Hurco Reports Fourth Quarter And Full-Year Results
The $1,932,000 decrease in other income for fiscal 2010 in comparison to fiscal 2009 was primarily due to net realized gains in fiscal 2009 of $2,028,000 from cash flow hedges of forecasted inter-company sales and purchases that became ineffective as we reduced production levels during that period.
The effective tax rate for the fourth quarter of fiscal 2010 was a provision of 18%, compared to a benefit of 44% for the same period in the prior year primarily due to the establishment of valuation allowances on certain deferred tax assets in the fourth quarter of fiscal 2010. The effective tax rate for fiscal 2010 was a benefit of 35%, compared to a benefit of 39% for the same period in the prior year. The reduction in the effective tax rate for the year was primarily due to the net impact of recording a valuation allowance on our state net operating loss carryforwards and the reversal of tax reserves for uncertain tax positions taken in previous years now expiring due to statutes of limitations.
Cash and cash equivalents totaled $48,255,000 as of October 31, 2010, compared to $28,782,000 as of October 31, 2009. This increase in cash was primarily the result of reducing our finished goods inventory by $15,189,000, or 36%. The reduction in inventory was due to both lower production levels and increased sales. In response to an increase in orders during the second half of fiscal 2010, we increased production to better align with those order levels. We continuously seek to adjust production levels to reflect changes in customer demand. Working capital, excluding cash, was $45,713,000 as of October 31, 2010, compared to $68,675,000 at October 31, 2009. The 33% reduction in working capital, excluding cash, was primarily due to a decrease in finished goods inventory and an increase in accounts payable.
Michael Doar, President and Chief Executive Officer, stated, "I am encouraged that order levels for the fourth quarter of fiscal 2010 are approaching levels we experienced before the economic downturn that began in 2008. Most importantly, we are seeing a strengthening in Europe, our largest and most profitable sales region. In response, our factory is currently operating at a near pre-recession production level and we are starting fiscal 2011 with a healthy backlog of orders. If these economic indicators continue, Hurco will be on the path to achieving the same levels of performance that we experienced before the downturn, as customers around the world begin to invest in technology that will make their businesses more profitable. As the global economy recovers, we expect to emerge as a stronger organization with a broader and more advanced product offering due to our investments in technology during this difficult economic cycle."
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