FOR IMMEDIATE RELEASE Exhibit 99(a)
Wednesday, December 10, 2003
HURCO REPORTS FYE 2003 AND FOURTH QUARTER RESULTS
INDIANAPOLIS, INDIANA, -- December 10, 2003 -- Hurco Companies, Inc.
(Nasdaq:HURC) today reported net income of $462,000, or $.08 per share, for its
fiscal year ended October 31, 2003 compared to a net loss of $8,263,000, or
$1.48 per share, reported for fiscal 2002. For the final quarter of fiscal 2003,
the Company reported net income of $574,000, or $.10 per share, compared to a
net loss of $1,760,000, or $.32 per share, for the corresponding 2002 period.
The Company attributed its return to profitability in fiscal 2003 to
strengthening European currencies in relation to the U.S. dollar, a significant
increase in fourth quarter sales and service fees and the benefits of
restructuring actions implemented over the past 18 months. Results for fiscal
2002 also were adversely impacted by $3,838,000 of restructuring expense.
Sales and service fees for fiscal 2003 were $75,532,000, compared to
$70,486,000 recorded a year ago. Sales and service fees reported in U.S. dollars
benefited from significantly stronger European currencies, when translating
foreign sales for financial reporting purposes. When measured at constant
exchange rates, sales and service fees for the year declined $1,837,000, or 3%,
from the 2002 period, due to reduced shipments in Europe. For the fourth
quarter, sales and service fees were $23,772,000, compared to $18,767,000
recorded in the corresponding 2002 period. When measured at constant exchange
rates, sales and service fees increased $3,143,000, or 17%, from the prior year
period due to increases in the United States, Europe and Asia of $770,000,
$1,730,000 and $643,000, respectively.
New order bookings in fiscal 2003 totaled $77,851,000, a 16% increase
over the $66,992,000 of new order bookings in the prior year. For the fourth
quarter of 2003, new order bookings were $24,508,000, an increase of 41% from
the $17,405,000 recorded in the fourth quarter of fiscal 2002. When measured in
constant dollars, new order bookings in the fourth quarter of 2003 increased
$4,876,000, or 28% over those in the fourth quarter of fiscal 2002, due to
increases in the United States, Europe and Asia of $330,000, $3,346,000 and
$1,200,000, respectively. Backlog was $8,153,000 at October 31, 2003, compared
to $7,280,000 at July 31, 2003, and $5,315,000 at October 31, 2002.
Gross margin in fiscal 2003 increased to 27.6% compared to 23.2%
(exclusive of an inventory write-down of $1,083,000) realized in 2002. The
improvement is attributable to cost reductions, improved product mix and the
strengthening of European currencies in relation to the U.S. dollar. Selling,
general and administrative expenses in fiscal 2003 were $18,749,000, a reduction
of $900,000, or 5%, from the prior year. When measured in constant exchange
rates, selling general and administrative expenses decreased $2,077,000, or 11%.
The Company also announced that on December 5, 2003 it amended and
restated its bank credit agreement. The amendment extends the maturity date of
the facility to December 1, 2006, increases the maximum permitted borrowings
from $7,000,000 to $8,000,000 and in addition, provides for a separate,
collateralized credit facility of GBP 1,000,000 (approximately $1,700,000) for
the Company's subsidiary in the United Kingdom.
Total debt was $9,222,000 at October 31, 2003, as compared to
$8,885,000 at October 31, 2002, and constituted 24% of total capitalization. As
of October 31, 2003, the Company had unutilized credit facilities of $6,351,000
available for direct borrowing or commercial letters of credit.
The Company further announced that during the fourth quarter, it
settled the disputed claim in the United Kingdom regarding a terminated facility
lease for $1,150,000, which had been previously accrued. The payment will be
made in the first quarter of fiscal 2004 and will be funded through cash flow
from operations and borrowings available from bank credit facilities.
Michael Doar, Chief Executive Officer stated, "2003 was a difficult
year for the machine tool industry. Nevertheless, due to the restructuring we
have done over the last 18 months, we were able to achieve a small profit in
2003. We benefited somewhat by the strengthening of the Euro over the course of
the year. We are very pleased by the remarkable success of our new product, the
VM1. This entry-level machine is particularly important in our U.S. market and
has been an important factor in increasing our market share in the United
States. The entering into the new loan agreement with our bank is important as
we can now focus all our efforts on improving our business and selling more
machines. We are cautiously optimistic about our outlook for 2004 and look
forward to the challenges ahead."
Hurco Companies, Inc. is an industrial technology company that designs
and produces interactive computer controls, software and computerized machine
tools for the worldwide metal cutting and metal forming industry. The end market
for the Company's products consists primarily of independent job shops and
short-run manufacturing operations within large corporations in industries such
as the aerospace, defense, medical equipment, energy, transportation and
computer equipment. The Company is based in Indianapolis, Indiana, and has
sales, application engineering and service subsidiaries in High Wycombe,
England; Munich, Germany; Paris, France; Milan, Italy; Shanghai, China and
Singapore, along with manufacturing operations in Taiwan. Products are sold
primarily through independent agents and distributors in the United States,
Europe and Asia. The Company also has direct sales forces in the United Kingdom,
Germany, France, Italy, and Asia.
