SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

      Annual report  pursuant to section 13 or 15(d) of the Securities  Exchange
      Act of 1934 [Fee  Required]  for the fiscal year ended October 31, 1999 or
      Transition  report  pursuant  to  section  13 or 15(d)  of the  Securities
      Exchange  Act of 1934 [No Fee  Required]  for the  transition  period from
      _________ to _________.

Commission File No. 0-9143

                              HURCO COMPANIES, INC.

             (Exact name of registrant as specified in its charter)

                               Indiana 35-1150732
      ------------------------------------------ -------------------------
     (State or other jurisdiction of (I.R.S. Employer Identification Number)
                         incorporation or organization)

                               One Technology Way

                           Indianapolis, Indiana 46268
       ------------------------------------------ ----------------------
               (Address of principal executive offices) (Zip code)

       Registrant's telephone number, including area code (317) 293-5309
                                 --------------

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, No Par
Value
--------------------------
(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during  the  preceding  12  months,  and  (2) has  been  subject  to the  filing
requirements for at least the past 90 days. Yes X No

The  aggregate   market  value  of  the   Registrant's   voting  stock  held  by
non-affiliates as of, January 11, 2000 was $20,087,524.

The number of shares of the Registrant's  common stock outstanding as of January
11, 2000 was 5,951,859.

DOCUMENTS INCORPORATED BY REFERENCE: None

Indicate by check mark if disclosure of delinquent  filers  pursuant to Rule 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
<PAGE>


                                     PART I

Item 1.  BUSINESS

(a)    General Development of Business

Hurco Companies, Inc. is an industrial automation systems company. We design and
produce  interactive  computer  numerical control (CNC) systems and software and
computerized  machine systems for sale through our own  distribution  network to
the worldwide  metal working  market.  Our  proprietary  CNC systems and related
software  products  are  either  sold  as  an  integral  component  of  our  own
computerized  machine  systems or sold  separately to machine tool end-users and
other machine tool manufacturers who integrate them with their own products.

We pioneered the  application of  microprocessor  technology and  conversational
programming  software to machine tool controls and,  since our founding in 1968,
have been a leader in the  introduction of interactive CNC systems that automate
manufacturing  processes  and improve  productivity  in certain  segments of the
metalworking  industry.  We have concentrated on designing  "user-friendly"  CNC
systems  that  can be  operated  by both  skilled  and  unskilled  machine  tool
operators and yet are capable of  instructing a machine tool to perform  complex
tasks. The combination of  microprocessor  technology and patented  interactive,
conversational  programming software in our CNC systems enables operators on the
production floor to quickly and easily create a program for machining or forming
a particular part from a blueprint or electronic  design and  immediately  begin
production of that part.

Our  executive  offices and principal  design,  engineering,  and  manufacturing
management  operations  are  headquartered  in  Indianapolis,   Indiana.  Sales,
application  engineering  and  service  offices  are  located  in  Indianapolis,
Indiana;  Farmington Hills, Michigan;  High Wycombe,  England;  Munich, Germany;
Paris, France; Milan, Italy and Singapore. A United States distribution facility
is located in Long Beach, California.

(b)      Financial Information About Industry Segments

We operate in one business segment,  industrial automation systems, as discussed
further in Note 14 in the Consolidated Financial Statements.

(c)      Narrative Description of Business

General

The  manufacture of metal parts for industrial and consumer  products  primarily
involves two major processes:  metal cutting and metal forming.  These processes
are performed by machine  tools.  Metal  cutting  machine tools produce parts by
milling,  drilling,  turning and grinding a solid block of metal.  Metal forming
machine tools  fabricate parts by shearing,  punching,  forming and bending flat
sheets of metal.

Approximately  three-fourths  of the  world's  machine  tools are made for metal
cutting  applications.  The milling  machine is one of the most common  types of
metal  cutting  machines.  Milling  machines  shape a part by moving a  rotating
cutting tool,  such as a drill,  tap or mill,  across a metal block.  Although a
majority of the milling machines in current use are still manually operated,  an
increasing  number are now operated  using CNC systems such as those produced by
our company.  CNC-operated  milling machines  automatically  and precisely shape
<PAGE>
parts by  directing  the  movement  of a  cutting  tool  according  to a program
specifically  designed for the desired part. Some CNC-operated milling machines,
referred to as machining centers, are equipped with automatic tool changers that
enable several  different  cutting tools to be used in a programmed  sequence on
the same part with little interruption time to change cutting tools.

Metal forming machines include press brakes,  presses,  shears and punches.  The
press brake is the basic machine tool used to perform simple bending  operations
on a wide variety of sheet metal to create parts such as computer cabinets, door
frames, aircraft components and electrical enclosures. Each press brake uses one
or more manual or automated  gauge systems that determine where the bend will be
made in the sheet metal part. Automated press brakes utilize CNC systems such as
those we produce.

We have pursued a strategy that is focused on developing and distributing to the
worldwide metal working market a comprehensive  line of interactive CNC products
that  incorporate   proprietary   technology  designed  to  enhance  the  user's
productivity  through  ease of  operation  and  adaptability  to a wide range of
manufacturing  applications.  As part of this strategy,  we have adopted an open
systems architecture that permits our CNC systems and software to be used with a
variety of hardware platforms and have emphasized an "operator  friendly" design
that employs interactive  "conversational"  programming  software.  We outsource
substantially  all of  our  manufacturing  operations  to  independent  contract
manufacturers  and concentrate our resources on product  research,  development,
design and engineering, marketing, distribution and customer service.

Products

Our  principal  products  consist  primarily  of  computerized  machine  systems
(CNC-operated  milling  machines,  machining  centers  and metal  forming  press
brakes)  into which our  proprietary  software  and CNC systems  have been fully
integrated.  We also  produce CNC systems  and related  software  for both metal
cutting and metal forming  machines that are sold primarily as retrofit  control
systems.  In  addition,  we produce and  distribute  software  options,  control
upgrades,  hardware  accessories  and  replacement  parts and  provide  operator
training and support services to our customers.

The following table sets forth the  contribution of each of these product groups
to our total sales and service fees during each of the past three fiscal years:
<TABLE>
                                                                       Year Ended October 31,

(Dollars in thousands)                                1999                    1998                    1997
                                                      ----                    ----                    ----
<S>                                          <C>       <C>           <C>      <C>            <C>       <C>
Computerized Machine Systems............      $63,793   (72.3%)       $64,770   (69.3%)       $61,679   (64.4%)
CNC Systems and Software*...............       10,623   (12.0%)        14,727   (15.8%)        19,296   (20.2%)
Service Parts...........................        9,574   (10.9%)         9,424   (10.1%)         9,612   (10.0%)
Service Fees............................        4,248    (4.8%)         4,501    (4.8%)         5,142    (5.4%)
                                           ----------    ------     --------- ---------     -------------------
                                              $88,238  (100.0%)       $93,422  (100.0%)       $95,729  (100.0%)
                                              =======  ========       =======  ========       =======  ========


* Amounts  shown do not include CNC systems sold as an  integrated  component of
computerized machine systems.

</TABLE>
<PAGE>
Computerized Machine Systems

Metal Cutting Systems - Ultimax(R)
-------------------------------
We design and market  computerized  machine  systems  which are equipped  with a
fully integrated  interactive  Ultimax(R) CNC system.  All of these machines are
built to our specifications by independent contract manufacturers  utilizing our
own CNC  systems.  Our  current  line of machine  tools is a complete  family of
products with  different  levels of  performance  features for different  market
applications ranging in price from $25,000 to $165,000.

Our  computerized  machine systems line consists of two milling machines with an
x-axis travel of 30 inches and 40 inches and computerized machining centers with
an x-axis travel of 24, 30, 40 and 64 inches.

Metal Cutting Systems - DynaPath(TM)
--------------------------------
In fiscal 1998, we expanded our product  strategy to include  marketing  milling
machines featuring fully integrated Delta(TM) CNC systems. These machine systems
are sold under the DynaPath(TM) name through one of our subsidiaries.  In fiscal
1999, we further expanded this product line to include turning machines.

Metal Forming Systems
In the first quarter of fiscal 1998, we introduced an up-acting press brake line
(bending machine) that incorporates our Autobend(R) CNC system.  This product is
sold to the North American  market by independent  distributors  and, in certain
territories,  by direct sales personnel.  We also began offering  European style
precision-ground  tooling which is sold either in conjunction with a press brake
or directly to end-users of press  brakes.  In November  1999,  we  introduced a
down-acting  press brake line and American style precision ground tooling.  Both
of these  products  are  expected to impact sales and service fees in the second
half of fiscal 2000.

CNC Systems and Software
Our CNC systems and  software  are  marketed  under the  tradenames  Ultimax(R),
Dynapath(TM)   UltiPath(TM),   Delta  (TM)  and  Autobend(R).   The  Ultimax(R),
UltiPath(TM)  and  Delta(TM)  product  lines are used to control  metal  cutting
machine  tools.  Autobend(R)  CNC systems and Autobend PC(R) are used to control
metal forming press brakes.

o    Ultimax(R)
     -------
Our patented Ultimax(R) twin screen  "conversational" CNC system, sold solely as
a fully integrated feature of a Hurco computerized machine system,  incorporates
an interactive and powerful "data block"  programming  methodology  supported by
extensive geometric and process data calculation software tools. This CNC system
enables a machine  operator  to create  complex  two-dimensional  part  programs
directly  from  blue  print  inspection.  Machine  operators  with  little or no
programming   experience  can  successfully  program  parts  and  begin  cutting
operations  in a short time with  minimum  special  training.  Since the initial
introduction of the Ultimax(R) CNC in 1984, we have added  enhancements  related
to  operator  programming  productivity,  CAD  compatibility,   data  processing
throughput  and  motion  control  speed and  accuracy.  In 1998,  we  introduced
Ultimax(R) 4 programming  stations,  which use a Pentium* processor featuring an
operator console with liquid crystal display screens. By incorporating  Industry
Standard Architecture (ISA) personal computer (PC) platform components, this CNC
product offers
-------------
*     Pentium is a registered trademark of Intel Corporation
<PAGE>
improved  performance  while  ensuring  access to the most  effective  computing
hardware and software technology.

o    UltiPath(TM)
UltiPath(TM)  is a  low-cost,  interactive  PC-based  CNC  system  that  permits
conversational programming.  This control product is intended for the 2-axis and
3-axis entry level machining  market and enables  skilled and unskilled  machine
operators  to  convert  manual  machine  operations  to  easy-to-use  CNC  parts
processing.  The  UltiPath(TM) CNC embodies our patented  interactive  machining
technology  and  our  recently  patented  "Object   Oriented"   software  design
methodology.  The  control  utilizes  the  Windows**  operating  system as a key
component  of  its  executive   software.   The  product  is  marketed   through
distributors  to  end-users  and to CNC  control  integrators  and  retrofitters
serving the large installed base of manual milling machines.

o    Delta(TM) Series
Our  Delta(TM)  series  CNCs,  which  feature  microprocessor-based  electronics
incorporating ISA computer platform  components,  are designed for the worldwide
metalworking  industry  and are used on  milling  machines,  machining  centers,
turning  centers and punching  equipment.  The  Delta(TM) CNC system is based on
industry  standard  point-to-point   programming  methodology  but  incorporates
software  features  that group  industry  standard  commands  into  useful  part
features,  such as circles and frames,  to simplify  programming.  The Delta(TM)
CNCs are  designed  and  configured  as  general-purpose  products,  which offer
flexibility,  reliability and ease of integration with a wide variety of machine
designs.  The Delta(TM) CNC System is sold either as an integrated  component of
our Dynapath(TM)  Machine System or to end-users of a wide range of machine tool
systems, primarily through retrofitters.

o    Autobend(R)
Autobend(R)  CNC systems are applied to press  brakes that form parts from sheet
metal  and  consist  of a  microprocessor-based  CNC  and  back  gauge.  We have
manufactured  and sold the  Autobend(R)  product  line since 1968.  We currently
market  two  models of our press  brake CNC  systems,  in  combination  with six
different back gauges,  through  distributors to end-users as retrofit units for
installation on existing or new press brakes,  as well as to original  equipment
manufacturers and importers of press brakes.  The Autobend(R) CNC system is sold
as a fully integrated feature of our press brake system.

o    CAM and Software Products
In  addition  to our CNC  product  lines,  we offer  metal  cutting  and forming
software products for programming two and  three-dimensional  parts. The primary
products  in this  line  are the  Ultimax(R)  PC and PC+,  off-line  programming
systems and a computer aided design (CAD)-compatible DXF (data file translation)
software  option.  The  products are  marketed to users of both  Ultimax(R)  and
competitive  CNC  systems.  Significant  features of the  Ultimax(R)  PC and PC+
include a CNC-compatible user interface,  CAD compatibility and the availability
of a configurable post processor. The DXF software option eliminates manual data
entry of part features by transferring  AutoCAD(TM)  drawing files directly into
an Ultimax(R) CNC or the off-line  programming  system  software,  substantially
increasing  operator  productivity.  In  fiscal  2000,  our PC and  PC+  will be
upgraded  to  Windows**  based  software  and  will be  called  WinMax.  We have
augmented our Autobend(R) product line with a computer-aided manufacturing (CAM)

**  Windows is a registered trademark of Microsoft Corporation
<PAGE>
software product, Autobend PC(R), that enables the user to create and manipulate
CNC compatible metal forming programs on a personal computer.

