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Hurco Reports Record Sales and Operating Income in Its Second Quarter 2006 Results

Posted on: Thursday, 18 May 2006, 09:10 CDT

Hurco Companies, Inc. (Nasdaq:HURC) today announced that for its second fiscal quarter, which ended April 30, 2006, it recorded net income of $3,929,000, or $.62 per share, compared to $3,299,000, or $.52 per share, for the corresponding quarter of 2005. For the first six months of fiscal 2006, Hurco recorded net income of $6,962,000 or $1.09 per share, compared to $6,329,000 or $1.00 per share, for the corresponding 2005 period.

The company noted that its provision for income taxes increased from prior periods by approximately $1,500,000 during the second quarter of fiscal 2006 and $2,700,000 for the six month period, due primarily to the company's prior utilization of substantially all of its domestic net operating loss carryforwards. Income before taxes for the latest quarter was $6,179,000, an increase of 51% over the $4,080,000 reported in the same period one year ago.

Sales and service fees for the second quarter of fiscal 2006 were the highest in the company's history and totaled $36,861,000, an increase of $5,871,000, or 19%, from the amount recorded in the corresponding quarter of 2005, which was also a record at that time. Due to the effects of a stronger U.S. Dollar when translating foreign sales for financial reporting purposes, sales and service fees for the second quarter of fiscal 2006 were approximately $1,600,000 less than would have been the case if foreign sales had been translated at the same rate of exchange that was utilized for the second quarter of 2005. The company attributed the significant growth in its second quarter revenues to a 27% increase in unit sales of its higher margin VMX computerized machine tools, which was most pronounced in the United States and Europe. Sales and Service fees for the six months ended April 30, 2006 totaled $68,755,000, an increase of $7,519,000, or 12%. Sales and service fees for the six months were unfavorably affected by approximately $3,400,000 due to currency translation.

New orders booked in the second quarter of fiscal 2006 totaled $36,990,000, an increase of $4,058,000, or 12%, from the amount recorded in the second quarter of 2005. For the six months ended April 30, 2006, new orders totaled $74,721,000, an increase of $14,904,000, or 25%, over the 2005 amount. The impact of currency translation on new orders booked was consistent with the impact on sales and service fees.

Gross margin for the second quarter of fiscal 2006 was 35.8% compared to 34.7% for the prior year period. The improvement was primarily due to the increased unit sales partially offset by the unfavorable effects of a strengthening U.S. Dollar compared to the prior year period. Selling, general and administrative expenses were $7,140,000 for the 2006 period, an increase of $777,000, or 12%, over the amount recorded for the corresponding 2005 period, primarily due to increased sales and marketing expenses.

Operating income for the second quarter of fiscal 2006 was a record for Hurco and totaled $6,039,000 or 16% of sales and service fees, compared to $4,404,000, or 14% of sales and service fees, for the same period in the prior year.

Michael Doar, Chief Executive Officer, stated, "The financial results for our second quarter are very satisfying. Our sales and service fees reached record levels and orders remained strong. We are continuing to increase our production capacity to fulfill orders received in the first half of fiscal 2006 and future orders."

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 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 Six Months Ended April 30, April 30, ---------------------- -------------------- 2006 2005 2006 2005 -------------------------------------- ---------- ----------- -------- (unaudited) (unaudited) Sales and service fees $36,861 $30,990 $68,755 $61,236 Cost of sales and service 23,682 20,223 44,649 40,729 ----------- ---------- ----------- -------- Gross profit 13,179 10,767 24,106 20,507 Selling, general and administrative expenses 7,140 6,363 13,436 12,550 ----------- ---------- ----------- -------- Operating income 6,039 4,404 10,670 7,957 Interest expense 80 86 164 169 Other income (expense), net 220 (238) 325 (309) ----------- ---------- ----------- -------- Income before taxes 6,179 4,080 10,831 7,479 Provision for income taxes 2,250 781 3,869 1,150 ----------- ---------- ----------- -------- Net income $3,929 $3,299 $6,962 $6,329 =========== ========== =========== ======== Earnings per common share Basic $0.62 $0.53 $1.11 $1.03 =========== ========== =========== ======== Diluted $0.62 $0.52 $1.09 $1.00 =========== ========== =========== ======== Weighted average common shares outstanding Basic 6,291 6,193 6,291 6,131 =========== ========== =========== ======== Diluted 6,377 6,370 6,377 6,307 =========== ========== =========== ======== OTHER CONSOLIDATED Three Months Ended Six Months Ended FINANCIAL DATA April 30, April 30, ---------------------- -------------------- Operating Data: 2006 2005 2006 2005 ----------- ---------- ----------- -------- (unaudited) (unaudited) Gross margin 35.8% 34.7% 35.1% 33.5% SG&A expense as a percentage of sales 19.4% 20.5% 19.5% 20.5% Operating income as a percentage of sales 16.4% 14.2% 15.5% 13.0% Income before taxes as a percentage of sales 16.8% 13.2% 15.8% 12.2% Effective Tax Rate 36.4% 19.1% 35.7% 15.4% Depreciation 367 305 732 622 Capital expenditures 704 452 1,196 1,075 Balance Sheet Data: 4/30/2006 4/30/2005 ----------- ---------- Working capital (excluding short term debt) $50,761 $35,504 Days sales outstanding 45 44 Inventory turns 2.5 2.3 Capitalization Total debt $4,074 $4,395 Shareholders' equity 67,624 48,246 ----------- ---------- Total $71,698 $52,641 =========== ========== Hurco Companies, Inc. CONDENSED CONSOLIDATED BALANCE SHEET (In thousands, except per-share data) April 30, October 31, 2006 2005 ---------------------------------------------------------- ----------- (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $24,210 $17,559 Accounts receivable 24,631 20,100 Inventories 36,308 29,530 Deferred tax assets, net 2,267 3,043 Other 4,072 3,586 ----------- ----------- Total current assets 91,488 73,818 ----------- ----------- Property and equipment: Land 761 761 Building 7,234 7,205 Machinery and equipment 13,533 13,170 Leasehold improvements 1,111 1,102 ----------- ----------- 22,639 22,238 Less accumulated depreciation and amortization (13,765) (13,187) ----------- ----------- 8,874 9,051 ----------- ----------- Deferred tax assets, net 1,303 1,346 Software development costs, less amortization 4,471 3,752 Investments and other assets 6,796 6,147 ----------- ----------- $112,932 $94,114 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $28,023 $17,051 Accrued expenses 12,704 13,584 Current portion of long-term debt 131 126 ----------- ----------- Total current liabilities 40,858 30,761 ----------- ----------- Non-current liabilities: Long-term debt 3,943 4,010 Deferred credits and other obligations 507 399 ----------- ----------- Total liabilities 45,308 35,170 ----------- ----------- 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 6,341,020 and 6,220,220 shares issued, respectively 634 622 Additional paid-in capital 49,727 48,701 Retained earnings 19,962 13,001 Accumulated other comprehensive income (2,699) (3,380) ----------- ----------- Total shareholders' equity 67,624 58,944 ----------- ----------- $112,932 $94,114 =========== ===========

Source: Business Wire

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