Hurco Companies (HURC) 10-Q 8 Mar 19 2019 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Jan. 31, 2019	Mar. 01, 2019
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jan. 31, 2019
Document Fiscal Year Focus	2,019
Document Fiscal Period Focus	Q1
Entity Registrant Name	HURCO COMPANIES INC
Entity Central Index Key	315,374
Current Fiscal Year End Date	--10-31
Entity Filer Category	Accelerated Filer
Trading Symbol	HURC
Entity Common Stock, Shares Outstanding		6,758,123
Entity Emerging Growth Company	false
Entity Small Business	false

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jan. 31, 2019	Jan. 31, 2018
Sales and service fees	$ 74,213	$ 68,444
Cost of sales and service	52,071	48,323
Gross profit	22,142	20,121
Selling, general and administrative expenses	13,914	12,966
Operating income	8,228	7,155
Interest expense	12	20
Interest income	82	18
Investment income	242	116
Other income (expense), net	567	168
Income before taxes	9,107	7,437
Provision for income taxes	2,453	4,500
Net income	$ 6,654	$ 2,937
Income per common share
Basic	$ 0.98	$ 0.44
Diluted	$ 0.97	$ 0.43
Weighted average common shares outstanding
Basic	6,735	6,659
Diluted	6,807	6,745
Dividends paid per share	$ 0.11	$ 0.10

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Jan. 31, 2019	Jan. 31, 2018
Net income	$ 6,654	$ 2,937
Other comprehensive income (loss):
Translation of foreign currency financial statements	1,309	5,065
(Gain) / loss on derivative instruments reclassified into operations, net of tax of $3 and $(74), respectively	12	(222)
Gain / (loss) on derivative instruments, net of tax of $(79) and $(382), respectively	(270)	(1,142)
Total other comprehensive income	1,051	3,701
Comprehensive income	$ 7,705	$ 6,638

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Jan. 31, 2019	Jan. 31, 2018
Realized loss (gains) on derivative instruments reclassified into operations, tax	$ 3	$ (74)
Unrealized (loss) gains on derivative instruments, tax	$ (79)	$ (382)

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jan. 31, 2019	Oct. 31, 2018
Current assets:
Cash and cash equivalents	$ 69,758	$ 77,170
Accounts receivable, net	53,045	54,414
Inventories, net	146,715	137,609
Derivative assets	1,092	3,085
Prepaid assets	8,418	7,332
Other	2,183	1,825
Total current assets	281,211	281,435
Property and equipment:
Land	868	868
Building	7,352	7,352
Machinery and equipment	27,722	26,840
Leasehold improvements	4,011	3,801
Property and equipment, gross	39,953	38,861
Less accumulated depreciation and amortization	(26,762)	(25,902)
Total property and equipment	13,191	12,959
Non-current assets:
Software development costs, less accumulated amortization	7,641	7,452
Goodwill	2,403	2,377
Intangible assets, net	916	938
Deferred income taxes	2,326	2,234
Investments and other assets, net	8,388	8,012
Total non-current assets	21,674	21,013
Total assets	316,076	315,407
Current liabilities:
Accounts payable	55,244	57,518
Derivative liabilities	1,241	2,020
Accrued payroll and employee benefits	8,515	14,032
Accrued income taxes	7,587	5,180
Accrued expenses	4,909	4,122
Accrued warranty	2,620	2,497
Short-term debt	0	1,434
Total current liabilities	80,116	86,803
Non-current liabilities:
Deferred income taxes	3	0
Accrued tax liability	2,212	2,194
Deferred credits and other	3,724	3,557
Total non-current liabilities	5,939	5,751
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, 6,955,895 and 6,891,508 shares issued; and 6,758,123 and 6,723,160 shares outstanding, as of January 31, 2019 and October 31, 2018, respectively	676	672
Additional paid-in capital	64,391	64,185
Retained earnings	173,766	167,859
Accumulated other comprehensive loss	(8,812)	(9,863)
Total shareholders' equity	230,021	222,853
Total liabilities and shareholders' equity	$ 316,076	$ 315,407

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jan. 31, 2019	Oct. 31, 2018
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	6,955,895	6,891,508
Common stock, shares outstanding	6,758,123	6,723,160

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Jan. 31, 2019	Jan. 31, 2018
Cash flows from operating activities:
Net income	$ 6,654	$ 2,937
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision for doubtful accounts	(47)	158
Deferred income taxes	(38)	638
Equity in income of affiliates	(285)	(139)
Depreciation and amortization	939	888
Foreign currency (gain) loss	(792)	(1,514)
Unrealized (gain) loss on derivatives	204	885
Stock-based compensation	709	549
Change in assets and liabilities:
(Increase) decrease in accounts receivable	2,059	10,437
(Increase) decrease in inventories	(7,097)	(6,947)
(Increase) decrease in prepaid expenses	(976)	(528)
Increase (decrease) in accounts payable	(2,892)	7,801
Increase (decrease) in accrued expenses	(2,379)	(1,680)
Net change in derivative assets and liabilities	451	40
Other	(479)	937
Net cash provided by (used for) operating activities	(3,969)	14,462
Cash flows from investing activities:
Purchase of property and equipment	(782)	(855)
Proceeds from sale of equipment	22	58
Software development costs	(461)	(625)
Net cash provided by (used for) investing activities	(1,221)	(1,422)
Cash flows from financing activities:
Dividends paid	(747)	(668)
Taxes paid related to net settlement of restricted shares	(499)	(502)
Proceeds from exercise of common stock options	0	492
Repayment of short-term debt	(1,454)	0
Net cash provided by (used for) financing activities	(2,700)	(678)
Effect of exchange rate changes on cash	478	1,567
Net increase (decrease) in cash and cash equivalents	(7,412)	13,929
Cash and cash equivalents at beginning of period	77,170	66,307
Cash and cash equivalents at end of period	$ 69,758	$ 80,236