In fiscal 1997,  we  introduced  UltiPro(TM),  a high-speed  machining  software
product for our Pentium*-based Ultimax(R) CNC platform. The UltiPro(TM) software
enables a customer to increase  machining  productivity  through the purchase of
our computerized machine system or by retrofitting and upgrading an existing 486
PC-based  Ultimax(R)  system  with our  Pentium*  platform  and the  UltiPro(TM)
software.  In fiscal 1998, we introduced  UltiNet(TM),  a networking product for
use by our customers to transfer part design and  manufacturing  information  to
computerized  machine systems at high speeds and to network computerized machine
systems within a customer's manufacturing facility.

Parts and Service
Our in-house service organization provides  installation,  operator training and
customer  support for our  products.  Our principal  distributors  in the United
States have primary responsibility for machine installation and warranty service
and support for new product  sales.  Our own service  organization  continues to
provide  installation  and warranty  service and support in certain direct sales
territories.  It also  continues  to service and support the  installed  base of
discontinued  models  and  supports  our  distributors  with  respect to complex
service operations. We also provide software options, CNC upgrades,  accessories
and replacement parts for our products.  Among the options are software programs
and additional CNC features that allow a customer to upgrade the  performance of
its Hurco machine  systems.  Our  after-sale  parts and service  business  helps
strengthen  our  customer  relationships  and  provides  continuous  information
concerning the evolving requirements of end-users.
<PAGE>
Marketing and Distribution
We continually strive to improve our global marketing and distribution  network.
During fiscal 1999,  1998 and 1997, we focused on  strengthening  our network of
independent  distributors in the United States and on improved  selling programs
and  training.  In fiscal  1999,  we  converted  to  direct  sales  agents  from
distributors  in the United  Kingdom.  In November  1999, we converted two sales
territories  in the Midwest  United States from  independent  distributors  to a
direct  sales force.  Also,  in November  1999,  we  established  a direct sales
subsidiary in Italy.

The end-users of our products are precision  tool,  die and mold  manufacturers,
independent metal parts  manufacturers and specialized  production groups within
large manufacturing corporations.  Industries served include aerospace, defense,
medical  equipment,  energy,  injection  molding,  transportation  and  computer
equipment.

Our computerized  machine systems  (integrated  CNC-operated  milling  machines,
machining centers and press brakes) along with software options and accessories,
are sold  primarily  to  end-users.  We sell certain CNC systems (i) to original
equipment  manufacturers  of new machine tools who integrate them with their own
products  prior to the sale of those  products to their own  customers,  (ii) to
retrofitters  of used machine tools who integrate  them with those machine tools
as part of the  retrofitting  operation  and  (iii)  to  end-users  who  have an
installed  base of machine  tools,  either with or without  related CNC systems.
During fiscal 1999, no single  end-user of our products  accounted for more than
5% of our total sales and service fees.

We sell our products through over 260 independent  agents and distributors in 58
countries throughout North America, Europe and Asia. We also have our own direct
sales personnel in the
------------
*  Pentium is a registered trademark of Intel Corporation
<PAGE>
United  States,  England,  France,  Germany,  Italy  and  Singapore,  which  are
considered  to be  among  the  world's  principal  computerized  machine  system
consuming countries.  During fiscal 1999, no distributor accounted for more than
5% of our sales and service fees. We have continuing  agreements with all of our
distributors,  but may terminate those agreements upon prior notice ranging from
30 days to 180 days.  Approximately 80% of the worldwide demand for computerized
machine systems and CNC systems comes from outside the U.S. and accordingly,  we
consider our international market presence to be critical to our operations.

We believe  changing  industrial  technology  and the  related  need for process
improvements  and also  capacity  expansion  drives the demand for  computerized
machine  systems and CNC systems.  Factors  affecting  demand  include:  (i) the
declining supply of skilled  machinists,  (ii) the need to continuously  improve
productivity  and shorten cycle time, (iii) an aging machine tool installed base
that will require  replacement  with more advanced and efficient  technology and
(iv) the  industrial  development  of  emerging  countries  in Asia and  Eastern
Europe.  However,  the demand  for  computerized  machine  systems  and  related
products is highly  dependent upon economic  conditions and the general level of
business confidence,  as well as such factors as production capacity utilization
and changes in governmental  policies regarding tariffs,  corporate taxation and
other  investment  incentives.  By marketing and  distributing our products on a
worldwide  basis,  we attempt to reduce the potential  impact on our total sales
and service fees by adverse  changes in economic  conditions  in any  particular
geographic region.

Competition

Numerous  companies compete with our product lines in both the United States and
international  markets.  Many of these  competitors  are larger and have greater
financial  resources  than we do. We strive to compete  effectively by designing
into our products  critical  proprietary  features  that offer a distinct  value
differential  from comparably priced  competitive  products in terms of enhanced
productivity,  technological  capabilities  and  ease of use.  In  addition,  by
offering our products in a range of prices and capabilities, we seek to meet the
needs of a broad potential market. We also believe that our  competitiveness  is
aided by our reputation for  reliability and quality,  our strong  international
sales  and  distribution   organization  and  our  extensive   customer  service
organization.
<PAGE>
In the United States and European metal cutting markets,  major competitors
include Haas Automation, Inc., Cincinnati Machine, Bridgeport Machines, Inc. and
Fadal Engineering along with a large number of foreign  manufacturers  including
Okuma  Machinery  Works  Ltd.,  Mori  Seiki Co.,  Ltd.  and  Matsuura  Machinery
Corporation.  The largest  competitors with respect to our computerized  forming
machine systems include Amada Co. Ltd. and Trumph.

We believe  we are one of the  largest  domestic  manufacturers  of CNC  gauging
systems for press brakes.  In the United States CNC gauging  systems  market for
press  brakes,  we compete with  Automec,  Inc., a CNC gauge  manufacturer,  and
Cybelec SA, a control manufacturer. We also compete with Cybelec in Europe.

Manufacturing

We have established a manufacturing  strategy that includes the development of a
global  network of  contract  manufacturers  who  manufacture  our  products  in
accordance with our design, quality and cost specifications. This has enabled us
to lower product costs,  lower working capital per sales dollar and increase our
worldwide  manufacturing capacity without significant  incremental investment in
capital equipment or increased personnel.

Our  computerized  machine  systems are  manufactured to our  specifications  by
manufacturing  contractors in Taiwan and in Europe.  We have worked closely with
our contract  manufacturers  to increase their  production  capacity to meet the
rising  demand for our machine tool  products and believe that such  capacity is
sufficient to meet our current and projected  demand.  Although we are exploring
additional  manufacturing  sources  for  certain  of  our  computerized  machine
systems,  alternative  sources are not readily  obtainable  and any  significant
reduction in capacity or performance  capability of our principal  manufacturing
contractors would have a material adverse effect on our operations.
<PAGE>
We have a contract manufacturing  agreement with a Taiwanese-based  affiliate in
which we have a 35% ownership  interest.  This company is manufacturing  most of
our CNC systems to our  specifications  and  supplies  certain  proprietary  and
standard  components  for  use in  our  domestic  production.  We  believe  that
alternative sources for the proprietary components are readily available.

Backlog

Backlog consists of firm orders received from customers and distributors but not
shipped.  Backlog was $8.5 million,  $7.5 million and $7.4 million as of October
31, 1999, 1998 and 1997, respectively.

Intellectual Property

We consider  certain  features of our  products  to be  proprietary  and we own,
directly or through a subsidiary,  a number of patents that are  significant  to
our business.  IMS  Technology,  Inc.  (IMS),  a wholly owned  subsidiary,  owns
domestic and foreign  patents  covering the machining  method  practiced  when a
machine  tool  is  integrated   with  an  interactive  CNC  (these  patents  are
collectively referred to as the "Interactive Machining Patents"). We also hold a
non-exclusive  license  covering  features of the automatic tool changer offered
with  certain  of  our  CNC  machining  centers.  We  also  own a  patent  on an
object-oriented, open architecture methodology for CNC software.

Beginning  in October  1995,  IMS  initiated  a number of  infringement  actions
against  enterprises  that it believed were  employing or  practicing  machining
methods covered by one of the Interactive  Machining Patents.  These enterprises
included   end-users  of  interactive  CNCs,  machine  tool  builders  employing
interactive  CNCs within their  products  and CNC  manufacturers  whose  control
designs  permit use of  interactive  methods when coupled to machine  tools (CNC
Users).  At the  present  date,  all but one  action  has been  settled  through
licensing arrangements or litigation settlements. See Item 3. Legal Proceedings.

IMS has  actively  pursued  a  program  to  license  the use of the  Interactive
Machining  Patents.  During  the past  three  fiscal  years,  IMS  entered  into
agreements  with  approximately  40 CNC  Users  under  which  IMS has  granted a
non-exclusive  license to practice methods covered by the Interactive  Machining
Patents in exchange for lump-sum payments or fixed payments through fiscal 2001.
We recorded  license fee income of $.3 million,  $6.3 million and $9.1  million,
net of legal fees and  expenses,  in fiscal 1999,  1998 and 1997,  respectively.
Subject to the continuing  validity of the U.S.  Interactive  Machining  Patent,
certain of the existing  license  agreements at October 31, 1999 are expected to
result in  additional  license fee income,  net of legal fees and  expenses,  of
approximately  $873,000  through  fiscal 2001.  In addition,  IMS has received a
royalty-free  non-exclusive  license  under  six  patents  owned  by  two of the
licensees.  There  are a  limited  number of  remaining  CNC users  that IMS has
identified as potential licensees.
<PAGE>
Research and Development

Research and development  expenditures for new products and significant  product
improvements,  included as period operating  expenses,  were $2.1 million,  $2.0
million  and $1.9  million  in  fiscal  1999,  1998 and 1997,  respectively.  In
addition, we recorded expenditures of $1.0 million in 1999, $1.3 million in 1998
and $1.6  million in 1997  related to software  development  projects  that were
capitalized.

Employees

We had  approximately  280 employees at the end of fiscal 1999, none of whom are
covered by a collective-bargaining  agreement or represented by a union. We have
experienced no employee-generated  work stoppages or disruptions and we consider
our employee relations to be satisfactory.

(d)      Financial Information About Geographic Areas

Financial  information  about  geographic  areas is set  forth in Note 14 to the
Consolidated Financial Statements.

We are  subject  to the risks of doing  business  on a global  basis,  including
foreign  currency  fluctuation  risks,  changes in general economic and business
conditions in the countries and markets that we serve and government actions and
initiatives including import and export restrictions and tariffs.

Item 2.  PROPERTIES

The following  table sets forth the location,  size and principal use of each of
our facilities:

          Location      Square Footage   Principal Uses

Indianapolis, Indiana       165,000(1)  Corporate headquarters, design and
                                        engineering, product testing, CNC
                                        assembly, sales, application engineering
                                        and customer service.

Long Beach, California        3,000     United  States Distribution.

Farmington Hills, Michigan   37,500(2)  Design and engineering, product
                                        testing, CNC assembly, sales,
                                        application engineering and
                                        customer service.

High Wycombe, England        45,000(3)  Sales, application engineering and
                                        customer service.

Paris, France                 2,800     Sales, application engineering and
                                        customer service.

Munich, Germany               10,700    Sales, application engineering and
                                        customer service.

Singapore                      1,200    Sales, application engineering and
                                        customer service.
--------------------------------------------------------------------------------
(1)  Approximately 45,000 square feet is available for sublease in fiscal 2000.
(2)  Approximately 24,000 square feet is under sublease through fiscal 2001.
(3)  Approximately 24,000 square feet have been sublet to a subtenant since
     November 1995.
<PAGE>
We own the Indianapolis facility and lease all other facilities. The leases have
terms  expiring at various dates ranging from January 2000 to February  2004. We
believe that all of our facilities are well  maintained and are adequate for our
needs  now and in the  foreseeable  future.  We do not  believe  that  we  would
experience any  difficulty in replacing any of the present  facilities if any of
our leases were not renewed at expiration.

Item 3.  LEGAL PROCEEDINGS

As  previously  reported,  Hurco  and IMS  have  been  parties  to a  number  of
proceedings  which  involved  alleged  infringement  of one  of the  Interactive
Machining  Patents.  At the present  date,  all but one action has been  settled
through  licensing  arrangements or litigation  settlements.  The only remaining
action is described below.

