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Hurco Reports Record Full-Year and Fourth Quarter Results.

INDIANAPOLIS -- Hurco Companies, Inc. (Nasdaq:HURC) today announced net income of $16,443,000, or $2.60 per share, for its fiscal year ended October 31, 2005. Net income includes a favorable non-cash adjustment recorded in the fourth quarter of approximately $2,340,000, or $.37 per share, due to the reversal of previously-established deferred tax valuation allowances as a result of the company's determination that the benefits of domestic tax credits and European net operating loss carryforwards are likely to be realized. Excluding the benefits of this adjustment, net income for fiscal 2005 was equal to a record $14,103,000, or $2.23 per share, compared to $6,269,000, or $1.04 per share, for fiscal 2004. The Company expects to be fully taxable in fiscal 2006.

For the final quarter of fiscal 2005, which also benefited from the non-cash adjustment, net income was $7,235,000, or $1.13 per share. Fourth quarter net income excluding the benefits of the adjustment was a record $4,895,000, or $.77 per share, compared to $2,281,000, or $.36 per share, for the corresponding 2004 period.

Sales and service fees for fiscal 2005 were the highest in the company's 37-year history, totaling $125,509,000, an increase of $25,937,000, or 26%, over fiscal 2004. The increase represented operational growth of 23.5% and a favorable currency translation impact of 2.5%. Computerized machine tool sales, which also were the highest in the company's history, totaled $107,313,000, an increase of 28% from the $83,663,000 recorded in 2004 primarily driven by strong worldwide demand for our existing products. Approximately $6,000,000, or 25%, of the increase in sales of computerized machine tools was the result of sales of our new lathe machine line, which was introduced in December of 2004. Sales and service fees for the fourth quarter of fiscal 2005 were also a record and totaled $34,718,000, an increase of $5,867,000, or 20%, over the corresponding period of 2004.

New order bookings in fiscal 2005 were a record amount and totaled $122,862,000, representing an increase of $19,362,000, or 19%, over the prior year. Approximately $2,432,000 of the increase was attributable to the effects of currency translation. Unit orders increased 18% in the United States, 15% in Europe and 13% in Asia. New order bookings for the fourth quarter of fiscal 2005 also were a record, totaling $34,155,000, an increase of $3,995,000, or 13%, over the corresponding 2004 period. Backlog was $10,031,000 at October 31, 2005, compared to $10,566,000 at July 31, 2005, and $12,746,000 at October 31, 2004.

Hurco's gross margin for fiscal 2005 was 33.9% compared to 30.4% for the prior year, reflecting the benefits of higher unit sales. Selling, general and administrative expenses were $26,057,000 for fiscal 2005, an increase of $4,191,000 over the amount recorded for 2004.

Operating income for fiscal 2005 was $16,501,000, or 13.1% of sales, compared to $8,432,000, or 8.5% of sales, in the prior year. Operating income in the fourth quarter totaled $5,318,000, or 15.3% of sales, compared to $2,470,000, or 8.6% of sales, in the same period one year ago.

Cash totaled $17,559,000 at October 31, 2005 compared to $8,526,000 at October 31, 2004. Total debt was $4,136,000 at October 31, 2005 and represented 6.6% of the company's total capitalization, which aggregated $63,080,000.

Michael Doar, Chief Executive Officer, stated, "I am extremely pleased with the financial results achieved in fiscal 2005. We were able to grow sales by $25 million while generating $12 million of cash from operations and only increasing inventory and accounts receivable by $3.4 million. This efficient use of our working capital demonstrates how well our business model functions. I am most thankful to our dedicated employees for their outstanding performance in executing our business strategy.

Order intake throughout our worldwide markets strengthened during the year and our new products continued to gain acceptance in the market. We are anticipating another strong year in fiscal 2006 driven by growth from our existing operations, new product introductions and new opportunities in emerging markets. We are also beginning a new production cost reduction program, which will make our machines even more competitive in our existing and new markets. I was very happy with the customer response to our existing and new machine tool models at the EMO Trade Show in September in Hanover Germany."

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 the aerospace, defense, medical equipment, energy, transportation and computer equipment. The Company is based in Indianapolis, Indiana, and has sales, application engineering and service subsidiaries in High Wycombe, England; Munich, Germany; Paris, France; Milan, Italy; Shanghai, China and Singapore, along with manufacturing operations in Taiwan. Products are sold through independent agents and distributors in the United States, Europe and Asia. The Company also has direct sales forces in the United Kingdom, Germany, France, Italy, and Asia.