CONDENSED CONSOLIDATED STATEM_5

CONDENSED 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 at Oct. 31, 2017	$ 203,085	$ 664	$ 61,344	$ 149,267	$ (8,190)
Balances (in shares) at Oct. 31, 2017		6,641,197
Net income	2,937	$ 0	0	2,937	0
Other comprehensive income	3,701	0	0	0	3,701
Exercise of common stock options	492	$ 3	489	0	0
Exercise of common stock options (in shares)		26,218
Stock-based compensation	549	$ 2	547	0	0
Stock-based compensation (in shares)		25,363
Dividends paid	(668)	$ 0	0	(668)	0
Balances at Jan. 31, 2018	210,096	$ 669	62,380	151,536	(4,489)
Balances (in shares) at Jan. 31, 2018		6,692,778
Balances at Oct. 31, 2018	222,853	$ 672	64,185	167,859	(9,863)
Balances (in shares) at Oct. 31, 2018		6,723,160
Net income	6,654	$ 0	0	6,654	0
Other comprehensive income	1,051	0	0	0	1,051
Stock-based compensation	210	$ 4	206	0	0
Stock-based compensation (in shares)		34,963
Dividends paid	(747)	$ 0	0	(747)	0
Balances at Jan. 31, 2019	$ 230,021	$ 676	$ 64,391	$ 173,766	$ (8,812)
Balances (in shares) at Jan. 31, 2019		6,758,123

GENERAL

GENERAL	3 Months Ended
	Jan. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
GENERAL	1. GENERAL The unaudited Condensed Consolidated Financial Statements include the accounts of Hurco Companies, Inc. and its consolidated subsidiaries. As used in this report, unless the context indicates otherwise, the terms “we”, “us”, “our” and similar language refer to Hurco Companies, Inc. and its consolidated subsidiaries as a whole. We design, manufacture and sell computerized (i.e., Computer Numeric Control, or CNC) 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, training and applications support. The condensed financial information as of January 31, 2019 and for the three months ended January 31, 2019 and January 31, 2018 is unaudited. However, in our opinion, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, results of operations, changes in shareholders’ equity and cash flows for and at the end of the interim periods. We suggest that you read these condensed consolidated financial statements in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended October 31, 2018.

REVENUE RECOGNITION

REVENUE RECOGNITION	3 Months Ended
	Jan. 31, 2019
Revenue from Contract with Customer [Abstract]
Revenue from Contract with Customer [Text Block]	2. REVENUE RECOGNITION We design, manufacture and sell computerized machine tools. 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, training and applications support. We adopted Accounting Standards Codification (“ASC”) 606 on November 1, 2018, the start of our 2019 fiscal year, and elected the modified retrospective method as of the date of adoption. Prior to the adoption of ASC 606, our revenues have already been recognized in the same manner as those required by ASC 606. Therefore, the adoption of ASC 606 did not have an effect on our beginning retained earnings or our overall financial statements as of and for the three months ended January 31, 2019. We recognize revenues from the sale of machine tools, components and accessories and services and reflect the consideration to which we expect to be entitled. We record revenues based on a five-step model in accordance with Financial Accounting Standards Board, or FASB, guidance codified in ASC 606 “Revenue from Contracts with Customers.” In accordance with ASC 606, we have defined contracts as agreements with our customers and distributors in the form of purchase orders, packing or shipping documents, invoices, and, periodically, verbal requests for components and accessories. For each contract, we identify our performance obligations, which is delivering goods or services, determine the transaction price, allocate the contract transaction price to the performance obligations (when applicable), and recognize the revenue when (or as) the performance obligation is transferred to the customer. A good or service is transferred when the customer obtains control of that good or service. Our computerized machine tools are general purpose computer controlled machine tools that are typically used in stand-alone operations. Prior to shipment, we test each machine to ensure the machine’s compliance with standard operating specifications. We deem the customer obtains control upon delivery of the product and that obtaining control is not contingent upon contractual customer acceptance. Therefore, 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. 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 for our three-axis machines to be inconsequential and perfunctory. For our five-axis machines that we install, we estimate the fair value of the installation performance obligation and defer the recognition of that revenue. We recognize installation revenue on a prorata basis over the period of the installation process. From time to time, and depending upon geographic location, we may provide training or freight services. We consider these services to be perfunctory within the context of the contract, as the value of these services typically does not rise to a material level as a component of the total contract value. Service fees from maintenance contracts are deferred and recognized in earnings on a prorata basis over the term of the contract, and are generally sold on a stand-alone basis. Customer discounts and estimated product returns are considered variable consideration and are recorded as a reduction of revenue in the same period that the related sales are recorded. We have reviewed the overall sales transactions for variable consideration and have determined that these amounts are not significant.

