SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
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Hurco Companies, Inc.
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(Name of Registrant as Specified in Its Charter)
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HURCO COMPANIES, INC.
ONE TECHNOLOGY WAY
P.O. BOX 68180
INDIANAPOLIS, INDIANA 46268
(317) 293-5309
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held March 11, 2004
To Our Shareholders:
The 2004 Annual Meeting of Shareholders of Hurco Companies, Inc., will be
held at the corporate headquarters of Hurco Companies, Inc., One Technology
Way, Indianapolis, Indiana, 46268 at 10:00 a.m. EST on Thursday, March 11, 2004,
for the following purposes:
1. To elect six directors to serve until the next annual meeting or until their
successors are duly elected and qualified.
2. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
If you do not expect to attend the Annual Meeting, please mark, sign and date
the enclosed proxy and return it in the enclosed return envelope which requires
no postage if mailed in the United States.
Only shareholders of record as of the close of business on January 8, 2004 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for approval of one or more
of the above matters at the time of the Annual Meeting, the Annual Meeting may
be adjourned in order to permit further solicitation of proxies.
By order of the Board of Directors,
Roger J. Wolf, Secretary
January 30, 2004
Indianapolis, Indiana
YOUR VOTE IS
IMPORTANT Even if you plan to attend
the meeting, we urge you to mark,
sign and date the enclosed proxy and
return it promptly in the enclosed
envelope.
HURCO COMPANIES, INC.
One Technology Way
P. O. Box 68180
Indianapolis, Indiana 46268
Annual Meeting of Shareholders
March 11, 2004
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PROXY STATEMENT
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished to the holders (the "Shareholders") of common
stock of Hurco Companies, Inc. ("Hurco" or the "Company") in connection with the
solicitation of proxies by the Board of Directors for the 2004 Annual Meeting of
Shareholders to be held at 10:00 a.m. EST on Thursday, March 11, 2004 at the
corporate headquarters of Hurco Companies, Inc., One Technology Way,
Indianapolis, Indiana, and at any adjournments thereof. This Proxy Statement and
the accompanying form of proxy are being mailed to the Shareholders on or about
January 30, 2004. Proxies are being solicited principally by mail. Directors,
officers and regular employees of Hurco may also solicit proxies personally by
telephone, electronic mail or otherwise. All expenses incident to the
preparation and mailing to the Shareholders of the Notice, Proxy Statement and
form of Proxy will be paid by Hurco.
Shareholders of record as of the close of business on January 8, 2004, are
entitled to notice of and vote at the Annual Meeting or any adjournments
thereof. On such record date, Hurco had 5,609,387 shares of common stock
outstanding and entitled to vote. Each share will be entitled to one vote with
respect to each matter submitted to a vote. The presence in person or by proxy
of the holders of a majority of the outstanding shares entitled to vote at the
Annual Meeting is necessary to constitute a quorum for the transaction of
business.
If the enclosed form of proxy is executed and returned, it may be revoked at any
time before it is voted by giving written notice to the Secretary of the
Company. If a Shareholder executes more than one proxy, the proxy having the
latest date will revoke any earlier proxies. Shareholders who attend the Annual
Meeting may revoke their proxies and vote in person.
A proxy, if returned properly executed and not subsequently revoked, will be
voted in accordance with the instructions of the Shareholder in the proxy. If no
instructions are given, the proxy will be voted for the election of the Board of
Directors' nominees named in this Proxy Statement. Directors will be elected by
a plurality of the votes cast. A proxy may indicate that all or a portion of the
shares represented by such proxy are not being voted with respect to a specific
proposal. This could occur, for example, when a broker is not permitted to vote
shares held in street name on certain proposals in the absence of instructions
from the beneficial owners. Shares that are not voted with respect to a specific
proposal will be considered present for purposes of determining a quorum and
voting on other proposals. Abstentions on a specific proposal will be considered
as present, but not as voting in favor of such proposal. Neither the non-voting
of shares nor abstentions will affect the matters to be voted on at the Annual
Meeting.
ELECTION OF DIRECTORS
The Board of Directors currently consists of six members and the Board has
nominated six persons for election as directors. All nominees are currently
directors. Each director will serve for a term of one year, which expires at the
next Annual Meeting of Shareholders of the Company, when his successor has been
elected. The six nominees are: Robert W. Cruickshank, Michael Doar, Richard T.
Niner, O. Curtis Noel, Charles E. Mitchell Rentschler and Gerald V. Roch. A
majority of the director nominees are "independent directors" as defined by the
listing standards for Nasdaq companies and the Board of Directors has
affirmatively determined that such independent directors have no relationship
with the Company that would impair their independence. The independent director
nominees are Messrs. Cruickshank, Niner, Noel, Rentschler and Roch. Unless
authority is specifically withheld, the shares represented by the enclosed form
of proxy will be voted in favor of these nominees.
If any of these nominees becomes unable to accept election, the persons named in
the proxy will exercise their voting power in favor of such person or persons as
the Board may recommend. All of the nominees have consented to being named in
this Proxy Statement and to serve if elected. The Board of Directors knows of no
reason why any of the nominees would be unable to accept election.
