Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Jul. 31, 2023 | Aug. 31, 2023 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jul. 31, 2023 | |
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 | 6,462,138 | |
Entity Central Index Key | 0000315374 | |
Current Fiscal Year End Date | --10-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Trading Symbol | HURC |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Sales and service fees | $ 53,201 | $ 57,640 | $ 161,702 | $ 187,352 |
Cost of sales and service | 39,753 | 43,241 | 122,953 | 140,444 |
Gross profit | 13,448 | 14,399 | 38,749 | 46,908 |
Selling, general and administrative expenses | 12,436 | 12,647 | 35,512 | 36,859 |
Operating income | 1,012 | 1,752 | 3,237 | 10,049 |
Interest expense | 88 | 9 | 159 | 22 |
Interest income | 122 | 16 | 259 | 69 |
Investment income, net | 11 | 47 | 170 | |
Investment income | (11) | |||
Other income (expense), net | (412) | (22) | (131) | (440) |
Income before income taxes | 645 | 1,726 | 3,253 | 9,826 |
Provision for income taxes | 385 | 488 | 1,286 | 3,024 |
Net income | $ 260 | $ 1,238 | $ 1,967 | $ 6,802 |
Income (loss) per common share - basic | $ 0.04 | $ 0.19 | $ 0.30 | $ 1.02 |
Income (loss) per common share - diluted | $ 0.04 | $ 0.18 | $ 0.30 | $ 1.01 |
Weighted average common shares outstanding - basic | 6,462 | 6,567 | 6,511 | 6,585 |
Weighted average common shares outstanding - diluted | 6,469 | 6,629 | 6,538 | 6,637 |
Dividends paid per share | $ 0.16 | $ 0.15 | $ 0.47 | $ 0.44 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net Income (Loss) | $ 260 | $ 1,238 | $ 1,967 | $ 6,802 |
Other comprehensive income (loss): | ||||
Translation gain (loss) of foreign currency financial statements | (1,315) | (3,079) | 8,346 | (12,622) |
(Gain) / loss on derivative instruments reclassified into operations, net of tax of $(35), $23, $(75) and $93, respectively | (117) | 76 | (249) | 302 |
Gain / (loss) on derivative instruments, net of tax of $(128), $30, $(430) and $121, respectively | (429) | 95 | (1,442) | 389 |
Total other comprehensive income (loss) | (1,861) | (2,908) | 6,655 | (11,931) |
Comprehensive income (loss) | $ (1,601) | $ (1,670) | $ 8,622 | $ (5,129) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
(Gain) / loss on derivative instruments reclassified into operations, tax | $ (35) | $ 23 | $ (75) | $ 93 |
Gain / (loss) on derivative instruments, tax | $ (128) | $ 30 | $ (430) | $ 121 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 31, 2023 | Oct. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 41,030 | $ 63,922 |
Accounts receivable, net | 33,281 | 38,444 |
Inventories, net | 178,423 | 156,207 |
Derivative assets | 169 | 2,515 |
Prepaid assets | 9,060 | 6,981 |
Total current assets | 261,963 | 268,069 |
Property and equipment: | ||
Land | 1,046 | 868 |
Building | 7,392 | 7,352 |
Machinery and equipment | 27,940 | 26,532 |
Leasehold improvements | 4,638 | 4,351 |
Property and equipment, gross | 41,016 | 39,103 |
Less accumulated depreciation and amortization | (33,119) | (30,620) |
Total property and equipment, net | 7,897 | 8,483 |
Non-current assets: | ||
Software development costs, less accumulated amortization | 7,085 | 7,302 |
Intangible assets, net | 1,071 | 1,246 |
Operating lease - right of use assets, net | 10,921 | 8,460 |
Deferred income taxes | 4,305 | 3,442 |
Investments and other assets, net | 9,975 | 9,235 |
Total non-current assets | 33,357 | 29,685 |
Total assets | 303,217 | 306,237 |
Current liabilities: | ||
Accounts payable | 36,338 | 40,707 |
Customer deposits | 5,502 | 4,839 |
Derivative liabilities | 2,603 | 3,632 |
Operating lease liabilities | 3,945 | 3,973 |
Accrued payroll and employee benefits | 8,331 | 10,751 |
Accrued income taxes | 1,545 | 2,611 |
Accrued expenses | 4,261 | 5,397 |
Accrued warranty expenses | 1,318 | 1,426 |
Total current liabilities | 63,843 | 73,336 |
Non-current liabilities: | ||
Accrued tax liability | 1,290 | 1,281 |
Operating lease liabilities | 7,342 | 4,814 |
Deferred income taxes | 88 | 67 |
Deferred credits and other | 4,853 | 4,095 |
Total non-current liabilities | 13,573 | 10,257 |
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; 6,553,673 and 6,645,352 shares issued and 6,462,138 and 6,566,994 shares outstanding, as of July 31, 2023 and October 31, 2022, respectively | 646 | 657 |
Additional paid-in capital | 61,274 | 63,635 |
Retained earnings | 178,751 | 179,877 |
Accumulated other comprehensive loss | (14,870) | (21,525) |
Total shareholders' equity | 225,801 | 222,644 |
Total liabilities and shareholders' equity | $ 303,217 | $ 306,237 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jul. 31, 2023 | Oct. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
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 | 6,553,673 | 6,645,352 |
Common stock, shares outstanding | 6,462,138 | 6,566,994 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
Cash flows from operating activities: | ||||
Net Income (Loss) | $ 260 | $ 1,238 | $ 1,967 | $ 6,802 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||||
Provision for doubtful accounts | (33) | 14 | 29 | (179) |
Deferred income taxes | (68) | (70) | 233 | (5) |
Equity in (income) loss of affiliates | (117) | (72) | (339) | (462) |
Foreign currency (gain) loss | (144) | 836 | (2,387) | 2,018 |
Unrealized (gain) loss on derivatives | 272 | 152 | 322 | (176) |
Depreciation and amortization | 1,037 | 1,049 | 3,141 | 2,956 |
Stock-based compensation | 756 | 791 | 2,280 | 2,386 |
Change in assets and liabilities: | ||||
(Increase) decrease in accounts receivable | 1,518 | (2,154) | 7,472 | 4,408 |
(Increase) decrease in inventories | (4,150) | (9,518) | (14,621) | (22,194) |
(Increase) decrease in prepaid expenses | 206 | 256 | (2,450) | 5,638 |
Increase (decrease) in accounts payable | (8,187) | (814) | (5,981) | 2,937 |
Increase (decrease) in customer deposits | (309) | 220 | 404 | (1,924) |
Increase (decrease) in accrued expenses | (227) | 1,195 | (2,154) | 1,057 |
Increase (decrease) in accrued payroll and employee benefits | 384 | 667 | (2,420) | (1,573) |
Net change in deferred tax assets and liabilities | (257) | (67) | (1,237) | 813 |
Net change in derivative assets and liabilities | 115 | 104 | 715 | 75 |
Other | (203) | 302 | (1,156) | (136) |
Net cash provided by (used for) operating activities | (9,147) | (5,871) | (16,182) | 2,441 |
Cash flows from investing activities: | ||||
Proceeds from sale of property and equipment | 2 | 1 | 103 | |
Purchase of property and equipment | (154) | (320) | (811) | (828) |
Software development costs | (191) | (202) | (940) | (800) |
Other investments | 273 | |||
Net cash provided by (used for) investing activities | (345) | (520) | (1,477) | (1,525) |
Cash flows from financing activities: | ||||
Proceeds from exercise of common stock options | 270 | 117 | ||
Dividends paid | (1,059) | (1,004) | (3,093) | (2,927) |
Taxes paid related to net settlement of restricted shares | (313) | (208) | ||
Stock repurchases | (4,609) | (2,890) | ||
Net cash provided by (used for) financing activities | (1,059) | (1,004) | (7,745) | (5,908) |
Effect of exchange rate changes on cash and cash equivalents | (574) | (1,111) | 2,512 | (5,535) |
Net increase (decrease) in cash and cash equivalents | (11,125) | (8,506) | (22,892) | (10,527) |
Cash and cash equivalents at beginning of period | 52,155 | 82,042 | 63,922 | 84,063 |
Cash and cash equivalents at end of period | 41,030 | $ 73,536 | 41,030 | $ 73,536 |
