Wednesday December 10, 8:02 am Eastern Time
Company Press Release
SOURCE: Hurco Companies, Inc.
Hurco Reports Fiscal 1997 Results
INDIANAPOLIS, Dec. 10 /PRNewswire/ -- Hurco Companies, Inc. (Nasdaq:
HURC - news), today announced results for its fiscal year and fourth
quarter ended October 31, 1997. Net income for fiscal 1997 was $13.8
million, or $2.06 per share, nearly three times the $4.3 million, or
$.72 per share, reported for fiscal 1996. For the final quarter of
fiscal 1997, net income rose to $4.1 million, or $.60 per share, from
$1.7 million, or $.26 per share, for the corresponding period in
fiscal 1996.
These favorable results were achieved despite a 3.7% decline in
sales and service fees to $95.7 million for the full fiscal year,
compared with $99.4 million for the prior year. For the fourth
quarter, sales and service fees were $26.2 million, compared with
the $27.0 million reported in the fourth quarter of fiscal 1996.
These decreases were due in major part to the negative impact of
a strengthening U.S. dollar when converting foreign sales to U.S.
dollars for financial reporting purposes. At constant exchange
rates, net sales for the full fiscal year and the fourth quarter
would have been $98.3 million and $27.1 million, respectively.
In addition, adverse economic and market conditions in Southeast
Asia resulted in a decline in sales in that market of $2.0 million
for the full fiscal year and $.5 million for the fourth quarter,
measured in constant exchange rates. Sales in Europe, however,
increased by $4.0 million, or 10%, during fiscal 1997 and $.7
million, or 6%, for the fourth quarter, measured in constant
exchange rates. In spite of increased order rates, sales in
the domestic U.S. market were down for the fiscal year and at
approximately the same level in the fourth quarter as compared
to the prior year period, as a result of backlog reduction which
occurred throughout fiscal 1996.
The principal contributor to the Company's dramatic improvement
in net income was the receipt during fiscal 1997 of patent license
fees from manufacturers and end users of computer numerical
controls. License fee income, net of expenses, which aggregated
$10.1 million in fiscal 1997, and $2.7 million in the fourth
quarter, increased net income by $9.1 million and $2.6 million
respectively, after deducting foreign withholding taxes. Net
income for fiscal 1997 also was favorably affected by a nearly
40% decrease in interest expense, as well as lower operating
expenses and improved gross margins.
Brian D. McLaughlin, Hurco's President and CEO, stated that results
for fiscal 1997 were particularly gratifying, considering the
unfavorable impact of adverse market conditions in Southeast Asia
and the strengthening of the U.S. dollar relative to most foreign
currencies. He noted that new order bookings of $94.8 million for
the fiscal year and $24.9 million for the fourth fiscal quarter
would have been $97.4 million and $25.9 million, respectively,
without the unfavorable currency effects. This compares to orders
of $92.8 million for the prior fiscal year and $25.0 million for
the prior fourth quarter period. Orders in Southeast Asia declined
in parallel with the decline in sales in that market. Orders in
Europe, however, increased by $6.0 million, or 15%, for the fiscal
year and $.3 million, or approximately 3%, for the fourth quarter
measured in constant exchange rates. Orders in the domestic U.S.
market increased $.6 million, or 1%, for the fiscal year, and $.9
million, or 7%, for the fourth fiscal quarter. Backlog was $7.4
million at October 31, 1997 as compared to $9.0 million at October
31, 1996 and $15.3 million at October 31, 1995.
Mr. McLaughlin stressed that, although license fees have been a
significant factor in the Company's ability to reduce its outstanding
debt and resulting interest expense, cash generated from operations
in fiscal 1997, exclusive of license fees, was approximately $6.5
million and contributed substantially to the $12.1 million of total
debt reduction and $1.5 million increase in cash during the year.
''The building of Hurco's global contract manufacturing network and
the development of its distribution system are progressing as
planned,'' he said. ''Aided by the substantial improvement in
liquidity as a result of licensing fees, these efforts have
positioned the Company to devote more resources to product
development and market expansion to meet the needs of an
increasingly demanding and competitive market. We expect to
expand both our machining system and computer control product
lines during 1998 and 1999, and believe our new product introductions
will favorably impact Hurco's future market share and bottom line.''
Hurco Companies, Inc. is one of the largest producers of computer
numerical control systems designed and built in the United States for
stand-alone machine tools. The end market for the Company's products
consists primarily of independent job shops and short-run
manufacturing operations within large corporations in industries such
as the aerospace, defense, medical equipment, energy, transportation
and computer equipment. The Company is based in Indianapolis, Ind.,
has additional production facilities in Farmington Hills, Mich., and
has sales, application engineering and service subsidiaries in High
Wycombe, England; Munich, Germany, Paris, France and Singapore.
Products are sold through independent agents and distributors in
the United States, Europe and Asia. The Company also has direct
sales forces in the United States, the United Kingdom, Germany,
France, and Asia.
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per-share data)
Three Months Ended Twelve Months Ended
October 31, October 31,
1997 1996 1997 1996
(Unaudited)
Sales and service fees $26,234 $26,993 $95,729 $99,351
Cost of sales and service 18,964 19,266 67,956 70,930
Gross profit 7,270 7,727 27,773 28,421
Selling, general and
administrative expenses 5,433 5,708 21,047 21,343
Operating income 1,837 2,019 6,726 7,078
License fee income, net 2,699 316 10,095 590
Interest expense 404 580 1,938 3,211
Other income (expense), net 32 (40) (51) (99)
Income before taxes 4,164 1,715 14,832 4,358
Provision for foreign
income taxes 111 11 1,028 94
Net income $4,053 $1,704 $13,804 $4,264
Earnings per common share $.60 $.26 $2.06 $.72
Weighted average common
shares outstanding 6,780 6,648 6,704 5,907
OTHER CONSOLIDATED FINANCIAL DATA
Q4 Fiscal Year
97 96 97 96
Gross Margin 27.7% 28.6% 29.0% 28.6%
SG&A expense as a
percentage of sales 20.7% 21.1% 22.0% 21.5%
Operating income as a
percentage of sales 7.0% 7.5% 7.0% 7.1%
License fee income,
net as a percentage
of sales 10.3% 1.2% 10.5% 0.6%
Pre-tax income as a
percentage of sales 15.9% 6.4% 15.5% 4.4%
EBITDA $5,213 $2,903 $18,848 $10,246
Depreciation 645 602 2,078 2,677
Capital Expenditures 745 423 2,235 1,879
Working Capital
(ex. Short Term Debt) $24,638 $23,822 $24,638 $23,822
Days Sales Outstanding 48.1 52.1 48.1 52.1
Inventory turns 3.5 3.2 3.5 3.2
Net assets per $ of
revenue (annual)
Working capital, net -- -- $.26 $.24
All other -- -- .16 .15
Total -- -- $.42 $.39
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share data)
October 31, October 31,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $3,371 $1,877
Accounts receivable 15,687 17,162
Inventories 21,752 24,215
Other 1,412 854
Total current assets 42,222 44,108
Long-term license fees receivable 1,178 1,040
Property and equipment:
Land 761 761
Building 7,067 7,095
Machinery and equipment 11,463 12,662
Leasehold improvements 1,121 1,002
Less accumulated depreciation
and amortization (11,218) (11,714)
9,194 9,806
Software development costs, less
amortization 4,447 3,792
Other assets 1,707 1,004
$58,748 $59,750
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $9,246 $11,407
Accrued expenses 8,338 8,879
Current portion of long-term debt 1,786 3,050
Total current liabilities 19,370 23,336
Non-current liabilities
Long-term debt 8,257 19,060
Deferred credits and other obligations 1,345 1,213
Total non-current liabilities 9,602 20,273
Shareholders' equity:
Preferred stock: no par value
per share; 1,000,000 shares
authorized; no shares issued -- --
Common stock: no par value; $.10
stated value per share;
12,500,000 shares authorized;
and 6,544,831 and 6,531,871
shares issued, respectively 654 653
Additional paid-in capital 50,349 50,312
Accumulated deficit (16,404) (30,208)
Foreign currency translation
adjustment (4,823) (4,616)
Total shareholders' equity 29,776 16,141
$58,748 $59,750
SOURCE: Hurco Companies, Inc. |