DERIVATIVE INSTRUMENTS AND HEDG

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES	3 Months Ended
	Jan. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES	3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We are exposed to certain market risks relating to our ongoing business operations, including foreign currency risk, interest rate risk and credit risk. We manage our exposure to these and other market risks through regular operating and financing activities. Currently, the only risk that we manage through the use of derivative instruments is foreign currency risk for which we enter into derivative instruments in the form of foreign currency forward exchange contracts with a few major financial institutions. We enter into these forward exchange contracts to reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, to reduce the impact on gross profit and net earnings from sales and purchases denominated in foreign currencies, and to reduce the impact on our net earnings of foreign currency fluctuations on receivables and payables denominated in foreign currencies that are different than the subsidiaries’ functional currency. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Indian Rupee, South African Rand, Singapore Dollars, Chinese Yuan, Polish Zloty, and New Taiwan Dollars. We record all derivative instruments as assets or liabilities at fair value. Derivatives Designated as Hedging Instruments We enter into foreign currency forward exchange contracts periodically to hedge certain forecasted inter-company sales and purchases denominated in the following foreign currencies: the Pound Sterling, Euro and New Taiwan Dollar. The purpose of these instruments is to mitigate the risk that the U.S. Dollar net cash inflows and outflows resulting from sales and purchases denominated in foreign currencies will be adversely affected by changes in exchange rates. These forward contracts have been designated as cash flow hedge instruments and are recorded in the Condensed Consolidated Balance Sheets at fair value in Derivative assets and Derivative liabilities. The effective portion of the gains and losses resulting from the changes in the fair value of these hedge contracts is deferred in Accumulated other comprehensive loss and recognized as an adjustment to Cost of sales and service in the period that the corresponding inventory sold that is the subject of the related hedge contract is recognized, thereby providing an offsetting economic impact against the corresponding change in the U.S. Dollar value of the inter-company sale or purchase being hedged. The ineffective portion of gains and losses resulting from the changes in the fair value of these hedge contracts is reported in Other (income) expense, net immediately. We perform quarterly assessments of hedge effectiveness by verifying and documenting the critical terms of the hedge instrument and determining that forecasted transactions have not changed significantly. We also assess on a quarterly basis whether there have been adverse developments regarding the risk of a counterparty default. We had forward contracts outstanding as of January 31, 2019, denominated in Euros, Pounds Sterling and New Taiwan Dollars with set maturity dates ranging from February 2019 through January 2020. The contract amounts, expressed at forward rates in U.S. Dollars at January 31, 2019, were $28.1 million for Euros, $10.1 million for Pounds Sterling and $29.7 million for New Taiwan Dollars. At January 31, 2019, we had approximately $270,000 of losses, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Included in this amount were approximately $67,000 of unrealized gains, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred losses will be recorded as an adjustment to Cost of sales and service in periods through January 2020, when the corresponding inventory that is the subject of the related hedge contracts is sold, as described above. We are also exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we entered into a forward contract with a notional amount of €3.0 million in November 2018. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under FASB guidance related to the accounting for derivative instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment in Accumulated other comprehensive loss, net of tax, in the same manner as the underlying hedged net assets. This forward contract matures in November 2019. As of January 31, 2019, we had a realized gain of $804,000 and an unrealized loss of $1,000, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss related to this forward contract. Derivatives Not Designated as Hedging Instruments We also enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on receivables and payables denominated in foreign currencies. These derivative instruments are not designated as hedges under the FASB guidance and, as a result, changes in their fair value are reported currently as Other (income) expense, net in the Condensed 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 January 31, 2019, denominated in Euros, South African Rand, and New Taiwan Dollar with set maturity dates ranging from February 2019 through December 2019. The contract amounts, expressed at forward rates in U.S. Dollars at January 31, 2019, totaled $69.9 million. Fair Value of Derivative Instruments We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Condensed Consolidated Balance Sheets. As of January 31, 2019 and October 31, 2018, all derivative instruments were recorded at fair value on our Consolidated Balance Sheets as follows (in thousands): January 31, 2019 October 31, 2018 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 1,054 Derivative assets $ 2,654 Foreign exchange forward contracts Derivative liabilities $ 969 Derivative liabilities $ 1,616 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 38 Derivative assets $ 431 Foreign exchange forward contracts Derivative liabilities $ 272 Derivative liabilities $ 404 Effect of Derivative Instruments on the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Income Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Income, net of tax, during the three months ended January 31, 2019 and 2018 (in thousands): Derivatives Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) Location of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) Three Months Ended January 31, Three Months Ended January 31, 2019 2018 2019 2018 Designated as Hedging Instruments: (Effective portion) Foreign exchange forward contracts – Intercompany sales/purchases $ (270 ) $ (1,142 ) Cost of sales and service $ (12 ) $ 222 Foreign exchange forward contract – Net investment $ (2 ) $ (166 ) We did not recognize any gains or losses as a result of hedges deemed ineffective for either of the three months ended January 31, 2019 and 2018. We recognized the following losses and gains in our Condensed Consolidated Statements of Income during the three months ended January 31, 2019 and 2018 on derivative instruments not designated as hedging instruments (in thousands): Derivatives Location of Gain (Loss) Recognized in Operations Amount of Gain (Loss) Recognized in Operations Three Months Ended January 31, 2019 2018 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other income (expense), net $ (234 ) $ (1,256 ) The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended January 31, 2019 (in thousands): Foreign Currency Translation Cash Flow Hedges Total Balance, October 31, 2018 $ (10,592 ) $ 729 $ (9,863 ) Other comprehensive income (loss) before reclassifications 1,309 (270 ) 1,039 Reclassifications — 12 12 Balance, January 31, 2019 $ (9,283 ) $ 471 $ (8,812 )

EQUITY INCENTIVE PLAN

EQUITY INCENTIVE PLAN	3 Months Ended
	Jan. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
EQUITY INCENTIVE PLAN	4. EQUITY INCENTIVE PLAN 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 stock units under the 2016 Equity Plan that are currently outstanding, and we have granted stock options 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 stock option activity for the three-month period ended January 31, 2019, is as follows: Stock Options Weighted Average Exercise Price Outstanding at October 31, 2018 37,045 $ 21.69 Options granted — — Options exercised — — Options cancelled — — Outstanding at January 31, 2019 37,045 $ 21.69 Summarized information about outstanding stock options as of January 31, 2019, that have already vested and are currently exercisable, are as follows: Options Already Vested and Currently Exercisable Number of outstanding options 37,045 Weighted average remaining contractual life (years) 3.02 Weighted average exercise price per share $ 21.69 Intrinsic value of outstanding options $ 617,000 The intrinsic value of an outstanding stock option is calculated as the difference between the stock price as of January 31, 2019 and the exercise price of the option. On November 14, 2018, the Compensation Committee granted a total of 7,200 shares of time-based restricted stock to our non-executive employees. 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 $40.01 per share. On January 2, 2019, the Compensation Committee determined the degree to which the long-term incentive compensation arrangement approved for the fiscal 2016-2018 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 2016. As a result, the Compensation Committee determined that a total of 32,559 performance shares were earned by our executive officers, which performance shares vested on January 2, 2019. 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 $36.08 per share. On January 2, 2019, 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 approximately 25% time-based vesting and approximately 75% performance-based vesting. The three-year performance period for the PSUs is fiscal 2019 through fiscal 2021. On that date, the Compensation Committee granted a total of 21,825 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 $36.08 per share. On January 2, 2019, the Compensation Committee also granted a total target number of 30,943 PSUs to our executive officers designated as “PSU – TSR”. These PSUs were weighted as approximately 40% of the overall 2019 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 2019-2021, 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 $40.72 per PSU and was calculated using the Monte Carlo approach. On January 2, 2019, the Compensation Committee also granted a total target number of 30,557 PSUs to our executive officers designated as “PSU – ROIC”. These PSUs were weighted as approximately 35% of the overall 2019 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 2019-2021. 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 $36.08 per share. A reconciliation of our restricted stock, performance share and PSU activity and related information for the three-month period ended January 31, 2019 is as follows: Number of Shares Weighted Average Grant Date Fair Value Unvested at October 31, 2018 168,348 $ 37.24 Shares or units granted 90,525 37.98 Shares or units vested (34,963 ) 29.96 Shares or units cancelled (12,462 ) 29.82 Shares or units withheld (13,676 ) 29.67 Unvested at January 31, 2019 197,772 $ 39.86 During the first three months of fiscal 2019 and 2018, we recorded approximately $709,000 and $549,000, respectively, of stock-based compensation expense related to grants under the 2008 Plan and the 2016 Equity Plan. As of January 31, 2019, there was an estimated $5.6 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal 2022.