The Company has received notice of a shareholder's nomination of himself to be
voted on at the Annual Meeting.
The following information sets forth the name of each director, his age, tenure
as a director, principal occupation and business experience for the last five
years:
Served as a
Name Age Director since
Robert W. Cruickshank (1,2,3) 58 2000
Michael Doar 48 2000
Richard T. Niner (1,2) 64 1986
O. Curtis Noel (3) 68 1993
Charles E. Mitchell Rentschler (2) 64 1986
Gerald V. Roch 72 2001
Robert W. Cruickshank since 1981 has been a consultant providing private
clients with financial advice. Mr. Cruickshank is also a director of Calgon
Carbon Corporation, a producer of products and services for the purification,
reparation and concentration of liquids and gases, and Friedman's Jewelers,
Inc., a retail jewelry business.
Michael Doar was elected Chairman of the Board of Directors and Chief Executive
Officer on November 14, 2001. Previously, Mr. Doar served as Vice President of
Sales and Marketing of Ingersoll Contract Manufacturing Company, a subsidiary of
Ingersoll International, an international engineering and machine tool systems
business. Mr. Doar had held various management positions with Ingersoll
International since 1989.
Richard T. Niner's principal occupation since 1998 has been acting as a general
partner of Wind River Associates. Mr. Niner is also a general partner of
Brynwood Management II, L.P., the general partner of Brynwood Partners II, L.P.,
and until December 31, 1998, his principal occupation was acting as a general
partner of Brynwood Management, the general partner of Brynwood Partners Limited
Partnership. Mr. Niner is a director of Arrow International, Inc., a cardiac and
critical care products business.
O. Curtis Noel has been an independent business consultant for more than ten
years specializing in market and industry studies, competitive analysis and
corporate development programs with clients in the U.S. and abroad.
Charles E. Mitchell Rentschler is a partner with Lagenberg & Company, a private
industrial securities research firm. Previously, Mr. Rentschler had been an
independent business consultant since 2001, providing general business
consulting services to the foundry industry. Mr. Rentschler served as President
and Chief Executive Officer of The Hamilton Foundry & Machine Co. from 1985
until 2001. The Hamilton Foundry and Machine Co. filed a petition for relief
under Chapter 11 of the Bankruptcy Code on October 10, 2000.
Gerald V. Roch has been an independent business consultant providing general
business and technology consulting services since 1994. Mr. Roch was a
co-founder of Hurco in 1968 and in 1986 was the founder of Made2Manage Systems,
Inc., a manufacturing software company. Mr. Roch served as President and Chief
Executive Officer of Made2Manage Systems, Inc. from 1986 until 1994.
(1) Member of Nominating and Governance Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
The Board of Directors recommends a vote FOR each of the nominees listed above.
Board Meetings and Committees
During the last fiscal year, the Board of Directors held five meetings. All of
the current directors attended at least 75% of the aggregate number of meetings
of the Board and the committees on which they served. Directors are expected to
attend Board meetings and meetings of committees on which they serve, and to
spend the time needed and meet as frequently as necessary to properly discharge
their responsibilities. All current directors attended the 2003 annual meeting
of shareholders.
The Board has an Audit Committee that held nine meetings during the last fiscal
year. The Audit Committee has the authority to oversee the Company's accounting
and financial reporting activities, and meets with the Company's independent
auditors and Chief Financial Officer to review the scope, cost and results of
the annual audit and to review internal accounting controls, policies and
procedures. The report of the Audit Committee is included on page 9 of this
Proxy Statement. The Audit Committee selects the independent auditors of Hurco.
See INDEPENDENT AUDITORS on page 12.
The Board has a Compensation Committee that held one meeting during the last
fiscal year. The Compensation Committee reviews and recommends to the Board the
compensation of the officers and managers of Hurco and guidelines for the
general wage structure of the entire workforce. The Compensation Committee also
oversees the administration of the Company's employee benefit plans. The report
of the Compensation Committee regarding executive compensation is included on
page 7 of this Proxy Statement.
The Board of Directors had an Executive/Nominating Committee that held one
meeting during the last fiscal year. The Executive/Nominating Committee reviewed
the structure and composition of the Board of Directors and considered the
qualifications of and recommended all nominees for directors. The
Executive/Nominating Committee considered candidates whose names were submitted
in writing by shareholders.
The Nominating and Governance Committee is composed on two independent
Directors. The Committee was established on January 9, 2004. This Committee
replaced the Executive/Nominating Committee. The Nominating and Corporate
Governance Committee has adopted a formal written charter which specifies the
scope and purpose of the Committee. Pursuant to its charter, the Committee is to
(1) assist the Board by identifying individuals qualified to become Board
members, and to recommend to the Board the director nominees for reelection or
appointment at the annual meeting of shareholders; (2) develop and recommend to
the Board Corporate Governance Principles and a Code of Business Conduct and
Ethics; (3) lead the Board in an annual self-evaluation; (4) recommend members
and chairs for each standing committee; and (5) determine and evaluate
succession plans for the Chief Executive Officer. The Nominating and Governance
Committee also reviews our Corporate Governance Principles regularly and updates
them as appropriate. A copy of the charter and our Corporate Governance
Principles are available on our website at www.hurco.com.
