Hurco Companies (HURC) 8-K Financial Statements and Exhibits

FOR IMMEDIATE RELEASE

THURSDAY, AUGUST 16, 2007

HURCO REPORTS STRONG THIRD QUARTER RESULTS – SALES UP 33% AND EARNINGS UP 36%.

INDIANAPOLIS, INDIANA, — August 16, 2007, Hurco Companies, Inc., (Nasdaq, Global Select Market: HURC) today reported net income of $5,163,000, or $.80 per share, for its third fiscal quarter, which ended July 31, 2007, compared to $3,802,000, or $.59 per share, for the corresponding period in 2006.  For the first nine months of fiscal 2007, Hurco recorded net income of $15,239,000, or $2.37 per share, compared to $10,764,000, or $1.68 per share, for the corresponding period in 2006.

Sales and service fees for the third quarter of fiscal 2007 were $48,555,000, an increase of $11,958,000, or 33%, from the amount for the prior year period.  Approximately 6% of the year-over-year increase reflects the effect of a weaker U.S. dollar when translating foreign sales to U.S. dollars for financial reporting purposes.  These results reflect increased demand, primarily driven by the European markets.  During the latest quarter, sales and service fees increased in Europe by $10,987,000, or 50% and in North America sales and service fees increased by $1,789,000, or 16%, compared to the third quarter of 2006.  Sales and service fees for Asia decreased by $818,000, or 25%, primarily due to the timing of two large non-recurring orders received in the third quarter of last year.  Sales and service fees for the nine months ended July 31, 2007 totaled $137,927,000, an increase of $32,575,000, or 31%, over the corresponding period in 2006.  Approximately 7% of the year-over-year increase reflects the effect of a weaker U.S. dollar when translating foreign sales to U.S. dollars for financial reporting purposes.

New orders booked during the third quarter of fiscal 2007 totaled $48,645,000, an increase of $10,685,000, or 28%, over the amount recorded in the third quarter of fiscal 2006.    During the latest quarter, orders increased in Europe and North America by $8,392,000, or 35%, and $3,594,000, or 35%, respectively, compared to the third quarter of 2006.  Orders for Asia decreased by $1,301,000, or 36%, due to the related sales issue described above.  For the nine months ended July 31, 2007, new orders totaled $144,193,000, an increase of $31,513,000, or 28%, over the corresponding period in 2006.  The impact of currency translation on new orders booked was consistent with the impact on sales and service fees on a quarter and year-to-date basis.

Gross margin for the third quarter of fiscal 2007 was 38% compared to 35% for the prior year period, as a result of higher volume and a more favorable product mix.  Selling, general and administrative expenses were $10,228,000, an increase from the $7,392,000 reported in the prior year period.  The increase was due to the effects of foreign currency translation of foreign operating expenses and expenses related to market expansion, commissions, and other administrative expenses.

Cash increased by $2,762,000 for the third quarter to $37,219,000 as working capital performance remains strong with increased sales.

Michael Doar, Chairman and Chief Executive Officer, stated, “Our global supply chain strategy continues to yield operational and financial benefits that allow us to focus on new product development, efficient worldwide release of new products, and targeted growth.  The newest technology development for all of our products is WinMax®, the software that powers our integrated control. Building on the momentum from the U.S. rollout of WinMax®, we are focused on its worldwide release”.

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 and China. 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, our ability to protect our intellectual property, fluctuations in exchange rates, fluctuations in prices of raw materials, changes in market demands, quality and delivery performance by our contract manufacturers and governmental actions and initiatives including import and export restrictions and tariffs.

Contact:   John G. Oblazney

  Vice President & Chief Financial Officer

  317-293-5309

Hurco Companies, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except per-share data)
	July 31,			October 31,
	2007			2006
	(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	37,219		$	29,846
Accounts receivable		26,968			22,248
Inventories		53,836			43,343
Deferred tax assets, net		3,965			2,768
Investments		2,114			-
Other		6,433			2,677
Total current assets		130,535			100,882
Property and equipment:
Land		761			761
Building		7,234			7,234
Machinery and equipment		14,111			12,952
Leasehold improvements		1,291			1,147
		23,397			22,094
Less accumulated depreciation and amortization		(13,913	)		(12,944	)
		9,484			9,150
Deferred tax assets, net		966			1,121
Software development costs, less amortization		6,229			5,580
Investments and other assets		6,662			7,381
	$	153,876		$	124,114
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	36,036		$	26,605
Accrued expenses		25,215			17,599
Current portion of long-term debt		-			136
Total current liabilities		61,251			44,340
Non-current liabilities:
Long-term debt		-			3,874
Deferred credits and other obligations		645			525
Total liabilities		61,896			48,739
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 6,389,720 and
6,346,520 shares issued, respectively		639			635
Additional paid-in capital		50,847			50,011
Retained earnings		43,719			28,480
Accumulated other comprehensive income		(3,225	)		(3,751	)
Total shareholders' equity		91,980			75,375
	$	153,876		$	124,114

Hurco Companies, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per-share data)
	Three Months Ended						Nine Months Ended
	July 31,						July 31,
	2007			2006			2007			2006
	(unaudited)						(unaudited)
Sales and service fees	$	48,555		$	36,597		$	137,927		$	105,352
Cost of sales and service		30,138			23,762			85,838			68,412
Gross profit		18,417			12,835			52,089			36,940
Selling, general and administrative expenses		10,228			7,392			28,883			20,828
Operating income		8,189			5,443			23,206			16,112
Interest expense (income)		(85	)		78			(48	)		242
Other income (expense), net		548			83			1,406			408
Income before taxes		8,822			5,448			24,660			16,278
Provision for income taxes		3,659			1,646			9,421			5,514
Net income	$	5,163		$	3,802		$	15,239		$	10,764
Earnings per common share
Basic	$	0.81		$	0.60		$	2.39		$	1.71
Diluted	$	0.80		$	0.59		$	2.37		$	1.68
Weighted average common shares outstanding
Basic		6,379			6,308			6,379			6,308
Diluted		6,440			6,392			6,435			6,393
OTHER CONSOLIDATED FINANCIAL DATA	Three Months Ended						Nine Months Ended
	July 31,						July 31,
Operating Data:	2007			2006			2007			2006
	(unaudited)						(unaudited)
Gross margin		37.9	%		35.1	%		37.8	%		35.1	%
SG&A expense as a percentage of sales		21.1	%		20.2	%		20.9	%		19.8	%
Operating income as a percentage of sales		16.9	%		14.9	%		16.8	%		15.3	%
Income before taxes as a percentage of sales		18.2	%		14.9	%		17.9	%		15.5	%
Effective Tax Rate		41.5	%		30.2	%		38.2	%		33.9	%
Depreciation		589			385			1,376			1,117
Capital expenditures		656			921			2,298			2,118
Balance Sheet Data:	7/31/2007			7/31/2006
Working capital (excluding short term debt)	$	69,284		$	52,747
Days sales outstanding		44			52
Inventory turns		2.2			2.3
Capitalization
Total debt	$	-		$	4,042
Shareholders' equity		91,980			70,384
Total	$	91,980		$	74,426