EARNINGS PER SHARE

EARNINGS PER SHARE	3 Months Ended
	Jan. 31, 2019
Earnings Per Share [Abstract]
EARNINGS PER SHARE	5. EARNINGS PER SHARE Per share results have been computed based on the average number of common shares outstanding over the period in question. The computation of basic and diluted net income per share is determined using net income applicable to common shareholders as the numerator and the number of shares outstanding as the denominator as follows (in thousands, except per share amounts): Three Months Ended January 31, 2019 2018 Basic Diluted Basic Diluted Net income $ 6,654 $ 6,654 $ 2,937 $ 2,937 Undistributed earnings allocated to participating shares (53 ) (53 ) (21 ) (21 ) Net income applicable to common shareholders $ 6,601 $ 6,601 $ 2,916 $ 2,916 Weighted average shares outstanding 6,735 6,735 6,659 6,659 Stock options and contingently issuable securities — 72 — 86 6,735 6,807 6,659 6,745 Income per share $ 0.98 $ 0.97 $ 0.44 $ 0.43

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE	3 Months Ended
	Jan. 31, 2019
Receivables [Abstract]
ACCOUNTS RECEIVABLE	6. ACCOUNTS RECEIVABLE Accounts receivable are net of allowances for doubtful accounts of $980,000 as of January 31, 2019 and $1.0 million as of October 31, 2018.

INVENTORIES

INVENTORIES	3 Months Ended
	Jan. 31, 2019
Inventory Disclosure [Abstract]
INVENTORIES	7. INVENTORIES Inventories, priced at the lower of cost (first-in, first-out method) or net realizable value, are summarized below (in thousands): January 31, 2019 October 31, 2018 Purchased parts and sub-assemblies $ 41,895 $ 38,303 Work-in-process 18,693 22,786 Finished goods 86,127 76,520 $ 146,715 $ 137,609

SEGMENT INFORMATION

SEGMENT INFORMATION	3 Months Ended
	Jan. 31, 2019
Segment Reporting [Abstract]
SEGMENT INFORMATION	8. SEGMENT INFORMATION We operate in a single segment: industrial automation equipment. We design, manufacture and sell computerized 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. 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, training and applications support.

GUARANTEES AND PRODUCT WARRANTI

GUARANTEES AND PRODUCT WARRANTIES	3 Months Ended
	Jan. 31, 2019
Standard Product Warranty Disclosure [Abstract]
GUARANTEES AND PRODUCT WARRANTIES	9. 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 January 31, 2019, we had 25 outstanding third party payment guarantees totaling approximately $687,000. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer assumes the risk of ownership and control. The customer does not obtain title, however, until the customer 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 certain components and shorter periods for service parts. We recognize a reserve with respect to this obligation at the time of product sale, with subsequent warranty claims recorded against the reserve. The amount of the warranty reserve is determined based on historical trend experience and any known warranty issues that could cause future warranty costs to differ from historical experience. A reconciliation of the changes in our warranty reserve is as follows (in thousands): Three Months Ended January 31, 2019 2018 Balance, beginning of period $ 2,499 $ 1,772 Provision for warranties during the period 962 980 Charges to the reserve (868 ) (771 ) Impact of foreign currency translation 27 62 Balance, end of period $ 2,620 $ 2,043 The year-over-year increase in our warranty reserve was primarily due to an increase in unit sales volume.

DEBT AGREEMENTS

DEBT AGREEMENTS	3 Months Ended
	Jan. 31, 2019
Debt Disclosure [Abstract]
DEBT AGREEMENTS	10. DEBT AGREEMENTS 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 “2012 Credit Agreement”) with JP Morgan Chase Bank, N.A. that provided us with an unsecured revolving credit and letter of credit facility. The 2012 Credit Agreement terminated on its scheduled maturity date of December 31, 2018. On December 31, 2018, we and our subsidiary Hurco B.V. entered into a new credit agreement (the “2018 Credit Agreement”) with Bank of America, N.A., as the lender. The 2018 Credit Agreement replaced the 2012 Credit Agreement. The 2018 Credit Agreement provides for an unsecured revolving credit and letter of credit facility in a maximum aggregate amount of $40.0 million. The 2018 Credit Agreement provides that the maximum amount of outstanding letters of credit at any one time may not exceed $ 10.0 Under the 2018 Credit Agreement, we and Hurco B.V. are borrowers, and certain of our other subsidiaries are guarantors. The scheduled maturity date of the 2018 Credit Agreement is December 31, 2020. Borrowings under the 2018 Credit Agreement will bear interest at floating rates based on, at our option, either (i) a LIBOR-based rate, or other alternative currency-based rate approved by the lender, plus 0.75% per annum, or (ii) a base rate (which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) the one month LIBOR-based rate plus 1.00%), plus 0.00% per annum. Outstanding letters of credit will carry an annual rate of 0.75%. The 2018 Credit Agreement contains customary affirmative and negative covenants and events of default, including covenants (1) restricting us from making certain investments, loans, advances and acquisitions (but permitting us to make investments in subsidiaries of up to $10.0 million); (2) restricting us from making certain payments, including cash dividends, except that we may pay cash dividends as long as immediately before and after giving effect to such payment, the sum of the unused amount of the commitments under the 2018 Credit Agreement plus our cash on hand is not less than $10.0 million, and as long as we are not in default before and after giving effect to such dividend payments; (3) requiring that we maintain a minimum working capital of $125.0 million; and (4) requiring that we maintain a minimum tangible net worth of $170.0 million. We may use the proceeds from advances under the 2018 Credit Agreement for general corporate purposes. In December 2018, in connection with our entry into the 2018 Credit Agreement, (1) using cash on hand, we repaid in full the $1.4 million outstanding under, and terminated, our credit facility in China and (2) we terminated our United Kingdom credit facility. As a result, as of January 31, 2019, our existing credit facilities consist of our €1.5 million revolving credit facility in Germany and the $ 40.0 As of January 31, 2019, there were no borrowings under any of our credit facilities and $41.7 million of available borrowing capacity thereunder. On March 6, 2019 , HML, our wholly owned subsidiary in Taiwan, closed on an uncommitted revolving credit facility in a maximum aggregate amount of 150 million New Taiwan Dollars, or approximately $ 5.0 million (the “Taiwan credit facility”). The Taiwan credit facility has a final maturity date of March 5, 2020 . Also on March 6, 2019 , NHML , our wholly owned subsidiary in China, closed on an uncommitted revolving credit facility in a maximum aggregate amount of 32.5 million Chinese Yuan, or approximately $ 5.0 million (the “China credit facility”). The China credit facility has a final maturity date of March 5, 2020 . No amounts were outstanding under either of these credit facilities as of March 8, 2019 .

