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Hurco Reports Third Quarter Results

Michael Doar, Chief Executive Officer, said, "I am encouraged that we have seen improvement to our bottom line each quarter of this fiscal year while continuing our product and technology development as scheduled. Our research and development efforts have resulted in a more advanced product line that we will showcase at the International Machine and Technology Show (IMTS) this September in Chicago. Because the value of our technology innovation is ultimately determined by our customers, we've designed the show around our customers' experiences. They will give presentations throughout the show that illustrate how Hurco technology increased their productivity and expanded their capabilities. One-half of the machines we will exhibit at IMTS are 5-axis and multi-tasking machines because they provide the greatest productivity gains. The recent release of our WinMax8 control software includes features that enhance multi-tasking and 5-axis machining as well as substantial advancements to existing features that benefit the entire line of Hurco machine tools. Our innovative controls and software, which help customers maximize productivity through reduced setup time and the ability to multi-task on the shop floor, continue to differentiate Hurco products in the marketplace."

Hurco Companies, Inc. is an industrial technology company that designs and produces interactive computer controls, software and computerized machine tools for the worldwide metal cutting and metal forming industry. 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 aerospace, defense, medical equipment, energy, transportation and computer equipment. The Company is based in Indianapolis, Indiana, with manufacturing operations in Taiwan and China, and sells its products through direct and indirect sales forces throughout North America, Europe, and Asia. The Company has sales, application engineering support and service subsidiaries in Canada, China, England, France, Germany, India, Italy, Poland, Singapore, South Africa, Spain, and the United States of America.  Web Site:

This news release contains forward looking statements which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the impact of the recent global economic recession, including disruption in credit markets, other changes in general economic and business conditions that affect demand for computerized machine systems, computer numerical control systems and software products, changes in manufacturing markets, innovations by competitors, our ability to protect our intellectual property, fluctuations in exchange rates, fluctuations in prices of raw materials, changes in market demands, quality and delivery performance by our contract manufacturers and governmental actions and initiatives including import and export restrictions and tariffs.

Hurco Companies, Inc.
(In thousands, except per-share data)
  Three Months Ended  Nine Months Ended 
  July 31,  July 31,
  2010 2009 2010 2009
   (unaudited)   (unaudited) 
Sales and service fees  $ 26,474  $ 19,039  $ 71,178  $ 67,835
Cost of sales and service  21,815  13,788  57,862  48,822
Gross profit  4,659  5,251  13,316  19,013
Selling, general and administrative expenses  6,994  7,200  20,757  22,747
Operating loss  (2,335)  (1,949)  (7,441)  (3,734)
Interest expense  21  6  43  33
Interest income  24  36  49  185
Investment income  4  3  12  32
Other expense (income), net  55  (133)  448  (1,828)
Loss before taxes  (2,383)  (1,783)  (7,871)  (1,722)
Benefit for income taxes  (1,210)  (552)  (3,289)  (564)
Net loss  $ (1,173)  $ (1,231)  $ (4,582)  $ (1,158)
Losses per common share        
Basic  $ (0.18)  $ (0.19)  $ (0.71)  $ (0.18)
Diluted  $ (0.18)  $ (0.19)  $ (0.71)  $ (0.18)
Weighted average common shares outstanding        
Basic  6,441  6,434  6,441  6,425
Diluted  6,441  6,434  6,441  6,425
OTHER CONSOLIDATED FINANCIAL DATA Three Months Ended  Nine Months Ended 
  July 31, July 31,
Operating Data: 2010 2009 2010 2009
   (unaudited)   (unaudited) 
Gross margin 17.6% 27.6% 18.7% 28.0%
SG&A expense as a percentage of sales 26.4% 37.8% 29.2% 33.5%
Operating loss as a percentage of sales -8.8% -10.2% -10.5% -5.5%
Pre-tax loss as a percentage of sales  -9.0% -9.4% -11.1% -2.5%
Effective tax rate 50.8% 31.0% 41.8% 32.8%
Depreciation  978  846  2,811  2,451
Capital expenditures  498  641  1,242  2,960
Balance Sheet Data: 7/31/2010 10/31/2009    
Working capital (excluding cash)  $ 48,093  $ 68,675    
Days sales outstanding  41  39    
Inventory turns  1.5  1.0    
Total debt  $ --   $ --     
Shareholders' equity  114,046  120,376    
Total  $ 114,046  $ 120,376    
Hurco Companies, Inc.
(In thousands, except share and per-share data)
  July 31, October 31,
  2010 2009
   (unaudited)   (audited) 
Current assets:    
Cash and cash equivalents  $ 45,189  $ 28,782
Accounts receivable, net  14,276  13,988
Refundable taxes  796  7,121
Inventories, net  51,027  60,281
Deferred income taxes, net  2,532  2,670
Derivative assets  1,287  376
Other  8,221  5,046
Total current assets  123,328  118,264
Property and equipment:    
Land  782  782
Building  7,116  7,116
Machinery and equipment  14,768  14,995
Leasehold improvements  2,042  2,021
   24,708  24,914
Less accumulated depreciation and amortization  (12,800)  (11,802)
   11,908  13,112
Non-current assets:    
 Software development costs, less accumulated amortization  6,093  6,503
 Other assets  6,284  6,864
   $ 147,613  $ 144,743
Current liabilities:    
Accounts payable  $ 20,561  $ 8,262
Derivative liabilities  1,516  2,234
Accrued expenses  7,969  10,311
Total current liabilities  30,046  20,807
Non-current liabilities:    
Deferred income taxes, net  2,592  2,570
Deferred credits and other obligations  929  990
Total liabilities  33,567  24,367
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;    
13,250,000 shares authorized; and 6,440,851 shares issued    
 and outstanding  644  644
Additional paid-in capital  52,098  52,003
Retained earnings  64,986  69,568
Accumulated other comprehensive loss  (3,682)  (1,839)
Total shareholders' equity  114,046  120,376
   $ 147,613  $ 144,743
CONTACT:  Hurco Companies, Inc.
          John Oblazney, Vice President & Chief Financial Officer

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