x | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended |
o | Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________ to _________. |
Indiana | 35-1150732 | |
(State or other jurisdiction of | (I.R.S. Employer Identification Number) | |
incorporation or organization) | ||
One Technology Way | ||
Indianapolis, Indiana | 46268 | |
(Address of principal executive offices) | (Zip code) |
Item 1. | Financial Statements | |
Condensed Consolidated Three and six months ended | 3 | |
Condensed Consolidated Balance As of | 4 | |
Condensed Consolidated Three and six months ended | 5 | |
Condensed Consolidated | 6 | |
Notes to Condensed Consolidated Financial | 7 | |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. | Controls and Procedures | |
Part II - Other Information |
Item 1. | Legal | |
Item 1A. | Risk | |
Item 4. | Submission of Matters to a Vote of Security Holders | 23 |
Item 5. | Other | |
Item 6. | ||
Signatures |
Item 1. | FINANCIAL STATEMENTS |
Three Months Ended | ||||||||
January 31 | ||||||||
2009 | 2008 | |||||||
(Unaudited) | ||||||||
Sales and service fees | $ | 28,307 | $ | 60,923 | ||||
Cost of sales and service | 19,765 | 36,066 | ||||||
Gross profit | 8,542 | 24,857 | ||||||
Selling, general and administrative expenses | 8,029 | 12,376 | ||||||
Operating income | 513 | 12,481 | ||||||
Interest expense | 23 | 11 | ||||||
Interest income | 104 | 149 | ||||||
Investment income | 28 | 172 | ||||||
Other expense, net | 73 | 464 | ||||||
Income before taxes | 549 | 12,327 | ||||||
Provision for income taxes | 195 | 4,522 | ||||||
Net income | $ | 354 | $ | 7,805 | ||||
Earnings per common share | ||||||||
Basic | $ | 0.06 | $ | 1.22 | ||||
Diluted | $ | 0.05 | $ | 1.21 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 6,421 | 6,401 | ||||||
Diluted | 6,438 | 6,433 |
Three Months Ended | Six Months Ended | |||||||||||||||
April 30 | April 30 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Sales and service fees | $ | 20,489 | $ | 58,285 | $ | 48,796 | $ | 119,208 | ||||||||
Cost of sales and service | 15,269 | 37,954 | 35,034 | 74,020 | ||||||||||||
Gross profit | 5,220 | 20,331 | 13,762 | 45,188 | ||||||||||||
Selling, general and administrative expenses | 7,518 | 11,676 | 15,547 | 24,052 | ||||||||||||
Operating income (loss) | (2,298 | ) | 8,655 | (1,785 | ) | 21,136 | ||||||||||
Interest expense | 4 | 10 | 27 | 21 | ||||||||||||
Interest income | 45 | 133 | 149 | 282 | ||||||||||||
Investment income | 1 | 119 | 29 | 291 | ||||||||||||
Other expense (income), net | (1,768 | ) | 376 | (1,695 | ) | 840 | ||||||||||
Income (loss) before taxes | (488 | ) | 8,521 | 61 | 20,848 | |||||||||||
Provision (benefit) for income taxes | (207 | ) | 3,054 | (12 | ) | 7,576 | ||||||||||
Net income (loss) | $ | (281 | ) | $ | 5,467 | $ | 73 | $ | 13,272 | |||||||
Earnings (loss) per common share | ||||||||||||||||
Basic | $ | (0.04 | ) | $ | 0.85 | $ | 0.01 | $ | 2.07 | |||||||
Diluted | $ | (0.04 | ) | $ | 0.85 | $ | 0.01 | $ | 2.06 | |||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 6,421 | 6,410 | 6,421 | 6,410 | ||||||||||||
Diluted | 6,421 | 6,444 | 6,430 | 6,442 |
January 31 | October 31 | |||||||
2009 | 2008 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 30,126 | $ | 26,394 | ||||
Short-term investments | -- | 6,674 | ||||||
Accounts receivable, net | 18,587 | 31,952 | ||||||
Inventories, net | 63,294 | 66,368 | ||||||
Deferred tax assets, net | 6,489 | 5,444 | ||||||
Derivative assets | 8,762 | 12,463 | ||||||
Other | 1,824 | 2,017 | ||||||
129,082 | 151,312 | |||||||
Property and equipment: | ||||||||
Land | 782 | 782 | ||||||
Building | 7,127 | 7,127 | ||||||
Machinery and equipment | 15,396 | 14,885 | ||||||
