Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2021 | Dec. 31, 2021 | Apr. 30, 2021 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Oct. 31, 2021 | ||
Entity File Number | 0-9143 | ||
Entity Registrant Name | HURCO COMPANIES INC | ||
Entity Incorporation, State or Country Code | IN | ||
Entity Tax Identification Number | 35-1150732 | ||
Entity Address, Address Line One | One Technology Way | ||
Entity Address, City or Town | Indianapolis | ||
Entity Address, State or Province | IN | ||
Entity Address, Postal Zip Code | 46268 | ||
City Area Code | 317 | ||
Local Phone Number | 293–5309 | ||
Title of 12(b) Security | Common Stock, no par value | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 6,613,699 | ||
Entity Central Index Key | 0000315374 | ||
Current Fiscal Year End Date | --10-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 226,758,000 | ||
Trading Symbol | HURC | ||
ICFR Auditor Attestation Flag | true |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Sales and service fees | $ 235,195 | $ 170,627 | $ 263,377 |
Cost of sales and service | 178,946 | 134,170 | 186,169 |
Gross profit | 56,249 | 36,457 | 77,208 |
Selling, general and administrative expenses | 46,001 | 41,416 | 54,668 |
Goodwill impairment | 4,903 | ||
Operating income (loss) | 10,248 | (9,862) | 22,540 |
Interest expense | 24 | 94 | 62 |
Interest income | 34 | 130 | 462 |
Investment income | 173 | 133 | 356 |
Income from equity investments | 203 | 69 | 583 |
Other expense, net | 513 | 1,179 | 555 |
Income (loss) before income taxes | 10,121 | (10,803) | 23,324 |
Provision (benefit) for income taxes | 3,357 | (4,556) | 5,829 |
Net income (loss) | $ 6,764 | $ (6,247) | $ 17,495 |
Income (loss) per common share - basic | $ 1.01 | $ (0.93) | $ 2.57 |
Income (loss) per common share - diluted | $ 1.01 | $ (0.93) | $ 2.55 |
Weighted average common shares outstanding - basic | 6,595 | 6,670 | 6,759 |
Weighted average common shares outstanding - diluted | 6,608 | 6,670 | 6,815 |
Dividends paid per share | $ 0.55 | $ 0.51 | $ 0.47 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ 6,764 | $ (6,247) | $ 17,495 |
Other comprehensive income (loss): | |||
Translation gain (loss) of foreign currency financial statements | 2,405 | 5,969 | 550 |
(Gain) / loss on derivative instruments reclassified into operations, net of tax of $(204), $(126) and $(70), respectively | (679) | (421) | (235) |
Gain / (loss) on derivative instruments, net of tax of $(143), $118 and $183, respectively | (477) | 395 | 615 |
Total other comprehensive income (loss) | 1,249 | 5,943 | 930 |
Comprehensive income (loss) | $ 8,013 | $ (304) | $ 18,425 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
(Gain) / loss on derivative instruments reclassified into operations, tax | $ (204) | $ (126) | $ (70) |
Gain / (loss) on derivative instruments, tax | $ (143) | $ 118 | $ 183 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2021 | Oct. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 84,063 | $ 57,859 |
Accounts receivable, less allowance for doubtful accounts of $1,645 in 2021 and $1,401 in 2020 | 42,620 | 27,686 |
Inventories, net | 148,216 | 149,864 |
Derivative assets | 905 | 968 |
Prepaid assets | 13,091 | 13,803 |
Other | 975 | 1,231 |
Total current assets | 289,870 | 251,411 |
Property and equipment: | ||
Land | 868 | 868 |
Building | 7,352 | 7,352 |
Machinery and equipment | 29,533 | 29,195 |
Leasehold improvements | 5,172 | 4,754 |
Property and equipment, gross | 42,925 | 42,169 |
Less accumulated depreciation and amortization | (32,318) | (30,248) |
Total property and equipment, net | 10,607 | 11,921 |
Non-current assets: | ||
Software development costs, less accumulated amortization | 7,553 | 7,840 |
Intangible assets, net | 1,565 | 1,846 |
Operating lease - right-of-use assets, net | 10,624 | 11,748 |
Deferred income taxes | 3,154 | 2,479 |
Investments and other assets, net | 9,562 | 8,410 |
Total non-current assets | 32,458 | 32,323 |
Total assets | 332,935 | 295,655 |
Current liabilities: | ||
Accounts payable | 42,716 | 26,354 |
Accounts payable-related parties | 6,165 | 1,289 |
Customer deposits | 8,593 | 5,356 |
Derivative liabilities | 467 | 872 |
Operating lease liabilities | 4,221 | 4,132 |
Accrued payroll and employee benefits | 10,389 | 6,931 |
Accrued income taxes | 1,192 | 285 |
Accrued expenses | 5,911 | 4,018 |
Accrued warranty expenses | 1,516 | 1,200 |
Total current liabilities | 81,170 | 50,437 |
Non-current liabilities: | ||
Deferred income taxes | 68 | 131 |
Accrued tax liability | 1,749 | 1,918 |
Operating lease liabilities | 6,794 | 7,989 |
Deferred credits and other | 4,735 | 4,032 |
Total non-current liabilities | 13,346 | 14,070 |
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; 6,691,052 and 6,636,906 shares issued and 6,617,717 and 6,565,163 shares outstanding, as of October 31, 2021 and October 31, 2020, respectively | 662 | 657 |
Additional paid-in capital | 63,924 | 60,997 |
Retained earnings | 175,574 | 172,484 |
Accumulated other comprehensive loss | (1,741) | (2,990) |
Total shareholders' equity | 238,419 | 231,148 |
Total liabilities and shareholders' equity | $ 332,935 | $ 295,655 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2021 | Oct. 31, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts | $ 1,645 | $ 1,401 |
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 | 6,691,052 | 6,636,906 |
Common stock, shares outstanding | 6,617,717 | 6,565,163 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 6,764 | $ (6,247) | $ 17,495 |
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities, net of acquisitions: | |||
Provision for doubtful accounts | 244 | 510 | (136) |
Deferred income taxes | (112) | (547) | 260 |
Equity in income of affiliates | (203) | (69) | (583) |
Foreign currency (gain) loss | 31 | 257 | 730 |
Unrealized (gain) loss on derivatives | (316) | 622 | (388) |
Depreciation and amortization | 4,193 | 4,547 | 3,745 |
Stock-based compensation | 2,779 | 2,058 | 2,670 |
Goodwill impairment charge | 4,903 | ||
Change in assets and liabilities, net of acquisitions: | |||
(Increase) decrease in accounts receivable | (15,188) | 15,909 | 11,239 |
(Increase) decrease in inventories | 2,165 | 3,461 | (10,499) |
(Increase) decrease in prepaid expenses | 437 | (4,364) | (1,474) |
Increase (decrease) in accounts payable | 20,617 | (2,367) | (23,281) |
Increase (decrease) in customer deposits | 3,111 | (189) | (499) |
Increase (decrease) in accrued expenses | 2,142 | (1,603) | 114 |
Increase (decrease) in accrued payroll and employee benefits | 3,458 | (4,941) | (2,468) |
Increase (decrease) in accrued income tax | 900 | (1,695) | (3,259) |
Net change in derivative assets and liabilities | (135) | 115 | 330 |
Other | 1,288 | 572 | (409) |
Net cash provided by (used for) operating activities | 32,175 | 10,932 | (6,413) |
Cash flows from investing activities: | |||
Proceeds from sale of property and equipment | 3 | 106 | 83 |
Purchase of property and equipment | (1,260) | (683) | (3,169) |
Software development costs | (1,109) | (973) | (1,701) |
Other investments | (979) | 371 | 243 |
Acquisition of business | (4,353) | ||
Net cash provided by (used for) investing activities | (3,345) | (1,179) | (8,897) |
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | 350 | 67 | |
Dividends paid | (3,674) | (3,420) | (3,203) |
Taxes paid related to net settlement of restricted shares | (197) | (498) | (499) |
Stock repurchases | (7,000) | ||
Repayment of short-term debt | (1,450) | ||
Net cash provided by (used for) financing activities | (3,521) | (10,851) | (5,152) |
Effect of exchange rate changes on cash and cash equivalents | 895 | 2,014 | 235 |
Net increase (decrease) in cash and cash equivalents | 26,204 | 916 | (20,227) |
Cash and cash equivalents at beginning of period | 57,859 | 56,943 | 77,170 |
Cash and cash equivalents at end of period | 84,063 | 57,859 | 56,943 |
Cash and cash equivalents at beginning of period | 57,859 | ||
Cash and cash equivalents at end of period | 84,063 | 57,859 | |
Cash paid for: | |||
Interest | 11 | ||
Income taxes, net | $ 1,572 | $ 487 | $ 11,025 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) | Total |
Balances at Oct. 31, 2018 | $ 672 | $ 64,185 | $ 167,859 | $ (9,863) | $ 222,853 |
Balances (in shares) at Oct. 31, 2018 | 6,723,160 | ||||
Net income (loss) | 17,495 | 17,495 | |||
Other comprehensive income (loss) | 930 | 930 | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | $ 5 | 2,165 | 2,170 | ||
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares) | 44,077 | ||||
Dividends paid | (3,203) | (3,203) | |||
Balances at Oct. 31, 2019 | $ 677 | 66,350 | 182,151 | (8,933) | 240,245 |
Balances (in shares) at Oct. 31, 2019 | 6,767,237 | ||||
Net income (loss) | (6,247) | (6,247) | |||
Other comprehensive income (loss) | 5,943 | 5,943 | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | $ 5 | 1,555 | 1,560 | ||
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares) | 47,750 | ||||
Exercise of common stock options | 67 | 67 | |||
Exercise of common stock options (in shares) | 3,738 | ||||
Stock repurchases | $ (25) | (6,975) | (7,000) | ||
Stock repurchases (in shares) | (253,562) | ||||
Dividends paid | (3,420) | (3,420) | |||
Balances at Oct. 31, 2020 | $ 657 | 60,997 | 172,484 | (2,990) | 231,148 |
Balances (in shares) at Oct. 31, 2020 | 6,565,163 | ||||
Net income (loss) | 6,764 | 6,764 | |||
Other comprehensive income (loss) | 1,249 | 1,249 | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | $ 3 | 2,579 | 2,582 | ||
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares) | 36,243 | ||||
Exercise of common stock options | $ 2 | 348 | 350 | ||
Exercise of common stock options (in shares) | 16,311 | ||||
Dividends paid | (3,674) | (3,674) | |||
Balances at Oct. 31, 2021 | $ 662 | $ 63,924 | $ 175,574 | $ (1,741) | $ 238,419 |
Balances (in shares) at Oct. 31, 2021 | 6,617,717 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
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”, “us”, “our”, “Hurco” or the “Company”). 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 $4.8 million and $4.4 million as of October 31, 2021 and 2020, respectively. That investment is included in Investments and other assets, net on the accompanying Consolidated Balance Sheets. Inter-company accounts and transactions have been eliminated. Reclassifications. Certain prior year amounts have been reclassified to conform to the current year presentation. This reclassification has no impact on previously reported net income or shareholders’ equity. 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, 2021, were a net loss of $1.7 million, net of tax, 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, 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 (the “FASB”), 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 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, 2021, in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from November 2021 through October 2022. The contract amount at forward rates in U.S. Dollars at October 31, 2021 for Euros and Pounds Sterling was $17.2 million and $8.5 million, respectively. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $26.2 million at October 31, 2021. At October 31, 2021, we had approximately $478,000 of losses, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Of this amount, $106,000 represented unrealized gains, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred gains will be recorded as an adjustment to Cost of sales and service in periods through October 2022, 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 2020. 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, net of tax, in Accumulated other comprehensive loss in the same manner as the underlying hedged net assets. This forward contract matured in November 2021, and we entered into a new forward contract for the same notional amount that is set to mature in November 2022. As of October 31, 2021, we had a realized gain of $813,000 and an unrealized gain of $98,000, 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 inter-company 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 Operations consistent with the transaction gain or loss on the related inter-company receivables, payables and loans denominated in foreign currencies. We had forward contracts outstanding as of October 31, 2021, in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from November 2021 through July 2022. The contract amounts at forward rates in U.S. Dollars at October 31, 2021 for Euros and Pounds Sterling totaled $14.6 million. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $23.5 million at October 31, 2021. 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. As of October 31, 2021 and October 31, 2020, all derivative instruments were recorded at fair value on the balance sheets as follows (in thousands): 2021 2020 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 646 Derivative assets $ 495 Foreign exchange forward contracts Derivative liabilities $ 403 Derivative liabilities $ 279 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 259 Derivative assets $ 473 Foreign exchange forward contracts Derivative liabilities $ 64 Derivative liabilities $ 593 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 Operations, net of tax, during the fiscal years ended October 31, 2021, 2020, and 2019 (in thousands): Location of Amount of Gain (Loss) Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified Reclassified from Other Comprehensive From Other Other Comprehensive Income (Loss) Comprehensive Income (Loss) Derivatives 2021 2020 2019 Income (Loss) 2021 2020 2019 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts – Intercompany sales/purchases (477) 395 615 Cost of sales and service 679 421 235 Foreign exchange forward contract – Net investment 43 (64) 128 We did not recognize any gains or losses as a result of hedges deemed ineffective during fiscal years ended October 31, 2021, 2020, and 2019 We recognized the following gains and losses in our Consolidated Statements of Operations during the fiscal years ended October 31, 2021, 2020, and 2019 on derivative instruments not designated as hedging instruments (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Recognized in Operations Derivatives Recognized in Operations 2021 2020 2019 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (313) $ (171) $ 514 The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the fiscal years ended October 31, 2021 and 2020 (in thousands): Foreign Cash Currency Flow Translation Hedges Total Balance, October 31, 2019 $ (10,042) $ 1,109 $ (8,933) Other comprehensive income (loss) before reclassifications 5,969 395 6,364 Reclassifications — (421) (421) Balance, October 31, 2020 $ (4,073) $ 1,083 $ (2,990) Other comprehensive income (loss) before reclassifications 2,405 (477) 1,928 Reclassifications — (679) (679) Balance, October 31, 2021 $ (1,668) $ (73) $ (1,741) Inventories . Inventories are stated at the lower of cost or net realizable value, 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 was $2.5 million for fiscal 2021, $2.7 million for fiscal 2020, and $2.6 million for fiscal 2019. 