Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Dec. 18, 2017 | Apr. 28, 2017 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Oct. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
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 | $ 192,102,000 | ||
Trading Symbol | HURC | ||
Entity Common Stock, Shares Outstanding | 6,641,197 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Sales and service fees | $ 243,667 | $ 227,289 | $ 219,383 |
Cost of sales and service | 173,103 | 156,849 | 150,292 |
Gross profit | 70,564 | 70,440 | 69,091 |
Selling, general and administrative expenses | 49,661 | 50,824 | 45,287 |
Operating income | 20,903 | 19,616 | 23,804 |
Interest expense | 91 | 72 | 198 |
Interest income | 41 | 40 | 76 |
Investment income | 138 | 149 | 78 |
Income from equity investments | 505 | 466 | 474 |
Other expense, net | 780 | 1,314 | 681 |
Income before income taxes | 20,716 | 18,885 | 23,553 |
Provision for income taxes | 5,601 | 5,593 | 7,339 |
Net income | $ 15,115 | $ 13,292 | $ 16,214 |
Income per common share - basic | $ 2.27 | $ 2.01 | $ 2.46 |
Weighted average common shares outstanding - basic | 6,615 | 6,569 | 6,543 |
Income per common share - diluted | $ 2.25 | $ 1.99 | $ 2.44 |
Weighted average common shares outstanding - diluted | 6,680 | 6,642 | 6,602 |
Dividends paid per share | $ 0.39 | $ 0.35 | $ 0.31 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Net Income | $ 15,115 | $ 13,292 | $ 16,214 |
Other comprehensive income (loss): | |||
Translation gain (loss) of foreign currency financial statements | 4,916 | (1,441) | (6,333) |
(Gain) / loss on derivative instruments reclassified into operations, net of tax of $(745), $(906), and $(431), respectively | (1,354) | (1,647) | (784) |
Gain / (loss) on derivative instruments, net of tax of $(390), $787, and $712, respectively | (709) | 1,431 | 1,291 |
Total other comprehensive income (loss) | 2,853 | (1,657) | (5,826) |
Comprehensive income | $ 17,968 | $ 11,635 | $ 10,388 |
CONSOLIDATED STATEMENTS OF COM4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Realized loss (gains) on derivative instruments reclassified into operations, tax | $ (745) | $ (906) | $ (431) |
Unrealized (loss) gains on derivative instruments, tax | $ (390) | $ 787 | $ 712 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2017 | Oct. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 66,307 | $ 41,217 |
Accounts receivable, less allowance for doubtful accounts of $639 in 2017 and $664 in 2016 | 50,094 | 48,631 |
Inventories, net | 119,948 | 117,025 |
Derivative assets | 596 | 1,725 |
Prepaid assets | 7,913 | 8,207 |
Other | 1,557 | 1,576 |
Total current assets | 246,415 | 218,381 |
Property and equipment: | ||
Land | 841 | 841 |
Building | 7,352 | 7,352 |
Machinery and equipment | 25,652 | 23,515 |
Leasehold improvements | 3,503 | 3,487 |
Property and equipment, gross | 37,348 | 35,195 |
Less accumulated depreciation and amortization | (25,167) | (22,898) |
Total property and equipment, net | 12,181 | 12,297 |
Non-current assets: | ||
Software development costs, less accumulated amortization | 6,226 | 4,926 |
Goodwill | 2,440 | 2,314 |
Intangible assets, net | 1,076 | 1,150 |
Deferred income taxes | 6,176 | 6,138 |
Investments and other assets, net | 7,131 | 6,743 |
Total non-current assets | 23,049 | 21,271 |
Total assets | 281,645 | 251,949 |
Current liabilities: | ||
Accounts payable | 45,127 | 35,210 |
Accounts payable-related parties | 2,511 | 1,990 |
Accrued expenses and other | 18,240 | 17,231 |
Accrued warranty expenses | 1,772 | 1,523 |
Derivative liabilities | 1,732 | 538 |
Short-term debt | 1,507 | 1,476 |
Total current liabilities | 70,889 | 57,968 |
Non-current liabilities: | ||
Deferred income taxes | 3,821 | 4,294 |
Accrued tax liability | 133 | 963 |
Deferred credits and other | 3,717 | 3,249 |
Total non-current liabilities | 7,671 | 8,506 |
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, 6,799,006 and 6,720,453 shares issued; and 6,641,197 and 6,573,103 shares outstanding, as of October 31, 2017 and October 31, 2016, respectively | 664 | 657 |
Additional paid-in capital | 61,344 | 59,119 |
Retained earnings | 149,267 | 136,742 |
Accumulated other comprehensive loss | (8,190) | (11,043) |
Total shareholders' equity | 203,085 | 185,475 |
Total liabilities and shareholders' equity | $ 281,645 | $ 251,949 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2017 | Oct. 31, 2016 |
Accounts receivable, allowance for doubtful accounts | $ 639 | $ 664 |
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, No Par Value | $ 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 | 6,799,006 | 6,720,453 |
Common stock, shares outstanding | 6,641,197 | 6,573,103 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 15,115 | $ 13,292 | $ 16,214 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities, net of acquisitions: | |||
Provision for doubtful accounts | (25) | (75) | (139) |
Deferred income taxes | 1,108 | (225) | (1,013) |
Equity in income of affiliates | (505) | (466) | (474) |
Foreign currency (gain) loss | (851) | 1,850 | 3,223 |
Unrealized (gain) loss on derivatives | (411) | 393 | 147 |
Depreciation and amortization | 3,616 | 3,868 | 3,222 |
Stock-based compensation | 1,698 | 1,607 | 1,193 |
Taxes paid related to net settlement of restricted shares | 295 | 146 | 239 |
Change in assets and liabilities, net of acquisitions: | |||
(Increase) decrease in accounts receivable | 563 | (8,141) | 3,666 |
(Increase) decrease in inventories | 1,638 | (13,881) | 2,852 |
(Increase) decrease in prepaid expenses | 80 | 809 | 383 |
Increase (decrease) in accounts payable | 8,529 | (6,001) | (1,028) |
Increase (decrease) in accrued expenses | 627 | (90) | (962) |
Net change in derivative assets and liabilities | 964 | (245) | 1,081 |
Other | (2,069) | 442 | 179 |
Net cash provided by (used for) operating activities | 30,372 | (6,717) | 28,783 |
Cash flows from investing activities: | |||
Proceeds from sale of property and equipment | 0 | 264 | 62 |
Purchase of property and equipment | (2,181) | (1,972) | (3,127) |
Software development costs | (2,264) | (2,205) | (1,406) |
Other investments | 417 | 0 | 308 |
Acquisition of business, net of cash acquired | 0 | 0 | (17,650) |
Net cash provided by (used for) investing activities | (4,028) | (3,913) | (21,813) |
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | 534 | 0 | 257 |
Dividends paid | (2,590) | (2,310) | (2,034) |
Tax benefit from exercise of stock options | 0 | 0 | 119 |
Taxes paid related to net settlement of restricted shares | (295) | (146) | (239) |
Repayment on short-term debt | 0 | 0 | (1,605) |
Net cash provided by (used for) financing activities | (2,351) | (2,456) | (3,502) |
Effect of exchange rate changes on cash and cash equivalents | 1,097 | (934) | (2,077) |
Net increase (decrease) in cash and cash equivalents | 25,090 | (14,020) | 1,391 |
Cash and cash equivalents at beginning of year | 41,217 | 55,237 | 53,846 |
Cash and cash equivalents at end of year | 66,307 | 41,217 | 55,237 |
Cash paid for: | |||
Interest | 66 | 56 | 156 |
Income taxes, net | $ 4,867 | $ 4,328 | $ 9,890 |
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, 2014 | $ 164,645 | $ 651 | $ 55,974 | $ 111,580 | $ (3,560) |
Balances, Beginning (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 | $ 0 | $ 0 | 0 | 0 | 0 |
Exercise of common stock options (Shares) | 0 | 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 | ||||
Net income | 15,115 | $ 0 | 0 | 15,115 | 0 |
Other comprehensive income (loss) | 2,853 | 0 | 0 | 0 | 2,853 |
Exercise of common stock options | $ 534 | $ 3 | 531 | 0 | 0 |
Exercise of common stock options (Shares) | 29,164 | 29,164 | |||
Stock-based compensation expense | $ 1,698 | $ 4 | 1,694 | 0 | 0 |
Stock-based compensation expense (Shares) | 38,930 | ||||
Dividends paid | (2,590) | $ 0 | 0 | (2,590) | 0 |
Balances, Ending at Oct. 31, 2017 | $ 203,085 | $ 664 | $ 61,344 | $ 149,267 | $ (8,190) |
Balances, Ending (Shares) at Oct. 31, 2017 | 6,641,197 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation . The consolidated financial statements include the accounts of Hurco Companies, Inc. (an Indiana corporation) and its wholly-owned subsidiaries. We have a 35% ownership interest in a Taiwan affiliate that is accounted for using the equity method. Our investment in that affiliate was approximately $3.6 million and $3.6 million as of October 31, 2017 and 2016, respectively. That investment is included in Investments and other assets, net on the accompanying Consolidated Balance Sheets. Intercompany accounts and transactions have been eliminated. 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 . 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, 2017 were a net loss of $7.4 million and are included in Accumulated other comprehensive loss. Foreign currency transaction gains and losses are recorded as income or expense as incurred and are recorded in Other expense, net. 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, 2017, in Euros, Pounds Sterling and New Taiwan Dollars with set maturity dates ranging from November 2017 through October 2018. The contract amount at forward rates in U.S. Dollars at October 31, 2017 for Euros and Pounds Sterling was $31.6 million and $8.5 million, respectively. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $31.2 million at October 31, 2017. At October 31, 2017, we had approximately $790,000 of loss, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Of this amount, $636,000 represented unrealized loss, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred losses will be recorded as an adjustment to Cost of sales and service in periods through October 2018, in which the corresponding inventory that is the subject of the related hedge contract is sold, as described above. 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 million in November 2016. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under the FASB guidance related to the accounting for derivatives instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment, net of tax, in Accumulated other comprehensive loss in the same manner as the underlying hedged net assets. This forward contract matured in November 2017 and we entered into a new forward contract for the same notional amount that is set to mature in November 2018. As of October 31, 2017, we had a realized gain of $809,000 and an unrealized loss of $140,000, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss, related to these forward contracts. Derivatives Not Designated as Hedging Instruments We enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on receivables and payables denominated in foreign currencies. These derivative instruments are not designated as hedges under 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, 2017, in Euros, Pounds Sterling, South African Rand and New Taiwan Dollars with set maturity dates ranging from November 2017 through October 2018. The contract amounts at forward rates in U.S. Dollars at October 31, 2017 for Euros, Pounds Sterling and South African Rand totaled $28.1 million. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $32.6 million at October 31, 2017. 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 . 2017 2016 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 305 Derivative assets $ 1,721 Foreign exchange forward contracts Derivative liabilities $ 1,508 Derivative liabilities $ 173 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 291 Derivative assets $ 4 Foreign exchange forward contracts Derivative liabilities $ 224 Derivative liabilities $ 365 Effect of Derivative Instruments on the Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity and Statements of Income Derivative instruments had the following effects on our Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity and Statements of Income, net of tax, during the fiscal years ended October 31, 2017 and 2016 (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified from Reclassified from Other Comprehensive Other Comprehensive Other Comprehensive Derivatives Income (Loss) Income (Loss) Income (Loss) 2017 2016 2017 2016 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts $ (709) $ 1,431 Cost of sales and service $ 1,354 $ 1,647 Intercompany sales/purchases Foreign exchange forward contract $ (96) $ 28 Net Investment We recognized a gain of $18,000 during the fiscal year ended October 31, 2017 and a gain of $18,000 during the fiscal year ended October 31, 2016 as a result of contracts closed early that were deemed ineffective for financial reporting and did not qualify as cash flow hedges. We recognized the following gains and losses in our Consolidated Statements of Income during the fiscal years ended October 31, 2017 and 2016 on derivative instruments not designated as hedging instruments (in thousands): Location of Gain (Loss) Amount of Gain (Loss) Derivatives Recognized in Operations Recognized in Operations 2017 2016 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (1,001) $ 536 The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the fiscal years ended October 31, 2017 and 2016 (in thousands): Foreign Cash Currency Flow Translation Hedges Total 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) Other comprehensive income (loss) before reclassifications 4,916 (709) 4,207 Reclassifications (1,354) (1,354) Balance, October 31, 2017 $ (7,409) $ (781) $ (8,190) 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 are carried at cost. 