Cash and cash equivalents at beginning of period | 63,922 | |||
Cash and cash equivalents at end of period | $ 41,030 | $ 41,030 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss [Member] | Total |
Balances at Oct. 31, 2021 | $ 662 | $ 63,924 | $ 175,574 | $ (1,741) | $ 238,419 |
Balances (in shares) at Oct. 31, 2021 | 6,617,717 | ||||
Net Income (Loss) | 6,802 | 6,802 | |||
Other comprehensive income (loss) | (11,931) | (11,931) | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | $ 3 | 2,178 | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares) | 33,761 | ||||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | 2,175 | ||||
Exercise of common stock options | $ 1 | 116 | 117 | ||
Exercise of common stock options (in shares) | 5,437 | ||||
Stock repurchases | $ (9) | (2,881) | (2,890) | ||
Stock repurchases (in shares) | (89,921) | ||||
Dividends paid | (2,927) | (2,927) | |||
Balances at Jul. 31, 2022 | $ 657 | 63,334 | 179,449 | (13,672) | 229,768 |
Balances (in shares) at Jul. 31, 2022 | 6,566,994 | ||||
Balances at Apr. 30, 2022 | $ 657 | 62,543 | 179,215 | (10,764) | 231,651 |
Balances (in shares) at Apr. 30, 2022 | 6,566,994 | ||||
Net Income (Loss) | 1,238 | 1,238 | |||
Other comprehensive income (loss) | (2,908) | (2,908) | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | 791 | ||||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | 791 | ||||
Dividends paid | (1,004) | (1,004) | |||
Balances at Jul. 31, 2022 | $ 657 | 63,334 | 179,449 | (13,672) | 229,768 |
Balances (in shares) at Jul. 31, 2022 | 6,566,994 | ||||
Balances at Oct. 31, 2022 | $ 657 | 63,635 | 179,877 | (21,525) | 222,644 |
Balances (in shares) at Oct. 31, 2022 | 6,566,994 | ||||
Net Income (Loss) | 1,967 | 1,967 | |||
Other comprehensive income (loss) | 6,655 | 6,655 | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | $ 5 | 1,967 | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares) | 49,874 | ||||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | 1,962 | ||||
Exercise of common stock options | $ 1 | 269 | 270 | ||
Exercise of common stock options (in shares) | 11,559 | ||||
Stock repurchases | $ (17) | (4,592) | (4,609) | ||
Stock repurchases (in shares) | (166,289) | ||||
Dividends paid | (3,093) | (3,093) | |||
Balances at Jul. 31, 2023 | $ 646 | 61,274 | 178,751 | (14,870) | 225,801 |
Balances (in shares) at Jul. 31, 2023 | 6,462,138 | ||||
Balances at Apr. 30, 2023 | $ 646 | 60,518 | 179,550 | (13,009) | 227,705 |
Balances (in shares) at Apr. 30, 2023 | 6,462,138 | ||||
Net Income (Loss) | 260 | 260 | |||
Other comprehensive income (loss) | (1,861) | (1,861) | |||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | 756 | ||||
Stock-based compensation expense, net of taxes withheld for vested restricted shares | 756 | ||||
Dividends paid | (1,059) | (1,059) | |||
Balances at Jul. 31, 2023 | $ 646 | $ 61,274 | $ 178,751 | $ (14,870) | $ 225,801 |
Balances (in shares) at Jul. 31, 2023 | 6,462,138 |
GENERAL
GENERAL | 9 Months Ended |
Jul. 31, 2023 | |
GENERAL | |
GENERAL | 1. GENERAL The unaudited Condensed Consolidated Financial Statements include the accounts of Hurco Companies, Inc. and its consolidated subsidiaries. As used in this report, the words “we”, “us”, “our”, “Hurco” and the “Company” refer to Hurco Companies, Inc. and its consolidated subsidiaries. We design, manufacture, and sell computerized (i.e., Computer Numeric Control (“CNC”)) machine tools, consisting primarily of vertical machining centers (mills) and turning centers (lathes), to companies in the metal cutting industry through a worldwide sales, service, and distribution network. Although the majority of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, 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 operate in the industrial equipment industry and have a global footprint that subjects us to various business risks in many different countries. Our operating results during fiscal years 2020 through 2022, and the nine months of fiscal year 2023, were affected by the international business disruption due to the outbreak of COVID-19, vendor delays, transportation issues, unusually high inflation, volatility of foreign currencies, competitive labor markets, and political friction in the U.S., and many other regions of the world. Because of the potential for extended vulnerability, we have closely evaluated the estimates we have made in preparing the financial statements as of July 31, 2023, 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. The condensed consolidated financial information as of July 31, 2023 and for the three and nine months ended July 31, 2023 and July 31, 2022 is unaudited. However, in our opinion, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, results of operations, changes in shareholders’ equity and cash flows for and at the end of the interim periods. We suggest that you read these Condensed Consolidated Financial Statements in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended October 31, 2022. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Jul. 31, 2023 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 2. REVENUE RECOGNITION We design, manufacture and sell computerized machine tools. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, 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 Financial Accounting Standards Board (“FASB”) guidance codified in Accounting Standard 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 are 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 operating 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. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Jul. 31, 2023 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We are exposed to certain market risks relating to our ongoing business operations, including foreign currency risk, interest rate risk and credit risk. We manage our exposure to these and other market risks through regular operating and financing activities. Currently, the only risk that we manage through the use of derivative instruments is foreign currency risk, for which we enter into derivative instruments in the form of foreign currency forward exchange contracts with a major financial institution. We enter into these forward exchange contracts to reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, to reduce the impact on gross profit and net earnings from sales and purchases denominated in foreign currencies, and to reduce the impact on our net earnings of foreign currency fluctuations on receivables and payables denominated in foreign currencies that are different than the subsidiaries’ functional currency. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Indian Rupee, Singapore Dollars, Chinese Yuan, Polish Zloty, and New Taiwan Dollars. We record all derivative instruments as assets or liabilities at fair value. Derivatives Designated as Hedging Instruments We enter into foreign currency forward exchange contracts periodically to hedge certain forecasted inter-company sales and purchases denominated in the following foreign currencies: the Pound Sterling, Euro and New Taiwan Dollar. The purpose of these instruments is to mitigate the risk that the U.S. dollar net cash inflows and outflows resulting from sales and purchases denominated in foreign currencies will be adversely affected by changes in exchange rates. These forward contracts have been designated as cash flow hedge instruments and are recorded in the Condensed Consolidated Balance Sheets at fair value in Derivative assets and Derivative liabilities. The effective portion of the gains and losses resulting from the changes in the fair value of these hedge contracts is deferred in Accumulated other comprehensive income (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 immediately reported in Other income (expense), net. 