On July 3, 1997, IMS commenced an action in the United States  District Court of
Virginia against Haas Automation,  Inc. and its owner  (collectively,  Haas) and
certain other end-users and manufacturers of computerized  machine tool systems.
The  action  sought   monetary   damages  and  an  injunction   against   future
infringement.  IMS  subsequently  entered into  settlements  with all defendants
other than Haas and dismissed  claims against them. As previously  reported,  on
October 2, 1998 the trial court  granted  summary  judgment in favor of Haas and
dismissed the action,  finding that there was no  infringement  by Haas based on
the court's claim  interpretation  and its finding that a floppy disk is not the
equal of a cassette tape. Haas' affirmative defenses challenging the validity of
the IMS patent  were also  dismissed.  IMS  subsequently  filed an appeal to the
United States Court of Appeals for the Federal Circuit.  The appeal seeks relief
from the trial court's order regarding claim  interpretation  of the IMS patent,
the  order  granting  defendant's  motion  for  summary  judgment  and the final
judgment in favor of Haas.  Haas has filed a cross-appeal to the same court from
the trial court's order  regarding claim  construction  of the IMS patent.  Oral
argument  was held  before the United  States  Court of Appeals  for the Federal
Circuit  in August  1999;  however,  the court has not yet ruled on the  appeal.
Although  management  continues  to  believe  that  the  IMS  claims  of  patent
infringement have substantial merit, it is unable to predict the outcome of this
matter.

Item. 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



<PAGE>
                                     PART II

Item 5.    MARKET FOR THE REGISTRANT'S EQUITY AND RELATED

           STOCKHOLDER MATTERS

Our  Common  Stock is traded on the  Nasdaq  National  Market  under the  symbol
"HURC".  The  following  table sets  forth the high and low sales  prices of the
shares of Common  Stock for the  periods  indicated,  as  reported by the Nasdaq
National Market.
<TABLE>
                                                               1999                             1998
                                                        -------------------             --------------------
         Fiscal Quarter Ended:                            High          Low                High          Low
         --------------------                           -------------------             --------------------
         <S>                                            <C>         <C>                <C>             <C>
         January 31..............................       $6-3/8      $4-5/32            $8-31/32        $6-1/4
         April 30................................            5        3-7/8               9-1/4        6-1/4
         July 31.................................        6-5/8        4-1/4                   9        6-7/8
         October 31..............................        4-1/2        3-3/8               7-1/8        6-1/4
</TABLE>

We do not  currently pay dividends on our Common Stock and intend to continue to
retain earnings for working capital, capital expenditures and debt reduction.

There were approximately 481 holders of record of our Common Stock as of January
11, 2000.

During the period covered by this report,  we did not sell any equity securities
that were not registered under the Securities Act of 1933, as amended.
<PAGE>
Item 6.  SELECTED FINANCIAL DATA

The  Selected  Financial  Data  presented  below  have  been  derived  from  our
Consolidated  Financial Statements for the years indicated and should be read in
conjunction  with the  Consolidated  Financial  Statements and related notes set
forth elsewhere herein.
<TABLE>
                                                                 Year Ended October 31,

                                                 1999            1998          1997          1996         1995
                                          --------------------------------------------------------------------
Statement of Operations Data:                        (In thousands, except per share amounts)
   <S>                                     <C>             <C>            <C>           <C>            <C>
   Sales and service fees................  $88,238         $    93,422    $   95,729    $   99,351     $  89,632

   Gross profit..........................  $24,174         $    27,939    $   27,773    $   28,421     $  23,470

   Selling, general and adminis-
     tration expenses....................  $21,259         $    21,786    $   21,047    $   21,343     $  19,002

   Restructuring charge (credit).........  $   (103)       $     1,162    $       --    $       --     $      --

   Operating income......................  $ 3,018         $     4,991    $    6,726    $    7,078     $   4,468

   Interest expense......................  $ 1,293         $       876    $    1,938    $    3,211     $   4,250

   License fee income and litigation
     settlement fees, net................  $   304         $     6,974    $   10,095    $      590     $      --

   Net income............................  $1,802          $     9,254    $   13,804    $    4,264     $     204

   Earnings
     per common share-diluted............  $    .30        $      1.39    $     2.06    $      .72     $     .04

   Weighted average common
     shares outstanding-diluted..........     6,061              6,670         6,704         5,907         5,536


                                                                     As of October 31,
                                           1999            1998                1997          1996         1995
                                         ---------------------------------------------------------------------
Balance Sheet Data:                                               (Dollars in thousands)

   Current assets........................  $52,856         $   55,143     $   42,222    $   44,108     $  46,356

   Current liabilities...................  $19,580         $   25,794     $   19,370    $   23,336     $  26,479

   Working capital ......................  $33,276         $   29,349     $   22,852    $   20,772     $  19,877

   Current ratio.........................         2.7             2.1            2.2           1.9           1.8

   Total assets..........................  $69,632         $   71,696     $   58,748    $   59,750     $  61,421

   Long-term obligations.................  $13,904         $    8,162     $    9,602    $   20,273     $  27,459

   Total debt............................  $14,172         $    8,358     $   10,043    $   22,110     $  33,599

   Shareholders' equity..................  $36,148         $   37,740     $   29,776    $   16,141     $   7,483
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF   OPERATIONS    -------------------------------------------------------------
-----------------------------------

The  following  discussion  should  be read in  conjunction  with  the  Selected
Financial  Data and the  Consolidated  Financial  Statements  and Notes  thereto
appearing  elsewhere  herein.   Certain  statements  made  in  this  report  may
constitute  "forward-looking  statements"  within  the  meaning  of the  Private
Securities  Litigation  Reform  Act of  1995.  Such  forward-looking  statements
involve known and unknown risks, uncertainties and other factors which may cause
our actual results,  performance or achievements or the machine tool industry to
be materially  different from any future  results,  performance or  achievements
expressed or implied by such forward-looking  statements.  Such factors include,
among  others,  (i) changes in general  economic  and business  conditions  that
affect  demand for Computer  Numeric  Control (CNC)  systems,  machine tools and
software products,  (ii) changes in manufacturing  markets, (iii) innovations by
competitors, (iv) quality and delivery performance by our contract manufacturers
and (v)  governmental  actions  and  initiatives  including  import  and  export
restrictions and tariffs.

Results of Operations

The following table  presents,  for the fiscal years  indicated,  selected items
from the  Consolidated  Statements  of  Operations  expressed as a percentage of
worldwide sales and service fees and the year-to-year  percentage changes in the
dollar amounts of those items.
<TABLE>
                                                  Percentage of Revenues             Year-to-Year % Change
                                                                                       Increase (Decrease)

                                               1999       1998        1997         99 vs. 98       98 vs. 97
                                               -----      -----       -----        ---------       ---------
   <S>                                        <C>        <C>         <C>          <C>                <C>
   Sales and service fees................     100.0%     100.0%      100.0%         (5.6%)             (2.4%)
   Gross profit..........................      27.4%      29.9%       29.0%        (13.5%)              0.6%
   Selling, general and
     administrative expenses.............      24.1%      23.3%       22.0%         (2.4%)              3.5%
   Restructuring charge (credit).........      (0.1%)      1.2%         --        (108.9%)              --
   Operating income......................       3.4%       5.3%        7.0%        (39.5%)           (25.8%)
   Interest expense......................       1.5%       0.9%        2.0%        (47.6%)           (54.8%)
   Net income............................       2.0%       9.9%       14.4%        (80.5%)           (33.0%)

</TABLE>
Fiscal 1999 Compared With Fiscal 1998

Net income for the fiscal year ending October 31, 1999 was $1.8 million, or $.30
per share, on a diluted basis, compared to $9.3 million, or $1.39 per share, for
the preceding year.  Results for fiscal 1999 are not comparable to the preceding
period because fiscal 1998 results include a $1.2 million  restructuring  charge
and $6.3 million of license fees and litigation  settlements net of expenses and
foreign  withholding  taxes.  As  discussed  below,  net  license fee income and
litigation settlements fees for fiscal 1999 were $304,000.

Sales and service  fees were $88.2  million for fiscal  1999, a decrease of 5.6%
from the $93.4 million reported in fiscal 1998. The decrease in sales was due in
part to the negative impact of a stronger U.S.  dollar when  converting  foreign
sales to U.S. dollars for financial  reporting  purposes.  At constant  exchange
rates, net sales and service fees for fiscal 1999 would have been $89.2 million.
<PAGE>
Sales of  computerized  machine  systems,  before foreign  currency  translation
effects were substantially unchanged from the prior year and accounted for 72.3%
of our annual sales and service fees.  Domestic  sales of  computerized  machine
systems in fiscal 1999 decreased by $3.2 million, or 13.2%, reflecting very weak
market  conditions  that have  existed  since the third  quarter of fiscal 1998.
Sales of computerized machine systems in Europe increased $1.7 million, or 4.3%,
in fiscal  1999 on a  constant  dollar  basis,  while  sales in  Southeast  Asia
increased $1.3 million.  The increase in international  sales was offset in part
by approximately $1.0 million negative effect from foreign currency translation.

Sales of  stand-alone  CNC systems and  software  declined by $4.1  million,  or
27.9%.  The decline in  stand-alone  CNC systems was  primarily the result of an
anticipated  reduction in shipments to original equipment  manufacturers  (OEMs)
and  retrofit  dealers of  stand-alone  CNC  systems,  primarily  related to our
DeltaTM Series CNC systems, as we have repositioned these products as components
of integrated machine systems.

International sales, including export sales from the United States, increased to
approximately  58.4% of  consolidated  sales and  service  fees for fiscal  1999
compared to 54.5% for fiscal 1998.

Orders for the year were $89.9  million  compared to $92.4  million in the prior
year, a $2.5 million,  or 2.7%,  decrease.  Computerized  machine  system orders
increased $1.5 million,  or 2.3%, while  stand-alone CNC system orders decreased
$2.9  million,  or 23.1%.  Computerized  machine  system  unit  orders in Europe
increased 7.2% while orders in the United States declined 10.5%.  Offsetting the
increase  in  computerized  machine  system  orders in Europe  was a decline  in
stand-alone  CNC  system  unit  orders  of 32.3%.  The  decline  in  orders  for
stand-alone  CNC systems is the result of our  repositioning  these products for
marketing as components of integrated computerized machine systems.

Backlog was $8.5  million at October  31,  1999 and $7.5  million at October 31,
1998.

Gross profit margin as a percentage  of sales  decreased to 27.4% in fiscal 1999
compared to 29.9% in the prior year.  The decrease was  primarily  the result of
lower service  margin and the effects of a stronger  dollar  relative to foreign
currencies.

Interest  expense  for fiscal 1999  increased  $417,000 or 47.6% from the amount
reported for the corresponding period in fiscal 1998, primarily due to increased
borrowing to support an increase in finished  product  inventory  which began in
the second half of fiscal 1998.

License fee income and litigation  settlement fees for fiscal 1999 were $304,000
compared to $7.0 million in the prior year. As previously reported,  there are a
limited  number  of CNC  users  that are not  already  licensed  and most of the
licenses  previously  granted provided for a single lump sum payment at the time
of grant.  As a result,  license fee income and  litigation  settlement  fees in
fiscal 1999 were not expected to equal that recorded in fiscal 1998. For further
information, refer to Note 10 to the Consolidated Financial Statements.
<PAGE>
The  provision  for  income  taxes in fiscal  1999 is  primarily  related to the
earnings  of a  foreign  subsidiary  which  no  longer  has the  benefit  of net
operating loss carryforwards to offset taxable income. The fiscal 1999 provision
was favorably  impacted by a $377,000 tax asset recorded by a foreign subsidiary
due to a change in its tax status.  The  provision  for foreign  income taxes in
fiscal 1998 consisted of $640,000 of foreign  withholding  taxes  resulting from
license fee income and litigation settlement fees and approximately $1.2 million
related  to  the  earnings  of  foreign   subsidiaries.   Net   operating   loss
carryforwards available to offset pre-tax income in future periods are set forth
in Note 6 to the Consolidated Financial Statements.

A German tax examiner has contested our transfer of net operating losses between
two of our German  subsidiaries  that merged in fiscal 1996.  The contingent tax
liability  resulting  from this issue is  approximately  $1.4  million.  We have
protested  this  matter and have not yet  received a ruling  from the German tax
authorities  on the tax  examiner's  finding  and our  protest.  In the event an
unfavorable ruling is received from the German tax authorities, we will consider
whether  to appeal  to the  German  Federal  Tax  Court.  No  provision  for the
contingency has been recorded.

Fiscal 1998 Compared With Fiscal 1997

Net income for the fiscal year ending  October  31,  1998 was $9.3  million,  or
$1.39 per share,  on a diluted basis,  compared to $13.8  million,  or $2.06 per
share,  for the  preceding  year.  Included in 1998  results was a $1.2  million
restructuring  charge (which is more fully discussed below and in Note 15 to the
Consolidated  Financial  Statements).  Net  income in fiscal  1998 and 1997 also
included  $6.3  million  and $9.1  million,  respectively,  of license  fees and
litigation  settlements net of expenses and foreign withholding taxes. Excluding
the  restructuring  charge and net license fee and litigation  settlements,  net
income in fiscal  1998 would  have been $4.1  million,  or $.61 per share,  on a
diluted basis,  compared to $4.7 million,  or $.70 per share, in fiscal 1997. In
addition,  the provision for income taxes in fiscal 1998  increased by $906,000,
or 88%,  primarily the result of the earnings of a foreign  subsidiary  which no
longer has the benefit of net operating  loss  carryforwards  to offset  taxable
income.