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 Building & leasehold improvements 3 40 Total depreciation and amortization expense recognized for property and equipment for the fiscal years ended October 31, 2017, 2016 and 2015 was $2.5 million, $2.5 million, and $2.2 million, respectively. Revenue Recognition. We recognize revenue from sales of our machine tool systems upon delivery of the product to the customer or distributor, 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 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, and are generally sold on a stand-alone basis. Sales related to software upgrades 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 . 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 we charge off uncollectible balances when all reasonable collection efforts have been exhausted. 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 11 of Notes to Consolidated Financial Statements for further discussion of warranties. 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 $4.2 million, $4.9 million, and $3.9 million, in fiscal 2017, 2016, and 2015, respectively. Software Development Costs. We sell software products that are essential to our machine tools. 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 $2.3 million in fiscal 2017, $2.2 million in fiscal 2016, and $1.4 million in fiscal 2015 related to software development projects. Amortization expense for software development costs was $1.0 million, $1.2 million, and $1.0 million, for the fiscal years ended October 31, 2017, 2016, and 2015, respectively. Accumulated amortization at October 31, 2017 and 2016 was $17.4 million and $16.5 million, respectively. Estimated amortization expense for the remaining unamortized software development costs for the fiscal years ending October 31, is as follows (in thousands): Fiscal Year Amortization Expense 2018 1,425 2019 1,250 2020 1,200 2021 1,075 2022 975 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. We use a qualitative approach to test goodwill and indefinite-lived assets for impairment annually. Periodically, or when indicators of impairment exist, we also utilize a two-stepped approach to measuring goodwill impairment. The first step of the test determines if there is potential goodwill impairment. In this step we compare the fair value of the reporting unit to its carrying amount (which includes goodwill). The fair value of the reporting unit is determined by using an estimate of future cash flows utilizing a risk-adjusted discount rate to calculate the net present value of future cash flows (income approach), and by using a market approach based upon an analysis of valuation metrics of comparable peer companies. If the carrying amount exceeds the fair value, we perform the second step of the test, which measures the amount of impairment loss to be recorded, if any. In the second step, we compare the carrying amount of the goodwill to the implied fair value of the goodwill based on the net fair value of the recognized and unrecognized assets and liabilities of the reporting unit. If the implied fair value is less than the carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill is less than its carrying value. For other separately recognized intangible assets with indefinite lives, we use a qualitative approach to test such assets for impairment if certain conditions are met. 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 2017, we utilized both the quantitative and qualitative approaches to test for goodwill impairment and a qualitative approach to test intangible assets for potential impairment. For fiscal 2016, we utilized the qualitative approach to test both goodwill and intangible assets for potential impairment. For each of fiscal 2017 and 2016, we concluded that goodwill and other intangible assets were not impaired. As of October 31, 2017, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Gross Accumulated Net Tradenames and trademarks 13 years $ 245 $ (81) $ 164 Tradenames and trademarks indefinite 60 - 60 Customer relationships 15 years 257 (132) 125 Technology 13 years 713 (239) 474 Patents 6 years 2,973 (2,765) 208 Other 8 years 378 (333) 45 Total $ 4,626 $ (3,550) $ 1,076 As of October 31, 2016, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Gross Accumulated Net Intangible 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 Intangible asset amortization expense was $136,000, $137,000, and $207,000 for fiscal 2017, 2016 and 2015, respectively. Annual intangible asset amortization expense is estimated to be $120,000 per year for fiscal years 2018 through 2022. Impairment of Long-Lived Assets. Annually, or when there are indicators of impairment, we 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. 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.” The following table presents a reconciliation of our basic and diluted earnings per share computation: Fiscal Year Ended October 31, 2017 2016 2015 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income $ 15,115 $ 15,115 $ 13,292 $ 13,292 $ 16,214 $ 16,214 Undistributed earnings allocated to participating shares (100) (100) (76) (76) (93) (93) Net income applicable to common shareholders $ 15,015 $ 15,015 $ 13,216 $ 13,216 $ 16,121 $ 16,121 Weighted average shares outstanding 6,615 6,615 6,569 6,569 6,543 6,543 Stock options and contingently issuable securities - 65 - 73 - 59 6,615 6,680 6,569 6,642 6,543 6,602 Income per share $ 2.27 $ 2.25 $ 2.01 $ 1.99 $ 2.46 $ 2.44 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, 2017 were approximately $92.9 million. In the event these earnings are later distributed to the U.S., such distributions would likely result in additional U.S. tax that may be offset, at least in part, by associated foreign tax credits. 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. 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. 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, 2017 | |
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 193 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, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 3. INVENTORIES Inventories as of October 31, 2017 and 2016 are summarized below (in thousands): 2017 2016 Purchased parts and sub-assemblies $ 33,045 $ 25,661 Work-in-process 20,008 17,724 Finished goods 66,895 73,640 $ 119,948 $ 117,025 Finished goods inventory consigned to our distributors and agents throughout the Americas, Europe and Asia was $12.1 million and $11.6 million as of October 31, 2017 and 2016, respectively. |
CREDIT AGREEMENTS AND BORROWING
CREDIT AGREEMENTS AND BORROWINGS | 12 Months Ended |
Oct. 31, 2017 | |
Debt Disclosure [Abstract] | |
CREDIT AGREEMENTS AND BORROWINGS | 4. CREDIT AGREEMENTS AND BORROWINGS On December 7, 2012, we entered into an agreement, which was subsequently amended on May 9, 2014, June 5, 2014, December 5, 2014 and December 6, 2016 (as amended, the “U.S. credit agreement”) with a financial institution that provided us with an unsecured revolving credit and letter of credit facility. 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 million), (2) requiring that we maintain a minimum working capital, and (3) requiring that we maintain a minimum tangible net worth. The U.S. credit agreement permits us to pay certain cash dividends, so long as we are not in default under the U.S. credit agreement before and after giving effect to such dividends. Borrowings under our 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%. The rate we must pay for that portion of the U.S. credit agreement which is not utilized is 0.05% per annum. On December 6, 2016, we entered into a fourth amendment to our U.S. credit agreement to, among other things, increase the unsecured revolving credit facility from $12.5 million to $15.0 million, to increase the cash dividend allowance from $4.0 million per calendar year to $5.0 million per calendar year, and to extend the scheduled maturity date to December 31, 2018. The U.S. credit agreement, as amended, provides for the issuance of up to $5.0 million in letters of credit. We also amended the U.S. credit agreement to increase the minimum working capital and minimum tangible net worth requirements from $90.0 million to $105.0 million and $120.0 million to $125.0 million, respectively. On February 16, 2017, we amended our credit facility in China to decrease the credit facility from 40.0 million Chinese Yuan to 20.0 million Chinese Yuan (approximately $3.0 million) and renewed the facility with an expiration date of February 15, 2018. We had $1.5 million of borrowings under our China credit facility at each of October 31, 2017 and October 31, 2016, which bears interest at variable rates of 4.4% and 4.6% annually, respectively. We also have a £1.0 million revolving credit facility in the United Kingdom and a €1.5 million revolving credit facility in Germany. We had no other debt or borrowings under any of our other credit facilities at either of those dates. All of our credit facilities are unsecured. At October 31, 2017, we had unutilized credit facilities of $19.6 million. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Oct. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FINANCIAL INSTRUMENTS | 5. 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 for which little or no market data exists, 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 above. 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. 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, 2017 and 2016 (in thousands): Assets Liabilities October 31, October 31, October 31, October 31, 2017 2016 2017 2016 Level 1 Deferred compensation $ 1,638 $ 1,363 $ $ Level 2 Derivatives $ 596 $ 1,725 $ 1,732 $ 538 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 $134.3 million and $125.6 million at October 31, 2017 and 2016, respectively. 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, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 6. INCOME TAXES In the fiscal years set forth below, the provision for income taxes consisted of the following (in thousands): Year Ended October 31, 2017 2016 2015 Current: U.S. taxes $ 308 $ 1,362 $ 4,600 Foreign taxes 4,185 4,456 3,752 4,493 5,818 8,352 Deferred: U.S. taxes 1,236 (176) (896) Foreign taxes (128) (49) (117) 1,108 (225) (1,013) $ 5,601 $ 5,593 $ 7,339 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, 2017 2016 2015 Income before income taxes: Domestic $ 5,477 $ 2,703 $ 10,806 Foreign 15,239 16,182 12,747 Earnings (Loss) before taxes on income $ 20,716 $ 18,885 $ 23,553 Tax rates: U.S. statutory rate 34 % 34 % 35 % Effect of tax rate of international jurisdictions different than U.S. statutory rates (5 %) (7 %) (5 %) Valuation allowance. 