EX-99 2 q4earningsrelease.htm Q4 EARNINGS RELEASE q4earningsrelease.htm
 
Exhibit 99
FOR IMMEDIATE RELEASE
FRIDAY, DECEMBER 7, 2007

HURCO REPORTS STRONG FULL-YEAR AND FOURTH QUARTER RESULTS

INDIANAPOLIS, INDIANA, — December 7, 2007, Hurco Companies, Inc., (Nasdaq, Global Select Market: HURC) today reported for its fiscal year ending October 31, 2007, net income of $20,889,000, or $3.24 per share, which is an increase of 35% over fiscal 2006 net income of $15,479,000, or $2.42 per share.  For the fourth quarter of fiscal 2007, Hurco recorded net income of $5,648,000, or $0.88 per share, which is an increase of 20% over $4,714,000, or $0.74 per share, for the corresponding period in fiscal 2006.

Sales and service fees for fiscal 2007 totaled $188,047,000, an increase of $39,530,000, or 27%, over fiscal 2006.  Sales and service fees for the fourth quarter of fiscal 2007 were $50,120,000, an increase of $6,956,000, or 16%, over the prior year period.  The effect of a weaker U.S. dollar when translating foreign sales to U.S. dollars for financial reporting purposes had a favorable impact on the year over year sales comparison of approximately 7%, or $11,011,000.  The currency translation impact on fourth quarter sales comparison was also 7%, or $3,179,000.

The following table sets forth net sales and service fees by geographic region for the three and twelve month periods ended October 31, 2007 and 2006, respectively:

Net Sales and Service Fees by Geographic Region


   
Three Months Ended October 31,
    
Twelve Months Ended October 31,
  
   
2007
    
2006
    
% Change
    
2007
    
2006
    
% Change
  
                                     
North America
   $
14,242
     $
14,386
       -1 %   $
52,133
     $
50,563
       3 %
Europe
    
32,215
      
25,498
       26 %    
125,446
      
87,735
       43 %
Asia Pacific
    
3,663
      
3,280
       12 %    
10,468
      
10,219
       2 %
  Total
   $
50,120
     $
43,164
       16 %   $
188,047
     $
148,517
       27 %

The annual and fourth quarter sales growth was primarily driven by a strong European market and continued demand for our higher end VMX product line across all three geographical regions.  The effect of a weaker U.S. dollar when translating foreign sales dollars for financial reporting purposes had a favorable impact of approximately 12% on the European sales comparison for both the full year and fourth quarter.  Sales in the United States, for the fourth quarter and full year, reflected market softening primarily in the Midwest.  Asia Pacific sales remained relatively unchanged for the year, as Hurco continues the development of its selling channels in China and India.

New order bookings in fiscal 2007, were $198,975,000, an increase of $44,208,000, or 29%, over the prior year.  Fourth quarter new order bookings totaled $54,782,000, an increase of $12,695,000, or 30%, over the corresponding 2006 period.  Europe was the primary contributor to both the annual and quarterly increases.  The impact of currency translation on new orders booked was consistent with the impact on sales and service fees year over year.

Hurco’s gross margin for fiscal 2007 was 38%, compared to 36% for the prior year, reflecting the impact of higher sales and improved mix.  Gross margin for the fourth quarter of fiscal 2007, was 38%, unchanged from the corresponding period in fiscal 2006.  Selling, general and administrative expenses were $40,124,000 for fiscal 2007, an increase of $9,427,000 over the amount for fiscal 2006, and $11,241,000 for the fourth quarter of fiscal 2007, an increase of $1,372,000 over the fourth quarter of fiscal 2006. The increases for both the full year and the fourth quarter were primarily attributable to expenses supporting sales growth and market expansion.

Hurco’s effective tax rate for fiscal 2007 was 36%, compared to 33% for the same period in the prior year.  The 2006 lower effective tax rate was primarily due to a deduction generated from a change in tax code.  The effective tax rate for the fourth quarter of fiscal 2007 was 30%, compared to 31% for the same period in the prior year.  The reduction in the fourth quarter effective tax rate was due to year to year differences in the relative income of various foreign subsidiaries and the utilization of foreign net operating losses and domestic tax credits.

Cash and cash equivalents totaled $39,760,000 as of October 31, 2007, compared to $29,846,000 as of October 31, 2006.  Working capital, excluding cash and short-term debt, was $33,290,000 as of October 31, 2007, compared to $26,832,000 as of October 31, 2006.  The increase in working capital relates to inventory to support increased order volume, particularly for Hurco’s larger machines.

Michael Doar, Chief Executive Officer, stated, "This was another great year for Hurco as we achieved even greater milestones. It is fitting that Hurco is in the best financial position of its history as we kick off our 40-year anniversary."

Doar attributed the Company's successful financial position to the strategic plan that was implemented in 2001. "Focusing on our core competencies has allowed Hurco to develop the Hurco brand and strengthen its presence globally.  Using a disciplined approach, Hurco has leveraged its extendable platforms to support its global business model and expansion in emerging markets.  These platforms encompass all areas of the business, including product development, software development, marketing and sales, manufacturing and information technology," stated Doar.
 