INCOME TAXES

INCOME TAXES	3 Months Ended
	Jan. 31, 2019
Income Tax Disclosure [Abstract]
INCOME TAXES	11. INCOME TAXES In December 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted. The Tax Reform Act lowered the U.S. corporate tax rate from 35% to 21%, implemented a territorial tax system from a worldwide system, imposed a tax on deemed repatriation of earnings of foreign subsidiaries and added provisions related to Global Intangible Low Taxed Income (“GILTI”) and Foreign-derived Intangible Income (”FDII”), among other provisions. In December 2017, the United States Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Reform Act. The Tax Reform Act created a new requirement that GILTI income earned by Controlled Foreign Corporations (“CFC’s”) must be included in the gross income of the CFC’s U.S. shareholder effective in fiscal 2019. Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or (2) factoring such amounts into our measurement of deferred taxes (the “deferred method”). We have included an estimate of the GILTI tax using the period cost method in our annualized effective tax rate used to determine tax expense for the three months ended January 31, 2019. The Tax Reform Act also created the FDII for U.S. companies that derive income from the export of tangible and intangible property and services effective in fiscal 2019. We have included an estimate of the deduction attributable to FDII in our annualized effective tax rate used to determine tax expense for the three months ended January 31, 2019. We recorded income tax expense during the first three months of fiscal 2019 of $2.5 million compared to $4.5 million for the same period in fiscal 2018. Our effective tax rate for the first three months of fiscal 2019 was 27% in comparison to 61% for the same period in fiscal 2018. Our unrecognized tax benefits were $223,000 as of January 31, 2019 and $205,000 as of October 31, 2018, and in each case included accrued interest. We recognize accrued interest and penalties related to unrecognized tax benefits as components of income tax expense. As of January 31, 2019, the gross amount of interest accrued, reported in Accrued expenses, was approximately $28,000, which did not include the federal tax benefit of interest deductions. We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. The statutes of limitations with respect to unrecognized tax benefits will expire between July 2019 and July 2022. Currently, our German subsidiary is under tax audit for fiscal year 2013 to 2016.

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS	3 Months Ended
	Jan. 31, 2019
Fair Value Disclosures [Abstract]
FINANCIAL INSTRUMENTS	12. FINANCIAL INSTRUMENTS FASB fair value guidance establishes a three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exist, therefore requiring an entity to develop its own assumptions. In accordance with this guidance, the following table represents the fair value hierarchy for our financial assets and liabilities measured at fair value as of January 31, 2019 and October 31, 2018 (in thousands): Assets Liabilities January 31, 2019 October 31, 2018 January 31, 2019 October 31, 2018 Level 1 Deferred Compensation $ 1,808 $ 1,723 $ — $ — Level 2 Derivatives $ 1,092 $ 3,085 $ 1,241 $ 2,020 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 that are readily available. Included in 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 condensed consolidated financial statements at fair value. We have derivative financial instruments in the form of foreign currency forward exchange contracts as described in Note 3 of Notes to the Condensed Consolidated Financial Statements. The U.S. Dollar equivalent notional amounts of these contracts was $143.1 million and $145.2 million at January 31, 2019 and October 31, 2018, respectively. The fair value of our foreign currency forward exchange contracts and the related currency positions are subject to offsetting market risk resulting from foreign currency exchange rate volatility. The counterparties to the forward exchange contracts are substantial and creditworthy financial institutions. We do not consider either the risk of counterparties non-performance or the economic consequences of counterparties non-performance to be material risks.

CONTINGENCIES AND LITIGATION

CONTINGENCIES AND LITIGATION	3 Months Ended
	Jan. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
CONTINGENCIES AND LITIGATION	13. CONTINGENCIES AND LITIGATION From time to time, we are involved in 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.

NEW ACCOUNTING PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Jan. 31, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
NEW ACCOUNTING PRONOUNCEMENTS	14. NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements: Between May 2014 and December 2016, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , and various related updates, establishing a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This standard provides a five-step analysis in determining when and how revenue is recognized. The new model requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services and supersedes most of the previously-existing revenue recognition guidance, including industry-specific guidance. We had the option of applying this new standard retrospectively to each prior period presented (“full retrospective approach”) or retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective approach”). Topic 606 was effective for us beginning November 1, 2018 and we adopted it on that date using the modified retrospective approach. Application of Topic 606 to our contracts that are subject to the new standard did not have an impact on our consolidated financial statements as described in Note 2 of Notes to the Condensed Consolidated Financial Statements. New Accounting Pronouncements: Between February 2016 and February 2019, the FASB issued ASU No. 2016-02, Leases (Topic 842) , and various related updates, which establish 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 and disclosures. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities , which simplifies the application of hedge accounting and enables companies to better portray the economics of their risk management activities in their financial statements . ASU 2017-12 is effective for our fiscal year 2020, including interim periods within the fiscal year, and requires modified retrospective application. Early adoption is permitted. We do not anticipate that the adoption of this ASU will have a material impact on our consolidated financial statements and disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects resulting from the Tax Reform Act that are stranded in accumulated other comprehensive income. This standard also requires certain disclosures about stranded tax effects. This ASU, however, does not change the underlying guidance that requires the effect of a change in tax laws or rates be included in income from continuing operations. ASU 2018-02 will be effective for our fiscal year 2020, with the option to early adopt at any time prior to the effective date. It must be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. We are assessing the impact this new accounting guidance will have on our consolidated financial statements and disclosures.

