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Hurco Companies Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: September 3, 2010 09:18AM

Hurco Companies Inc. (HURC) filed Quarterly Report for the period ended 2010-07-31. Hurco Companies Inc. has a market cap of $105.3 million; its shares were traded at around $16.35 with and P/S ratio of 1.1.

HURC is in the portfolios of Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Orders. New order bookings in the third quarter of fiscal 2010 were $28.0 million, an increase of $10.1 million, or 56%, from the same period in fiscal 2009. Orders increased in North America by $2.5 million, or 45%, in Europe by $4.3 million, or 38%, and in Asia Pacific by $3.3 million, or 285%, in each case as compared to the third quarter of fiscal 2009. The increase in orders reflected higher demand in China and India for our entry-level, lower-priced VM series machines and increased demand in the other Asia Pacific territories. The impact of currency translation on new orders booked in fiscal 2010 was consistent with its impact on sales.

Income Taxes. Our effective tax rate for the third quarter of fiscal 2010 was 51% in comparison to 31% for the same period in fiscal 2009. We recorded a benefit for income taxes during the third quarter of fiscal 2010 of approximately $1.2 million compared to a benefit of $552,000 for the same period in fiscal 2009. The increase in the effective tax rate relates primarily to the recognition of tax benefits of $495,000 for uncertain tax positions due to expiration of statutes of limitations.

Orders. New order bookings in the first nine months of fiscal 2010 were $79.2 million, an increase of $18.6 million, or 31%, from the same period in fiscal 2009. Orders increased in North America by $2.9 million, or 16%, in Europe by $7.0 million, or 18%, and in the Asia Pacific region by $8.7 million, or 316%, compared to the same period of fiscal 2009. The increase in orders reflected higher demand in China and India for our entry-level, lower-priced VM series machines and increased demand in the other Asia Pacific territories. The impact of currency translation on new orders booked in fiscal 2010 was consistent with its impact on sales.

Income Taxes. Our effective tax rate for the first nine months of fiscal 2010 was 42% in comparison to 33% for the same period in fiscal 2009. We recorded a benefit for income taxes during the first nine months of fiscal 2010 of approximately $3.3 million compared to a benefit of $564,000 for the same period in fiscal 2009. The increase in the effective tax rate relates primarily to the recognition of tax benefits of $495,000 for uncertain tax positions due to the expiration of statutes of limitations.

At July 31, 2010, our cash balance was $45.2 million, compared to $28.8 million at October 31, 2009. Approximately 76% of the $45.2 million of cash is in U.S. Dollars. The balance is held outside the U.S. in the local currencies of our various foreign entities and is subject to fluctuations in currency exchange rates.

Inventories were $51.0 million at July 31, 2010, compared to $60.3 million at October 31, 2009. The $9.3 million decrease was due to a combination of lower production levels and an increase in market demand which decreased finished goods inventory by $15.5 million or 37%. As a result of the recent increase in orders, we have started increasing production to meet current order levels and reduce our backlog. This increase in production has increased work-in-process inventory by $5.6 million, or 159%. We continue to evaluate changes in production levels due to changes in customer demand.

Read the The complete Report



Stocks Discussed: HURC,
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