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 July 31, 2023, denominated in Euros, Pounds Sterling and New Taiwan Dollars with set maturity dates ranging from August 2023 through July 2024. The contract amounts, expressed at forward rates in U.S. dollars at July 31, 2023, were $11.6 million for Euros, $5.3 million for Pounds Sterling and $18.3 million for New Taiwan Dollars. At July 31, 2023, we had approximately $1.4 million of loss, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive income (loss). Included in this amount was $0.9 million of unrealized loss, 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 July 2024, when the corresponding inventory that is the subject of the related hedge contracts is sold, as described above. We are also exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we entered into a forward contract with a notional amount of €3.0 million in November 2022. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under FASB guidance related to the accounting for derivative instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment in Accumulated other comprehensive income (loss), net of tax, in the same manner as the underlying hedged net assets. This forward contract matures in November 2023. As of July 31, 2023, we had a realized gain of $1.3 million and an unrealized loss of $0.2 million, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive income (loss) related to this forward contract. Derivatives Not Designated as Hedging Instruments We also enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on inter-company receivables, payables and loans 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 in Other income (expense), net in the Condensed Consolidated Statements of Operations consistent with the transaction gain or loss on the related receivables and payables denominated in foreign currencies. We had forward contracts outstanding as of July 31, 2023, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from August 2023 through January 2024. The contract amounts, expressed at forward rates in U.S. dollars at July 31, 2023, totaled $53.6 million. Fair Value of Derivative Instruments We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Condensed Consolidated Balance Sheets. As of July 31, 2023 and October 31, 2022, all derivative instruments were recorded at fair value on our Condensed Consolidated Balance Sheets as follows (in thousands): July 31, 2023 October 31, 2022 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 7 Derivative assets $ 2,273 Foreign exchange forward contracts Derivative liabilities $ 1,457 Derivative liabilities $ 2,891 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 162 Derivative assets $ 242 Foreign exchange forward contracts Derivative liabilities $ 1,146 Derivative liabilities $ 741 Effect of Derivative Instruments on the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Operations Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Operations, net of tax, during the three months ended July 31, 2023 and 2022 (in thousands): Location of Gain Amount of Gain Amount of Gain (Loss) (Loss) Reclassified (Loss) Reclassified Recognized in Other from Other from Other Comprehensive Comprehensive Comprehensive Derivatives Income (Loss) Income (Loss) Income (Loss) Three Months Ended Three Months Ended July 31, July 31, 2023 2022 2023 2022 Designated as Hedging Instruments: (Effective portion) Foreign exchange forward contracts $ (429) $ 95 Cost of sales and service $ 117 $ (76) Foreign exchange forward contract $ 14 $ 89 We did not recognize any gains or losses as a result of hedges deemed ineffective for either of the three months ended July 31, 2023 or 2022. We recognized the following gains in our Condensed Consolidated Statements of Operations during the three months ended July 31, 2023 and 2022 on derivative instruments not designated as hedging instruments (in thousands): Location of Gain (Loss) Recognized Amount of Gain (Loss) Derivatives in Operations Recognized in Operations Three Months Ended July 31, 2023 2022 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other income (expense), net $ (1,040) $ 1,059 The following table presents the changes in the components of Accumulated other comprehensive income (loss), net of tax, for the three months ended July 31, 2023 (in thousands): Foreign Currency Cash Flow Translation Hedges Total Balance, April 30, 2023 $ (11,598) $ (1,411) $ (13,009) Other comprehensive income (loss) before reclassifications (1,315) (429) (1,744) Reclassifications — (117) (117) Balance, July 31, 2023 $ (12,913) $ (1,957) $ (14,870) Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Operations, net of tax, during the nine months ended July 31, 2023 and 2022 (in thousands): Location of Gain Amount of Gain Amount of Gain (Loss) (Loss) Reclassified (Loss) Reclassified Recognized in Other from Other from Other Comprehensive Comprehensive Comprehensive Income (Loss) Income (Loss) Income (Loss) Nine Months Ended Nine Months Ended July 31, July 31, Derivatives 2023 2022 2023 2022 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts $ (1,442) $ 389 Cost of sales and service $ 249 $ (302) Foreign exchange forward contract $ (210) $ 310 We did not recognize any gains or losses as a result of hedges deemed ineffective for either of the nine months ended July 31, 2023 or 2022. We recognized the following gains in our Condensed Consolidated Statements of Operations during the nine months ended July 31, 2023 and 2022 on derivative instruments not designated as hedging instruments (in thousands): Location of Gain (Loss) Recognized Amount of Gain (Loss) Derivatives in Operations Recognized in Operations Nine Months Ended July 31, Derivatives 2023 2022 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other income (expense), net $ (2,504) $ 1,838 The following table presents the changes in the components of Accumulated other comprehensive income (loss), net of tax, for the nine months ended July 31, 2023 (in thousands): Foreign Cash Currency Flow Translation Hedges Total Balance, October 31, 2022 $ (21,259) $ (266) $ (21,525) Other comprehensive income (loss) before reclassifications 8,346 (1,442) 6,904 Reclassifications — (249) (249) Balance, July 31, 2023 $ (12,913) $ (1,957) $ (14,870) |
EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN | 9 Months Ended |
Jul. 31, 2023 | |
EQUITY INCENTIVE PLAN | |