Web Site: www.hurco.com
This news release contains forward looking statements which involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. These factors include, among others, changes in
general economic and business conditions that affect demand for computerized
machine systems, computer numerical control systems and software products,
changes in manufacturing markets, innovations by competitors, quality and
delivery performance by our contract manufacturers and governmental actions and
initiatives including import and export restrictions and tariffs.
Hurco Companies, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per-share data)
Three Months Ended Twelve Months Ended
October 31, October 31,
2003 2002 2003 2002
--------- -------- -------- ---------
Sales and service fees $23,772 $ 18,767 $75,532 $70,486
Cost of sales and service 17,146 13,788 54,710 54,157
Cost of sales - restructuring - - - 1,083
--------- -------- -------- ---------
Gross profit 6,626 4,979 20,822 15,246
Selling, general and administrative expenses 5,426 5,237 18,749 19,658
Restructuring and other expense, net (124) 1,004 (124) 2,755
--------- -------- -------- ---------
Operating income (loss) 1,324 (1,262) 2,197 (7,167)
License fee income, net - - - 163
Interest expense 182 165 658 634
Other income (expense), net (124) (26) (119) (36)
--------- -------- -------- ---------
Income (loss) before taxes 1,018 (1,453) 1,420 (7,674)
Provision for income taxes 444 307 958 589
--------- -------- -------- ---------
Net income (loss) $ 574 $ (1,760) $ 462 $ (8,263)
========= ========== ======== =========
Earnings (loss) per common share
Basic $ 0.10 $ (0.32) $ 0.08 $ (1.48)
========= ========== ======== =========
Diluted $ 0.10 $ (0.32) $ 0.08 $ (1.48)
========= ========== ======== =========
Weighted average common shares outstanding
Basic 5,578 5,583 5,582 5,583
========= ========== ======== =========
Diluted 5,612 5,583 5,582 5,583
========= ========== ======== =========
OTHER CONSOLIDATED FINANCIAL DATA Three Months Ended Twelve Months Ended
October 31, October 31,
Operating Data: 2003 2002 2003 2002
---------- --------- --------- ---------
Gross margin, excluding restructuring charges 27.9% 26.5% 27.6% 23.2%
SG&A expense as a percentage of sales 22.8% 27.9% 24.8% 27.9%
Operating income (loss) as a percentage of sales 5.6% -6.7% 2.9% -10.2%
Pre-tax income (loss) as a percentage of sales 4.3% -7.7% 1.9% -10.9%
Depreciation and amortization 356 454 1,429 1,929
Capital expenditures 380 203 1,215 1,716
Balance Sheet Data: 10/31/2003 10/31/2002
---------- ----------
Working capital (excluding short term debt) $ 22,881 $ 21,663
Days sales outstanding 39 44
Inventory turns 2.3 2.3
Net assets per $ of revenue (trailing twelve months)
Working capital, net $ 0.30 $ 0.31
All other 0.20 0.22
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Total $ 0.50 $ 0.53
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Hurco Companies, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except per-share data)
October 31, October 31,
2003 2002
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 5,289 $ 4,358
Cash - restricted 622 -
Accounts receivable 12,823 13,425
Inventories 22,247 22,548
Other 1,409 1,204
-------- -------
Total current assets 42,390 41,535
Property and equipment:
Land 761 761
Building 7,239 7,203
Machinery and equipment 10,568 10,144
Leasehold improvements 544 396
-------- -------
19,112 18,504
Less accumulated depreciation and amortization (10,730) (9,696)
-------- -------
8,382 8,808
Software development costs, less amortization 1,922 1,604
Investments and other assets 5,264 5,205
-------- -------
$ 57,958 $ 57,152
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,461 $ 9,856
Accrued expenses 10,048 10,016
Current portion of long-term debt 645 1,313
-------- -------
Total current liabilities 20,154 21,185
Non-current liabilities:
Long-term debt 8,577 7,572
Deferred credits and other obligations 486 378
-------- -------
Total liabilities 29,217 29,135
Shareholders' equity:
Preferred stock: no par value per share; 1,000,000 shares
authorized; no shares issued - -
Common stock: no par value; $.10 stated value per share;
12,500,000 shares authorized; and 5,583,158 and
5,580,658 shares issued, respectively 556 558
Additional paid-in capital 44,696 44,717
Accumulated deficit (9,711) (10,173)
Accumulated other comprehensive income (6,800) (7,085)
-------- -------
Total shareholders' equity 28,741 28,017
-------- -------
$ 57,958 $ 57,152
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