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, automation integration equipment and solutions for job shops, software options, control upgrades, accessories and replacement parts for our products, as well as customer service, training, and applications support. 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 FASB guidance codified in Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). 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 each of the performance obligations (when applicable), and recognize the revenue when (or as) the performance obligation to the customer is fulfilled. 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 that 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 facility 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 immaterial within the context of the contract. For our five-axis machines that we install, we estimate the fair value of the installation performance obligation and recognize that 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 immaterial 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. 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 12 of these 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 $3.2 million, $3.5 million, and $4.4 million, in fiscal 2021, 2020, and 2019, 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 related to software development projects of $1.1 million in fiscal 2021, $1.0 million in fiscal 2020, and $1.8 million in fiscal 2019. Amortization expense for software development costs was $1.4 million, $1.5 million, and $1.0 million, for the fiscal years ended October 31, 2021, 2020, and 2019, respectively. Accumulated amortization at October 31, 2021 and 2020 was $22.0 million and $21.0 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 2022 $ 1,575 2023 1,856 2024 1,685 2025 1,089 2026 and thereafter 1,348 Goodwill and Intangible Assets. Goodwill and indefinite-lived intangibles arising from a business combination are not amortized and charged to expense over time. Instead, goodwill and indefinite-lived intangibles must be reviewed for impairment annually as of the last day of our third fiscal quarter, or more frequently, if circumstances arise indicating potential impairment. For goodwill, if the carrying amount of the reporting unit containing the goodwill exceeds the fair value of that reporting unit, an impairment loss is recognized for that excess, but only to the extent of the goodwill amount allocated to that reporting unit. We had goodwill for our single reporting unit, arising from the acquisitions of ProCobots, LLC (“ProCobots”) ( $2.5 million) in 2019, LCM Precision Technology S.r.l. (“LCM”) ( $2.2 million) in 2013, and our wholly-owned distributor located in Michigan ( $0.2 million) in 2008. The adverse change in the business climate resulting from the COVID-19 pandemic and the net loss for fiscal 2020 caused the fair value of the reporting unit to fall below our book value of equity as of October 31, 2020, resulting in a full impairment loss of $4.9 million. As such, we have no goodwill as of October 31, 2021. For indefinite-lived intangible assets, if the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess. 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. There were no impairments recognized with respect to the carrying value of intangible assets for the years ended October 31, 2021, 2020, or 2019. As of October 31, 2021, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 763 (234) 529 Customer relationships 15 years 373 (223) 150 Technology 13 years 708 (454) 254 Noncompete 5 years 580 (261) 319 Patents 6 years 2,972 (2,860) 112 Other 8 years 397 (373) 24 Total $ 5,970 $ (4,405) $ 1,565 As of October 31, 2020, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 765 (181) 584 Customer relationships 15 years 374 (199) 175 Technology 13 years 713 (402) 311 Noncompete 5 years 580 (145) 435 Patents 6 years 2,972 (2,837) 135 Other 8 years 397 (368) 29 Total $ 5,978 $ (4,132) $ 1,846 Intangible asset amortization expense was $273,000, $358,000, and $117,000 for fiscal 2021, 2020, and 2019, respectively. Annual intangible asset amortization expense for the next five years is estimated to be $278,000 per year for fiscal years 2022 through 2023 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). We determined that we have a single asset group due to the interdependent nature of our operations. We estimated the cash flows during the remaining useful life of the primary asset, and our undiscounted cash flow was in excess of the book value of our single asset group, and therefore, there was no impairment indications for our long-lived assets for the period ended October 31, 2021. Thus, there was no impairment recognized with respect to the carrying values of long-lived assets for the years ended October 31, 2021, 2020, or 2019. Earnings Per Share. Basic earnings per share is calculated by dividing net income (loss) 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, 2021 2020 2019 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income (loss) $ 6,764 $ 6,764 $ (6,247) $ (6,247) $ 17,495 $ 17,495 Undistributed earnings (loss) allocated to participating shares (76) (76) 66 66 (147) (147) Net income (loss) applicable to common shareholders $ 6,688 $ 6,688 $ (6,181) $ (6,181) $ 17,348 $ 17,348 Weighted average shares outstanding 6,595 6,595 6,670 6,670 6,759 6,759 Stock options and contingently issuable securities — 13 — — — 56 6,595 6,608 6,670 6,670 6,759 6,815 Income (loss) per share $ 1.01 $ 1.01 $ (0.93) $ (0.93) $ 2.57 $ 2.55 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. Net deferred tax assets and liabilities are classified as non-current in the consolidated financial statements. 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 federal, state and foreign 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. 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 operate in multiple jurisdictions through wholly-owned subsidiaries, and our global structure is complex. The estimates of our uncertain tax positions involve judgments and assessment of the potential tax implications. 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. Our tax positions are subject to audit by taxing authorities across multiple global jurisdictions, and the resolution of such audits may span multiple years. Tax law is complex and often subject to varied interpretations. Accordingly, the ultimate outcome with respect to taxes we may owe may differ from the amounts recognized. 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, 2021 | |
BUSINESS OPERATIONS | |
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, automation integration equipment and solutions for job shops, software options, control upgrades, accessories and replacement parts for our products, as well as customer service, training, and applications 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 principally through more than 180 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, the Netherlands, Poland, Singapore, Taiwan, the United Kingdom, and certain areas of the United States. We operate in the industrial equipment industry and have a global footprint that subjects us to various business risks in many different countries. During fiscal 2020, our operating results were adversely affected by the international business disruption due to the outbreak of COVID-19 and the economic slowdown in Europe, uncertainty surrounding the U.K. Brexit activities, and political friction in the U.S. Many of our customers deferred or eliminated investments in capital equipment last year, which we attributed largely to the uncertainty these events created. During fiscal 2021, our sales increased year-over-year in all regions as countries began to lift the government-mandated COVID-19 stay-at-home orders or other similar operating restrictions. Because of the potential for extended vulnerability, we have closely evaluated the estimates we have made in preparing the financial statements as of October 31, 2021, with the understanding that these estimates could change in the near term. We will continue to evaluate and disclose any uncertainty associated with key assumptions underlying fair value estimates, trends, and uncertainties that have had, or are reasonably expected to have, a material effect on our consolidated financial position, results of operations, changes in shareholders' equity, and cash flows for and at the end of each interim period. 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 Machine Tool Co., Ltd. (“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. 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 trade wars or tariffs, or an earthquake, typhoon, or tsunami. Any interruption with one of our other third-party key suppliers may also have an adverse effect on our operating results and our financial condition. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Oct. 31, 2021 | |
INVENTORIES | |
INVENTORIES | 3. INVENTORIES Inventories as of October 31, 2021 and 2020 are summarized below (in thousands): 2021 2020 Purchased parts and sub–assemblies $ 37,527 $ 30,390 Work–in–process 17,559 12,635 Finished goods 93,130 106,839 $ 148,216 $ 149,864 Finished goods inventory consigned to our distributors and agents throughout the Americas, Europe, and Asia was $11.8 million and $17.2 million as of October 31, 2021 and 2020, respectively. |
ACQUISITION OF BUSINESS
ACQUISITION OF BUSINESS | 12 Months Ended |
Oct. 31, 2021 | |
ACQUISITION OF BUSINESS | |
ACQUISITION OF BUSINESS | 4. ACQUISITION OF BUSINESS On August 5, 2019, we (through a newly-formed subsidiary, ProCobots) acquired substantially all of the assets of a U.S.-based automation integration company for approximately $4.4 million. This acquired business provides automation solutions that can be integrated with any machine tool. The acquisition was accounted for in accordance with ASC Topic 805, Business Combinations. Accordingly, the total purchase price was allocated to tangible assets and liabilities based on their fair value and the intangibles and goodwill were allocated on a provisional basis at the date of acquisition. These allocations reflected various provisional estimates that were available at the time and were subject to change during the purchase price allocation period as valuations were finalized. All valuations are now final. The following table summarizes the allocation of the opening balance sheet of ProCobots as of August 5, 2019 (in thousands): Initial Allocation Adjustments Final Allocation Current assets $ 349 $ — $ 349 Property plant and equipment 452 — 452 Intangibles 148 972 1,120 Goodwill 3,500 (972) 2,528 Total assets 4,449 — 4,449 Current liabilities 96 — 96 Total liabilities 96 — 96 Total purchase price and cash expended $ 4,353 $ — $ 4,353 Intangible assets of $1.1 million were recorded as a result of the purchase. The fair value of the intangible assets was based upon a discounted cash flow method that involves inputs that are not observable in the market (Level 3). Intangible assets are amortized primarily using a straight-line methodology. The intangible assets consisted of the following (in thousands): Remaining Economic Useful Life Trademark/name $ 520 15 Noncompete 580 5 Other 20 1 1,120 The excess purchase price over the fair value of the assets acquired and the liabilities assumed was recorded as goodwill in the amount of $2.5 million. Goodwill recognized in the acquisition relates primarily to expanding our current product offering. The amount recorded as goodwill will be fully deductible for tax purposes. As of October 31, 2020, we recognized an impairment loss for the full $2.5 million of goodwill relating to ProCobots. See Note 1 of these Notes to Consolidated Financial Statements for further information. The results of operations of ProCobots have been included in the consolidated financial statements from the date of acquisition. |
CREDIT AGREEMENTS AND BORROWING
CREDIT AGREEMENTS AND BORROWINGS | 12 Months Ended |
Oct. 31, 2021 | |
CREDIT AGREEMENTS AND BORROWINGS | |
CREDIT AGREEMENTS AND BORROWINGS | 5. CREDIT AGREEMENTS AND BORROWINGS On December 31, 2018, we and our subsidiary Hurco B.V. entered into a credit agreement with Bank of America, N.A., as the lender, which was subsequently amended on each of March 13, 2020, December 23, 2020 and December 17, 2021 (as amended, the “2018 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. 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, 2023. Borrowings under the 2018 Credit Agreement bear interest at floating rates based on, at our option, either (i) a rate based upon the secured overnight financing rate (“SOFR”), the Sterling Overnight Index Average Reference Rate, the Euro Interbank Offering Rate, or another alternative currency-based rate approved by the lender, depending on the term of the loan and the currency in which such loan is denominated, plus 1.00% 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 SOFR-based rate plus 1.00% ), plus 0.00% per annum. Outstanding letters of credit will carry an annual rate of 1.00% . 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 (a) 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 and (b) payments made to repurchase shares of our common stock, except that we may repurchase shares of our common stock as long as we are not in default before and after giving effect to such repurchases and the aggregate amount of payments made by us for all such repurchases during any fiscal year does not exceed $10.0 million; (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 $176.5 million. We may use the proceeds from advances under the 2018 Credit Agreement for general corporate purposes. In March 2019, our wholly-owned subsidiaries in Taiwan, HML, and China, NHML, closed on uncommitted revolving credit facilities with maximum aggregate amounts of 150 million New Taiwan Dollars and 32.5 million Chinese Yuan, respectively. As uncommitted facilities, both the Taiwan and China credit facilities are subject to review and termination by the respective underlying lending institution from time to time. As a result, as of October 31, 2021, our existing credit facilities consisted of the €1.5 million revolving credit facility in Germany, the 150 million New Taiwan Dollars Taiwan credit facility, the 32.5 million Chinese Yuan China credit facility and the $40.0 million revolving credit facility under the 2018 Credit Agreement. As of October 31, 2021, there were no borrowings under any of our credit facilities and there was $52.2 million of available borrowing capacity thereunder. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Oct. 31, 2021 | |
FINANCIAL INSTRUMENTS | |