EQUITY INCENTIVE PLAN | 4. EQUITY INCENTIVE PLAN In March 2016, we adopted the Hurco Companies, Inc. 2016 Equity Incentive Plan (as amended as described below, 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 initially was 856,048, which included 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. On March 10, 2022, our shareholders approved the Amended and Restated Hurco Companies, Inc. 2016 Equity Incentive Plan, which, among other items, increased the aggregate number of shares that may be issued under the 2016 Equity Plan by 850,000 shares. 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. We have previously granted stock options under the 2008 Equity Plan. No stock option may be exercised more than ten years after the date of grant or such shorter period as the Compensation Committee may determine at the date of grant. The market value of a share of our common stock, for purposes of the 2016 Equity Plan, is the closing sale price as reported by the Nasdaq Global Select Market on the date in question or, if not a trading day, on the last preceding trading date. A summary of stock option activity for the nine-month period ended July 31, 2023, is as follows: Weighted Average Stock Options Exercise Price Outstanding at October 31, 2022 11,559 $ 23.30 Options granted — — Options exercised (11,559) 23.30 Options cancelled — — Outstanding at July 31, 2023 — $ — As of July 31, 2023, no stock options remained outstanding. On March 9, 2023, the Compensation Committee granted a total of 17,226 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 $27.86 per share. On January 3, 2023, the Compensation Committee approved a long-term incentive compensation arrangement for our executive officers in the form of time-based restricted shares and performance stock units (“PSUs”) under the 2016 Equity Plan, which will be payable in shares of our common stock if earned and vested. The awards were approximately 25% time-based vesting and approximately 75% performance-based vesting. The three-year performance period for the PSUs is fiscal year 2023 through fiscal year 2025. On that date, the Compensation Committee granted a total of 29,376 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 $26.38 per share. On January 3, 2023, the Compensation Committee also granted a total target number of 47,003 PSUs to our executive officers designated as “PSU – NI”. These PSUs were weighted as approximately 40% of the overall 2023 executive long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average net income over the three-year period of fiscal 2023-2025. Participants will have the ability to earn between 50% of the target number of the PSUs – NI for achieving threshold performance and 200% of the target number of the PSUs – NI for achieving maximum performance. The grant date fair value of the PSUs – NI was based on the closing sales price of our common stock on grant date, which was $26.38 per PSU. On January 3, 2023, the Compensation Committee also granted a total target number of 41,126 PSUs to our executive officers designated as “PSU –FCF”. These PSUs were weighted as approximately 35% of the overall 2023 executive long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average free cash flow over the three-year period of fiscal 2023-2025. Participants will have the ability to earn between 50% of the target number of the PSUs – FCF for achieving threshold performance and 200% of the target number of the PSUs – FCF for achieving maximum performance. The grant date fair value of the PSUs – FCF was based on the closing sales price of our common stock on the grant date, which was $26.38 per PSU. On November 9, 2022, the Compensation Committee granted a total of 12,223 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 $24.53 per share. A reconciliation of our restricted stock and PSU activity and related information for the nine-month period ended July 31, 2023 is as follows: Weighted Average Grant Number of Shares Date Fair Value Unvested at October 31, 2022 273,103 $ 32.90 Shares or units granted 146,954 26.40 Shares or units vested (49,874) 36.23 Shares or units cancelled (39,916) 40.22 Shares withheld (11,950) 37.84 Unvested at July 31, 2023 318,317 $ 28.27 During the nine months of fiscal 2023 and 2022, we recorded approximately $2.3 million and $2.4 million, respectively, of stock-based compensation expense, related to grants under the 2016 Equity Plan. As of July 31, 2023, there was an estimated $4.5 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal year 2026. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Jul. 31, 2023 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 5. EARNINGS PER SHARE Per share results have been computed based on the average number of common shares outstanding over the period in question. The computation of basic and diluted net income per share is determined using net income applicable to common shareholders as the numerator and the number of shares outstanding as the denominator as follows (in thousands, except per share amounts): Three Months Ended Nine Months Ended July 31, July 31, 2023 2022 2023 2022 Basic Diluted Basic Diluted Basic Diluted Basic Diluted Net income $ 260 $ 260 $ 1,238 $ 1,238 $ 1,967 $ 1,967 $ 6,802 $ 6,802 Undistributed earnings allocated to participating shares (4) (4) (15) (15) (27) (27) (80) (80) Net income applicable to common shareholders $ 256 $ 256 $ 1,223 $ 1,223 $ 1,940 $ 1,940 $ 6,722 $ 6,722 Weighted average shares outstanding 6,462 6,462 6,567 6,567 6,511 6,511 6,585 6,585 Stock options and contingently issuable securities — 7 — 62 — 27 — 52 6,462 6,469 6,567 6,629 6,511 6,538 6,585 6,637 Income per share $ 0.04 $ 0.04 $ 0.19 $ 0.18 $ 0.30 $ 0.30 $ 1.02 $ 1.01 |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Jul. 31, 2023 | |
ACCOUNTS RECEIVABLE | |
ACCOUNTS RECEIVABLE | 6. ACCOUNTS RECEIVABLE Accounts receivable are net of allowances for doubtful accounts of $1.5 million as of each of July 31, 2023 and October 31, 2022. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Jul. 31, 2023 | |
INVENTORIES | |
INVENTORIES | 7. INVENTORIES Inventories, priced at the lower of cost (first-in, first-out method) or net realizable value, are summarized below (in thousands): July 31, October 31, 2023 2022 Purchased parts and sub–assemblies $ 46,884 $ 46,796 Work–in–process 19,446 16,539 Finished goods 115,852 96,305 Inventories, gross $ 182,182 $ 159,640 Reserve for purchased parts and sub-assemblies (3,759) (3,433) Inventories, net $ 178,423 $ 156,207 |
LEASES
LEASES | 9 Months Ended |
Jul. 31, 2023 | |
LEASES | |
LEASES | 8. LEASES 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 Condensed Consolidated Balance Sheets for all leases that, at the commencement date, have a lease term of more than 12 months and are classified as operating leases. We recorded total operating lease expense of $3.9 million and $3.8 million for the nine months ended July 31, 2023 and 2022, respectively, which is classified within Cost of sales and service and Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations. Operating lease expense includes short-term leases and variable lease payments which are immaterial. There have been no lease costs capitalized on the Condensed Consolidated Balance Sheets as of July 31, 2023. The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for the nine months ended July 31, 2023 and 2022 (in thousands): Nine Months Ended Nine Months Ended July 31, 2023 July 31, 2022 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 3,768 $ 3,476 Non-cash information: Right-of-use assets obtained in exchange for new operating lease liabilities $ 6,053 $ 2,593 The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of July 31, 2023 (in thousands): Remainder of 2023 $ 1,241 2024 3,808 2025 2,290 2026 1,415 2027 1,239 2028 and thereafter 2,075 Total 12,068 Less: Imputed interest (781) Present value of operating lease liabilities $ 11,287 As of July 31, 2023, the weighted-average remaining term of our lease portfolio was approximately 4.2 years and the weighted-average discount rate was approximately 2.9%. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Jul. 31, 2023 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 9. SEGMENT INFORMATION We operate in a single segment |