DERIVATIVE INSTRUMENTS AND HE_2

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)	3 Months Ended
	Jan. 31, 2019
Schedule of Fair Value of Derivative Instruments	We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Condensed Consolidated Balance Sheets. As of January 31, 2019 and October 31, 2018, all derivative instruments were recorded at fair value on our Consolidated Balance Sheets as follows (in thousands): January 31, 2019 October 31, 2018 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 1,054 Derivative assets $ 2,654 Foreign exchange forward contracts Derivative liabilities $ 969 Derivative liabilities $ 1,616 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 38 Derivative assets $ 431 Foreign exchange forward contracts Derivative liabilities $ 272 Derivative liabilities $ 404
Period One [Member]
Schedule of Changes in Components of Accumulated Other Comprehensive Loss	The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended January 31, 2019 (in thousands): Foreign Currency Translation Cash Flow Hedges Total Balance, October 31, 2018 $ (10,592 ) $ 729 $ (9,863 ) Other comprehensive income (loss) before reclassifications 1,309 (270 ) 1,039 Reclassifications — 12 12 Balance, January 31, 2019 $ (9,283 ) $ 471 $ (8,812 )
Period One [Member] | Designated as Hedging Instrument [Member]
Schedule of Effect of Derivative Instruments on the Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations	Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Income, net of tax, during the three months ended January 31, 2019 and 2018 (in thousands): Derivatives Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) Location of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) Three Months Ended January 31, Three Months Ended January 31, 2019 2018 2019 2018 Designated as Hedging Instruments: (Effective portion) Foreign exchange forward contracts – Intercompany sales/purchases $ (270 ) $ (1,142 ) Cost of sales and service $ (12 ) $ 222 Foreign exchange forward contract – Net investment $ (2 ) $ (166 )
Period One [Member] | Not Designated as Hedging Instrument [Member]
Schedule of Derivatives Not Designated as Hedging Instruments	We recognized the following losses and gains in our Condensed Consolidated Statements of Income during the three months ended January 31, 2019 and 2018 on derivative instruments not designated as hedging instruments (in thousands): Derivatives Location of Gain (Loss) Recognized in Operations Amount of Gain (Loss) Recognized in Operations Three Months Ended January 31, 2019 2018 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other income (expense), net $ (234 ) $ (1,256 )

EQUITY INCENTIVE PLAN (Tables)

EQUITY INCENTIVE PLAN (Tables)	3 Months Ended
	Jan. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Stock Option Activity	A summary of stock option activity for the three-month period ended January 31, 2019, is as follows: Stock Options Weighted Average Exercise Price Outstanding at October 31, 2018 37,045 $ 21.69 Options granted — — Options exercised — — Options cancelled — — Outstanding at January 31, 2019 37,045 $ 21.69
Summary of Stock Options Already Vested and Currently Exercisable	Summarized information about outstanding stock options as of January 31, 2019, that have already vested and are currently exercisable, are as follows: Options Already Vested and Currently Exercisable Number of outstanding options 37,045 Weighted average remaining contractual life (years) 3.02 Weighted average exercise price per share $ 21.69 Intrinsic value of outstanding options $ 617,000
Reconciliation of Restricted Stock Activity and Related Information	A reconciliation of our restricted stock, performance share and PSU activity and related information for the three-month period ended January 31, 2019 is as follows: Number of Shares Weighted Average Grant Date Fair Value Unvested at October 31, 2018 168,348 $ 37.24 Shares or units granted 90,525 37.98 Shares or units vested (34,963 ) 29.96 Shares or units cancelled (12,462 ) 29.82 Shares or units withheld (13,676 ) 29.67 Unvested at January 31, 2019 197,772 $ 39.86

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Jan. 31, 2019
Earnings Per Share [Abstract]
Reconciliation of Basic and Diluted Earnings Per Share	The computation of basic and diluted net income per share is determined using net income applicable to common shareholders as the numerator and the number of shares outstanding as the denominator as follows (in thousands, except per share amounts): Three Months Ended January 31, 2019 2018 Basic Diluted Basic Diluted Net income $ 6,654 $ 6,654 $ 2,937 $ 2,937 Undistributed earnings allocated to participating shares (53 ) (53 ) (21 ) (21 ) Net income applicable to common shareholders $ 6,601 $ 6,601 $ 2,916 $ 2,916 Weighted average shares outstanding 6,735 6,735 6,659 6,659 Stock options and contingently issuable securities — 72 — 86 6,735 6,807 6,659 6,745 Income per share $ 0.98 $ 0.97 $ 0.44 $ 0.43

INVENTORIES (Tables)

INVENTORIES (Tables)	3 Months Ended
	Jan. 31, 2019
Inventory Disclosure [Abstract]
Schedule of Inventories	Inventories, priced at the lower of cost (first-in, first-out method) or net realizable value, are summarized below (in thousands): January 31, 2019 October 31, 2018 Purchased parts and sub-assemblies $ 41,895 $ 38,303 Work-in-process 18,693 22,786 Finished goods 86,127 76,520 $ 146,715 $ 137,609

GUARANTEES AND PRODUCT WARRAN_2

GUARANTEES AND PRODUCT WARRANTIES (Tables)	3 Months Ended
	Jan. 31, 2019
Standard Product Warranty Disclosure [Abstract]
Reconciliation of Warranty Reserve	A reconciliation of the changes in our warranty reserve is as follows (in thousands): Three Months Ended January 31, 2019 2018 Balance, beginning of period $ 2,499 $ 1,772 Provision for warranties during the period 962 980 Charges to the reserve (868 ) (771 ) Impact of foreign currency translation 27 62 Balance, end of period $ 2,620 $ 2,043

FINANCIAL INSTRUMENTS (Tables)

FINANCIAL INSTRUMENTS (Tables)	3 Months Ended
	Jan. 31, 2019
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 January 31, 2019 and October 31, 2018 (in thousands): Assets Liabilities January 31, 2019 October 31, 2018 January 31, 2019 October 31, 2018 Level 1 Deferred Compensation $ 1,808 $ 1,723 $ — $ — Level 2 Derivatives $ 1,092 $ 3,085 $ 1,241 $ 2,020

DERIVATIVE INSTRUMENTS AND HE_3

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands	Jan. 31, 2019	Oct. 31, 2018
Derivatives, Fair Value [Line Items]
Derivative assets	$ 1,092	$ 3,085
Derivative liabilities	1,241	2,020
Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	1,054	2,654
Derivative liabilities	969	1,616
Foreign Exchange Forward [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	38	431
Derivative liabilities	$ 272	$ 404