FINANCIAL INSTRUMENTS | 6. FINANCIAL INSTRUMENTS Estimated Fair Value of Financial Instruments FASB fair value guidance establishes a three–tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs 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, 2021 and 2020 (in thousands): Assets Liabilities October 31, October 31, October 31, October 31, 2021 2020 2021 2020 Level 1 Deferred compensation $ 2,481 $ 1,868 $ — $ — Level 2 Derivatives $ 905 $ 968 $ 467 $ 872 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 $94.6 million and $70.8 million at October 31, 2021 and 2020, 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, 2021 | |
INCOME TAXES | |
INCOME TAXES | 7. INCOME TAXES We utilize the asset and liability method of accounting for income taxes. Under this method, the provision (benefit) for income taxes represents income taxes payable or refundable for the current year plus the change in deferred taxes during the year. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law on March 27, 2020. The CARES Act, among other things, included tax provisions that we applied relating to refundable payroll tax credits, the deferral of employer’s social security payments, and modifications to net operating loss carryback provisions. After we filed the net operating loss carryback claims during the fourth quarter of fiscal 2021, we included the $5.4 million of tax refunds in current assets. On December 27, 2020, the Consolidated Appropriations Act of 2021 (the “CAA”), which includes the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and the American Rescue Plan Act of 2021, was signed into law and provided further COVID-19 economic relief with an expansion of the employee retention credit. As a result, we recorded operating income of $2.9 million related to the employee retention credit during fiscal 2021. In the fiscal years set forth below, the provision (benefit) for income taxes consisted of the following (in thousands): Year Ended October 31, 2021 2020 2019 Current: U.S. taxes $ 1,763 $ (4,932) $ 1,854 Foreign taxes 1,706 923 3,715 3,469 (4,009) 5,569 Deferred: U.S. taxes 66 (256) (31) Foreign taxes (178) (291) 291 (112) (547) 260 $ 3,357 $ (4,556) $ 5,829 The components of income (loss) before taxes are (in thousands): Year Ended October 31, 2021 2020 2019 Income (loss) before income taxes: Domestic $ 4,340 $ (11,681) $ 9,793 Foreign 5,781 878 13,531 $ 10,121 $ (10,803) $ 23,324 A comparison of income tax expense at the U.S. statutory rate to our effective tax rate is as follows: Year Ended October 31, 2021 2020 2019 U.S. statutory rate 21 % 21 % 21 % Effect of tax rate of international jurisdictions different than U.S. statutory rates 4 % (2) % 3 % Valuation allowance — % — % 1 % State taxes 1 % 2 % 1 % Tax credits — % 1 % (2) % Transition tax — % — % (1) % US tax on distributed and undistributed earnings — % — % 3 % US benefit of foreign intangible income (1) % — % (3) % Impact of CARES act 5 % 22 % — % Other 3 % 1 (2) % 2 % Effective tax rate 33 % 42 % 25 % 1 The Tax Reform Act enacted on December 22, 2017, made comprehensive changes to U.S. federal income tax laws by moving from a global to a modified territorial tax regime. As a result, cash repatriated to the U.S. is generally no longer subject to U.S federal income tax. As of October 31, 2021, the undistributed earnings of our foreign subsidiaries are expected to be permanently reinvested and retained for continuing operations. Accordingly, we did not accrue for any withholding taxes on the undistributed earnings of our foreign subsidiaries, consistent with the position adopted on January 1, 2018. 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. Net deferred tax assets and liabilities are classified as non-current in the consolidated financial statements. As of October 31, 2021, 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 tax credits of $0.8 million. We established a valuation allowance against some of these carryforwards due to the uncertainty of their full realization. As of October 31, 2021, and 2020, the balance of this valuation allowance was $1.9 million and $2.2 million, respectively. Significant components of our deferred tax assets and liabilities at October 31, 2021 and 2020 are as follows (in thousands): October 31, 2021 2020 Deferred Tax Assets: Accrued inventory reserves $ 973 $ 1,241 Accrued warranty expenses 308 248 Compensation related expenses 2,444 1,849 Net derivative gain 49 — Unrealized exchange gain — 14 Other accrued expenses 282 226 Net operating loss carryforwards 1,705 1,957 Other credit carryforwards 839 887 Operating lease liabilities 2,570 2,736 Goodwill and intangibles 967 1,019 Other 215 183 10,352 10,360 Less: Valuation allowance – net operating loss and other credit carryforwards (1,871) (2,164) Deferred tax assets 8,481 8,196 Deferred Tax Liabilities: Net derivative loss — (305) Unrealized exchange loss (15) — Property and equipment and capitalized software development costs (2,533) (2,563) Operating lease - right of use assets (2,495) (2,666) Other (352) (314) Net deferred tax assets $ 3,086 $ 2,348 As of October 31, 2021, we had net operating loss carryforwards for international and U.S. income tax purposes of $6.3 million, of which $3.9 million will expire within 5 years beginning in fiscal 2022 and $0.4 million are state net operating losses which will expire between 5 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): 2021 2020 2019 Balance, beginning of year $ 168 $ 193 $ 180 Additions based on tax positions related to the current year 74 9 36 Additions (reductions) related to prior year tax positions — (2) — Reductions due to statute expiration (75) (32) (23) Other — — — Balance, end of year $ 167 $ 168 $ 193 The entire balance of the unrecognized tax benefits and related interest on October 31, 2021, if recognized, could affect the effective tax rate in future periods. We recognize accrued interest and penalties related to unrecognized tax benefits as components of our income tax provision. As of October 31, 2021, the amount of interest accrued, reported in other liabilities, was approximately $31,000 which did not include the federal tax benefit of interest deductions. The statute of limitations with respect to unrecognized tax benefits will expire between August 2022 and August 2025. We file U.S. federal and state income tax returns, as well as tax returns in applicable foreign jurisdictions. Currently, our subsidiary in Taiwan is under tax audit for fiscal year 2018. A summary of open tax years by major jurisdiction is presented below: United States federal Fiscal 2014 through the current period Germany¹ Fiscal 2017 through the current period Taiwan Fiscal 2016 through the current period United Kingdom Fiscal 2015 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, 2021 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 8. EMPLOYEE BENEFITS We have defined contribution plans that include a majority of our U.S. 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 $1.2 million, $1.3 million, $1.4 million, for the fiscal years ended October 31, 2021, 2020, and 2019, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Oct. 31, 2021 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 9. STOCK–BASED COMPENSATION In March 2016, we adopted the Hurco Companies, Inc. 2016 Equity Incentive Plan (the “2016 Equity Plan”), which allows us to grant awards of stock options, stock appreciation rights, restricted stock, stock units and other stock–based awards. The 2016 Equity Plan replaced the Hurco Companies, Inc. 2008 Equity Incentive Plan (the “2008 Equity 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 Equity 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 Equity 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 under the 2008 Equity 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, 2021, 2020 and 2019 and the related activity for the year is as follows: Shares Under Weighted Average Grant Option Date Fair Value Balance October 31, 2018 37,045 $ 21.69 Granted — — Cancelled — — Expired — — Exercised — $ — Balance October 31, 2019 37,045 $ 21.69 Granted — — Cancelled — — Expired — — Exercised (3,738) 18.13 Balance October 31, 2020 33,307 $ 22.09 Granted — — Cancelled — — Expired — — Exercised (16,311) 21.45 Balance October 31, 2021 16,996 $ 22.71 The total intrinsic value of stock options exercised during the twelve months ended October 31, 2021, 2020 and 2019 was approximately $179,000 , $44,000, and $0 , respectively. As of October 31, 2021, the total intrinsic value of stock options that were outstanding and exercisable was $166,000 . Stock options outstanding and exercisable on October 31, 2021, were as follows: Weighted Average Weighted Average Range of Exercise Shares Under Exercise Price Per Remaining Contractual Prices Per Share Option Share Life in Years Outstanding and Exercisable $ 21.45 5,437 $ 21.45 0.04 23.30 11,559 23.30 0.76 $ 21.45 - 23.30 16,996 $ 22.71 0.80 On March 11, 2021, the Compensation Committee granted a total of 9,708 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 $37.06 per share. On January 5, 2021, the Compensation Committee determined that no performance stock units (“PSUs”) were earned pursuant to the long-term incentive compensation arrangement for the fiscal 2018-2020 performance period based on the results of the performance metrics that were established by the Compensation Committee in 2018. On January 5, 2021, the Compensation Committee approved a long-term incentive compensation arrangement for our executive officers in the form of time-based restricted shares and 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 2021 through fiscal 2023. On that date, the Compensation Committee granted a total of 23,164 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 $28.60 per share. On January 5, 2021, the Compensation Committee granted a total target number of 39,199 PSUs to our executive officers designated as “PSU – TSR”. These PSUs were weighted as approximately 40% of the overall 2021 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 2021-2023, 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 $27.04 per PSU and was calculated using the Monte Carlo approach. On January 5, 2021, the Compensation Committee granted a total target number of 32,430 PSUs to our executive officers designated as “PSU – ROIC”. These PSUs were weighted as approximately 35% of the overall 2021 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 2021-2023. 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 $28.60 per share. On November 12, 2020, the Compensation Committee granted a total of 11,531 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 $29.30 per share. On March 12, 2020, the Compensation Committee granted a total of 17,780 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 $23.62 per share. On January 2, 2020, the Compensation Committee determined the degree to which the long-term incentive compensation arrangement approved for the fiscal 2017-2019 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 2017. As a result, the Compensation Committee determined that a total of 28,979 PSUs were earned by our executive officers, which PSUs vested on January 2, 2020. The vesting date fair value of the PSUs was based on the closing sales price of our common stock on the vesting date, which was $37.79 per share. On January 2, 2020, the Compensation Committee also approved a long-term incentive compensation arrangement for our executive officers in the form of restricted shares and 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 2020 through fiscal 2022. On that date, the Compensation Committee granted a total of 20,837 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 $37.79 per share. On January 2, 2020, the Compensation Committee also granted a total target number of 26,918 PSUs to our executive officers designated as “PSU – TSR”. These PSUs were weighted as approximately 40% of the overall 2020 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 2020-2022, 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 $46.81 per PSU and was calculated using the Monte Carlo approach. On January 2, 2020, the Compensation Committee also granted a total target number of 29,174 PSUs to our executive officers designated as “PSU – ROIC”. These PSUs were weighted as approximately 35% of the overall 2020 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 2020-2022. 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 $37.79 per share. On November 13, 2019, the Compensation Committee granted a total of 8,052 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 $35.75 per share. On March 14, 2019, the Compensation Committee granted a total of 11,824 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 remained 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 $40.58 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 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. 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. A reconciliation of our restricted stock, performance share and PSU activity and related information is as follows: Weighted Average Grant Number of Shares Date Fair Value Unvested at October 31, 2020 231,960 $ 39.03 Shares or units granted 116,032 28.85 Shares or units vested (36,243) 31.12 Shares or units cancelled (42,625) 43.99 Shares withheld (6,568) 38.20 Unvested at October 31, 2021 262,556 $ 34.84 During fiscal 2021, 2020, and 2019, we recorded approximately $2.8 million, $2.1 million, and $2.7 million, respectively, of stock–based compensation expense related to grants under the 2016 Equity Plan. As of October 31, 2021, there was an estimated $3.1 million of total unrecognized stock–based compensation cost that we expect to recognize by the end of the first quarter of fiscal 2024. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 10. RELATED PARTY TRANSACTIONS As of October 31, 2021, 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 $4.8 million and $4.4 million at October 31, 2021 and 2020, respectively, is included in Investments and other assets, net on the Consolidated Balance Sheets. Purchases of controls from HAL amounted to $4.8 million, $6.2 million, and $8.5 million in fiscal 2021, 2020 and 2019, respectively. Sales of control component parts to HAL were $262,000 , $265,000 and $198,000 for the fiscal years ended October 31, 2021, 2020, and 2019, respectively. Trade payables to HAL were $6.2 million and $1.3 million at October 31, 2021 and 2020, respectively. Trade receivables from HAL were $74,000 and $25,000 at October 31, 2021 and 2020, respectively. Summary unaudited financial information for HAL’s operations and financial condition is as follows (in thousands): 2021 2020 2019 Net Sales $ 12,361 $ 10,096 $ 15,957 Gross Profit 2,011 1,418 2,322 Operating Income 216 160 992 Net Income 802 265 1,490 Current Assets $ 14,695 $ 12,436 $ 12,019 Non–current Assets 6,850 6,152 5,560 Current Liabilities 5,339 3,708 3,674 |
CONTINGENCIES AND LITIGATION
CONTINGENCIES AND LITIGATION | 12 Months Ended |
Oct. 31, 2021 | |
CONTINGENCIES AND LITIGATION | |