Leasehold improvements | 1,827 | 1,765 | ||||||
25,132 | 24,559 | |||||||
Less accumulated depreciation and amortization | (11,300 | ) | (10,961 | ) | ||||
13,832 | 13,598 | |||||||
Non-current assets: | ||||||||
Software development costs, less accumulated amortization | 5,967 | 5,711 | ||||||
Other assets | 6,825 | 6,823 | ||||||
$ | 155,706 | $ | 177,444 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 14,587 | $ | 28,303 | ||||
Derivative liabilities | 3,094 | 2,692 | ||||||
Accrued expenses | 12,105 | 20,134 | ||||||
29,786 | 51,129 | |||||||
Non-current liabilities: | ||||||||
Deferred tax liability, net | 2,083 | 2,056 | ||||||
Deferred credits and other obligations | 786 | 782 | ||||||
Total liabilities | 32,655 | 53,967 | ||||||
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; | ||||||||
13,250,000 shares authorized, and 6,420,851 and 6,420,851 | ||||||||
shares issued and outstanding, respectively | 642 | 642 | ||||||
Additional paid-in capital | 51,747 | 51,690 | ||||||
Retained earnings | 72,243 | 71,889 | ||||||
Accumulated other comprehensive loss | (1,581 | ) | (744 | ) | ||||
Total shareholders’ equity | 123,051 | 123,477 | ||||||
$ | 155,706 | $ | 177,444 |
April 30 | October 31 | |||||||
2009 | 2008 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 27,850 | $ | 26,394 | ||||
Short-term investments | — | 6,674 | ||||||
Accounts receivable, net | 15,903 | 31,952 | ||||||
Inventories, net | 64,880 | 66,368 | ||||||
Deferred tax assets, net | 7,856 | 5,444 | ||||||
Derivative assets | 1,446 | 12,463 | ||||||
Other | 2,591 | 2,017 | ||||||
120,526 | 151,312 | |||||||
Property and equipment: | ||||||||
Land | 782 | 782 | ||||||
Building | 7,127 | 7,127 | ||||||
Machinery and equipment | 15,952 | 14,885 | ||||||
Leasehold improvements | 1,878 | 1,765 | ||||||
25,739 | 24,559 | |||||||
Less accumulated depreciation and amortization | (11,900 | ) | (10,961 | ) | ||||
13,839 | 13,598 | |||||||
Non-current assets: | ||||||||
Software development costs, less accumulated amortization | 6,097 | 5,711 | ||||||
Other assets | 7,438 | 6,823 | ||||||
$ | 147,900 | $ | 177,444 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 10,678 | $ | 28,303 | ||||
Derivative liabilities | 1,452 | 2,692 | ||||||
Accrued expenses | 11,020 | 20,134 | ||||||
23,150 | 51,129 | |||||||
Non-current liabilities: | ||||||||
Deferred tax liabilities, net | 2,006 | 2,056 | ||||||
Deferred credits and other obligations | 827 | 782 | ||||||
Total liabilities | 25,983 | 53,967 | ||||||
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; | ||||||||
13,250,000 shares authorized, and 6,420,851 | ||||||||
shares issued and outstanding | 642 | 642 | ||||||
Additional paid-in capital | 51,804 | 51,690 | ||||||
Retained earnings | 71,962 | 71,889 | ||||||
Accumulated other comprehensive loss | (2,491 | ) | (744 | ) | ||||
Total shareholders’ equity | 121,917 | 123,477 | ||||||
$ | 147,900 | $ | 177,444 |
Three Months Ended | ||||||||
January 31 | ||||||||
2009 | 2008 | |||||||
(Unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 354 | $ | 7,805 | ||||
Adjustments to reconcile net income to Net cash provided by (used for) operating activities: | ||||||||
Provision for doubtful accounts | 306 | (25 | ) | |||||
Deferred tax provision | (1,106 | ) | (268 | ) | ||||
Equity in (income) loss of affiliates | 24 | 20 | ||||||
Depreciation and amortization | 791 | 683 | ||||||
Stock-based compensation | 57 | 57 | ||||||
Change in assets and liabilities: | ||||||||
(Increase) decrease in accounts receivable | 13,047 | (10,019 | ) | |||||
(Increase) decrease in inventories | 2,929 | (2,029 | ) | |||||
Increase (decrease) in accounts payable | (13,441 | ) | 982 | |||||