GUARANTEES AND PRODUCT WARRANTI
GUARANTEES AND PRODUCT WARRANTIES | 9 Months Ended |
Jul. 31, 2023 | |
GUARANTEES AND PRODUCT WARRANTIES | |
GUARANTEES AND PRODUCT WARRANTIES | 10. 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 Guarantees We provide warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year for machines and shorter periods for service parts. We recognize a reserve with respect to this obligation at the time of product sale, with subsequent warranty claims recorded against the reserve. The amount of the warranty reserve is determined based on historical trend experience and any known warranty issues that could cause future warranty costs to differ from historical experience. A reconciliation of the changes in our warranty reserve is as follows (in thousands): Nine Months Ended July 31, 2023 2022 Balance, beginning of period $ 1,426 $ 1,516 Provision for warranties during the period 1,949 2,183 Charges to the reserve (2,119) (2,177) Impact of foreign currency translation 62 (85) Balance, end of period $ 1,318 $ 1,437 The year-over-year decrease in our warranty reserve was primarily due to a lower volume of machine sales. |
DEBT AGREEMENTS
DEBT AGREEMENTS | 9 Months Ended |
Jul. 31, 2023 | |
DEBT AGREEMENTS | |
DEBT AGREEMENTS | 11. DEBT AGREEMENTS 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, December 17, 2021, and January 4, 2023 (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 $25.0 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 (Hurco Manufacturing Limited (“HML”)) and China (Ningbo Hurco Machine Tool, Ltd. (“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. In February 2023, NHML renewed the above-referenced credit facility on substantially similar terms and an identical maximum aggregate limit. As a result, as of July 31, 2023, our existing credit facilities consisted of a €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 July 31, 2023, there were no borrowings under any of our credit facilities and there was approximately $51.0 million of available borrowing capacity thereunder. There were also no borrowings under any of our credit facilities as of October 31, 2022. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Jul. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES Our provision for income taxes and effective tax rate is affected by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates, and other events that are not consistent from period to period, such as changes in income tax laws. The Inflation Reduction Act of 2022 (the “Inflation Reduction Act” or “IRA”) was signed into law on August 16, 2022. The IRA provides investment in clean energy, promotes reductions in carbon emissions, and extends select Affordable Care Act premium reductions. The IRA is paid for through the implementation of a 15 percent corporate minimum tax on corporations with over $1 billion of financial statement income, budget increases for the Internal Revenue Service, an excise tax on stock repurchases, and changes to Medicare rules. The Company does not currently expect that the Inflation Reduction Act will have a material impact on its income taxes. We recorded an income tax expense during the nine months of fiscal year 2023 of $1.3 million compared to an income tax expense of $3.0 million for the same period in 2022. Our effective tax rate for the nine months of fiscal year 2023 was 40%, compared to 31% in the corresponding prior year period. The year-over-year increase in the effective tax rate was primarily due to changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, discrete items related to stock compensation and the impact of valuation allowances for our China operations combined with lower levels of consolidated income before taxes. Our unrecognized tax benefits were $179,000 as of July 31, 2023, and $171,000 as of October 31, 2022, and in each case included accrued interest. We recognize accrued interest and penalties related to unrecognized tax benefits as components of income tax expense. As of July 31, 2023, the gross amount of interest accrued, reported in Accrued expenses, was approximately $41,000, which did not include the federal tax benefit of interest deductions. We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. The statutes of limitations with respect to unrecognized tax benefits will expire between August 2023 and September 2024. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 9 Months Ended |
Jul. 31, 2023 | |
FINANCIAL INSTRUMENTS | |
FINANCIAL INSTRUMENTS | 13. FINANCIAL INSTRUMENTS FASB fair value guidance establishes a three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exist, therefore requiring an entity to develop its own assumptions. The carrying amounts for cash and cash equivalents approximate their fair values due to the short maturity of these instruments, and such instruments meet the Level 1 criteria of the three–tier fair value hierarchy discussed 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 July 31, 2023 and October 31, 2022 (in thousands): Assets Liabilities July 31, 2023 October 31, 2022 July 31, 2023 October 31, 2022 Level 1 Deferred compensation $ 2,400 $ 1,996 $ — $ — Level 2 Derivatives $ 169 $ 2,515 $ 2,603 $ 3,632 Included in Level 1 assets are mutual fund investments under a nonqualified deferred compensation plan. We estimate the fair value of these investments on a recurring basis using market prices that are readily available. Included in Level 2 fair value measurements are derivative assets and liabilities related to gains and losses on foreign currency forward exchange contracts entered into with a third party. We estimate the fair value of these derivatives on a recurring basis using foreign currency exchange rates obtained from active markets. Derivative instruments are reported in the accompanying Condensed Consolidated Financial Statements at fair value. We have derivative financial instruments in the form of foreign currency forward exchange contracts as described in Note 3 of Notes to the Condensed Consolidated Financial Statements. The U.S. dollar equivalent notional amounts of these contracts were $93.0 million and $102.8 million at July 31, 2023 and October 31, 2022, respectively. The fair value of our foreign currency forward exchange contracts and the related currency positions are subject to offsetting market risk resulting from foreign currency exchange rate volatility. The counterparties to the forward exchange contracts are substantial and creditworthy financial institutions. We do not consider either the risk of counterparties’ non-performance or the economic consequences of counterparties’ non-performance to be material risks. |
CONTINGENCIES AND LITIGATION
CONTINGENCIES AND LITIGATION | 9 Months Ended |
Jul. 31, 2023 | |
CONTINGENCIES AND LITIGATION | |
CONTINGENCIES AND LITIGATION | 14. 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. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Jul. 31, 2023 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
NEW ACCOUNTING PRONOUNCEMENTS | 15. NEW ACCOUNTING PRONOUNCEMENTS We reviewed all recently issued accounting pronouncements and concluded they are either not applicable or not expected to have a significant impact on our condensed consolidated financial statements as of July 31, 2023. |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Jul. 31, 2023 | |