1 % 3 % 1 % State taxes 0 % 0 % 1 % Tax Credits (3 %) (2 %) (1 %) Effect of Tax Rate Changes 0 % 4 % 0 % Other 0 % (2 %) 0 % Effective tax rate 27 % 30 % 31 % 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, 2017 were approximately $92.9 million. In the event these earnings are later distributed to the U.S., such distributions would likely result in additional U.S. tax that may be offset, at least in part, by associated foreign tax credits. Deferred income taxes are determined based on the difference between the amounts used for financial reporting purposes and tax bases 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, 2017, we had deferred tax assets established for accumulated net operating loss carryforwards of $1.7 million, primarily related to state and foreign jurisdictions. We also have deferred tax assets for research and development tax credits of $0.5 million. We have established a valuation allowance against some of these carryforwards due to the uncertainty of their full realization. As of October 31, 2017 and 2016, the balance of this valuation allowance was $2.3 million and $2.1 million, respectively. Significant components of our deferred tax assets and liabilities at October 31, 2017 and 2016 were as follows (in thousands): October 31, 2017 2016 Deferred Tax Assets: Accrued inventory reserves $ 1,965 $ 1,824 Accrued warranty expenses 438 312 Compensation related expenses 2,952 2,664 Net derivative instruments 417 Unrealized exchange gain/loss 370 Other accrued expenses 187 194 Net operating loss carryforwards 1,722 1,616 Other credit carryforwards 517 474 Other 404 331 8,602 7,785 Less: Valuation allowance - net operating loss and other credit carryforwards (2,282) (2,067) Deferred tax assets 6,320 5,718 Deferred Tax Liabilities: Net derivative instruments (701) Property and equipment and capitalized software development costs (3,241) (2,717) Unrealized exchange gain/loss (116) Other (624) (456) Net deferred tax assets $ 2,339 $ 1,844 As of October 31, 2017, we had net operating losses carryforwards for international and U.S. income tax purposes of $8.1 million, of which $6.7 million will expire within 5 years beginning in 2018 and $1.4 million will expire between 5 and 20 years. We also had tax credits of $784,000 which will expire between year s 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): 2017 2016 2015 Balance, beginning of year $ 1,102 $ 1,034 $ 1,196 Additions based on tax positions related to the current year 37 52 17 Additions (reductions) related to prior year tax positions (20) 19 (51) Reductions due to statute expiration (74) Other 56 (3) (128) Balance, end of year $ 1,101 $ 1,102 $ 1,034 The entire balance of the unrecognized tax benefits and related interest at October 31, 2017, if recognized, would affect the effective tax rate in future periods. This balance will be reduced by $1.0 million during the next fiscal year due to statute of limitations expiration. We recognize accrued interest and penalties related to unrecognized tax benefits as components of our income tax provision. As of October 31, 2017, the amount of interest accrued, reported in other liabilities, was approximately $65,000, which did not include the federal tax benefit of interest deductions. The statute of limitations with respect to unrecognized tax benefits will expire between July 2018 and July 2020. We file income tax returns in the U.S. federal jurisdiction and various states, local, and non-U.S. jurisdictions. A summary of open tax years by major jurisdiction is presented below: United States federal Fiscal 2014 through the current period Germany¹ Fiscal 2013 through the current period Taiwan Fiscal 2014 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, 2017 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
EMPLOYEE BENEFITS | 7. 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 million, $1.1 million, and $933,000, for the fiscal years ended October 31, 2017, 2016 and 2015, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Oct. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | 8. 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, restricted stock, stock units and other stock-based awards. The 2016 Equity Plan replaced the Hurco Companies, Inc. 2008 Equity Incentive Plan (the “2008 Plan”) and is the only active plan under which equity awards may be made by us 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, which includes 386,048 shares remaining available for future grants under the 2008 Plan as of March 10, 2016, the date our shareholders approved the 2016 Equity Plan. The Compensation Committee of our Board of Directors has the authority to determine the officers, directors and key employees who will be granted awards under the 2016 Equity Plan; 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 and performance units under the 2016 Equity Plan that are currently outstanding, and we have granted stock options, restricted shares and performance shares under the 2008 Plan that 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. A summary of the status of the options as of October 31, 2017, 2016 and 2015 and the related activity for the year is as follows: Shares Under Weighted Average Grant Option Date Fair Value 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 Granted Cancelled Expired Exercised (29,164) $ 18.31 Balance October 31, 2017 78,725 $ 20.97 The total intrinsic value of stock options exercised during the twelve months ended October 31, 2017, 2016 and 2015 was approximately $771,000, $0 and $154,000, respectively. As of October 31, 2017, the total intrinsic value of outstanding stock options already vested and the intrinsic value of options that are outstanding and exercisable was $1.8 million. Stock options outstanding and exercisable on October 31, 2017, were Weighted Average Weighted Average Range of Exercise Shares Under Exercise Price Per Remaining Contractual Prices Per Share Option Share Life in Years Outstanding $ 14.82 11,000 $ 14.82 2.1 14.88 4,200 14.88 1.5 18.13 12,000 18.13 2.5 21.45 30,012 21.45 4.1 23.30 16,513 23.30 5.1 35.83 5,000 35.83 0.6 $ 14.82 35.83 78,725 $ 20.25 3.4 Exercisable $ 14.82 11,000 $ 14.82 2.1 14.88 4,200 14.88 1.5 18.13 12,000 18.13 2.5 21.45 30,012 21.45 4.1 23.30 16,513 23.30 5.1 35.83 5,000 35.83 0.6 $ 14.82 35.83 78,725 $ 20.25 3.4 On March 9, 2017, the Compensation Committee granted a total of 14,920 shares of time-based restricted stock to our non-employee directors. The restricted shares vest in full one year from the date of grant provided the recipient remains on the board of directors through that date. The grant date fair value of the restricted shares was based on the closing sales price of our common stock on the grant date, which was $26.80 per share. On January 5, 2017, the Compensation Committee determined the degree to which the long-term incentive compensation arrangement approved for the fiscal 2014-2016 performance period was attained, and the resulting payout level relative to the target amount for each of the metrics that were established by the Compensation Committee in 2014. As a result, the Compensation Committee determined that a total of 30,683 performance shares were earned by our executive officers, which performance shares vested on January 5, 2017. The vesting date fair value of the performance shares was based on the closing sales price of our common stock on the vesting date, which was $33.90 per share. All related stock-based compensation cost for these vested performance shares was expensed accordingly during the three year performance period ending October 31, 2016. On January 5, 2017, the Compensation Committee also approved a long-term incentive compensation arrangement for our executive officers in the form of restricted shares and performance stock units (“PSUs”) under the 2016 Equity Plan, which will be payable in shares of our common stock if earned and vested. The awards were 25% time-based vesting and 75% performance-based vesting. The three-year performance period for the PSUs is fiscal 2017 through fiscal 2019. On that date, the Compensation Committee granted a total of 14,747 shares of time-based restricted stock to our executive officers. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $33.90 per share. On January 5, 2017, the Compensation Committee also granted a total target number of 18,496 PSUs to our executive officers designated as “PSU TSR”. These PSUs were weighted as approximately 40% of the overall 2017 executive long-term incentive compensation arrangement and will vest and be paid based upon the total shareholder return of our common stock over the three-year period of fiscal 2017-2019, relative to the total shareholder return of the companies in a specified peer group over that period. Participants will have the ability to earn between 50% of the target number of the PSUs TSR for achieving threshold performance and 200% of the target number of the PSUs TSR for achieving maximum performance. The grant date fair value of the PSUs TSR was $43.25 per PSU and was calculated using the Monte Carlo approach. On January 5, 2017, the Compensation Committee also granted a total target number of 20,647 PSUs to our executive officers designated as “PSU ROIC”. These PSUs were weighted as approximately 35% of the overall 2017 executive long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average return on invested capital over the three-year period of fiscal 2017-2019. Participants will have the ability to earn between 50% of the target number of the PSUs - ROIC for achieving threshold performance and 200% of the target number of the PSUs - ROIC for achieving maximum performance. The grant date fair value of the PSUs ROIC was based on the closing sales price of our common stock on the grant date, which was $33.90 per share. On March 10, 2016, the Compensation Committee granted a total of 9,170 shares of time-based restricted stock to our non-employee directors under the 2016 Equity Plan. The restricted shares vest in full one year from the date of grant provided the recipient remains on the board of directors through that date. The grant date fair value of the restricted shares was based on the closing sales price of our common stock on the grant date which was $30.52 per share. 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% time-based vesting and 75% performance-based vesting. The three-year performance period is fiscal 2016 through fiscal 2018. On that date, the Compensation Committee granted a total of 17,684 shares of time-based restricted s tock On January 4, 2016, the Compensation Committee also granted a total target number of 24,023 performance shares to our executive officers designated as “Performance Shares TSR”. The shares were weighted as 40% of the overall long-term incentive compensation arrangement and will vest and be paid based upon the total shareholder return of our common stock over a three-year period, relative to the total shareholder return of the companies in a specified peer group over that period. Participants will have the ability to earn between 50% of the target number of shares for achieving threshold performance and 200% of the target number of shares for achieving maximum performance. The grant date fair value of the Performance Shares - TSR was $30.67 per share and was calculated using the Monte Carlo approach. On January 4, 2016, the Compensation Committee also granted a total target number of 24,759 performance shares to our executive officers designated as “Performance Shares ROIC”. These shares were weighted as 35% of the overall long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average return on invested capital over the three-year period. Participants will have the ability to earn between 50% of the target number of shares for achieving threshold performance and 200% of the target number of shares for achieving maximum performance. The grant date fair value of the Performance Shares - ROIC was based on the closing sales price of our common stock on the grant date which was $26.04 per share. On March 12, 2015, the Compensation Committee granted a total of 9,086 shares of restricted stock to our non-employee directors. The restricted stock vests in full one year from the date of grant provided the recipient remains on the board of directors through that date. The grant date fair value of restricted stock was based on the closing sales price of our common stock on the grant date which was $30.80 per share. 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% time-based vesting and 75% performance-based vesting. The three-year performance period is fiscal 2015 through fiscal 2017. On that date, the Compensation Committee granted a total of 11,174 shares of time-based restricted shares to our executive officers. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant which was $32.22 per share. On January 6, 2015, the Compensation Committee also granted a total target number of 16,740 performance shares to our executive officers designated as “Performance Shares TSR”. The shares were weighted as 40% of the overall long-term incentive compensation arrangement and will vest and be paid based upon the total shareholder return of our common stock over a three-year period, relative to the total shareholder return of the companies in a specified peer group over that period. Participants will have the ability to earn between 50% of the target number of shares for achieving threshold performance and 200% of the target number of shares for achieving maximum performance. The grant date fair value of the Performance Shares - TSR was $34.41 per share and was calculated using the Monte Carlo approach. On January 6, 2015, the Compensation Committee also granted a total target number of 15,643 performance shares to our executive officers designated as “Performance Shares ROIC”. These shares were weighted as 35% of the overall long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average return on invested capital over the three-year period. Participants will have the ability to earn between 50% of the target number of shares for achieving threshold performance and 200% of the target number of shares for achieving maximum performance. The grant date fair value of the Performance Shares - ROIC was based on the closing sales price of our common stock on the grant date which was $32.22 per share. A reconciliation of the Company’s restricted stock activity and related information is as follows: Number Weighted Average Grant of Shares Date Fair Value Unvested at October 31, 2016 147,350 $ 28.79 Shares or units granted 71,011 34.61 Shares or units vested (38,930) 26.98 Shares or units cancelled (7,678) 29.98 Shares withheld (13,944) 25.89 Unvested at October 31, 2017 157,809 $ 32.05 During fiscal 2017 and 2016, we recorded approximately $1.7 million and $1.6 million, respectively, of stock-based compensation expense related to grants under the 2008 Plan and the 2016 Equity Plan. We recorded approximately $1.2 million of stock-based compensation expense related to grants under the 2008 Plan for fiscal 2015. As of October 31, 2017, there was an estimated $2.1 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal 2020. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS As of October 31, 2017, we owned approximately 35% of the outstanding shares of a Taiwanese-based contract manufacturer, Hurco Automation, Ltd. (“HAL”). HAL’s scope of activities includes the design, manufacture, sales and distribution of industrial automation products, software systems and related components, including control systems and components produced under contract for sale exclusively to us. We are accounting for this investment using the equity method. The investment of $3.6 million and $3.6 million at October 31, 2017 and 2016, respectively, is included in Investments and other assets, net on the Consolidated Balance Sheets. Purchases of controls from HAL amounted to $10.0 million, $9.9 million and $8.9 million in fiscal 2017, 2016 and 2015, respectively. Sales of control component parts to HAL were $139,000, $623,000 and $723,000 for the fiscal years ended October 31, 2017, 2016 and 2015, respectively. Trade payables to HAL were $2.5 million and $2.0 million at October 31, 2017 and 2016, respectively. Trade receivables from HAL were $30,000 and $94,000 at October 31, 2017 and 2016, respectively. Summary unaudited financial information for HAL’s operations and financial condition is as follows (in thousands): 2017 2016 2015 Net Sales $ 15,800 $ 13,948 $ 12,852 Gross Profit 2,457 2,240 2,041 Operating Income 1,037 952 665 Net Income 1,320 1,323 1,546 Current Assets $ 11,310 $ 10,238 $ 10,262 Non-current Assets 4,440 3,733 3,087 Current Liabilities 3,916 2,572 3,472 |
CONTINGENCIES AND LITIGATION
CONTINGENCIES AND LITIGATION | 12 Months Ended |
Oct. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES AND LITIGATION | 10. 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, 2017 | |
Standard Product Warranty Disclosure [Abstract] | |
GUARANTEES AND PRODUCT WARRANTIES | 11. 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, 2017, we had 27 outstanding third party payment guarantees totaling approximately $1.0 million. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer has the risk of ownership. The customer does not obtain title, however, until it has paid for the machine. A retention of title clause allows us to recover the machine if the customer defaults on the financing. We accrue liabilities under these guarantees at fair value, which amounts are insignificant. 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. A reconciliation of the changes in our warranty reserve is as follows (in thousands): 2017 2016 2015 Balance, beginning of year $ 1,523 $ 2,186 $ 2,048 Provision for warranties during the year 3,379 2,715 3,736 Charges to the accrual (3,203) (3,349) (3,495) Impact of foreign currency translation 73 (29) (103) Balance, end of year $ 1,772 $ 1,523 $ 2,186 The increase in our warranty reserve from fiscal 2016 to fiscal 2017 was primarily due to an a |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Oct. 31, 2017 | |
Leases, Operating [Abstract] | |
OPERATING LEASES | 12. OPERATING LEASES We lease facilities, certain equipment and vehicles under operating leases that expire at various dates through 2024. Future payments required under operating leases as of October 31, 2017, are summarized as follows (in thousands): 2018 $ 3,316 2019 2,077 2020 902 2021 706 2022 and thereafter 967 Total $ 7,968 Lease expense for the fiscal years ended October 31, 2017, 2016, and 2015 was $4.4 million, $4.5 million, and $3.8 million, respectively. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION | 12 Months Ended |
Oct. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL INFORMATION | 13. QUARTERLY FINANCIAL INFORMATION (Unaudited) First Second Third Fourth 2017 (In thousands, except per share data) Quarter Quarter Quarter Quarter Sales and service fees $ 48,744 $ 58,222 $ 60,770 $ 75,931 Gross profit 12,586 17,068 17,540 23,370 Gross profit margin 26 % 29 % 29 % 31 % Selling, general and administrative expenses 11,167 11,714 12,395 14,385 Operating income 1,419 5,354 5,145 8,985 Provision for income taxes 543 1,467 1,353 2,238 Net income 879 3,646 3,888 6,702 Income per common share basic $ 0.13 $ 0.55 $ 0.58 $ 1.01 Income per common share diluted $ 0.13 $ 0.54 $ 0.58 $ 1.00 First Second Third Fourth 2016 (In thousands, except per share data) Quarter Quarter Quarter Quarter 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 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Oct. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 14. 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 193 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 2017, no distributor accounted for more than 5% of our sales and service fees. In fiscal 2017, approximately 71% 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. 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, 2017 2016 2015 Computerized Machine Tools * $ 209,311 $ 195,618 $ 189,712 Computer Control Systems and Software 2,324 2,078 3,085 Service Parts 24,255 21,908 19,375 Service Fees 7,777 7,685 7,211 Total $ 243,667 $ 227,289 $ 219,383 * 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. 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, 2017 2016 2015 United States of America $ 70,912 $ 70,630 $ 66,781 Canada 3,801 3,881 3,114 Central & South Americas 1,844 1,950 1,930 Total Americas 76,557 76,461 71,825 Germany 48,786 44,411 43,727 United Kingdom 28,019 25,313 30,235 Italy 13,416 12,947 11,768 France 13,917 13,787 13,162 Other Europe 27,583 27,150 26,598 Total Europe 131,721 123,608 125,490 Asia Pacific 32,694 25,633 20,265 Other Foreign 2,695 1,587 1,803 Total Europe, Asia Pacific and Other Foreign 167,110 150,828 147,558 $ 243,667 $ 227,289 $ 219,383 Long-lived tangible assets, net by geographic area, were (in thousands): As of October 31, 2017 2016 2015 United States of America $ 7,599 $ 7,846 $ 8,658 Foreign countries 6,185 5,911 5,893 $ 13,784 $ 13,757 $ 14,551 Net assets by geographic area were (in thousands): As of October 31, 2017 2016 2015 Americas $ 86,432 $ 84,040 $ 83,236 Europe 70,536 60,861 59,468 Asia Pacific 46,117 40,574 31,864 $ 203,085 $ 185,475 $ 174,568 |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Oct. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | 15. NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncement: In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation Stock Compensation (Topic 718), which simplifies several areas of accounting for share-based compensation arrangements, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for our fiscal year 2018, including interim periods within the fiscal year. Early adoption is permitted. We elected to early adopt the new guidance in the fourth quarter of fisc al 6 a a We adopted the aspects of the standard affecting the cash flow presentation retrospectively, and accordingly, to conform to the current year presentation, we reclassified $ 1 46,000 239,000 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 Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a comprehensive new lease accounting model. ASU 2016-02 clarifies the definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and requires lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. ASU 2016-02 is effective for our fiscal year 2020, including interim periods within the fiscal year, and requires modified retrospective application. Early adoption is permitted. We are assessing the impact this new accounting guidance will have on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business We do not expect that the adoption of this accounting standard update will have a material effect on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, IntangiblesGoodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, CompensationStock Compensation (Topic 718): Scope of Modification Accounting, to provide clarity and to reduce diversity in practice and cost and complexity when applying the guidance in Topic 718 to the modification of the terms and conditions of a share-based payment award. ASU 2017-09 includes guidance on determining which changes to the terms and conditions of share-based payment awards require a company to apply modification accounting under Topic 718. This update requires the entity to account for the effects of a modification unless specific conditions are met. ASU 2017-09 applies to entities that change the terms or conditions of a share-based payment award and is effective for our fiscal year 2019. Early adoption is permitted, including adoption in any interim period. We do not expect that the adoption of this accounting standard update will have a material effect on our consolidated financial statements. There have been no other significant changes in the Company’s critical accounting policies and estimates during the fiscal year ended October 31, 2017. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts and Reserves | 12 Months Ended |
Oct. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts and Reserves | Schedule II - Valuation and Qualifying Accounts and Reserves for the Years Ended October 31, 2017, 2016, and 2015 (Dollars in thousands) Description Balance at Charged to/ Charged Deductions Balance Allowance for doubtful accounts for the year ended: October 31, 2017 $ 664 $ (123) $ $ 98 (1) $ 639 October 31, 2016 $ 739 $ (15) $ $ 60 (1) $ 664 October 31, 2015 $ 878 $ (13) $ $ 126 (1) $ 739 Income tax valuation allowance for the year ended: October 31, 2017 $ 2,067 $ 515 $ $ 300 $ 2,282 October 31, 2016 $ 1,485 $ 587 $ $ 5 $ 2,067 October 31, 2015 $ 1,225 $ 402 $ $ 142 $ 1,485 (1) Receivable write-offs. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
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% ownership interest in a Taiwan affiliate that is accounted for using the equity method. Our investment in that affiliate was approximately $3.6 million and $3.6 million as of October 31, 2017 and 2016, respectively. That investment is included in Investments and other assets, net on the accompanying Consolidated Balance Sheets. Intercompany accounts and transactions have been eliminated. |
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, 2017 were a net loss of $7.4 million and are included in Accumulated other comprehensive loss. Foreign currency transaction gains and losses are recorded as income or expense as incurred and are recorded in Other expense, net. |
