 | $ 0.60 | $ 0.57 | $ 1.99 | $ 2.44 | $ 2.30 |
SEGMENT INFORMATION (Schedule o
SEGMENT INFORMATION (Schedule of Net Sales and Service Fees by Product Category) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jan. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | ||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | $ 66,354 | $ 52,403 | $ 52,029 | $ 56,503 | $ 65,693 | $ 52,535 | $ 50,183 | $ 50,972 | $ 227,289 | $ 219,383 | $ 222,303 | |
Computerized Machine Tools [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | [1] | 195,618 | 189,712 | 193,937 | ||||||||
Computer Control Systems and Software [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | [2] | 2,078 | 3,085 | 3,407 | ||||||||
Service Parts [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | 21,908 | 19,375 | 17,391 | |||||||||
Service Fees [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | $ 7,685 | $ 7,211 | $ 7,568 | |||||||||
[1] | Amounts shown include sales of Milltronics and Takumi computerized machine tools to third parties since the respective dates of acquisitions. | |||||||||||
[2] | Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine systems. |
SEGMENT INFORMATION (Schedule69
SEGMENT INFORMATION (Schedule of Revenues by Geographic Area) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jan. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 66,354 | $ 52,403 | $ 52,029 | $ 56,503 | $ 65,693 | $ 52,535 | $ 50,183 | $ 50,972 | $ 227,289 | $ 219,383 | $ 222,303 |
United States of America [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 70,630 | 66,781 | 59,414 | ||||||||
Canada [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 3,881 | 3,114 | 2,434 | ||||||||
South America [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 1,950 | 1,930 | 450 | ||||||||
Total Americas [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 76,461 | 71,825 | 62,298 | ||||||||
Germany [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 44,411 | 43,727 | 51,581 | ||||||||
United Kingdom [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 25,313 | 30,235 | 34,288 | ||||||||
Italy [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 12,947 | 11,768 | 13,456 | ||||||||
France [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 13,787 | 13,162 | 9,972 | ||||||||
Other Europe [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 27,150 | 26,598 | 24,728 | ||||||||
Total Europe [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 123,608 | 125,490 | 134,025 | ||||||||
Asia Pacific [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 25,633 | 20,265 | 23,766 | ||||||||
Other Foreign [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 1,587 | 1,803 | 2,214 | ||||||||
Foreign [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 150,828 | $ 147,558 | $ 160,005 |
SEGMENT INFORMATION (Schedule70
SEGMENT INFORMATION (Schedule of Long-Lived Tangible Assets and net assets, Net by Geographic Area) (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 13,757 | $ 14,551 |
Net Assets | 185,475 | 174,568 |
United States of America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | 7,846 | 8,658 |
Foreign Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | 5,911 | 5,893 |
Americas [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net Assets | 84,040 | 83,236 |
Europe [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net Assets | 60,861 | 59,468 |
Asia Pacific [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Net Assets | $ 40,574 | $ 31,864 |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Narrative) (Details) $ in Millions | Oct. 31, 2015USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative Effect Of Change On Total Current Assets | $ 2 |
Cumulative Effect Of Change On Total Non-current Assets | 4.7 |
Cumulative Effect Of Change On Total Non-current Liabilities | $ 2.7 |