Increase (decrease) in accrued expenses | (7,993 | ) | (2,003 | ) | ||||
Other | 3,522 | 1,103 | ||||||
Net cash provided by (used for) operating activities | (1,510 | ) | (3,694 | ) | ||||
Cash flows from investing activities: | ||||||||
Proceeds from sale of property and equipment | 4 | 12 | ||||||
Purchase of property and equipment | (792 | ) | (1,096 | ) | ||||
Purchase of investments | -- | (8,000 | ) | |||||
Sale of investments | 6,674 | 4,000 | ||||||
Software development costs | (559 | ) | (51 | ) | ||||
Other investments | (48 | ) | (106 | ) | ||||
Net cash provided by (used for) investing activities | 5,279 | (5,241 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of common stock options | -- | 54 | ||||||
Net cash provided by (used for) financing activities | -- | 54 | ||||||
Effect of exchange rate changes on cash | (37 | ) | 297 | |||||
Net increase (decrease) in cash and cash equivalents | 3,732 | (8,584 | ) | |||||
Cash and cash equivalents at beginning of period | 26,394 | 29,760 | ||||||
Cash and cash equivalents at end of period | $ | 30,126 | $ | 21,176 |
Three Months Ended | Six Months Ended | |||||||||||||||
April 30 | April 30 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | (281 | ) | $ | 5,467 | $ | 73 | $ | 13,272 | |||||||
Adjustments to reconcile net income (loss) to Net cash used for operating activities: | ||||||||||||||||
Provision for doubtful accounts | 210 | (116 | ) | 516 | (141 | ) | ||||||||||
Deferred income tax provision | (140 | ) | (378 | ) | (1,246 | ) | (646 | ) | ||||||||
Equity loss of affiliates | 64 | 9 | 88 | 29 | ||||||||||||
Depreciation and amortization | 814 | 730 | 1,605 | 1,413 | ||||||||||||
Stock-based compensation | 57 | 57 | 114 | 114 | ||||||||||||
Change in assets and liabilities: | ||||||||||||||||
(Increase) decrease in accounts receivable | 2,848 | 3,736 | 15,895 | (6,283 | ) | |||||||||||
(Increase) decrease in inventories | 571 | (2,118 | ) | 3,500 | (4,147 | ) | ||||||||||
Decrease in accounts payable | (4,072 | ) | (1,715 | ) | (17,513 | ) | (733 | ) | ||||||||
Decrease in accrued expenses | (1,313 | ) | (1,966 | ) | (9,306 | ) | (3,970 | ) | ||||||||
Net change in derivative assets and liabilities | 5,675 | 1,043 | 9,777 | 769 | ||||||||||||
Other | (5,326 | ) | (6,037 | ) | (5,906 | ) | (4,660 | ) | ||||||||
Net cash used for operating activities | (893 | ) | (1,288 | ) | (2,403 | ) | (4,983 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Proceeds from sale of property and equipment | 217 | — | 221 | 12 | ||||||||||||
Purchase of property and equipment | (536 | ) | (659 | ) | (1,328 | ) | (1,755 | ) | ||||||||
Purchase of investments | — | (1,100 | ) | — | (9,100 | ) | ||||||||||
Sale of investments | — | 6,350 | 6,674 | 10,350 | ||||||||||||
Software development costs | (432 | ) | (108 | ) | (991 | ) | (159 | ) | ||||||||
Other investments | (846 | ) | 367 | (894 | ) | 261 | ||||||||||
Net cash provided by (used for) investing activities | (1,597 | ) | 4,850 | 3,682 | (391 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||
Tax benefit from exercise of stock options | — | 36 | — | 36 | ||||||||||||
Proceeds from exercise of common stock options | — | 97 | — | 151 | ||||||||||||
Net cash provided by financing activities | — | 133 | — | 187 | ||||||||||||
Effect of exchange rate changes on cash | 214 | 739 | 177 | 1,036 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (2,276 | ) | 4,434 | 1,456 | (4,151 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 30,126 | 21,175 | 26,394 | 29,760 | ||||||||||||
Cash and cash equivalents at end of period | $ | 27,850 | $ | 25,609 | $ | 27,850 | $ | 25,609 |