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, 2017, in Euros, Pounds Sterling and New Taiwan Dollars with set maturity dates ranging from November 2017 through October 2018. The contract amount at forward rates in U.S. Dollars at October 31, 2017 for Euros and Pounds Sterling was $31.6 million and $8.5 million, respectively. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $31.2 million at October 31, 2017. At October 31, 2017, we had approximately $790,000 of loss, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Of this amount, $636,000 represented unrealized loss, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred losses will be recorded as an adjustment to Cost of sales and service in periods through October 2018, in which the corresponding inventory that is the subject of the related hedge contract is sold, as described above. 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 million in November 2016. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under the FASB guidance related to the accounting for derivatives instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment, net of tax, in Accumulated other comprehensive loss in the same manner as the underlying hedged net assets. This forward contract matured in November 2017 and we entered into a new forward contract for the same notional amount that is set to mature in November 2018. As of October 31, 2017, we had a realized gain of $809,000 and an unrealized loss of $140,000, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss, related to these forward contracts. Derivatives Not Designated as Hedging Instruments We enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on receivables and payables denominated in foreign currencies. These derivative instruments are not designated as hedges under 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, 2017, in Euros, Pounds Sterling, South African Rand and New Taiwan Dollars with set maturity dates ranging from November 2017 through October 2018. The contract amounts at forward rates in U.S. Dollars at October 31, 2017 for Euros, Pounds Sterling and South African Rand totaled $28.1 million. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $32.6 million at October 31, 2017. 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 . 2017 2016 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 305 Derivative assets $ 1,721 Foreign exchange forward contracts Derivative liabilities $ 1,508 Derivative liabilities $ 173 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 291 Derivative assets $ 4 Foreign exchange forward contracts Derivative liabilities $ 224 Derivative liabilities $ 365 Effect of Derivative Instruments on the Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity and Statements of Income Derivative instruments had the following effects on our Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity and Statements of Income, net of tax, during the fiscal years ended October 31, 2017 and 2016 (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified from Reclassified from Other Comprehensive Other Comprehensive Other Comprehensive Derivatives Income (Loss) Income (Loss) Income (Loss) 2017 2016 2017 2016 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts $ (709) $ 1,431 Cost of sales and service $ 1,354 $ 1,647 Intercompany sales/purchases Foreign exchange forward contract $ (96) $ 28 Net Investment We recognized a gain of $18,000 during the fiscal year ended October 31, 2017 and a gain of $18,000 during the fiscal year ended October 31, 2016 as a result of contracts closed early that were deemed ineffective for financial reporting and did not qualify as cash flow hedges. We recognized the following gains and losses in our Consolidated Statements of Income during the fiscal years ended October 31, 2017 and 2016 on derivative instruments not designated as hedging instruments (in thousands): Location of Gain (Loss) Amount of Gain (Loss) Derivatives Recognized in Operations Recognized in Operations 2017 2016 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (1,001) $ 536 The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the fiscal years ended October 31, 2017 and 2016 (in thousands): Foreign Cash Currency Flow Translation Hedges Total 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) Other comprehensive income (loss) before reclassifications 4,916 (709) 4,207 Reclassifications (1,354) (1,354) Balance, October 31, 2017 $ (7,409) $ (781) $ (8,190) |
Inventories | 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. 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 Building & leasehold improvements 3 40 Total depreciation and amortization expense recognized for property and equipment for the fiscal years ended October 31, 2017, 2016 and 2015 was $2.5 million, $2.5 million, and $2.2 million, respectively. |
Revenue Recognition | Revenue Recognition. We recognize revenue from sales of our machine tool systems upon delivery of the product to the customer or distributor, 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 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, and are generally sold on a stand-alone basis. Sales related to software upgrades 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 we 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 11 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 $4.2 million, $4.9 million, and $3.9 million, in fiscal 2017, 2016, and 2015, respectively. |
Software Development Costs | Software Development Costs. We sell software products that are essential to our machine tools. 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 $2.3 million in fiscal 2017, $2.2 million in fiscal 2016, and $1.4 million in fiscal 2015 related to software development projects. Amortization expense for software development costs was $1.0 million, $1.2 million, and $1.0 million, for the fiscal years ended October 31, 2017, 2016, and 2015, respectively. Accumulated amortization at October 31, 2017 and 2016 was $17.4 million and $16.5 million, respectively. Estimated amortization expense for the remaining unamortized software development costs for the fiscal years ending October 31, is as follows (in thousands): Fiscal Year Amortization Expense 2018 1,425 2019 1,250 2020 1,200 2021 1,075 2022 975 |
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. We use a qualitative approach to test goodwill and indefinite-lived assets for impairment annually. Periodically, or when indicators of impairment exist, we also utilize a two-stepped approach to measuring goodwill impairment. The first step of the test determines if there is potential goodwill impairment. In this step we compare the fair value of the reporting unit to its carrying amount (which includes goodwill). The fair value of the reporting unit is determined by using an estimate of future cash flows utilizing a risk-adjusted discount rate to calculate the net present value of future cash flows (income approach), and by using a market approach based upon an analysis of valuation metrics of comparable peer companies. If the carrying amount exceeds the fair value, we perform the second step of the test, which measures the amount of impairment loss to be recorded, if any. In the second step, we compare the carrying amount of the goodwill to the implied fair value of the goodwill based on the net fair value of the recognized and unrecognized assets and liabilities of the reporting unit. If the implied fair value is less than the carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill is less than its carrying value. For other separately recognized intangible assets with indefinite lives, we use a qualitative approach to test such assets for impairment if certain conditions are met. 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 2017, we utilized both the quantitative and qualitative approaches to test for goodwill impairment and a qualitative approach to test intangible assets for potential impairment. For fiscal 2016, we utilized the qualitative approach to test both goodwill and intangible assets for potential impairment. For each of fiscal 2017 and 2016, we concluded that goodwill and other intangible assets were not impaired. As of October 31, 2017, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Gross Accumulated Net Tradenames and trademarks 13 years $ 245 $ (81) $ 164 Tradenames and trademarks indefinite 60 - 60 Customer relationships 15 years 257 (132) 125 Technology 13 years 713 (239) 474 Patents 6 years 2,973 (2,765) 208 Other 8 years 378 (333) 45 Total $ 4,626 $ (3,550) $ 1,076 As of October 31, 2016, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Gross Accumulated Net Intangible 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 Intangible asset amortization expense was $136,000, $137,000, and $207,000 for fiscal 2017, 2016 and 2015, respectively. Annual intangible asset amortization expense is estimated to be $120,000 per year for fiscal years 2018 through 2022. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets. Annually, or when there are indicators of impairment, we 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.” The following table presents a reconciliation of our basic and diluted earnings per share computation: Fiscal Year Ended October 31, 2017 2016 2015 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income $ 15,115 $ 15,115 $ 13,292 $ 13,292 $ 16,214 $ 16,214 Undistributed earnings allocated to participating shares (100) (100) (76) (76) (93) (93) Net income applicable to common shareholders $ 15,015 $ 15,015 $ 13,216 $ 13,216 $ 16,121 $ 16,121 Weighted average shares outstanding 6,615 6,615 6,569 6,569 6,543 6,543 Stock options and contingently issuable securities - 65 - 73 - 59 6,615 6,680 6,569 6,642 6,543 6,602 Income per share $ 2.27 $ 2.25 $ 2.01 $ 1.99 $ 2.46 $ 2.44 |
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, 2017 were approximately $92.9 million. In the event these earnings are later distributed to the U.S., such distributions would likely result in additional U.S. tax that may be offset, at least in part, by associated foreign tax credits. 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, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value of Derivative Instruments | 2017 2016 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 305 Derivative assets $ 1,721 Foreign exchange forward contracts Derivative liabilities $ 1,508 Derivative liabilities $ 173 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 291 Derivative assets $ 4 Foreign exchange forward contracts Derivative liabilities $ 224 Derivative liabilities $ 365 |
Schedule of Effect of Derivative Instruments on the Consolidated Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations | Derivative instruments had the following effects on our Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity and Statements of Income, net of tax, during the fiscal years ended October 31, 2017 and 2016 (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified from Reclassified from Other Comprehensive Other Comprehensive Other Comprehensive Derivatives Income (Loss) Income (Loss) Income (Loss) 2017 2016 2017 2016 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts $ (709) $ 1,431 Cost of sales and service $ 1,354 $ 1,647 Intercompany sales/purchases Foreign exchange forward contract $ (96) $ 28 Net Investment We recognized the following gains and losses in our Consolidated Statements of Income during the fiscal years ended October 31, 2017 and 2016 on derivative instruments not designated as hedging instruments (in thousands): Location of Gain (Loss) Amount of Gain (Loss) Derivatives Recognized in Operations Recognized in Operations 2017 2016 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (1,001) $ 536 |
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, 2017 and 2016 (in thousands): Foreign Cash Currency Flow Translation Hedges Total 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) Other comprehensive income (loss) before reclassifications 4,916 (709) 4,207 Reclassifications (1,354) (1,354) Balance, October 31, 2017 $ (7,409) $ (781) $ (8,190) |
Schedule of Property and Equipment Estimated Useful Lives | Number of Years Land Indefinite Building 40 Machines 7 10 Shop and office equipment 3 7 Building & 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): Fiscal Year Amortization Expense 2018 1,425 2019 1,250 2020 1,200 2021 1,075 2022 975 |
Schedule of Intangible Assets | As of October 31, 2017, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Gross Accumulated Net Tradenames and trademarks 13 years $ 245 $ (81) $ 164 Tradenames and trademarks indefinite 60 - 60 Customer relationships 15 years 257 (132) 125 Technology 13 years 713 (239) 474 Patents 6 years 2,973 (2,765) 208 Other 8 years 378 (333) 45 Total $ 4,626 $ (3,550) $ 1,076 As of October 31, 2016, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Gross Accumulated Net Intangible 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 |
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, 2017 2016 2015 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income $ 15,115 $ 15,115 $ 13,292 $ 13,292 $ 16,214 $ 16,214 Undistributed earnings allocated to participating shares (100) (100) (76) (76) (93) (93) Net income applicable to common shareholders $ 15,015 $ 15,015 $ 13,216 $ 13,216 $ 16,121 $ 16,121 Weighted average shares outstanding 6,615 6,615 6,569 6,569 6,543 6,543 Stock options and contingently issuable securities - 65 - 73 - 59 6,615 6,680 6,569 6,642 6,543 6,602 Income per share $ 2.27 $ 2.25 $ 2.01 $ 1.99 $ 2.46 $ 2.44 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories as of October 31, 2017 and 2016 are summarized below (in thousands): 2017 2016 Purchased parts and sub-assemblies $ 33,045 $ 25,661 Work-in-process 20,008 17,724 Finished goods 66,895 73,640 $ 119,948 $ 117,025 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