Sales and service  fees were $93.4  million for fiscal  1998, a decrease of 2.4%
from the $95.7  million  reported in fiscal 1997.  The decrease in sales for the
fiscal year was due in part to the  negative  impact of a stronger  U.S.  dollar
during the first three fiscal  quarters,  when converting  foreign sales to U.S.
dollars for financial reporting purposes.  At constant exchange rates, net sales
and service fees for the fiscal year would have been $95.0 million.
<PAGE>
Sales of  computerized  machine  systems,  before foreign  currency  translation
effects,  increased  $4.6  million,  or 7.5%,  for fiscal 1998 and accounted for
69.3% of our annual  sales and  service  fees.  Domestic  sales of  computerized
machine systems in fiscal 1998 approximated the fiscal 1997 level while sales in
the United Kingdom, which experienced unfavorable economic conditions,  declined
$2.6 million,  or 24.1%.  Sales of  computerized  machine systems in continental
Europe,  primarily  Germany and France,  increased  $6.6 million,  or 26.2%,  in
fiscal 1998. Also  contributing to the increase in computerized  machine systems
was our offering of a new milling machine featuring a fully integrated Delta(TM)
CNC system sold under the DynaPath(TM) name and our press brake system sold with
a fully integrated  Autobend(R) CNC system.  Both  computerized  machine systems
were released for sale in the second half of fiscal 1998.

The  increase  in sales of  computerized  machine  systems  was offset by a $4.8
million, or 27.4%,  decline in sales of stand-alone CNC systems.  The decline in
stand-alone  CNC  systems  was the  result  of  reduced  shipments  to  original
equipment  manufacturers (OEMs) and retrofit dealers of stand-alone CNC systems,
primarily  related to our Delta(TM)  Series CNC systems,  as we reposition these
products for marketing as components of integrated machine systems.

Service income declined by approximately  $600,000, or 12.1%, as a result of our
on-going  transfer  of  customer  servicing  responsibility  to  certain  of our
distributors as well as improved quality of the computerized machine systems.

International sales, including export sales from the United States, increased to
approximately  54.5% of  consolidated  sales and  service  fees for fiscal  1998
compared  to 51.4% for  fiscal  1997.  Orders  for the year were  $92.4  million
compared to $94.8 million in the prior year, a $2.4 million, or 2.5%,  decrease.
Computerized  machine  system  orders  increased  $2.4 million,  or 4.8%,  while
stand-alone  CNC system orders  decreased $3.7 million,  or 24.0%.  Computerized
machine system unit orders in continental Europe (principally  Germany & France)
increased  23.7% while  orders in the United  States and England  declined  5.8%
reflecting   weaker  demand  in  those  markets.   Offsetting  the  increase  in
computerized  machine  system  orders  was a decline in  stand-alone  CNC system
orders units of 26.4%.  The decline in orders for stand-alone CNC systems is the
result of our  repositioning  these  products  for  marketing as  components  of
integrated computerized machine systems.

Backlog was $7.5  million at October  31,  1998 and $7.4  million at October 31,
1997.

Gross profit margin as a percentage  of sales  increased to 29.9% in fiscal 1998
compared to 29.0% in the prior year.  The increase was  primarily  the result of
reduced  costs  of  computerized   machine  systems  produced  by  our  contract
manufacturers  in Taiwan due to the weakening of the New Taiwan dollar in fiscal
1998.  Also  contributing  to  the  improved  margin  was  an  increased  mix of
higher-margin European sales.

As disclosed in Note 15 to the Consolidated Financial Statements,  we recorded a
restructuring  charge in the fourth quarter of fiscal 1998 totaling $1.2 million
related to our subsidiary  Autocon  Technologies,  Inc. (ATI).  ATI historically
marketed  its  Delta(TM)  series of CNC  systems to OEMs and  through  retro-fit
dealers.  Throughout fiscal 1998, we repositioned ATI to market its CNC products
as  components  of fully  integrated  computerized  machine  systems  under  the
DynaPath(TM) brand name. The first of several planned models of the DynaPath(TM)
machine systems product line was successfully  launched in fiscal 1998 resulting
in sales of  $500,000.  The decline in OEM  controls  sales,  concurrent  with a
decline in demand for retro-fit CNC systems and inventory write-downs,  resulted
in  operating  losses  related to ATI,  before  restructuring  charges,  of $1.2
million for the fiscal year ended October 31, 1998.
<PAGE>
As  discussed  above,  in  October  1998,  we  initiated  a  more  comprehensive
restructuring of ATI's business to include consolidation of operations, contract
manufacturing  of CNC  systems  in  Taiwan,  simplification  of the CNC  product
offering and cancellation of certain product  development  projects,  as well as
rationalizing  the sales and customer  service  activities.  This  restructuring
program,  which was in the first half of fiscal 1999, resulted in a $1.2 million
restructuring  charge.  The restructuring  charge was comprised of approximately
$600,000 of reserves  for the write down of fixed assets and $600,000 of accrued
liabilities  for  employee  severance  costs  and  obligations  under  lease  of
manufacturing and office space that will no longer be used.

Interest expense for fiscal 1998 decreased approximately $1.1 million, or 54.8%,
from the amount reported for the corresponding  period in fiscal 1997, primarily
due to debt  reduction in fiscal 1998  combined with the full year effect of the
$12.1 million debt reduction that occurred in fiscal 1997.

License fee income and litigation  settlement fees for fiscal 1998,  represented
62.3%  of  income  before  taxes  compared  to  68.1%  in  fiscal  1997  and was
attributable almost entirely to licenses entered into during the year by IMS. As
of October 31, 1998, license fees of approximately  $797,000,  net of legal fees
and  expenses,  have been  deferred  and are expected to be  recognized  through
fiscal  2001.  There are a limited  number of  remaining  CNC users that IMS has
identified as potential licensees.  Accordingly,  we believe that it is unlikely
that future  license fee income and litigation  settlement  fees will equal that
recorded  in  fiscal  1998.  For  further  information,  refer to Note 10 to the
Consolidated Financial Statements.

The  provision  for  income  taxes in fiscal  1998  consisted  of  approximately
$640,000 of foreign  withholding  taxes  resulting  from  license fee income and
litigation  settlement  fees  and  approximately  $1.2  million  related  to the
earnings  of a  foreign  subsidiary  which  no  longer  has the  benefit  of net
operating loss carryforwards to offset taxable income. The provision for foreign
income taxes in fiscal 1997  consisted  almost  entirely of foreign  withholding
taxes  resulting  from license fee income and  litigation  settlement  fees. Net
operating  loss  carryforwards  available  to  offset  pre-tax  income in future
periods are set forth in Note 6 to the Consolidated Financial Statements.

EURO Currency

Many of the  countries  in which we sell our  products  and  services are Member
States of the Economic and Monetary  Union ("EMU").  Beginning  January 1, 1999,
Member  States of the EMU were  permitted to begin trading in either their local
currencies  or the Euro,  the  official  currency  of EMU  participating  Member
States.  Parties  are  free to  choose  the  unit  they  prefer  in  contractual
relationships during the transitional period,  beginning January 1999 and ending
June  2002.  Our  computer   system  contains  the   functionality   to  process
transactions  in either a  country's  local  currency  or the Euro.  We have not
incurred and do not  anticipate  incurring any material  adverse  effects on our
operations related to the EMU's conversion to the Euro. However, there can be no
assurance  that the  conversion of EMU Member States to the Euro will not have a
material adverse effect on our operations.
<PAGE>
Foreign Currency Risk Management

We manage our foreign  currency  exposure  through  the use of foreign  currency
forward exchange  contracts.  We do not speculate in the financial  markets and,
therefore,  do not enter into these  contracts  for  trading  purposes.  We also
moderate our currency  risk related to  significant  purchase  commitments  with
certain foreign vendors through price  adjustment  agreements that provide for a
sharing of, or otherwise limit,  the risk of currency  fluctuations on the costs
of purchased products.  The results of these programs achieved our objectives in
fiscal  1999  and  fiscal  1998.  See  Note  1  to  the  Consolidated  Financial
Statements.

Year 2000 Compliance

We did not  experience  any  interruptions  in our  operations  from Y2K related
matters. The amount spent on Y2K testing and remediation was not material.


<PAGE>
Liquidity and Capital Resources

At October 31, 1999, we had cash and cash  equivalents of $3.5 million  compared
to $3.3 million at October 31, 1998. Cash used for operations  totaled  $827,000
in fiscal  1999,  compared to cash  provided by  operations  of $5.9  million in
fiscal 1998.  Cash flow from  operations in fiscal 1998 was enhanced by receipts
of approximately $6.3 million of license fees, net of legal fees and taxes.

Working capital was $33.3 million at October 31, 1999, compared to $29.3 million
at October 31, 1998. The working capital  increase is attributable to a decrease
in accounts payable of $4.8 million and accrued expenses of $928,000 offset by a
decrease in accounts receivable of $1.0 million.

The  decrease in accounts  payable  relates  primarily  to payments  made to our
contract manufacturers for inventory purchases that occurred in late fiscal 1998
under  terms  that  generally  range  from 60 to 120 days.  Accounts  payable at
October 31, 1998  reflected a  higher-than-normal  level of  shipments  from our
contract manufacturers in the fourth fiscal quarter.

Capital  investments  for the  fiscal  year ended  October  31,  1999  consisted
principally of expenditures for software  development  projects and purchases of
equipment. Cash used for investing activities during the year was funded by cash
flow from operations and bank credit facilities.

We repurchased 395,752 and 254,500 shares of our common stock during fiscal 1999
and 1998, respectively, under our previously announced stock repurchase program.
These  shares are  reflected  as a  reduction  of common  stock  outstanding  in
calculating basic and diluted earnings per common share.

Total debt at October 31, 1999 was $14.2  million,  representing  28.2% of total
capitalization,  compared to $8.4 million, or 18.1%, of total  capitalization at
October 31, 1998.

We were in  compliance  with all loan  covenants at October 31, 1999. We believe
that anticipated cash flow from operations and available borrowings under credit
facilities will be sufficient to meet our anticipated  cash  requirements in the
foreseeable future.


<PAGE>
Item 7A.  Quantitative and Qualitative Disclosures About Market Risks

Interest Rate Risk

Our bank line of credit is affected by the general  level of U.S.  and  European
interest rates and/or Libor. However, we only had $9.6 million outstanding under
our bank line of credit at  October  31,  1999 and the effect of  interest  rate
changes would likely not be significant.

Foreign Currency Exchange Risk

A significant  portion of our product content is sourced from foreign  suppliers
or  built  to  our  specifications  by  contract  manufacturers   overseas.  Our
contractual arrangements with those suppliers typically include foreign currency
risk sharing  agreements  which reduce the effects of currency  fluctuations  on
product cost. The  predominant  portion of foreign  currency  exchange rate risk
regarding product cost relates to the New Taiwan Dollar.

In Fiscal 1999,  approximately  58.4% of our sales and service  fees,  including
export  sales,  were derived  from foreign  markets.  All  computerized  machine
systems,  CNC  systems and certain  proprietary  service  parts are sourced by a
central  engineering and  manufacturing  division of the U.S. parent company and
re-invoiced  to our foreign sales and service  subsidiaries,  primarily in their
functional  currencies.  The parent company enters into forward foreign exchange
contracts from time to time to hedge the cash flow risk related to inter-company
sales and inter-company  accounts  receivable in foreign  currencies.  We do not
speculate  in the  financial  markets  and,  therefore,  do not enter into these
contracts for trading purposes.
<TABLE>
Forward contracts for the sale of foreign currencies as of October 31, 1999:

                          Notional Amount    Weighted Avg.                        Market Value
                            in Foreign        Forward Rate     Notional Amount     October 31,
   Forward Contracts         Currency                             in U.S. $           1999         Maturity Dates
           ---------         --------                                ------           ----         --------------
<S>                          <C>                 <C>             <C>               <C>            <C>
Sterling                     2,060,000           1.6532          3,391,310         3,389,318      Nov '99-Jan `00
Euro                         1,028,000           1.0776          1,107,805         1,084,540            Nov'99

</TABLE>

<PAGE>
Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                    Report of Independent Public Accountants

To the Shareholders and
Board of Directors of
Hurco Companies, Inc.

We have audited the accompanying consolidated balance sheets of Hurco Companies,
Inc. (an Indiana  corporation) and subsidiaries as of October 31, 1999 and 1998,
and the related consolidated statements of operations,  changes in shareholders'
equity and cash flows for each of the three  years in the period  ended  October
31, 1999.  These  financial  statements  and schedule  referred to below are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Hurco Companies,
Inc.  and  subsidiaries  as of October 31, 1999 and 1998,  and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period  ended  October 31,  1999,  in  conformity  with  generally  accepted
accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  The schedule listed in Item 14(a) 2 is
presented for purposes of complying with the Securities and Exchange Commissions
rules and is not part of the basic financial statements.  This schedule has been
subjected  to the  auditing  procedures  applied  in  the  audits  of the  basic
financial statements and, in our opinion, fairly states in all material respects
the  financial  data  required to be set forth  therein in relation to the basic
financial statements taken as a whole.

