Hurco Companies (HURC) 8-K Hurco Reportsthird Quarter 2004 Results

EXHIBIT 99

FOR IMMEDIATE RELEASE

WEDNESDAY,AUGUST18, 2004

HURCO REPORTSTHIRD QUARTER 2004 RESULTS

INDIANAPOLIS, INDIANA,—August 18,2004—Hurco Companies, Inc. (Nasdaq:HURC)today announced that for its third fiscal quarter, which ended July 31, 2004, it recorded net income of $1,582,000, or $.25 per share, compared to $331,000, or $.06 per share, for the corresponding quarter of 2003. For the first nine months of fiscal 2004, Hurco recorded net income of $3,988,000, or $.67 per share, compared to a net loss of $112,000, or $.02 per share, for the corresponding 2003 period.

The Company attributed the dramatic improvement in its operating results to a substantial increase in its sales of computerized machine tools, due primarily to strong demand for its new machine tool models introduced over the past two years and improving market conditions, particularly in the United States and Southeast Asia. The improved results also reflected the favorable effects of stronger European currencies during the 2004 period, which resulted in a more favorable average exchange rate when translating foreign currencies into U.S. dollars for financial reporting purposes.

Sales and service fees for the third quarter of fiscal 2004 were $23,748,000, an increase of $5,394,000, or 29%, over the corresponding quarter of 2003. Approximately 67% of Hurco’s sales during the 2004 period were made outside the United States and were denominated in local currencies (primarily the Euro and Pound Sterling). As a result, approximately $1,000,000 of the increase was attributable to the favorable effects of currency translation.

New order bookings for the third quarter of fiscal 2004 were $27,448,000, an increase of $8,539,000, or 45%, over the third quarter of 2003. Approximately $1,200,000 of the increase was attributable to the favorable effects of currency translation. Orders increased 54% in the United States, 33% in Europe and 244% in Asia. For the nine months ended July 31, 2004, new orders increased $19,995,000, or 38%, over the 2003 period. Backlog was $11,104,000 at July 31, 2004, compared to $7,392,000 at April 30, 2004., and $8,153,000 at October 31, 2003.

Hurco’s gross margin for the third quarter of fiscal 2004 was 30.8% compared to 27.6% for the prior year period. The improvement reflected the benefits of higher unit sales and stronger European currencies. Selling, general and administrative expenses were $5,241,000 for the 2004 period, an increase of $909,000 over the amount recorded for the corresponding 2003 period.

Total debt was $4,953,000 at July 31, 2004, and represented 12% of the Company’s total capitalization, which aggregated $40,859,000. As of July 31, 2004, the Company had unutilized credit facilities of  $12,211,000 available for direct borrowing or commercial letters of credit.

Michael Doar, Chief Executive Officer, stated, "We are encouraged by the financial results achieved in the third quarter. Order intake in the United States and Asia continues to be strong while order rates in Europe improved considerably in the third quarter. Our lower-priced VM product line introduced nearly two years ago continues to generate significant orders. To meet customer demand, we have increased our inventories of finished products and are increasing our production capacity. We look forward to introducing new machine tool models at the International Manufacturing Technology Show in September, including a series of turning centers (lathes), a first for Hurco, that will broaden our product lines and the markets we can serve. ”

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, Ger many, 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.

Contact: Roger J. Wolf

Sr. Vice President & CFO

317-293-5319

Hurco Companies, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per-share data)
	Three Months Ended July 31,						Nine Months Ended July 31,
	2004			2003			2004			2003
		(unaudited)						(unaudited)
Sales and service fees	$	23,748		$	18,354		$	70,721		$	51,760
Cost of sales and service		16,435			13,280			49,464			37,564
Gross profit		7,313			5,074			21,257			14,196
Selling, general and administrative expenses		5,241			4,332			15,295			13,323
Operating income		2,072			742			5,962			873
Interest expense		113			167			374			476
Variable Option Expense		-			-			322			-
Other income (expense), net		28			(43	)		(119	)		5
Income before taxes		1,987			532			5,147			402
Provision for income taxes		405			201			1,159			514
Net income (loss)	$	1,582		$	331		$	3,988		$	(112	)
Earnings (loss) per common share
Basic	$	0.27		$	0.06		$	0.70		$	(0.02	)
Diluted	$	0.25		$	0.06		$	0.67		$	(0.02	)
Weighted average common shares outstanding
Basic		5,882			5,583			5,722			5,583
Diluted		6,204			5,630			5,964			5,583
OTHER CONSOLIDATED FINANCIAL DATA		Three Months Ended July 31,						Nine Months Ended July 31,
Operating Data:		2004			2003			2004			2003
		(unaudited)						(unaudited)
Gross margin		30.8	%		27.6	%		30.1	%		27.4	%
SG&A expense as a percentage of sales		22.1	%		23.6	%		21.6	%		25.7	%
Operating income as a percentage of sales		8.7	%		4.0	%		8.4	%		1.7	%
Income before taxes as a percentage of sales		8.4	%		2.9	%		7.3	%		0.8	%
Depreciation		291			358			932			1,073
Capital expenditures		742			338			1,732			835
Balance Sheet Data:		7/31/2004			7/31/2003
Working capital (excluding short term debt)	$	24,698		$	23,448
Days sales outstanding		45			45
Inventory turns		2.5			1.9
Capitalization
Total debt	$	4,953		$	10,334
Shareholders' equity		35,906			27,986
Total	$	40,859		$	38,320

Hurco Companies, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except per-share data)
	July 31,			October 31,
	2004			2003
		(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	6,564		$	5,289
Cash - restricted		-			622
Accounts receivable		14,351			12,823
Inventories		27,393			22,247
Other		2,171			1,409
Total current assets		50,479			42,390
Property and equipment:
Land		761			761
Building		7,242			7,239
Machinery and equipment		10,908			10,568
Leasehold improvements		648			544
		19,559			19,112
Less accumulated depreciation and amortization		(11,131	)		(10,730	)
		8,428			8,382
Software development costs, less amortization		2,686			1,922
Investments and other assets		5,599			5,264
	$	67,192		$	57,958
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	16,746		$	9,461
Accrued expenses		9,035			10,048
Current portion of long-term debt		315			645
Total current liabilities		26,096			20,154
Non-current liabilities:
Long-term debt		4,638			8,577
Deferred credits and other obligations		552			486
Total liabilities		31,286			29,217
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 5,953,694 and
5,575,987 shares issued, respectively		595			557
Additional paid-in capital		46,495			44,695
Accumulated deficit		(5,723	)		(9,711	)
Accumulated other comprehensive income		(5,461	)		(6,800	)
Total shareholders' equity		35,906			28,741
	$	67,192		$	57,958