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, 2017 and 2016 (in thousands): Assets Liabilities October 31, October 31, October 31, October 31, 2017 2016 2017 2016 Level 1 Deferred compensation $ 1,638 $ 1,363 $ $ Level 2 Derivatives $ 596 $ 1,725 $ 1,732 $ 538 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
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, 2017 2016 2015 Current: U.S. taxes $ 308 $ 1,362 $ 4,600 Foreign taxes 4,185 4,456 3,752 4,493 5,818 8,352 Deferred: U.S. taxes 1,236 (176) (896) Foreign taxes (128) (49) (117) 1,108 (225) (1,013) $ 5,601 $ 5,593 $ 7,339 |
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, 2017 2016 2015 Income before income taxes: Domestic $ 5,477 $ 2,703 $ 10,806 Foreign 15,239 16,182 12,747 Earnings (Loss) before taxes on income $ 20,716 $ 18,885 $ 23,553 Tax rates: U.S. statutory rate 34 % 34 % 35 % Effect of tax rate of international jurisdictions different than U.S. statutory rates (5 %) (7 %) (5 %) Valuation allowance. 1 % 3 % 1 % State taxes 0 % 0 % 1 % Tax Credits (3 %) (2 %) (1 %) Effect of Tax Rate Changes 0 % 4 % 0 % Other 0 % (2 %) 0 % Effective tax rate 27 % 30 % 31 % |
Schedule of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets and liabilities at October 31, 2017 and 2016 were as follows (in thousands): October 31, 2017 2016 Deferred Tax Assets: Accrued inventory reserves $ 1,965 $ 1,824 Accrued warranty expenses 438 312 Compensation related expenses 2,952 2,664 Net derivative instruments 417 Unrealized exchange gain/loss 370 Other accrued expenses 187 194 Net operating loss carryforwards 1,722 1,616 Other credit carryforwards 517 474 Other 404 331 8,602 7,785 Less: Valuation allowance - net operating loss and other credit carryforwards (2,282) (2,067) Deferred tax assets 6,320 5,718 Deferred Tax Liabilities: Net derivative instruments (701) Property and equipment and capitalized software development costs (3,241) (2,717) Unrealized exchange gain/loss (116) Other (624) (456) Net deferred tax assets $ 2,339 $ 1,844 |
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): 2017 2016 2015 Balance, beginning of year $ 1,102 $ 1,034 $ 1,196 Additions based on tax positions related to the current year 37 52 17 Additions (reductions) related to prior year tax positions (20) 19 (51) Reductions due to statute expiration (74) Other 56 (3) (128) Balance, end of year $ 1,101 $ 1,102 $ 1,034 |
Summary of open tax years by major jurisdiction | A summary of open tax years by major jurisdiction is presented below: United States federal Fiscal 2014 through the current period Germany¹ Fiscal 2013 through the current period Taiwan Fiscal 2014 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, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Option Activity | A summary of the status of the options as of October 31, 2017, 2016 and 2015 and the related activity for the year is as follows: Shares Under Weighted Average Grant Option Date Fair Value 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 Granted Cancelled Expired Exercised (29,164) $ 18.31 Balance October 31, 2017 78,725 $ 20.97 |
Schedule of Stock Options Outstanding and Exercisable | Stock options outstanding and exercisable on October 31, 2017, were Weighted Average Weighted Average Range of Exercise Shares Under Exercise Price Per Remaining Contractual Prices Per Share Option Share Life in Years Outstanding $ 14.82 11,000 $ 14.82 2.1 14.88 4,200 14.88 1.5 18.13 12,000 18.13 2.5 21.45 30,012 21.45 4.1 23.30 16,513 23.30 5.1 35.83 5,000 35.83 0.6 $ 14.82 35.83 78,725 $ 20.25 3.4 Exercisable $ 14.82 11,000 $ 14.82 2.1 14.88 4,200 14.88 1.5 18.13 12,000 18.13 2.5 21.45 30,012 21.45 4.1 23.30 16,513 23.30 5.1 35.83 5,000 35.83 0.6 $ 14.82 35.83 78,725 $ 20.25 3.4 |
Schedule of Restricted Stock Activity | A reconciliation of the Company’s restricted stock activity and related information is as follows: Number Weighted Average Grant of Shares Date Fair Value Unvested at October 31, 2016 147,350 $ 28.79 Shares or units granted 71,011 34.61 Shares or units vested (38,930) 26.98 Shares or units cancelled (7,678) 29.98 Shares withheld (13,944) 25.89 Unvested at October 31, 2017 157,809 $ 32.05 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Financial Information | Summary unaudited financial information for HAL’s operations and financial condition is as follows (in thousands): 2017 2016 2015 Net Sales $ 15,800 $ 13,948 $ 12,852 Gross Profit 2,457 2,240 2,041 Operating Income 1,037 952 665 Net Income 1,320 1,323 1,546 Current Assets $ 11,310 $ 10,238 $ 10,262 Non-current Assets 4,440 3,733 3,087 Current Liabilities 3,916 2,572 3,472 |
GUARANTEES AND PRODUCT WARRAN32
GUARANTEES AND PRODUCT WARRANTIES (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Standard Product Warranty Disclosure [Abstract] | |
Reconciliation of Warranty Reserve | A reconciliation of the changes in our warranty reserve is as follows (in thousands): 2017 2016 2015 Balance, beginning of year $ 1,523 $ 2,186 $ 2,048 Provision for warranties during the year 3,379 2,715 3,736 Charges to the accrual (3,203) (3,349) (3,495) Impact of foreign currency translation 73 (29) (103) Balance, end of year $ 1,772 $ 1,523 $ 2,186 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Leases, Operating [Abstract] | |
Schedule of Future Minimum Payments under Operating Leases | We lease facilities, certain equipment and vehicles under operating leases that expire at various dates through 2024. Future payments required under operating leases as of October 31, 2017, are summarized as follows (in thousands): 2018 $ 3,316 2019 2,077 2020 902 2021 706 2022 and thereafter 967 Total $ 7,968 |
QUARTERLY FINANCIAL INFORMATI34
QUARTERLY FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Selected Quarterly Financial Information | First Second Third Fourth 2017 (In thousands, except per share data) Quarter Quarter Quarter Quarter Sales and service fees $ 48,744 $ 58,222 $ 60,770 $ 75,931 Gross profit 12,586 17,068 17,540 23,370 Gross profit margin 26 % 29 % 29 % 31 % Selling, general and administrative expenses 11,167 11,714 12,395 14,385 Operating income 1,419 5,354 5,145 8,985 Provision for income taxes 543 1,467 1,353 2,238 Net income 879 3,646 3,888 6,702 Income per common share basic $ 0.13 $ 0.55 $ 0.58 $ 1.01 Income per common share diluted $ 0.13 $ 0.54 $ 0.58 $ 1.00 First Second Third Fourth 2016 (In thousands, except per share data) Quarter Quarter Quarter Quarter 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 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
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, 2017 2016 2015 Computerized Machine Tools * $ 209,311 $ 195,618 $ 189,712 Computer Control Systems and Software 2,324 2,078 3,085 Service Parts 24,255 21,908 19,375 Service Fees 7,777 7,685 7,211 Total $ 243,667 $ 227,289 $ 219,383 * 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, 2017 2016 2015 United States of America $ 70,912 $ 70,630 $ 66,781 Canada 3,801 3,881 3,114 Central & South Americas 1,844 1,950 1,930 Total Americas 76,557 76,461 71,825 Germany 48,786 44,411 43,727 United Kingdom 28,019 25,313 30,235 Italy 13,416 12,947 11,768 France 13,917 13,787 13,162 Other Europe 27,583 27,150 26,598 Total Europe 131,721 123,608 125,490 Asia Pacific 32,694 25,633 20,265 Other Foreign 2,695 1,587 1,803 Total Europe, Asia Pacific and Other Foreign 167,110 150,828 147,558 $ 243,667 $ 227,289 $ 219,383 |
Schedule of Assets by Geographic Area | Long-lived tangible assets, net by geographic area, were (in thousands): As of October 31, 2017 2016 2015 United States of America $ 7,599 $ 7,846 $ 8,658 Foreign countries 6,185 5,911 5,893 $ 13,784 $ 13,757 $ 14,551 Net assets by geographic area were (in thousands): As of October 31, 2017 2016 2015 Americas $ 86,432 $ 84,040 $ 83,236 Europe 70,536 60,861 59,468 Asia Pacific 46,117 40,574 31,864 $ 203,085 $ 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, 2017 | Oct. 31, 2016 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 596 | $ 1,725 |
Derivative liabilities | 1,732 | 538 |
Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 305 | 1,721 |
Derivative liabilities | 1,508 | 173 |
Foreign Exchange Forward [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 291 | 4 |
Derivative liabilities | $ 224 | $ 365 |
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, 2017 | Oct. 31, 2016 | |
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) | $ (709) | $ 1,431 |
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) | 1,354 | 1,647 |
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) | (96) | 28 |
Not Designated as Hedging Instrument [Member] | Other Income And Expense [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Operations | $ (1,001) | $ 536 |
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, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Derivative [Line Items] | |||
Beginning Balance | $ (11,043) | $ (9,386) | |
Other comprehensive income (loss) before reclassifications | 4,207 | (10) | |
Reclassifications | (1,354) | (1,647) | $ (784) |
Ending Balance | (8,190) | (11,043) | (9,386) |
Foreign Currency Translation [Member] | |||
Derivative [Line Items] | |||
Beginning Balance | (12,325) | (10,884) | |
Other comprehensive income (loss) before reclassifications | 4,916 | (1,441) | |
Reclassifications | 0 | 0 | |
Ending Balance | (7,409) | (12,325) | (10,884) |
Cash Flow Hedges [Member] | |||
Derivative [Line Items] | |||
Beginning Balance | 1,282 | 1,498 | |
Other comprehensive income (loss) before reclassifications | (709) | 1,431 | |
Reclassifications | (1,354) | (1,647) | |
Ending Balance | $ (781) | $ 1,282 | $ 1,498 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Estimated Useful Lives) (Details) | 12 Months Ended |
Oct. 31, 2017 | |
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 |
Building And Leasehold Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Building And 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, 2017USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
2,018 | $ 1,425 |
2,019 | 1,250 |
2,020 | 1,200 |
2,021 | 1,075 |
2,022 | $ 975 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 4,626 | $ 4,562 |
Accumulated Amortization | (3,550) | (3,412) |
Net Intangible Assets | 1,076 | 1,150 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | 257 | 254 |
Accumulated Amortization | (132) | (114) |
Net Intangible Assets | $ 125 | $ 140 |
Weighted Average Amortization Period | 15 years | 15 years |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 713 | $ 672 |
Accumulated Amortization | (239) | (172) |
Net Intangible Assets | $ 474 | $ 500 |
Weighted Average Amortization Period | 13 years | 13 years |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 2,973 | $ 2,972 |
Accumulated Amortization | (2,765) | (2,741) |
Net Intangible Assets | $ 208 | $ 231 |
Weighted Average Amortization Period | 6 years | 6 years |
Other [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 378 | $ 373 |
Accumulated Amortization | (333) | (326) |
Net Intangible Assets | $ 45 | $ 47 |
Weighted Average Amortization Period | 8 years | 8 years |
Tradenames and trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 245 | $ 231 |
Accumulated Amortization | (81) | (59) |
Net Intangible Assets | 164 | 172 |
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, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Net income | $ 6,702 | $ 3,888 | $ 3,646 | $ 879 | $ 3,003 | $ 2,720 | $ 3,674 | $ 3,895 | $ 15,115 | $ 13,292 | $ 16,214 |
Undistributed earnings allocated to participating shares - Basic | (100) | (76) | (93) | ||||||||
Undistributed earnings allocated to participating shares - Diluted | (100) | (76) | (93) | ||||||||
Net income applicable to common shareholders - Basic | 15,015 | 13,216 | 16,121 | ||||||||
Net income applicable to common shareholders - Diluted | $ 15,015 | $ 13,216 | $ 16,121 | ||||||||
Weighted average shares outstanding - Basic | 6,615 | 6,569 | 6,543 | ||||||||
Weighted average shares outstanding -Diluted | 6,680 | 6,642 | 6,602 | ||||||||
Stock options and contingently issuable securities | 65 | 73 | 59 | ||||||||
Income per share -Basic | $ 1.01 | $ 0.58 | $ 0.55 | $ 0.13 | $ 0.45 | $ 0.41 | $ 0.56 | $ 0.59 | $ 2.27 | $ 2.01 | $ 2.46 |
Income per share - Diluted | $ 1 | $ 0.58 | $ 0.54 | $ 0.13 | $ 0.45 | $ 0.4 | $ 0.56 | $ 0.58 | $ 2.25 | $ 1.99 | $ 2.44 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) € in Millions | 12 Months Ended | |||
Oct. 31, 2017USD ($) | Oct. 31, 2016USD ($) | Oct. 31, 2015USD ($) | Nov. 30, 2016EUR (€) | |