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; Mississauga, Canada and Singapore, along with manufacturing operations in Taiwan and China.  Products are sold through independent agents and distributors in North America, Europe and Asia.  The Company also has direct sales forces in the United Kingdom, Germany, France, Italy, Canada, 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 Oblazney
    Vice President & Chief Financial Officer
    317-293-5309

 
 
             
Hurco Companies, Inc.      
CONDENSED CONSOLIDATED BALANCE SHEET      
(In thousands, except per-share data)      
             
             
   
October 31,
    
October 31,
  
   
2007
    
2006
  
   
(unaudited)
    
(audited)
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
   $
39,760
     $
29,846
  
Accounts receivable
    
25,645
      
22,248
  
Inventories
    
61,121
      
43,343
  
Deferred tax assets, net
    
5,909
      
2,768
  
Other
    
4,481
      
2,677
  
Total current assets
    
136,916
      
100,882
  
                 
Property and equipment:
                
Land
    
776
      
761
  
Building
    
7,135
      
7,234
  
Machinery and equipment
    
13,629
      
12,952
  
Leasehold improvements
    
1,473
      
1,147
  
     
23,013
      
22,094
  
Less accumulated depreciation and amortization
     (11,617 )     (12,944 )
     
11,396
      
9,150
  
                 
                 
Deferred tax assets, net
    
774
      
1,121
  
Software development costs, less amortization
    
5,960
      
5,580
  
Investments and other assets
    
7,160
      
7,381
  
    $
162,206
     $
124,114
  
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
Current liabilities:
                
Accounts payable
   $
35,486
     $
26,605
  
Accrued expenses
    
28,380
      
17,599
  
Current portion of long-term debt
    
-
      
136
  
Total current liabilities
    
63,866
      
44,340
  
                 
Non-current liabilities:
                
Long-term debt
    
-
      
3,874
  
Deferred credits and other obligations
    
737
      
525
  
Total liabilities
    
64,603
      
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 6,392,220 and
                
6,346,520 shares issued, respectively
    
639
      
635
  
Additional paid-in capital
    
50,971
      
50,011
  
Retained earnings
    
49,367
      
28,480
  
Accumulated other comprehensive income
     (3,374 )     (3,751 )
Total shareholders' equity
    
97,603
      
75,375
  
    $
162,206
     $
124,114
  
                 


                         
Hurco Companies, Inc.            
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS          
(In thousands, except per-share data)            
                         
   
Three Months Ended October 31,
    
Twelve Months Ended October 31,
  
                         
   
2007
    
2006
    
2007
    
2006
  
   
(unaudited)    
  
(unaudited)    
Sales and service fees
   $
50,120
     $
43,164
     $
188,047
     $
148,517
  
                                 
Cost of sales and service
    
31,128
      
26,780
      
116,965
      
95,192
  
Gross profit
    
18,992
      
16,384
      
71,082
      
53,325
  
                                 
Selling, general and administrative expenses
    
11,241
      
9,869
      
40,124
      
30,697
  
Operating income
    
7,751
      
6,515
      
30,958
      
22,628
  
                                 
Interest expense (income)
     (17 )    
18
       (65 )    
259
  
                                 
Other income (expense), net
    
335
      
337
      
1,742
      
745
  
                                 
Income before taxes
    
8,103
      
6,834
      
32,765
      
23,114
  
                                 
Provision for income taxes
    
2,455
      
2,120
      
11,876
      
7,635
  
                                 
Net income
   $
5,648
     $
4,714
     $
20,889
     $
15,479
  
                                 
Earnings per common share
                                
                                 
Basic
   $
0.88
     $
0.75
     $
3.27
     $
2.45
  
Diluted
   $
0.88
     $
0.74
     $
3.24
     $
2.42
  
                                 
Weighted average common shares outstanding
                                
Basic
    
6,382
      
6,317
      
6,382
      
6,317
  
Diluted
    
6,445
      
6,396
      
6,440
      
6,397
  
                                 
OTHER CONSOLIDATED FINANCIAL DATA
  
Three Months Ended October 31,
    
Twelve Months Ended October 31,
  
                                 
Operating Data:
  
2007
    
2006
    
2007
    
2006
  
   
(unaudited)     
  
(unaudited)     
Gross margin
     37.9 %     38.0 %     37.8 %     35.9 %
                                 
SG&A expense as a percentage of sales
     22.4 %     22.9 %     21.3 %     20.7 %
                                 
Operating income as a percentage of sales
     15.5 %     15.1 %     16.5 %     15.2 %
                                 
Income before taxes as a percentage of sales
     16.2 %     15.8 %     17.4 %     15.6 %
                                 
Effective Tax Rate
     30.3 %     31.0 %     36.2 %     33.0 %
                                 
Depreciation
    
730
      
387
      
2,106
      
1,504
  
                                 
Capital expenditures
    
2,212
      
1,183
      
4,510
      
3,301
  
                                 
Balance Sheet Data:
  
10/31/2007
    
10/31/2006
                  
                                 
Working capital (excluding short term debt)
   $
73,050
     $
56,678
                  
                                 
Days sales outstanding
    
33
      
41
                  
                                 
Inventory turns
    
2.0
      
2.2
                  
                                 
Capitalization
                                
Total debt
   $
-
     $
4,010
                  
Shareholders' equity
    
97,603
      
75,375
                  
Total
   $
97,603
     $
79,385