CONTINGENCIES AND LITIGATION | 11. CONTINGENCIES AND LITIGATION From time to time, 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, 2021 | |
GUARANTEES AND PRODUCT WARRANTIES | |
GUARANTEES AND PRODUCT WARRANTIES | 12. GUARANTEES AND PRODUCT WARRANTIES From time to time, our subsidiaries guarantee third party payment obligations in connection with the sale of machines to customers that use financing. We follow FASB guidance for accounting for guarantees (codified in ASC 460). As of October 31, 2021, we had eight outstanding third party payment guarantees totaling approximately $0.9 million. 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. 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 for each of the last three fiscal years is as follows (in thousands): 2021 2020 2019 Balance, beginning of year $ 1,200 $ 1,760 $ 2,497 Provision for warranties during the year 2,948 2,075 2,246 Charges to the accrual (2,643) (2,669) (2,991) Impact of foreign currency translation 11 34 8 Balance, end of year $ 1,516 $ 1,200 $ 1,760 The increase in our warranty reserve from fiscal 2020 to fiscal 2021 was primarily due to an increase in the number of machines under warranty from increased sales volume in fiscal 2021. The decrease in our warranty reserve from fiscal 2019 to fiscal 2020 was primarily due to a decrease in the number of machines under warranty from decreased sales volume. |
LEASES
LEASES | 12 Months Ended |
Oct. 31, 2021 | |
LEASES | |
LEASES | 13. LEASES We adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (“ASC 842”) on November 1, 2019, the start of our 2020 fiscal year, and utilized the transition method allowed. Accordingly, comparative period financial information was not adjusted for the effects of adopting ASC 842 and no cumulative-effect adjustment was required to the opening balance of retained earnings on the adoption date. Upon adoption of ASC 842, we utilized the following elections and practical expedients: ● We elected to combine non-lease components with lease components. ● If at the lease commencement date, a lease has a lease term of 12 months or less and does not include a purchase option that is reasonably certain to be exercised, we have elected not to apply ASC 842 recognition requirements. Nonetheless, we intend to include leases of less than 12 months within the updated footnote disclosures, if material. ● We elected not to use the portfolio method if we enter into a large number of leases in the same month with the same terms and conditions. ● As we have applied the new transition method allowed per ASU 2018-11, we have elected not to reassess arrangements entered into prior to November 1, 2019 for whether an arrangement is or contains a lease, the lease classification applied or to separate initial direct costs. ● We elected not to use hindsight in determining the lease term for lease contracts that have historically been renewed or amended. Our lease portfolio includes leased production and assembly facilities, warehouses and distribution centers, office space, vehicles, material handling equipment utilized in our production and assembly facilities, laptops and other information technology equipment, as well as other miscellaneous leased equipment. Most of the leased production and assembly facilities have lease terms ranging from two We record a right-of-use asset and lease liability on our Consolidated Balance Sheets for all leases for which we are a lessee, in accordance with ASC 842. All our leases for which we are a lessee are classified as operating leases under the guidance in Topic 840. We recorded total operating lease expense for the fiscal years ended October 31, 2021, 2020, and 2019 of $5.2 million, $5.0 million, and $5.1 million, respectively, which is classified within Cost of sales and service and Selling, general and administrative expenses within the Consolidated Statements of Operations. Operating lease expense includes short-term leases and variable lease payments which are immaterial. There has been no cost to obtain leases capitalized on the Consolidated Balance Sheets as of October 31, 2021. The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for fiscal 2021 (in thousands): Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 5,025 Noncash information: Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,698 The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of October 31, 2021 (in thousands): Remainder of 2022 $ 4,375 2023 3,026 2024 1,398 2025 829 2026 615 2027 and thereafter 1,108 Total 11,351 Less: Imputed interest (336) Present value of operating lease liabilities $ 11,015 As of October 31, 2021, the weighted-average remaining term of our lease portfolio was approximately 3.9 years and the weighted-average discount rate was approximately 1.6%. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (Unaudited) | 12 Months Ended |
Oct. 31, 2021 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | 14. QUARTERLY FINANCIAL INFORMATION (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter 2021 (In thousands, except per share data) Sales and service fees $ 54,115 $ 57,920 $ 54,178 $ 68,982 Gross profit 11,547 14,794 12,974 16,934 Gross profit margin 21 % 26 % 24 % 25 % Selling, general and administrative expenses 10,568 11,273 10,331 13,829 Operating income (loss) 979 3,521 2,643 3,105 Provision (benefit) for income taxes 546 947 1,109 755 Net income (loss) 663 2,437 1,568 2,096 Income (loss) per common share – basic $ 0.10 $ 0.37 $ 0.23 $ 0.31 Income (loss) per common share – diluted $ 0.10 $ 0.37 $ 0.23 $ 0.31 First Second Third Fourth Quarter Quarter Quarter Quarter 2020 (In thousands, except per share data) Sales and service fees $ 43,660 $ 37,126 $ 45,382 $ 44,459 Gross profit 9,159 6,709 11,069 9,520 Gross profit margin 21 % 18 % 24 % 21 % Selling, general and administrative expenses 10,846 10,599 9,627 10,344 Goodwill impairment — — — 4,903 Operating income (loss) (1,687) (3,890) 1,442 (5,727) Provision (benefit) for income taxes (597) (765) (937) (2,257) Net income (loss) (893) (3,927) 2,162 (3,589) Income (loss) per common share – basic $ (0.13) $ (0.58) $ 0.32 $ (0.54) Income (loss) per common share – diluted $ (0.13) $ (0.58) $ 0.32 $ (0.54) |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Oct. 31, 2021 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 15. SEGMENT INFORMATION We operate in a single We principally sell our products through more than 180 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, the Netherlands, Poland, Singapore, Taiwan, the United Kingdom, and certain areas of the United States, which are among the world's principal machine tool consuming countries. During fiscal 2021, no distributor accounted for more than 5% of our sales and service fees. In fiscal 2021, approximately 63% of our revenues were from customers located outside of the Americas, 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 and services 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, 2021 2020 2019 Computerized Machine Tools $ 198,602 $ 139,577 $ 223,735 Computer Control Systems and Software † 2,528 1,699 2,818 Service Parts 26,425 22,484 27,854 Service Fees 7,640 6,867 8,970 Total $ 235,195 $ 170,627 $ 263,377 † The following table sets forth revenues by geographic area, based on customer location, for each of the past three fiscal years (in thousands): Year Ended October 31, 2021 2020 2019 United States of America $ 83,218 $ 64,500 $ 95,196 Canada 2,636 1,621 2,580 Central & South Americas 989 1,543 1,409 Total Americas 86,843 67,664 99,185 Germany 37,584 24,993 52,002 United Kingdom 30,314 19,679 29,349 Italy 12,718 8,599 14,772 France 14,252 10,797 14,346 Other Europe 21,467 14,034 20,028 Total Europe 116,335 78,102 130,497 China 14,284 14,225 15,706 Other Asia Pacific 16,047 10,048 16,858 Total Asia Pacific 30,331 24,273 32,564 Other Foreign 1,686 588 1,131 Grand Total $ 235,195 $ 170,627 $ 263,377 Long–lived tangible assets, net by geographic area, were (in thousands): As of October 31, 2021 2020 2019 United States of America $ 6,104 $ 6,826 $ 7,967 Foreign countries 6,640 7,059 8,006 $ 12,744 $ 13,885 $ 15,973 Net assets by geographic area were (in thousands): As of October 31, 2021 2020 2019 Americas $ 84,385 $ 83,214 $ 103,863 Europe 80,769 77,840 71,411 Asia Pacific 73,265 70,094 64,971 $ 238,419 $ 231,148 $ 240,245 |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Oct. 31, 2021 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
NEW ACCOUNTING PRONOUNCEMENTS | 16. NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements: In June 2016, FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This standard modifies the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. This standard is effective for our fiscal 2021 and we adopted this standard on November 1, 2020. This standard did not have a significant effect on our accounting policies or on our consolidated financial statements and related disclosures. New Accounting Pronouncements: In December 2019, FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which allows for companies to remove certain exceptions and clarifies certain requirements regarding franchise taxes, goodwill, consolidated tax expenses, and annual effective tax rate calculations. This standard is effective for our fiscal year 2022, with early adoption permitted. We are assessing the impact this new accounting standard will have on our consolidated financial statements and related disclosures. In March 2020, FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides temporary optional expedients and exceptions to the U.S. Generally Accepted Accounting Principles guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. This standard is effective for all entities as of March 12, 2020 through December 31, 2022. We are assessing the impact this new accounting standard will have on our consolidated financial statements and related disclosures. There have been no other significant changes in the Company’s critical accounting policies and estimates during the fiscal year ended October 31, 2021. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts and Reserves | 12 Months Ended |
Oct. 31, 2021 | |
Schedule II - Valuation and Qualifying Accounts and Reserves | |
Schedule II - Valuation and Qualifying Accounts and Reserves | Schedule II – Valuation and Qualifying Accounts and Reserves for the Years Ended October 31, 2021, 2020 and 2019 (Dollars in thousands) Charged to/ (Recovered Balance at from) Charged Balance Beginning Costs and to Other at End Description of Period Expenses Accounts Deductions of Period Allowance for doubtful accounts for the year ended: October 31, 2021 $ 1,401 $ 268 $ — $ 24 (1) $ 1,645 October 31, 2020 $ 891 $ 575 $ — $ 65 (1) $ 1,401 October 31, 2019 $ 1,027 $ (136) $ — $ — (1) $ 891 Income tax valuation allowance for the year ended: October 31, 2021 $ 2,164 $ 49 $ — $ 342 $ 1,871 October 31, 2020 $ 2,227 $ 50 $ — $ 113 $ 2,164 October 31, 2019 $ 2,106 $ 458 $ — $ 337 $ 2,227 (1) Receivable write–offs . All other financial statement schedules are omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Consolidation | Consolidation . The consolidated financial statements include the accounts of Hurco Companies, Inc. (an Indiana corporation) and its wholly–owned subsidiaries (“we”, “us”, “our”, “Hurco” or the “Company”). 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 $4.8 million and $4.4 million as of October 31, 2021 and 2020, respectively. That investment is included in Investments and other assets, net on the accompanying Consolidated Balance Sheets. Inter-company accounts and transactions have been eliminated. |
Reclassifications | Reclassifications. Certain prior year amounts have been reclassified to conform to the current year presentation. This reclassification has no impact on previously reported net income or shareholders’ equity. |
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, 2021, were a net loss of $1.7 million, net of tax, 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, 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 (the “FASB”), 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 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, 2021, in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from November 2021 through October 2022. The contract amount at forward rates in U.S. Dollars at October 31, 2021 for Euros and Pounds Sterling was $17.2 million and $8.5 million, respectively. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $26.2 million at October 31, 2021. At October 31, 2021, we had approximately $478,000 of losses, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Of this amount, $106,000 represented unrealized gains, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred gains will be recorded as an adjustment to Cost of sales and service in periods through October 2022, 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 2020. 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, net of tax, in Accumulated other comprehensive loss in the same manner as the underlying hedged net assets. This forward contract matured in November 2021, and we entered into a new forward contract for the same notional amount that is set to mature in November 2022. As of October 31, 2021, we had a realized gain of $813,000 and an unrealized gain of $98,000, 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 inter-company 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 Operations consistent with the transaction gain or loss on the related inter-company receivables, payables and loans denominated in foreign currencies. We had forward contracts outstanding as of October 31, 2021, in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from November 2021 through July 2022. The contract amounts at forward rates in U.S. Dollars at October 31, 2021 for Euros and Pounds Sterling totaled $14.6 million. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $23.5 million at October 31, 2021. 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. As of October 31, 2021 and October 31, 2020, all derivative instruments were recorded at fair value on the balance sheets as follows (in thousands): 2021 2020 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 646 Derivative assets $ 495 Foreign exchange forward contracts Derivative liabilities $ 403 Derivative liabilities $ 279 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 259 Derivative assets $ 473 Foreign exchange forward contracts Derivative liabilities $ 64 Derivative liabilities $ 593 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 Operations, net of tax, during the fiscal years ended October 31, 2021, 2020, and 2019 (in thousands): Location of Amount of Gain (Loss) Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified Reclassified from Other Comprehensive From Other Other Comprehensive Income (Loss) Comprehensive Income (Loss) Derivatives 2021 2020 2019 Income (Loss) 2021 2020 2019 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts – Intercompany sales/purchases (477) 395 615 Cost of sales and service 679 421 235 Foreign exchange forward contract – Net investment 43 (64) 128 We did not recognize any gains or losses as a result of hedges deemed ineffective during fiscal years ended October 31, 2021, 2020, and 2019 We recognized the following gains and losses in our Consolidated Statements of Operations during the fiscal years ended October 31, 2021, 2020, and 2019 on derivative instruments not designated as hedging instruments (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Recognized in Operations Derivatives Recognized in Operations 2021 2020 2019 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (313) $ (171) $ 514 The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the fiscal years ended October 31, 2021 and 2020 (in thousands): Foreign Cash Currency Flow Translation Hedges Total Balance, October 31, 2019 $ (10,042) $ 1,109 $ (8,933) Other comprehensive income (loss) before reclassifications 5,969 395 6,364 Reclassifications — (421) (421) Balance, October 31, 2020 $ (4,073) $ 1,083 $ (2,990) Other comprehensive income (loss) before reclassifications 2,405 (477) 1,928 Reclassifications — (679) (679) Balance, October 31, 2021 $ (1,668) $ (73) $ (1,741) |