DERIVATIVE INSTRUMENTS AND HE_4

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Effect of Derivative Instruments on Consolidated Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jan. 31, 2019	Jan. 31, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)	$ (270)	$ (1,142)
Foreign Exchange Forward [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss)	(12)	222
Designated as Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Intercompany sales/purchases [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)	(270)	(1,142)
Designated as Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Net Investment Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)	(2)	(166)
Not Designated as Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Other Income And Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Operations	$ (234)	$ (1,256)

DERIVATIVE INSTRUMENTS AND HE_5

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Changes in Components of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jan. 31, 2019	Jan. 31, 2018
Derivative [Line Items]
Beginning Balance	$ (9,863)
Other comprehensive income (loss) before reclassifications	1,039
Reclassifications	12	$ (222)
Ending Balance	(8,812)
Foreign Currency Translation [Member]
Derivative [Line Items]
Beginning Balance	(10,592)
Other comprehensive income (loss) before reclassifications	1,309
Reclassifications	0
Ending Balance	(9,283)
Cash Flow Hedges [Member]
Derivative [Line Items]
Beginning Balance	729
Other comprehensive income (loss) before reclassifications	(270)
Reclassifications	12
Ending Balance	$ 471

DERIVATIVE INSTRUMENTS AND HE_6

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Narrative) (Details) € in Millions	3 Months Ended
	Jan. 31, 2019USD ($)	Nov. 30, 2018EUR (€)	Oct. 31, 2018USD ($)
Derivative financial instruments:
Notional principal of foreign exchange contracts	$ 143,100,000		$ 145,200,000
Unrealized gain (loss), net of tax, to be reclassified in next 12 months	67,000
Not Designated as Hedging Instrument [Member]
Derivative financial instruments:
Notional principal of foreign exchange contracts	69,900,000
Forward Contracts [Member] | Designated as Hedging Instrument [Member]
Derivative financial instruments:
Notional principal of foreign exchange contracts | €		€ 3
Realized gain, net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss	804,000
Unrealized loss, net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss	1,000
Euros [Member] | Designated as Hedging Instrument [Member]
Derivative financial instruments:
Notional principal of foreign exchange contracts	28,100,000
Pounds Sterling [Member] | Designated as Hedging Instrument [Member]
Derivative financial instruments:
Notional principal of foreign exchange contracts	10,100,000
New Taiwan Dollars [Member] | Designated as Hedging Instrument [Member]
Derivative financial instruments:
Notional principal of foreign exchange contracts	$ 29,700,000

EQUITY INCENTIVE PLAN (Summary

EQUITY INCENTIVE PLAN (Summary of Stock Option Activity and Related Information) (Details) - Employee Stock Option [Member]	3 Months Ended
	Jan. 31, 2019$ / sharesshares
Stock Options
Outstanding at October 31, 2018 | shares	37,045
Options granted | shares	0
Options exercised | shares	0
Options cancelled | shares	0
Outstanding at January 31, 2019 | shares	37,045
Weighted Average Exercise Price
Outstanding at October 31, 2018 | $ / shares	$ 21.69
Options granted | $ / shares	0
Options exercised | $ / shares	0
Options cancelled | $ / shares	0
Outstanding at January 31, 2019 | $ / shares	$ 21.69

EQUITY INCENTIVE PLAN (Schedule

EQUITY INCENTIVE PLAN (Schedule of Information about Outstanding Stock Options Vested and Currently Exercisable) (Details)	3 Months Ended
	Jan. 31, 2019USD ($)$ / sharesshares
Options Currently Exercisable
Number of outstanding options | shares	37,045
Weighted average remaining contractual life (years)	3 years 7 days
Weighted average exercise price per share | $ / shares	$ 21.69
Intrinsic value of outstanding options | $	$ 617,000

EQUITY INCENTIVE PLAN (Reconcil

EQUITY INCENTIVE PLAN (Reconciliation of Restricted Stock Activity and Related Information) (Details)	3 Months Ended
	Jan. 31, 2019$ / sharesshares
Number of Shares
Unvested at October 31, 2018 | shares	168,348
Shares or units granted | shares	90,525
Shares or units vested | shares	(34,963)
Shares or units cancelled | shares	(12,462)
Shares withheld | shares	(13,676)
Unvested at January 31, 2019 | shares	197,772
Weighted Average Grant Date Fair Value
Unvested at October 31, 2018 | $ / shares	$ 37.24
Shares or units granted | $ / shares	37.98
Shares or units vested | $ / shares	29.96
Shares or units cancelled | $ / shares	29.82
Shares withheld | $ / shares	29.67
Unvested at January 31, 2019 | $ / shares	$ 39.86

EQUITY INCENTIVE PLAN (Narrativ

EQUITY INCENTIVE PLAN (Narrative) (Details) - USD ($)	Jan. 02, 2019	Nov. 14, 2018	Jan. 31, 2019	Jan. 31, 2018	Oct. 31, 2018	Mar. 10, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 709,000	$ 549,000
Unrecognized Stock-based compensation expense			$ 5,600,000
Restricted stock granted			90,525
Grant date fair value of restricted stock			$ 39.86		$ 37.24
2016 Equity Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
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]
Number of Shares Available for Grant under the 2008 Plan						386,048
Non-Executive Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted		7,200
Grant date fair value of restricted stock		$ 40.01
Time Based [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	21,825
Grant date fair value of restricted stock	$ 36.08
Percentage of incentive compensation arrangement	25.00%
Performance Based [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	32,559
Grant date fair value of restricted stock	$ 36.08
Percentage of incentive compensation arrangement	75.00%
Performance Based [Member] | PSU TSR [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	30,943
Grant date fair value of restricted stock	$ 40.72
Percentage of incentive compensation arrangement	40.00%
Performance Based [Member] | PSU 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%
Performance Based [Member] | PSU 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%
Performance Based [Member] | PSU ROIC [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	30,557
Grant date fair value of restricted stock	$ 36.08
Percentage of incentive compensation arrangement	35.00%
Performance Based [Member] | PSU 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%
Performance Based [Member] | PSU 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%

