Item 9A. Controls and Procedures
Item 9A. CONTROLS AND PROCEDURES
Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2020, pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of the evaluation date.
There have been no changes in our internal control over financial reporting that occurred during the fourth quarter of the fiscal year ended October 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The attestation report of our independent registered public accounting firm on our internal control over financial reporting is included in this report under Item 8. Financial Statements and Supplementary Data. Our management’s annual report on internal control over financial reporting is included in this report immediately preceding Item 8.
Item 9B. OTHER INFORMATION
On January 7, 2021, our Board of Directors approved and adopted amendments to the Company’s Amended and Restated By-Laws, effective on that date. The amendments amend Section 1, Section 4, Section 5, Section 6(e), and Section 7(c) of Article II of the Amended and Restated By-Laws to explicitly provide for shareholder meetings to be conducted by means of remote communication and related matters. The foregoing summary is qualified in its entirety by reference to the full text of the Amended and Restated By-Laws, as so amended, a copy of which is filed as Exhibit 3.2 hereto and is incorporated herein by reference.
During the fourth quarter of fiscal 2020, the Audit Committee of the Board of Directors did not engage our independent registered public accounting firm to perform any new non-audit services. This disclosure is made pursuant to Section 10A(i)(2) of the Securities Exchange Act of 1934, as amended, as added by Section 202 of the Sarbanes-Oxley Act of 2002.
74
The graph below matches the cumulative 5-Year total return of holders of Hurco Companies, Inc.'s common stock with the cumulative total returns of the Russell 2000 index, the NASDAQ Global Select index and a customized peer group of eighteen companies that includes: Ampco-Pittsburgh Corp, DMC Global Inc., Douglas Dynamics Inc., Eastern Co, FARO Technologies Inc., Graham Corp, Helios Technologies Inc., IEC Electronics Corp, Kadant Inc., Key Tronic Corp, L S Starrett Co, Novanta Inc., Onto Innovation Inc., Proto Labs Inc., QAD Inc., Transcat Inc., Twin Disc Inc. and Vishay Precision Group Inc. The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on October 31, 2015 and tracks it through October 31, 2020.
10/15
10/16
10/17
10/18
10/19
10/20
Hurco Companies, Inc.
100.00
98.70
170.56
156.78
135.65
118.46
Russell 2000
100.00
104.11
133.11
135.57
142.22
142.03
NASDAQ Global Select
100.00
104.76
137.55
150.03
173.35
229.57
Peer Group
100.00
103.48
185.41
205.72
211.64
227.44
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
75
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is incorporated herein by reference to the definitive proxy statement for our 2021 annual meeting of shareholders except that the information required by Item 10 regarding our executive officers is included herein under the caption “Information about our Executive Officers” at the end of Part I.
Item 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to the definitive proxy statement for our 2021 annual meeting of shareholders.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference to the definitive proxy statement for our 2021 annual meeting of shareholders.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated herein by reference to the definitive proxy statement for our 2021 annual meeting of shareholders.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated herein by reference to the definitive proxy statement for our 2021 annual meeting of shareholders.
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PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. Financial Statements . The following consolidated financial statements of the Company are included herein under Item 8 of Part II:
Page
Reports of Independent Registered Public Accounting Firm
41
Consolidated Statements of Operations – years ended October 31, 2020, 2019 and 2018
44
Consolidated Statements of Comprehensive Income (Loss) – years ended October 31, 2020, 2019 and 201 8
45
Consolidated Balance Sheets – as of October 31, 2020 and 2019
46
Consolidated Statements of Cash Flows – years ended October 31, 2020, 2019 and 2018
47
Consolidated Statements of Changes in Shareholders’ Equity – years ended October 31, 2020, 2019 and 2018
48
Notes to Consolidated Financial Statements
49
2. Financial Statement Schedule . The following financial statement schedule is included in this Item.
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.
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(b) Exhibits
EXHIBITS INDEX
Exhibits Filed . The following exhibits are filed with this report:
3.2
Amended and Restated By-Laws of the Registrant as amended through January 7, 2021.
4.1
Description of the Company’s Common Stock.
21.1
Subsidiaries of the Registrant.
23.1
Consent of Independent Registered Public Accounting Firm, RSM US LLP.