The Nominating and Governance Committee will consider candidates recommended by
shareholders. A shareholder who wishes to recommend a director candidate for
consideration by the Nominating and Governance Committee should send such
recommendation to the Secretary of the Company, One Technology Way,
Indianapolis, Indiana 46268, who will forward it to the Committee. Any such
recommendation should include a description of the candidate's qualifications
for board service; the candidate's written consent to be considered for
nomination and to serve if nominated and elected, and addresses and telephone
numbers for contacting the shareholder and the candidate for more information. A
shareholder, who wishes to nominate an individual to the Nominating and
Governance Committee as a nominee, must comply with the advanced notice
requirements set forth in the Company's By-Laws which are more fully explained
later in this proxy statement under "Shareholder Proposals."
The Nominating and Governance Committee will identify potential nominees based
on specified objectives in terms of the composition of the Board, taking into
account such factors as industry experience and areas of expertise. Nominees
will be evaluated on the basis of their experience, judgment, integrity, ability
to make independent inquiries, understanding of the Company and willingness to
devote adequate time to Board duties.
The members of these Committees are identified in the table on page 2.
Compensation of Directors
Each director who is not an employee of the Company receives a fee of $1,500 for
each meeting of the Board of Directors attended. Each such director also
receives $5,000 per fiscal quarter. Directors are also entitled to receive
reimbursement for travel and other expenses incurred in attending such meetings.
In fiscal 2003, Mr. Niner received additional annual compensation of $36,000 for
his services as chairman of the Executive / Nominating Committee. In fiscal
2004, Mr. Niner will receive $36,000 of additional annual compensation for his
services as Presiding Independent Director.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's common stock, to file reports of ownership with the Securities and
Exchange Commission and Nasdaq. Such persons are also required to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms received by it,
or written representations from certain reporting persons that they were not
required to file a Form 5 to report previously unreported ownership or changes
in ownership, the Company believes that, during its fiscal year ending October
31, 2003, its officers, directors and greater than 10% beneficial owners
complied with all filing requirements under Section 16(a). However, after the
end of the fiscal year, on December 29, 2003, Mr. Roch, a director of the
Company, purchased 1,000 share of common stock, which were not reported until
January 8, 2004.
Code of Business Conduct and Ethics
Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 and Nasdaq listing
requirements, the Company has adopted a Code of Business Conduct and Ethics
which applies to all Company's directors, officers and employees, including its
principal executive officer, principal financial officer and principal
accounting officer. If the Company makes any substantive amendment of, or grants
any waiver to, the Code of Business Conduct and Ethics, the Company will
disclose the nature of such amendment of waiver in a current report of Form 8-K.
A copy of the Code of Business Conduct and Ethics is available on our website at
www.hurco.com.
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth all compensation paid or accrued during each of
the last three fiscal years to each of the individuals who served as the
Company's Chief Executive Officer during the fiscal year ended October 31, 2003
and each of the other three executive officers of Hurco (the "Named Executive
Officers") whose salary and bonus exceeded $100,000 during the fiscal year ended
October 31, 2003.
Summary Compensation Table
Long-term
Annual Compensation Compensation
---------------------------------------- -----------------
Securities All Other
Name and Fiscal Salary Bonus Other Annual Underlying Compensation
Principal Position Year ($) ($)(1) Compensation ($) Options(2) ($) (3)
------------------ ------ ------ ------ --------------- ---------------- -----------
Michael Doar 2003 245,000 50,000 -- -- 5,790
Chairman and CEO 2002 207,470 -- -- 80,000 33,564
James D. Fabris 2003 225,000 55,000 -- -- 6,208
President and 2002 223,365 -- -- 35,000 24,688
Chief Operating Officer 2001 198,077 -- -- -- 24,284
Roger J. Wolf 2003 191,262 25,000 -- -- 5,193
Sr. VP, Secretary, 2002 185,000 -- -- 35,000 47,217
Treasurer and CFO 2001 183,077 -- -- -- 48,762
David E. Platts 2003 129,231 2,000 -- -- 2,930
Vice President - 2002 125,000 -- -- 10,000 13,555
Technology 2001 121,154 -- -- -- 14,177
Stephen J. Alesia 2003 107,692 21,000 -- -- 3,231
Corporate Controller 2002 95,000 -- -- 10,000 10,044
2001 92,846 5,000 -- -- 9,100
(1) Represents cash bonuses earned and paid in the subsequent year.
(2) Represents shares of common stock underlying grants of options made during the year. We have not granted any Stock
Appreciation Rights (SARs).
(3) Represents contributions to defined contribution plans and, for the years prior to fiscal 2003, split dollar life
insurance premiums.
Stock Options
There were no options granted in fiscal 2003.