                                                             ARTHUR ANDERSEN LLP


Indianapolis, Indiana,
December 1, 1999.
<PAGE>
                              HURCO COMPANIES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
                                                                                 Year Ended October 31,
                                                                                 ----------------------
                                                                         1999              1998             1997
                                                                         ----              ----             ----
                                                                    (Dollars in thousands, except per share amounts)
<S>                                                                 <C>              <C>               <C>
Sales and service fees........................................       $ 88,238         $  93,422         $ 95,729

Cost of sales and service ....................................         64,064           65,483            67,956
                                                                     --------         --------          --------

     Gross profit.............................................         24,174            27,939           27,773

Selling, general and administrative expenses..................         21,259            21,786           21,047

Restructuring charge (credit) (Note 15).......................          (103)             1,162               --
                                                                     ---------        ---------         --------

     Operating income ........................................          3,018             4,991            6,726

License fee income and litigation settlement fees, net
     (Note 12)................................................            304             6,974           10,095

Interest expense..............................................          1,293               876            1,938

Other income (expense), net...................................             25                99              (51)
                                                                      --------        ---------         --------

     Income before income taxes...............................          2,054            11,188           14,832

Provision for income taxes (Note 6)...........................            252             1,934            1,028
                                                                      --------        ---------         --------

Net income ...................................................       $  1,802         $   9,254         $ 13,804
                                                                      ========        =========         ========


Earnings per common share - basic.............................       $    .30         $    1.42         $   2.11
                                                                     ========         =========         ========

Weighted average common shares outstanding - basic............          5,980             6,498            6,536
                                                                     ========         =========         ========

Earnings per common share - diluted...........................       $    .30         $    1.39         $   2.06
                                                                     ========         =========         ========

Weighted average common shares outstanding - diluted..........          6,061             6,670            6,704
                                                                     ========         =========         ========


The accompanying  notes are an integral part of the Consolidated Financial Statements.
</TABLE>
<PAGE><TABLE>
                              HURCO COMPANIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                                                                                         As of October 31,
                                                                                        1999           1998
                                                                                        ----           ----
                                                                        (Dollars in thousands, except per share amounts)
<S>                                                                               <C>            <C>
Current assets:
   Cash and cash equivalents.....................................................  $   3,495      $   3,276
   Accounts receivable, less allowance for doubtful accounts
    of $687 in 1999 and $769 in 1998.............................................     17,154         18,896
   Inventories ..................................................................     30,767         30,817
   Other.........................................................................      1,440          2,154
                                                                                   ---------      ---------
     Total current assets........................................................     52,856         55,143
                                                                                   ---------      ---------
Long-term license fee receivables (Note 12)......................................        434            797
                                                                                   ---------      ---------
Property and equipment:
   Land..........................................................................        761            761
   Building......................................................................      7,168          7,067
   Machinery and equipment.......................................................     11,182         11,184
   Leasehold improvements........................................................      1,005          1,107
                                                                                   ---------      ---------
                                                                                      20,116         20,119
   Less accumulated depreciation and amortization................................    (11,165)       (11,037)
                                                                                   ---------      ----------
                                                                                       8,951          9,082
                                                                                   ---------      ---------
Software development costs, less accumulated amortization of $5,174
   in 1999 and $6,014 in 1998....................................................      3,951          4,231
Other assets.....................................................................      3,440          2,443
                                                                                   ---------      ---------
                                                                                   $  69,632      $  71,696
                                                                                   ---------      ---------
                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable..............................................................  $   8,519      $  13,235
   Accounts payable-related parties..............................................      2,372          2,556
   Accrued expenses..............................................................      5,935          7,157
   Accrued warranty expenses.....................................................        968          1,060
   Current portion of long-term debt.............................................      1,786          1,786
                                                                                   ---------      ---------
     Total current liabilities...................................................     19,580         25,794
                                                                                   ---------      ---------
Non-current liabilities:
   Long-term debt ...............................................................     12,386          6,572
   Deferred credits and other ...................................................      1,518          1,590
                                                                                   ---------      ---------
                                                                                      13,904          8,162
                                                                                   ---------      ---------
Commitments and contingencies (Notes 10 and 11)
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; 5,951,859 and
     6,340,111 shares issued and outstanding in 1999 and 1998, respectively......        595            634
   Additional paid-in capital....................................................     46,340         48,662
   Accumulated deficit...........................................................     (5,348)        (7,150)
   Foreign currency translation adjustment.......................................     (5,439)        (4,406)
                                                                                   ---------      ---------
     Total shareholders' equity..................................................     36,148         37,740
                                                                                   ---------      ---------
                                                                                   $  69,632      $  71,696
                                                                                   =========      =========
The accompanying  notes are an integral part of the Consolidated Financial Statements.
</TABLE>
<PAGE>
                                                 HURCO COMPANIES, INC.
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
                                                                                       Year Ended October 31,
                                                                                    1999         1998          1997
                                                                                    ----         ----          ----
                                                                                         (Dollars in thousands)
<S>                                                                             <C>          <C>          <C>
Cash flows from operating activities:
   Net income .............................................................     $  1,802     $  9,254     $  13,804
   Adjustments to reconcile net income to
   net cash provided by (used for) operating activities:
     Depreciation and amortization.........................................        2,428        2,138         2,078
     Restructuring charge (credit) ........................................         (103)       1,162            --
     Unrealized (gain) loss on foreign currency transactions...............          671         (219)          294
     Change in assets/liabilities

      (Increase) decrease in accounts receivable...........................          974       (2,808)        1,043
      (Increase) decrease in inventories...................................         (801)      (8,775)        2,107
      Increase (decrease) in accounts payable..............................       (4,825)       6,864        (2,096)
      Decrease in accrued expenses.........................................         (928)        (994)         (681)
      Other................................................................          (45)        (712)         (525)
                                                                                 -------        -----       -------
         Net cash provided by (used for) operating activities..............         (827)       5,910        16,024
                                                                                 -------        -----       -------
Cash flows from investing activities:
   Proceeds from sale of equipment.........................................           69           93           126
   Purchase of property and equipment......................................       (1,176)      (1,013)         (640)
   Software development costs..............................................         (981)      (1,315)       (1,595)
   Other ..................................................................         (288)        (411)         (418)
                                                                                 -------       ------       -------
         Net cash (used for) investing activities..........................       (2,376)      (2,646)       (2,527)
                                                                                 -------       ------        ------
Cash flows from financing activities:
   Advances on bank credit facilities......................................       61,920       15,053        30,173
   Repayments of bank credit facilities....................................      (54,320)     (14,953)      (39,154)
   Repayments of term debt.................................................       (1,786)      (1,786)       (3,036)
   Proceeds from exercise of common stock options..........................           18          120            38
   Purchase of common stock................................................       (2,379)      (1,827)           --
                                                                                 -------       ------   -----------
         Net cash provided by (used for) financing activities..............        3,453       (3,393)      (11,979)
                                                                                 -------       ------       -------
Effect of exchange rate changes on cash....................................          (31)          34           (24)
                                                                                 -------      -------       -------
         Net increase (decrease) in cash...................................          219          (95)        1,494

Cash and cash equivalents at beginning of year.............................        3,276        3,371         1,877
                                                                                 -------        -----         -----
Cash and cash equivalents at end of year...................................       $3,495       $3,276        $3,371
                                                                                   =====       ======        ======
Supplemental disclosures:
   Cash paid for:
      Interest.............................................................     $  1,016     $    702     $   1,828
      Income taxes.........................................................     $  1,003     $  1,818     $   1,234
The accompanying notes are an integral part of the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
                                                    HURCO COMPANIES, INC.
                                  CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                                                                                             Accumulated
                                                                                                                Other
                                                                                                            Comprehensive
                                                                                                            Income (loss):
                                                                                                               Foreign
                                                               Common Stock    Additional                      Currency
                                                      Shares Issued              Paid-In      Accumulated    Translation
                                                      & Outstanding    Amount    Capital         Deficit      Adjustment   Total

                                                                                   (Dollars in thousands)
<S>                                                    <C>             <C>      <C>         <C>           <C>          <C>
Balances, October 31, 1996                             6,531,871       $ 653    $50,312     $(30,208)     $(4,616)     $16,141

Net income...........................................         --          --         --       13,804           --       13,804

Translation of foreign currency financial
   statements........................................         --          --         --           --         (207)        (207)
                                                                                                                        -------
Comprehensive Income................................                                                                    13,597

Exercise of common stock options.....................     12,960           1         37           --            --          38
                                                       ---------       ------   --------     -------       -------       -----

Balances, October 31, 1997...........................  6,544,831       $ 654    $50,349     $(16,404)     $(4,823)     $29,776
                                                       ---------       ------   --------     -------       -------      ------
Net income...........................................         --          --         --        9,254           --        9,254

Translation of foreign currency financial
   statements........................................         --          --         --           --          417          417
                                                                                                                        ------
Comprehensive Income.................................                                                                    9,671

Exercise of common stock options.....................     49,780           5        115           --           --          120

Purchase of common stock.............................   (254,500)        (25)    (1,802)          --           --       (1,827)
                                                        --------       ------   --------      -------        ------     -------
Balances, October 31, 1998...........................  6,340,111      $  634    $48,662       $(7,150)     $(4,406)    $37,740
                                                         -------        -----   --------      -------        ------      ------
Net income...........................................         --          --         --         1,802           --       1,802

Translation of foreign currency financial
   statements........................................         --          --         --            --       (1,033)     (1,033)
                                                                                                                        ------
Comprehensive Income.................................                                                                      769

Exercise of common stock options.....................      7,500           1         17            --           --          18

Purchase of common stock.............................   (395,752 )       (40)    (2,339)           --           --      (2,379)
                                                        ---------      ------    ------        -------      -------     -------
Balances, October 31, 1999...........................  5,951,859      $  595    $46,340       $(5,348)     $(5,439)    $36,148
                                                        =========      ======   =======       ========    ========     =======
The   accompanying   notes  are  an  integral  part  of  the
Consolidated Financial Statements.
</TABLE>
<PAGE>
                              HURCO COMPANIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation.  The consolidated  financial  statements  include the accounts of
Hurco  Companies,  Inc.  (an  Indiana  corporation)  and our  wholly  owned  and
controlled subsidiaries. A 35% ownership interest in an affiliate recorded using
the equity method and a 15% ownership  interest in an affiliate recorded at cost
are included in Other Assets on the  accompanying  Consolidated  Balance Sheets.
Intercompany accounts and transactions have been eliminated.

Statements of Cash Flows.  We consider all highly liquid  investments  purchased
with a maturity of three months or less to be cash equivalents.  Cash flows from
hedges are classified consistent with the items being hedged.

Translation  of Foreign  Currencies.  All  balance  sheet  accounts  of non-U.S.
subsidiaries  are  translated  at the  exchange  rate as of the end of the year.
Income and  expenses are  translated  at the average  exchange  rates during the
year.  Foreign  currency  translation  adjustments  are  recorded  as a separate
component of shareholders' equity. Foreign currency transaction gains and losses
are recorded as income or expense as incurred.

Hedging.  We enter into foreign  currency  forward  exchange  contracts to hedge
certain firm  intercompany  sale commitments  denominated in foreign  currencies
(primarily pound sterling and Euro) for which we have firm purchase commitments.
The  purpose of these  instruments  is to protect us from the risk that the U.S.
dollar  net  cash  inflows  resulting  from the  sales  denominated  in  foreign
currencies will be adversely  affected by changes in exchange  rates.  Gains and
losses on these hedge  contracts are deferred and recognized as an adjustment to
the related sales transactions.

We enter into  foreign  currency  forward  exchange  contracts  periodically  to
provide  a  hedge  against  the  effect  of  foreign  currency  fluctuations  on
receivables  denominated  in foreign  currencies.  Gains and  losses  related to
contracts designated as hedges of receivables  denominated in foreign currencies
are  accrued as  exchange  rates  change  and are  recognized  as "Other  income
(expense), net" in the Consolidated Statements of Operations.
<PAGE>
The U.S.  dollar  equivalent  notional  amount of outstanding  foreign  currency
forward exchange contracts was approximately $4.5 million as of October 31, 1999
($2.1 million related to firm intercompany  sales commitments) and $13.5 million
as of  October  31,  1998  ($8.7  million  related  to firm  intercompany  sales
commitments).  Deferred  losses  related to hedges of future sales  transactions
were  approximately  $48,000  and  $434,000  as of  October  31,  1999 and 1998,
respectively.  Contracts outstanding at October 31, 1999 mature at various times
through January 2000. All contracts are for the sale of foreign currency.  We do
not enter into these contracts for trading purposes.

Inventories. Inventories are stated at the lower of cost or market, with
cost determined using the first-in, first-out method.


<PAGE>


                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Property and Equipment. Property and equipment are carried at cost. Depreciation
and amortization of assets are provided primarily under the straight-line method
over the shorter of the estimated useful lives or the lease terms as follows:

                                                Number of Years

                  Building                            40
                  Machines                            10
                  Shop and office equipment            5
                  Leasehold improvements               5

Revenue  Recognition.  Sales of products and services are recorded when products
are shipped or services are performed.  Service fees from maintenance  contracts
are deferred and  recognized  in earnings on a pro rata basis over the period of
the agreement. Sales related to software products are recognized when shipped in
conformity  with  American  Institute  of  Certified  Accountants'  Statement of
Position 97-2 Software Revenue Recognition.