(Dollars in thousands, except Shares Issued and Outstanding) | Common Stock | Additional | Accumulated Other Comprehensive | |||||||||||||||||||||
Shares Issued & Outstanding | Amount | Paid-In Capital | Retained Earnings | Income (Loss) | Total | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Balances, October 31, 2007 | 6,392,220 | $ | 639 | $ | 50,971 | $ | 49,369 | $ | (3,376 | ) | $ | 97,603 | ||||||||||||
Net income | — | — | — | 13,272 | — | 13,272 | ||||||||||||||||||
Translation of foreign currency financial statements | — | — | — | — | 2,284 | 2,284 | ||||||||||||||||||
Unrealized loss on derivative instruments, net of tax | — | — | — | — | (695 | ) | (695 | ) | ||||||||||||||||
Unrealized loss on investments, net of tax | — | — | — | — | (202 | ) | (202 | ) | ||||||||||||||||
Comprehensive income | 14,659 | |||||||||||||||||||||||
Exercise of common stock options | 28,631 | 3 | 148 | — | — | 151 | ||||||||||||||||||
Tax benefit from exercise of stock options | — | — | 36 | — | — | 36 | ||||||||||||||||||
Stock-based compensation | — | — | 114 | — | — | 114 | ||||||||||||||||||
Balances, April 30, 2008 (Unaudited) | 6,420,851 | $ | 642 | $ | 51,269 | $ | 62,641 | $ | (1,989 | ) | $ | 112,563 | ||||||||||||
Balances, October 31, 2008 | 6,420,851 | $ | 642 | $ | 51,690 | $ | 71,889 | $ | (744 | ) | $ | 123,477 | ||||||||||||
Net income | — | — | — | 73 | — | 73 | ||||||||||||||||||
Translation of foreign currency financial statements | — | — | — | — | 156 | 156 | ||||||||||||||||||
Unrealized loss on derivative instruments, net of tax | — | — | — | — | (2,105 | ) | (2,105 | ) | ||||||||||||||||
Reversal of unrealized loss on investments, net of tax | — | — | — | — | 202 | 202 | ||||||||||||||||||
Comprehensive loss | (1,674 | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | 114 | — | — | 114 | ||||||||||||||||||
Balances, April 30, 2009 (Unaudited) | 6,420,851 | $ | 642 | $ | 51,804 | $ | 71,962 | $ | (2,491 | ) | $ | 121,917 |
(Dollars in thousands, except Shares Issued and Outstanding) | Common Stock | Additional | Accumulated Other Comprehensive | |||||||||||||||||||||
Shares Issued & Outstanding | Amount | Paid-In Capital | Retained Earnings | Income (Loss) | Total | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Balances, October 31, 2007 | 6,392,220 | $ | 639 | $ | 50,971 | $ | 49,369 | $ | (3,376 | ) | $ | 97,603 | ||||||||||||
Net income | -- | -- | -- | 7,805 | -- | 7,805 | ||||||||||||||||||
Translation of foreign currency financial statements | -- | -- | -- | -- | 456 | 456 | ||||||||||||||||||
Unrealized gain on derivative instruments, net of tax | -- | -- | -- | -- | 30 | 30 | ||||||||||||||||||
Comprehensive income | -- | -- | -- | -- | -- | 8,291 | ||||||||||||||||||
Exercise of common stock options | 25,000 | 3 | 51 | -- | -- | 54 | ||||||||||||||||||
Tax benefit from exercise of stock options | -- | -- | -- | -- | -- | -- | ||||||||||||||||||
Stock-based compensation expense | -- | -- | 57 | -- | -- | 57 | ||||||||||||||||||
Balances, January 31, 2008 (Unaudited) | 6,417,220 | $ | 642 | $ | 51,079 | $ | 57,174 | $ | (2,890 | ) | $ | 106,005 | ||||||||||||
Balances, October 31, 2008 | 6,420,851 | $ | 642 | $ | 51,690 | $ | 71,889 | $ | (744 | ) | $ | 123,477 | ||||||||||||
Net income | -- | -- | -- | 354 | -- | 354 | ||||||||||||||||||
Translation of foreign currency financial statements | -- | -- | -- | -- | (740 | ) | (740 | ) | ||||||||||||||||
Unrealized loss on derivative instruments, net of tax | -- | -- | -- | -- | (299 | ) | (299 | ) | ||||||||||||||||
Reversal of unrealized loss on investments, net of tax | -- | -- | -- | -- | 202 | 202 | ||||||||||||||||||
Comprehensive income (loss) | -- | -- | -- | -- | -- | (483 | ) | |||||||||||||||||