Aggregated Option Exercises in Fiscal 2003 and Year-End Option Values
Shares
Acquired Number of Securities Value of Unexercised
On Value Underlying Unexercised Options In-the-Money Options
Exercise Realized At FY End (#) At FY End ($) (1)
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
Michael Doar -- -- 41,667 53,333 10,667 21,333
James D. Fabris -- -- 94,667 23,333 9,327 9,333
Roger J. Wolf -- -- 91,667 23,333 5,157 9,333
David E. Platts -- -- 38,333 6,667 1,333 2,667
Stephen J. Alesia -- -- 28,333 6,667 1,333 2,667
(1) Value is calculated based on the closing market price of the common stock on October 31, 2003 ($ 2.57) less the option
exercise price.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are O. Curtis Noel and Robert W.
Cruickshank. None of the Compensation Committee members are involved in a
relationship requiring disclosure as an interlocking executive officer/director
or under Item 404 of Regulation S-K or is a former officer or employee of the
Company or any of its subsidiaries.
Employment Contracts
Michael Doar entered into an employment contract effective November 13, 2001.
The contract term is unspecified. Mr. Doar's salary and bonus arrangements are
set annually by the Compensation Committee of the Board of Directors. Other
compensation, such as stock option grants, is awarded periodically at the
discretion of the Compensation Committee. Mr. Doar is entitled to thirty days
notice and twelve months salary and benefits if he is removed as Chairman and
Chief Executive Officer by action of the Board of Directors.
James D. Fabris entered into an employment contract on November 18, 1997. The
contract term is unspecified. Mr. Fabris' salary and bonus arrangement are set
annually by the Compensation Committee of the Board of Directors. Other
compensation, such as stock option grants, is awarded periodically at the
discretion of the Compensation Committee. As part of the contract, Mr. Fabris is
entitled to 12 months' salary if Hurco terminates his employment for any reason
other than gross misconduct.
Roger J. Wolf entered into an employment contract on January 8, 1993. The
contract term is unspecified. Mr. Wolf's salary and bonus arrangements are set
annually by the Compensation Committee of the Board of Directors. Other
compensation, such as stock option grants, is awarded periodically at the
discretion of the Compensation Committee. Mr. Wolf is entitled to 12 months'
salary if Hurco terminates his employment without just cause.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes policies
relating to the compensation arrangements of the Chief Executive Officer and all
other executive officers and oversees the administration of the Company's
employee benefit plans. All decisions of the Compensation Committee relating to
the compensation of the Company's executive officers are reviewed by the full
Board.
Compensation Policy
The goal of the Company's executive compensation policy is to ensure that an
appropriate relationship exists between executive pay and the creation of
shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policy
integrates annual base compensation with incentive compensation plans based upon
corporate performance and individual initiatives and performance. Measurement of
corporate performance is primarily based on Company goals and industry
performance levels. Accordingly, in years in which performance goals and
industry levels are achieved or exceeded, executive compensation tends to be
higher than in years in which performance is below expectations. Annual cash
compensation, together with stock option incentives, are designed to attract and
retain qualified executives and to ensure that such executives have a continuing
stake in the long-term success of the Company.
Stock options are granted from time to time to key employees, based primarily on
such person's potential contribution to the Company's growth and profitability.
The Compensation Committee feels that stock options are an effective incentive
for managers to create value for shareholders since the value of an option bears
a direct relationship to the Company's stock price. The Compensation Committee
believes that linking compensation for the Chief Executive Officer and all other
executive officers to corporate performance results in a better alignment of
compensation with corporate goals and shareholder interest. As performance goals
are met or exceeded, resulting in increased value to shareholders, executives
are rewarded commensurately.
Fiscal 2003 Executive Compensation
For fiscal 2003, the Company's compensation program for the Chief Executive
Officer and all other executive officers consisted of base salary and bonus
awards described above. No stock options were granted in fiscal 2003. During
fiscal year 2003, the annual compensation of the Chief Executive Officer
consisted of base salary and a performance bonus. In evaluating 2003
performance, the Committee considered the Company's financial performance in
relation to its business plan and other corporate performance criteria and
determined that bonuses would be awarded to the Chief Executive Officer and
other corporate executive officers. The Committee believes that compensation
levels for the Chief Executive Officer and all other executive officers and key
employees during fiscal 2003 adequately reflect the Company's compensation goals
and policies.
O. Curtis Noel
Robert W. Cruickshank
REPORT OF AUDIT COMMITTEE
The Company's Audit Committee is comprised of three Directors. The Board of
Directors and the Audit Committee believe that the Audit Committee's current
composition satisfies the Nasdaq listing requirements that govern audit
committee composition, including the requirement that audit committee members
all be "independent directors" as defined by Nasdaq listing requirements. The
Board of Directors annually reviews the independence of the audit committee
members in view of the Nasdaq listing requirements and the Securities and
Exchange Commission's definition of independence for audit committee members and
the audit committee independence requirements in our Corporate Governance
Principles (a copy of which is on our website at www.hurco.com). The Board has
determined that Robert W. Cruickshank meets the Securities and Exchange
Commission's definition of an "audit committee financial expert."