License Fee Income and Litigation  Settlement  Fees, Net. From time to time, our
wholly owned subsidiary,  IMS Technology,  Inc. (IMS) enters into agreements for
the licensing of its  interactive  computer  numerical  control  (CNC)  patents.
License fees received or receivable  under a fully  paid-up  license,  for which
there are no future  performance  requirements or  contingencies  and litigation
settlement  fees, are recognized in income,  net of legal fees and expenses,  if
any, at the time the related  agreement  is executed.  License fees  received in
periodic  installments  that are contingent  upon the  continuing  validity of a
licensed  patent are  recognized in income,  net of legal fees and expenses,  if
any, over the life of the licensed patent.

Product Warranty.  Expected future product warranty expense is recorded when the
product is sold.

Research  and  Development   Costs.  The  costs  associated  with  research  and
development  programs for new products and significant product  improvements are
expensed  as incurred  and  included  in  selling,  general  and  administrative
expenses.  Research and development expenses totaled $2.1 million,  $2.0 million
and $1.9 million in fiscal 1999, 1998 and 1997, respectively.

Costs  incurred  to  develop   computer   software   products  and   significant
enhancements to software  features of existing  products to be sold or otherwise
marketed  are  capitalized,  after  technological  feasibility  is  established.
Software  development  costs are  amortized to Cost of Sales on a  straight-line
basis over the estimated product life of the related software, which ranges from
three to five years.  We capitalized  $1.0 million in 1999, $1.3 million in 1998
and $1.6 million in 1997 related to software development projects.  Amortization
expense was $1.3 million,  $1.1 million and $940,000,  for the three years ended
October 31, 1999, 1998 and 1997 respectively.

Earnings Per Share. Earnings per share of common stock are based on the weighted
average  number of common  shares  outstanding,  which,  for  diluted  purposes,
includes the effects of  outstanding  stock options  computed using the treasury
method.
<PAGE>
Income  Taxes.  We record income taxes under  Statement of Accounting  Standards
(SFAS) 109 "Accounting for Income Taxes". SFAS 109 utilizes the liability method
for  computing  deferred  income taxes and requires  that the benefit of certain
loss  carryforwards  be recorded as an asset and that a valuation  allowance  be
established  against  the asset to the extent it is "more  likely than not" that
the benefit will not be realized.


<PAGE>


                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Estimates.  The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires us to make estimates and  assumptions
that  affect  the  reported  amounts of assets and  liabilities,  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of sales and expenses during the reporting  period.  Actual
results could differ from those estimates.

2.  BUSINESS OPERATIONS

Nature of  Business.  We design and produce  computer  numerical  control  (CNC)
systems and software and  computerized  machine systems for sale through our own
distribution system to the worldwide machine tool industry.

The end market for our products  consists  primarily of precision  tool, die and
mold manufacturers,  independent job shops and specialized  short-run production
applications within large manufacturing  operations.  Industries served include:
aerospace,  defense,  medical  equipment,  energy,  transportation  and computer
industries. Our products are sold through independent agents and distributors in
countries  throughout  North America,  Europe and Asia. We also maintain  direct
sales operations in the United States, England, France, Germany and Singapore.

Credit Risk.  We sell products to customers  located  throughout  the world.  We
perform  ongoing  credit  evaluations  of customers and generally do not require
collateral.  Allowances  are maintained  for potential  credit losses,  and such
losses have been within our expectations.

Concentration  of credit  risk with  respect  to trade  accounts  receivable  is
limited due to the large number of customers  and their  dispersion  across many
geographic  areas.  Although a significant  amount of trade receivables are with
distributors  primarily located in the United States,  no single  distributor or
region represents a significant concentration of credit risk.

Reliance on Contract Manufacturers.  We contract with manufacturing  contractors
located in Taiwan and Europe for the  manufacture  and assembly of  computerized
machine systems, based on our designs and specifications.  Any interruption from
these  sources  would  restrict the  availability  of our  computerized  machine
systems, which would affect operating results adversely.
<PAGE>
3. INVENTORIES

Inventories as of October 31, 1999 and 1998 are summarized below (in thousands):
<TABLE>
                                                                                               1999           1998
                                                                                         ----------     ----------
               <S>                                                                       <C>            <C>
               Purchased parts and sub-assemblies...................................     $    9,104     $   11,749
               Work-in-process......................................................          1,070          1,774
               Finished goods.......................................................         20,593         17,294
                                                                                          ---------         ------
                                                                                         $   30,767     $   30,817
                                                                                          =========         ======

</TABLE>

<PAGE>


                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

4.  DEBT AGREEMENTS
<TABLE>
         Long-term debt as of October 31, 1999 and 1998, consisted of (in thousands):

                                                                                               1999           1998
                                                                                           --------       --------
         <S>                                                                             <C>            <C>
         Bank revolving credit facilities.............................................   $    9,600     $    2,000
         Senior Notes.................................................................        3,572          5,358
         Economic Development Revenue Bonds, Series 1990..............................       1,000           1,000
                                                                                          --------       ---------
                                                                                             14,172          8,358
         Less current portion.........................................................        1,786          1,786
                                                                                          ---------      ---------
                                                                                         $   12,386     $    6,572
                                                                                          =========      =========

         As of October 31, 1999, long-term debt was payable as follows (in thousands):

         Fiscal 2000..................................................................        1,786
         Fiscal 2001..................................................................        1,986
         Fiscal 2002..................................................................        9,800
         Fiscal 2003..................................................................          200
         Fiscal 2004 and thereafter...................................................          400
                                                                                           --------
                                                                                            $14,172
</TABLE>
As of  October  31,  1999 and  1998,  we had $7.2  million  and  $11.4  million,
respectively,  of outstanding letters of credit issued to non-U.S. suppliers for
inventory purchase commitments. As of October 31, 1999, we had unutilized credit
facilities of $8.2 million  available for either direct borrowings or commercial
letters of credit.

As of October 31, 1999 and 1998, the domestic bank revolving credit facility was
payable at interest  rates  ranging from 6.9% to 8.25%.  Interest was payable on
the Senior Notes at 10.37% at October 31, 1999 and 1998.

The principal terms of the Bank Credit  Agreement and Senior Notes Agreement are
set forth below:

     a)  Bank Credit Agreement

         Our bank credit  agreement  provides for a revolving,  unsecured credit
         facility  expiring May 1, 2002,  which permits  borrowings,  at any one
         time  outstanding,  of up to $25.0 million  (inclusive  of  outstanding
         letters of credit up to $15.0 million). Of such borrowings,  up to $5.0
         million may be drawn in designated European currencies. Interest on all
         outstanding  borrowings  is payable at Libor  plus an  applicable  Euro
         dollar  rate  margin  ranging  from 1.0% to 2.0% based on a  prescribed
<PAGE>
         formula,  or at our option,  the greater of the prime rate or 1.0% plus
         the Federal Funds Rate. An additional  margin of .25% may be charged if
         our fixed charge  coverage  ratio falls below 1.25 to 1. The  agreement
         requires us to maintain a specified  minimum net worth and  establishes
         maximum leverage and fixed charge coverage  ratios.  We are required to
         maintain  consolidated tangible net worth (as defined) of not less than
         $30.0 million plus (i) 50% of cumulative  net income  subsequent to May
         1, 1999 and (ii) 75% of  proceeds  from  sales of capital  stock  after
         April  30,  1999.  Total  consolidated  debt  may  not  exceed  50%  of
         consolidated  capitalization  (defined as total debt plus  consolidated
         tangible net worth). Our fixed charge coverage ratio requirement varies
         within a range of 1.0-1.25 to 1 during the term of the agreement.


<PAGE>


                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

     b)  Senior Notes

         At October 31, 1999, we had outstanding  approximately  $3.6 million of
         unsecured  Senior Notes,  bearing an interest rate of 10.37%,  of which
         approximately  $1.8 million is due on December 1, 1999, and the balance
         is due in fiscal 2000. The financial covenants substantially conform to
         those contained in our bank credit agreement.

The  Economic  Development  Revenue  Bonds  are  payable  in five  equal  annual
installments  beginning  on  September  1, 2001 and are  secured  by a letter of
credit issued in the amount of $1.1 million by a bank. The Bonds' interest rates
adjust  weekly and, as of October 31, 1999 and 1998,  interest was accruing at a
rate of 3.7% and 3.4% respectively.

We were in compliance with all loan covenants at October 31, 1999.

5. FINANCIAL INSTRUMENTS

The carrying amounts for trade  receivables and payables  approximate their fair
values.  At  October  31,  1999 the  carrying  amounts  and fair  values  of our
financial instruments,  which includes bank revolving credit facilities,  senior
notes and Economic Development Bonds are not materially different.

We also have  off-balance  sheet  financial  instruments  in the form of foreign
currency forward  exchange  contracts as described in Note 1 to the Consolidated
Financial Statements.  The U.S. dollar equivalent notional amount and fair value
of these  contracts  were both $4.5 million at October 31, 1999.  Current market
prices were used to  estimate  the fair value of the  foreign  currency  forward
exchange contracts.

The future value of the foreign  currency  forward  exchange  contracts  and the
related currency  positions are subject to offsetting market risk resulting from
foreign currency exchange rate volatility. The counterparties to these contracts
are substantial and creditworthy  financial  institutions.  Neither the risks of
counterparty  non-performance  nor the  economic  consequences  of  counterparty
non-performance  associated  with these  contracts  are  considered  by us to be
material.


<PAGE>
                              HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

6.  INCOME TAXES
Deferred  income taxes reflect the effect of temporary  differences  between the
tax basis of assets and liabilities and the reported amounts of those assets and
liabilities for financial reporting purposes. Deferred income taxes also reflect
the value of net operating  losses and an offsetting  valuation  allowance.  Our
total deferred tax assets and corresponding  valuation  allowance at October 31,
1999 and 1998, consisted of the following (in thousands):
<TABLE>
                                                                                                   October 31,
                                                                                            1999                1998
<S>                                                                                    <C>                  <C>
Tax effects of future tax deductible items related to:
     Accrued inventory reserves.................................................       $      824           $     710
     Accrued warranty expenses..................................................              249                 276
     Deferred Compensation .....................................................              310                 194
     Other accrued expenses.....................................................              745                 977
                                                                                        ---------              ------
         Total deferred tax assets..............................................            2,128               2,157
                                                                                        ---------             -------
Tax effects of future taxable differences related to:
     Accelerated tax deduction and other tax over book
       deductions related to property, equipment and software...................           (1,774)             (1,883)
     Other......................................................................             (575)               (575)
                                                                                        ---------            --------
       Total deferred tax liabilities...........................................           (2,349)             (2,458)
                                                                                        ---------            --------
       Net tax effects of temporary differences.................................             (221)               (301)
                                                                                        ---------             --------
Tax effects of carryforward benefits:
     U.S. federal net operating loss carryforwards,
       expiring 2008-2013.......................................................            1,636               2,170
     Foreign net tax benefit carryforwards with various expiration years........            1,339               1,174
     U.S. federal general business tax credits,
       expiring 2008-2013.......................................................            1,001               1,367
     U.S. Alternative Minimum Tax Credit with no expiration.....................              426                 412
                                                                                        ---------           ---------
         Tax effects of carryforwards ..........................................            4,402               5,123
                                                                                        ---------           ---------
         Tax effects of temporary differences and carryforwards.................            4,181               4,822
         Less valuation allowance...............................................           (3,755)             (4,410)
                                                                                        ---------           ---------
         Net deferred tax asset.................................................        $     426           $     412
                                                                                        =========           =========
</TABLE>
Except as indicated above, our carryforwards expire at specific future dates and
utilization of certain  carryforwards  is limited to specific  amounts each year
and further  limitations  may be imposed if an  "ownership  change" would occur.
Realization is entirely dependent upon generating  sufficient future earnings in
specific tax  jurisdictions  prior to the expiration of the loss  carryforwards.
Due to the  uncertain  nature  of their  ultimate  realization  based  upon past
performance and expiration dates, we have established a full valuation allowance
against  carryforward  benefits with expiration dates.  Alternative  minimum tax
credits may be carried forward  indefinitely  and as a result,  are not provided
with a  valuation  allowance.  While the need for this  valuation  allowance  is
subject to periodic review, if the allowance is reduced, the tax benefits of the
carryforwards will be recorded in future operations as a reduction of our income
tax expense.
<PAGE>


                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Income (loss) before income taxes (in thousands):
<TABLE>
                                                                               Year Ended October 31,
                                                                               ----------------------
                                                                       1999              1998             1997
                                                                   ----------       ------------     ---------
<S>                                                                <C>              <C>              <C>
       Domestic...............................................     $   1,848        $    8,809       $   10,303
       Foreign................................................           206             2,379            4,529
                                                                     -------          --------           ------
                                                                   $   2,054        $   11,188       $   14,832
                                                                    ========         =========        =========


Differences between the effective tax rate and
U.S. federal income tax rate were (in thousands):

Tax at U.S. statutory rate....................................     $     719         $   3,915       $    5,191

Foreign withholding taxes.....................................             4               640            1,012

Effect of tax rates of international jurisdictions
  in excess of U.S. statutory rates...........................           209               563              342

State income taxes............................................            41                35               16

Utilization of net operating loss carryforwards...............          (721)           (3,219)          (5,533)
                                                                     -------            ------           ------

Provision for income taxes....................................      $    252         $   1,934        $   1,028
                                                                    ========         =========        =========
</TABLE>
Foreign  withholding taxes are the result of foreign  dividends  received during
fiscal 1999 and certain  license fee payments  received  during  fiscal 1998 and
1997.  Our provision for income taxes in fiscal 1999,  1998 and 1997  represents
taxes currently payable with the exception of the $377,000 tax asset recorded in
1999 by a foreign subsidiary due to a change in its tax status.