Exercise of common stock options | -- | -- | -- | -- | -- | -- | ||||||||||||||||||
Tax benefit from exercise of stock options | -- | -- | -- | -- | -- | -- | ||||||||||||||||||
Stock-based compensation expense | -- | -- | 57 | -- | -- | 57 | ||||||||||||||||||
Balances, January 31, 2009 (Unaudited) | 6,420,851 | $ | 642 | $ | 51,747 | $ | 72,243 | $ | (1,581 | ) | $ | 123,051 | ||||||||||||
1. | GENERAL |
2. | SHORT-TERM INVESTMENTS |
3. | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
2009 | 2008 | ||||||||||
Balance Sheet | Fair | Balance Sheet | Fair | ||||||||
Derivatives | Location | Value | Location | Value | |||||||
Designated as Hedging Instruments: | |||||||||||
Foreign exchange forward contracts | Derivative assets | $ | 1,344 | Derivative assets | $ | 9,733 | |||||
Foreign exchange forward contracts | Derivative liabilities | $ | 486 | Derivative liabilities | $ | 2,568 | |||||
Not Designated as Hedging Instruments: | |||||||||||
Foreign exchange forward contracts | Derivative assets | $ | 102 | Derivative assets | $ | 2,730 | |||||
Foreign exchange forward contracts | Derivative liabilities | $ | 966 | Derivative liabilities | $ | 124 |
Derivatives | Amount of Gain Recognized in Other Comprehensive Income | Location of Gain (Loss) Reclassified from Other Comprehensive Income | Amount of Gain (Loss) Reclassified from Other Comprehensive Income | ||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||||
Designated as Hedging Instruments: | |||||||||||||||||
(Effective Portion) | |||||||||||||||||
Foreign exchange forward contracts | $ | 1,835 | $ | 3,938 | Cost of sales and service | $ | (104 | ) | $ | (1,191 | ) | ||||||
(Ineffective Portion) | |||||||||||||||||
Foreign exchange forward contracts | N/A | N/A | Other income (expense) | $ | 2,202 | $ | 10 |
Location of Loss | Amount of Loss | |||||||||
Derivatives | Recognized in Operations | Recognized in Operations | ||||||||
2009 | 2008 | |||||||||
Not Designated as Hedging Instruments: | ||||||||||
Foreign exchange forward contracts | Other income (expense) | $ | (1,487 | ) | $ | (1,287 | ) |
4. | STOCK OPTIONS |
Stock Options | Weighted Average Exercise Price | |||||||
Outstanding at October 31, 2008 | 64,369 | $ | 20.29 | |||||
Options granted | -- | $ | -- | |||||
Options exercised | -- | $ | -- | |||||
Options cancelled | -- | $ | -- | |||||
Outstanding at January 31, 2009 | 64,369 | $ | 20.29 | |||||
Stock Options | Weighted Average Exercise Price | |||||||
Outstanding at October 31, 2008 | 64,369 | $ | 20.29 | |||||
Options granted | 21,000 | 14.84 | ||||||
Options exercised | — | — | ||||||
Options cancelled | — | — | ||||||
Outstanding at April 30, 2009 | 85,369 | $ | 18.96 |
Outstanding Stock Options Already Vested and Expected to Vest | Options Outstanding and Exercisable | |||||||
Number of outstanding options | 64,369 | 54,369 | ||||||
Weighted average remaining contractual life | 7.34 | 6.82 | ||||||
Weighted average exercise price per share | $ | 20.29 | $ | 19.12 | ||||
Intrinsic value | $ | 247,000 | $ | 247,000 |
Options Already Vested and Expected to Vest | Options Currently Exercisable | |||||||
Number of outstanding options | 85,369 | 54,369 | ||||||
Weighted average remaining contractual life (years) | 7.86 | 6.64 | ||||||
Weighted average exercise price per share | $ | 18.96 | $ | 19.12 | ||||
Intrinsic value | $ | 280,000 | $ | 270,000 |
5. | EARNINGS PER SHARE |
6. | ACCOUNTS RECEIVABLE |
7. | INVENTORIES |
January 31, 2009 | October 31, 2008 | |||||||
Purchased parts and sub-assemblies | $ | 12,412 | $ | 13,098 | ||||
Work-in-process | 10,860 | 11,243 | ||||||
Finished goods | 40,022 | 42,027 | ||||||
$ | 63,294 | $ | 66,368 |
April 30, 2009 | October 31, 2008 | |||||||