Schedule of Fair Value of Derivative Instruments | July 31, 2023 October 31, 2022 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 7 Derivative assets $ 2,273 Foreign exchange forward contracts Derivative liabilities $ 1,457 Derivative liabilities $ 2,891 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 162 Derivative assets $ 242 Foreign exchange forward contracts Derivative liabilities $ 1,146 Derivative liabilities $ 741 |
Schedule of changes in the components of Accumulated other comprehensive loss, net of tax | The following table presents the changes in the components of Accumulated other comprehensive income (loss), net of tax, for the three months ended July 31, 2023 (in thousands): Foreign Currency Cash Flow Translation Hedges Total Balance, April 30, 2023 $ (11,598) $ (1,411) $ (13,009) Other comprehensive income (loss) before reclassifications (1,315) (429) (1,744) Reclassifications — (117) (117) Balance, July 31, 2023 $ (12,913) $ (1,957) $ (14,870) The following table presents the changes in the components of Accumulated other comprehensive income (loss), net of tax, for the nine months ended July 31, 2023 (in thousands): Foreign Cash Currency Flow Translation Hedges Total Balance, October 31, 2022 $ (21,259) $ (266) $ (21,525) Other comprehensive income (loss) before reclassifications 8,346 (1,442) 6,904 Reclassifications — (249) (249) Balance, July 31, 2023 $ (12,913) $ (1,957) $ (14,870) |
Designated as Hedging Instrument | |
Schedule of Effect of Derivative Instruments on the Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations | Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Operations, net of tax, during the three months ended July 31, 2023 and 2022 (in thousands): Location of Gain Amount of Gain Amount of Gain (Loss) (Loss) Reclassified (Loss) Reclassified Recognized in Other from Other from Other Comprehensive Comprehensive Comprehensive Derivatives Income (Loss) Income (Loss) Income (Loss) Three Months Ended Three Months Ended July 31, July 31, 2023 2022 2023 2022 Designated as Hedging Instruments: (Effective portion) Foreign exchange forward contracts $ (429) $ 95 Cost of sales and service $ 117 $ (76) Foreign exchange forward contract $ 14 $ 89 Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Operations, net of tax, during the nine months ended July 31, 2023 and 2022 (in thousands): Location of Gain Amount of Gain Amount of Gain (Loss) (Loss) Reclassified (Loss) Reclassified Recognized in Other from Other from Other Comprehensive Comprehensive Comprehensive Income (Loss) Income (Loss) Income (Loss) Nine Months Ended Nine Months Ended July 31, July 31, Derivatives 2023 2022 2023 2022 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts $ (1,442) $ 389 Cost of sales and service $ 249 $ (302) Foreign exchange forward contract $ (210) $ 310 |
Not Designated as Hedging Instrument | |
Schedule of derivative instruments not designated as hedging instruments | We recognized the following gains in our Condensed Consolidated Statements of Operations during the three months ended July 31, 2023 and 2022 on derivative instruments not designated as hedging instruments (in thousands):We recognized the following gains in our Condensed Consolidated Statements of Operations during the nine months ended July 31, 2023 and 2022 on derivative instruments not designated as hedging instruments (in thousands): |
EQUITY INCENTIVE PLAN (Tables)
EQUITY INCENTIVE PLAN (Tables) | 9 Months Ended |
Jul. 31, 2023 | |
EQUITY INCENTIVE PLAN | |
Schedule of stock option activity | A summary of stock option activity for the nine-month period ended July 31, 2023, is as follows: Weighted Average Stock Options Exercise Price Outstanding at October 31, 2022 11,559 $ 23.30 Options granted — — Options exercised (11,559) 23.30 Options cancelled — — Outstanding at July 31, 2023 — $ — |
Schedule of reconciliation of our restricted stock, performance share and PSU activity and related information | A reconciliation of our restricted stock and PSU activity and related information for the nine-month period ended July 31, 2023 is as follows: Weighted Average Grant Number of Shares Date Fair Value Unvested at October 31, 2022 273,103 $ 32.90 Shares or units granted 146,954 26.40 Shares or units vested (49,874) 36.23 Shares or units cancelled (39,916) 40.22 Shares withheld (11,950) 37.84 Unvested at July 31, 2023 318,317 $ 28.27 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Jul. 31, 2023 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted net income (loss) per share | Three Months Ended Nine Months Ended July 31, July 31, 2023 2022 2023 2022 Basic Diluted Basic Diluted Basic Diluted Basic Diluted Net income $ 260 $ 260 $ 1,238 $ 1,238 $ 1,967 $ 1,967 $ 6,802 $ 6,802 Undistributed earnings allocated to participating shares (4) (4) (15) (15) (27) (27) (80) (80) Net income applicable to common shareholders $ 256 $ 256 $ 1,223 $ 1,223 $ 1,940 $ 1,940 $ 6,722 $ 6,722 Weighted average shares outstanding 6,462 6,462 6,567 6,567 6,511 6,511 6,585 6,585 Stock options and contingently issuable securities — 7 — 62 — 27 — 52 6,462 6,469 6,567 6,629 6,511 6,538 6,585 6,637 Income per share $ 0.04 $ 0.04 $ 0.19 $ 0.18 $ 0.30 $ 0.30 $ 1.02 $ 1.01 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Jul. 31, 2023 | |
INVENTORIES | |
Schedule of inventories | Inventories, priced at the lower of cost (first-in, first-out method) or net realizable value, are summarized below (in thousands): July 31, October 31, 2023 2022 Purchased parts and sub–assemblies $ 46,884 $ 46,796 Work–in–process 19,446 16,539 Finished goods 115,852 96,305 Inventories, gross $ 182,182 $ 159,640 Reserve for purchased parts and sub-assemblies (3,759) (3,433) Inventories, net $ 178,423 $ 156,207 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Jul. 31, 2023 | |
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 the nine months ended July 31, 2023 and 2022 (in thousands): Nine Months Ended Nine Months Ended July 31, 2023 July 31, 2022 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 3,768 $ 3,476 Non-cash information: Right-of-use assets obtained in exchange for new operating lease liabilities $ 6,053 $ 2,593 |
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 July 31, 2023 (in thousands): Remainder of 2023 $ 1,241 2024 3,808 2025 2,290 2026 1,415 2027 1,239 2028 and thereafter 2,075 Total 12,068 Less: Imputed interest (781) Present value of operating lease liabilities $ 11,287 |
GUARANTEES AND PRODUCT WARRAN_2
GUARANTEES AND PRODUCT WARRANTIES (Tables) | 9 Months Ended |
Jul. 31, 2023 | |
GUARANTEES AND PRODUCT WARRANTIES | |
Schedule of reconciliation of the changes in warranty reserve | Nine Months Ended July 31, 2023 2022 Balance, beginning of period $ 1,426 $ 1,516 Provision for warranties during the period 1,949 2,183 Charges to the reserve (2,119) (2,177) Impact of foreign currency translation 62 (85) Balance, end of period $ 1,318 $ 1,437 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Jul. 31, 2023 | |
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 July 31, 2023 and October 31, 2022 (in thousands): Assets Liabilities July 31, 2023 October 31, 2022 July 31, 2023 October 31, 2022 Level 1 Deferred compensation $ 2,400 $ 1,996 $ — $ — Level 2 Derivatives $ 169 $ 2,515 $ 2,603 $ 3,632 |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Fair value of derivative instruments (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Oct. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 169 | $ 2,515 |
Derivative liabilities | 2,603 | 3,632 |