We have not provided any U.S. income taxes on the undistributed  earnings of our
foreign  subsidiaries  based upon our  determination  that such earnings will be
indefinitely reinvested.
<PAGE>
7.  EMPLOYEE BENEFITS

We have  defined  contribution  plans that  include a majority of our  employees
worldwide, under which our contributions are discretionary. The purpose of these
plans is generally to provide additional financial security during retirement by
providing  employees with an incentive to save throughout their employment.  Our
contributions to the plans are based on employee  contributions or compensation.
Our contributions  totaled  $331,605,  $357,000 and $307,000 for the years ended
October 31, 1999, 1998 and 1997, respectively.

We  also  have  Split-Dollar  Life  Insurance  Agreements  with  certain  of our
officers.  Under  the terms of the  agreements,  we pay all of the  premiums  on
behalf of the officers.  We will be repaid the premiums from the policies'  cash
surrender  value  when  the  policies  are  terminated  in  accordance  with the
provisions of the agreements.


<PAGE>


                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

8.  STOCK OPTIONS

In March 1997,  we adopted the 1997 Stock  Option and  Incentive  Plan (the 1997
Plan)  which  allows us to grant  awards of  options to  purchase  shares of our
common stock,  stock  appreciation  rights,  restricted  shares and  performance
shares.  Under the  provisions of the 1997 Plan, the maximum number of shares of
common stock that may be issued is 500,000. The total number of shares of common
stock  which may be granted to any  individual  during the term of the 1997 Plan
may not  exceed  100,000  shares.  Options  granted  under  the  1997  Plan  are
exercisable  for a period up to ten years  after date of grant and vest in equal
annual  installments as specified by the Compensation  Committee of our Board of
Directors (the Committee) as the Committee  determines at the time of grant. The
option  price may not be less than 100% of the fair  market  value of a share of
common stock on the date of grant.  As of October 31, 1999,  305,500  shares had
been granted under the 1997 Plan.

In 1990,  we adopted the 1990 Stock Option Plan (the 1990 Plan) which allowed us
to grant  options to  purchase  shares of our  common  stock and  related  stock
appreciation rights and limited rights to officers and our key employees.  Under
the  provisions of the 1990 Plan,  the maximum  number of shares of common stock
which may be issued  under  options and related  rights is 500,000.  There is no
annual  limit on the number of such  shares  with  respect to which  options and
rights may be granted. Options granted under the 1990 Plan are exercisable for a
period up to ten years after date of grant and vest in equal installments over a
period of three to five years from the date of grant.  The option  price may not
be less than  100% of the fair  market  value of a share of common  stock on the
date of grant and no options or rights may be granted  under the 1990 Plan after
April 30, 2000.
<PAGE>
A summary  of the  status  of the  options  under the 1990 and 1997  Plans as of
October  31,  1999,  1998 and 1997 and the related  activity  for the year is as
follows:
<TABLE>
                                                       Shares under    Weighted average exercise
                                                             option              price per share
----------------------------------------------- -------------------- ----------------------------
----------------------------------------------- -------------------- ----------------------------
<S>                                                        <C>                             <C>
Balance October 31, 1996                                    431,620                        $4.01
  Granted                                                     5,000                         8.25
  Cancelled                                                 (1,800)                         3.79
  Expired                                                         -                            -
  Exercised                                                (12,960)                         3.63
----------------------------------------------- -------------------- ----------------------------
----------------------------------------------- -------------------- ----------------------------
Balance October 31, 1997                                    421,860                         4.07
  Granted                                                    26,000                         8.25
  Cancelled                                                 (4,000)                         5.13
  Expired                                                         -                            -
  Exercised                                                (49,780)                         2.43
----------------------------------------------- -------------------- ----------------------------
----------------------------------------------- -------------------- ----------------------------
Balance October 31, 1998                                    394,080                         4.54
  Granted                                                   305,500                         5.68
  Cancelled                                                (20,400)                         4.91
  Expired                                                         -                            -
  Exercised                                                 (7,500)                         2.42
----------------------------------------------- -------------------- ----------------------------
----------------------------------------------- -------------------- ----------------------------
Balance October 31, 1999                                    671,680                        $5.07
=============================================== ==================== ============================
</TABLE>
<PAGE>
                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Stock options outstanding and exercisable on October 31, 1999 are as follows:
<TABLE>
                                                          Weighted average      Weighted average remaining
Range of exercise prices     Shares under option  exercise price per share       contractual life in years
per share
--------------------------- --------------------- ------------------------- -------------------------------
--------------------------- --------------------- ------------------------- -------------------------------
Outstanding
<S>                                      <C>                         <C>                               <C>
  $2.125-5.125                           294,180                     $3.49                             5.3
   5.813-8.250                           377,500                      6.31                             7.7
--------------------------- --------------------- ------------------------- -------------------------------
--------------------------- --------------------- ------------------------- -------------------------------
  $2.125-8.250                           671,680                     $5.07                             6.6
=========================== ===================== ========================= ===============================
=========================== ===================== ========================= ===============================
Exercisable

  $2.125-5.125                           245,544                     $3.27                               -
    5.813-8.250                          139,100                      6.82                               -
--------------------------- --------------------- ------------------------- -------------------------------
--------------------------- --------------------- ------------------------- -------------------------------
  $2.125-8.250                           384,644                     $4.55                               -
=========================== ===================== ========================= ===============================
=========================== ===================== ========================= ===============================

We apply Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued
to Employees" (APB25), and related  interpretations in accounting for the Plans,
and,  therefore,  no compensation  expense has been recognized for stock options
issued  under the Plans.  For  companies  electing to continue the use of APB25,
SFAS No. 123  "Accounting  for  Stock-Based  Compensation",  requires  pro forma
disclosures  determined  through  the use of an  option-pricing  model as if the
provisions of SFAS No. 123 had been adopted.
<PAGE>
The  weighted  average  fair value at date of grant for options  granted  during
fiscal 1999, 1998 and 1997 was $3.99,  $6.10 and $6.11 per share,  respectively.
The fair value of each option grant was estimated on the date of the grant using
the Black-Scholes option-pricing model with the following assumptions:

                                      1999        1998        1997
---------------------------------- ----------- ----------- -----------
---------------------------------- ----------- ----------- -----------
Expected dividend yield                 0.00%       0.00%       0.00%
Expected volatility                    55.31%      58.16%      57.88%
Risk-free interest rate                 4.70%       5.83%       6.04%
Expected term in years                 10          10          10
---------------------------------- ----------- ----------- -----------

If we had adopted the  provisions  of SFAS No. 123,  the impact of reported  net
income and earnings per share would have been as follows:

                                      1999       1998         1997
------------------------------------ -------- -----------   ---------
------------------------------------ -------- -----------   ---------
Net income (in thousands)             $1,613     $9,181      $13,752
Earnings per share:
  Basic                                 $.27      $1.41        $2.10
  Diluted                               $.27      $1.38        $2.05
------------------------------------ --------- -----------   --------

</TABLE>
<PAGE>

                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

As of October 31, 1999,  there were outstanding  non-qualified  options that had
been granted  outside of the 1990 and 1997 plans to outside members of the Board
of Directors to purchase  50,000 and 75,000 shares at $5.13 and $5.81 per share,
respectively.  The 50,000 shares are exercisable  while the 75,000 shares become
exercisable  on December 15, 1999.  The options  expire at various dates between
2002 and 2008.

9.  RELATED PARTY TRANSACTIONS

Hurco  and Air  Express  International  Corporation  (AEI) are  related  parties
because a common group of shareholders holds a significant ownership interest in
both companies.  AEI provides freight  forwarding and shipping  services for us.
The cost of these  freight  services are  negotiated on an arms length basis and
amounted to $4.3  million,  $4.1  million  and $2.6  million for the years ended
October  31,  1999,  1998 and 1997,  respectively.  Trade  payables  to AEI were
$200,000, $217,000 and $30,000 at October 31, 1999, 1998 and 1997, respectively.

We  own  approximately  15%  of  one  of  our  Taiwanese-based  suppliers.  This
investment  is  carried  at  cost  and  is  included  in  Other  Assets  on  the
Consolidated  Balance  Sheet.  Purchases  of  product  from  this  supplier  are
negotiated  on an arms length basis and totaled $7.8  million,  $7.4 million and
$8.2 million for the years ended October 31, 1999, 1998 and 1997,  respectively.
Trade  payables to this  supplier  were $1.5  million,  $1.7  million,  and $1.8
million at October 31, 1999, 1998 and 1997, respectively.

As of October 31, 1999, we own 35% of Hurco  Automation,  Ltd.  (HAL),  a Taiwan
based company. HAL's scope of activities includes the design, manufacture, sales
and distribution of industrial automated products,  software systems and related
components, including CNC systems and components manufactured under contract for
sale  exclusively to us. We are  accounting for the investment  using the equity
method.  The  investment  of  $732,929  at October 31, 1999 is included in Other
Assets  on the  Consolidated  Balance  Sheet.  Purchases  of  product  from this
supplier  are  negotiated  on an arms length basis and amounted to $3.6 and $3.1
million in 1999 and 1998, respectively.  Trade payables to HAL were $672,000 and
$668,000 at October 31, 1999 and 1998, respectively.

10.  LITIGATION AND CONTINGENCIES

As previously reported, Hurco and its subsidiary IMS Technology, Inc. (IMS) have
been parties to a number of proceedings  which involved alleged  infringement of
one of the  Interactive  Machining  Patents.  At the present  date,  all but one
action  has  been  settled   through   licensing   arrangements   or  litigation
settlements. The only remaining action is described below.

On July 3, 1997, IMS commenced an action in the United States  District Court of
Virginia against Haas Automation,  Inc. and its owner  (collectively,  Haas) and
certain other end-users and manufacturers of computerized  machine tool systems.
The  action  sought   monetary   damages  and  an  injunction   against   future
infringement.  IMS  subsequently  entered into  settlements  with all defendants
other than Haas and dismissed  claims against them. As previously  reported,  on
October 2, 1998 the trial court  granted  summary  judgment in favor of Haas and
dismissed the action,  finding that there was no  infringement  by Haas based on
the court's claim  interpretation  and its finding that a floppy disk is not the
<PAGE>
equal of a cassette tape. Haas' affirmative defenses challenging the validity of
the IMS patent  were also  dismissed.  IMS  subsequently  filed an appeal to the
United States Court of Appeals for the Federal Circuit.  The appeal seeks relief
from the trial court's order regarding claim  interpretation  of the IMS patent,
the  order  granting  defendant's  motion  for  summary  judgment  and the final
judgment in favor of Haas.  Haas has filed a cross-appeal to the same court from
the trial court's order  regarding claim  construction  of the IMS patent.  Oral
argument  was held  before the United  States  Court of Appeals  for the Federal
Circuit  in August  1999;  however,  the court has not yet ruled on the  appeal.
Although  management  continues  to  believe  that  the  IMS  claims  of  patent
infringement have substantial merit, it is unable to predict the outcome of this
matter.

A German tax examiner has contested our transfer of net operating losses between
two of our German  subsidiaries  that merged in fiscal 1996.  The contingent tax
liability  resulting  from this issue is  approximately  $1.4  million.  We have
protested  this  matter and have not yet  received a ruling  from the German tax
authorities  on the tax  examiner's  finding  and our  protest.  In the event an
unfavorable ruling is received from the German tax authorities, we will consider
whether  to appeal  to the  German  Federal  Tax  Court.  No  provision  for the
contingency has been recorded.

In addition, we are involved in various other claims and lawsuits arising in the
normal course of business. None of these claims, in our opinion, are expected to
have a material adverse effect on our consolidated financial position or results
of operations.

11.  OPERATING LEASES

We lease  facilities and vehicles under operating  leases that expire at various
dates  through  2003.  Future  payments,  exclusive of amounts  reflected in the
balance  sheet,  required  under  operating  leases as of October 31, 1999,  are
summarized as follows (in thousands):

         2000..............................................$  1,350
         2001..............................................     801
         2002..............................................     537
         2003..............................................      77
         2004..............................................       1
                                                           --------
         Total.............................................$  2,766
                                                           ========

Rent  expense  for the years  ended  October  31,  1999,  1998 and 1997 was $1.7
million, $1.8 million and $1.9 million, respectively.