The primary function of the Audit Committee is to assist the Board in fulfilling
its oversight responsibilities by reviewing the financial information which will
be provided to the shareholders and others, the system of internal controls
which management has established, and the audit process. In doing so, it is the
responsibility of the Audit Committee to provide an open avenue of communication
between the Board of Directors, management, and the independent auditors.
The Audit Committee has adopted a formal, written charter, which was amended by
the full Board of Directors of the Company on January 9, 2004. The Charter
specifies the scope of the Audit Committee's responsibilities and how it should
carry out those responsibilities. The Audit Committee reviews and reassesses the
adequacy of the Charter on an annual basis. A copy of the Charter is attached as
Exhibit A to this proxy statement.
The Audit Committee has reviewed and discussed the audited financial statements
of the Company for the fiscal year ended October 31, 2003, with the Company's
management. The Audit Committee has discussed with PricewaterhouseCoopers LLP,
the Company's independent public auditors, the matters required to be discussed
by Statement on Auditing Standards No. 61, as amended (Communication with Audit
Committees). The Audit Committee has also received the written disclosures and
the letter from PricewaterhouseCoopers LLP required by Independence Standards
Board Standard No. 1 (Independence Discussion with Audit Committees) and the
Audit Committee has discussed the independence of PricewaterhouseCoopers LLP
with that firm.
The members of the Audit Committee have also confirmed that there have been no
new circumstances or developments since their appointment to the Committee that
would impair any member's ability to act independently.
Based on the review and discussions with the Company's independent auditors for
the fiscal year ended October 31, 2003, the Audit Committee recommended to the
Board of Directors that the financial statements be included in the Company's
Annual Report on Form 10-K for filing with the Securities and Exchange
Commission.
Robert W. Cruickshank
Richard T. Niner
Charles E. M. Rentschler
PERFORMANCE GRAPH *
The following graph illustrates the cumulative total shareholder return on Hurco
common stock for the five-year period ended October 31, 2003, as compared to the
Russell 2000 and a peer group consisting of traded securities for U.S. companies
in the same three digit SIC group as Hurco (SIC 3540-3549 - Metal Working
Machinery and Equipment). The comparisons in this table are required by the
Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of Hurco common stock.
[OBJECT OMITTED]
* $100 invested on 10/31/98 in stock or index- including reinvestment of
dividends. Fiscal year ending October 31.
10/98 10/99 10/00 10/01 10/02 10/03
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HURCO COMPANIES, INC. 100.00 57.73 56.71 35.30 27.38 42.39
RUSSELL 2000 100.00 114.87 134.86 117.73 104.11 149.26
PEER GROUP 100.00 97.80 98.70 88.37 91.13 110.94
INCORPORATION BY REFERENCE
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that may incorporate future filings (including
this Proxy Statement, in whole or in part), the preceding Report of the Audit
Committee, Compensation Committee Report on Executive Compensation and the stock
price Performance Graph shall not be incorporated by reference in any such
filings.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of January 8, 2004, regarding
beneficial ownership of the Company's common stock by each director and Named
Executive Officer, by all directors and executive officers as a group, and by
certain other beneficial owners of more than 5% of the common stock. Each such
person has sole voting and investment power with respect to such securities,
except as otherwise noted.
Other Beneficial Owners
Shares Beneficially Owned
Name and Address Number Percent
Richard T. Niner 942,312 (1) 15.6%
Wind River Associates, LP
1055 Washington Blvd.
Box 9-5th Floor
Stamford, CT 06901
Bridgeway Capital Management 393,334 (2) 7.1%
5615 Kirby Drive, Suite 518
Houston, Texas 77005
Dimensional Fund Advisors Inc. 342,000 (3) 6.1%
1299 Ocean Avenue
Santa Monica, CA 90401
FMR Corp. 387,428 (4) 6.9%
82 Devonshire Street
Boston, Massachusetts 02109
Royce & Associates, Inc. 560,600 (5) 10.1%
1414 Avenue of the Americas
New York, NY 10019
Directors and Executive Officers
Richard T. Niner 942,312 (1) 15.6%
Robert W. Cruickshank 45,000 (7) 0.7%
Michael Doar 75,333 (12) 1.3%
Charles E. Mitchell Rentschler 63,100 (1,6) 1.0%
O. Curtis Noel 25,000 (1) 0.4%
Gerald V. Roch 16,012 (7) 0.3%
James D. Fabris 111,333 (10) 1.8%
David E. Platts 53,367 (8) 0.9%
Roger J. Wolf 120,125 (9) 2.0%
Stephen J. Alesia 31,667 (11) 0.5%
Executive officers and directors as a group (10 persons) 1,483,249 (13) 24.6%
(1) Includes 25,000 shares subject to options that are exercisable within
60 days.
(2) According to Form 13F, filed November 11, 2003, Bridgeway Capital
Management has shared voting power for all shares.
(3) According to Form 13F, filed November 11, 2003, Dimensional Fund
Advisors has sole voting power for all shares.
(4) According to Form 13F, filed November 11, 2003, FMR Corporation sole
power to dispose all shares.
(5) According to Schedule 13G, filed December 8, 2003, Royce & Associates
has sole voting power for all shares.
(6) Includes 11,100 shares owned by Mr. Rentschler's wife, as to which he
may be deemed to have beneficial ownership.
(7) Includes 15,000 shares subject to options that are exercisable within
60 days.
(8) Includes 41,667 shares subject to options that are exercisable within
60 days.
(9) Includes 103,333 shares subject to options that are exercisable within
60 days.
(10) Includes 96,333 shares subject to options that are exercisable within
60 days.
(11) Includes 31,667 shares subject to options that are exercisable within
60 days.
(12) Includes 68,333 shares subject to options that are exercisable within
60 days.
(13) Includes 446,333 shares subject to options that are exercisable within
60 days.
INDEPENDENT
AUDITORS
PricewaterhouseCoopers, LLP ("PwC") served as the Company's independent auditors
for fiscal 2003. A representative of PwC is expected to be present at the Annual
Meeting and will have the opportunity to make a statement if desired, and such
representative is expected to be available to respond to appropriate questions.
The Audit Committee has reappointed PwC as independent auditors for fiscal 2004.
On May 31, 2002, Hurco dismissed Arthur Andersen LLP ("Andersen") as its
independent auditors. This decision was approved by the Audit Committee of the
Board of Directors. Andersen's report on Hurco's financial statements for the
year ended October 31, 2001, did not contain an adverse opinion or disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope or
accounting principles. During the fiscal year ended October 31, 2001, and the
subsequent interim period through May 31, 2002, there were no disagreements with
Andersen on any matter of accounting principle or practices, financial statement
disclosure or auditing scope or procedure which, if not resolved to Andersen's
satisfaction, would have caused Andersen to make reference to the subject matter
in its report on Hurco's consolidated financial statements for such year; nor
were there any reportable events as defined in Item 304(a)(1)(v) of Regulation
S-K. On June 27, 2002, the Board of Directors approved the recommendation of its
Audit Committee to engage PwC as Hurco's independent auditors.
Audit and Non-Audit Fees
The following table sets forth fees paid to PwC and Andersen for services
provided during fiscal years 2003 and 2002:
PwC PwC Andersen
2003 2002 2002
------------- ------------ --------------
Audit Fees 1 $301,600 $242,500 $30,000
Audit Related Fees 2 8,000 -- 10,500
Tax Fees 3 27,600 -- 64,738
All Other Fees 4 7,000 3,900 --
------------- ------------ --------------
TOTAL $344,200 $246,400 $105,238
============= ============ ==============
1. Represents fees for professional services provided in
connection with the audit of annual financial statements and
review of quarterly financial statements.
2. Represents fees for the audit of our benefit plan.
3. Represents fees for services provided in connection with tax
compliance, tax advice and tax planning, including services
provided in connection with assistance in the preparation and
filing of tax returns.
4. Represents fees for all other permissible services that do not
meet the above category descriptions.
Pre-approval Policy
The Audit Committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditor. These services may
include audit services, audit-related services, tax services and other services.
Pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is generally
subject to a specific budget. The independent auditor and management are
required to periodically report to the Audit Committee regarding the extent of
services provided by the independent auditor in accordance with this
pre-approval, and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis. For
fiscal 2003, pre-approved non-audit services included only those services
described above for "Audit Related Fees," "Tax Fees," and "All Other Fees."
SHAREHOLDER PROPOSALS AND OTHER COMMUNICATIONS
The date by which shareholder proposals must be received by the Company for
inclusion in proxy materials relating to the 2005 Annual Meeting of Shareholders
is October 3, 2004.
In order to be considered at the 2005 Annual Meeting, shareholder proposals,
including shareholder nominations for director, must comply with the advance
notice and eligibility requirements contained in the Company's By-Laws. The
Company's By-Laws provide that shareholders are required to give advance notice
to the Company of any business to be brought by a shareholder before an annual
shareholders' meeting. For business to be properly brought before an annual
meeting by a shareholder, the shareholder must give timely written notice
thereof to the Secretary of the Company. In order to be timely, a shareholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Company not less than 60 days prior to the meeting. In the event
that less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder must be
received not later than the close of business on the tenth day following the day
on which notice of the date of the meeting was mailed or public disclosure was
made. The notice must contain specified information about the proposed business
or nominee, as the case may be, and the shareholder making the proposal. A copy
of the Company's By-Laws is available upon request. Such requests and any
shareholder proposals should be sent to Roger J. Wolf, Secretary, Hurco
Companies, Inc., One Technology Way, P.O. Box 68180, Indianapolis, Indiana,
46268, the principal executive offices of the Company. These procedures apply to
any matter that a shareholder wishes to raise at the 2005 Annual Meeting,
including those matters raised other than pursuant to 17 C.F.R. ss.240.14a-8 of
the rules and regulations of the SEC. A shareholder proposal that does not meet
the above requirements will be considered untimely, and any proxy solicited by
the Company may confer discretionary authority to vote on such proposal.
The Board of Directors of the Company has implemented a process whereby
shareholders may send communications to the Board's attention. The process for
communicating with the Board is set forth in the Company's Corporate Governance
Principles which are available on our website at www.hurco.com.
ANNUAL REPORT ON FORM 10-K
The Company filed its Annual Report on Form 10-K for the fiscal year ended
October 31, 2003 with the Securities and Exchange Commission. Shareholders
may obtain a copy of the Form 10-K by writing to Roger J. Wolf, Senior
Vice-President and Chief Financial Officer, Hurco Companies, Inc., One
Technology Way, P. O. Box 68180, Indianapolis, Indiana 46268. A copy of the
10-K can also be obtained at hurco.com or SEC.gov.
OTHER BUSINESS
The Board of Directors knows of no other matters which may be presented at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, the persons named in the enclosed form of proxy will vote in accordance
with their business judgment on such matters.
Exhibit A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
HURCO COMPANIES, INC.
Purpose
The Audit Committee of the Board of Directors of Hurco
Companies, Inc. (the "Company") is appointed by the Board to assist the Board in
monitoring (1) the accounting and financial reporting processes of the Company
and the audits of the financial statements of the Company, (2) the independent
auditor's qualifications and independence, (3) the performance of the Company's
independent auditor, and (4) the Company's compliance with legal and regulatory
requirements.
The Audit Committee is also responsible for producing the
annual Audit Committee report required by the rules of the Securities and
Exchange Commission (the "SEC") to be included in the Company's proxy statement.
Committee Membership
The Audit Committee shall consist of at least three directors.
The members of the Audit Committee shall meet the independence and experience
requirements of the NASDAQ Stock Market, Section 10A(m)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and SEC rules and
regulations.
The members and the Chair of the Audit Committee shall be
appointed by the Board. Audit Committee members may be replaced by the Board.
Meetings
The Audit Committee shall meet as often as it determines, but
not less frequently than quarterly. The Audit Committee shall meet periodically
with management and the independent auditor in separate executive sessions. The
Audit Committee may request any officer or employee of the Company or the
Company's outside counsel or independent auditor to attend a meeting of the
Committee or to meet with any members of, or advisors to, the Committee.
Committee Authority and Responsibilities
The Audit Committee shall be directly responsible for the
appointment, determination of compensation, retention and oversight of the work
of the independent auditor, including resolution of disagreements between
management and the independent auditor regarding financial reporting, as
required by Section 10A(m)(2) of the Exchange Act. The Audit Committee shall
preapprove all auditing services and permitted non-audit services, including the
fees and terms thereof. The independent auditor shall report directly to the
Audit Committee.
The Audit Committee shall have the authority, to the extent it
deems necessary or appropriate and without seeking Board approval, to retain
independent legal, accounting or other advisors. The Company shall provide for
appropriate funding, as determined by the Audit Committee, for payment of
compensation to the independent auditor for the purpose of rendering or issuing
an audit report, to any advisors employed by the Audit Committee and for
ordinary administrative expenses of the Audit Committee that are necessary or
appropriate in carrying out its duties.
The Audit Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including the
authority to grant preapprovals of audit and permitted non-audit services,
provided that decisions of such subcommittee to grant preapprovals shall be
presented to the Audit Committee at its next scheduled meeting.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board for approval. The Audit
Committee, to the extent it deems necessary or appropriate, shall:
Financial Statement and Disclosure Matters
1. Review and discuss with management and the independent auditor the
annual audited financial statements, including disclosures made in
management's discussion and analysis, and recommend to the Board
whether the audited financial statements should be included in the
Company's Form 10-K.
2. Review and discuss with management and the independent auditor the
Company's quarterly financial statements prior to the filing of its
Form 10-Q, including the results of the independent auditor's reviews
of the quarterly financial statements.
3. In connection with such quarterly reviews and annual audit, discuss
with management and the independent auditor major issues regarding
accounting principles and financial statement presentations, including
any significant changes in the Company's selection or application of
accounting principles, any major issues as to the adequacy of the
Company's internal controls and any special audit steps adopted in
light of material control deficiencies.
4. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended
relating to the conduct of the audit, including any difficulties
encountered in the course of the audit work, any restrictions on the
scope of activities or access to requested information, and any
significant disagreements with management.
5. Review and discuss quarterly reports from the independent auditor on:
a. changes in critical accounting policies and practices used;
b. all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management, ramifications of the use of such alternative disclosures
and treatments, and the treatment preferred by the independent auditor;
c. management's disposition of significant audit adjustments as identified
by the external auditor;
d. any proposed changes by regulatory authorities in accounting standards
or financial disclosures that could materially affect the Company's
financial statements; and
e. other material written communications between the independent auditor
and management, such as any management letter with respect to internal
control deficiencies.
6. Discuss with management and the independent auditor, the Company's
earnings press releases prior to issuance, including the use of any
"pro forma" or "adjusted" non-GAAP information.
7. Discuss with management and the independent auditor the effect of any
material off-balance sheet structures on the Company's financial
statements.
8. Discuss with management at least annually the Company's major financial
risk exposures and the steps management has taken to monitor and
control such exposures, including the Company's risk assessment and
risk management policies.
9. Review disclosures made to the Audit Committee by the Company's CEO and
CFO during their certification process for the Form 10-K and Forms 10-Q
about any significant deficiencies in the design or operation of
disclosure controls and internal controls or material weaknesses
therein and any fraud involving management or other employees who have
a significant role in the company's disclosure controls and internal
controls.
10. Review and approve all related-party transactions, i.e. with Directors,
Executive Officers, significant shareholders or affiliated entities in
which such persons have material interests of the Company.
Oversight of the Company's Relationship with the Independent Auditor
11. Review and evaluate the lead partner of the independent auditor team.
12. Obtain annually, to the extent made available, and review a report from
the independent auditor regarding (a) the independent auditor's
internal quality-control procedures, (b) any material issues raised by
the most recent internal quality-control review, or peer review, of the
firm, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years respecting one
or more independent audits carried out by the firm, and (c) any steps
taken to deal with any such issues.
13. Ensure receipt from the independent auditor of a formal written
statement delineating all relationships between the independent auditor
and the company, consistent with Independence Standards Board Standard
No. 1, and actively engage in a dialogue with the independent auditor
with respect to any disclosed relationships or services that may impact
the objectivity and independence of the independent auditor. The Audit
Committee shall take, or recommend that the full Board take,
appropriate action to oversee the independence of the independent
auditor.
14. Ensure the rotation of the lead (or coordinating) audit partner having
primary responsibility for the audit and the audit partner responsible
for reviewing the audit every five years or as otherwise required by
Section 10A(j) of the Exchange Act.
15. Ensure that the Company's Chief Executive Officer, Chief Financial
Officer, Corporate Controller or other principal accounting officer did
not participate in the audit of the Company in any capacity as an
employee of the independent auditing firm within one year preceding the
appointment of such firm for any audit.
16. Meet with the independent auditor prior to the audit to discuss the
planning, scope and staffing of the audit.
Compliance Oversight Responsibilities
17. Obtain from the independent auditor assurance that any reportable
events under the provisions of Section l0A(b) of the Exchange Act
respecting the detection and reporting of illegal acts, of which they
are aware, have been communicated to the Committee.
18. Establish and maintain procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and the confidential,
anonymous submission by Company employees of concerns regarding
questionable accounting or auditing matters.
19. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any published reports
which raise material issues regarding the Company's financial
statements or accounting policies.
20. Discuss, as deemed necessary, with the Company's outside counsel, legal
matters that may have a material impact on the financial statements or
the Company's compliance policies.
Limitation of Audit Committee's Role
While the Audit Committee has the responsibilities and powers
set forth in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements and
disclosures are complete and accurate and are in accordance with generally
accepted accounting principles and applicable rules and regulations. These are
the responsibilities of management and the independent auditor.
-FRONT-
X Please mark
votes as in
this example.
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HURCO COMPANIES, INC.
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1. To elect six directors to serve until the next Annual Meeting or
2. To transact such other business as may properly until their successors are
duly elected and qualified. come before the Annual Meeting or any
adjournments thereof.
(01) Robert W. Cruickshank, (02) Michael Doar, (03) Richard T. Niner,
(04) O. Curtis Noel, (05) Charles E. Mitchell Rentschler and
(06) Gerald V. Roch
For Witheld
All From All
Nominees Nominees
---------------------------------------
For all nominees except as noted above
Mark box at right if you plan to attend the Annual Meeting.
Mark box at right if an address change or comments have
been noted on the reverse side of this card.
Please be sure to sign and date this Proxy.
Signature:___________________________ Date: _______________
Signature:___________________________ Date: _______________
- BACK -
HURCO COMPANIES, INC.
One Technology Way, Indianapolis, Indiana 46268
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - March 11, 2004
Solicited on Behalf of the Board of Directors
The undersigned hereby appoints as proxies Michael Doar and Richard T. Niner, or
either of them, with full power of substitution, to vote all shares of common
stock which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Hurco Companies, Inc., to be held at Hurco's Corporate Office,
One Technology Way, Indianapolis, Indiana at 10:00 a.m. (EST) on Thursday, March
11, 2004 and any adjournments thereof, upon the matters on the reverse side.
Only shareholders of record as of the close of business on January 8, 2004, are
entitle to notice of and to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for approval of one or more
of the above matters at the time of the Annual Meeting, the Annual Meeting may
be adjourned in order to permit further solicitation of proxies. If you do not
expect to attend the Annual Meeting, please mark, sign and date the enclosed
proxy and return it in the enclosed return envelope which requires no postage if
mailed in the United States.
The shares represented by the Proxy, unless otherwise specified, shall
be voted FOR each nominee listed on the reserve side.
PLEASE VOTE, DATE AND SIGN ON RESERVE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
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Please sign this proxy exactly as your name(s) appear(s) on the reverse side
hereof. Joint owners should each sign personally. Trustees and other fiduciaries
should indicate the capacity in which they sign. If a corporation or
partnership, this signature should be that of an authorized officer who should
state his or her title.
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Has Your Address Changed? Do You Have Any Comments?
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