Inventories | Inventories . Inventories are stated at the lower of cost or net realizable value, 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 was $2.5 million for fiscal 2021, $2.7 million for fiscal 2020, and $2.6 million for fiscal 2019. |
Revenue Recognition | 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, automation integration equipment and solutions for job shops, software options, control upgrades, accessories and replacement parts for our products, as well as customer service, training, and applications support. 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 FASB guidance codified in Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). 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 each of the performance obligations (when applicable), and recognize the revenue when (or as) the performance obligation to the customer is fulfilled. 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 that 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 facility 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 immaterial within the context of the contract. For our five-axis machines that we install, we estimate the fair value of the installation performance obligation and recognize that 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 immaterial 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. |
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 12 of these 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 $3.2 million, $3.5 million, and $4.4 million, in fiscal 2021, 2020, and 2019, 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 related to software development projects of $1.1 million in fiscal 2021, $1.0 million in fiscal 2020, and $1.8 million in fiscal 2019. Amortization expense for software development costs was $1.4 million, $1.5 million, and $1.0 million, for the fiscal years ended October 31, 2021, 2020, and 2019, respectively. Accumulated amortization at October 31, 2021 and 2020 was $22.0 million and $21.0 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 2022 $ 1,575 2023 1,856 2024 1,685 2025 1,089 2026 and thereafter 1,348 |
Goodwill and Intangible Assets | Goodwill and Intangible Assets. Goodwill and indefinite-lived intangibles arising from a business combination are not amortized and charged to expense over time. Instead, goodwill and indefinite-lived intangibles must be reviewed for impairment annually as of the last day of our third fiscal quarter, or more frequently, if circumstances arise indicating potential impairment. For goodwill, if the carrying amount of the reporting unit containing the goodwill exceeds the fair value of that reporting unit, an impairment loss is recognized for that excess, but only to the extent of the goodwill amount allocated to that reporting unit. We had goodwill for our single reporting unit, arising from the acquisitions of ProCobots, LLC (“ProCobots”) ( $2.5 million) in 2019, LCM Precision Technology S.r.l. (“LCM”) ( $2.2 million) in 2013, and our wholly-owned distributor located in Michigan ( $0.2 million) in 2008. The adverse change in the business climate resulting from the COVID-19 pandemic and the net loss for fiscal 2020 caused the fair value of the reporting unit to fall below our book value of equity as of October 31, 2020, resulting in a full impairment loss of $4.9 million. As such, we have no goodwill as of October 31, 2021. For indefinite-lived intangible assets, if the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess. 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. There were no impairments recognized with respect to the carrying value of intangible assets for the years ended October 31, 2021, 2020, or 2019. As of October 31, 2021, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 763 (234) 529 Customer relationships 15 years 373 (223) 150 Technology 13 years 708 (454) 254 Noncompete 5 years 580 (261) 319 Patents 6 years 2,972 (2,860) 112 Other 8 years 397 (373) 24 Total $ 5,970 $ (4,405) $ 1,565 As of October 31, 2020, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 765 (181) 584 Customer relationships 15 years 374 (199) 175 Technology 13 years 713 (402) 311 Noncompete 5 years 580 (145) 435 Patents 6 years 2,972 (2,837) 135 Other 8 years 397 (368) 29 Total $ 5,978 $ (4,132) $ 1,846 Intangible asset amortization expense was $273,000, $358,000, and $117,000 for fiscal 2021, 2020, and 2019, respectively. Annual intangible asset amortization expense for the next five years is estimated to be $278,000 per year for fiscal years 2022 through 2023 |
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). We determined that we have a single asset group due to the interdependent nature of our operations. We estimated the cash flows during the remaining useful life of the primary asset, and our undiscounted cash flow was in excess of the book value of our single asset group, and therefore, there was no impairment indications for our long-lived assets for the period ended October 31, 2021. Thus, there was no impairment recognized with respect to the carrying values of long-lived assets for the years ended October 31, 2021, 2020, or 2019. |
Earnings Per Share | Earnings Per Share. Basic earnings per share is calculated by dividing net income (loss) 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, 2021 2020 2019 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income (loss) $ 6,764 $ 6,764 $ (6,247) $ (6,247) $ 17,495 $ 17,495 Undistributed earnings (loss) allocated to participating shares (76) (76) 66 66 (147) (147) Net income (loss) applicable to common shareholders $ 6,688 $ 6,688 $ (6,181) $ (6,181) $ 17,348 $ 17,348 Weighted average shares outstanding 6,595 6,595 6,670 6,670 6,759 6,759 Stock options and contingently issuable securities — 13 — — — 56 6,595 6,608 6,670 6,670 6,759 6,815 Income (loss) per share $ 1.01 $ 1.01 $ (0.93) $ (0.93) $ 2.57 $ 2.55 |
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. Net deferred tax assets and liabilities are classified as non-current in the consolidated financial statements. 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 federal, state and foreign 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. 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 operate in multiple jurisdictions through wholly-owned subsidiaries, and our global structure is complex. The estimates of our uncertain tax positions involve judgments and assessment of the potential tax implications. 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. Our tax positions are subject to audit by taxing authorities across multiple global jurisdictions, and the resolution of such audits may span multiple years. Tax law is complex and often subject to varied interpretations. Accordingly, the ultimate outcome with respect to taxes we may owe may differ from the amounts recognized. |
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 ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Fair Value of Derivative Instruments | 2021 2020 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 646 Derivative assets $ 495 Foreign exchange forward contracts Derivative liabilities $ 403 Derivative liabilities $ 279 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 259 Derivative assets $ 473 Foreign exchange forward contracts Derivative liabilities $ 64 Derivative liabilities $ 593 |
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 Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity, and Statements of Operations, net of tax, during the fiscal years ended October 31, 2021, 2020, and 2019 (in thousands): Location of Amount of Gain (Loss) Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified Reclassified from Other Comprehensive From Other Other Comprehensive Income (Loss) Comprehensive Income (Loss) Derivatives 2021 2020 2019 Income (Loss) 2021 2020 2019 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts – Intercompany sales/purchases (477) 395 615 Cost of sales and service 679 421 235 Foreign exchange forward contract – Net investment 43 (64) 128 |
Schedule of derivative instruments not designated as hedging instruments | We recognized the following gains and losses in our Consolidated Statements of Operations during the fiscal years ended October 31, 2021, 2020, and 2019 on derivative instruments not designated as hedging instruments (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Recognized in Operations Derivatives Recognized in Operations 2021 2020 2019 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (313) $ (171) $ 514 |
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, 2021 and 2020 (in thousands): Foreign Cash Currency Flow Translation Hedges Total Balance, October 31, 2019 $ (10,042) $ 1,109 $ (8,933) Other comprehensive income (loss) before reclassifications 5,969 395 6,364 Reclassifications — (421) (421) Balance, October 31, 2020 $ (4,073) $ 1,083 $ (2,990) Other comprehensive income (loss) before reclassifications 2,405 (477) 1,928 Reclassifications — (679) (679) Balance, October 31, 2021 $ (1,668) $ (73) $ (1,741) |
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 2022 $ 1,575 2023 1,856 2024 1,685 2025 1,089 2026 and thereafter 1,348 |
Schedule of Intangible Assets | As of October 31, 2021, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 763 (234) 529 Customer relationships 15 years 373 (223) 150 Technology 13 years 708 (454) 254 Noncompete 5 years 580 (261) 319 Patents 6 years 2,972 (2,860) 112 Other 8 years 397 (373) 24 Total $ 5,970 $ (4,405) $ 1,565 As of October 31, 2020, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 765 (181) 584 Customer relationships 15 years 374 (199) 175 Technology 13 years 713 (402) 311 Noncompete 5 years 580 (145) 435 Patents 6 years 2,972 (2,837) 135 Other 8 years 397 (368) 29 Total $ 5,978 $ (4,132) $ 1,846 |
Schedule of computation of basic and diluted net income (loss) per share | The following table presents a reconciliation of our basic and diluted earnings per share computation: Fiscal Year Ended October 31, 2021 2020 2019 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income (loss) $ 6,764 $ 6,764 $ (6,247) $ (6,247) $ 17,495 $ 17,495 Undistributed earnings (loss) allocated to participating shares (76) (76) 66 66 (147) (147) Net income (loss) applicable to common shareholders $ 6,688 $ 6,688 $ (6,181) $ (6,181) $ 17,348 $ 17,348 Weighted average shares outstanding 6,595 6,595 6,670 6,670 6,759 6,759 Stock options and contingently issuable securities — 13 — — — 56 6,595 6,608 6,670 6,670 6,759 6,815 Income (loss) per share $ 1.01 $ 1.01 $ (0.93) $ (0.93) $ 2.57 $ 2.55 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
INVENTORIES | |
Schedule of inventories | Inventories as of October 31, 2021 and 2020 are summarized below (in thousands): 2021 2020 Purchased parts and sub–assemblies $ 37,527 $ 30,390 Work–in–process 17,559 12,635 Finished goods 93,130 106,839 $ 148,216 $ 149,864 |
ACQUISITION OF BUSINESS (Tables
ACQUISITION OF BUSINESS (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
ACQUISITION OF BUSINESS | |
Schedule of allocation of the opening balance sheet of ProCobots | The following table summarizes the allocation of the opening balance sheet of ProCobots as of August 5, 2019 (in thousands): Initial Allocation Adjustments Final Allocation Current assets $ 349 $ — $ 349 Property plant and equipment 452 — 452 Intangibles 148 972 1,120 Goodwill 3,500 (972) 2,528 Total assets 4,449 — 4,449 Current liabilities 96 — 96 Total liabilities 96 — 96 Total purchase price and cash expended $ 4,353 $ — $ 4,353 |
Schedule of intangible assets | Remaining Economic Useful Life Trademark/name $ 520 15 Noncompete 580 5 Other 20 1 1,120 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
FINANCIAL INSTRUMENTS | |
Schedule of fair value hierarchy for financial assets and liabilities measured at 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, 2021 and 2020 (in thousands): Assets Liabilities October 31, October 31, October 31, October 31, 2021 2020 2021 2020 Level 1 Deferred compensation $ 2,481 $ 1,868 $ — $ — Level 2 Derivatives $ 905 $ 968 $ 467 $ 872 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
INCOME TAXES | |
Components of Income (Loss) Before Taxes | The components of income (loss) before taxes are (in thousands): Year Ended October 31, 2021 2020 2019 Income (loss) before income taxes: Domestic $ 4,340 $ (11,681) $ 9,793 Foreign 5,781 878 13,531 $ 10,121 $ (10,803) $ 23,324 |
Schedule of Income Taxes Provision (Benefit) | In the fiscal years set forth below, the provision (benefit) for income taxes consisted of the following (in thousands): Year Ended October 31, 2021 2020 2019 Current: U.S. taxes $ 1,763 $ (4,932) $ 1,854 Foreign taxes 1,706 923 3,715 3,469 (4,009) 5,569 Deferred: U.S. taxes 66 (256) (31) Foreign taxes (178) (291) 291 (112) (547) 260 $ 3,357 $ (4,556) $ 5,829 |
Schedule of Reconciliation of Statutory Tax Rate to Effective Tax Rate | Year Ended October 31, 2021 2020 2019 U.S. statutory rate 21 % 21 % 21 % Effect of tax rate of international jurisdictions different than U.S. statutory rates 4 % (2) % 3 % Valuation allowance — % — % 1 % State taxes 1 % 2 % 1 % Tax credits — % 1 % (2) % Transition tax — % — % (1) % US tax on distributed and undistributed earnings — % — % 3 % US benefit of foreign intangible income (1) % — % (3) % Impact of CARES act 5 % 22 % — % Other 3 % 1 (2) % 2 % Effective tax rate 33 % 42 % 25 % 1 |