Translation of Foreign Currencies | ||||
Cumulative foreign currency translation adjustments | $ 7,400,000 | |||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | 134,300,000 | $ 125,600,000 | ||
(Losses) gains, net of tax, related to cash flow hedges deferred in Accumulated Other Comprehensive Loss | (790,000) | |||
Unrealized gain (loss), net of tax, to be reclassified in next 12 months | (636,000) | |||
Gain (loss) on hedge ineffectiveness | 18,000 | 18,000 | ||
Property and Equipment | ||||
Depreciation and amortization expense | 2,500,000 | 2,500,000 | $ 2,200,000 | |
Research and Development Costs | ||||
Research and development expenses | 4,200,000 | 4,900,000 | 3,900,000 | |
Software Development Costs | ||||
Capitalized costs | 2,300,000 | 2,200,000 | 1,400,000 | |
Accumulated amortization | 17,400,000 | 16,500,000 | ||
Capitalized Computer Software, Amortization | 1,000,000 | 1,200,000 | 1,000,000 | |
Goodwill and Intangible Assets | ||||
Intangible assets amortization expense | 136,000 | 137,000 | $ 207,000 | |
Expected future amortization expense, 2018 | 120,000 | |||
Expected future amortization expense, 2019 | 120,000 | |||
Expected future amortization expense, 2020 | 120,000 | |||
Expected future amortization expense, 2021 | 120,000 | |||
Expected future amortization expense, 2022 | 120,000 | |||
Undistributed Earnings of Foreign Subsidiaries | 92,900,000 | |||
Forward Contracts [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | € | € 3 | |||
Realized gain on net investment hedge | 809,000 | |||
Unrealized gain (loss), net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss | $ (140,000) | |||
Derivative maturity date | November 2017 through October 2018 | |||
Forward Contracts [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Derivative maturity date | November 2017 through October 2018 | |||
Euros [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | $ 31,600,000 | |||
Pounds Sterling [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | 8,500,000 | |||
New Taiwan Dollars [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | 31,200,000 | |||
New Taiwan Dollars [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative financial instruments: | ||||
Notional principal of foreign exchange contracts | 32,600,000 | |||
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 | $ 28,100,000 | |||
Hurco Automation Ltd [Member] | ||||
Consolidation | ||||
Ownership interest | 35.00% | |||
Equity investment in affiliate | $ 3,600,000 | $ 3,600,000 |
INVENTORIES (Schedule Of Invent
INVENTORIES (Schedule Of Inventory Current) (Details) - USD ($) $ in Thousands | Oct. 31, 2017 | Oct. 31, 2016 |
Inventory [Line Items] | ||
Purchased parts and sub-assemblies | $ 33,045 | $ 25,661 |
Work-in-process | 20,008 | 17,724 |
Finished goods | 66,895 | 73,640 |
Inventories | $ 119,948 | $ 117,025 |
INVENTORIES (Narrative) (Detail
INVENTORIES (Narrative) (Details) - USD ($) $ in Millions | Oct. 31, 2017 | Oct. 31, 2016 |
Inventory [Line Items] | ||
Finished goods inventory consigned to distributors and agents | $ 12.1 | $ 11.6 |
CREDIT AGREEMENTS AND BORROWI46
CREDIT AGREEMENTS AND BORROWINGS (Narrative) (Details) € in Millions, ¥ in Millions, £ in Millions, $ in Millions | Dec. 06, 2016USD ($) | Dec. 07, 2012USD ($) | Feb. 16, 2017USD ($) | Oct. 31, 2017USD ($) | Oct. 31, 2017EUR (€) | Oct. 31, 2017GBP (£) | Feb. 16, 2017CNY (¥) | Feb. 15, 2017CNY (¥) | Dec. 05, 2016USD ($) | Oct. 31, 2016USD ($) |
Line of Credit Facility [Line Items] | ||||||||||
Borrowings available under credit facility | $ 19.6 | |||||||||
Letter of Credit [Member] | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit, maximum borrowing capacity | $ 5 | |||||||||
Revolving Credit Facility [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 | 90 | ||||||||
Minimum tangible net worth requirement | $ 125 | $ 120 | ||||||||
Line of Credit, interest rate description | Borrowings under our 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%. The rate we must pay for that portion of the U.S. credit agreement which is not utilized is 0.05% per annum. | |||||||||
Line of credit, maturity date | Dec. 31, 2018 | |||||||||
Allowable investments in subsidiaries | $ 5 | |||||||||
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] | China [Member] | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit, maximum borrowing capacity | $ 3 | ¥ 20 | ¥ 40 | |||||||
Line of credit, maturity date | Feb. 15, 2018 | |||||||||
Line of credit amount outstanding | $ 1.5 | $ 1.5 | ||||||||
Interest rate | 4.40% | 4.40% | 4.40% | 4.60% |
FINANCIAL INSTRUMENTS (Fair val
FINANCIAL INSTRUMENTS (Fair value hierarchy) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Oct. 31, 2017 | Oct. 31, 2016 |
Level 1 [Member] | ||
Assets | ||
Deferred Compensation | $ 1,638 | $ 1,363 |
Liabilities | ||
Deferred Compensation | 0 | 0 |
Level 2 [Member] | ||
Assets | ||
Derivatives | 596 | 1,725 |
Liabilities | ||
Derivatives | $ 1,732 | $ 538 |
FINANCIAL INSTRUMENTS (Narrativ
FINANCIAL INSTRUMENTS (Narrative) (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notional amount of contracts | $ 134,300,000 | $ 125,600,000 |
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, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Current: | |||||||||||
U.S. taxes | $ 308 | $ 1,362 | $ 4,600 | ||||||||
Foreign taxes | 4,185 | 4,456 | 3,752 | ||||||||
Current provision for income taxes | 4,493 | 5,818 | 8,352 | ||||||||
Deferred: | |||||||||||
U.S. taxes | 1,236 | (176) | (896) | ||||||||
Foreign taxes | (128) | (49) | (117) | ||||||||
Deferred provision for income taxes | 1,108 | (225) | (1,013) | ||||||||
Provision for income taxes | $ 2,238 | $ 1,353 | $ 1,467 | $ 543 | $ 1,539 | $ 1,120 | $ 1,225 | $ 1,709 | $ 5,601 | $ 5,593 | $ 7,339 |
INCOME TAXES (Schedule of Compa
INCOME TAXES (Schedule of Comparison of Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Income before income taxes: | |||
Domestic | $ 5,477 | $ 2,703 | $ 10,806 |
Foreign | 15,239 | 16,182 | 12,747 |
Earnings (Loss) before taxes on income | $ 20,716 | $ 18,885 | $ 23,553 |
Tax rates: | |||
U.S. statutory rate | 34.00% | 34.00% | 35.00% |
Effect of tax rate of international jurisdictions different than U.S. statutory rates | (5.00%) | (7.00%) | (5.00%) |
Valuation allowance. | 1.00% | 3.00% | 1.00% |
State taxes | 0.00% | 0.00% | 1.00% |
Tax Credits | (3.00%) | (2.00%) | (1.00%) |
Effect of Tax Rate Changes | 0.00% | 4.00% | 0.00% |
Other | 0.00% | (2.00%) | 0.00% |
Effective tax rate | 27.00% | 30.00% | 31.00% |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Oct. 31, 2017 | Oct. 31, 2016 |
Deferred Tax Assets: | ||
Accrued inventory reserves | $ 1,965 | $ 1,824 |
Accrued warranty expenses | 438 | 312 |
Compensation related expenses | 2,952 | 2,664 |
Net derivative instruments | 417 | 0 |
Unrealized exchange gain/loss | 0 | 370 |
Other accrued expenses | 187 | 194 |
Net operating loss carryforwards | 1,722 | 1,616 |
Other credit carryforwards | 517 | 474 |
Other | 404 | 331 |
Deferred tax assets, gross | 8,602 | 7,785 |
Less: Valuation allowance - net operating loss and other credit carryforwards | (2,282) | (2,067) |
Deferred tax assets | 6,320 | 5,718 |
Deferred Tax Liabilities: | ||
Net derivative instruments | 0 | (701) |
Property and equipment and capitalized software development costs | (3,241) | (2,717) |
Unrealized exchange gain/loss | (116) | 0 |
Other | (624) | (456) |
Net deferred tax assets | $ 2,339 | $ 1,844 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Balance, beginning of year | $ 1,102 | $ 1,034 | $ 1,196 |
Additions based on tax positions related to the current year | 37 | 52 | 17 |
Additions (reductions) related to prior year tax positions | (20) | 19 | (51) |
Reductions due to statute expiration | (74) | 0 | 0 |
Other | 56 | (3) | (128) |
Balance, end of year | $ 1,101 | $ 1,102 | $ 1,034 |
INCOME TAXES (Summary of Open T
INCOME TAXES (Summary of Open Tax Years) (Details) | 12 Months Ended | |
Oct. 31, 2017 | ||
United States federal [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2014 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 2014 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, 2018 | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Income Tax Contingency [Line Items] | ||||
Undistributed Earnings of Foreign Subsidiaries | $ 92,900,000 | |||
Operating Loss Carryforwards, Valuation Allowance | 2,282,000 | $ 2,067,000 | ||
Deferred Tax Assets, Operating Loss Carryforwards, Total | 1,722,000 | 1,616,000 | ||
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | $ 8,100,000 | |||
Unrecognized Tax Benefits Expiration Term | expire between July 2018 and July 2020 | |||
Unrecognized tax benefits, interest accrued | $ 65,000 | |||
Deferred Tax Assets for Research and Development Tax Credits | 500,000 | |||
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | 74,000 | $ 0 | $ 0 | |
Scenario, Forecast [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | $ 1,000,000 | |||
Expirations Within Five Years [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | $ 6,700,000 | |||
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 | $ 784,000 | |||
Tax Credits Expiration Term | expire between years 2022 and 2027 |
EMPLOYEE BENEFITS (Narrative) (
EMPLOYEE BENEFITS (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Contributions to defined contribution plans | $ 1,100,000 | $ 1,100,000 | $ 933,000 |
STOCK-BASED COMPENSATION (Summa
STOCK-BASED COMPENSATION (Summary of Stock Option Activity and Related Information) (Details) - $ / shares | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Shares Under Option | |||
Outstanding | 107,889 | 107,889 | 128,189 |
Options granted | 0 | 0 | 0 |
Options cancelled | 0 | 0 | (5,000) |
Options Expired | 0 | 0 | 0 |
Options exercised | (29,164) | 0 | (15,300) |
Outstanding | 78,725 | 107,889 | 107,889 |
Weighted Average Exercise Price | |||
Outstanding | $ 20.25 | $ 20.25 | $ 20.45 |
Options granted | 0 | 0 | 0 |
Options cancelled | 0 | 0 | 35.83 |
Options Expired | 0 | 0 | 0 |
Options exercised | 18.31 | 0 | 16.81 |
Outstanding | $ 20.97 | $ 20.25 | $ 20.25 |
STOCK-BASED COMPENSATION (Sched
STOCK-BASED COMPENSATION (Schedule of Options Outstanding and Exercisable) (Details) | 12 Months Ended |
Oct. 31, 2017$ / sharesshares | |
Outstanding | |
Shares Under Option | shares | 78,725 |
Weighted Average Exercise Price Per Share | $ / shares | $ 20.25 |
Weighted Average Remaining Contractual Life in Years | 3 years 4 months 24 days |
Exercisable | |
Shares Under Option | shares | 78,725 |
Weighted Average Exercise Price Per Share | $ / shares | $ 20.25 |
Weighted Average Remaining Contractual Life in Years | 3 years 4 months 24 days |
$ 14.82 [Member] | |
Outstanding | |
Shares Under Option | shares | 11,000 |
Weighted Average Exercise Price Per Share | $ / shares | $ 14.82 |
Weighted Average Remaining Contractual Life in Years | 2 years 1 month 6 days |
Exercisable | |
Shares Under Option | shares | 11,000 |
Weighted Average Exercise Price Per Share | $ / shares | $ 14.82 |
Weighted Average Remaining Contractual Life in Years | 2 years 1 month 6 days |
$ 14.88 [Member] | |
Outstanding | |
Shares Under Option | shares | 4,200 |
Weighted Average Exercise Price Per Share | $ / shares | $ 14.88 |
Weighted Average Remaining Contractual Life in Years | 1 year 6 months |
Exercisable | |
Shares Under Option | shares | 4,200 |
Weighted Average Exercise Price Per Share | $ / shares | $ 14.88 |
Weighted Average Remaining Contractual Life in Years | 1 year 6 months |
$ 18.13 [Member] | |
Outstanding | |
Shares Under Option | shares | 12,000 |
Weighted Average Exercise Price Per Share | $ / shares | $ 18.13 |
Weighted Average Remaining Contractual Life in Years | 2 years 6 months |
Exercisable | |
Shares Under Option | shares | 12,000 |
Weighted Average Exercise Price Per Share | $ / shares | $ 18.13 |
Weighted Average Remaining Contractual Life in Years | 2 years 6 months |
$ 21.45 [Member] | |
Outstanding | |
Shares Under Option | shares | 30,012 |
Weighted Average Exercise Price Per Share | $ / shares | $ 21.45 |
Weighted Average Remaining Contractual Life in Years | 4 years 1 month 6 days |
Exercisable | |
Shares Under Option | shares | 30,012 |
Weighted Average Exercise Price Per Share | $ / shares | $ 21.45 |
Weighted Average Remaining Contractual Life in Years | 4 years 1 month 6 days |
$ 23.30 [Member] | |
Outstanding | |
Shares Under Option | shares | 16,513 |
Weighted Average Exercise Price Per Share | $ / shares | $ 23.30 |
Weighted Average Remaining Contractual Life in Years | 5 years 1 month 6 days |
Exercisable | |
Shares Under Option | shares | 16,513 |
Weighted Average Exercise Price Per Share | $ / shares | $ 23.30 |