Foreign Exchange Forward | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 7 | 2,273 |
Derivative liabilities | 1,457 | 2,891 |
Foreign Exchange Forward | Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 162 | 242 |
Derivative liabilities | $ 1,146 | $ 741 |
DERIVATIVE INSTRUMENTS AND HE_4
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Effect of derivative instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | $ (429) | $ 95 | $ (1,442) | $ 389 |
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) | 117 | (76) | 249 | (302) |
Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) | 249 | (302) | ||
Designated as Hedging Instrument | Foreign Exchange Forward | Intercompany sales/purchases [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | (429) | 95 | (1,442) | 389 |
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) | 117 | (76) | ||
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) | 14 | 89 | (210) | 310 |
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 | $ (1,040) | $ 1,059 | $ (2,504) | $ 1,838 |
DERIVATIVE INSTRUMENTS AND HE_5
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Changes in components of accumulated other comprehensive loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
Derivative [Line Items] | ||||
Beginning Balance | $ (13,009) | $ (21,525) | ||
Other comprehensive income (loss) before reclassifications | (1,744) | 6,904 | ||
Reclassifications | (117) | $ 76 | (249) | $ 302 |
Ending Balance | (14,870) | (14,870) | ||
Foreign Currency Translation | ||||
Derivative [Line Items] | ||||
Beginning Balance | (11,598) | (21,259) | ||
Other comprehensive income (loss) before reclassifications | (1,315) | 8,346 | ||
Ending Balance | (12,913) | (12,913) | ||
Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Beginning Balance | (1,411) | (266) | ||
Other comprehensive income (loss) before reclassifications | (429) | (1,442) | ||
Reclassifications | (117) | (249) | ||
Ending Balance | $ (1,957) | $ (1,957) |
DERIVATIVE INSTRUMENTS AND HE_6
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Additional Information (Details) $ in Thousands, € in Millions | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2023 USD ($) | Jul. 31, 2022 USD ($) | Jul. 31, 2023 USD ($) | Jul. 31, 2022 USD ($) | Nov. 30, 2022 EUR (€) | Oct. 31, 2022 USD ($) | |
Derivative financial instruments: | ||||||
Notional principal of foreign exchange contracts | $ 93,000 | $ 93,000 | $ 102,800 | |||
Gain (loss), net of tax, related to cash flow hedged | (1,400) | (1,400) | ||||
Unrealized gain (loss), net of tax, to be reclassified in next 12 months | 900 | 900 | ||||
Designated as Hedging Instrument | ||||||
Derivative financial instruments: | ||||||
Gains or (losses) from hedges deemed ineffective | 0 | $ 0 | ||||
Gains or (losses) from hedges deemed ineffective | 0 | $ 0 | ||||
Not Designated as Hedging Instrument | ||||||
Derivative financial instruments: | ||||||
Notional principal of foreign exchange contracts | 53,600 | 53,600 | ||||
Forward Contracts | Designated as Hedging Instrument | ||||||
Derivative financial instruments: | ||||||
Notional principal of foreign exchange contracts | € | € 3 | |||||
Realized gain, net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss | 1,300 | 1,300 | ||||
Unrealized gain, net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss | (200) | |||||
Euros | Designated as Hedging Instrument | ||||||
Derivative financial instruments: | ||||||
Notional principal of foreign exchange contracts | 11,600 | 11,600 | ||||
Pounds Sterling | Designated as Hedging Instrument | ||||||
Derivative financial instruments: | ||||||
Notional principal of foreign exchange contracts | 5,300 | 5,300 | ||||
New Taiwan Dollars [Member] | Designated as Hedging Instrument | ||||||
Derivative financial instruments: | ||||||
Notional principal of foreign exchange contracts | $ 18,300 | $ 18,300 |
EQUITY INCENTIVE PLAN - Stock o
EQUITY INCENTIVE PLAN - Stock option activity (Details) - Employee Stock Option [Member] | 9 Months Ended |
Jul. 31, 2023 $ / shares shares | |
Stock Options | |
Outstanding at beginning of period | shares | 11,559 |
Options granted | shares | 0 |
Options exercised | shares | (11,559) |
Options cancelled | shares | 0 |
Outstanding at end of period | shares | 0 |
Weighted Average Exercise Price | |
Outstanding at beginning of period | $ / shares | $ 23.30 |
Options granted | $ / shares | 0 |
Options exercised | $ / shares | 23.30 |
Options cancelled | $ / shares | 0 |
Outstanding at end of period | $ / shares | $ 0 |
EQUITY INCENTIVE PLAN - Reconci
EQUITY INCENTIVE PLAN - Reconciliation of restricted stock activity (Details) | 9 Months Ended |
Jul. 31, 2023 $ / shares shares | |
Number of Shares | |
Unvested at October 31, 2022 | shares | 273,103 |
Shares or units granted | shares | 146,954 |
Shares or units vested | shares | (49,874) |
Shares or units cancelled | shares | (39,916) |
Shares or units withheld | shares | (11,950) |
Unvested at January 31, 2023 | shares | 318,317 |
Weighted Average Grant Date Fair Value | |
Unvested at October 31, 2022 | $ / shares | $ 32.90 |
Shares or units granted | $ / shares | 26.40 |
Shares or units vested | $ / shares | 36.23 |
Shares or units cancelled | $ / shares | 40.22 |
Shares or units withheld | $ / shares | 37.84 |
Unvested at January 31, 2023 | $ / shares | $ 28.27 |
EQUITY INCENTIVE PLAN - Additio
EQUITY INCENTIVE PLAN - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | ||||||
Mar. 09, 2023 | Jan. 03, 2023 | Nov. 09, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | Oct. 31, 2022 | Mar. 10, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized Stock-based compensation expense | $ 4.5 | ||||||
Restricted stock granted | 146,954 | ||||||
Restricted stock vested | 49,874 | ||||||
Grant date fair value of restricted stock | $ 28.27 | $ 32.90 | |||||
Performance period | 3 years | ||||||
Stock-based compensation expense | $ 2.3 | $ 2.4 | |||||
Employee Stock Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Option expiration period | 10 years | ||||||
Options outstanding | 0 | 11,559 | |||||
2016 Equity Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total number of shares of common stock that may be issued as awards under 2016 Plan | 850,000 | 856,048 | |||||
2008 Equity Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of Shares Available for Grant under the 2008 Plan | 386,048 | ||||||
Restricted stock granted | 0 | ||||||
PSU TSR | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of target number of shares to be earned | 50% | ||||||
PSU ROIC | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of target number of shares to be earned | 200% | ||||||
PSU ROIC | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of target number of shares to be earned | 50% | ||||||
Time Based | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Restricted stock granted | 29,376 | 12,223 | |||||
Grant date fair value of restricted stock | $ 26.38 | $ 24.53 | |||||
Percentage of incentive compensation arrangement | 25% | ||||||
Performance period | 3 years | ||||||
Time Based | Non-employee Directors and Non-Executive Employees | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Restricted stock granted | 17,226 | ||||||
Grant date fair value of restricted stock | $ 27.86 | ||||||
Performance period | 1 year | ||||||
Performance Based | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of incentive compensation arrangement | 75% | ||||||