Schedule of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets and liabilities at October 31, 2021 and 2020 are as follows (in thousands): October 31, 2021 2020 Deferred Tax Assets: Accrued inventory reserves $ 973 $ 1,241 Accrued warranty expenses 308 248 Compensation related expenses 2,444 1,849 Net derivative gain 49 — Unrealized exchange gain — 14 Other accrued expenses 282 226 Net operating loss carryforwards 1,705 1,957 Other credit carryforwards 839 887 Operating lease liabilities 2,570 2,736 Goodwill and intangibles 967 1,019 Other 215 183 10,352 10,360 Less: Valuation allowance – net operating loss and other credit carryforwards (1,871) (2,164) Deferred tax assets 8,481 8,196 Deferred Tax Liabilities: Net derivative loss — (305) Unrealized exchange loss (15) — Property and equipment and capitalized software development costs (2,533) (2,563) Operating lease - right of use assets (2,495) (2,666) Other (352) (314) Net deferred tax assets $ 3,086 $ 2,348 |
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): 2021 2020 2019 Balance, beginning of year $ 168 $ 193 $ 180 Additions based on tax positions related to the current year 74 9 36 Additions (reductions) related to prior year tax positions — (2) — Reductions due to statute expiration (75) (32) (23) Other — — — Balance, end of year $ 167 $ 168 $ 193 |
Summary of open tax years by major jurisdiction | United States federal Fiscal 2014 through the current period Germany¹ Fiscal 2017 through the current period Taiwan Fiscal 2016 through the current period United Kingdom Fiscal 2015 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, 2021 | |
STOCK-BASED COMPENSATION | |
Schedule of stock option activity | A summary of the status of the options as of October 31, 2021, 2020 and 2019 and the related activity for the year is as follows: Shares Under Weighted Average Grant Option Date Fair Value Balance October 31, 2018 37,045 $ 21.69 Granted — — Cancelled — — Expired — — Exercised — $ — Balance October 31, 2019 37,045 $ 21.69 Granted — — Cancelled — — Expired — — Exercised (3,738) 18.13 Balance October 31, 2020 33,307 $ 22.09 Granted — — Cancelled — — Expired — — Exercised (16,311) 21.45 Balance October 31, 2021 16,996 $ 22.71 |
Schedule of Stock Options Outstanding and Exercisable | Weighted Average Weighted Average Range of Exercise Shares Under Exercise Price Per Remaining Contractual Prices Per Share Option Share Life in Years Outstanding and Exercisable $ 21.45 5,437 $ 21.45 0.04 23.30 11,559 23.30 0.76 $ 21.45 - 23.30 16,996 $ 22.71 0.80 |
Schedule of Restricted Stock Activity | A reconciliation of our restricted stock, performance share and PSU activity and related information is as follows: Weighted Average Grant Number of Shares Date Fair Value Unvested at October 31, 2020 231,960 $ 39.03 Shares or units granted 116,032 28.85 Shares or units vested (36,243) 31.12 Shares or units cancelled (42,625) 43.99 Shares withheld (6,568) 38.20 Unvested at October 31, 2021 262,556 $ 34.84 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
Schedule of Financial Information | Summary unaudited financial information for HAL’s operations and financial condition is as follows (in thousands): 2021 2020 2019 Net Sales $ 12,361 $ 10,096 $ 15,957 Gross Profit 2,011 1,418 2,322 Operating Income 216 160 992 Net Income 802 265 1,490 Current Assets $ 14,695 $ 12,436 $ 12,019 Non–current Assets 6,850 6,152 5,560 Current Liabilities 5,339 3,708 3,674 |
GUARANTEES AND PRODUCT WARRAN_2
GUARANTEES AND PRODUCT WARRANTIES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
GUARANTEES AND PRODUCT WARRANTIES | |
Schedule of reconciliation of the changes in warranty reserve | 2021 2020 2019 Balance, beginning of year $ 1,200 $ 1,760 $ 2,497 Provision for warranties during the year 2,948 2,075 2,246 Charges to the accrual (2,643) (2,669) (2,991) Impact of foreign currency translation 11 34 8 Balance, end of year $ 1,516 $ 1,200 $ 1,760 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
LEASES | |
Schedule of supplemental cash flow information and non-cash activity related to operating leases | The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for fiscal 2021 (in thousands): Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 5,025 Noncash information: Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,698 |
Schedule of maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability | The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of October 31, 2021 (in thousands): Remainder of 2022 $ 4,375 2023 3,026 2024 1,398 2025 829 2026 615 2027 and thereafter 1,108 Total 11,351 Less: Imputed interest (336) Present value of operating lease liabilities $ 11,015 |
QUARTERLY FINANCIAL INFORMATI_2
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | |
Schedule of Selected Quarterly Financial Information | First Second Third Fourth Quarter Quarter Quarter Quarter 2021 (In thousands, except per share data) Sales and service fees $ 54,115 $ 57,920 $ 54,178 $ 68,982 Gross profit 11,547 14,794 12,974 16,934 Gross profit margin 21 % 26 % 24 % 25 % Selling, general and administrative expenses 10,568 11,273 10,331 13,829 Operating income (loss) 979 3,521 2,643 3,105 Provision (benefit) for income taxes 546 947 1,109 755 Net income (loss) 663 2,437 1,568 2,096 Income (loss) per common share – basic $ 0.10 $ 0.37 $ 0.23 $ 0.31 Income (loss) per common share – diluted $ 0.10 $ 0.37 $ 0.23 $ 0.31 First Second Third Fourth Quarter Quarter Quarter Quarter 2020 (In thousands, except per share data) Sales and service fees $ 43,660 $ 37,126 $ 45,382 $ 44,459 Gross profit 9,159 6,709 11,069 9,520 Gross profit margin 21 % 18 % 24 % 21 % Selling, general and administrative expenses 10,846 10,599 9,627 10,344 Goodwill impairment — — — 4,903 Operating income (loss) (1,687) (3,890) 1,442 (5,727) Provision (benefit) for income taxes (597) (765) (937) (2,257) Net income (loss) (893) (3,927) 2,162 (3,589) Income (loss) per common share – basic $ (0.13) $ (0.58) $ 0.32 $ (0.54) Income (loss) per common share – diluted $ (0.13) $ (0.58) $ 0.32 $ (0.54) |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
SEGMENT INFORMATION | |
Schedule of Net Sales and Service Fees by Product Category | The following table sets forth the contribution of each of our product groups and services 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, 2021 2020 2019 Computerized Machine Tools $ 198,602 $ 139,577 $ 223,735 Computer Control Systems and Software † 2,528 1,699 2,818 Service Parts 26,425 22,484 27,854 Service Fees 7,640 6,867 8,970 Total $ 235,195 $ 170,627 $ 263,377 † |
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): Year Ended October 31, 2021 2020 2019 United States of America $ 83,218 $ 64,500 $ 95,196 Canada 2,636 1,621 2,580 Central & South Americas 989 1,543 1,409 Total Americas 86,843 67,664 99,185 Germany 37,584 24,993 52,002 United Kingdom 30,314 19,679 29,349 Italy 12,718 8,599 14,772 France 14,252 10,797 14,346 Other Europe 21,467 14,034 20,028 Total Europe 116,335 78,102 130,497 China 14,284 14,225 15,706 Other Asia Pacific 16,047 10,048 16,858 Total Asia Pacific 30,331 24,273 32,564 Other Foreign 1,686 588 1,131 Grand Total $ 235,195 $ 170,627 $ 263,377 |
Schedule of Long-Lived Assets by Geographic Area | Long–lived tangible assets, net by geographic area, were (in thousands): As of October 31, 2021 2020 2019 United States of America $ 6,104 $ 6,826 $ 7,967 Foreign countries 6,640 7,059 8,006 $ 12,744 $ 13,885 $ 15,973 |
Schedule of Assets by Geographic Area | Net assets by geographic area were (in thousands): As of October 31, 2021 2020 2019 Americas $ 84,385 $ 83,214 $ 103,863 Europe 80,769 77,840 71,411 Asia Pacific 73,265 70,094 64,971 $ 238,419 $ 231,148 $ 240,245 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Oct. 31, 2020 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 905 | $ 968 |
Derivative liabilities | 467 | 872 |
Foreign Exchange Forward | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 646 | 495 |
Derivative liabilities | 403 | 279 |
Foreign Exchange Forward | Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 259 | 473 |
Derivative liabilities | $ 64 | $ 593 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Effect of Derivative Instruments on Consolidated Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | $ (477) | $ 395 | $ 615 |
Designated as Hedging Instrument | Foreign Exchange Forward | Intercompany sales/purchases | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | (477) | 395 | 615 |
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) | 679 | 421 | 235 |
Designated as Hedging Instrument | Foreign Exchange Forward | Net Investment Hedging | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | 43 | (64) | 128 |
Not Designated as Hedging Instrument | Foreign Exchange Forward | Other Income And Expense | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain (Loss) Recognized in Operations | $ (313) | $ (171) | $ 514 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Changes in Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Derivative [Line Items] | |||
Beginning Balance | $ (2,990) | $ (8,933) | |
Other comprehensive income (loss) before reclassifications | 1,928 | 6,364 | |
Reclassifications | (679) | (421) | $ (235) |
Ending Balance | (1,741) | (2,990) | (8,933) |
Foreign Currency Translation | |||
Derivative [Line Items] | |||
Beginning Balance | (4,073) | (10,042) | |
Other comprehensive income (loss) before reclassifications | 2,405 | 5,969 | |
Ending Balance | (1,668) | (4,073) | (10,042) |
Cash Flow Hedging | |||
Derivative [Line Items] | |||
Beginning Balance | 1,083 | 1,109 | |
Other comprehensive income (loss) before reclassifications | (477) | 395 | |
Reclassifications | (679) | (421) | |
Ending Balance | $ (73) | $ 1,083 | $ 1,109 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Estimated Useful Lives (Details) | 12 Months Ended |
Oct. 31, 2021 | |
Land [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life, Indefinite | Indefinite |
Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
Machines [Member] | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Machines [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Shop and Office Equipment [Member] | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Shop and Office Equipment [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Building And Leasehold Improvements [Member] | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Building And Leasehold Improvements [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Estimated Amortization Expense (Details) $ in Thousands | Oct. 31, 2021USD ($) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
2022 | $ 1,575 |
2023 | 1,856 |
2024 | 1,685 |
2025 | 1,089 |
2026 and thereafter | $ 1,348 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Carrying amount of goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Oct. 31, 2020 | Oct. 31, 2020 | |
Changes in the carrying amount of goodwill | ||
Goodwill impairment | $ (4,903) | $ (4,903) |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 5,970 | $ 5,978 |
Accumulated Amortization | (4,405) | (4,132) |
Net Intangible Assets | 1,565 | 1,846 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | 373 | 374 |
Accumulated Amortization | (223) | (199) |
Net Intangible Assets | $ 150 | $ 175 |
Weighted Average Amortization Period | 15 years | 15 years |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 708 | $ 713 |
Accumulated Amortization | (454) | (402) |
Net Intangible Assets | $ 254 | $ 311 |
Weighted Average Amortization Period | 13 years | 13 years |
Noncompete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 580 | $ 580 |
Accumulated Amortization | (261) | (145) |
Net Intangible Assets | $ 319 | $ 435 |
Weighted Average Amortization Period | 5 years | 5 years |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 2,972 | $ 2,972 |
Accumulated Amortization | (2,860) | (2,837) |
Net Intangible Assets | $ 112 | $ 135 |
Weighted Average Amortization Period | 6 years | 6 years |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 397 | $ 397 |
Accumulated Amortization | (373) | (368) |
Net Intangible Assets | $ 24 | $ 29 |
Weighted Average Amortization Period | 8 years | 8 years |
Trademark/name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 763 | $ 765 |
Accumulated Amortization | (234) | (181) |
Net Intangible Assets | 529 | 584 |
Indefinite tradenames and trademarks | $ 177 | $ 177 |
Weighted Average Amortization Period | 14 years | 14 years |
SUMMARY OF SIGNIFICANT ACCOU_11
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, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||
Net income (loss) | $ 2,096 | $ 1,568 | $ 2,437 | $ 663 | $ (3,589) | $ 2,162 | $ (3,927) | $ (893) | $ 6,764 | $ (6,247) | $ 17,495 |
Undistributed (earnings) loss allocated to participating shares | (76) | 66 | (147) | ||||||||
Undistributed (earnings) loss allocated to participating shares | (76) | 66 | (147) | ||||||||
Net income applicable to common shareholders - Basic | 6,688 | (6,181) | 17,348 | ||||||||
Net income applicable to common shareholders - Diluted | $ 6,688 | $ (6,181) | $ 17,348 | ||||||||
Weighted average shares outstanding - Basic | 6,595 | 6,670 | 6,759 | ||||||||
Weighted average shares outstanding - Diluted | 6,608 | 6,670 | 6,815 | ||||||||
Stock options and contingently issuable securities | 13 | 56 | |||||||||
Income per share -Basic | $ 0.31 | $ 0.23 | $ 0.37 | $ 0.10 | $ (0.54) | $ 0.32 | $ (0.58) | $ (0.13) | $ 1.01 | $ (0.93) | $ 2.57 |
Income per share - Diluted | $ 0.31 | $ 0.23 | $ 0.37 | $ 0.10 | $ (0.54) | $ 0.32 | $ (0.58) | $ (0.13) | $ 1.01 | $ (0.93) | $ 2.55 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) € in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Nov. 30, 2021 | Oct. 31, 2020USD ($) | Oct. 31, 2021USD ($) | Oct. 31, 2020USD ($) | Oct. 31, 2019USD ($) | Nov. 30, 2020EUR (€) | Aug. 05, 2019USD ($) | May 08, 2019USD ($) | Oct. 31, 2013USD ($) | Oct. 31, 2008USD ($) | |
Translation of Foreign Currencies | ||||||||||
Cumulative foreign currency translation adjustments | $ 1,700,000 | |||||||||
Derivative financial instruments: | ||||||||||
Notional principal of foreign exchange contracts | $ 70,800,000 | 94,600,000 | $ 70,800,000 | |||||||
(Losses) gains, net of tax, related to cash flow hedges deferred in Accumulated Other Comprehensive Loss | 478,000 | |||||||||
Unrealized gain (loss), net of tax, to be reclassified in next 12 months | 106,000 | |||||||||
Property and Equipment | ||||||||||
Depreciation and amortization expense | 2,500,000 | 2,700,000 | $ 2,600,000 | |||||||
Research and Development Costs | ||||||||||
Research and development expenses | 3,200,000 | 3,500,000 | 4,400,000 | |||||||
Software Development Costs | ||||||||||
Capitalized costs | 1,100,000 | 1,000,000 | 1,800,000 | |||||||
Accumulated amortization | 21,000,000 | 22,000,000 | 21,000,000 | |||||||
Capitalized Computer Software, Amortization | 1,400,000 | 1,500,000 | 1,000,000 | |||||||
Goodwill and Intangible Assets | ||||||||||
Intangible assets amortization expense | 273,000 | 358,000 | $ 117,000 | |||||||
Expected future amortization expense, 2022 | 278,000 | |||||||||
Expected future amortization expense, 2023 | 278,000 | |||||||||
Expected future amortization expense, 2024 | 242,000 | |||||||||
Expected future amortization expense, 2025 | 148,000 | |||||||||
Expected future amortization expense, 2026 | $ 114,000 | |||||||||