31.1
Certification by the Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
31.2
Certification by the Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
32.1
Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
The following financial information from the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 2020, formatted in Inline XBRL: (i) Consolidated Statements of Operations; (ii) Consolidated Statements of Comprehensive Income (Loss); (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Cash Flows; (v) Consolidated Statements of Changes in Shareholders’ Equity; and (vi) Notes to Consolidated Financial Statements
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
78
Exhibits Incorporated by Reference . The following exhibits are incorporated into this report:
3.1
Amended and Restated Articles of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 31, 1997.
10.1*
Hurco Companies, Inc. 2016 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 10, 2016.
10.2*
Form of Restricted Stock Agreement (Director) under the 2016 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 10, 2016.
10.3*
Form of Restricted Stock Award Agreement (Employee) under the 2016 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 10-Q for the quarter ended January 31, 2017.
10.4*
Form of Performance Stock Unit Award Agreement (Employee) under the 2016 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 10-Q for the quarter ended January 31, 2017.
10.5*
Hurco Companies, Inc. Cash Incentive Plan, incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 10, 2016.
10.6*
Employment Agreement dated March 15, 2012, between Hurco Companies, Inc. and Michael Doar, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed March 16, 2012.
10.7*
Employment Agreement dated March 15, 2012, between Hurco Companies, Inc. and Gregory S. Volovic, incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed March 16, 2012.
10.8*
Employment Agreement dated March 15, 2012, between Hurco Companies, Inc. and Sonja K. McClelland, incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed March 16, 2012.
10.9*
Hurco Companies, Inc. 2008 Equity Incentive Plan, incorporated by reference to Appendix A of the Registrant’s definitive Proxy Statement on Schedule 14A filed January 28, 2008.
10.10*
Form of restated split-dollar insurance agreement, incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K for the year ended October 31, 2008.
10.11
Credit Agreement, dated as of December 31, 2018, among Hurco Companies, Inc. and Hurco B.V., as the Borrowers, certain subsidiaries party thereto, as the Guarantors, and Bank of America, N.A., as the Lender, incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the year ended October 31, 2018.
10.12
First Amendment to Credit Agreement, dated as of March 13, 2020, to the Credit Agreement, dated as of December 31, 2018, among Hurco Companies, Inc. and Hurco B.V., as the Borrowers, certain subsidiaries party thereto, as the Guarantors, and Bank of America, N.A., as the Lender, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed March 13, 2020 .
10.13
Second Amendment to Credit Agreement, dated as of December 23, 2020, to the Credit Agreement, dated as of December 31, 2018, among Hurco Companies, Inc. and Hurco B.V., as the Borrowers, certain subsidiaries party thereto, as the Guarantors, and Bank of America, N.A., as the Lender, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed December 29, 2020.
*
The indicated exhibit is a management contract, compensatory plan, or arrangement required to be listed by Item 601 of Regulation S-K.
Item 16. FORM 10-K SUMMARY
None.
79
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, this 8th day of January, 2021.
HURCO COMPANIES, INC.
By:
/s/ Sonja K. McClelland
Sonja K. McClelland
Executive Vice President, Secretary, Treasurer and
Chief Financial Officer
80
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature and Title(s)
Date
/s/ Michael Doar
January 8, 2021
Michael Doar, Chairman and
Chief Executive Officer of Hurco Companies, Inc.
(Principal Executive Officer)
/s/ Sonja K. McClelland
January 8, 2021
Sonja K. McClelland
Executive Vice President, Secretary, Treasurer and
Chief Financial Officer of Hurco Companies, Inc.
(Principal Financial Officer and Principal Accounting Officer)
/s/ Thomas A. Aaro
January 8, 2021
Thomas A. Aaro, Director
/s/ Robert W. Cruickshank
January 8, 2021
Robert W. Cruickshank, Director
/s/ Cynthia Dubin
January 8, 2021
Cynthia Dubin, Director
/s/ Timothy J. Gardner
January 8, 2021
Timothy J. Gardner, Director
/s/ Jay C. Longbottom
January 8, 2021
Jay C. Longbottom, Director
/s/ Richard Porter
January 8, 2021
Richard Porter, Director
/s/ Janaki Sivanesan
January 8, 2021
Janaki Sivanesan, Director
/s/ Gregory Volovic
January 8, 2021
Gregory Volovic, Director
81