EARNINGS PER SHARE (Reconciliat

EARNINGS PER SHARE (Reconciliation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jan. 31, 2019	Jan. 31, 2018
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income	$ 6,654	$ 2,937
Undistributed earnings allocated to participating share	(53)	(21)
Net income applicable to common shareholders	$ 6,601	$ 2,916
Weighted average shares outstanding, Basic	6,735	6,659
Stock options and contingently issuable shares	72	86
Weighted average shares outstanding, Diluted	6,807	6,745
Income per share, Basic	$ 0.98	$ 0.44
Income per share, Diluted	$ 0.97	$ 0.43

ACCOUNTS RECEIVABLE (Narrative)

ACCOUNTS RECEIVABLE (Narrative) (Details) - USD ($)	Jan. 31, 2019	Oct. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Doubtful Accounts Receivable	$ 980,000	$ 1,000,000

INVENTORIES (Schedule Of Invent

INVENTORIES (Schedule Of Inventory Current) (Details) - USD ($) $ in Thousands	Jan. 31, 2019	Oct. 31, 2018
Inventory [Line Items]
Purchased parts and sub-assemblies	$ 41,895	$ 38,303
Work-in-process	18,693	22,786
Finished goods	86,127	76,520
Inventories	$ 146,715	$ 137,609

GUARANTEES AND PRODUCT WARRAN_3

GUARANTEES AND PRODUCT WARRANTIES (Reconciliation of the changes in our warranty reserve) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jan. 31, 2019	Jan. 31, 2018
Product Warranty Liability [Line Items]
Balance, beginning of period	$ 2,499	$ 1,772
Provision for warranties during the period	962	980
Charges to the reserve	(868)	(771)
Impact of foreign currency translation	27	62
Balance, end of period	$ 2,620	$ 2,043

GUARANTEES AND PRODUCT WARRAN_4

GUARANTEES AND PRODUCT WARRANTIES (Narrative) (Details)	3 Months Ended
	Jan. 31, 2019USD ($)
Product Warranty Liability [Line Items]
Number Of Guarantees	25
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 687,000
Term of Product Warranty	1 year

DEBT AGREEMENTS (Narrative) (De

DEBT AGREEMENTS (Narrative) (Details) € in Millions, ¥ in Millions, $ in Millions, $ in Millions	Mar. 06, 2019USD ($)	Dec. 31, 2018USD ($)	Jan. 31, 2019USD ($)	Mar. 06, 2019TWD ($)	Mar. 06, 2019CNY (¥)	Jan. 31, 2019EUR (€)
Line Of Credit Agreement 2018 [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity			$ 40
Minimum working capital requirement		$ 125
Minimum tangible net worth requirement		$ 170
Line of Credit, interest rate description			Borrowings under the 2018 Credit Agreement will bear interest at floating rates based on, at our option, either (i) a LIBOR-based rate, or other alternative currency-based rate approved by the lender, plus 0.75% per annum, or (ii) a base rate (which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) the one month LIBOR-based rate plus 1.00%), plus 0.00% per annum. Outstanding letters of credit will carry an annual rate of 0.75%.
Line of credit, maturity date		Dec. 31, 2020
Allowable investments in subsidiaries			$ 10
Borrowings available under credit facility			$ 41.7
Line of Credit Facility, Covenant Terms		The 2018 Credit Agreement contains customary affirmative and negative covenants and events of default, including covenants (1) restricting us from making certain investments, loans, advances and acquisitions (but permitting us to make investments in subsidiaries of up to $10.0 million); (2) restricting us from making certain payments, including cash dividends, except that we may pay cash dividends as long as immediately before and after giving effect to such payment, the sum of the unused amount of the commitments under the 2018 Credit Agreement plus our cash on hand is not less than $10.0 million, and as long as we are not in default before and after giving effect to such dividend payments; (3) requiring that we maintain a minimum working capital of $125.0 million; and (4) requiring that we maintain a minimum tangible net worth of $170.0 million.
Hurco BV [Member] | Line Of Credit Agreement 2018 [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Description		On December 31, 2018, we and our subsidiary Hurco B.V. entered into a new credit agreement (the "2018 Credit Agreement") with Bank of America, N.A., as the lender. The 2018 Credit Agreement replaced the 2012 Credit Agreement. The 2018 Credit Agreement provides for an unsecured revolving credit and letter of credit facility in a maximum aggregate amount of $40.0 million. The 2018 Credit Agreement provides that the maximum amount of outstanding letters of credit at any one time may not exceed $10.0 million, the maximum amount of outstanding loans made to our subsidiary Hurco B.V. at any one time may not exceed $20.0 million, and the maximum amount of all outstanding loans denominated in alternative currencies at any one time may not exceed $20.0 million.
Germany [Member]
Line of Credit Facility [Line Items]
Revolving Credit Facility | €						€ 1.5
China [Member]
Line of Credit Facility [Line Items]
Repayments of Credit Facility		$ 1.4
Taiwan credit facility [Member] | Subsequent Event [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 5			$ 150
Line of credit, maturity date	Mar. 5, 2020
China credit facility [Member] | Subsequent Event [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 5				¥ 32.5
Line of credit, maturity date	Mar. 5, 2020

INCOME TAXES (Narrative) (Detai

INCOME TAXES (Narrative) (Details) - USD ($)	1 Months Ended	3 Months Ended
	Dec. 31, 2017	Jan. 31, 2019	Jan. 31, 2018	Oct. 31, 2018
Income Tax Contingency [Line Items]
Unrecognized tax benefits, interest accrued		$ 28,000
Effective Income Tax Rate Reconciliation, Percent		27.00%	61.00%
Income Tax Expense (Benefit)		$ 2,453,000	$ 4,500,000
Unrecognized Tax Benefits		$ 223,000		$ 205,000
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	35.00%	21.00%
Unrecognized Tax Benefits Expiration Term		expire between July 2019 and July 2022

FINANCIAL INSTRUMENTS (Fair val

FINANCIAL INSTRUMENTS (Fair value hierarchy) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Jan. 31, 2019	Oct. 31, 2018
Level 1 [Member]
Assets
Deferred Compensation	$ 1,808	$ 1,723
Liabilities
Deferred Compensation	0	0
Level 2 [Member]
Assets
Derivatives	1,092	3,085
Liabilities
Derivatives	$ 1,241	$ 2,020

FINANCIAL INSTRUMENTS (Narrativ

FINANCIAL INSTRUMENTS (Narrative) (Details) - USD ($) $ in Millions	Jan. 31, 2019	Oct. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notional amount of contracts	$ 143.1	$ 145.2