Purchased parts and sub-assemblies | $ | 13,006 | $ | 13,098 | ||||
Work-in-process | 5,032 | 11,243 | ||||||
Finished goods | 46,842 | 42,027 | ||||||
$ | 64,880 | $ | 66,368 |
8. | SEGMENT INFORMATION |
9. | GUARANTEES |
Three months ended | ||||||||
January 31, 2009 | January 31, 2008 | |||||||
Balance, beginning of period | $ | 2,536 | $ | 2,449 | ||||
Provision for warranties during the period | 57 | 669 | ||||||
Charges to the accrual | (434 | ) | (598 | ) | ||||
Impact of foreign currency translation | (25 | ) | 30 | |||||
Balance, end of period | $ | 2,134 | $ | 2,550 |
Six months ended | ||||||||
April 30, 2009 | April 30, 2008 | |||||||
Balance, beginning of period | $ | 2,536 | $ | 2,449 | ||||
Provision for warranties during the period | 248 | 1,461 | ||||||
Charges to the reserve | (829 | ) | (1,257 | ) | ||||
Impact of foreign currency translation | (6 | ) | 141 | |||||
Balance, end of period | $ | 1,949 | $ | 2,794 |
10. | COMPREHENSIVE INCOME |
Three months ended | ||||||||
January 31, 2009 | January 31, 2008 | |||||||
Net income | $ | 354 | $ | 7,805 | ||||
Translation of foreign currency financial statements | (740 | ) | 456 | |||||
Unrealized gain (loss) on derivative instruments, net of tax | (299 | ) | 30 | |||||
Reversal of unrealized loss on investments, net of tax | 202 | -- | ||||||
Comprehensive income (loss) | $ | (483 | ) | $ | 8,291 |
Three months ended | ||||||||
April 30, 2009 | April 30, 2008 | |||||||
Net income (loss) | $ | (281 | ) | $ | 5,467 | |||
Translation of foreign currency financial statements | 896 | 1,828 | ||||||
Unrealized loss on derivative instruments, net of tax | (1,806 | ) | (725 | ) | ||||
Unrealized loss on investments, net of tax | — | (202 | ) | |||||
Comprehensive income (loss) | $ | (1,191 | ) | $ | 6,368 |
11. | DEBT AGREEMENTS |
12. | INCOME TAXES |
13. | FAIR VALUE |
Level I | Level II | Level III | Total | |||||||||||||
Assets: | ||||||||||||||||
Money Market Funds | $ | 19,744 | $ | -- | $ | -- | $ | 19,744 | ||||||||
Derivative Assets | 8,762 | 8,762 | ||||||||||||||
Total | $ | 19,744 | $ | 8,762 | $ | -- | $ | 28,506 |
Level I | Level II | Level III | Total | |||||||||||||
Assets: | ||||||||||||||||
Derivative Assets | $ | — | $ | 1,446 | $ | — | $ | 1,446 |
Level I | Level II | Level III | Total | Level I | Level II | Level III | Total | |||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Derivative Liabilities | $ | -- | $ | 3,094 | $ | -- | $ | 3,094 | $ | — | $ | 1,452 | $ | — | $ | 1,452 | ||||||||||||||||
Total | $ | -- | $ | 3,094 | $ | -- | $ | 3,094 |
14. | EMPLOYEE BENEFITS |
Net Sales and Service Fees by Geographic Region | ||||||||||||||||||||||||
Three months ended April 30, | Change | |||||||||||||||||||||||
2009 | 2008 | Amount | % | |||||||||||||||||||||
North America | $ | 6,171 | 30.1 | % | $ | 11,706 | 20.1 | % | $ | (5,535 | ) | (47.3 | )% | |||||||||||
Europe | 13,042 | 63.7 | % | 42,653 | 73.2 | % | (29,611 | ) | (69.5 | )% | ||||||||||||||
Asia Pacific | 1,276 | 6.2 | % | 3,926 | 6.7 | % | (2,650 | ) | (67.5 | )% | ||||||||||||||
Total | $ | 20,489 | 100.0 | % | $ | 58,285 | 100.0 | % | $ | (37,796 | ) | (64.9 | )% |
Net Sales and Service Fees by Product Category | ||||||||||||||||||||||||
Three months ended April 30, | Change | |||||||||||||||||||||||
2009 | 2008 | Amount | % | |||||||||||||||||||||
Computerized Machine Tools | $ | 16,518 | 80.6 | % | $ | 52,062 | 89.3 | % | $ | (35,544 | ) | (68.3 | )% | |||||||||||
Service Fees, Parts and Other | 3,971 | 19.4 | % | 6,223 | 10.7 | % | (2,252 | ) | (36.2 | )% | ||||||||||||||
Total | $ | 20,489 | 100.0 | % | $ | 58,285 | 100.0 | % | $ | (37,796 | ) | (64.9 | )% |
Net Sales and Service Fees by Geographic Region | ||||||||||||||||||||||||
January 31, | Increase | |||||||||||||||||||||||
2009 | 2008 | Amount | % | |||||||||||||||||||||
North America | $ | 9,636 | 34.0 | % | $ | 13,079 | 21.5 | % | $ | (3,443 | ) | (26.3 | %) | |||||||||||
Europe | 18,060 | 63.8 | % | 45,052 | 73.9 | % | (26,992 | ) | (59.9 | %) | ||||||||||||||
Asia Pacific | 611 | 2.2 | % | 2,792 | 4.6 | % | (2,181 | ) | (78.1 | %) | ||||||||||||||
Total | $ | 28,307 | 100.0 | % | $ | 60,923 | 100.0 | % | $ | (32,616 | ) | (53.5 | %) |
Six months ended April 30, | Change | |||||||||||||||||||||||
2009 | 2008 | Amount | % | |||||||||||||||||||||
North America | $ | 15,808 | 32.4 | % | $ | 24,785 | 20.8 | % | $ | (8,977 | ) | (36.2 | )% | |||||||||||
Europe | 31,102 | 63.7 | % | 87,705 | 73.6 | % | (56,603 | ) | (64.5 | )% | ||||||||||||||
Asia Pacific | 1,886 | 3.9 | % | 6,718 | 5.6 | % | (4,832 | ) | (72.0 | )% | ||||||||||||||
Total | $ | 48,796 | 100.0 | % | $ | 119,208 | 100.0 | % | $ | (70,412 | ) | (59.1 | )% |
Net Sales and Service Fees by Product Category | ||||||||||||||||||||||||
January 31, | Increase | |||||||||||||||||||||||
2009 | 2008 | Amount | % | |||||||||||||||||||||
Computerized Machine Tools | $ | 23,948 | 84.6 | % | $ | 54,924 | 90.2 | % | $ | (30,976 | ) | (56.4 | %) | |||||||||||
Service Fees, Parts and Other | 4,359 | 15.4 | % | 5,999 | 9.8 | % | (1,640 | ) | (27.3 | %) | ||||||||||||||
Total | $ | 28,307 | 100.0 | % | $ | 60,923 | 100.0 | % | $ | (32,616 | ) | (53.5 | %) |
Six months ended April 30, | Change | |||||||||||||||||||||||
2009 | 2008 | Amount | % | |||||||||||||||||||||
Computerized Machine Tools | $ | 40,466 | 82.9 | % | $ | 106,986 | 89.7 | % | $ | (66,520 | ) | (62.2 | )% | |||||||||||
Service Fees, Parts and Other | 8,330 | 17.1 | % | 12,222 | 10.3 | % | (3,892 | ) | (31.9 | )% | ||||||||||||||
Total | $ | 48,796 | 100.0 | % | $ | 119,208 | 100.0 | % | $ | (70,412 | ) | (59.1 | )% |
· | The impact of the current global economic |
· | The cyclical nature of the machine tool industry; |
· | The risks of our international operations; |
· | The limited number of our manufacturing sources; |
· | The effects of changes in currency exchange rates; |
· | Our dependence on new product development; |
· | The need to make technological advances; |
· | Competition with larger companies that have greater financial resources; |
· | Changes in the prices of raw materials, especially steel and iron products; |
· | Possible obsolescence of our technology; |
· | Acquisitions that could disrupt our operations and affect operating results; |
· | Impairment of our goodwill or other assets; |
· | The need to protect our intellectual property assets; |
· | The impact of the continuing downturn in the U.S. economy; |
· | The impact of ongoing disruptions in the credit markets on our investment securities; and |
· | The effect of the loss of key personnel. |
Notional Amount | Weighted Avg. | Contract Amount at Forward Rates in U.S. Dollars | |||||||||||||||
Forward Contracts | in Foreign Currency | Forward Rate | Contract Date | January 31, 2009 | Maturity Dates | ||||||||||||
Sale Contracts: | |||||||||||||||||
Euro | 29,250,000 | 1.4835 | 43,393,130 | 37,394,080 | February 2009 – January 2010 | ||||||||||||
Pound Sterling | 3,750,000 | 1.8593 | 6,972,268 | 5,418,761 | February 2009 – January 2010 | ||||||||||||
Purchase Contracts: | |||||||||||||||||
New Taiwan Dollar | 900,000,000 | 30.41 | * | 29,596,687 | 26,621,009 | February 2009 – January 2010 |
Notional Amount | Weighted Avg. | Contract Amount at Forward Rates in U.S. Dollars | |||||||||||||||
Forward Contracts | in Foreign Currency | Forward Rate | Contract Date | April 30, 2009 | Maturity Dates | ||||||||||||
Sale Contracts: | |||||||||||||||||
Euro | 15,230,000 | 1.3956 | 21,254,988 | 20,187,061 | May 2009 – April 2010 | ||||||||||||
Pound Sterling | 900,000 | 1.5480 | 1,393,200 | 1,334,100 | May 2009 – April 2010 | ||||||||||||
Purchase Contracts: | |||||||||||||||||
New Taiwan Dollar | 460,000,000 | 31.79 | * | 14,470,141 | 14,295,233 | May 2009 – April 2010 |
Contract Amount at Forward Rates in U.S. Dollars | |||||||||||||||||
Forward Contracts | Notional Amount in Foreign Currency | Weighted Avg. Forward Rate | Contract Date | January 31, 2009 | Maturity Dates | ||||||||||||
Sale Contracts: | |||||||||||||||||
Euro | 20,435,446 | 1.3312 | 27,204,254 | 26,128,097 | February 2009 – April 2009 | ||||||||||||
Pound Sterling | 1,737,254 | 1.4280 | 2,480,803 | 2,510,133 | February 2009 – April 2009 | ||||||||||||
Canadian Dollar | 218,156 | .8034 | 175,262 | 177,448 | February 2009 | ||||||||||||
Purchase Contracts: | |||||||||||||||||
New Taiwan Dollar | 15,517,000 | 33.75 | * | 459,763 | 458,918 | February 2009 |
Contract Amount at Forward Rates in U.S. Dollars | |||||||||||||||||
Forward Contracts | Notional Amount in Foreign Currency | Weighted Avg. Forward Rate | Contract Date | April 30, 2009 | Maturity Dates | ||||||||||||
Sale Contracts: | |||||||||||||||||
Euro | 22,353,985 | 1.2965 | 28,981,941 | 29,631,999 | May 2009 – January 2010 | ||||||||||||
Pound Sterling | 558,470 | 1.4434 | 806,096 | 827,769 | May 2009 – June 2009 | ||||||||||||
Canadian Dollar | 275,431 | .8218 | 226,349 | 230,834 | May 2009 – June 2009 | ||||||||||||
Singapore Dollar | 8,481,355 | 1.5501 | 5,471,489 | 5,734,714 | March 2010 | ||||||||||||
Purchase Contracts: | |||||||||||||||||
New Taiwan Dollar | 97,409,700 | 33.56 | * | 2,902,441 | 2,978,286 | May 2009 – June 2009 |
Notional Amount | Weighted Avg. | Contract Amount at Forward Rates in U.S. Dollars | |||||||||||||||
Forward Contracts | in Foreign Currency | Forward Rate | Contract Date | January 31, 2009 | Maturity Date | ||||||||||||
Sale Contracts: | |||||||||||||||||
Euro | 3,000,000 | 1.2936 | 3,880,800 | 3,835,547 | November 2009 |
Notional Amount | Weighted Avg. | Contract Amount at Forward Rates in U.S. Dollars | |||||||||||||||
Forward Contracts | in Foreign Currency | Forward Rate | Contract Date | April 30, 2009 | Maturity Date | ||||||||||||
Sale Contracts: | |||||||||||||||||
Euro | 3,000,000 | 1.2936 | 3,880,800 | 3,975,960 | November 2009 |
Election of Directors Name | Number of Votes FOR | Number of Votes WITHHELD | Abstentions or Broker Non-Votes | |||||||||
Stephen H. Cooper | 5,345,701 | 226,524 | 848,626 | |||||||||
Robert W. Cruickshank | 4,825,587 | 746,638 | 848,626 | |||||||||
Michael Doar | 5,417,395 | 154,830 | 848,626 | |||||||||
Philip James | 5,411,556 | 160,669 | 848,626 | |||||||||
Michael P. Mazza | 5,419,695 | 152,530 | 848,626 | |||||||||
Richard T. Niner | 4,863,218 | 709,007 | 848,626 | |||||||||
Charlie Rentschler | 5,414,770 | 157,455 | 848,626 | |||||||||
Janaki Sivanesan | 5,378,649 | 193,576 | 848,626 |
Item 6. | EXHIBITS |
11 | Computation of per share earnings. | |
31.1 | Certification by the Chief Executive Officer, pursuant to Rule 13a-15(b) under the Securities and Exchange Act of 1934, as amended. | |
31.2 | Certification by the Chief Financial Officer, pursuant to Rule 13a-15(b) under the Securities and Exchange Act of 1934, as amended. | |
32.1 | Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
HURCO COMPANIES, INC. | |
By: | /s/ John G. Oblazney |
John G. Oblazney | |
Vice President and | |
Chief Financial Officer | |
By: | /s/ Sonja K. McClelland |
Sonja K. McClelland | |
Corporate Controller and | |
Principal Accounting Officer |