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, 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, quality and delivery performance by our contract manufacturers and governmental actions and initiatives including import and export restrictions and tariffs.
Hurco Companies, Inc.
 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 (In thousands, except per-share data)

 Three Months Ended Twelve Months Ended
 October 31, October 31,
 ---------------------- ----------------------
 2005 2004 2005 2004
----------------------------------- ----------- ---------- -----------
 (audited) (audited)
Sales and service fees $34,718 $28,851 $125,509 $99,572

Cost of sales and service 22,530 19,810 82,951 69,274
 ---------- ----------- ---------- -----------
 Gross profit 12,188 9,041 42,558 30,298

Selling, general and
 administrative expenses 6,870 6,106 26,057 21,401
Severance expense - 465 - 465
 ---------- ----------- ---------- -----------
 Operating income 5,318 2,470 16,501 8,432

Interest expense 107 94 355 468

Variable Option Expense - - - 322

Other income (expense),
 net 196 45 (64) (74)
 ---------- ----------- ---------- -----------

 Income before taxes 5,407 2,421 16,082 7,568

Provision (benefit) for
 income taxes (1,828) 140 (361) 1,299
 ---------- ----------- ---------- -----------

Net income $7,235 $2,281 $16,443 $6,269
 ========== =========== ========== ===========

Earnings per common share

 Basic $1.16 $0.38 $2.66 $1.08
 ========== =========== ========== ===========
 Diluted $1.13 $0.36 $2.60 $1.04
 ========== =========== ========== ===========

Weighted average common
 shares outstanding
 Basic 6,216 5,969 6,171 5,784
 ========== =========== ========== ===========
 Diluted 6,384 6,263 6,336 6,026
 ========== =========== ========== ===========

OTHER CONSOLIDATED Three Months Ended Twelve Months Ended
 FINANCIAL DATA October 31, October 31,
 ---------------------- ----------------------
Operating Data: 2005 2004 2005 2004
 ---------- ----------- ---------- -----------
 (audited) (audited)
Gross margin 35.1% 31.3% 33.9% 30.4%

SG&A expense as a
 percentage of sales 19.8% 21.2% 20.8% 21.5%

Operating income as a
 percentage of sales 15.3% 8.6% 13.1% 8.5%

Income before taxes as a
 percentage of sales 15.6% 8.4% 12.8% 7.6%

Depreciation 387 291 1,332 1,223

Capital expenditures 1,284 371 3,040 2,103

Balance Sheet Data: 10/31/2005 10/31/2004
 ---------- -----------

Working capital
 (excluding short term
 debt) $43,183 $26,664

Days sales outstanding 41 38

Inventory turns 2.6 2.3

Capitalization
 Total debt $4,136 $4,600
 Shareholders' equity 58,944 38,455
 ---------- -----------
 Total $63,080 $43,055
 ========== ===========


 Hurco Companies, Inc.
 CONDENSED CONSOLIDATED BALANCE SHEET
 (In thousands, except per-share data)

 October 31, October 31,
 2005 2004
--------------------------------------------------------- ------------
 (audited) (audited)
ASSETS
Current assets:
 Cash and cash equivalents $17,559 $8,249
 Cash - restricted - 277
 Accounts receivable 20,100 17,337
 Inventories 29,530 28,937
 Deferred tax assets 3,043 -
 Other 3,586 1,672
 ----------- ------------
 Total current assets 73,818 56,472
 ----------- ------------

Property and equipment:
 Land 761 761
 Building 7,205 7,205
 Machinery and equipment 13,170 12,106
 Leasehold improvements 1,102 676
 ----------- ------------
 22,238 20,748
 Less accumulated depreciation and
 amortization (13,187) (12,512)
 ----------- ------------
 9,051 8,236
 ----------- ------------

Deferred tax assets 1,346 -
Software development costs, less amortization 3,752 2,920
Investments and other assets 6,147 5,818
 ----------- ------------
 $94,114 $73,446
 =========== ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable $17,051 $18,361
 Accrued expenses 13,584 11,447
 Current portion of long-term debt 126 317
 ----------- ------------
 Total current liabilities 30,761 30,125
 ----------- ------------

Non-current liabilities:
 Long-term debt 4,010 4,283
 Deferred credits and other obligations 399 583
 ----------- ------------
 Total liabilities 35,170 34,991
 ----------- ------------

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; and 6,220,220 and 6,019,594
 shares issued, respectively 622 602
 Additional paid-in capital 48,701 46,778
 Retained earnings (deficit) 13,001 (3,442)
 Accumulated other comprehensive income (3,380) (5,483)
 ----------- ------------
 Total shareholders' equity 58,944 38,455
 ----------- ------------
 $94,114 $73,446
 =========== ============
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Publication:Business Wire
Article Type:Company Profile
Date:Dec 6, 2005
Words:1599
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