Goodwill | $ 2,500,000 | |||||||||
Goodwill impairment | 4,903,000 | $ 4,903,000 | ||||||||
Income Tax | ||||||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% | 21.00% | |||||||
Wholly Owned Distributor [Member] | MICHIGAN | ||||||||||
Goodwill and Intangible Assets | ||||||||||
Goodwill | $ 200,000 | |||||||||
LCM | ||||||||||
Goodwill and Intangible Assets | ||||||||||
Goodwill | $ 2,200,000 | |||||||||
ProCobots | ||||||||||
Goodwill and Intangible Assets | ||||||||||
Goodwill | $ 0 | $ 2,500,000 | $ 2,528,000 | |||||||
Goodwill impairment | $ 2,500,000 | |||||||||
Forward Contracts | Designated as Hedging Instrument | ||||||||||
Derivative financial instruments: | ||||||||||
Notional principal of foreign exchange contracts | € | € 3 | |||||||||
Realized gain on foreign currency translation adjustments | 813,000 | |||||||||
Unrealized gain (loss), net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss | $ 98,000 | |||||||||
Derivative maturity date | November 2021 | |||||||||
Forward Contracts | Designated as Hedging Instrument | Subsequent Event [Member] | ||||||||||
Derivative financial instruments: | ||||||||||
Derivative maturity date | November 2022 | |||||||||
Euros | Designated as Hedging Instrument | ||||||||||
Derivative financial instruments: | ||||||||||
Notional principal of foreign exchange contracts | $ 17,200,000 | |||||||||
Pounds Sterling | Designated as Hedging Instrument | ||||||||||
Derivative financial instruments: | ||||||||||
Notional principal of foreign exchange contracts | 8,500,000 | |||||||||
New Taiwan Dollars | Designated as Hedging Instrument | ||||||||||
Derivative financial instruments: | ||||||||||
Notional principal of foreign exchange contracts | 26,200,000 | |||||||||
New Taiwan Dollars | Not Designated as Hedging Instrument | ||||||||||
Derivative financial instruments: | ||||||||||
Notional principal of foreign exchange contracts | $ 23,500,000 | |||||||||
Forward Contracts Denominated In Euros Pounds Sterling And New Taiwan [Member] | Designated as Hedging Instrument | ||||||||||
Derivative financial instruments: | ||||||||||
Derivative maturity date | November 2021 through October 2022 | |||||||||
Forward Contracts Denominated In Euros Pounds Sterling and South African Rand [Member] | Not Designated as Hedging Instrument | ||||||||||
Derivative financial instruments: | ||||||||||
Notional principal of foreign exchange contracts | $ 14,600,000 | |||||||||
Derivative maturity date | November 2021 through July 2022 | |||||||||
Hurco Automation Ltd [Member] | ||||||||||
Consolidation | ||||||||||
Ownership interest | 35.00% | |||||||||
Equity investment in affiliate | $ 4,400,000 | $ 4,800,000 | $ 4,400,000 |
BUSINESS OPERATIONS (Narrative)
BUSINESS OPERATIONS (Narrative) (Details) | 12 Months Ended |
Oct. 31, 2021entity | |
Minimum | |
Number of independent agents and distributors products are sold through | 180 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Oct. 31, 2020 |
INVENTORIES | ||
Purchased parts and sub-assemblies | $ 37,527 | $ 30,390 |
Work-in-process | 17,559 | 12,635 |
Finished goods | 93,130 | 106,839 |
Inventories | $ 148,216 | $ 149,864 |
INVENTORIES - Additional inform
INVENTORIES - Additional information (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Oct. 31, 2020 |
INVENTORIES | ||
Finished goods inventory consigned to distributors and agents | $ 11.8 | $ 17.2 |
ACQUISITION OF BUSINESS (Detail
ACQUISITION OF BUSINESS (Details) - USD ($) $ in Thousands | Aug. 05, 2019 | Oct. 31, 2020 | Oct. 31, 2020 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2019 | May 08, 2019 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||||
Intangibles | $ 1,120 | $ 1,100 | |||||
Goodwill | $ 2,500 | ||||||
Goodwill impairment | $ 4,903 | $ 4,903 | |||||
ProCobots | |||||||
ACQUISITION OF BUSINESS | |||||||
Purchase Consideration | 4,400 | ||||||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustments [Abstract] | |||||||
Current assets | 349 | ||||||
Property plant and equipment | 452 | ||||||
Intangibles | 148 | $ 972 | |||||
Goodwill | 3,500 | $ (972) | |||||
Total assets | 4,449 | ||||||
Current liabilities | 96 | ||||||
Total liabilities | 96 | ||||||
Total purchase price and cash expended | 4,353 | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||||
Current assets | 349 | ||||||
Property plant and equipment | 452 | ||||||
Intangibles | 1,120 | ||||||
Goodwill | 2,528 | $ 0 | $ 2,500 | ||||
Total assets | 4,449 | ||||||
Current liabilities | 96 | ||||||
Total liabilities | 96 | ||||||
Total purchase price and cash expended | $ 4,353 | ||||||
Goodwill impairment | $ 2,500 |
ACQUISITION OF BUSINESS - Intan
ACQUISITION OF BUSINESS - Intangible Assets (Details) - USD ($) $ in Thousands | Aug. 05, 2019 | Oct. 31, 2021 | Oct. 31, 2019 | May 08, 2019 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 1,120 | $ 1,100 | ||
Goodwill | $ 2,500 | |||
Trademark/name | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 520 | |||
Remaining Economic Useful Life | 15 years | |||
Noncompete | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 580 | |||
Remaining Economic Useful Life | 5 years | |||
Other | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 20 | |||
Remaining Economic Useful Life | 1 year | |||
ProCobots | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 1,120 | |||
Goodwill | $ 2,528 | $ 0 | $ 2,500 |
CREDIT AGREEMENTS AND BORROWI_2
CREDIT AGREEMENTS AND BORROWINGS (Narrative) (Details) € in Millions, ¥ in Millions, $ in Millions, $ in Millions | 12 Months Ended | |||||
Oct. 31, 2021USD ($) | Oct. 31, 2021TWD ($) | Oct. 31, 2021CNY (¥) | Oct. 31, 2021EUR (€) | Mar. 31, 2019TWD ($) | Mar. 31, 2019CNY (¥) | |
Line Of Credit Agreement 2018 [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit, maximum borrowing capacity | $ 40 | |||||
Line of credit, maximum borrowing capacity in alternative currencies | $ 20 | |||||
Variable interest rate | 0.00% | |||||
Minimum working capital requirement | $ 125 | |||||
Minimum tangible net worth requirement | $ 176.5 | |||||
Line of credit, maturity date | Dec. 31, 2023 | |||||
Allowable investments in alternative investments | $ 10 | |||||
Borrowings available under credit facility | 52.2 | |||||
Line of Credit, covenant, minimum cash on hand before dividends are paid | 10 | |||||
Line of Credit, covenant, maximum annual share repurchase | 10 | |||||
Hurco BV [Member] | Line Of Credit Agreement 2018 [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit, maximum borrowing capacity | $ 20 | |||||
Germany | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit, maximum borrowing capacity | € | € 1.5 | |||||
Federal funds | Line Of Credit Agreement 2018 [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Variable interest rate | 0.50% | |||||
SOFR | Line Of Credit Agreement 2018 [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Variable interest rate | 1.00% | |||||
Letter of Credit [Member] | Line Of Credit Agreement 2018 [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit, maximum borrowing capacity | $ 10 | |||||
Stated interest rate | 1.00% | 1.00% | 1.00% | 1.00% | ||
Taiwan credit facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit, maximum borrowing capacity | $ 150 | $ 150 | ||||
China credit facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit, maximum borrowing capacity | ¥ | ¥ 32.5 | ¥ 32.5 |
FINANCIAL INSTRUMENTS - Fair va
FINANCIAL INSTRUMENTS - Fair value hierarchy (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Oct. 31, 2021 | Oct. 31, 2020 |
Fair Value, Inputs, Level 1 | ||
Assets | ||
Deferred Compensation | $ 2,481 | $ 1,868 |
Liabilities | ||
Deferred Compensation | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Assets | ||
Derivatives | 905 | 968 |
Liabilities | ||
Derivatives | $ 467 | $ 872 |
FINANCIAL INSTRUMENTS - Additio
FINANCIAL INSTRUMENTS - Additional Information (Details) - USD ($) $ in Millions | Oct. 31, 2021 | Oct. 31, 2020 |
FINANCIAL INSTRUMENTS | ||
Notional amount of contracts | $ 94.6 | $ 70.8 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||||
Oct. 31, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Income Tax Contingency [Line Items] | ||||||||||||
Employee retention credit | $ 2,900,000 | |||||||||||
Income Tax Expense (Benefit) | $ 755,000 | $ 1,109,000 | $ 947,000 | $ 546,000 | $ (2,257,000) | $ (937,000) | $ (765,000) | $ (597,000) | $ 3,357,000 | $ (4,556,000) | $ 5,829,000 | |
Unrecognized Tax Benefits | 167,000 | 168,000 | 167,000 | 168,000 | $ 193,000 | $ 180,000 | ||||||
Valuation allowance | 1,871,000 | 2,164,000 | 1,871,000 | 2,164,000 | ||||||||
Deferred tax assets, net operating loss carryforwards | 1,705,000 | $ 1,957,000 | 1,705,000 | $ 1,957,000 | ||||||||
Deferred tax assets, net operating loss carryforwards | 6,300,000 | 6,300,000 | ||||||||||
Deferred tax assets, unexpired net operating loss | 2,000,000 | 2,000,000 | ||||||||||
Tax credits subject to expiration | 800,000 | 800,000 | ||||||||||
Unrecognized tax benefits, interest accrued | 31,000 | $ 31,000 | ||||||||||
Unrecognized Tax Benefits Expiration Term | expire between August 2022 and August 2025 | |||||||||||
Deferred tax assets for research and development tax credits | 800,000 | $ 800,000 | ||||||||||
Tax Credits Expiration Term | expire between years 2022 and 2031 | |||||||||||
CARES Act [Member] | ||||||||||||
Income Tax Contingency [Line Items] | ||||||||||||
Income Tax Expense (Benefit) | 5,400,000 | |||||||||||
Expirations Within Five Years [Member] | ||||||||||||
Income Tax Contingency [Line Items] | ||||||||||||
Deferred tax assets, net operating loss carryforwards | 3,900,000 | $ 3,900,000 | ||||||||||
Expiration maximum term | 5 years | |||||||||||
Expirations After Six Years [Member] | ||||||||||||
Income Tax Contingency [Line Items] | ||||||||||||
Deferred tax assets, net operating loss carryforwards | $ 400,000 | $ 400,000 | ||||||||||
Expiration minimum term | 5 years | |||||||||||
Expiration maximum term | 20 years |
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, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Income (loss) before income taxes: | |||||||||||
Domestic | $ 4,340 | $ (11,681) | $ 9,793 | ||||||||
Foreign | 5,781 | 878 | 13,531 | ||||||||
Income (loss) before income taxes | 10,121 | (10,803) | 23,324 | ||||||||
Current: | |||||||||||
U.S. taxes | 1,763 | (4,932) | 1,854 | ||||||||
Foreign taxes | 1,706 | 923 | 3,715 | ||||||||
Current (benefit) provision for income taxes | 3,469 | (4,009) | 5,569 | ||||||||
Deferred: | |||||||||||
U.S. taxes | 66 | (256) | (31) | ||||||||
Foreign taxes | (178) | (291) | 291 | ||||||||
Deferred Income Tax Expense (Benefit), Total | (112) | (547) | 260 | ||||||||
Income Tax Expense (Benefit), Total | $ 755 | $ 1,109 | $ 947 | $ 546 | $ (2,257) | $ (937) | $ (765) | $ (597) | $ 3,357 | $ (4,556) | $ 5,829 |
INCOME TAXES (Schedule of Compa
INCOME TAXES (Schedule of Comparison of Income Tax Expense) (Details) | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Tax rates: | |||
U.S. statutory rate | 21.00% | 21.00% | 21.00% |
Effect of tax rate of international jurisdictions different than U.S. statutory rates | 4.00% | (2.00%) | 3.00% |
Valuation allowance | 0.00% | 0.00% | 1.00% |
State taxes | 1.00% | 2.00% | 1.00% |
Tax Credits | 0.00% | 1.00% | (2.00%) |
Transition Tax | 0 | 0 | (0.01) |
US tax on distributed and undistributed earnings | 0.00% | 0.00% | 3.00% |
US benefit of foreign intangible income | (1.00%) | 0.00% | (3.00%) |
Impact of CARES act | 5.00% | 22.00% | 0.00% |
Other | 3.00% | (2.00%) | 2.00% |
Effective Income Tax Rate Reconciliation, Percent, Total | 33.00% | 42.00% | 25.00% |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Oct. 31, 2020 |
Deferred Tax Assets: | ||
Accrued inventory reserves | $ 973 | $ 1,241 |
Accrued warranty expenses | 308 | 248 |
Compensation related expenses | 2,444 | 1,849 |
Net derivative gain | 49 | 0 |
Unrealized exchange gain/loss | 0 | 14 |
Other accrued expenses | 282 | 226 |
Net operating loss carryforwards | 1,705 | 1,957 |
Other credit carryforwards | 839 | 887 |
Operating lease liabilities | 2,570 | 2,736 |
Goodwill and intangibles | 967 | 1,019 |
Other | 215 | 183 |
Deferred tax assets, gross | 10,352 | 10,360 |
Less: Valuation allowance - net operating loss and other credit carryforwards | 1,871 | 2,164 |
Deferred tax assets | 8,481 | 8,196 |
Deferred Tax Liabilities: | ||
Net derivative loss | 0 | (305) |
Unrealized exchange gain/loss | (15) | 0 |
Property and equipment and capitalized software development costs | (2,533) | (2,563) |
Operating lease - right of use assets | (2,495) | (2,666) |
Other | (352) | (314) |
Net deferred tax assets | $ 3,086 | $ 2,348 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
INCOME TAXES | |||
Unrecognized Tax Benefits, Beginning Balance | $ 168 | $ 193 | $ 180 |
Additions based on tax positions related to the current year | 74 | 9 | 36 |
Additions (reductions) related to prior year tax positions | 0 | (2) | 0 |
Reductions due to statute expiration | (75) | (32) | (23) |
Other | 0 | 0 | 0 |
Unrecognized Tax Benefits, Ending Balance | $ 167 | $ 168 | $ 193 |
INCOME TAXES (Summary of Open T
INCOME TAXES (Summary of Open Tax Years) (Details) | 12 Months Ended | |
Oct. 31, 2021 | ||
United States federal [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2014 through the current period | |
Germany | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2017 through the current period | [1] |
Taiwan [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2016 through the current period | |
United Kingdom | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2015 through the current period | |
[1] | Includes federal as well as state, provincial or similar local jurisdictions, as applicable. |
EMPLOYEE BENEFITS (Narrative) (
EMPLOYEE BENEFITS (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
EMPLOYEE BENEFITS | |||
Contributions to defined contribution plans | $ 1.2 | $ 1.3 | $ 1.4 |
STOCK-BASED COMPENSATION (Summa
STOCK-BASED COMPENSATION (Summary of Stock Option Activity and Related Information) (Details) - $ / shares | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Stock Options | |||
Outstanding at beginning of period | 33,307 | 37,045 | 37,045 |
Outstanding at end of period | 16,996 | 33,307 | 37,045 |
Employee Stock Option | |||
Stock Options | |||
Options granted | 0 | 0 | 0 |
Options cancelled | 0 | 0 | 0 |
Options Expired | 0 | 0 | 0 |
Options exercised | (16,311) | (3,738) | |
Weighted Average Exercise Price | |||
Outstanding at beginning of period | $ 22.09 | $ 21.69 | $ 21.69 |
Options granted | 0 | 0 | 0 |
Options cancelled | 0 | 0 | 0 |
Options Expired | 0 | 0 | 0 |
Options exercised | 21.45 | 18.13 | |
Outstanding at end of period | $ 22.71 | $ 22.09 | $ 21.69 |
STOCK-BASED COMPENSATION (Sched
STOCK-BASED COMPENSATION (Schedule of Options Outstanding and Exercisable) (Details) | 12 Months Ended |
Oct. 31, 2021shares | |
Outstanding and Exercisable | |
Shares Under Option | 16,996 |
