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Hurco Reports Third Quarter Results

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 and the United States of America.  Web Site: www.hurco.com

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 cyclical nature of the machine tool industry, changes in general economic and business conditions that affect demand for our products, the risks of our international operations, changes in manufacturing markets, innovations by competitors, the ability to protect our intellectual property, fluctuations in foreign currency exchange rates, increases in prices of raw materials, quality and delivery performance by our vendors, changes in operations due to acquisitions or loss of key personnel, uncertainty concerning our ability to use tax loss carryforwards and governmental actions and initiatives including import and export restrictions and tariffs.

Hurco Companies, Inc.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per-share data)
         
  Three Months Ended  July 31, Nine Months Ended  July 31,
  2012 2011 2012 2011
   (unaudited)   (unaudited) 
Sales and service fees  $ 49,959  $ 50,573  $ 147,050  $ 131,829
         
Cost of sales and service  33,875  34,723  101,089  91,637
Gross profit  16,084  15,850  45,961  40,192
         
Selling, general and administrative expenses  10,272  9,317  29,290  27,401
Operating income  5,812  6,533  16,671  12,791
         
Interest expense  43  47  105  61
         
Interest income  16  35  57  107
         
Investment income (expense)  3  2  5  9
         
Other expense (income), net  190  242  69  721
         
Income before taxes  5,598  6,281  16,559  12,125
         
Provision for income taxes  1,641  1,706  5,007  3,655
         
Net income  $ 3,957  $ 4,575  $ 11,552  $ 8,470
         
Earnings per common share        
Basic  $ 0.61  $ 0.71  $ 1.78  $ 1.31
Diluted  $ 0.61  $ 0.70  $ 1.77  $ 1.30
         
Weighted average common shares outstanding        
Basic  6,447  6,441  6,444  6,441
Diluted  6,465  6,480  6,470  6,474
         
OTHER CONSOLIDATED FINANCIAL DATA Three Months Ended  July 31, Nine Months Ended  July 31,
Operating Data: 2012 2011 2012 2011
   (unaudited)   (unaudited) 
Gross margin 32% 31% 31% 30%
         
SG&A expense as a percentage of sales 21% 18% 20% 21%
         
Operating income as a percentage of sales 12% 13% 11% 10%
         
Pre-tax income as a percentage of sales  11% 12% 11% 9%
         
Effective Tax Rate 29% 27% 30% 30%
         
Depreciation and amortization  955  1,081  3,195  3,227
         
Capital expenditures  1,293  718  2,603  1,745
         
Balance Sheet Data: 7/31/2012 10/31/2011    
   (unaudited)       
Working capital (excluding cash)  $ 85,155  $ 61,885    
         
Days sales outstanding (unaudited)  43  37    
         
Inventory turns (unaudited)  1.4  1.6    
         
Capitalization        
Total debt  $ 3,143  $ 865    
Shareholders' equity  138,492  126,212    
Total  $ 141,635  $ 127,077    
     
Hurco Companies, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)
     
  July 31, October 31,
  2012 2011
   (Unaudited)   (Audited) 
ASSETS    
Current assets:    
Cash and cash equivalents  $ 35,095  $ 44,961
Accounts receivable, net  30,514  27,057
Refundable taxes  1,255  1,442
Inventories, net  95,717  81,127
Deferred income taxes  744  2,692
Derivative assets  3,104  1,197
Other  9,048  5,598
Total current assets  175,477  164,074
     
Property and equipment:    
Land  782  782
Building  7,353  7,116
Machinery and equipment  16,985  16,336
Leasehold improvements  2,999  2,508
   28,119  26,742
Less accumulated depreciation and amortization  (16,432)  (15,198)
   11,687  11,544
     
Non-current assets:    
Software development costs, less accumulated amortization  4,040  4,928
Other assets  5,792  5,999
   $ 196,996  $ 186,545
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 38,544  $ 39,046
Derivative liabilities  447  1,609
Accrued expenses  13,093  15,708
Short-term debt  3,143  865
Total current liabilities  55,227  57,228
     
Non-current liabilities:    
Deferred income taxes  2,104  1,982
Deferred credits and other obligations  1,173  1,123
Total liabilities  58,504  60,333
     
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; 12,500,000 shares authorized; 6,502,928 and 6,471,710 shares issued; and 6,447,210 and 6,440,851 shares outstanding, as of July 31, 2012 and October 31, 2011, respectively  645  644
Additional paid-in capital  53,260  52,614
Retained earnings  86,500  74,948
Accumulated other comprehensive loss  (1,913)  (1,994)
Total shareholders' equity  138,492  126,212
   $ 196,996  $ 186,545
CONTACT: John G. Oblazney
         Vice President & Chief Financial Officer
         317-293-5309

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