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Hurco Reports Second Quarter Results

Stocks in this article: HURC

Selling, general and administrative expenses in the second quarter of fiscal 2013 were $10,679,000, an increase of $1,391,000 from the prior year period primarily due to the timing of the recognition of incentive compensation accruals in the 2013 period. Selling, general and administrative expenses were $19,599,000 for the first six months of fiscal 2013 compared to $19,018,000 for the first six months of fiscal 2012. The year-to-date increase primarily reflects higher sales and marketing expenses relating to our ongoing rebranding initiative.  

Cash and cash equivalents totaled $43,277,000 as of April 30, 2013, compared to $35,770,000 as of October 31, 2012. The increase in cash in the first six months was driven by the collection of receivables and a decrease in refundable taxes and inventory levels.

Michael Doar, Chairman, Chief Executive Officer, stated, "The second quarter order activity in Europe was positive in light of the lingering recession in the region and performance in North America was steady. Although activity in Asia was down, I was pleased with the level of activity at the China Industrial Machine Tool show last month, where we officially launched the Hurco rebranding initiative to the Chinese market. The key aspect of this rebranding is concise communication of our core value proposition, which is increased profitability for smaller-volume production environments where a variety of parts are manufactured versus mass production environments. I am confident this focused value proposition will differentiate us in the market place."

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 China, England, France, Germany, India, Italy, Poland, Singapore, South Africa 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 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.
(In thousands, except per-share data)
  Three Months Ended  April 30, Six Months Ended  April 30,
  2013 2012 2013 2012
   (unaudited)   (unaudited) 
Sales and service fees  $ 49,619  $ 45,965  $ 93,704  $ 97,091
Cost of sales and service  34,336  32,572  65,505  67,214
Gross profit  15,283  13,393  28,199  29,877
Selling, general and administrative expenses  10,679  9,288  19,599  19,018
Operating income  4,604  4,105  8,600  10,859
Interest expense  55  38  120  62
Interest income  31  19  47  41
Investment income (expense)  4  (4)  15  2
Other (income) expense, net  72  17  331  (121)
Income before taxes  4,512  4,065  8,211  10,961
Provision for income taxes  1,329  1,103  2,774  3,366
Net income  $ 3,183  $ 2,962  $ 5,437  $ 7,595
Income per common share        
Basic  $ 0.49  $ 0.46  $ 0.83  $ 1.17
Diluted  $ 0.48  $ 0.45  $ 0.83  $ 1.16
Weighted average common shares outstanding        
Basic  6,452  6,443  6,449  6,442
Diluted  6,496  6,479  6,489  6,473
OTHER CONSOLIDATED FINANCIAL DATA Three Months Ended  April 30, Six Months Ended  April 30,
Operating Data: 2013 2012 2013 2012
   (unaudited)   (unaudited) 
Gross margin 31% 29% 30% 31%
SG&A expense as a percentage of sales 22% 20% 21% 20%
Operating income as a percentage of sales 9% 9% 9% 11%
Pre-tax income as a percentage of sales  9% 9% 9% 11%
Effective Tax Rate 29% 27% 34% 31%
Depreciation and amortization  798  1,153  1,715  2,240
Capital expenditures  453  766  1,289  1,310
Balance Sheet Data: 4/30/2013 10/31/2012    
Working capital (excluding cash)  $ 85,652  $ 88,239    
Days sales outstanding (unaudited)  48  38    
Inventory turns (unaudited)  1.5  1.5    
Total debt  $ 3,244  $ 3,206    
Shareholders' equity  148,327  143,793    
Total  $ 151,571  $ 146,999    
Hurco Companies, Inc.
(In thousands, except share and per-share data)
  April 30, 2013 October 31, 2012
   (Unaudited)   (Audited) 
Current assets:    
Cash and cash equivalents  $ 43,277  $ 35,770
Accounts receivable, net  33,602  35,297
Refundable taxes  204  1,459
Inventories, net  90,044  91,320
Deferred income taxes  2,169  1,182
Derivative assets  367  708
Other  8,180  7,645
Total current assets  177,843  173,381
Property and equipment:    
Land  782  782
Building  7,326  7,352
Machinery and equipment  17,843  17,411
Leasehold improvements  3,588  3,467
   29,539  29,012
Less accumulated depreciation and amortization  (17,811)  (16,933)
   11,728  12,079
Non-current assets:    
 Software development costs, less accumulated amortization  3,885  3,969
 Other assets  6,076  5,883
   $ 199,532  $ 195,312
Current liabilities:    
Accounts payable  $ 32,899  $ 29,788
Derivative liabilities  1,177  569
Accrued expenses  11,594  15,809
Short-term debt  3,244  3,206
Total current liabilities  48,914  49,372
Non-current liabilities:    
Deferred income taxes  920  903
Deferred credits and other obligations  1,371  1,244
Total liabilities  51,205  51,519
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; 6,522,141 and 6,502,928 shares issued; and 6,453,685 and 6,447,210 shares outstanding, as of April 30, 2013 and October 31, 2012, respectively  646  645
Additional paid-in capital  53,917  53,415
Retained earnings  96,023  90,586
Accumulated other comprehensive loss  (2,259)  (853)
Total shareholders' equity  148,327  143,793
   $ 199,532  $ 195,312
CONTACT: John G. Oblazney
         Vice President & Chief Financial Officer

Hurco Companies, Inc. Logo

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