Performance period | 3 years | ||||||
Performance Based | PSU TSR | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Restricted stock granted | 47,003 | ||||||
Grant date fair value of restricted stock | $ 26.38 | ||||||
Percentage of incentive compensation arrangement | 40% | ||||||
Performance Based | PSU TSR | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of target number of shares to be earned | 200% | ||||||
Performance Based | PSU ROIC | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Restricted stock granted | 41,126 | ||||||
Grant date fair value of restricted stock | $ 26.38 | ||||||
Percentage of incentive compensation arrangement | 35% | ||||||
Performance period | 3 years |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
Basic | ||||
Net Income (Loss) | $ 260 | $ 1,238 | $ 1,967 | $ 6,802 |
Undistributed earnings (loss) allocated to participating shares | (4) | (15) | (27) | (80) |
Net income (loss) applicable to common shareholders | $ 256 | $ 1,223 | $ 1,940 | $ 6,722 |
Weighted average shares outstanding | 6,462 | 6,567 | 6,511 | 6,585 |
Income (loss) per share | $ 0.04 | $ 0.19 | $ 0.30 | $ 1.02 |
Diluted | ||||
Net Income (Loss) | $ 260 | $ 1,238 | $ 1,967 | $ 6,802 |
Undistributed earnings (loss) allocated to participating shares | (4) | (15) | (27) | (80) |
Net income (loss) applicable to common shareholders | $ 256 | $ 1,223 | $ 1,940 | $ 6,722 |
Weighted average shares outstanding prior to dilution effect | 6,462 | 6,567 | 6,511 | 6,585 |
Stock options and contingently issuable shares | 7 | 62 | 27 | 52 |
Weighted average shares outstanding | 6,469 | 6,629 | 6,538 | 6,637 |
Income (loss) per share | $ 0.04 | $ 0.18 | $ 0.30 | $ 1.01 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Millions | Jul. 31, 2023 | Oct. 31, 2022 |
ACCOUNTS RECEIVABLE | ||
Allowance for Doubtful Accounts Receivable | $ 1.5 | $ 1.5 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Oct. 31, 2022 |
INVENTORIES | ||
Purchased parts and sub-assemblies | $ 46,884 | $ 46,796 |
Work-in-process | 19,446 | 16,539 |
Finished goods | 115,852 | 96,305 |
Inventories, gross | 182,182 | 159,640 |
Reserve for purchased parts and sub-assemblies | (3,759) | (3,433) |
Inventories, net | $ 178,423 | $ 156,207 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Millions | 9 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
LEASES | ||
Operating lease expense | $ 3.9 | $ 3.8 |
Weighted-average remaining term | 4 years 2 months 12 days | |
Weighted-average discount rate | 2.90% | |
Capitalized lease costs | $ 0 | |
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) - USD ($) $ in Thousands | 9 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
LEASES | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 3,768 | $ 3,476 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 6,053 | $ 2,593 |
LEASES - Maturities of undiscou
LEASES - Maturities of undiscounted cash flows of lease commitments (Details) $ in Thousands | Jul. 31, 2023 USD ($) |
LEASES | |
Remainder of 2023 | $ 1,241 |
2024 | 3,808 |
2025 | 2,290 |
2026 | 1,415 |
2027 | 1,239 |
2028 and thereafter | 2,075 |
Total | 12,068 |
Less: Imputed interest | (781) |
Present value of operating lease liabilities | $ 11,287 |
SEGMENT INFORMATION (Narrative)
SEGMENT INFORMATION (Narrative) (Details) | 9 Months Ended |
Jul. 31, 2023 segment | |
SEGMENT INFORMATION | |
Number of operating segments | 1 |
GUARANTEES AND PRODUCT WARRAN_3
GUARANTEES AND PRODUCT WARRANTIES - Reconciliation of the changes in warranty reserve (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
GUARANTEES AND PRODUCT WARRANTIES | ||
Balance, beginning of period | $ 1,426 | $ 1,516 |
Provision for warranties during the period | 1,949 | 2,183 |
Charges to the reserve | (2,119) | (2,177) |
Impact of foreign currency translation | 62 | (85) |
Balance, end of period | $ 1,318 | $ 1,437 |
GUARANTEES AND PRODUCT WARRAN_4
GUARANTEES AND PRODUCT WARRANTIES - Additional Information (Details) $ in Millions | 9 Months Ended |
Jul. 31, 2023 USD ($) | |
GUARANTEES AND PRODUCT WARRANTIES | |
Number Of Guarantees | 9 |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 0.9 |
Term of Product Warranty | 1 year |
DEBT AGREEMENTS (Details)
DEBT AGREEMENTS (Details) $ in Thousands, € in Millions, ¥ in Millions, $ in Millions | 9 Months Ended | ||||||
Jul. 31, 2023 USD ($) | Jul. 31, 2023 TWD ($) | Jul. 31, 2023 CNY (¥) | Jul. 31, 2023 EUR (€) | Oct. 31, 2022 USD ($) | Mar. 31, 2019 TWD ($) | Mar. 31, 2019 CNY (¥) | |
Line of Credit Facility [Line Items] | |||||||
Line of credit | $ 0 | $ 0 | |||||
Line Of Credit Agreement 2018 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, maximum borrowing capacity | 40,000 | ||||||
Line of credit, maximum borrowing capacity in alternative currencies | $ 20,000 | ||||||
Variable interest rate | 0% | ||||||
Line of Credit, covenant, minimum cash on hand before dividends are paid | $ 10,000 | ||||||
Minimum working capital requirement | 125,000 | ||||||
Minimum tangible net worth requirement | 176,500 | ||||||
Line of Credit, covenant, maximum annual share repurchase | $ 25,000 | ||||||
Line of credit, maturity date | Dec. 31, 2023 | ||||||
Allowable investments in alternative investments | $ 10,000 | ||||||
Borrowings available under credit facility | 51,000 | ||||||
Hurco BV [Member] | Line Of Credit Agreement 2018 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, maximum borrowing capacity | $ 20,000 | ||||||
SOFR | Line Of Credit Agreement 2018 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Variable interest rate | 1% | ||||||
Federal funds | Line Of Credit Agreement 2018 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Variable interest rate | 0.50% | ||||||
Letter of Credit [Member] | Line Of Credit Agreement 2018 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, maximum borrowing capacity | $ 10,000 | ||||||
Stated interest rate | 1% | 1% | 1% | 1% | |||
Revolving Credit Facility [Member] | Line Of Credit Agreement 2018 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, maximum borrowing capacity | $ 40,000 | ||||||
Revolving Credit Facility [Member] | Germany [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, maximum borrowing capacity | € | € 1.5 | ||||||
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 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | Oct. 31, 2022 | |
INCOME TAXES | |||||
Income Tax Expense (Benefit) | $ 385 | $ 488 | $ 1,286 | $ 3,024 | |
Effective Income Tax Rate Reconciliation | 40% | 31% | |||
Unrecognized Tax Benefits | 179 | $ 179 | $ 171 | ||
Unrecognized tax benefits, interest accrued | $ 41 | $ 41 |
FINANCIAL INSTRUMENTS - Fair va
FINANCIAL INSTRUMENTS - Fair value hierarchy (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Jul. 31, 2023 | Oct. 31, 2022 |
Fair Value, Inputs, Level 1 | ||
Assets | ||
Deferred Compensation | $ 2,400 | $ 1,996 |
Liabilities | ||
Deferred Compensation | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Assets | ||
Derivatives | 169 | 2,515 |
Liabilities | ||
Derivatives | $ 2,603 | $ 3,632 |
FINANCIAL INSTRUMENTS - Additio
FINANCIAL INSTRUMENTS - Additional Information (Details) - USD ($) $ in Millions | Jul. 31, 2023 | Oct. 31, 2022 |
FINANCIAL INSTRUMENTS | ||
Notional amount of contracts | $ 93 | $ 102.8 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 260 | $ 1,238 | $ 1,967 | $ 6,802 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jul. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |