Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2020 | Dec. 31, 2020 | Apr. 30, 2020 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Oct. 31, 2020 | ||
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 | 6,570,635 | ||
Entity Central Index Key | 0000315374 | ||
Current Fiscal Year End Date | --10-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 217,919,000 | ||
Trading Symbol | HURC | ||
ICFR Auditor Attestation Flag | true |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Sales and service fees | $ 170,627 | $ 263,377 | $ 300,671 |
Cost of sales and service | 134,170 | 186,169 | 208,865 |
Gross profit | 36,457 | 77,208 | 91,806 |
Selling, general and administrative expenses | 41,416 | 54,668 | 58,010 |
Goodwill impairment charge | 4,903 | ||
Operating income (loss) | (9,862) | 22,540 | 33,796 |
Interest expense | 94 | 62 | 100 |
Interest income | 130 | 462 | 189 |
Investment income | 133 | 356 | 339 |
Income from equity investments | 69 | 583 | 639 |
Other expense, net | (1,179) | (555) | (2,367) |
Income (loss) before income taxes | (10,803) | 23,324 | 32,496 |
Provision (benefit) for income taxes | (4,556) | 5,829 | 11,006 |
Net income (loss) | $ (6,247) | $ 17,495 | $ 21,490 |
Income (loss) per common share - basic | $ (0.93) | $ 2.57 | $ 3.19 |
Weighted average common shares outstanding - basic | 6,670 | 6,759 | 6,700 |
Income (loss) per common share - diluted | $ (0.93) | $ 2.55 | $ 3.15 |
Weighted average common shares outstanding - diluted | 6,670 | 6,815 | 6,771 |
Dividends paid per share | $ 0.51 | $ 0.47 | $ 0.43 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ (6,247) | $ 17,495 | $ 21,490 |
Other comprehensive income (loss): | |||
Translation gain (loss) of foreign currency financial statements | 5,969 | 550 | (3,183) |
(Gain) / loss on derivative instruments reclassified into operations, net of tax of $(126), $(70) and $453, respectively | (421) | (235) | 1,355 |
Gain / (loss) on derivative instruments, net of tax of $118, $183 and $52, respectively | 395 | 615 | 155 |
Total other comprehensive income (loss) | 5,943 | 930 | (1,673) |
Comprehensive income (loss) | $ (304) | $ 18,425 | $ 19,817 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
(Gain) / loss on derivative instruments reclassified into operations, tax | $ (126) | $ (70) | $ 453 |
Gain / (loss) on derivative instruments, tax | $ 118 | $ 183 | $ 52 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2020 | Oct. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 57,859 | $ 56,943 |
Accounts receivable, less allowance for doubtful accounts of $1,401 in 2020 and $891 in 2019 | 27,686 | 43,279 |
Inventories, net | 149,864 | 148,851 |
Derivative assets | 968 | 1,391 |
Prepaid assets | 13,803 | 9,414 |
Other | 1,231 | 1,983 |
Total current assets | 251,411 | 261,861 |
Property and equipment: | ||
Land | 868 | 868 |
Building | 7,352 | 7,352 |
Machinery and equipment | 29,195 | 28,846 |
Leasehold improvements | 4,754 | 4,902 |
Property and equipment, gross | 42,169 | 41,968 |
Less accumulated depreciation and amortization | (30,248) | (28,055) |
Total property and equipment, net | 11,921 | 13,913 |
Non-current assets: | ||
Software development costs, less accumulated amortization | 7,840 | 8,318 |
Goodwill | 0 | 5,847 |
Intangible assets, net | 1,846 | 1,096 |
Operating lease - right-of-use assets, net | 11,748 | |
Deferred income taxes | 2,479 | 1,846 |
Investments and other assets, net | 8,410 | 8,184 |
Total non-current assets | 32,323 | 25,291 |
Total assets | 295,655 | 301,065 |
Current liabilities: | ||
Accounts payable | 31,710 | 33,031 |
Accounts payable-related parties | 1,289 | 938 |
Derivative liabilities | 872 | 388 |
Operating lease liabilities | 4,132 | |
Accrued payroll and employee benefits | 6,209 | 11,564 |
Accrued income taxes | 285 | 1,936 |
Accrued expenses | 4,740 | 5,015 |
Accrued warranty expenses | 1,200 | 1,760 |
Total current liabilities | 50,437 | 54,632 |
Non-current liabilities: | ||
Deferred income taxes | 131 | 160 |
Accrued tax liability | 1,918 | 2,036 |
Operating lease liabilities | 7,989 | |
Deferred credits and other | 4,032 | 3,992 |
Total non-current liabilities | 14,070 | 6,188 |
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 6,636,906 and 6,967,719 shares issued; and 6,565,163 and 6,767,237 shares outstanding, as of October 31, 2020 and October 31, 2019, respectively | 657 | 677 |
Additional paid-in capital | 60,997 | 66,350 |
Retained earnings | 172,484 | 182,151 |
Accumulated other comprehensive loss | (2,990) | (8,933) |
Total shareholders' equity | 231,148 | 240,245 |
Total liabilities and shareholders' equity | $ 295,655 | $ 301,065 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2020 | Oct. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts | $ 1,401 | $ 891 |
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 | 6,636,906 | 6,967,719 |
Common stock, shares outstanding | 6,565,163 | 6,767,237 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (6,247) | $ 17,495 | $ 21,490 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities, net of acquisitions: | |||
Provision for doubtful accounts | 510 | (136) | 388 |
Deferred income taxes | (547) | 260 | (530) |
Equity in income of affiliates | (69) | (583) | (639) |
Foreign currency (gain) loss | 257 | 730 | 755 |
Unrealized (gain) loss on derivatives | 622 | (388) | 456 |
Depreciation and amortization | 4,547 | 3,745 | 3,713 |
Stock-based compensation | 2,058 | 2,670 | 2,504 |
Goodwill impairment charge | 4,903 | ||
Change in assets and liabilities, net of acquisitions: | |||
(Increase) decrease in accounts receivable | 15,909 | 11,239 | (5,148) |
(Increase) decrease in inventories | 3,461 | (10,499) | (20,386) |
(Increase) decrease in prepaid expenses | (4,364) | (1,474) | 710 |
Increase (decrease) in accounts payable | (2,556) | (23,780) | 10,788 |
Increase (decrease) in accrued expenses | (6,544) | (2,354) | 3,090 |
Increase (decrease) in accrued income tax | (1,695) | (3,259) | 2,934 |
Increase (decrease) in accrued tax liability | (119) | (157) | 2,061 |
Net change in operating lease assets and liabilities | 370 | ||
Net change in derivative assets and liabilities | 115 | 330 | (1,178) |
Other | 321 | (252) | 4 |
Net cash provided by (used for) operating activities | 10,932 | (6,413) | 21,012 |
Cash flows from investing activities: | |||
Proceeds from sale of property and equipment | 106 | 83 | 180 |
Purchase of property and equipment | (683) | (3,169) | (3,537) |
Software development costs | (973) | (1,701) | (2,326) |
Other investments | 371 | 243 | 233 |
Acquisition of business | (4,353) | (1,156) | |
Net cash provided by (used for) investing activities | (1,179) | (8,897) | (6,606) |
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | 67 | 847 | |
Dividends paid | (3,420) | (3,203) | (2,898) |
Taxes paid related to net settlement of restricted shares | (498) | (499) | (502) |
Stock repurchases | (7,000) | ||
Repayment of short-term debt | (1,450) | ||
Net cash provided by (used for) financing activities | (10,851) | (5,152) | (2,553) |
Effect of exchange rate changes on cash and cash equivalents | 2,014 | 235 | (990) |
Net increase (decrease) in cash and cash equivalents | 916 | (20,227) | 10,863 |
Cash and cash equivalents at beginning of year | 56,943 | 77,170 | 66,307 |
Cash and cash equivalents at end of year | 57,859 | 56,943 | 77,170 |
Cash paid for: | |||
Interest | 11 | 64 | |
Income taxes, net | $ 487 | $ 11,025 | $ 6,172 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) | Total |
Balances at Oct. 31, 2017 | $ 664,000 | $ 61,344,000 | $ 149,267,000 | $ (8,190,000) | $ 203,085,000 |
Balances (in shares) at Oct. 31, 2017 | 6,641,197 | ||||
Net income (loss) | $ 0 | 0 | 21,490,000 | 0 | 21,490,000 |
Other comprehensive income (loss) | 0 | 0 | 0 | (1,673,000) | (1,673,000) |
Stock-based compensation expense, net of taxes withheld for vested restricted shares | $ 4,000 | 1,998,000 | 0 | 0 | 2,002,000 |
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares) | 40,283 | ||||
Exercise of common stock options | $ 4,000 | 843,000 | 0 | 0 | 847,000 |
Exercise of common stock options (in shares) | 41,680 | ||||
Dividends paid | $ 0 | 0 | (2,898,000) | 0 | (2,898,000) |
Balances at Oct. 31, 2018 | $ 672,000 | 64,185,000 | 167,859,000 | (9,863,000) | 222,853,000 |
Balances (in shares) at Oct. 31, 2018 | 6,723,160 | ||||
Net income (loss) | $ 0 | 0 | 17,495,000 | 0 | 17,495,000 |
Other comprehensive income (loss) | 0 | 0 | 0 | 930,000 | 930,000 |
Stock-based compensation expense, net of taxes withheld for vested restricted shares | $ 5,000 | 2,165,000 | 0 | 0 | 2,170,000 |
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares) | 44,077 | ||||
Dividends paid | $ 0 | 0 | (3,203,000) | 0 | (3,203,000) |
Balances at Oct. 31, 2019 | $ 677,000 | 66,350,000 | 182,151,000 | (8,933,000) | 240,245,000 |
Balances (in shares) at Oct. 31, 2019 | 6,767,237 | ||||
Net income (loss) | $ 0 | 0 | (6,247,000) | 0 | (6,247,000) |
Other comprehensive income (loss) | 0 | 0 | 0 | 5,943,000 | 5,943,000 |
Stock-based compensation expense, net of taxes withheld for vested restricted shares | $ 5,000 | 1,555,000 | 0 | 0 | 1,560,000 |
Stock-based compensation expense, net of taxes withheld for vested restricted shares (in shares) | 47,750 | ||||
Exercise of common stock options | 67,000 | 67,000 | |||
Exercise of common stock options (in shares) | 3,738 | ||||
Stock repurchases | $ (25,000) | (6,975,000) | (7,000,000) | ||
Stock repurchases (in shares) | (253,562) | ||||
Dividends paid | $ 0 | 0 | (3,420,000) | 0 | (3,420,000) |
Balances at Oct. 31, 2020 | $ 657,000 | $ 60,997,000 | $ 172,484,000 | $ (2,990,000) | $ 231,148,000 |
Balances (in shares) at Oct. 31, 2020 | 6,565,163 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation Reclassifications. Statements of Cash Flows Translation of Foreign Currencies Hedging. We operate on a global basis and are exposed to the risk that our financial condition, results of operations, and cash flows could be adversely affected by changes in foreign currency exchange rates. To reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, and the gross profit and net earnings of certain of our foreign subsidiaries, we enter into derivative financial instruments in the form of foreign exchange forward contracts with a major financial institution. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Indian Rupee, Singapore Dollars, Chinese Yuan, Polish Zloty, and New Taiwan Dollars. We account for derivative instruments as either assets or liabilities and carry them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments designated as a fair value hedge, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributed to the risk being hedged. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of Accumulated other comprehensive loss in shareholders’ equity and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion of the gain or loss is reported in earnings immediately. For derivative instruments that are not designated as accounting hedges under the Derivatives and Hedging Topic of the Financial Accounting Standards Board (the “FASB”), changes in fair value are recognized in earnings in the period of change. We do not hold or issue derivative financial instruments for speculative trading purposes. We only enter into derivatives with one counterparty, which is among one of the largest U.S. banks (ranked by assets), in order to minimize credit risk and, to date, that counterparty has not failed to meet its financial obligations under such contracts. Derivatives Designated as Hedging Instruments We enter into foreign currency forward exchange contracts periodically to hedge certain forecasted inter–company sales and purchases denominated in foreign currencies (the Pound Sterling, Euro, and New Taiwan Dollar). The purpose of these instruments is to mitigate the risk that the U.S. Dollar net cash inflows and outflows resulting from sales and purchases denominated in foreign currencies will be adversely affected by changes in exchange rates. These forward contracts have been designated as cash flow hedge instruments, and are recorded in the Consolidated Balance Sheets at fair value in Derivative assets and Derivative liabilities. The effective portion of the gains and losses resulting from the changes in the fair value of these hedge contracts are deferred in Accumulated other comprehensive loss and recognized as an adjustment to Cost of sales and service in the period that the corresponding inventory sold that is the subject of the related hedge contract is recognized, thereby providing an offsetting economic impact against the corresponding change in the U.S. Dollar value of the inter–company sale or purchase being hedged. The ineffective portion of gains and losses resulting from the changes in the fair value of these hedge contracts is reported in Other expense, net immediately. We perform quarterly assessments of hedge effectiveness by verifying and documenting the critical terms of the hedge instrument and determining that forecasted transactions have not changed significantly. We also assess on a quarterly basis whether there have been adverse developments regarding the risk of a counterparty default. We had forward contracts outstanding as of October 31, 2020, in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from November 2020 through October 2021. The contract amount at forward rates in U.S. Dollars at October 31, 2020 for Euros and Pounds Sterling was $9.0 million and $3.1 million, respectively. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $13.9 million at October 31, 2020. At October 31, 2020, we had approximately $395,000 of gains, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Of this amount, $262,000 represented unrealized gains, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred gains will be recorded as an adjustment to Cost of sales and service in periods through October 2021, in which the corresponding inventory that is the subject of the related hedge contract is sold, as described above. We are exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we entered into a forward contract with a notional amount of €3.0 million in November 2019. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under FASB guidance related to the accounting for derivative instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment, net of tax, in Accumulated other comprehensive loss in the same manner as the underlying hedged net assets. This forward contract matured in November 2020, and we entered into a new forward contract for the same notional amount that is set to mature in November 2021. As of October 31, 2020, we had a realized gain of $947,000 and an unrealized loss of $78,000, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss, related to these forward contracts. Derivatives Not Designated as Hedging Instruments We enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on inter-company receivables, 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 as Other expense, net in the Consolidated Statements of Operations consistent with the transaction gain or loss on the related inter-company receivables, payables and loans denominated in foreign currencies. We had forward contracts outstanding as of October 31, 2020, in Euros, Pound Sterling, and New Taiwan Dollars with set maturity dates ranging from November 2020 through October 2021. The contract amounts at forward rates in U.S. Dollars at October 31, 2020 for Euros and Pounds Sterling totaled $18.0 million. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $24.5 million at October 31, 2020. Fair Value of Derivative Instruments We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Consolidated Balance Sheets. As of October 31, 2020 and October 31, 2019, all derivative instruments were recorded at fair value on the balance sheets as follows (in thousands): 2020 2019 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 495 Derivative assets $ 751 Foreign exchange forward contracts Derivative liabilities $ 279 Derivative liabilities $ 99 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 473 Derivative assets $ 640 Foreign exchange forward contracts Derivative liabilities $ 593 Derivative liabilities $ 289 Effect of Derivative Instruments on the Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity, and Statements of Operations Derivative instruments had the following effects on our Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity, and Statements of Operations, net of tax, during the fiscal years ended October 31, 2020, 2019, and 2018 (in thousands): Location of Amount of Gain (Loss) Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified Reclassified from Other Comprehensive From Other Other Comprehensive Income (Loss) Comprehensive Income (Loss) Derivatives 2020 2019 2018 Income (Loss) 2020 2019 2018 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts Cost of sales – Intercompany sales/purchases $ 395 $ 615 $ 155 and service $ 421 $ 235 $ (1,355) –Net Investment $ (64) $ 128 $ 136 We did not recognize any gains or losses as a result of hedges deemed ineffective during fiscal years ended October 31, 2020, 2019, and 2018. We recognized the following gains and losses in our Consolidated Statements of Operations during the fiscal years ended October 31, 2020, 2019, and 2018 on derivative instruments not designated as hedging instruments (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Recognized in Operations Derivatives Recognized in Operations 2020 2019 2018 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (171) $ 514 $ (963) The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the fiscal years ended October 31, 2020 and 2019 (in thousands): Foreign Cash Currency Flow Translation Hedges Total Balance, October 31, 2018 $ (10,592) $ 729 $ (9,863) Other comprehensive income (loss) before reclassifications 550 615 1,165 Reclassifications — (235) (235) Balance, October 31, 2019 $ (10,042) $ 1,109 $ (8,933) Other comprehensive income (loss) before reclassifications 5,969 395 6,364 Reclassifications — (421) (421) Balance, October 31, 2020 $ (4,073) $ 1,083 $ (2,990) Inventories Property and Equipment Number of Years Land Indefinite Building 40 Machines 7 – 10 Shop and office equipment 3 – 7 Building & leasehold improvements 3 – 40 Total depreciation and amortization expense recognized for property and equipment was $2.7 million for fiscal 2020, $2.6 million for fiscal 2019, and $2.5 million for fiscal 2018. Revenue Recognition. We recognize revenues from the sale of machine tools, components and accessories and services, and reflect the consideration to which we expect to be entitled. We record revenues based on a five-step model in accordance with FASB guidance codified in Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). In accordance with ASC 606, we have defined contracts as agreements with our customers and distributors in the form of purchase orders, packing or shipping documents, invoices, and, periodically, verbal requests for components and accessories. For each contract, we identify our performance obligations, which is delivering goods or services, determine the transaction price, allocate the contract transaction price to each of the performance obligations (when applicable), and recognize the revenue when (or as) the performance obligation to the customer is fulfilled. A good or service is transferred when the customer obtains control of that good or service. Our computerized machine tools are general purpose computer-controlled machine tools that are typically used in stand–alone operations. Prior to shipment, we test each machine to ensure the machine’s compliance with standard operating specifications. We deem that the customer obtains control upon delivery of the product and that obtaining control is not contingent upon contractual customer acceptance. Therefore, we recognize revenue from sales of our machine tool systems upon delivery of the product to the customer or distributor, which is normally at the time of shipment. Depending upon geographic location, after shipment, a machine may be installed at the customer’s facilities by a distributor, independent contractor, or by one of our service technicians. In most instances where a machine is sold through a distributor, we have no installation involvement. If sales are direct or through sales agents, we will typically complete the machine installation, which consists of the reassembly of certain parts that were removed for shipping and the re-testing of the machine to ensure that it is performing within the standard specifications. We consider the machine installation process for our three-axis machines to be inconsequential and perfunctory. For our five-axis machines that we install, we estimate the fair value of the installation performance obligation and 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 perfunctory within the context of the contract, as the value of these services typically does not rise to a material level as a component of the total contract value. Service fees from maintenance contracts are deferred and recognized in earnings on a prorata basis over the term of the contract and are generally sold on a stand-alone basis. Customer discounts and estimated product returns are considered variable consideration and are recorded as a reduction of revenue in the same period that the related sales are recorded. We have reviewed the overall sales transactions for variable consideration and have determined that these amounts are not significant. Allowance for Doubtful Accounts Product Warranty Research and Development Costs. Software Development Costs. Estimated amortization expense for the remaining unamortized software development costs for the fiscal years ending October 31, is as follows (in thousands): Fiscal Year Amortization Expense 2021 $ 1,369 2022 1,883 2023 1,742 2024 1,503 2025 and thereafter 1,343 Goodwill and Intangible Assets. We have a total of $4.9 million of goodwill for our single reporting unit, arising from the acquisitions of ProCobots, LLC (“ProCobots”) ($2.5 million) in 2019, LCM Precision Technology S.r.l. (“LCM”) ($2.2 million) in 2013, and our wholly-owned distributor located in Michigan ($0.2 million) in 2008. The adverse change in the business climate resulting from the COVID-19 pandemic created triggering events during the second quarter of fiscal 2020, which warranted our review of these assets for potential impairment. With the assistance of a third-party expert, we developed a discounted cash flow model, which included projected growth rates and an appropriate market-participant discount rate, to compute the fair value of the reporting unit as of April 30, 2020. In addition, the fair value determined was also compared to the value obtained using a market approach from guideline public company multiples. The computed fair value of the reporting unit was in excess of our book value of equity as of April 30, 2020, and, therefore, we determined that goodwill and indefinite lived assets were not impaired at that time. Due to the prolonged ongoing uncertainty in the global markets as a result of the COVID-19 pandemic and the net loss for fiscal 2020, we believed there was a risk that the total cash flow projections of this reporting unit could fall short of its previous projections, As such, we reperformed the goodwill impairment test as of October 31, 2020 using a similar discounted cash flow model. As a result of the net loss for fiscal 2020 and the delayed timing of the recovery period, the total cash flow projected at October 31, 2020 fell short of those projected at April 30, 2020, causing the fair value of the reporting unit to fall below our book value of equity as of October 31, 2020, thus, resulting in a full impairment loss of $4.9 million. The changes in the carrying amounts of goodwill for the fiscal year ended October 31, 2020 were as follows (in thousands): Balance as of October 31, 2019 $ 5,847 Changes in goodwill acquired (972) Goodwill impairment (4,903) Impact of foreign currency translation 28 Balance as of October 31, 2020 $ 0 For indefinite-lived intangible assets, if the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess. Intangible assets that are determined to have a finite life are amortized over their estimated useful lives and are also subject to review for impairment, if indicators of impairment are identified. There were no impairments recognized with respect to the carrying value of intangible assets for the years ended October 31, 2020, 2019, or 2018. As of October 31, 2020, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 765 (181) 584 Customer relationships 15 years 374 (199) 175 Technology 13 years 713 (402) 311 Noncompete 5 years 580 (145) 435 Patents 6 years 2,972 (2,837) 135 Other 8 years 397 (368) 29 Total $ 5,978 $ (4,132) $ 1,846 As of October 31, 2019, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 60 $ — $ 60 Tradenames and trademarks 13 years 408 (114) 294 Customer relationships 15 years 372 (173) 199 Technology 13 years 683 (333) 350 Patents 6 years 2,972 (2,813) 159 Other 8 years 375 (341) 34 Total $ 4,870 $ (3,774) $ 1,096 Intangible asset amortization expense was $358,000, $117,000, and $107,000 for fiscal 2020, 2019, and 2018, respectively. Annual intangible asset amortization expense is estimated to be $280,000 per year fiscal years 2025 Impairment of Long–Lived Assets. Due to the prolonged ongoing uncertainty in the global markets as a result of the COVID-19 pandemic and the net loss for fiscal 2020, we believed there was a risk that the total cash flow projections could fall short of its previous projections, As such, we reevaluated the cash flows during the remaining useful life of the primary asset as of October 31, 2020. The result indicated that our undiscounted cash flow continued to be in excess of the book value of our single asset group, and therefore, there was no impairment indications for our long-lived assets for the period ended October 31, 2020. Thus, there was no impairment recognized with respect to the carrying values of long-lived assets for the years ended October 31, 2020, 2019, or 2018. Earnings Per Share. The following table presents a reconciliation of our basic and diluted earnings per share computation: Fiscal Year Ended October 31, 2020 2019 2018 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income (loss) $ (6,247) $ (6,247) $ 17,495 $ 17,495 $ 21,490 $ 21,490 Undistributed earnings (loss) allocated to participating shares 66 66 (147) (147) (132) (132) Net income (loss) applicable to common shareholders $ (6,181) $ (6,181) $ 17,348 $ 17,348 $ 21,358 $ 21,358 Weighted average shares outstanding 6,670 6,670 6,759 6,759 6,700 6,700 Stock options and contingently issuable securities — — — 56 — 71 6,670 6,670 6,759 6,815 6,700 6,771 Income (loss) per share $ (0.93) $ (0.93) $ 2.57 $ 2.55 $ 3.19 $ 3.15 Income Taxes – The determination of our provision for income taxes requires judgment, the use of estimates, and the interpretation and application of complex federal, state and foreign tax laws. Our provision for income taxes reflects a combination of income earned and taxed at the federal and state level in the U.S., as well as in various foreign jurisdictions. In addition to the risks to the effective tax rate described above, the future effective tax rate reflected in forward–looking statements is based on currently effective tax laws. Significant changes in those laws could materially affect these estimates. We operate in multiple jurisdictions through wholly-owned subsidiaries, and our global structure is complex. The estimates of our uncertain tax positions involve judgments and assessment of the potential tax implications. We recognize uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Our tax positions are subject to audit by taxing authorities across multiple global jurisdictions, and the resolution of such audits may span multiple years. Tax law is complex and often subject to varied interpretations. Accordingly, the ultimate outcome with respect to taxes we may owe may differ from the amounts recognized. Stock Compensation. Estimates. assumptions associated with goodwill, intangible and long–lived asset impairment tests, useful lives for depreciation and amortization, warranty programs, stock compensation, income taxes and deferred tax valuation allowances, and contingencies. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates. |
BUSINESS OPERATIONS
BUSINESS OPERATIONS | 12 Months Ended |
Oct. 31, 2020 | |
BUSINESS OPERATIONS | |
BUSINESS OPERATIONS | 2. BUSINESS OPERATIONS Nature of Business The end market for our products consists primarily of precision tool, die and mold manufacturers, independent job shops, and specialized short–run production applications within large manufacturing operations. Industries served include: aerospace, defense, medical equipment, energy, automotive/transportation, electronics, and computer industries. Our products are sold principally through more than 200 independent agents and distributors throughout the Americas, Europe and Asia. We also have our own direct sales and service organizations in China, France, Germany, India, Italy, the Netherlands, Poland, Singapore, Taiwan, the United Kingdom, and certain areas of the United States. Credit Risk Manufacturing Risk. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Oct. 31, 2020 | |
INVENTORIES | |
INVENTORIES | 3. INVENTORIES Inventories as of October 31, 2020 and 2019 are summarized below (in thousands): 2020 2019 Purchased parts and sub–assemblies $ 30,390 $ 32,074 Work–in–process 12,635 20,901 Finished goods 106,839 95,876 $ 149,864 $ 148,851 Finished goods inventory consigned to our distributors and agents throughout the Americas, Europe, and Asia was $17.2 million and $12.0 million as of October 31, 2020 and 2019, respectively. |
ACQUISITION OF BUSINESS
ACQUISITION OF BUSINESS | 12 Months Ended |
Oct. 31, 2020 | |
ACQUISITION OF BUSINESS | |
ACQUISITION OF BUSINESS | 4. ACQUISITION OF BUSINESS On August 5, 2019, we (through a newly-formed subsidiary, ProCobots) acquired substantially all of the assets of a U.S.-based automation integration company for approximately $4.4 million. This acquired business provides automation solutions that can be integrated with any machine tool. The acquisition was accounted for in accordance with ASC Topic 805, Business Combinations. Accordingly, the total purchase price was allocated to tangible assets and liabilities based on their fair value and the intangibles and goodwill were allocated on a provisional basis at the date of acquisition. These allocations reflected various provisional estimates that were available at the time and were subject to change during the purchase price allocation period as valuations were finalized. All valuations are now final. The following table summarizes the allocation of the opening balance sheet of ProCobots as of August 5, 2019 (in thousands): Initial Allocation Adjustments Final Allocation Current assets $ 349 $ — $ 349 Property plant and equipment 452 — 452 Intangibles 148 972 1,120 Goodwill 3,500 (972) 2,528 Total assets 4,449 — 4,449 Current liabilities 96 — 96 Total liabilities 96 — 96 Total purchase price and cash expended $ 4,353 $ — $ 4,353 Intangible assets of $1.1 million were recorded as a result of the purchase. The fair value of the intangible assets was based upon a discounted cash flow method that involves inputs that are not observable in the market (Level 3). Intangible assets are amortized primarily using a straight-line methodology. The intangible assets consisted of the following (in thousands): Remaining Economic Useful Life Trademark/name $ 520 15 Noncompete 580 5 Other 20 1 1,120 The excess purchase price over the fair value of the assets acquired and the liabilities assumed was recorded as goodwill in the amount of $2.5 million. Goodwill recognized in the acquisition relates primarily to expanding our current product offering. The amount recorded as goodwill will be fully deductible for tax purposes. As of October 31, 2020, we have recognized an impairment loss for the full $2.5 million of goodwill relating to ProCobots. See Note 1 of these Notes to Consolidated Financial Statements for further information. The results of operations of ProCobots have been included in the consolidated financial statements from the date of acquisition. |
CREDIT AGREEMENTS AND BORROWING
CREDIT AGREEMENTS AND BORROWINGS | 12 Months Ended |
Oct. 31, 2020 | |
DEBT AGREEMENTS | |
CREDIT AGREEMENTS AND BORROWINGS | 5. CREDIT AGREEMENTS AND BORROWINGS On December 31, 2018, we and our subsidiary Hurco B.V. entered into a new credit agreement, which was amended by that certain First Amendment dated March 13, 2020 and that certain Second Amendment dated December 23, 2020 (as amended, the “2018 Credit Agreement”), with Bank of America, N.A., as the lender. 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, 2021. Borrowings under the 2018 Credit Agreement bear interest at floating rates based on, at our option, either (i) a LIBOR–based rate, or other alternative currency–based rate approved by the lender, plus 1.25% per annum, or (ii) a base rate (which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) the one month LIBOR–based rate plus 1.00%), plus 0.00% per annum. Outstanding letters of credit will carry an annual rate of 1.25%. The 2018 Credit Agreement contains customary affirmative and negative covenants and events of default, including covenants (1) restricting us from making certain investments, loans, advances and acquisitions (but permitting us to make investments in subsidiaries of up to $10.0 million); (2) restricting us from making certain payments, including (a) cash dividends, except that we may pay cash dividends as long as immediately before and after giving effect to such payment, the sum of the unused amount of the commitments under the 2018 Credit Agreement plus our cash on hand is not less than $10.0 million, and as long as we are not in default before and after giving effect to such dividend payments and (b) payments made to repurchase shares of our common stock, except that we may repurchase shares of our common stock as long as we are not in default before and after giving effect to such repurchases and the aggregate amount of payments made by us for all such repurchases during any fiscal year does not exceed $10.0 million; (3) requiring that we maintain a minimum working capital of $125.0 million; (4) requiring that we maintain a minimum tangible net worth of $170.0 million; and (5) providing that if the total amount of indebtedness outstanding owed by the Company and its Taiwanese and Chinese subsidiaries to the lender or its affiliates (the “Specified Outstanding Amount”) exceeds $25.0 million, then the Company will not permit the amount of unrestricted cash-on-hand of the Company and its subsidiaries to be less than the Specified Outstanding Amount. We may use the proceeds from advances under the 2018 Credit Agreement for general corporate purposes. In December 2018, in connection with our entry into the 2018 Credit Agreement, (1) using cash on hand, we repaid in full the $1.4 million outstanding under, and terminated, our credit facility in China and (2) we terminated our United Kingdom credit facility. In March 2019, our wholly-owned subsidiaries in Taiwan, HML, and China, NHML, closed on uncommitted revolving credit facilities with maximum aggregate amounts of 150 million New Taiwan Dollars (the "Taiwan credit facility") and 32.5 million Chinese Yuan (the "China credit facility"), respectively. As uncommitted facilities, both the Taiwan and China credit facilities are subject to review and termination by the respective underlying lending institutions from time to time. As a result, as of October 31, 2020, our existing credit facilities consisted of our €1.5 million revolving credit facility in Germany, the 150 million New Taiwan Dollars Taiwan credit facility, the 32.5 million Chinese Yuan China credit facility and the $40.0 million revolving credit facility under the 2018 Credit Agreement. As of October 31, 2020, there were no borrowings under any of our credit facilities and there was $51.8 million of available borrowing capacity thereunder. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Oct. 31, 2020 | |
FINANCIAL INSTRUMENTS | |
FINANCIAL INSTRUMENTS | 6. FINANCIAL INSTRUMENTS Estimated Fair Value of Financial Instruments FASB fair value guidance establishes a three–tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. The carrying amounts for cash and cash equivalents approximate their fair values due to the short maturity of these instruments, and such instruments meet the Level 1 criteria of the three–tier fair value hierarchy discussed above. The carrying amount of short–term debt approximates fair value due to the variable rate of the interest and the short term nature of the instrument. In accordance with this guidance, the following table represents the fair value hierarchy for our financial assets and liabilities measured at fair value as of October 31, 2020 and 2019 (in thousands): Assets Liabilities October 31, October 31, October 31, October 31, 2020 2019 2020 2019 Level 1 Deferred compensation $ 1,868 $ 1,991 $ — $ — Level 2 Derivatives $ 968 $ 1,391 $ 872 $ 388 Recurring Fair Value Measurements Included in Level 1 assets are mutual fund investments under a nonqualified deferred compensation plan. We estimate the fair value of these investments on a recurring basis using market prices which are readily available. Included as Level 2 fair value measurements are derivative assets and liabilities related to gains and losses on foreign currency forward exchange contracts entered into with a third party. We estimate the fair value of these derivatives on a recurring basis using foreign currency exchange rates obtained from active markets. Derivative instruments are reported in the accompanying consolidated financial statements at fair value. We have derivative financial instruments in the form of foreign currency forward exchange contracts as described in Note 1 of Notes to Consolidated Financial Statements in which the U.S. Dollar equivalent notional amount of these contracts was $70.8 million and $108.6 million at October 31, 2020 and 2019, respectively. The fair value of the foreign currency forward exchange contracts and the related currency positions are subject to offsetting market risk resulting from foreign currency exchange rate volatility. The counterparty to the forward exchange contract is a substantial and creditworthy financial institution. We do not consider either the risk of counterparty non–performance or the economic consequences of counterparty non–performance as material risks. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Oct. 31, 2020 | |
INCOME TAXES | |
INCOME TAXES | 7. INCOME TAXES We account for income taxes using the asset and liability method. Under this method, the (benefit) provision for income taxes represents income taxes payable or refundable for the current year plus the change in deferred taxes during the year. On March 27, 2020, the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to COVID-19 pandemic. The CARES Act, among other things, allows net operating losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021, to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes, permits net operating loss carryovers and carrybacks to offset 100 percent of taxable income for taxable years beginning before January 1, 2021. Any net operating losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021, are created in years that have a 21.0% federal income tax rate. If these net operating losses are carried back to years prior to December 31, 2017, the resulting refund would be in years with a 34.0% federal income tax rate. We are planning to carry back our taxable loss in the U.S. for fiscal 2020 under the provisions of the CARES Act and has recorded a tax benefit in the current year at 34%. The 2019 rate and 2018 rate reflect several effects associated with the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”), which was enacted in December 2017. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, implemented a modified territorial tax system from a global system by adding provisions related to Global Intangible Low Taxed Income (“GILTI”) and Foreign-derived Intangible Income (”FDII”) among other provisions. These provisions under the Tax Reform Act became effective for our fiscal 2019. The Tax Reform Act also imposed a one-time transition tax which was recorded in the fiscal 2018, on deemed repatriation of historical earnings of foreign subsidiaries. The components of income (loss) before taxes are (in thousands): Year Ended October 31, 2020 2019 2018 Income (loss) before income taxes: Domestic $ (11,681) $ 9,793 $ 14,101 Foreign 878 13,531 18,395 $ (10,803) $ 23,324 $ 32,496 The components of income tax provision (benefit) are (in thousands): Year Ended October 31, 2020 2019 2018 Current: U.S. taxes $ (4,932) $ 1,854 $ 6,333 Foreign taxes 923 3,715 5,203 (4,009) 5,569 11,536 Deferred: U.S. taxes (256) (31) (326) Foreign taxes (291) 291 (204) (547) 260 (530) $ (4,556) $ 5,829 $ 11,006 A comparison of income tax expense at the U.S. statutory rate to the Company’s effective tax rate is as follows: Year Ended October 31, 2020 2019 2018 U.S. statutory rate 21 % 21 % 23 % Effect of tax rate of international jurisdictions different than U.S. statutory rates 3 % 4 % 2 % Valuation allowance 0 % 1 % 0 % State taxes 2 % 1 % 0 % Tax credits 1 % (2) % (1) % Effect of tax rate changes 0 % 0 % 4 % Transition tax 0 % (1) % 7 % US tax on distributed and undistributed earnings 0 % 3 % 0 % US benefit of foreign intangible income 0 % (3) % 0 % Impact of CARES act 16 % 0 % 0 % Other (1) % 1 % (1) % Effective tax rate 42 % 25 % 34 % The Tax Reform Act also made comprehensive changes to U.S. federal income tax laws by moving from a global to a modified territorial tax regime. As a result, cash repatriated to the U.S. is generally no longer subject to U.S federal income tax. On October 31, 2020, undistributed earnings of our foreign subsidiaries are expected to be permanently reinvested or otherwise retained for continuing operations. Accordingly, we have not provided for any withholding taxes on the undistributed earnings of our foreign subsidiaries beginning January 1, 2018. Deferred income taxes are determined based on the difference between the amounts used for financial reporting purposes and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred taxes are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Net deferred tax assets and liabilities are classified as non-current in the consolidated financial statements. As of October 31, 2020, we had deferred tax assets established for accumulated net operating loss carryforwards of $2.0 million, primarily related to certain states in the U.S. and foreign jurisdictions. We also had deferred tax assets for tax credits of $0.9 million. We have established a valuation allowance against some of these carryforwards due to the uncertainty of their full realization. As of October 31, 2020 and 2019, the balance of this valuation allowance was $2.2 million for each fiscal year. Significant components of our deferred tax assets and liabilities at October 31, 2020 and 2019 were as follows (in thousands): October 31, 2020 2019 Deferred Tax Assets: Accrued inventory reserves $ 1,241 $ 1,224 Accrued warranty expenses 248 363 Compensation related expenses 1,849 2,723 Unrealized exchange gain/loss 14 143 Other accrued expenses 226 170 Net operating loss carryforwards 1,957 1,380 Other credit carryforwards 887 766 Operating lease liabilities 2,736 — Goodwill and intangibles 1,019 99 Other 183 194 10,360 7,062 Less: Valuation allowance – net operating loss and other credit carryforwards (2,164) (2,227) Deferred tax assets 8,196 4,835 Deferred Tax Liabilities: Net derivative instruments (305) (313) Property and equipment and capitalized software development costs (2,563) (2,632) Operating lease - right of use assets (2,666) — Other (314) (204) Net deferred tax assets $ 2,348 $ 1,686 As of October 31, 2020, we had net operating loss carryforwards for international and U.S. income tax purposes of $6.8 million, of which $5.1 million related to foreign jurisdictions will expire within 5 years beginning in fiscal 2021 and $1.7 million will expire between 5 A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding the related accrual for interest or penalties, is as follows (in thousands): 2020 2019 2018 Balance, beginning of year $ 193 $ 180 $ 1,101 Additions based on tax positions related to the current year 9 36 37 Additions (reductions) related to prior year tax positions (2) — (945) Reductions due to statute expiration (32) (23) (18) Other — — 5 Balance, end of year $ 168 $ 193 $ 180 The entire balance of the unrecognized tax benefits and related interest at October 31, 2020, if recognized, could affect the effective tax rate in future periods. We recognize accrued interest and penalties related to unrecognized tax benefits as components of our income tax provision. As of October 31, 2020, the amount of interest accrued, reported in other liabilities, was approximately $36,000 which did not include the federal tax benefit of interest deductions. The statute of limitations with respect to unrecognized tax benefits will expire between August 2021 and August 2024. We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. Currently, our subsidiary in France is under tax audit for fiscal years 2018 and 2019. A summary of open tax years by major jurisdiction is presented below: United States federal Fiscal 2017 through the current period Germany¹ Fiscal 2018 through the current period Taiwan Fiscal 2018 through the current period ¹ Includes federal as well as state, provincial or similar local jurisdictions, as applicable. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Oct. 31, 2020 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 8. EMPLOYEE BENEFITS We have defined contribution plans that include a majority of our U.S. employees, under which our matching contributions are primarily discretionary. The purpose of these plans is generally to provide additional financial security during retirement by providing employees with an incentive to save throughout their employment. Our contributions and related expense totaled $1.3 million, $1.4 million, $1.2 million, for the fiscal years ended October 31, 2020, 2019, and 2018, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Oct. 31, 2020 | |
EQUITY INCENTIVE PLAN | |
STOCK-BASED COMPENSATION | 9. STOCK–BASED COMPENSATION In March 2016, we adopted the Hurco Companies, Inc. 2016 Equity Incentive Plan (the “2016 Equity Plan”), which allows us to grant awards of stock options, stock appreciation rights, restricted stock, stock units and other stock–based awards. The 2016 Equity Plan replaced the Hurco Companies, Inc. 2008 Equity Incentive Plan (the “2008 Equity Plan”) and is the only active plan under which equity awards may be made by us to our employees and non–employee directors. No further awards will be made under our 2008 Equity Plan. The total number of shares of our common stock that may be issued pursuant to awards under the 2016 Equity Plan is 856,048, which includes 386,048 shares remaining available for future grants under the 2008 Equity Plan as of March 10, 2016, the date our shareholders approved the 2016 Equity Plan. The Compensation Committee of our Board of Directors has the authority to determine the officers, directors and key employees who will be granted awards under the 2016 Equity Plan; designate the number of shares subject to each award; determine the terms and conditions upon which awards will be granted; and prescribe the form and terms of award agreements. We have granted restricted shares and performance units under the 2016 Equity Plan that are currently outstanding, and we have granted stock options under the 2008 Equity Plan that are currently outstanding. No stock option may be exercised more than ten years after the date of grant or such shorter period as the Compensation Committee may determine at the date of grant. The market value of a share of our common stock, for purposes of the 2016 Equity Plan, is the closing sale price as reported by the Nasdaq Global Select Market on the date in question or, if not a trading day, on the last preceding trading date. A summary of the status of the options as of October 31, 2020, 2019 and 2018 and the related activity for the year is as follows: Shares Under Weighted Average Grant Option Date Fair Value Balance October 31, 2017 78,725 $ 20.97 Granted — — Cancelled — — Expired — — Exercised (41,680) $ 20.33 Balance October 31, 2018 37,045 $ 21.69 Granted — — Cancelled — — Expired — — Exercised — — Balance October 31, 2019 37,045 $ 21.69 Granted — — Cancelled — — Expired — — Exercised (3,738) 18.13 Balance October 31, 2020 33,307 $ 22.09 The total intrinsic value of stock options exercised during the twelve months ended October 31, 2020, 2019 and 2018 was approximately $44,000, $0, and $847,000, respectively. As of October 31, 2020, the total intrinsic value of stock options that were outstanding and exercisable was $258,000. Stock options outstanding and exercisable on October 31, 2020, were as follows: Weighted Average Weighted Average Range of Exercise Shares Under Exercise Price Per Remaining Contractual Prices Per Share Option Share Life in Years Outstanding and Exercisable 21.45 21,748 21.45 0.73 23.30 11,559 23.30 0.73 $ 21.45 - 23.30 33,307 $ 22.09 1.47 On March 12, 2020, the Compensation Committee granted a total of 17,780 shares of time-based restricted stock to our non-employee directors. The restricted shares vest in full one year from the date of grant provided the recipient remains on the board of directors through that date. The grant date fair value of the restricted shares was based on the closing sales price of our common stock on the grant date, which was $23.62 per share. On January 2, 2020, the Compensation Committee determined the degree to which the long-term incentive compensation arrangement approved for the fiscal 2017-2019 performance period was attained, and the resulting payout level relative to the target amount for each of the metrics that were established by the Compensation Committee in 2017. As a result, the Compensation Committee determined that a total of 28,979 performance stock units (“PSUs”) were earned by our executive officers, which PSUs vested on January 2, 2020. The vesting date fair value of the PSUs was based on the closing sales price of our common stock on the vesting date, which was $37.79 per share. On January 2, 2020, the Compensation Committee also approved a long-term incentive compensation arrangement for our executive officers in the form of restricted shares and PSUs under the 2016 Equity Plan, which will be payable in shares of our common stock if earned and vested. The awards were approximately 25% time-based vesting and approximately 75% performance-based vesting. The three-year performance period for the PSUs is fiscal 2020 through fiscal 2022. On that date, the Compensation Committee granted a total of 20,837 shares of time-based restricted stock to our executive officers. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $37.79 per share. On January 2, 2020, the Compensation Committee also granted a total target number of 26,918 PSUs to our executive officers designated as “PSU – TSR”. These PSUs were weighted as approximately 40% of the overall 2020 executive long-term incentive compensation arrangement and will vest and be paid based upon the total shareholder return of our common stock over the three-year period of fiscal 2020-2022, relative to the total shareholder return of the companies in a specified peer group over that period. Participants will have the ability to earn between 50% of the target number of the PSUs – TSR for achieving threshold performance and 200% of the target number of the PSUs – TSR for achieving maximum performance. The grant date fair value of the PSUs – TSR was $46.81 per PSU and was calculated using the Monte Carlo approach. On January 2, 2020, the Compensation Committee also granted a total target number of 29,174 PSUs to our executive officers designated as “PSU – ROIC”. These PSUs were weighted as approximately 35% of the overall 2020 executive long-term incentive compensation arrangement and will vest and be paid based upon the achievement of pre-established goals related to our average return on invested capital over the three-year period of fiscal 2020-2022. Participants will have the ability to earn between 50% of the target number of the PSUs - ROIC for achieving threshold performance and 200% of the target number of the PSUs - ROIC for achieving maximum performance. The grant date fair value of the PSUs – ROIC was based on the closing sales price of our common stock on the grant date, which was $37.79 per share. On November 13, 2019, the Compensation Committee granted a total of 8,052 shares of time-based restricted stock to our non-executive employees. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $35.75 per share. On March 14, 2019, the Compensation Committee granted a total of 11,824 shares of time–based restricted stock to our non–employee directors. The restricted shares vest in full one year from the date of grant provided the recipient 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 $40.58 per share. On January 2, 2019, the Compensation Committee determined the degree to which the long–term incentive compensation arrangement approved for the fiscal 2016–2018 performance period was attained, and the resulting payout level relative to the target amount for each of the metrics that were established by the Compensation Committee in 2016. As a result, the Compensation Committee determined that a total of 32,559 performance shares were earned by our executive officers, which performance shares vested on January 2, 2019. The vesting date fair value of the performance shares was based on the closing sales price of our common stock on the vesting date, which was $36.08 per share. On January 2, 2019, the Compensation Committee also approved a long–term incentive compensation arrangement for our executive officers in the form of restricted shares and PSUs under the 2016 Equity Plan, which will be payable in shares of our common stock if earned and vested. The awards were approximately 25% time–based vesting and approximately 75% performance–based vesting. The three-year performance period for the PSUs is fiscal 2019 through fiscal 2021. On that date, the Compensation Committee granted a total of 21,825 shares of time–based restricted stock to our executive officers. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $36.08 per share. On January 2, 2019, the Compensation Committee also granted a total target number of 30,943 PSUs to our executive officers designated as “PSU – TSR”. These PSUs were weighted as approximately 40% of the overall 2019 executive long–term incentive compensation arrangement and will vest and be paid based upon the total shareholder return of our common stock over the three-year period of fiscal 2019–2021, relative to the total shareholder return of the companies in a specified peer group over that period. Participants will have the ability to earn between 50% of the target number of the PSUs – TSR for achieving threshold performance and 200% of the target number of the PSUs – TSR for achieving maximum performance. The grant date fair value of the PSUs – TSR was $40.72 per PSU and was calculated using the Monte Carlo approach. On January 2, 2019, the Compensation Committee also granted a total target number of 30,557 PSUs to our executive officers designated as “PSU – ROIC”. These PSUs were weighted as approximately 35% of the overall 2019 executive long–term incentive compensation arrangement and will vest and be paid based upon the achievement of pre–established goals related to our average return on invested capital over the three-year period of fiscal 2019–2021. Participants will have the ability to earn between 50% of the target number of the PSUs – ROIC for achieving threshold performance and 200% of the target number of the PSUs – ROIC for achieving maximum performance. The grant date fair value of the PSUs – ROIC was based on the closing sales price of our common stock on the grant date, which was $36.08 per share. On November 14, 2018, the Compensation Committee granted a total of 7,200 shares of time–based restricted stock to our non–executive employees. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $40.01 per share. On March 15, 2018, the Compensation Committee granted a total of 9,114 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 $46.05 per share. On January 3, 2018, the Compensation Committee determined the degree to which the long–term incentive compensation arrangement approved for the fiscal 2015–2017 performance period was attained, and the resulting payout level relative to the target amount for each of the metrics that were established by the Compensation Committee in 2015. As a result, the Compensation Committee determined that a total of 23,299 performance shares were earned by our executive officers, which performance shares vested on January 3, 2018. The vesting date fair value of the performance shares was based on the closing sales price of our common stock on the vesting date, which was $42.20 per share. All related stock–based compensation cost for these vested performance shares was expensed accordingly during the three-year performance period ended October 31, 2017. On January 3, 2018, the Compensation Committee also approved a long–term incentive compensation arrangement for our executive officers in the form of restricted shares and PSUs under the 2016 Equity Plan, which will be payable in shares of our common stock if earned and vested. The awards were 25% time–based vesting and 75% performance–based vesting. The three-year performance period for the PSUs is fiscal 2018 through fiscal 2020. On that date, the Compensation Committee granted a total of 14,810 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 $42.20 per share. On January 3, 2018, the Compensation Committee also granted a total target number of 21,891 PSUs to our executive officers designated as “PSU – TSR”. These PSUs were weighted as approximately 40% of the overall 2018 executive long–term incentive compensation arrangement and will vest and be paid based upon the total shareholder return of our common stock over the three-year period of fiscal 2018–2020, relative to the total shareholder return of the companies in a specified peer group over that period. Participants will have the ability to earn between 50% of the target number of the PSUs – TSR for achieving threshold performance and 200% of the target number of the PSUs – TSR for achieving maximum performance. The grant date fair value of the PSUs – TSR was $45.68 per PSU and was calculated using the Monte Carlo approach. On January 3, 2018, the Compensation Committee also granted a total target number of 20,734 PSUs to our executive officers designated as “PSU – ROIC”. These PSUs were weighted as approximately 35% of the overall 2018 executive long–term incentive compensation arrangement and will vest and be paid based upon the achievement of pre–established goals related to our average return on invested capital over the three-year period of fiscal 2018–2020. Participants will have the ability to earn between 50% of the target number of the PSUs – ROIC for achieving threshold performance and 200% of the target number of the PSUs – ROIC for achieving maximum performance. The grant date fair value of the PSUs – ROIC was based on the closing sales price of our common stock on the grant date, which was $42.20 per share. On November 15, 2017, the Compensation Committee granted a total of 2,364 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 $42.30 per share. A reconciliation of our restricted stock, performance share and PSU activity and related information is as follows: Weighted Average Grant Number of Shares Date Fair Value Unvested at October 31, 2019 200,482 $ 39.62 Shares or units granted 102,761 37.54 Shares or units vested (47,750) 38.35 Shares or units cancelled (10,164) 40.88 Shares withheld (13,369) 37.38 Unvested at October 31, 2020 231,960 $ 39.03 During fiscal 2020, 2019, and 2018, we recorded approximately $2.1 million, $2.7 million, and $2.5 million, respectively, of stock–based compensation expense related to grants under the 2008 Equity Plan and the 2016 Equity Plan. As of October 31, 2020, there was an estimated $2.8 million of total unrecognized stock–based compensation cost that we expect to recognize by the end of the first quarter of fiscal 2023. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 10. RELATED PARTY TRANSACTIONS As of October 31, 2020, we owned approximately 35% of the outstanding shares of a Taiwanese–based contract manufacturer, Hurco Automation, Ltd. (“HAL”). HAL’s scope of activities includes the design, manufacture, sales, and distribution of industrial automation products, software systems, and related components, including control systems and components produced under contract for sale exclusively to us. We are accounting for this investment using the equity method. The investment of $4.4 million and $4.2 million at October 31, 2020 and 2019, respectively, is included in Investments and other assets, net on the Consolidated Balance Sheets. Purchases of controls from HAL amounted to $6.2 million, $8.5 million, and $11.3 million in fiscal 2020, 2019 and 2018, respectively. Sales of control component parts to HAL were $265,000, $198,000 and $197,000 for the fiscal years ended October 31, 2020, 2019, and 2018, respectively. Trade payables to HAL were $1.3 million and $938,000 at October 31, 2020 and 2019, respectively. Trade receivables from HAL were $25,000 and $22,000 at October 31, 2020 and 2019, respectively. Summary unaudited financial information for HAL’s operations and financial condition is as follows (in thousands): 2020 2019 2018 Net Sales $ 10,096 $ 15,957 $ 17,841 Gross Profit 1,418 2,322 2,944 Operating Income 160 992 1,534 Net Income 265 1,490 1,845 Current Assets $ 12,436 $ 12,019 $ 12,870 Non–current Assets 6,152 5,560 4,579 Current Liabilities 3,708 3,674 4,666 |
CONTINGENCIES AND LITIGATION
CONTINGENCIES AND LITIGATION | 12 Months Ended |
Oct. 31, 2020 | |
CONTINGENCIES AND LITIGATION | |
CONTINGENCIES AND LITIGATION | 11. CONTINGENCIES AND LITIGATION From time to time, we are involved in various claims and lawsuits arising in the normal course of business. Pursuant to applicable accounting rules, we accrue the minimum liability for each known claim when the estimated outcome is a range of possible loss and no one amount within that range is more likely than another. We maintain insurance policies for such matters, and we record insurance recoveries when we determine such recovery to be probable. We do not expect any of these claims, individually or in the aggregate, to have a material adverse effect on our consolidated financial position or results of operations. We believe that the ultimate resolution of claims for any losses will not exceed our insurance policy coverages. |
GUARANTEES AND PRODUCT WARRANTI
GUARANTEES AND PRODUCT WARRANTIES | 12 Months Ended |
Oct. 31, 2020 | |
GUARANTEES AND PRODUCT WARRANTIES | |
GUARANTEES AND PRODUCT WARRANTIES | 12. GUARANTEES AND PRODUCT WARRANTIES From time to time, our subsidiaries guarantee third party payment obligations in connection with the sale of machines to customers that use financing. We follow FASB guidance for accounting for guarantees (codified in ASC 460). As of October 31, 2020, we had 14 outstanding third party payment guarantees totaling approximately $0.4 million. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer assumes the risk of ownership. The customer does not obtain title, however, until it has paid for the machine. A retention of title clause allows us to recover the machine if the customer defaults on the financing. We accrue liabilities under these guarantees at fair value, which amounts are insignificant. We provide warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year for machines and shorter periods for service parts. We recognize a reserve with respect to this obligation at the time of product sale, with subsequent warranty claims recorded against the reserve. The amount of the warranty reserve is determined based on historical trend experience and any known warranty issues that could cause future warranty costs to differ from historical experience. A reconciliation of the changes in our warranty reserve for each of the last three fiscal years is as follows (in thousands): 2020 2019 2018 Balance, beginning of year $ 1,760 $ 2,497 $ 1,772 Provision for warranties during the year 2,075 2,246 4,121 Charges to the accrual (2,669) (2,991) (3,326) Impact of foreign currency translation 34 8 (70) Balance, end of year $ 1,200 $ 1,760 $ 2,497 The decreases in our warranty reserve from fiscal 2019 to fiscal 2020 and from fiscal 2018 to fiscal 2019 were primarily due to a decrease in the number of machines under warranty resulting from decreased sales volume. |
LEASES
LEASES | 12 Months Ended |
Oct. 31, 2020 | |
LEASES | |
LEASES | 13. LEASES We adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (“ASC 842”) on November 1, 2019, the start of our 2020 fiscal year, and utilized the transition method allowed. Accordingly, comparative period financial information was not adjusted for the effects of adopting ASC 842 and no cumulative-effect adjustment was required to the opening balance of retained earnings on the adoption date. Upon adoption of ASC 842, we utilized the following elections and practical expedients: ● We elected to combine non-lease components with lease components. ● If at the lease commencement date, a lease has a lease term of 12 months or less and does not include a purchase option that is reasonably certain to be exercised, we have elected not to apply ASC 842 recognition requirements. Nonetheless, we intend to include leases of less than 12 months within the updated footnote disclosures, if material. ● We elected not to use the portfolio method if we enter into a large number of leases in the same month with the same terms and conditions. ● As we have applied the new transition method allowed per ASU 2018-11, we have elected not to reassess arrangements entered into prior to November 1, 2019 for whether an arrangement is or contains a lease, the lease classification applied or to separate initial direct costs. ● We elected not to use hindsight in determining the lease term for lease contracts that have historically been renewed or amended. Our lease portfolio includes leased production and assembly facilities, warehouses and distribution centers, office space, vehicles, material handling equipment utilized in our production and assembly facilities, laptops and other information technology equipment, as well as other miscellaneous leased equipment. Most of the leased production and assembly facilities have lease terms ranging from two We record a right-of-use asset and lease liability on our Consolidated Balance Sheets for all leases for which we are a lessee, in accordance with ASC 842. We are a lessor in a small number of lease agreements associated with our automation integration equipment for which the impact to our consolidated financial statements is immaterial. All our leases for which we are a lessee are classified as operating leases under the guidance in Topic 840. We recorded total operating lease expense for the fiscal years ended October 31, 2020, 2019, and 2018 of $5.0 million, $5.1 million, and $4.5 million, respectively, which is classified within Cost of sales and service and Selling, general and administrative expenses within the Consolidated Statements of Operations. Operating lease expense includes short-term leases and variable lease payments which are immaterial. There have been no cost to obtain leases capitalized on the Consolidated Balance Sheets as of October 31, 2020. The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for fiscal 2020 (in thousands): Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 4,892 Noncash information: Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,600 The following table summarizes the maturities of lease commitments as of October 31, 2019, prior to the adoption of the new lease guidance, as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019 (in thousands): 2020 $ 4,015 2021 3,149 2022 2,224 2023 1,482 2024 and thereafter 2,531 Total $ 13,401 The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of October 31, 2020 (in thousands): 2021 $ 4,286 2022 3,124 2023 1,913 2024 913 2025 666 2026 and thereafter 1,579 Total 12,481 Less: Imputed interest (360) Present value of operating lease liabilities $ 12,121 As of October 31, 2020, the weighted-average remaining term of our lease portfolio was approximately 4.4 years and the weighted-average discount rate was approximately 1.5%. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (Unaudited) | 12 Months Ended |
Oct. 31, 2020 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | 14. QUARTERLY FINANCIAL INFORMATION (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter 2020 (In thousands, except per share data) Sales and service fees $ 43,660 $ 37,126 $ 45,382 $ 44,459 Gross profit 9,159 6,709 11,069 9,520 Gross profit margin 21 % 18 % 24 % 21 % Selling, general and administrative expenses 10,846 10,599 9,627 10,344 Goodwill impairment — — — 4,903 Operating income (loss) (1,687) (3,890) 1,442 (5,727) Provision (benefit) for income taxes (597) (765) (937) (2,257) Net income (loss) (893) (3,927) 2,162 (3,589) Income (loss) per common share – basic $ (0.13) $ (0.58) $ 0.32 $ (0.54) Income (loss) per common share – diluted $ (0.13) $ (0.58) $ 0.32 $ (0.54) First Second Third Fourth Quarter Quarter Quarter Quarter 2019 (In thousands, except per share data) Sales and service fees $ 74,213 $ 70,674 $ 58,501 $ 59,989 Gross profit 22,142 21,637 17,189 16,240 Gross profit margin 30 % 31 % 29 % 27 % Selling, general and administrative expenses 13,914 14,111 12,592 14,051 Operating income 8,228 7,526 4,597 2,189 Provision (benefit) for income taxes 2,453 2,481 1,155 (260) Net income 6,654 5,252 3,491 2,098 Income per common share – basic $ 0.98 $ 0.77 $ 0.51 $ 0.31 Income per common share – diluted $ 0.97 $ 0.76 $ 0.51 $ 0.31 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Oct. 31, 2020 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 15. SEGMENT INFORMATION We operate in a single We principally sell our products through more than 200 independent agents and distributors throughout the Americas, Europe and Asia. Our line is the primary line for the majority of our distributors globally even though some may carry competitive products. We also have our own direct sales and service organizations in China, France, Germany, India, Italy, the Netherlands, Poland, Singapore, Taiwan, the United Kingdom, and certain areas of the United States, which are among the world's principal machine tool consuming countries. During fiscal 2020, no distributor accounted for more than 5% of our sales and service fees. In fiscal 2020, approximately 61% of our revenues were from customers located outside of the Americas, and no single end-user of our products accounted for more than 5% of our total sales and service fees. The following table sets forth the contribution of each of our product groups and services to our total sales and service fees during each of the past three fiscal years (in thousands): Net Sales and Service Fees by Product Category Year ended October 31, 2020 2019 2018 Computerized Machine Tools $ 139,577 $ 223,735 $ 261,710 Computer Control Systems and Software † 1,699 2,818 2,870 Service Parts 22,484 27,854 27,501 Service Fees 6,867 8,970 8,590 Total $ 170,627 $ 263,377 $ 300,671 † The following table sets forth revenues by geographic area, based on customer location, for each of the past three fiscal years (in thousands): Year Ended October 31, 2020 2019 2018 United States of America $ 64,500 $ 95,196 $ 87,231 Canada 1,621 2,580 2,915 Central & South Americas 1,543 1,409 2,194 Total Americas 67,664 99,185 92,340 Germany 24,993 52,002 62,346 United Kingdom 19,679 29,349 34,216 Italy 8,599 14,772 16,691 France 10,797 14,346 15,815 Other Europe 14,034 20,028 32,034 Total Europe 78,102 130,497 161,102 China 14,225 15,706 27,748 Other Asia Pacific 10,048 16,858 17,937 Total Asia Pacific 24,273 32,564 45,685 Other Foreign 588 1,131 1,544 Grand Total $ 170,627 $ 263,377 $ 300,671 Long–lived tangible assets, net by geographic area, were (in thousands): As of October 31, 2020 2019 2018 United States of America $ 6,826 $ 7,967 $ 8,375 Foreign countries 7,059 8,006 6,617 $ 13,885 $ 15,973 $ 14,992 Net assets by geographic area were (in thousands): As of October 31, 2020 2019 2018 Americas $ 83,214 $ 103,863 $ 96,348 Europe 77,840 71,411 74,558 Asia Pacific 70,094 64,971 51,947 $ 231,148 $ 240,245 $ 222,853 |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Oct. 31, 2020 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
NEW ACCOUNTING PRONOUNCEMENTS | 16. NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements: Between February 2016 and February 2019, FASB issued ASC 842, and various related updates, which establish a comprehensive new lease accounting model. ASC 842 clarifies the definition of a lease, requires a dual approach to lease classification similar to previous lease classifications, and requires lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. Under ASC 842, the income statement reflects lease expense for operating leases and amortization/interest expense for financing leases. ASC 842 was effective for our fiscal year 2020, including interim periods within the fiscal year, and requires modified retrospective application. We adopted ASC 842 on November 1, 2019 utilizing the transition method allowed per ASU 2018-11, and accordingly, comparative period financial information was not adjusted for the effects of adopting ASC 842 and no cumulative-effect adjustment was required to the opening balance of retained earnings on the adoption date. See Note 13 of these Notes to the Consolidated Financial Statements for further information. In August 2017, FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . In February 2018, FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income New Accounting Pronouncements: In June 2016, FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In December 2019, FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which allows for companies to remove certain exceptions and clarifies certain requirements regarding franchise taxes, goodwill, consolidated tax expenses, and annual effective tax rate calculations. This standard is effective for our fiscal year 2022, with early adoption permitted. We are assessing the impact this new accounting standard will have on our consolidated financial statements and related disclosures. In March 2020, FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. There have been no other significant changes in the Company’s critical accounting policies and estimates during the fiscal year ended October 31, 2020. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts and Reserves | 12 Months Ended |
Oct. 31, 2020 | |
Schedule II - Valuation and Qualifying Accounts and Reserves | |
Schedule II - Valuation and Qualifying Accounts and Reserves | Schedule II – Valuation and Qualifying Accounts and Reserves for the Years Ended October 31, 2020, 2019 and 2018 (Dollars in thousands) Charged to/ (Recovered Balance at from) Charged Balance Beginning Costs and to Other at End Description of Period Expenses Accounts Deductions of Period Allowance for doubtful accounts for the year ended: October 31, 2020 $ 891 $ 575 $ — $ 65 (1) $ 1,401 October 31, 2019 $ 1,027 $ (136) $ — $ — (1) $ 891 October 31, 2018 $ 639 $ 394 $ — $ 6 (1) $ 1,027 Income tax valuation allowance for the year ended: October 31, 2020 $ 2,227 $ 50 $ — $ 113 $ 2,164 October 31, 2019 $ 2,106 $ 458 $ — $ 337 $ 2,227 October 31, 2018 $ 2,282 $ 253 $ — $ 429 $ 2,106 (1) Receivable write–offs . All other financial statement schedules are omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Consolidation | Consolidation |
Reclassifications | Reclassifications. |
Statements of Cash Flows | Statements of Cash Flows |
Translation of Foreign Currencies | Translation of Foreign Currencies |
Hedging | Hedging. We operate on a global basis and are exposed to the risk that our financial condition, results of operations, and cash flows could be adversely affected by changes in foreign currency exchange rates. To reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, and the gross profit and net earnings of certain of our foreign subsidiaries, we enter into derivative financial instruments in the form of foreign exchange forward contracts with a major financial institution. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Indian Rupee, Singapore Dollars, Chinese Yuan, Polish Zloty, and New Taiwan Dollars. We account for derivative instruments as either assets or liabilities and carry them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments designated as a fair value hedge, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributed to the risk being hedged. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of Accumulated other comprehensive loss in shareholders’ equity and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion of the gain or loss is reported in earnings immediately. For derivative instruments that are not designated as accounting hedges under the Derivatives and Hedging Topic of the Financial Accounting Standards Board (the “FASB”), changes in fair value are recognized in earnings in the period of change. We do not hold or issue derivative financial instruments for speculative trading purposes. We only enter into derivatives with one counterparty, which is among one of the largest U.S. banks (ranked by assets), in order to minimize credit risk and, to date, that counterparty has not failed to meet its financial obligations under such contracts. Derivatives Designated as Hedging Instruments We enter into foreign currency forward exchange contracts periodically to hedge certain forecasted inter–company sales and purchases denominated in foreign currencies (the Pound Sterling, Euro, and New Taiwan Dollar). The purpose of these instruments is to mitigate the risk that the U.S. Dollar net cash inflows and outflows resulting from sales and purchases denominated in foreign currencies will be adversely affected by changes in exchange rates. These forward contracts have been designated as cash flow hedge instruments, and are recorded in the Consolidated Balance Sheets at fair value in Derivative assets and Derivative liabilities. The effective portion of the gains and losses resulting from the changes in the fair value of these hedge contracts are deferred in Accumulated other comprehensive loss and recognized as an adjustment to Cost of sales and service in the period that the corresponding inventory sold that is the subject of the related hedge contract is recognized, thereby providing an offsetting economic impact against the corresponding change in the U.S. Dollar value of the inter–company sale or purchase being hedged. The ineffective portion of gains and losses resulting from the changes in the fair value of these hedge contracts is reported in Other expense, net immediately. We perform quarterly assessments of hedge effectiveness by verifying and documenting the critical terms of the hedge instrument and determining that forecasted transactions have not changed significantly. We also assess on a quarterly basis whether there have been adverse developments regarding the risk of a counterparty default. We had forward contracts outstanding as of October 31, 2020, in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from November 2020 through October 2021. The contract amount at forward rates in U.S. Dollars at October 31, 2020 for Euros and Pounds Sterling was $9.0 million and $3.1 million, respectively. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $13.9 million at October 31, 2020. At October 31, 2020, we had approximately $395,000 of gains, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Of this amount, $262,000 represented unrealized gains, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred gains will be recorded as an adjustment to Cost of sales and service in periods through October 2021, in which the corresponding inventory that is the subject of the related hedge contract is sold, as described above. We are exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we entered into a forward contract with a notional amount of €3.0 million in November 2019. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under FASB guidance related to the accounting for derivative instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment, net of tax, in Accumulated other comprehensive loss in the same manner as the underlying hedged net assets. This forward contract matured in November 2020, and we entered into a new forward contract for the same notional amount that is set to mature in November 2021. As of October 31, 2020, we had a realized gain of $947,000 and an unrealized loss of $78,000, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss, related to these forward contracts. Derivatives Not Designated as Hedging Instruments We enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on inter-company receivables, 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 as Other expense, net in the Consolidated Statements of Operations consistent with the transaction gain or loss on the related inter-company receivables, payables and loans denominated in foreign currencies. We had forward contracts outstanding as of October 31, 2020, in Euros, Pound Sterling, and New Taiwan Dollars with set maturity dates ranging from November 2020 through October 2021. The contract amounts at forward rates in U.S. Dollars at October 31, 2020 for Euros and Pounds Sterling totaled $18.0 million. The contract amount at forward rates in U.S. Dollars for New Taiwan Dollars was $24.5 million at October 31, 2020. Fair Value of Derivative Instruments We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Consolidated Balance Sheets. As of October 31, 2020 and October 31, 2019, all derivative instruments were recorded at fair value on the balance sheets as follows (in thousands): 2020 2019 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 495 Derivative assets $ 751 Foreign exchange forward contracts Derivative liabilities $ 279 Derivative liabilities $ 99 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 473 Derivative assets $ 640 Foreign exchange forward contracts Derivative liabilities $ 593 Derivative liabilities $ 289 Effect of Derivative Instruments on the Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity, and Statements of Operations Derivative instruments had the following effects on our Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity, and Statements of Operations, net of tax, during the fiscal years ended October 31, 2020, 2019, and 2018 (in thousands): Location of Amount of Gain (Loss) Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified Reclassified from Other Comprehensive From Other Other Comprehensive Income (Loss) Comprehensive Income (Loss) Derivatives 2020 2019 2018 Income (Loss) 2020 2019 2018 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts Cost of sales – Intercompany sales/purchases $ 395 $ 615 $ 155 and service $ 421 $ 235 $ (1,355) –Net Investment $ (64) $ 128 $ 136 We did not recognize any gains or losses as a result of hedges deemed ineffective during fiscal years ended October 31, 2020, 2019, and 2018. We recognized the following gains and losses in our Consolidated Statements of Operations during the fiscal years ended October 31, 2020, 2019, and 2018 on derivative instruments not designated as hedging instruments (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Recognized in Operations Derivatives Recognized in Operations 2020 2019 2018 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (171) $ 514 $ (963) The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the fiscal years ended October 31, 2020 and 2019 (in thousands): Foreign Cash Currency Flow Translation Hedges Total Balance, October 31, 2018 $ (10,592) $ 729 $ (9,863) Other comprehensive income (loss) before reclassifications 550 615 1,165 Reclassifications — (235) (235) Balance, October 31, 2019 $ (10,042) $ 1,109 $ (8,933) Other comprehensive income (loss) before reclassifications 5,969 395 6,364 Reclassifications — (421) (421) Balance, October 31, 2020 $ (4,073) $ 1,083 $ (2,990) |
Inventories | Inventories |
Property and Equipment | Property and Equipment Number of Years Land Indefinite Building 40 Machines 7 – 10 Shop and office equipment 3 – 7 Building & leasehold improvements 3 – 40 Total depreciation and amortization expense recognized for property and equipment was $2.7 million for fiscal 2020, $2.6 million for fiscal 2019, and $2.5 million for fiscal 2018. |
Revenue Recognition | Revenue Recognition. We recognize revenues from the sale of machine tools, components and accessories and services, and reflect the consideration to which we expect to be entitled. We record revenues based on a five-step model in accordance with FASB guidance codified in Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). In accordance with ASC 606, we have defined contracts as agreements with our customers and distributors in the form of purchase orders, packing or shipping documents, invoices, and, periodically, verbal requests for components and accessories. For each contract, we identify our performance obligations, which is delivering goods or services, determine the transaction price, allocate the contract transaction price to each of the performance obligations (when applicable), and recognize the revenue when (or as) the performance obligation to the customer is fulfilled. A good or service is transferred when the customer obtains control of that good or service. Our computerized machine tools are general purpose computer-controlled machine tools that are typically used in stand–alone operations. Prior to shipment, we test each machine to ensure the machine’s compliance with standard operating specifications. We deem that the customer obtains control upon delivery of the product and that obtaining control is not contingent upon contractual customer acceptance. Therefore, we recognize revenue from sales of our machine tool systems upon delivery of the product to the customer or distributor, which is normally at the time of shipment. Depending upon geographic location, after shipment, a machine may be installed at the customer’s facilities by a distributor, independent contractor, or by one of our service technicians. In most instances where a machine is sold through a distributor, we have no installation involvement. If sales are direct or through sales agents, we will typically complete the machine installation, which consists of the reassembly of certain parts that were removed for shipping and the re-testing of the machine to ensure that it is performing within the standard specifications. We consider the machine installation process for our three-axis machines to be inconsequential and perfunctory. For our five-axis machines that we install, we estimate the fair value of the installation performance obligation and 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 perfunctory within the context of the contract, as the value of these services typically does not rise to a material level as a component of the total contract value. Service fees from maintenance contracts are deferred and recognized in earnings on a prorata basis over the term of the contract and are generally sold on a stand-alone basis. Customer discounts and estimated product returns are considered variable consideration and are recorded as a reduction of revenue in the same period that the related sales are recorded. We have reviewed the overall sales transactions for variable consideration and have determined that these amounts are not significant. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts |
Product Warranty | Product Warranty |
Research and Development Costs | Research and Development Costs. |
Software Development Costs | Software Development Costs. Estimated amortization expense for the remaining unamortized software development costs for the fiscal years ending October 31, is as follows (in thousands): Fiscal Year Amortization Expense 2021 $ 1,369 2022 1,883 2023 1,742 2024 1,503 2025 and thereafter 1,343 |
Goodwill and Intangible Assets | Goodwill and Intangible Assets. We have a total of $4.9 million of goodwill for our single reporting unit, arising from the acquisitions of ProCobots, LLC (“ProCobots”) ($2.5 million) in 2019, LCM Precision Technology S.r.l. (“LCM”) ($2.2 million) in 2013, and our wholly-owned distributor located in Michigan ($0.2 million) in 2008. The adverse change in the business climate resulting from the COVID-19 pandemic created triggering events during the second quarter of fiscal 2020, which warranted our review of these assets for potential impairment. With the assistance of a third-party expert, we developed a discounted cash flow model, which included projected growth rates and an appropriate market-participant discount rate, to compute the fair value of the reporting unit as of April 30, 2020. In addition, the fair value determined was also compared to the value obtained using a market approach from guideline public company multiples. The computed fair value of the reporting unit was in excess of our book value of equity as of April 30, 2020, and, therefore, we determined that goodwill and indefinite lived assets were not impaired at that time. Due to the prolonged ongoing uncertainty in the global markets as a result of the COVID-19 pandemic and the net loss for fiscal 2020, we believed there was a risk that the total cash flow projections of this reporting unit could fall short of its previous projections, As such, we reperformed the goodwill impairment test as of October 31, 2020 using a similar discounted cash flow model. As a result of the net loss for fiscal 2020 and the delayed timing of the recovery period, the total cash flow projected at October 31, 2020 fell short of those projected at April 30, 2020, causing the fair value of the reporting unit to fall below our book value of equity as of October 31, 2020, thus, resulting in a full impairment loss of $4.9 million. The changes in the carrying amounts of goodwill for the fiscal year ended October 31, 2020 were as follows (in thousands): Balance as of October 31, 2019 $ 5,847 Changes in goodwill acquired (972) Goodwill impairment (4,903) Impact of foreign currency translation 28 Balance as of October 31, 2020 $ 0 For indefinite-lived intangible assets, if the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess. Intangible assets that are determined to have a finite life are amortized over their estimated useful lives and are also subject to review for impairment, if indicators of impairment are identified. There were no impairments recognized with respect to the carrying value of intangible assets for the years ended October 31, 2020, 2019, or 2018. As of October 31, 2020, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 765 (181) 584 Customer relationships 15 years 374 (199) 175 Technology 13 years 713 (402) 311 Noncompete 5 years 580 (145) 435 Patents 6 years 2,972 (2,837) 135 Other 8 years 397 (368) 29 Total $ 5,978 $ (4,132) $ 1,846 As of October 31, 2019, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 60 $ — $ 60 Tradenames and trademarks 13 years 408 (114) 294 Customer relationships 15 years 372 (173) 199 Technology 13 years 683 (333) 350 Patents 6 years 2,972 (2,813) 159 Other 8 years 375 (341) 34 Total $ 4,870 $ (3,774) $ 1,096 Intangible asset amortization expense was $358,000, $117,000, and $107,000 for fiscal 2020, 2019, and 2018, respectively. Annual intangible asset amortization expense is estimated to be $280,000 per year fiscal years 2025 |
Impairment of Long-Lived Assets | Impairment of Long–Lived Assets. Due to the prolonged ongoing uncertainty in the global markets as a result of the COVID-19 pandemic and the net loss for fiscal 2020, we believed there was a risk that the total cash flow projections could fall short of its previous projections, As such, we reevaluated the cash flows during the remaining useful life of the primary asset as of October 31, 2020. The result indicated that our undiscounted cash flow continued to be in excess of the book value of our single asset group, and therefore, there was no impairment indications for our long-lived assets for the period ended October 31, 2020. Thus, there was no impairment recognized with respect to the carrying values of long-lived assets for the years ended October 31, 2020, 2019, or 2018. |
Earnings Per Share | Earnings Per Share. The following table presents a reconciliation of our basic and diluted earnings per share computation: Fiscal Year Ended October 31, 2020 2019 2018 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income (loss) $ (6,247) $ (6,247) $ 17,495 $ 17,495 $ 21,490 $ 21,490 Undistributed earnings (loss) allocated to participating shares 66 66 (147) (147) (132) (132) Net income (loss) applicable to common shareholders $ (6,181) $ (6,181) $ 17,348 $ 17,348 $ 21,358 $ 21,358 Weighted average shares outstanding 6,670 6,670 6,759 6,759 6,700 6,700 Stock options and contingently issuable securities — — — 56 — 71 6,670 6,670 6,759 6,815 6,700 6,771 Income (loss) per share $ (0.93) $ (0.93) $ 2.57 $ 2.55 $ 3.19 $ 3.15 |
Income Taxes | Income Taxes – The determination of our provision for income taxes requires judgment, the use of estimates, and the interpretation and application of complex federal, state and foreign tax laws. Our provision for income taxes reflects a combination of income earned and taxed at the federal and state level in the U.S., as well as in various foreign jurisdictions. In addition to the risks to the effective tax rate described above, the future effective tax rate reflected in forward–looking statements is based on currently effective tax laws. Significant changes in those laws could materially affect these estimates. We operate in multiple jurisdictions through wholly-owned subsidiaries, and our global structure is complex. The estimates of our uncertain tax positions involve judgments and assessment of the potential tax implications. We recognize uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Our tax positions are subject to audit by taxing authorities across multiple global jurisdictions, and the resolution of such audits may span multiple years. Tax law is complex and often subject to varied interpretations. Accordingly, the ultimate outcome with respect to taxes we may owe may differ from the amounts recognized. |
Stock Compensation | Stock Compensation. |
Estimates | Estimates. assumptions associated with goodwill, intangible and long–lived asset impairment tests, useful lives for depreciation and amortization, warranty programs, stock compensation, income taxes and deferred tax valuation allowances, and contingencies. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Fair Value of Derivative Instruments | 2020 2019 Balance Sheet Fair Balance Sheet Fair Derivatives Location Value Location Value Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 495 Derivative assets $ 751 Foreign exchange forward contracts Derivative liabilities $ 279 Derivative liabilities $ 99 Not Designated as Hedging Instruments: Foreign exchange forward contracts Derivative assets $ 473 Derivative assets $ 640 Foreign exchange forward contracts Derivative liabilities $ 593 Derivative liabilities $ 289 |
Schedule of Effect of Derivative Instruments on the Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Operations | Derivative instruments had the following effects on our Consolidated Balance Sheets, Statements of Changes in Shareholders’ Equity, and Statements of Operations, net of tax, during the fiscal years ended October 31, 2020, 2019, and 2018 (in thousands): Location of Amount of Gain (Loss) Gain (Loss) Amount of Gain (Loss) Recognized in Reclassified Reclassified from Other Comprehensive From Other Other Comprehensive Income (Loss) Comprehensive Income (Loss) Derivatives 2020 2019 2018 Income (Loss) 2020 2019 2018 Designated as Hedging Instruments: (Effective Portion) Foreign exchange forward contracts Cost of sales – Intercompany sales/purchases $ 395 $ 615 $ 155 and service $ 421 $ 235 $ (1,355) –Net Investment $ (64) $ 128 $ 136 |
Schedule of derivative instruments not designated as hedging instruments | We recognized the following gains and losses in our Consolidated Statements of Operations during the fiscal years ended October 31, 2020, 2019, and 2018 on derivative instruments not designated as hedging instruments (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Recognized in Operations Derivatives Recognized in Operations 2020 2019 2018 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (171) $ 514 $ (963) |
Schedule of Accumulated Other Comprehensive Loss | Amount of Gain (Loss) Location of Gain (Loss) Recognized in Operations Derivatives Recognized in Operations 2020 2019 2018 Not Designated as Hedging Instruments: Foreign exchange forward contracts Other expense, net $ (171) $ 514 $ (963) |
Schedule of Property and Equipment Estimated Useful Lives | Number of Years Land Indefinite Building 40 Machines 7 – 10 Shop and office equipment 3 – 7 Building & leasehold improvements 3 – 40 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for the remaining unamortized software development costs for the fiscal years ending October 31, is as follows (in thousands): Fiscal Year Amortization Expense 2021 $ 1,369 2022 1,883 2023 1,742 2024 1,503 2025 and thereafter 1,343 |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amounts of goodwill for the fiscal year ended October 31, 2020 were as follows (in thousands): Balance as of October 31, 2019 $ 5,847 Changes in goodwill acquired (972) Goodwill impairment (4,903) Impact of foreign currency translation 28 Balance as of October 31, 2020 $ 0 |
Schedule of Intangible Assets | As of October 31, 2020, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 177 $ — $ 177 Tradenames and trademarks 14 years 765 (181) 584 Customer relationships 15 years 374 (199) 175 Technology 13 years 713 (402) 311 Noncompete 5 years 580 (145) 435 Patents 6 years 2,972 (2,837) 135 Other 8 years 397 (368) 29 Total $ 5,978 $ (4,132) $ 1,846 As of October 31, 2019, the balances of intangible assets, other than goodwill, were as follows (in thousands): Weighted Average Gross Amortization Intangible Accumulated Net Intangible Period Assets Amortization Assets Tradenames and trademarks indefinite $ 60 $ — $ 60 Tradenames and trademarks 13 years 408 (114) 294 Customer relationships 15 years 372 (173) 199 Technology 13 years 683 (333) 350 Patents 6 years 2,972 (2,813) 159 Other 8 years 375 (341) 34 Total $ 4,870 $ (3,774) $ 1,096 |
Schedule of computation of basic and diluted net income (loss) per share | The following table presents a reconciliation of our basic and diluted earnings per share computation: Fiscal Year Ended October 31, 2020 2019 2018 (in thousands, except per share amounts) Basic Diluted Basic Diluted Basic Diluted Net income (loss) $ (6,247) $ (6,247) $ 17,495 $ 17,495 $ 21,490 $ 21,490 Undistributed earnings (loss) allocated to participating shares 66 66 (147) (147) (132) (132) Net income (loss) applicable to common shareholders $ (6,181) $ (6,181) $ 17,348 $ 17,348 $ 21,358 $ 21,358 Weighted average shares outstanding 6,670 6,670 6,759 6,759 6,700 6,700 Stock options and contingently issuable securities — — — 56 — 71 6,670 6,670 6,759 6,815 6,700 6,771 Income (loss) per share $ (0.93) $ (0.93) $ 2.57 $ 2.55 $ 3.19 $ 3.15 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
INVENTORIES | |
Schedule of inventories | Inventories as of October 31, 2020 and 2019 are summarized below (in thousands): 2020 2019 Purchased parts and sub–assemblies $ 30,390 $ 32,074 Work–in–process 12,635 20,901 Finished goods 106,839 95,876 $ 149,864 $ 148,851 |
ACQUISITION OF BUSINESS (Tables
ACQUISITION OF BUSINESS (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
ACQUISITION OF BUSINESS | |
Schedule of allocation of the opening balance sheet of ProCobots | The following table summarizes the allocation of the opening balance sheet of ProCobots as of August 5, 2019 (in thousands): Initial Allocation Adjustments Final Allocation Current assets $ 349 $ — $ 349 Property plant and equipment 452 — 452 Intangibles 148 972 1,120 Goodwill 3,500 (972) 2,528 Total assets 4,449 — 4,449 Current liabilities 96 — 96 Total liabilities 96 — 96 Total purchase price and cash expended $ 4,353 $ — $ 4,353 |
Schedule of intangible assets | Remaining Economic Useful Life Trademark/name $ 520 15 Noncompete 580 5 Other 20 1 1,120 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
FINANCIAL INSTRUMENTS | |
Schedule of fair value hierarchy for financial assets and liabilities measured at fair value | In accordance with this guidance, the following table represents the fair value hierarchy for our financial assets and liabilities measured at fair value as of October 31, 2020 and 2019 (in thousands): Assets Liabilities October 31, October 31, October 31, October 31, 2020 2019 2020 2019 Level 1 Deferred compensation $ 1,868 $ 1,991 $ — $ — Level 2 Derivatives $ 968 $ 1,391 $ 872 $ 388 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
INCOME TAXES | |
Components of Income (Loss) Before Taxes | The components of income (loss) before taxes are (in thousands): Year Ended October 31, 2020 2019 2018 Income (loss) before income taxes: Domestic $ (11,681) $ 9,793 $ 14,101 Foreign 878 13,531 18,395 $ (10,803) $ 23,324 $ 32,496 |
Schedule of Income Taxes Provision (Benefit) | The components of income tax provision (benefit) are (in thousands): Year Ended October 31, 2020 2019 2018 Current: U.S. taxes $ (4,932) $ 1,854 $ 6,333 Foreign taxes 923 3,715 5,203 (4,009) 5,569 11,536 Deferred: U.S. taxes (256) (31) (326) Foreign taxes (291) 291 (204) (547) 260 (530) $ (4,556) $ 5,829 $ 11,006 |
Schedule of Reconciliation of Statutory Tax Rate to Effective Tax Rate | A comparison of income tax expense at the U.S. statutory rate to the Company’s effective tax rate is as follows: Year Ended October 31, 2020 2019 2018 U.S. statutory rate 21 % 21 % 23 % Effect of tax rate of international jurisdictions different than U.S. statutory rates 3 % 4 % 2 % Valuation allowance 0 % 1 % 0 % State taxes 2 % 1 % 0 % Tax credits 1 % (2) % (1) % Effect of tax rate changes 0 % 0 % 4 % Transition tax 0 % (1) % 7 % US tax on distributed and undistributed earnings 0 % 3 % 0 % US benefit of foreign intangible income 0 % (3) % 0 % Impact of CARES act 16 % 0 % 0 % Other (1) % 1 % (1) % Effective tax rate 42 % 25 % 34 % |
Schedule of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets and liabilities at October 31, 2020 and 2019 were as follows (in thousands): October 31, 2020 2019 Deferred Tax Assets: Accrued inventory reserves $ 1,241 $ 1,224 Accrued warranty expenses 248 363 Compensation related expenses 1,849 2,723 Unrealized exchange gain/loss 14 143 Other accrued expenses 226 170 Net operating loss carryforwards 1,957 1,380 Other credit carryforwards 887 766 Operating lease liabilities 2,736 — Goodwill and intangibles 1,019 99 Other 183 194 10,360 7,062 Less: Valuation allowance – net operating loss and other credit carryforwards (2,164) (2,227) Deferred tax assets 8,196 4,835 Deferred Tax Liabilities: Net derivative instruments (305) (313) Property and equipment and capitalized software development costs (2,563) (2,632) Operating lease - right of use assets (2,666) — Other (314) (204) Net deferred tax assets $ 2,348 $ 1,686 |
Schedule of Income Tax Expense | A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding the related accrual for interest or penalties, is as follows (in thousands): 2020 2019 2018 Balance, beginning of year $ 193 $ 180 $ 1,101 Additions based on tax positions related to the current year 9 36 37 Additions (reductions) related to prior year tax positions (2) — (945) Reductions due to statute expiration (32) (23) (18) Other — — 5 Balance, end of year $ 168 $ 193 $ 180 |
Summary of open tax years by major jurisdiction | United States federal Fiscal 2017 through the current period Germany¹ Fiscal 2018 through the current period Taiwan Fiscal 2018 through the current period ¹ Includes federal as well as state, provincial or similar local jurisdictions, as applicable. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
EQUITY INCENTIVE PLAN | |
Schedule of stock option activity | A summary of the status of the options as of October 31, 2020, 2019 and 2018 and the related activity for the year is as follows: Shares Under Weighted Average Grant Option Date Fair Value Balance October 31, 2017 78,725 $ 20.97 Granted — — Cancelled — — Expired — — Exercised (41,680) $ 20.33 Balance October 31, 2018 37,045 $ 21.69 Granted — — Cancelled — — Expired — — Exercised — — Balance October 31, 2019 37,045 $ 21.69 Granted — — Cancelled — — Expired — — Exercised (3,738) 18.13 Balance October 31, 2020 33,307 $ 22.09 |
Schedule of Stock Options Outstanding and Exercisable | Weighted Average Weighted Average Range of Exercise Shares Under Exercise Price Per Remaining Contractual Prices Per Share Option Share Life in Years Outstanding and Exercisable 21.45 21,748 21.45 0.73 23.30 11,559 23.30 0.73 $ 21.45 - 23.30 33,307 $ 22.09 1.47 |
Schedule of Restricted Stock Activity | A reconciliation of our restricted stock, performance share and PSU activity and related information is as follows: Weighted Average Grant Number of Shares Date Fair Value Unvested at October 31, 2019 200,482 $ 39.62 Shares or units granted 102,761 37.54 Shares or units vested (47,750) 38.35 Shares or units cancelled (10,164) 40.88 Shares withheld (13,369) 37.38 Unvested at October 31, 2020 231,960 $ 39.03 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
RELATED PARTY TRANSACTIONS | |
Schedule of Financial Information | Summary unaudited financial information for HAL’s operations and financial condition is as follows (in thousands): 2020 2019 2018 Net Sales $ 10,096 $ 15,957 $ 17,841 Gross Profit 1,418 2,322 2,944 Operating Income 160 992 1,534 Net Income 265 1,490 1,845 Current Assets $ 12,436 $ 12,019 $ 12,870 Non–current Assets 6,152 5,560 4,579 Current Liabilities 3,708 3,674 4,666 |
GUARANTEES AND PRODUCT WARRAN_2
GUARANTEES AND PRODUCT WARRANTIES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
GUARANTEES AND PRODUCT WARRANTIES | |
Schedule of reconciliation of the changes in warranty reserve | 2020 2019 2018 Balance, beginning of year $ 1,760 $ 2,497 $ 1,772 Provision for warranties during the year 2,075 2,246 4,121 Charges to the accrual (2,669) (2,991) (3,326) Impact of foreign currency translation 34 8 (70) Balance, end of year $ 1,200 $ 1,760 $ 2,497 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
LEASES | |
Schedule of supplemental cash flow information and non-cash activity related to operating leases | The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for fiscal 2020 (in thousands): Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 4,892 Noncash information: Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,600 |
Schedule of maturities of lease commitments prior to the adoption of the new lease guidance | The following table summarizes the maturities of lease commitments as of October 31, 2019, prior to the adoption of the new lease guidance, as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019 (in thousands): 2020 $ 4,015 2021 3,149 2022 2,224 2023 1,482 2024 and thereafter 2,531 Total $ 13,401 |
Schedule of maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability | The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of October 31, 2020 (in thousands): 2021 $ 4,286 2022 3,124 2023 1,913 2024 913 2025 666 2026 and thereafter 1,579 Total 12,481 Less: Imputed interest (360) Present value of operating lease liabilities $ 12,121 |
QUARTERLY FINANCIAL INFORMATI_2
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | |
Schedule of Selected Quarterly Financial Information | First Second Third Fourth Quarter Quarter Quarter Quarter 2020 (In thousands, except per share data) Sales and service fees $ 43,660 $ 37,126 $ 45,382 $ 44,459 Gross profit 9,159 6,709 11,069 9,520 Gross profit margin 21 % 18 % 24 % 21 % Selling, general and administrative expenses 10,846 10,599 9,627 10,344 Goodwill impairment — — — 4,903 Operating income (loss) (1,687) (3,890) 1,442 (5,727) Provision (benefit) for income taxes (597) (765) (937) (2,257) Net income (loss) (893) (3,927) 2,162 (3,589) Income (loss) per common share – basic $ (0.13) $ (0.58) $ 0.32 $ (0.54) Income (loss) per common share – diluted $ (0.13) $ (0.58) $ 0.32 $ (0.54) First Second Third Fourth Quarter Quarter Quarter Quarter 2019 (In thousands, except per share data) Sales and service fees $ 74,213 $ 70,674 $ 58,501 $ 59,989 Gross profit 22,142 21,637 17,189 16,240 Gross profit margin 30 % 31 % 29 % 27 % Selling, general and administrative expenses 13,914 14,111 12,592 14,051 Operating income 8,228 7,526 4,597 2,189 Provision (benefit) for income taxes 2,453 2,481 1,155 (260) Net income 6,654 5,252 3,491 2,098 Income per common share – basic $ 0.98 $ 0.77 $ 0.51 $ 0.31 Income per common share – diluted $ 0.97 $ 0.76 $ 0.51 $ 0.31 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
SEGMENT INFORMATION | |
Schedule of Net Sales and Service Fees by Product Category | The following table sets forth the contribution of each of our product groups and services to our total sales and service fees during each of the past three fiscal years (in thousands): Net Sales and Service Fees by Product Category Year ended October 31, 2020 2019 2018 Computerized Machine Tools $ 139,577 $ 223,735 $ 261,710 Computer Control Systems and Software † 1,699 2,818 2,870 Service Parts 22,484 27,854 27,501 Service Fees 6,867 8,970 8,590 Total $ 170,627 $ 263,377 $ 300,671 † |
Schedule of Revenues by Geographic Area | The following table sets forth revenues by geographic area, based on customer location, for each of the past three fiscal years (in thousands): Year Ended October 31, 2020 2019 2018 United States of America $ 64,500 $ 95,196 $ 87,231 Canada 1,621 2,580 2,915 Central & South Americas 1,543 1,409 2,194 Total Americas 67,664 99,185 92,340 Germany 24,993 52,002 62,346 United Kingdom 19,679 29,349 34,216 Italy 8,599 14,772 16,691 France 10,797 14,346 15,815 Other Europe 14,034 20,028 32,034 Total Europe 78,102 130,497 161,102 China 14,225 15,706 27,748 Other Asia Pacific 10,048 16,858 17,937 Total Asia Pacific 24,273 32,564 45,685 Other Foreign 588 1,131 1,544 Grand Total $ 170,627 $ 263,377 $ 300,671 |
Schedule of Long-Lived Assets by Geographic Area | Long–lived tangible assets, net by geographic area, were (in thousands): As of October 31, 2020 2019 2018 United States of America $ 6,826 $ 7,967 $ 8,375 Foreign countries 7,059 8,006 6,617 $ 13,885 $ 15,973 $ 14,992 |
Schedule of Assets by Geographic Area | Net assets by geographic area were (in thousands): As of October 31, 2020 2019 2018 Americas $ 83,214 $ 103,863 $ 96,348 Europe 77,840 71,411 74,558 Asia Pacific 70,094 64,971 51,947 $ 231,148 $ 240,245 $ 222,853 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Oct. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 968 | $ 1,391 |
Derivative liabilities | 872 | 388 |
Foreign Exchange Forward | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 495 | 751 |
Derivative liabilities | 279 | 99 |
Foreign Exchange Forward | Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 473 | 640 |
Derivative liabilities | $ 593 | $ 289 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Effect of Derivative Instruments on Consolidated Balance Sheets, Statements of Changes in Shareholders' Equity and Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | $ 395 | $ 615 | $ 155 |
Designated as Hedging Instrument | Foreign Exchange Forward | Intercompany sales/purchases | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | 395 | 615 | 155 |
Designated as Hedging Instrument | Foreign Exchange Forward | Cost of sales and service | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) | 421 | 235 | (1,355) |
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) | (64) | 128 | 136 |
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 | $ (171) | $ 514 | $ (963) |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Changes in Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Derivative [Line Items] | |||
Beginning Balance | $ (8,933) | $ (9,863) | |
Other comprehensive income (loss) before reclassifications | 6,364 | 1,165 | |
Reclassifications | (421) | (235) | $ 1,355 |
Ending Balance | (2,990) | (8,933) | (9,863) |
Foreign Currency Translation | |||
Derivative [Line Items] | |||
Beginning Balance | (10,042) | (10,592) | |
Other comprehensive income (loss) before reclassifications | 5,969 | 550 | |
Ending Balance | (4,073) | (10,042) | (10,592) |
Cash Flow Hedging | |||
Derivative [Line Items] | |||
Beginning Balance | 1,109 | 729 | |
Other comprehensive income (loss) before reclassifications | 395 | 615 | |
Reclassifications | (421) | (235) | |
Ending Balance | $ 1,083 | $ 1,109 | $ 729 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Estimated Useful Lives (Details) | 12 Months Ended |
Oct. 31, 2020 | |
Land [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life, Indefinite | Indefinite |
Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
Machines [Member] | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Machines [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Shop and Office Equipment [Member] | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Shop and Office Equipment [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Building And Leasehold Improvements [Member] | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Building And Leasehold Improvements [Member] | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Estimated Amortization Expense (Details) $ in Thousands | Oct. 31, 2020USD ($) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
2021 | $ 1,369 |
2022 | 1,883 |
2023 | 1,742 |
2024 | 1,503 |
2025 | $ 1,343 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Carrying amount of goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Oct. 31, 2020 | Oct. 31, 2020 | |
Changes in the carrying amount of goodwill | ||
Beginning balance | $ 5,847 | |
Changes in goodwill acquired | (972) | |
Goodwill impairment | $ (4,903) | (4,903) |
Impact of foreign currency translation | 28 | |
Ending balance | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 5,978 | $ 4,870 |
Accumulated Amortization | (4,132) | (3,774) |
Net Intangible Assets | 1,846 | 1,096 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | 374 | 372 |
Accumulated Amortization | (199) | (173) |
Net Intangible Assets | $ 175 | $ 199 |
Weighted Average Amortization Period | 15 years | 15 years |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 713 | $ 683 |
Accumulated Amortization | (402) | (333) |
Net Intangible Assets | $ 311 | $ 350 |
Weighted Average Amortization Period | 13 years | 13 years |
Noncompete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 580 | |
Accumulated Amortization | (145) | |
Net Intangible Assets | $ 435 | |
Weighted Average Amortization Period | 5 years | |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 2,972 | $ 2,972 |
Accumulated Amortization | (2,837) | (2,813) |
Net Intangible Assets | $ 135 | $ 159 |
Weighted Average Amortization Period | 6 years | 6 years |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 397 | $ 375 |
Accumulated Amortization | (368) | (341) |
Net Intangible Assets | $ 29 | $ 34 |
Weighted Average Amortization Period | 8 years | 8 years |
Trademark/name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangible Assets | $ 765 | $ 408 |
Accumulated Amortization | (181) | (114) |
Net Intangible Assets | 584 | 294 |
Indefinite tradenames and trademarks | $ 177 | $ 60 |
Weighted Average Amortization Period | 14 years | 13 years |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Basic and Diluted Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||
Net income (loss) | $ (3,589) | $ 2,162 | $ (3,927) | $ (893) | $ 2,098 | $ 3,491 | $ 5,252 | $ 6,654 | $ (6,247) | $ 17,495 | $ 21,490 |
Undistributed (earnings) loss allocated to participating shares | 66 | (147) | (132) | ||||||||
Undistributed (earnings) loss allocated to participating shares | 66 | (147) | (132) | ||||||||
Net income applicable to common shareholders - Basic | (6,181) | 17,348 | 21,358 | ||||||||
Net income applicable to common shareholders - Diluted | $ (6,181) | $ 17,348 | $ 21,358 | ||||||||
Weighted average shares outstanding - Basic | 6,670 | 6,759 | 6,700 | ||||||||
Weighted average shares outstanding - Diluted | 6,670 | 6,815 | 6,771 | ||||||||
Stock options and contingently issuable securities | 56 | 71 | |||||||||
Income per share -Basic | $ (0.54) | $ 0.32 | $ (0.58) | $ (0.13) | $ 0.31 | $ 0.51 | $ 0.77 | $ 0.98 | $ (0.93) | $ 2.57 | $ 3.19 |
Income per share - Diluted | $ (0.54) | $ 0.32 | $ (0.58) | $ (0.13) | $ 0.31 | $ 0.51 | $ 0.76 | $ 0.97 | $ (0.93) | $ 2.55 | $ 3.15 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) € in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
Nov. 30, 2020 | Nov. 30, 2017 | Oct. 31, 2020USD ($) | Oct. 31, 2020USD ($) | Oct. 31, 2019USD ($) | Dec. 31, 2018 | Oct. 31, 2018USD ($) | Dec. 31, 2017 | Nov. 30, 2019EUR (€) | Aug. 05, 2019USD ($) | May 08, 2019USD ($) | Oct. 31, 2013USD ($) | Oct. 31, 2008USD ($) | |
Translation of Foreign Currencies | |||||||||||||
Cumulative foreign currency translation adjustments | $ 4,100,000 | $ 4,100,000 | |||||||||||
Derivative financial instruments: | |||||||||||||
Notional principal of foreign exchange contracts | 70,800,000 | 70,800,000 | $ 108,600,000 | ||||||||||
(Losses) gains, net of tax, related to cash flow hedges deferred in Accumulated Other Comprehensive Loss | 395,000 | 395,000 | |||||||||||
Unrealized gain (loss), net of tax, to be reclassified in next 12 months | 262,000 | 262,000 | |||||||||||
Property and Equipment | |||||||||||||
Depreciation and amortization expense | 2,700,000 | 2,600,000 | $ 2,500,000 | ||||||||||
Research and Development Costs | |||||||||||||
Research and development expenses | 3,500,000 | 4,400,000 | 4,700,000 | ||||||||||
Software Development Costs | |||||||||||||
Capitalized costs | 1,000,000 | 1,800,000 | 2,300,000 | ||||||||||
Accumulated amortization | 21,000,000 | 21,000,000 | 19,500,000 | ||||||||||
Capitalized Computer Software, Amortization | 1,500,000 | 1,000,000 | 1,100,000 | ||||||||||
Goodwill and Intangible Assets | |||||||||||||
Intangible assets amortization expense | 358,000 | 117,000 | $ 107,000 | ||||||||||
Expected future amortization expense, 2021 | 280,000 | 280,000 | |||||||||||
Expected future amortization expense, 2022 | 280,000 | 280,000 | |||||||||||
Expected future amortization expense, 2023 | 280,000 | 280,000 | |||||||||||
Expected future amortization expense, 2024 | 280,000 | 280,000 | |||||||||||
Expected future amortization expense, 2025 | 280,000 | 280,000 | |||||||||||
Goodwill | 0 | 0 | $ 5,847,000 | $ 2,500,000 | |||||||||
Goodwill impairment | 4,903,000 | $ 4,903,000 | |||||||||||
Income Tax | |||||||||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 21.00% | 21.00% | 21.00% | 23.00% | 34.00% | |||||||
Wholly Owned Distributor [Member] | MICHIGAN | |||||||||||||
Goodwill and Intangible Assets | |||||||||||||
Goodwill | $ 200,000 | ||||||||||||
LCM | |||||||||||||
Goodwill and Intangible Assets | |||||||||||||
Goodwill | $ 2,200,000 | ||||||||||||
ProCobots | |||||||||||||
Goodwill and Intangible Assets | |||||||||||||
Goodwill | 4,900,000 | $ 4,900,000 | $ 2,500,000 | $ 2,528,000 | |||||||||
Goodwill impairment | 2,500,000 | ||||||||||||
Forward Contracts | Designated as Hedging Instrument | |||||||||||||
Derivative financial instruments: | |||||||||||||
Notional principal of foreign exchange contracts | € | € 3 | ||||||||||||
Realized gain on foreign currency translation adjustments | 947,000 | ||||||||||||
Unrealized gain (loss), net of tax, recorded as cumulative translation adjustments in Accumulated Other Comprehensive Loss | 78,000 | $ 78,000 | |||||||||||
Derivative maturity date | November 2020 | ||||||||||||
Forward Contracts | Designated as Hedging Instrument | Subsequent Event [Member] | |||||||||||||
Derivative financial instruments: | |||||||||||||
Derivative maturity date | November 2021 | ||||||||||||
Euros | Designated as Hedging Instrument | |||||||||||||
Derivative financial instruments: | |||||||||||||
Notional principal of foreign exchange contracts | 9,000,000 | $ 9,000,000 | |||||||||||
Pounds Sterling | Designated as Hedging Instrument | |||||||||||||
Derivative financial instruments: | |||||||||||||
Notional principal of foreign exchange contracts | 3,100,000 | 3,100,000 | |||||||||||
New Taiwan Dollars | Designated as Hedging Instrument | |||||||||||||
Derivative financial instruments: | |||||||||||||
Notional principal of foreign exchange contracts | 13,900,000 | 13,900,000 | |||||||||||
New Taiwan Dollars | Not Designated as Hedging Instrument | |||||||||||||
Derivative financial instruments: | |||||||||||||
Notional principal of foreign exchange contracts | 24,500,000 | $ 24,500,000 | |||||||||||
Forward Contracts Denominated In Euros Pounds Sterling And New Taiwan [Member] | Designated as Hedging Instrument | |||||||||||||
Derivative financial instruments: | |||||||||||||
Derivative maturity date | November 2020 through October 2021 | ||||||||||||
Forward Contracts Denominated In Euros Pounds Sterling and South African Rand [Member] | Not Designated as Hedging Instrument | |||||||||||||
Derivative financial instruments: | |||||||||||||
Notional principal of foreign exchange contracts | $ 18,000,000 | $ 18,000,000 | |||||||||||
Derivative maturity date | November 2020 through October 2021 | ||||||||||||
Hurco Automation Ltd [Member] | |||||||||||||
Consolidation | |||||||||||||
Ownership interest | 35.00% | 35.00% | |||||||||||
Equity investment in affiliate | $ 4,400,000 | $ 4,400,000 | $ 4,200,000 |
BUSINESS OPERATIONS (Narrative)
BUSINESS OPERATIONS (Narrative) (Details) | 12 Months Ended |
Oct. 31, 2020entity | |
Minimum | |
Number of independent agents and distributors products are sold through | 200 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Oct. 31, 2019 |
INVENTORIES | ||
Purchased parts and sub-assemblies | $ 30,390 | $ 32,074 |
Work-in-process | 12,635 | 20,901 |
Finished goods | 106,839 | 95,876 |
Inventories | $ 149,864 | $ 148,851 |
INVENTORIES - Additional inform
INVENTORIES - Additional information (Details) - USD ($) $ in Millions | Oct. 31, 2020 | Oct. 31, 2019 |
INVENTORIES | ||
Finished goods inventory consigned to distributors and agents | $ 17.2 | $ 12 |
ACQUISITION OF BUSINESS (Detail
ACQUISITION OF BUSINESS (Details) - USD ($) $ in Thousands | Aug. 05, 2019 | Oct. 31, 2020 | Oct. 31, 2020 | Oct. 31, 2020 | Oct. 31, 2019 | May 08, 2019 |
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustments [Abstract] | ||||||
Goodwill | $ (972) | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||||||
Intangibles | $ 1,120 | $ 1,100 | 1,100 | $ 1,100 | ||
Goodwill | 0 | 0 | 0 | $ 5,847 | $ 2,500 | |
Goodwill impairment | 4,903 | 4,903 | ||||
ProCobots | ||||||
ACQUISITION OF BUSINESS | ||||||
Purchase Consideration | 4,400 | |||||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustments [Abstract] | ||||||
Current assets | 349 | |||||
Property plant and equipment | 452 | |||||
Intangibles | 148 | 972 | ||||
Goodwill | 3,500 | (972) | ||||
Total assets | 4,449 | |||||
Current liabilities | 96 | |||||
Total liabilities | 96 | |||||
Total purchase price and cash expended | 4,353 | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||||||
Current assets | 349 | |||||
Property plant and equipment | 452 | |||||
Intangibles | 1,120 | |||||
Goodwill | 2,528 | $ 4,900 | 4,900 | $ 4,900 | $ 2,500 | |
Total assets | 4,449 | |||||
Current liabilities | 96 | |||||
Total liabilities | 96 | |||||
Total purchase price and cash expended | $ 4,353 | |||||
Goodwill impairment | $ 2,500 |
ACQUISITION OF BUSINESS - Intan
ACQUISITION OF BUSINESS - Intangible Assets (Details) - USD ($) $ in Thousands | Aug. 05, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | May 08, 2019 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 1,120 | $ 1,100 | ||
Goodwill | 0 | $ 5,847 | $ 2,500 | |
Trademark/name | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 520 | |||
Remaining Economic Useful Life | 15 years | |||
Noncompete | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 580 | |||
Remaining Economic Useful Life | 5 years | |||
Other | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 20 | |||
Remaining Economic Useful Life | 1 year | |||
ProCobots | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 1,120 | |||
Goodwill | $ 2,528 | $ 4,900 | $ 2,500 |
CREDIT AGREEMENTS AND BORROWI_2
CREDIT AGREEMENTS AND BORROWINGS (Narrative) (Details) € in Millions, ¥ in Millions, $ in Millions, $ in Millions | Dec. 23, 2020USD ($) | Dec. 31, 2018USD ($) | Oct. 31, 2020USD ($) | Oct. 31, 2020TWD ($) | Oct. 31, 2020CNY (¥) | Oct. 31, 2020EUR (€) | Mar. 31, 2019TWD ($) | Mar. 31, 2019CNY (¥) |
Line Of Credit Agreement 2018 [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of credit, maximum borrowing capacity | $ 40 | |||||||
Line of credit, maximum borrowing capacity in alternative currencies | $ 20 | |||||||
Stated interest rate | 0.00% | 0.00% | 0.00% | 0.00% | ||||
Minimum working capital requirement | $ 125 | |||||||
Minimum tangible net worth requirement | $ 170 | |||||||
Line of Credit, interest rate description | Borrowings under the 2018 Credit Agreement bear interest at floating rates based on, at our option, either (i) a LIBOR–based rate, or other alternative currency–based rate approved by the lender, plus 1.25% per annum, or (ii) a base rate (which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) the one month LIBOR–based rate plus 1.00%), plus 0.00% per annum. Outstanding letters of credit will carry an annual rate of 1.25%. | |||||||
Allowable investments in subsidiaries | $ 10 | |||||||
Borrowings available under credit facility | 51.8 | |||||||
Line of credit, covenant, minimum threshold required before and after dividends are paid | 10 | |||||||
Line of Credit, covenant, maximum annual share repurchase | $ 10 | |||||||
Line of Credit Facility, Covenant Terms | The 2018 Credit Agreement contains customary affirmative and negative covenants and events of default, including covenants (1) restricting us from making certain investments, loans, advances and acquisitions (but permitting us to make investments in subsidiaries of up to $10.0 million); (2) restricting us from making certain payments, including (a) cash dividends, except that we may pay cash dividends as long as immediately before and after giving effect to such payment, the sum of the unused amount of the commitments under the 2018 Credit Agreement plus our cash on hand is not less than $10.0 million, and as long as we are not in default before and after giving effect to such dividend payments and (b) payments made to repurchase shares of our common stock, except that we may repurchase shares of our common stock as long as we are not in default before and after giving effect to such repurchases and the aggregate amount of payments made by us for all such repurchases during any fiscal year does not exceed $10.0 million; (3) requiring that we maintain a minimum working capital of $125.0 million; (4) requiring that we maintain a minimum tangible net worth of $170.0 million; and (5) providing that if the total amount of indebtedness outstanding owed by the Company and its Taiwanese and Chinese subsidiaries to the lender or its affiliates (the “Specified Outstanding Amount”) exceeds $25.0 million, then the Company will not permit the amount of unrestricted cash-on-hand of the Company and its subsidiaries to be less than the Specified Outstanding Amount. | |||||||
Hurco BV [Member] | Line Of Credit Agreement 2018 [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of credit, maximum borrowing capacity | $ 20 | |||||||
Line of Credit Facility, Description | On December 31, 2018, we and our subsidiary Hurco B.V. entered into a new credit agreement, which was amended by that certain First Amendment dated March 13, 2020 and that certain Second Amendment dated December 23, 2020 (as amended, the “2018 Credit Agreement”), with Bank of America, N.A., as the lender. The 2018 Credit Agreement provides for an unsecured revolving credit and letter of credit facility in a maximum aggregate amount of $40.0 million. The 2018 Credit Agreement provides that the maximum amount of outstanding letters of credit at any one time may not exceed $10.0 million, the maximum amount of outstanding loans made to our subsidiary Hurco B.V. at any one time may not exceed $20.0 million, and the maximum amount of all outstanding loans denominated in alternative currencies at any one time may not exceed $20.0 million. | |||||||
Germany [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of credit, maximum borrowing capacity | € | € 1.5 | |||||||
China, Yuan Renminbi | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of credit, maximum borrowing capacity | ¥ | ¥ 32.5 | |||||||
Repayments of Credit Facility | $ 1.4 | |||||||
Taiwan, New Dollars | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of credit, maximum borrowing capacity | $ 150 | |||||||
Federal funds | Line Of Credit Agreement 2018 [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Variable interest rate | 0.50% | |||||||
Base rate | Line Of Credit Agreement 2018 [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Variable interest rate | 1.00% | |||||||
Subsequent Event [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of Credit, total amount of indebtedness threshold | $ 25 | |||||||
Subsequent Event [Member] | Line Of Credit Agreement 2018 [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of credit, maturity date | Dec. 31, 2021 | |||||||
Subsequent Event [Member] | LIBOR | Line Of Credit Agreement 2018 [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Variable interest rate | 1.25% | |||||||
Letter of Credit [Member] | Subsequent Event [Member] | Line Of Credit Agreement 2018 [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Stated interest rate | 1.25% | |||||||
Taiwan credit facility [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of credit, maximum borrowing capacity | $ 150 | |||||||
China credit facility [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of credit, maximum borrowing capacity | ¥ | ¥ 32.5 |
FINANCIAL INSTRUMENTS - Fair va
FINANCIAL INSTRUMENTS - Fair value hierarchy (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Oct. 31, 2020 | Oct. 31, 2019 |
Fair Value, Inputs, Level 1 | ||
Assets | ||
Deferred Compensation | $ 1,868 | $ 1,991 |
Liabilities | ||
Deferred Compensation | 0 | |
Fair Value, Inputs, Level 2 | ||
Assets | ||
Derivatives | 968 | 1,391 |
Liabilities | ||
Derivatives | $ 872 | $ 388 |
FINANCIAL INSTRUMENTS - Additio
FINANCIAL INSTRUMENTS - Additional Information (Details) - USD ($) $ in Millions | Oct. 31, 2020 | Oct. 31, 2019 |
FINANCIAL INSTRUMENTS | ||
Notional amount of contracts | $ 70.8 | $ 108.6 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||
Nov. 30, 2017 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Dec. 31, 2018 | Oct. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2017 | |
Income Tax Contingency [Line Items] | |||||||||||||||
Income Tax Expense (Benefit) | $ (2,257,000) | $ (937,000) | $ (765,000) | $ (597,000) | $ (260,000) | $ 1,155,000 | $ 2,481,000 | $ 2,453,000 | $ (4,556,000) | $ 5,829,000 | $ 11,006,000 | ||||
Effective Income Tax Rate Reconciliation, Percent | 42.00% | 25.00% | 34.00% | ||||||||||||
Percentage of tax benefit recorded under Provisions of the CARES Act | 34.00% | ||||||||||||||
U.S. statutory rate | 35.00% | 21.00% | 21.00% | 21.00% | 23.00% | 34.00% | |||||||||
Unrecognized Tax Benefits | 168,000 | 193,000 | $ 168,000 | $ 193,000 | $ 180,000 | $ 1,101,000 | |||||||||
Valuation allowance | 2,164,000 | 2,227,000 | 2,164,000 | 2,227,000 | |||||||||||
Deferred Tax Assets, Operating Loss Carryforwards | 1,957,000 | $ 1,380,000 | 1,957,000 | $ 1,380,000 | |||||||||||
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | 6,800,000 | 6,800,000 | |||||||||||||
Tax credits subject to expiration | 900,000 | 900,000 | |||||||||||||
Unrecognized tax benefits, interest accrued | 36,000 | $ 36,000 | |||||||||||||
Unrecognized Tax Benefits Expiration Term | expire between August 2021 and August 2024 | ||||||||||||||
Deferred Tax Assets for Research and Development Tax Credits | 900,000 | $ 900,000 | |||||||||||||
Tax Credits Expiration Term | expire between years 2021 and 2030 | ||||||||||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 21.00% | 21.00% | 21.00% | 23.00% | 34.00% | |||||||||
Expirations Within Five Years [Member] | |||||||||||||||
Income Tax Contingency [Line Items] | |||||||||||||||
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | 5,100,000 | $ 5,100,000 | |||||||||||||
Expiration maximum term | 5 years | ||||||||||||||
Expirations After Six Years [Member] | |||||||||||||||
Income Tax Contingency [Line Items] | |||||||||||||||
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | $ 1,700,000 | $ 1,700,000 | |||||||||||||
Expiration minimum term | 5 years | ||||||||||||||
Expiration maximum term | 20 years |
INCOME TAXES (Schedule of Provi
INCOME TAXES (Schedule of Provision for Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Income (loss) before income taxes: | |||||||||||
Domestic | $ (11,681) | $ 9,793 | $ 14,101 | ||||||||
Foreign | 878 | 13,531 | 18,395 | ||||||||
Income (loss) before income taxes | (10,803) | 23,324 | 32,496 | ||||||||
Current: | |||||||||||
U.S. taxes | (4,932) | 1,854 | 6,333 | ||||||||
Foreign taxes | 923 | 3,715 | 5,203 | ||||||||
Current (benefit) provision for income taxes | (4,009) | 5,569 | 11,536 | ||||||||
Deferred: | |||||||||||
U.S. taxes | (256) | (31) | (326) | ||||||||
Foreign taxes | (291) | 291 | (204) | ||||||||
Deferred Income Tax Expense (Benefit), Total | (547) | 260 | (530) | ||||||||
Income Tax Expense (Benefit), Total | $ (2,257) | $ (937) | $ (765) | $ (597) | $ (260) | $ 1,155 | $ 2,481 | $ 2,453 | $ (4,556) | $ 5,829 | $ 11,006 |
INCOME TAXES (Schedule of Compa
INCOME TAXES (Schedule of Comparison of Income Tax Expense) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Nov. 30, 2017 | Oct. 31, 2020 | Oct. 31, 2019 | Dec. 31, 2018 | Oct. 31, 2018 | Dec. 31, 2017 | |
Income before income taxes: | ||||||
Domestic | $ (11,681) | $ 9,793 | $ 14,101 | |||
Foreign | 878 | 13,531 | 18,395 | |||
Earnings (Loss) before taxes on income | $ (10,803) | $ 23,324 | $ 32,496 | |||
Tax rates: | ||||||
U.S. statutory rate | 35.00% | 21.00% | 21.00% | 21.00% | 23.00% | 34.00% |
Effect of tax rate of international jurisdictions different than U.S. statutory rates | 3.00% | 4.00% | 2.00% | |||
Valuation allowance | 0.00% | 1.00% | 0.00% | |||
State taxes | 2.00% | 1.00% | 0.00% | |||
Tax Credits | 1.00% | (2.00%) | (1.00%) | |||
Effect of Tax Rate Changes | 0.00% | 0.00% | 4.00% | |||
Transition Tax | 0 | (0.01) | 0.07 | |||
US tax on distributed and undistributed earnings | 0.00% | 3.00% | 0.00% | |||
US benefit of foreign intangible income | 0.00% | (3.00%) | 0.00% | |||
Impact of CARES act | 16.00% | 0.00% | 0.00% | |||
Other | (1.00%) | 1.00% | (1.00%) | |||
Effective Income Tax Rate Reconciliation, Percent, Total | 42.00% | 25.00% | 34.00% |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Oct. 31, 2019 |
Deferred Tax Assets: | ||
Accrued inventory reserves | $ 1,241 | $ 1,224 |
Accrued warranty expenses | 248 | 363 |
Compensation related expenses | 1,849 | 2,723 |
Unrealized exchange gain/loss | 14 | 143 |
Other accrued expenses | 226 | 170 |
Net operating loss carryforwards | 1,957 | 1,380 |
Other credit carryforwards | 887 | 766 |
Operating lease liabilities | 2,736 | 0 |
Goodwill and intangibles | 1,019 | 99 |
Other | 183 | 194 |
Deferred tax assets, gross | 10,360 | 7,062 |
Less: Valuation allowance - net operating loss and other credit carryforwards | 2,164 | 2,227 |
Deferred tax assets | 8,196 | 4,835 |
Deferred Tax Liabilities: | ||
Net derivative instruments | (305) | (313) |
Property and equipment and capitalized software development costs | (2,563) | (2,632) |
Operating lease - right of use assets | (2,666) | 0 |
Other | (314) | (204) |
Net deferred tax assets | $ 2,348 | $ 1,686 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
INCOME TAXES | |||
Unrecognized Tax Benefits, Beginning Balance | $ 193 | $ 180 | $ 1,101 |
Additions based on tax positions related to the current year | 9 | 36 | 37 |
Additions (reductions) related to prior year tax positions | (2) | 0 | (945) |
Reductions due to statute expiration | (32) | (23) | (18) |
Other | 0 | 0 | 5 |
Unrecognized Tax Benefits, Ending Balance | $ 168 | $ 193 | $ 180 |
INCOME TAXES (Summary of Open T
INCOME TAXES (Summary of Open Tax Years) (Details) | 12 Months Ended | |
Oct. 31, 2020 | ||
United States federal [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2017 through the current period | |
Germany [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2018 through the current period | [1] |
Taiwan [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | Fiscal 2018 through the current period | |
[1] | Includes federal as well as state, provincial or similar local jurisdictions, as applicable. |
EMPLOYEE BENEFITS (Narrative) (
EMPLOYEE BENEFITS (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
EMPLOYEE BENEFITS | |||
Contributions to defined contribution plans | $ 1.3 | $ 1.4 | $ 1.2 |
STOCK-BASED COMPENSATION (Summa
STOCK-BASED COMPENSATION (Summary of Stock Option Activity and Related Information) (Details) - $ / shares | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Stock Options | |||
Outstanding at beginning of period | 37,045 | 37,045 | 78,725 |
Outstanding at end of period | 33,307 | 37,045 | 37,045 |
Employee Stock Option | |||
Stock Options | |||
Options granted | 0 | 0 | 0 |
Options cancelled | 0 | 0 | 0 |
Options Expired | 0 | 0 | 0 |
Options exercised | (3,738) | 0 | (41,680) |
Weighted Average Exercise Price | |||
Outstanding at beginning of period | $ 21.69 | $ 21.69 | $ 20.97 |
Options granted | 0 | 0 | 0 |
Options cancelled | 0 | 0 | 0 |
Options Expired | 0 | 0 | 0 |
Options exercised | 18.13 | 0 | 20.33 |
Outstanding at end of period | $ 22.09 | $ 21.69 | $ 21.69 |
STOCK-BASED COMPENSATION (Sched
STOCK-BASED COMPENSATION (Schedule of Options Outstanding and Exercisable) (Details) | 12 Months Ended |
Oct. 31, 2020shares | |
Outstanding and Exercisable | |
Shares Under Option | 33,307 |
Weighted Average Exercise Price Per Share | 22.09 |
Weighted Average Remaining Contractual Life in Years | 1 year 5 months 19 days |
$ 18.13 [Member] | |
Outstanding and Exercisable | |
Shares Under Option | 21,748 |
Weighted Average Exercise Price Per Share | 21.45 |
Weighted Average Remaining Contractual Life in Years | 8 months 23 days |
$ 21.45 [Member] | |
Outstanding and Exercisable | |
Shares Under Option | 11,559 |
Weighted Average Exercise Price Per Share | 23.30 |
Weighted Average Remaining Contractual Life in Years | 8 months 23 days |
$ 23.30 [Member] | |
Outstanding and Exercisable | |
Weighted Average Exercise Price Per Share | 23.30 |
STOCK-BASED COMPENSATION (Recon
STOCK-BASED COMPENSATION (Reconciliation of Restricted Stock Activity and Related Information) (Details) | 12 Months Ended |
Oct. 31, 2020$ / sharesshares | |
Number of Shares | |
Unvested at October 31, 2019 | shares | 200,482 |
Restricted stock granted | shares | 102,761 |
Shares or units vested | shares | (47,750) |
Shares or units cancelled | shares | (10,164) |
Shares or units withheld | shares | (13,369) |
Unvested at October 31, 2020 | shares | 231,960 |
Weighted Average Grant Date Fair Value | |
Unvested at October 31, 2019 | $ / shares | $ 39.62 |
Shares or units granted | $ / shares | 37.54 |
Shares or units vested | $ / shares | 38.35 |
Shares or units cancelled | $ / shares | 40.88 |
Shares or units withheld | $ / shares | 37.38 |
Unvested at October 31, 2020 | $ / shares | $ 39.03 |
STOCK-BASED COMPENSATION (Narra
STOCK-BASED COMPENSATION (Narrative) (Details) - USD ($) | Mar. 12, 2020 | Jan. 02, 2020 | Nov. 13, 2019 | Mar. 14, 2019 | Jan. 02, 2019 | Nov. 14, 2018 | Mar. 15, 2018 | Jan. 03, 2018 | Nov. 15, 2017 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | Oct. 31, 2017 | Mar. 10, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Total number of shares of common stock that may be issued as awards under 2016 Plan | 856,048 | |||||||||||||
Unrecognized Stock-based compensation expense | $ 2,800,000 | |||||||||||||
Restricted stock granted | 102,761 | |||||||||||||
Grant date fair value per share | $ 37.54 | |||||||||||||
Grant date fair value of restricted stock | $ 39.03 | $ 39.62 | ||||||||||||
Total intrinsic value of stock options exercised | $ 44,000 | $ 0 | $ 847,000 | |||||||||||
Total intrinsic value of outstanding stock options vested and expected to vest and intrinsic value of options outstanding and exercisable | $ 258,000 | |||||||||||||
2016 Equity Plan | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Expiration period of options granted | 10 years | |||||||||||||
Stock-based compensation expense | $ 2,100,000 | $ 2,700,000 | $ 2,500,000 | |||||||||||
2008 Equity Plan [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 386,048 | |||||||||||||
Time Based | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted stock granted | 17,780 | |||||||||||||
Grant date fair value per share | $ 23.62 | |||||||||||||
Vesting period | 1 year | |||||||||||||
Percentage of incentive compensation arrangement | 25.00% | 25.00% | 25.00% | |||||||||||
Time Based | 2016 Equity Plan | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted stock granted | 20,837 | 8,052 | 11,824 | 21,825 | 7,200 | 9,114 | 14,810 | 2,364 | ||||||
Grant date fair value per share | $ 37.79 | $ 35.75 | $ 40.58 | $ 36.08 | $ 40.01 | $ 46.05 | $ 42.20 | $ 42.30 | ||||||
Vesting period | 3 years | 3 years | 1 year | 3 years | 3 years | 1 year | 3 years | 3 years | ||||||
Performance Based | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted stock granted | 28,979 | 32,559 | 23,299 | |||||||||||
Grant date fair value per share | $ 37.79 | |||||||||||||
Grant date fair value of restricted stock | $ 36.08 | $ 42.20 | ||||||||||||
Vesting period | 3 years | 3 years | 3 years | |||||||||||
Performance period | 3 years | |||||||||||||
Percentage of incentive compensation arrangement | 75.00% | 75.00% | 75.00% | |||||||||||
Performance Based | Performance Shares TSR [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of incentive compensation arrangement | 40.00% | 40.00% | 40.00% | |||||||||||
Performance Based | Performance Shares TSR [Member] | 2016 Equity Plan | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted stock granted | 26,918 | 30,943 | 21,891 | |||||||||||
Grant date fair value per share | $ 46.81 | |||||||||||||
Grant date fair value of restricted stock | $ 40.72 | $ 45.68 | ||||||||||||
Vesting period | 3 years | 3 years | 3 years | |||||||||||
Performance Based | Performance Shares TSR [Member] | Maximum | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of target number of shares to be earned | 200.00% | 200.00% | 200.00% | |||||||||||
Performance Based | Performance Shares TSR [Member] | Minimum | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of target number of shares to be earned | 50.00% | 50.00% | 50.00% | |||||||||||
Performance Based | Performance Shares ROIC [Member] | 2016 Equity Plan | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted stock granted | 29,174 | 30,557 | 20,734 | |||||||||||
Grant date fair value per share | $ 37.79 | |||||||||||||
Grant date fair value of restricted stock | $ 36.08 | $ 42.20 | ||||||||||||
Vesting period | 3 years | 3 years | 3 years | |||||||||||
Percentage of incentive compensation arrangement | 35.00% | 35.00% | 35.00% | |||||||||||
Performance Based | Performance Shares ROIC [Member] | Maximum | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of target number of shares to be earned | 200.00% | 200.00% | 200.00% | |||||||||||
Performance Based | Performance Shares ROIC [Member] | Minimum | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of target number of shares to be earned | 50.00% | 50.00% | 50.00% |
RELATED PARTY TRANSACTIONS (Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Related Party Transaction [Line Items] | |||
Accounts Payable, Related Parties, Current | $ 1,289,000 | $ 938,000 | |
Hurco Automation Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Equity Method Investment, Ownership Percentage | 35.00% | ||
Equity Method Investments | $ 4,400,000 | 4,200,000 | |
Related Party Transaction, Purchases from Related Party | 6,200,000 | 8,500,000 | $ 11,300,000 |
Revenue from Related Parties | 265,000 | 198,000 | $ 197,000 |
Accounts Payable, Related Parties, Current | 1,300,000 | 938,000 | |
Accounts Receivable, Related Parties, Current | $ 25,000 | $ 22,000 |
RELATED PARTY TRANSACTIONS (Sch
RELATED PARTY TRANSACTIONS (Schedule of unaudited financial information for HAL's operations and financial conditions ) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Related Party Transaction [Line Items] | |||||||||||
Gross Profit | $ 9,520 | $ 11,069 | $ 6,709 | $ 9,159 | $ 16,240 | $ 17,189 | $ 21,637 | $ 22,142 | $ 36,457 | $ 77,208 | $ 91,806 |
Current Assets | 251,411 | 261,861 | 251,411 | 261,861 | |||||||
Current Liabilities | 50,437 | 54,632 | 50,437 | 54,632 | |||||||
Hurco Automation Ltd [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Net Sales | 10,096 | 15,957 | 17,841 | ||||||||
Gross Profit | 1,418 | 2,322 | 2,944 | ||||||||
Operating Income | 160 | 992 | 1,534 | ||||||||
Net Income | 265 | 1,490 | 1,845 | ||||||||
Current Assets | 12,436 | 12,019 | 12,436 | 12,019 | 12,870 | ||||||
Non-current Assets | 6,152 | 5,560 | 6,152 | 5,560 | 4,579 | ||||||
Current Liabilities | $ 3,708 | $ 3,674 | $ 3,708 | $ 3,674 | $ 4,666 |
GUARANTEES AND PRODUCT WARRAN_3
GUARANTEES AND PRODUCT WARRANTIES - Reconciliation of the changes in warranty reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
GUARANTEES AND PRODUCT WARRANTIES | |||
Balance, beginning of period | $ 1,760 | $ 2,497 | $ 1,772 |
Provision for warranties during the period | 2,075 | 2,246 | 4,121 |
Charges to the accrual | (2,669) | (2,991) | (3,326) |
Impact of foreign currency translation | 34 | 8 | (70) |
Balance, end of period | $ 1,200 | $ 1,760 | $ 2,497 |
GUARANTEES AND PRODUCT WARRAN_4
GUARANTEES AND PRODUCT WARRANTIES - Additional Information (Details) $ in Millions | 12 Months Ended |
Oct. 31, 2020USD ($)item | |
GUARANTEES AND PRODUCT WARRANTIES | |
Number Of Guarantees | item | 14 |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ | $ 0.4 |
Term of Product Warranty | 1 year |
LEASES (Details)
LEASES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
LEASES | |||
Lease, Practical Expedient, Use of Hindsight [true false] | false | ||
Operating lease expense | $ 5 | $ 5.1 | $ 4.5 |
Weighted-average remaining term | 4 years 4 months 24 days | ||
Weighted-average discount rate | 1.50% | ||
Minimum | |||
LEASES | |||
Lease term (in years) | 2 years | ||
Maximum | |||
LEASES | |||
Lease term (in years) | 5 years |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information (Details) $ in Thousands | 12 Months Ended |
Oct. 31, 2020USD ($) | |
LEASES | |
Cash paid for amounts included in the measurement of lease liabilities | $ 4,892 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 2,600 |
LEASES - Schedule of future pay
LEASES - Schedule of future payments required under operating leases (Details) $ in Thousands | Oct. 31, 2019USD ($) |
LEASES | |
2020 | $ 4,015 |
2021 | 3,149 |
2022 | 2,224 |
2023 | 1,482 |
2024 and thereafter | 2,531 |
Total | $ 13,401 |
LEASES - Maturities of undiscou
LEASES - Maturities of undiscounted cash flows of lease commitments (Details) $ in Thousands | Oct. 31, 2020USD ($) |
LEASES | |
2021 | $ 4,286 |
2022 | 3,124 |
2023 | 1,913 |
2024 | 913 |
2025 | 666 |
2026 and thereafter | 1,579 |
Total | 12,481 |
Less: Imputed interest | (360) |
Present value of operating lease liabilities | $ 12,121 |
QUARTERLY FINANCIAL INFORMATI_3
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | |||||||||||
Sales and service fees | $ 44,459 | $ 45,382 | $ 37,126 | $ 43,660 | $ 59,989 | $ 58,501 | $ 70,674 | $ 74,213 | $ 170,627 | $ 263,377 | $ 300,671 |
Gross profit | $ 9,520 | $ 11,069 | $ 6,709 | $ 9,159 | $ 16,240 | $ 17,189 | $ 21,637 | $ 22,142 | 36,457 | 77,208 | 91,806 |
Gross profit margin | 21.00% | 24.00% | 18.00% | 21.00% | 27.00% | 29.00% | 31.00% | 30.00% | |||
Selling, general and administrative expenses | $ 10,344 | $ 9,627 | $ 10,599 | $ 10,846 | $ 14,051 | $ 12,592 | $ 14,111 | $ 13,914 | 41,416 | 54,668 | 58,010 |
Goodwill impairment | 4,903 | 4,903 | |||||||||
Operating income (loss) | (5,727) | 1,442 | (3,890) | (1,687) | 2,189 | 4,597 | 7,526 | 8,228 | (9,862) | 22,540 | 33,796 |
Provision (benefit) for income taxes | (2,257) | (937) | (765) | (597) | (260) | 1,155 | 2,481 | 2,453 | (4,556) | 5,829 | 11,006 |
Net income (loss) | $ (3,589) | $ 2,162 | $ (3,927) | $ (893) | $ 2,098 | $ 3,491 | $ 5,252 | $ 6,654 | $ (6,247) | $ 17,495 | $ 21,490 |
Income (loss) per common share - basic (in dollars per share) | $ (0.54) | $ 0.32 | $ (0.58) | $ (0.13) | $ 0.31 | $ 0.51 | $ 0.77 | $ 0.98 | $ (0.93) | $ 2.57 | $ 3.19 |
Income (loss) per common share - diluted (in dollars per share) | $ (0.54) | $ 0.32 | $ (0.58) | $ (0.13) | $ 0.31 | $ 0.51 | $ 0.76 | $ 0.97 | $ (0.93) | $ 2.55 | $ 3.15 |
SEGMENT INFORMATION (Schedule o
SEGMENT INFORMATION (Schedule of Net Sales and Service Fees by Product Category) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | ||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | $ 44,459 | $ 45,382 | $ 37,126 | $ 43,660 | $ 59,989 | $ 58,501 | $ 70,674 | $ 74,213 | $ 170,627 | $ 263,377 | $ 300,671 | |
Computerized Machine Tools [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | 139,577 | 223,735 | 261,710 | |||||||||
Computer Control Systems and Software [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | [1] | 1,699 | 2,818 | 2,870 | ||||||||
Service Parts [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | 22,484 | 27,854 | 27,501 | |||||||||
Service Fees [Member] | ||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||
Net Sales and Service Fees | $ 6,867 | $ 8,970 | $ 8,590 | |||||||||
[1] | Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine systems. |
SEGMENT INFORMATION (Schedule_2
SEGMENT INFORMATION (Schedule of Revenues by Geographic Area) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 44,459 | $ 45,382 | $ 37,126 | $ 43,660 | $ 59,989 | $ 58,501 | $ 70,674 | $ 74,213 | $ 170,627 | $ 263,377 | $ 300,671 |
United States of America [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 64,500 | 95,196 | 87,231 | ||||||||
Canada [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 1,621 | 2,580 | 2,915 | ||||||||
Central & South America [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 1,543 | 1,409 | 2,194 | ||||||||
Total Americas [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 67,664 | 99,185 | 92,340 | ||||||||
Germany [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 24,993 | 52,002 | 62,346 | ||||||||
United Kingdom [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 19,679 | 29,349 | 34,216 | ||||||||
Italy [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 8,599 | 14,772 | 16,691 | ||||||||
France [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 10,797 | 14,346 | 15,815 | ||||||||
Other Europe [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 14,034 | 20,028 | 32,034 | ||||||||
Total Europe [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 78,102 | 130,497 | 161,102 | ||||||||
China [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 14,225 | 15,706 | 27,748 | ||||||||
Other Asia Pacific [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 10,048 | 16,858 | 17,937 | ||||||||
Asia Pacific [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 24,273 | 32,564 | 45,685 | ||||||||
Foreign [Member] | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 588 | $ 1,131 | $ 1,544 |
SEGMENT INFORMATION (Schedule_3
SEGMENT INFORMATION (Schedule of Long-Lived Tangible Assets and net assets, Net by Geographic Area) (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | $ 13,885 | $ 15,973 | $ 14,992 |
Net Assets | 231,148 | 240,245 | 222,853 |
United States of America [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | 6,826 | 7,967 | 8,375 |
Foreign [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived Assets | 7,059 | 8,006 | 6,617 |
Total Americas [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | 83,214 | 103,863 | 96,348 |
Total Europe [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | 77,840 | 71,411 | 74,558 |
Asia Pacific [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Assets | $ 70,094 | $ 64,971 | $ 51,947 |
SEGMENT INFORMATION (Narrative)
SEGMENT INFORMATION (Narrative) (Details) | 12 Months Ended |
Oct. 31, 2020segmententity | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Number of operating segments | segment | 1 |
Minimum | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Number of independent agents and distributors products are sold through | entity | 200 |
Geographic Concentration Risk [Member] | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Concentration risk, geographic | In fiscal 2020, approximately 61% of our revenues were from customers located outside of the Americas, |
Customer Concentration Risk [Member] | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Concentration risk, customer | no distributor accounted for more than 5% of our sales and service fees |
Outside the Americas [Member] | Geographic Concentration Risk [Member] | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Percentage | 61.00% |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Narrative) (Details) $ in Thousands | Oct. 31, 2020USD ($) |
NEW ACCOUNTING PRONOUNCEMENTS. | |
Operating Lease, Liability | $ 12,121 |
Operating Lease, Right-of-Use Asset | $ 11,748 |
Operating Lease, Weighted Average Remaining Lease Term | 4 years 4 months 24 days |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts and Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | ||
Schedule II - Valuation and Qualifying Accounts and Reserves | ||||
Allowance for Doubtful Accounts Receivable, Beginning Balance | $ 891 | $ 1,027 | $ 639 | |
Charged to Costs and Expenses | 575 | 394 | ||
Recovered from Costs and Expenses | (136) | |||
Deductions | [1] | 65 | 6 | |
Allowance for Doubtful Accounts Receivable, Ending Balance | 1,401 | 891 | 1,027 | |
Income tax valuation allowance Balance at Beginning of Period | 2,227 | 2,106 | 2,282 | |
Charged to/ (Recovered from) Costs and Expenses | 50 | 458 | 253 | |
Deductions | 113 | 337 | 429 | |
Income tax valuation allowance Balance at End of Period | $ 2,164 | $ 2,227 | $ 2,106 | |
[1] | Receivable write–offs |