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, 2021, 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, 2021 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
During the fourth quarter of fiscal 2021, 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.
The following graph compares the cumulative 5-Year total return to shareholders of Hurco Companies, Inc.'s common stock relative to the cumulative total returns of the Russell 2000 index, the Nasdaq Global Select index and two customized peer groups of sixteen companies and eighteen companies for the 2020 peer group and the 2021 peer group, respectively, whose individual companies are listed below. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in each index and in each of the peer groups on October 31, 2016 and its relative performance is tracked through October 31, 2021.
● The sixteen companies included in the Company's first customized peer group are: Ampco-Pittsburgh Corp, DMC Global Inc., Douglas Dynamics Inc., Eastern Co, Faro Technologies Inc., Graham Corp, Helios Technologies Inc., Kadant Inc., Key Tronic Corp, L S Starrett Co, Novanta Inc., Onto Innovation Inc., Proto Labs Inc., Transcat Inc., Twin Disc Inc. and Vishay Precision Group Inc.
● The eighteen companies included in the Company's second customized peer group are: Ampco-Pittsburgh Corp, Broadwind Inc., DMC Global Inc., Douglas Dynamics Inc., Eastern Co, Energy Recovery Inc., Faro Technologies Inc., Graham Corp, Helios Technologies Inc., Key Tronic Corp, L S Starrett Co, Omega Flex Inc., Onto Innovation Inc., Proto Labs Inc., Transcat Inc., Twin Disc Inc., UFP Technologies Inc. and Vishay Precision Group Inc.
91
10/31/16
10/31/17
10/31/18
10/31/19
10/31/20
10/31/21
Hurco Companies, Inc.
100.00
172.80
158.84
137.43
120.02
132.76
Russell 2000
100.00
127.85
130.22
136.60
136.42
205.72
NASDAQ Global Select
100.00
129.42
142.78
162.48
209.73
293.16
2020 Peer Group
100.00
181.00
200.35
205.09
221.96
328.58
2021 Peer Group
100.00
152.45
167.33
163.99
175.64
238.70
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
92
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 2022 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 2022 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 2022 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 2022 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 2022 annual meeting of shareholders.
93
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
54
Consolidated Statements of Operations – years ended October 31, 2021, 2020 and 2019
58
Consolidated Statements of Comprehensive Income (Loss) – years ended October 31, 2021, 2020 and 201 9
59
Consolidated Balance Sheets – as of October 31, 2021 and 2020
60
Consolidated Statements of Cash Flows – years ended October 31, 2021, 2020 and 2019
61
Consolidated Statements of Changes in Shareholders’ Equity – years ended October 31, 2021, 2020 and 20 19
62
Notes to Consolidated Financial Statements
63
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, 2021, 2020 and 2019
(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, 2021
$
1,401
$
268
$
—
$
24
(1)
$
1,645
October 31, 2020
$
891
$
575
$
—
$
65
(1)
$
1,401
October 31, 2019
$
1,027
$
( 136 )
$
—
$
—
(1)
$
891
Income tax valuation allowance for the year ended:
October 31, 2021
$
2,164
$
49
$
—
$
342
$
1,871
October 31, 2020
$
2,227
$
50
$
—
$
113
$
2,164
October 31, 2019
$
2,106
$
458
$
—
$
337
$
2,227
(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.
94
(b) Exhibits
EXHIBITS INDEX
Exhibits Filed . The following exhibits are filed with this report:
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, 2021, 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)
95
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.
3.2
Amended and Restated By-Laws of the Registrant as amended through March 12, 2021, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on March 12, 2021.
4.1
Description of the Company’s Common Stock, incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-K filed on January 8, 2021.
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*
First Amendment to Employment Agreement, dated as of November 11, 2021, by and 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 on November 17, 2021.
10.8*
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.
10.9*
First Amendment to Employment Agreement, dated as of November 11, 2021, by and between Hurco Companies, Inc. and Gregory S. Volovic, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on November 17, 2021.
10.10*
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.
10.11*
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.
10.12*
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.
10.13
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.
96
10.14
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 .
10.15
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.
10.16
Third Amendment to Credit Agreement, dated as of December 17, 2021, 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 23, 2021.
*
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.
97
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 7th day of January, 2022.
HURCO COMPANIES, INC.
By:
/s/ Sonja K. McClelland
Sonja K. McClelland
Executive Vice President, Treasurer and
Chief Financial Officer
98
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/ Gregory S. Volovic
January 7, 2022
Gregory S. Volovic
Chief Executive Officer and President
of Hurco Companies, Inc.
(Principal Executive Officer)
/s/ Sonja K. McClelland
January 7, 2022
Sonja K. McClelland
Executive Vice President, Treasurer and
Chief Financial Officer of Hurco Companies, Inc.
(Principal Financial Officer)
/s/ HaiQuynh Jamison
January 7, 2022
HaiQuynh Jamison
Corporate Controller of Hurco Companies, Inc.
(Principal Accounting Officer)
/s/ Michael Doar
January 7, 2022
Michael Doar, Executive Chairman of the Board
/s/ Thomas A. Aaro
January 7, 2022
Thomas A. Aaro, Director
/s/ Cynthia Dubin
January 7, 2022
Cynthia Dubin, Director
/s/ Timothy J. Gardner
January 7, 2022
Timothy J. Gardner, Director
/s/ Jay C. Longbottom
January 7, 2022
Jay C. Longbottom, Director
/s/ Richard Porter
January 7, 2022
Richard Porter, Director
/s/ Janaki Sivanesan
January 7, 2022
Janaki Sivanesan, Director
99
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.