Weighted Average Exercise Price Per Share | 22.71 |
Weighted Average Remaining Contractual Life in Years | 9 months 18 days |
$ 21.45 [Member] | |
Outstanding and Exercisable | |
Shares Under Option | 5,437 |
Weighted Average Exercise Price Per Share | 21.45 |
Weighted Average Remaining Contractual Life in Years | 14 days |
$ 23.30 [Member] | |
Outstanding and Exercisable | |
Shares Under Option | 11,559 |
Weighted Average Exercise Price Per Share | 23.30 |
Weighted Average Remaining Contractual Life in Years | 9 months 3 days |
STOCK-BASED COMPENSATION (Recon
STOCK-BASED COMPENSATION (Reconciliation of Restricted Stock Activity and Related Information) (Details) | 12 Months Ended |
Oct. 31, 2021$ / sharesshares | |
Number of Shares | |
Unvested at October 31, 2020 | shares | 231,960 |
Restricted stock granted | shares | 116,032 |
Shares or units vested | shares | (36,243) |
Shares or units cancelled | shares | (42,625) |
Shares or units withheld | shares | (6,568) |
Unvested at October 31, 2021 | shares | 262,556 |
Weighted Average Grant Date Fair Value | |
Unvested at October 31, 2020 | $ / shares | $ 39.03 |
Shares or units granted | $ / shares | 28.85 |
Shares or units vested | $ / shares | 31.12 |
Shares or units cancelled | $ / shares | 43.99 |
Shares or units withheld | $ / shares | 38.20 |
Unvested at October 31, 2021 | $ / shares | $ 34.84 |
STOCK-BASED COMPENSATION (Narra
STOCK-BASED COMPENSATION (Narrative) (Details) - USD ($) | Mar. 11, 2021 | Jan. 05, 2021 | Nov. 12, 2020 | Mar. 12, 2020 | Jan. 02, 2020 | Nov. 13, 2019 | Mar. 14, 2019 | Jan. 02, 2019 | Nov. 14, 2018 | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | Mar. 10, 2016 |
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 | ||||||||||||
Unrecognized Stock-based compensation expense | $ 3,100,000 | ||||||||||||
Restricted stock granted | 116,032 | ||||||||||||
Grant date fair value per share | $ 28.85 | ||||||||||||
Grant date fair value of restricted stock | $ 34.84 | $ 39.03 | |||||||||||
Total intrinsic value of stock options exercised | $ 179,000 | $ 44,000 | $ 0 | ||||||||||
Total intrinsic value of outstanding stock options vested and expected to vest and intrinsic value of options outstanding and exercisable | $ 166,000 | ||||||||||||
2016 Equity Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Expiration period of options granted | 10 years | ||||||||||||
Stock-based compensation expense | $ 2,800,000 | $ 2,100,000 | $ 2,700,000 | ||||||||||
2008 Equity Plan [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 386,048 | ||||||||||||
Time Based | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock granted | 9,708 | 17,780 | |||||||||||
Grant date fair value per share | $ 37.06 | $ 23.62 | |||||||||||
Vesting period | 1 year | 1 year | |||||||||||
Percentage of incentive compensation arrangement | 25.00% | 25.00% | 25.00% | ||||||||||
Time Based | 2016 Equity Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock granted | 23,164 | 11,531 | 20,837 | 8,052 | 11,824 | 21,825 | 7,200 | ||||||
Grant date fair value per share | $ 28.60 | $ 29.30 | $ 37.79 | $ 35.75 | $ 40.58 | $ 36.08 | $ 40.01 | ||||||
Vesting period | 3 years | 3 years | 3 years | 3 years | 1 year | 3 years | 3 years | ||||||
Performance Based | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock granted | 28,979 | 32,559 | |||||||||||
Grant date fair value per share | $ 37.79 | ||||||||||||
Grant date fair value of restricted stock | $ 36.08 | ||||||||||||
Vesting period | 3 years | 3 years | 3 years | ||||||||||
Percentage of incentive compensation arrangement | 75.00% | 75.00% | 75.00% | ||||||||||
Performance Based | 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 | Performance Shares TSR [Member] | 2016 Equity Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock granted | 39,199 | 26,918 | 30,943 | ||||||||||
Grant date fair value per share | $ 27.04 | $ 46.81 | |||||||||||
Grant date fair value of restricted stock | $ 40.72 | ||||||||||||
Vesting period | 3 years | 3 years | 3 years | ||||||||||
Performance Based | Performance Shares TSR [Member] | Maximum | |||||||||||||
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 | Performance Shares TSR [Member] | Minimum | |||||||||||||
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 | Performance Shares ROIC [Member] | 2016 Equity Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock granted | 32,430 | 29,174 | 30,557 | ||||||||||
Grant date fair value per share | $ 28.60 | $ 37.79 | |||||||||||
Grant date fair value of restricted stock | $ 36.08 | ||||||||||||
Vesting period | 3 years | 3 years | 3 years | ||||||||||
Percentage of incentive compensation arrangement | 35.00% | 35.00% | 35.00% | ||||||||||
Performance Based | Performance Shares ROIC [Member] | Maximum | |||||||||||||
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 | Performance Shares ROIC [Member] | Minimum | |||||||||||||
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 (Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Related Party Transaction [Line Items] | |||
Accounts Payable, Related Parties, Current | $ 6,165,000 | $ 1,289,000 | |
Hurco Automation Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Equity Method Investment, Ownership Percentage | 35.00% | ||
Equity Method Investments | $ 4,800,000 | 4,400,000 | |
Related Party Transaction, Purchases from Related Party | 4,800,000 | 6,200,000 | $ 8,500,000 |
Revenue from Related Parties | 262,000 | 265,000 | $ 198,000 |
Accounts Payable, Related Parties, Current | 6,200,000 | 1,300,000 | |
Accounts Receivable, Related Parties, Current | $ 74,000 | $ 25,000 |
RELATED PARTY TRANSACTIONS (Sch
RELATED PARTY TRANSACTIONS (Schedule of unaudited financial information for HAL's operations and financial conditions ) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Related Party Transaction [Line Items] | |||||||||||
Gross Profit | $ 16,934 | $ 12,974 | $ 14,794 | $ 11,547 | $ 9,520 | $ 11,069 | $ 6,709 | $ 9,159 | $ 56,249 | $ 36,457 | $ 77,208 |
Current Assets | 289,870 | 251,411 | 289,870 | 251,411 | |||||||
Current Liabilities | 81,170 | 50,437 | 81,170 | 50,437 | |||||||
Hurco Automation Ltd [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Net Sales | 12,361 | 10,096 | 15,957 | ||||||||
Gross Profit | 2,011 | 1,418 | 2,322 | ||||||||
Operating Income | 216 | 160 | 992 | ||||||||
Net Income | 802 | 265 | 1,490 | ||||||||
Current Assets | 14,695 | 12,436 | 14,695 | 12,436 | 12,019 | ||||||
Non-current Assets | 6,850 | 6,152 | 6,850 | 6,152 | 5,560 | ||||||
Current Liabilities | $ 5,339 | $ 3,708 | $ 5,339 | $ 3,708 | $ 3,674 |
GUARANTEES AND PRODUCT WARRAN_3
GUARANTEES AND PRODUCT WARRANTIES - Reconciliation of the changes in warranty reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
GUARANTEES AND PRODUCT WARRANTIES | |||
Balance, beginning of period | $ 1,200 | $ 1,760 | $ 2,497 |
Provision for warranties during the period | 2,948 | 2,075 | 2,246 |
Charges to the accrual | (2,643) | (2,669) | (2,991) |
Impact of foreign currency translation | 11 | 34 | 8 |
Balance, end of period | $ 1,516 | $ 1,200 | $ 1,760 |
GUARANTEES AND PRODUCT WARRAN_4
GUARANTEES AND PRODUCT WARRANTIES - Additional Information (Details) $ in Millions | 12 Months Ended |
Oct. 31, 2021USD ($)item | |
GUARANTEES AND PRODUCT WARRANTIES | |
Number Of Guarantees | item | 8 |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ | $ 0.9 |
Term of Product Warranty | 1 year |
LEASES (Details)
LEASES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
LEASES | |||
Lease, Practical Expedient, Use of Hindsight [true false] | false | ||
Operating lease expense | $ 5.2 | $ 5 | $ 5.1 |
Weighted-average remaining term | 3 years 10 months 24 days | ||
Weighted-average discount rate | 1.60% | ||
Minimum | |||
LEASES | |||
Lease term (in years) | 2 years | ||
Maximum | |||
LEASES | |||
Lease term (in years) | 5 years |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information (Details) $ in Thousands | 12 Months Ended |
Oct. 31, 2021USD ($) | |
LEASES | |
Cash paid for amounts included in the measurement of lease liabilities | $ 5,025 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 3,698 |
LEASES - Maturities of undiscou
LEASES - Maturities of undiscounted cash flows of lease commitments (Details) $ in Thousands | Oct. 31, 2021USD ($) |
LEASES | |
Remainder of 2022 | $ 4,375 |
2023 | 3,026 |
2024 | 1,398 |
2025 | 829 |
2026 | 615 |
2027 and thereafter | 1,108 |
Total | 11,351 |
Less: Imputed interest | (336) |
Present value of operating lease liabilities | $ 11,015 |
QUARTERLY FINANCIAL INFORMATI_3
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | |||||||||||
Sales and service fees | $ 68,982 | $ 54,178 | $ 57,920 | $ 54,115 | $ 44,459 | $ 45,382 | $ 37,126 | $ 43,660 | $ 235,195 | $ 170,627 | $ 263,377 |
Gross profit | $ 16,934 | $ 12,974 | $ 14,794 | $ 11,547 | $ 9,520 | $ 11,069 | $ 6,709 | $ 9,159 | 56,249 | 36,457 | 77,208 |
Gross profit margin | 25.00% | 24.00% | 26.00% | 21.00% | 21.00% | 24.00% | 18.00% | 21.00% | |||
Selling, general and administrative expenses | $ 13,829 | $ 10,331 | $ 11,273 | $ 10,568 | $ 10,344 | $ 9,627 | $ 10,599 | $ 10,846 | 46,001 | 41,416 | 54,668 |
Goodwill impairment | 4,903 | 4,903 | |||||||||
Operating income (loss) | 3,105 | 2,643 | 3,521 | 979 | (5,727) | 1,442 | (3,890) | (1,687) | 10,248 | (9,862) | 22,540 |
Provision (benefit) for income taxes | 755 | 1,109 | 947 | 546 | (2,257) | (937) | (765) | (597) | 3,357 | (4,556) | 5,829 |
Net income (loss) | $ 2,096 | $ 1,568 | $ 2,437 | $ 663 | $ (3,589) | $ 2,162 | $ (3,927) | $ (893) | $ 6,764 | $ (6,247) | $ 17,495 |
Income (loss) per common share - basic (in dollars per share) | $ 0.31 | $ 0.23 | $ 0.37 | $ 0.10 | $ (0.54) | $ 0.32 | $ (0.58) | $ (0.13) | $ 1.01 | $ (0.93) | $ 2.57 |
Income (loss) per common share - diluted (in dollars per share) | $ 0.31 | $ 0.23 | $ 0.37 | $ 0.10 | $ (0.54) | $ 0.32 | $ (0.58) | $ (0.13) | $ 1.01 | $ (0.93) | $ 2.55 |
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, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Revenue from External Customer [Line Items] | |||||||||||
Net Sales and Service Fees | $ 68,982 | $ 54,178 | $ 57,920 | $ 54,115 | $ 44,459 | $ 45,382 | $ 37,126 | $ 43,660 | $ 235,195 | $ 170,627 | $ 263,377 |
Computerized Machine Tools | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net Sales and Service Fees | 198,602 | 139,577 | 223,735 | ||||||||
Computer Control Systems and Software | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net Sales and Service Fees | 2,528 | 1,699 | 2,818 | ||||||||
Service Parts | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net Sales and Service Fees | 26,425 | 22,484 | 27,854 | ||||||||
Service Fees | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net Sales and Service Fees | $ 7,640 | $ 6,867 | $ 8,970 |
SEGMENT INFORMATION (Schedule_2
SEGMENT INFORMATION (Schedule of Revenues by Geographic Area) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 68,982 | $ 54,178 | $ 57,920 | $ 54,115 | $ 44,459 | $ 45,382 | $ 37,126 | $ 43,660 | $ 235,195 | $ 170,627 | $ 263,377 |
United States of America | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 83,218 | 64,500 | 95,196 | ||||||||
Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 2,636 | 1,621 | 2,580 | ||||||||
Central & South Americas | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 989 | 1,543 | 1,409 | ||||||||
Total Americas | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 86,843 | 67,664 | 99,185 | ||||||||
Germany | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 37,584 | 24,993 | 52,002 | ||||||||
United Kingdom | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 30,314 | 19,679 | 29,349 | ||||||||
Italy | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 12,718 | 8,599 | 14,772 | ||||||||
France | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 14,252 | 10,797 | 14,346 | ||||||||
Other Europe | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 21,467 | 14,034 | 20,028 | ||||||||
Total Europe | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 116,335 | 78,102 | 130,497 | ||||||||
China | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 14,284 | 14,225 | 15,706 | ||||||||
Other Asia Pacific | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 16,047 | 10,048 | 16,858 | ||||||||
Total Asia Pacific | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 30,331 | 24,273 | 32,564 | ||||||||
Foreign | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 1,686 | $ 588 | $ 1,131 |
SEGMENT INFORMATION (Schedule_3
SEGMENT INFORMATION (Schedule of Long-Lived Tangible Assets and net assets, Net by Geographic Area) (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | $ 12,744 | $ 13,885 | $ 15,973 |
Net Assets | 238,419 | 231,148 | 240,245 |
United States of America | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | 6,104 | 6,826 | 7,967 |
Foreign | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | 6,640 | 7,059 | 8,006 |
Total Americas | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | 84,385 | 83,214 | 103,863 |
Total Europe | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | 80,769 | 77,840 | 71,411 |
Total Asia Pacific | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | $ 73,265 | $ 70,094 | $ 64,971 |
SEGMENT INFORMATION (Narrative)
SEGMENT INFORMATION (Narrative) (Details) | 12 Months Ended |
Oct. 31, 2021segmententity | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Number of operating segments | segment | 1 |
Minimum | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Number of independent agents and distributors products are sold through | entity | 180 |
Geographic Concentration Risk [Member] | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Concentration risk, geographic | In fiscal 2021, approximately 63% of our revenues were from customers located outside of the Americas, |
Customer Concentration Risk [Member] | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Concentration risk, customer | no distributor accounted for more than 5% of our sales and service fees |
Outside the Americas [Member] | Geographic Concentration Risk [Member] | Revenue Benchmark [Member] | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Percentage | 63.00% |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts and Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2019 | ||
Schedule II - Valuation and Qualifying Accounts and Reserves | ||||
Allowance for Doubtful Accounts Receivable, Beginning Balance | $ 1,401 | $ 891 | $ 1,027 | |
Charged to Costs and Expenses | 268 | 575 | ||
Recovered from Costs and Expenses | (136) | |||
Deductions | [1] | 24 | 65 | |
Allowance for Doubtful Accounts Receivable, Ending Balance | 1,645 | 1,401 | 891 | |
Income tax valuation allowance Balance at Beginning of Period | 2,164 | 2,227 | 2,106 | |
Charged to/ (Recovered from) Costs and Expenses | 49 | 50 | 458 | |
Deductions | 342 | 113 | 337 | |
Income tax valuation allowance Balance at End of Period | $ 1,871 | $ 2,164 | $ 2,227 | |
[1] | Receivable write–offs |