INDIANAPOLIS, Dec. 11, 2008 (GLOBE NEWSWIRE) -- December 11, 2008, Hurco Companies, Inc., (Nasdaq:HURC) today reported for its fiscal year ending October 31, 2008, net income of $22,520,000, or $3.49 per diluted share, which is an increase of 8% over fiscal 2007 net income of $20,889,000, or $3.24 per diluted share. For the fourth quarter of fiscal 2008, Hurco recorded net income of $3,422,000, or $0.53 per diluted share, which is a decrease of 40% from $5,651,000, or $0.88 per diluted share, for the corresponding period in fiscal 2007.

Sales and service fees for fiscal 2008 totaled $223,994,000, an increase of $35,947,000, or 19%, over fiscal 2007. Sales and service fees for the fourth quarter of fiscal 2008 were $47,468,000, a decrease of $2,652,000, or 5%, from the prior year period. Translating foreign sales to US Dollars for financial reporting purposes had a favorable impact on the year over year sales comparison of approximately 7%, or $13,178,000, reflecting a decrease in the value of the US Dollar relative to the Euro and Pound Sterling, and an unfavorable impact on the quarter to quarter sales comparison of 3%, or $1,728,000, reflecting an increase in the value of the US Dollar relative to those currencies during the 2008 fourth quarter.

The following table sets forth net sales and service fees by geographic region for the three and twelve month periods ended October 31, 2008 and 2007 (in thousands), respectively:

                 Net Sales and Service Fees by Geographic Region
                   Three Months Ended          Twelve Months Ended
                       October 31,                 October 31,
                                    %                             %
                  2008      2007  Change    2008      2007      Change
                ------------------------  ----------------------------
 North America  $ 12,946  $ 14,242   -9%  $ 48,373  $ 52,133      -7%
 Europe           33,031    32,215    3%   163,807   125,446      31%
 Asia Pacific      1,491     3,663  -59%    11,814    10,468      13%
                ------------------------  ----------------------------
  Total         $ 47,468  $ 50,120   -5%  $223,994  $188,047      19%
                ------------------------  ----------------------------

Sales growth was primarily driven by strong customer demand in European markets during the first nine months of the fiscal year, particularly for our higher end VMX product line. Translating foreign sales to US Dollars for financial reporting purposes had a favorable impact of approximately 10% on the European sales comparison for fiscal 2008 but it had an unfavorable impact of 5% for the fourth quarter of 2008. Sales for the fourth quarter were negatively affected in all regions as a result of the rapidly deteriorating global economy and resulted in a net reduction in backlog of approximately 42% during the quarter, of which 14% was attributable to currency translation effects.

New order bookings in fiscal 2008, were $212,530,000, an increase of $13,555,000, or 7%, over the prior year. This increase was driven by European orders, which were up $20,707,000, or 15%, while North America and Asia Pacific orders declined 12% and 6%, respectively. Fourth quarter new order bookings totaled $40,016,000, a decrease of $14,766,000, or 27%, over the corresponding 2007 period. Orders declined in all regions as our customers, consisting primarily of small job shops, reacted to the sudden downturn in the markets they serve. North America orders declined by $2,325,000, or 15%, Europe $10,440,000, or 29%, and Asia $2,000,000, or 62%. The impact of currency translation on new orders booked for the year and the fourth quarter was consistent with the impact on sales comparisons for those periods.

Hurco's gross margin for fiscal 2008 was 37%, compared to 38% for the prior year, and for the fourth quarter of fiscal 2008, gross margin was 35%, compared to 38% for the prior year period. The decreases in margin rates were primarily attributable to higher material costs. While some material costs have recently declined, our production cycle extends for approximately six months and reflects material costs from the time a purchase order is accepted. Selling, general and administrative expenses were $46,811,000 for fiscal 2008, an increase of $6,687,000 over the amount for fiscal 2007, and $10,930,000 for the fourth quarter of fiscal 2008, a reduction of $311,000 from the fourth quarter of fiscal 2007. The increase for the full year was primarily attributable to the unfavorable impact of foreign currency translation and increased selling expenses to support global sales growth initiatives and market expansion. Fourth quarter expenses were lower than in the prior year, despite the increased costs related to the International Manufacturing Technology Show (IMTS) in Chicago, as efforts were made to reduce spending due to the economic downturn.

The decrease in other income for the full year was primarily due to $2,342,000 of currency exchange losses on inter-company receivables and payables denominated in foreign currencies, net of gains or losses on forward exchange contracts. Included in this decrease was approximately $220,000 of net losses related to cash flow hedges of forecasted inter-company sales and purchases that became ineffective as production levels steeply declined in the fourth quarter of fiscal 2008. Additionally, fiscal 2007 included income from our equity investment in a Taiwan contract manufacturer, which was sold during the fourth quarter of that year.

Hurco's effective tax rate for fiscal 2008 was 34%, compared to 36% for the same period in the prior year. The effective tax rate for the fourth quarter for fiscal 2008 was 25%, compared to 30% for the same period in the prior year. The reduction in the effective tax rate in the fourth quarter and for the year was primarily due to the utilization of tax credits.