Weighted Average Remaining Contractual Life in Years | 5 years 1 month 6 days |
$ 35.83 [Member] | |
Outstanding | |
Shares Under Option | shares | 5,000 |
Weighted Average Exercise Price Per Share | $ / shares | $ 35.83 |
Weighted Average Remaining Contractual Life in Years | 7 months 6 days |
Exercisable | |
Shares Under Option | shares | 5,000 |
Weighted Average Exercise Price Per Share | $ / shares | $ 35.83 |
Weighted Average Remaining Contractual Life in Years | 7 months 6 days |
STOCK-BASED COMPENSATION (Recon
STOCK-BASED COMPENSATION (Reconciliation of Restricted Stock Activity and Related Information) (Details) | 12 Months Ended |
Oct. 31, 2017$ / sharesshares | |
Number of Shares | |
Unvested at October 31, 2016 | shares | 147,350 |
Shares or units granted | shares | 71,011 |
Shares or units vested | shares | (38,930) |
Shares or units cancelled | shares | (7,678) |
Shares withheld | shares | (13,944) |
Unvested at October 31, 2017 | shares | 157,809 |
Weighted Average Grant Date Fair Value | |
Unvested at October 31, 2016 | $ / shares | $ 28.79 |
Shares or units granted | $ / shares | 34.61 |
Shares or units vested | $ / shares | 26.98 |
Shares or units cancelled | $ / shares | 29.98 |
Shares withheld | $ / shares | 25.89 |
Unvested at October 31, 2017 | $ / shares | $ 32.05 |
STOCK-BASED COMPENSATION (Narra
STOCK-BASED COMPENSATION (Narrative) (Details) - USD ($) | Mar. 09, 2017 | Jan. 05, 2017 | Mar. 10, 2016 | Jan. 04, 2016 | Mar. 12, 2015 | Jan. 06, 2015 | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unrecognized Stock-based compensation expense | $ 2,100,000 | ||||||||
Shares or units granted | 71,011 | ||||||||
Grant date fair value of restricted stock | $ 32.05 | $ 28.79 | |||||||
Total intrinsic value of stock options exercised | $ 771,000 | $ 0 | $ 154,000 | ||||||
Total intrinsic value of outstanding stock options vested and expected to vest and intrinsic value of options outstanding and exercisable | 1,800,000 | ||||||||
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] | |||||||||
Stock-based compensation expense | $ 1,200,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 386,048 | ||||||||
2008 and 2016 Equity Plans [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | $ 1,700,000 | $ 1,600,000 | |||||||
Time 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 | 25.00% | 25.00% | 25.00% | ||||||
Time Based [Member] | 2016 Equity Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shares or units granted | 14,920 | 14,747 | 9,170 | ||||||
Grant date fair value of restricted stock | $ 26.80 | $ 33.90 | $ 30.52 | ||||||
Vesting period | 1 year | 3 years | 1 year | ||||||
Time Based [Member] | 2008 Equity Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shares or units granted | 17,684 | 9,086 | 11,174 | ||||||
Grant date fair value of restricted stock | $ 26.04 | $ 30.80 | $ 32.22 | ||||||
Vesting period | 3 years | 1 year | 3 years | ||||||
Performance Based [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shares or units granted | 30,683 | ||||||||
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] | |||||||||
Percentage of incentive compensation arrangement | 40.00% | 40.00% | 40.00% | ||||||
Performance Based [Member] | Performance Shares TSR [Member] | 2016 Equity Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shares or units granted | 18,496 | ||||||||
Grant date fair value of restricted stock | $ 43.25 | ||||||||
Vesting period | 3 years | ||||||||
Performance Based [Member] | Performance Shares TSR [Member] | 2008 Equity Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shares or units granted | 24,023 | 16,740 | |||||||
Grant date fair value of restricted stock | $ 30.67 | $ 34.41 | |||||||
Vesting period | 3 years | 3 years | |||||||
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] | |||||||||
Shares or units granted | 20,647 | 24,759 | 15,643 | ||||||
Grant date fair value of restricted stock | $ 33.90 | $ 26.04 | |||||||
Vesting period | 3 years | 3 years | 3 years | ||||||
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, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Net Sales | $ 15,800 | $ 13,948 | $ 12,852 |
Gross Profit | 2,457 | 2,240 | 2,041 |
Operating Income | 1,037 | 952 | 665 |
Net Income | 1,320 | 1,323 | 1,546 |
Current Assets | 11,310 | 10,238 | 10,262 |
Non-current Assets | 4,440 | 3,733 | 3,087 |
Current Liabilities | $ 3,916 | $ 2,572 | $ 3,472 |
RELATED PARTY TRANSACTIONS (Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Accounts Payable, Related Parties, Current | $ 2,511,000 | $ 1,990,000 | |
Hurco Automation Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Equity Method Investment, Ownership Percentage | 35.00% | ||
Equity Method Investments | $ 3,600,000 | 3,600,000 | |
Related Party Transaction, Purchases from Related Party | 10,000,000 | 9,900,000 | $ 8,900,000 |
Revenue from Related Parties | 139,000 | 623,000 | $ 723,000 |
Accounts Payable, Related Parties, Current | 2,500,000 | 2,000,000 | |
Accounts Receivable, Related Parties, Current | $ 30,000 | $ 94,000 |
GUARANTEES AND PRODUCT WARRAN62
GUARANTEES AND PRODUCT WARRANTIES (Reconciliation of the changes in our warranty reserve) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Product Warranty Liability [Line Items] | |||
Balance, beginning of year | $ 1,523 | $ 2,186 | $ 2,048 |
Provision for warranties during the year | 3,379 | 2,715 | 3,736 |
Charges to the accrual | (3,203) | (3,349) | (3,495) |
Impact of foreign currency translation | 73 | (29) | (103) |
Balance, end of year | $ 1,772 | $ 1,523 | $ 2,186 |
GUARANTEES AND PRODUCT WARRAN63
GUARANTEES AND PRODUCT WARRANTIES (Narrative) (Details) $ in Millions | 12 Months Ended |
Oct. 31, 2017USD ($) | |
Product Warranty Liability [Line Items] | |
Number Of Guarantees | 27 |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 1 |
Term of Product Warranty | 1 year |
OPERATING LEASES (Schedule of f
OPERATING LEASES (Schedule of future payments required under operating leases) (Details) $ in Thousands | Oct. 31, 2017USD ($) |
2,018 | $ 3,316 |
2,019 | 2,077 |
2,020 | 902 |
2,021 | 706 |
2022 and thereafter | 967 |
Total | $ 7,968 |
OPERATING LEASES (Narrative) (D
OPERATING LEASES (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Lease expense | $ 4.4 | $ 4.5 | $ 3.8 |
QUARTERLY FINANCIAL INFORMATI66
QUARTERLY FINANCIAL INFORMATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Sales and service fees | $ 75,931 | $ 60,770 | $ 58,222 | $ 48,744 | $ 66,354 | $ 52,403 | $ 52,029 | $ 56,503 | $ 243,667 | $ 227,289 | $ 219,383 |
Gross profit | $ 23,370 | $ 17,540 | $ 17,068 | $ 12,586 | $ 19,997 | $ 16,135 | $ 16,610 | $ 17,698 | 70,564 | 70,440 | 69,091 |
Gross profit margin | 31.00% | 29.00% | 29.00% | 26.00% | 30.00% | 31.00% | 32.00% | 31.00% | |||
Selling, general and administrative expenses | $ 14,385 | $ 12,395 | $ 11,714 | $ 11,167 | $ 14,878 | $ 12,042 | $ 11,943 | $ 11,961 | 49,661 | 50,824 | 45,287 |
Operating income | 8,985 | 5,145 | 5,354 | 1,419 | 5,119 | 4,093 | 4,667 | 5,737 | 20,903 | 19,616 | 23,804 |
Provision for income taxes | 2,238 | 1,353 | 1,467 | 543 | 1,539 | 1,120 | 1,225 | 1,709 | 5,601 | 5,593 | 7,339 |
Net income | $ 6,702 | $ 3,888 | $ 3,646 | $ 879 | $ 3,003 | $ 2,720 | $ 3,674 | $ 3,895 | $ 15,115 | $ 13,292 | $ 16,214 |
Income per common share - basic (in dollars per share) | $ 1.01 | $ 0.58 | $ 0.55 | $ 0.13 | $ 0.45 | $ 0.41 | $ 0.56 | $ 0.59 | $ 2.27 | $ 2.01 | $ 2.46 |
Income per common share - diluted (in dollars per share) | $ 1 | $ 0.58 | $ 0.54 | $ 0.13 | $ 0.45 | $ 0.4 | $ 0.56 | $ 0.58 | $ 2.25 | $ 1.99 | $ 2.44 |
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, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | ||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | $ 75,931 | $ 60,770 | $ 58,222 | $ 48,744 | $ 66,354 | $ 52,403 | $ 52,029 | $ 56,503 | $ 243,667 | $ 227,289 | $ 219,383 | |
Computerized Machine Tools [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | [1] | 209,311 | 195,618 | 189,712 | ||||||||
Computer Control Systems and Software [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | [2] | 2,324 | 2,078 | 3,085 | ||||||||
Service Parts [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | 24,255 | 21,908 | 19,375 | |||||||||
Service Fees [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | $ 7,777 | $ 7,685 | $ 7,211 | |||||||||
[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 (Schedule68
SEGMENT INFORMATION (Schedule of Revenues by Geographic Area) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jan. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 75,931 | $ 60,770 | $ 58,222 | $ 48,744 | $ 66,354 | $ 52,403 | $ 52,029 | $ 56,503 | $ 243,667 | $ 227,289 | $ 219,383 |
United States of America [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 70,912 | 70,630 | 66,781 | ||||||||
Canada [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 3,801 | 3,881 | 3,114 | ||||||||
Central & South America [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 1,844 | 1,950 | 1,930 | ||||||||
Total Americas [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 76,557 | 76,461 | 71,825 | ||||||||
Germany [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 48,786 | 44,411 | 43,727 | ||||||||
United Kingdom [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 28,019 | 25,313 | 30,235 | ||||||||
Italy [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 13,416 | 12,947 | 11,768 | ||||||||
France [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 13,917 | 13,787 | 13,162 | ||||||||
Other Europe [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 27,583 | 27,150 | 26,598 | ||||||||
Total Europe [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 131,721 | 123,608 | 125,490 | ||||||||
Asia Pacific [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 32,694 | 25,633 | 20,265 | ||||||||
Other Foreign [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 2,695 | 1,587 | 1,803 | ||||||||
Foreign [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 167,110 | $ 150,828 | $ 147,558 |
SEGMENT INFORMATION (Schedule69
SEGMENT INFORMATION (Schedule of Long-Lived Tangible Assets and net assets, Net by Geographic Area) (Details) - USD ($) $ in Thousands | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | $ 13,784 | $ 13,757 | $ 14,551 |
Net Assets | 203,085 | 185,475 | 174,568 |
United States of America [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | 7,599 | 7,846 | 8,658 |
Foreign Countries [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | 6,185 | 5,911 | 5,893 |
Americas [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | 86,432 | 84,040 | 83,236 |
Europe [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | 70,536 | 60,861 | 59,468 |
Asia Pacific [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | $ 46,117 | $ 40,574 | $ 31,864 |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Narrative) (Details) - USD ($) $ in Thousands | Nov. 01, 2017 | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Payments Related to Tax Withholding for Share-based Compensation | $ 295 | $ 146 | $ 239 | |
Accounting Standards Update 2016-09 [Member] | Subsequent Event [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Prior Period Reclassification Adjustment | $ 200 |
Schedule II - Valuation and Q71
Schedule II - Valuation and Qualifying Accounts and Reserves (Details) $ in Thousands | 12 Months Ended | |
Oct. 31, 2017USD ($) | ||
October 31, 2017 | ||
Balance at Beginning of Period | $ 664 | |
Charged to/ (Recovered from) Costs and Expenses | (123) | |
Charged to Other Accounts | 0 | |
Deductions | 98 | [1] |
Balance at End of Period | 639 | |
October 31, 2016 | ||
Balance at Beginning of Period | 739 | |
Charged to/ (Recovered from) Costs and Expenses | (15) | |
Charged to Other Accounts | 0 | |
Deductions | 60 | [1] |
Balance at End of Period | 664 | |
October 31, 2015 | ||
Balance at Beginning of Period | 878 | |
Charged to/ (Recovered from) Costs and Expenses | (13) | |
Charged to Other Accounts | 0 | |
Deductions | 126 | [1] |
Balance at End of Period | 739 | |
October 31, 2017 | ||
Balance at Beginning of Period | 2,067 | |
Charged to/ (Recovered from) Costs and Expenses | 515 | |
Charged to Other Accounts | 0 | |
Deductions | 300 | |
Balance at End of Period | 2,282 | |
October 31, 2016 | ||
Balance at Beginning of Period | 1,485 | |
Charged to/ (Recovered from) Costs and Expenses | 587 | |
Charged to Other Accounts | 0 | |
Deductions | 5 | |
Balance at End of Period | 2,067 | |
October 31, 2015 | ||
Balance at Beginning of Period | 1,225 | |
Charged to/ (Recovered from) Costs and Expenses | 402 | |
Charged to Other Accounts | 0 | |
Deductions | 142 | |
Balance at End of Period | $ 1,485 | |
[1] | Receivable write-offs. |