12.  LICENSE FEE INCOME AND LITIGATION SETTLEMENT FEES, NET

License fee income and litigation settlement fees, net for fiscal 1999, 1998 and
1997 were attributable to agreements  entered into by IMS, pursuant to which IMS
granted fully paid-up  licenses of its  interactive  CNC patents in exchange for
cash and other consideration. As of October 31, 1999, additional license fees of
approximately  $873,000,  net of legal  fees and  expenses,  related  to  future
payments under completed license  agreements have been deferred and are expected
to be  recognized  in income over the  two-year  remaining  life of the licensed
patent.
<PAGE>


                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

13.  QUARTERLY HIGHLIGHTS (Unaudited)

1999 (In thousands, except per share data)
<TABLE>
                                                         First Quarter     Second Quarter     Third Quarter      Fourth Quarter
<S>                                                      <C>              <C>                <C>                  <C>
Sales and service fees...............................    $  21,147            $21,532            $20,783            $24,776

Gross profit.........................................        6,004              5,858              5,915              6,397

Gross profit margin percentage.......................        28.4%              27.2%              28.5%              25.8%

Selling, general and administrative  expenses........        5,335              5,352              5,152              5,420

Restructuring charge (credit)........................           --              (103)                 --                 --

Operating income.....................................          669                609                763                977

Net income ..........................................          175                554                400                673

Earnings per common share - basic....................    $     .03         $      .09         $      .07          $     .11

Earnings per common share - diluted..................    $     .03         $      .09         $      .07          $     .11


1998 (In thousands, except per share data)

                                                         First Quarter     Second Quarter     Third Quarter      Fourth Quarter

Sales and service fees...............................    $  22,120         $   21,542         $   23,444          $  26,316

Gross profit.........................................        6,123              6,286              6,980              8,550

Gross profit margin percentage.......................        27.7%              29.2%              29.8%              32.5%

Selling, general and administrative expenses.........        5,024              5,354              5,573              5,835

Restructuring charge (credit)........................           --                 --                 --              1,162

Operating income.....................................        1,099                932              1,407              1,553

Net income ..........................................        2,186              4,270              1,830                968

Earnings per common share - basic....................    $     .33         $      .65         $      .28          $     .15

Earnings per common share - diluted..................    $     .32         $      .63         $      .27          $     .15


</TABLE>
<PAGE>


                              HURCO COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

14.      SEGMENT INFORMATION

We operate in a single segment:  industrial  automation  systems.  We design and
produce  interactive  computer  numerical control (CNC) systems and software and
computerized  machine systems for sale through our own  distribution  network to
the worldwide  metal  working  market.  We also provide  software  options,  CNC
upgrades,  accessories  and  replacement  parts  for  our  products,  as well as
customer service and training support.

     Substantially  all of our machine systems and CNC systems are  manufactured
to our specifications by contract manufacturing  companies in Taiwan and Europe.
Our  executive  offices and principal  design,  engineering,  and  manufacturing
management  operations are headquartered in Indianapolis,  Indiana.  We sell our
products  through over 240 independent  agents and  distributors in 45 countries
throughout North America, Europe and Asia. We also have our own direct sales and
service organizations in the United States, England,  France, Germany, Italy and
Singapore,  which are considered to be among the world's principal  computerized
machine system consuming  countries.  During fiscal 1999, no customer  accounted
for more than 5% of our sales and service fees.

The following table sets forth the contribution of each of our product groups to
our total sales and service  fees during each of the past three fiscal years (in
thousands):
<TABLE>
                                                                                Year Ended October 31,

                                                                       1999              1998             1997
                                                                    -------           -------          -------
         <S>                                                        <C>               <C>              <C>
         Computerized Machine Systems........................       $63,793           $64,770          $61,679
         CNC Systems and Software*............................       10,623            14,727           19,296
         Service Parts........................................        9,574             9,424            9,612
         Services Fees........................................        4,248             4,501            5,142
                                                                    -------           -------          -------
         .                                                          $88,238           $93,422          $95,729
                                                                    =======           =======          =======
</TABLE>
--------------
*Amounts  shown do not include CNC systems  sold as an  integrated  component of
computerized machine systems.
<PAGE>
<TABLE>
Revenues by geographic area, based on customer location, for each of the past three fiscal years were (in thousands):
                                                                               Year Ended October 31,
                                                                     ----------------------------------------
                                                                       1999              1998             1997
                                                                    -------           -------          -------
         <S>                                                       <C>                <C>              <C>
         United States.........................................     $36,730           $42,486          $46,535
                                                                    -------           -------          -------

         Germany..............................................       25,388            24,949           20,320
         United Kingdom.......................................        9,567             9,454           13,280
         Other Europe.........................................       12,087            12,112           12,125
                                                                   --------           -------         --------
           Total Europe.......................................       47,042            46,515           45,725

         Asia and Other.......................................        4,466             4,421            3,469
                                                                   --------           -------         --------
           Total Foreign......................................       51,508            50,936           49,194
                                                                   --------            ------         --------
                                                                    $88,238           $93,422          $95,729
                                                                   ========           =======          =======
</TABLE>
<TABLE>

Long-lived assets by geographic area were (in thousands):
                                                                                                 October 31,
                                                                                               1999           1998
                                                                                         ----------     ----------
               <S>                                                                       <C>            <C>
               United States........................................................     $   13,528     $   13,836
               Foreign Countries....................................................            686            528
                                                                                         ----------     ----------
         .                                                                               $ 14,214       $   14,364
                                                                                         ==========     ==========
</TABLE>

15.  RESTRUCTURING CHARGE

In fiscal 1998, we recorded a reserve for anticipated  costs associated with the
restructuring  of a  subsidiary  to convert its  operations  from  manufacturing
computer  controls to sales and service of computerized  machine  systems.  This
restructuring program, which was completed during the first half of fiscal 1999,
resulted in a special  charge to  operations  of $1.2 million  consisting of the
following components:

         Excess building capacity                       $   500,000
         Discontinued capitalized software projects         300,714
         Fixed asset impairments                            170,245
         Equipment leases                                   101,187
         Severance costs                                     89,574
                                                        -----------
                                                         $1,161,720
<PAGE>
Of the $1.2 million provision, $690,761 was charged to the restructuring reserve
while the  remainder  was used for asset  impairments.  On April 30,  1999,  the
excess  building space was  subleased,  effective June 15, 1999 through July 31,
2001. The reserve was adjusted to reflect the terms of the sublease resulting in
a  restructuring  credit of  approximately  $103,000.  At October 31, 1999,  the
restructuring  reserve balance was  approximately  $400,000 and consisted of the
following:
<TABLE>
                                                    Balance        Charges to                         Balance
                  Description                       10/31/98         Accrual        Adjustment        10/31/99
                  -----------                       --------         -------        ----------        --------
<S>                                                 <C>             <C>               <C>             <C>
Excess Building Capacity                            $500,000        $ 10,615          $103,486        $285,899
Equipment Leases                                     101,187          23,808                --          77,379
Severance Costs                                       89,574          89,574                --              --
                                                    --------        --------          --------        --------
                                                    $690,761        $223,997          $103,486        $363,278
                                                     =======         =======           =======         =======
</TABLE>
16.  NEW ACCOUNTING PROUNCEMENT

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133,  Accounting  for  Derivatives  Instruments  and Hedging  Instruments.  This
statement   establishes   accounting  and  reporting  standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging  activities.  The  statement  is effective in fiscal
2000. We have not yet  determined  the impact of adopting this  statement on our
financial position or results of operations.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
---------------------

Not applicable.


<PAGE>
                                    PART III

Item 10.  EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT

The  following  information  sets forth the name of each  executive  officer and
director,  his age,  tenure as a director,  principal  occupation  and  business
experience for the last five years:
<TABLE>
Name                                       Age       Position(s) with the Company
<S>                                        <C>       <C>
Brian D. McLaughlin                        57        President, Chief Executive Officer and Director

Roger J. Wolf                              59        Senior Vice President, Secretary,
                                                     Treasurer and Chief Financial Officer

James D. Fabris                            48        Executive Vice President - Operations

Richard Blake                              41        Vice President of the Company and
                                                     President Hurco Machine Tool Products Division

David E. Platts                            47        Vice President, Research and Development

Stephen J. Alesia                          33        Corporate Controller

Hendrik J. Hartong, Jr.                    60        Director

Andrew L. Lewis IV                         43        Director

E. Keith Moore                             77        Director

Richard T. Niner                           60        Director

O. Curtis Noel                             64        Director

Charles E. Mitchell Rentschler             60        Director

</TABLE>

Brian D.  McLaughlin  has been  President and Chief  Executive  Officer of Hurco
since December 1987. From 1982 to 1987, he was employed as President and General
Manager  of  various  divisions  of  Ransburg   Corporation,   an  international
manufacturer of factory  automation  equipment.  Previously,  he was employed in
general  management and marketing  management  positions with Eaton Corporation.
Mr. McLaughlin has been a director since 1987.

Roger J. Wolf has been Senior Vice  President,  Secretary,  Treasurer  and Chief
Financial  Officer  since  January 1993.  Prior to joining  Hurco,  Mr. Wolf was
Executive Vice President of a privately  owned  investment and service  business
for over  seven  years.  Previously,  he  served  as Vice  President,  Corporate
Controller,   Vice   President  and  Treasurer  of  Ransburg   Corporation,   an
international manufacturer of factory automation equipment.

James D. Fabris was elected  Executive  Vice  President - Operations in November
1997 and Vice  President of Hurco in February  1995. Mr. Fabris was President of
Hurco  Machine Tool  Products  Division  from November 1993 to December 1997 and
previously served various operating  capacities since being employed by Hurco in
1988.
<PAGE>
Richard Blake was named  President of Hurco Machine Tool Products  Division
in November  1997 and Vice  President of Hurco in January  1996.  Mr. Blake also
served as Managing  Director of Hurco Europe,  Ltd., a subsidiary of Hurco, from
December 1993 until October 1998. Mr. Blake  previously  served in several sales
and marketing capacities since being employed by Hurco in 1989.

David E. Platts has been  employed by Hurco  since  1982,  and was elected  Vice
President, Research and Development in 1989.

Stephen J. Alesia joined Hurco in June 1996 and was elected an executive officer
in September  1996.  Prior to joining  Hurco,  Mr. Alesia was employed for seven
years by Arthur Andersen LLP, an international public accounting firm.

Hendrik J. Hartong, Jr. is a general partner of Brynwood Management III and
Brynwood  Management IV, L.P., the general partner of Brynwood  Partners III and
Brynwood  Partners  IV, L.P. Mr.  Hartong is also a general  partner of Brynwood
Management  II, L.P.,  the general  partner of Brynwood  Partners II, L.P.,  and
until  December  31, 1998,  was a general  partner of Brynwood  Management,  the
general partner of Brynwood Partners Limited Partnership. Mr. Hartong has served
as a director of Lincoln  Snacks since June 1998. Mr. Hartong has also served as
a director  and Chairman of the Board of Air Express  International  Corporation
since 1985. Mr. Hartong has been a director since 1986.

Andrew L. Lewis IV has served as Chief  Executive  Officer of KRR Partners,
L.P. since July 1993. Mr. Lewis was a consultant for USPCI of Pennsylvania, Inc.
from 1991 to 1993.  Mr.  Lewis is also a director of Air  Express  International
Corporation. Mr. Lewis has been a director since 1988.

E. Keith Moore has served as  President  of Hurco  International,  Inc.,  a
subsidiary of the Hurco,  from April 1988 until December 1999. Mr. Moore is also
a director of Met-Coil Systems Corporation.  Mr. Moore has been a director since
1990.

Richard T. Niner was elected Chairman of the Board of Directors on March 9,
1999. Mr. Niner is a general partner of Wind River Associates. Mr. Niner is also
a general  partner of Brynwood  Management  II,  L.P.,  the  general  partner of
Brynwood  Partners II, L.P., and until December 31, 1998, was a general  partner
of  Brynwood  Management,  the  general  partner of  Brynwood  Partners  Limited
Partnership.  Mr.  Niner  is  also  a  director  of  Air  Express  International
Corporation,  Arrow  International,  Inc. and Case, Pomeroy & Company,  Inc. Mr.
Niner has been a director since 1986.

O. Curtis Noel has been an  independent  business  consultant for more than
ten years specializing in market and industry studies,  competitive analysis and
corporate development programs with clients in the U.S. and abroad. Mr. Noel has
been a director since 1993.

Charles E. Mitchell  Rentschler has served as President and Chief Executive
Officer of The Hamilton  Foundry & Machine Co. since 1985.  Mr.  Rentschler  has
been a director since 1986.

<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act of 1934 requires our directors and
executive  officers,  and persons who own more than 10% of our common stock,  to
file reports of  ownership  with the  Securities  and  Exchange  Commission  and
Nasdaq.  Such persons are also required to furnish us with copies of all Section
16(a) forms they file.

Based  solely on our  review of the  copies of such  forms  received  or written
representations  from certain  reporting  persons that they were not required to
file a Form 5 to report previously unreported ownership or changes in ownership,
we believe that,  during our fiscal year ending  October 31, 1999, our officers,
directors  and  greater  than 10%  beneficial  owners  complied  with all filing
requirements under Section 16(a).
<PAGE>
Item 11.  EXECUTIVE COMPENSATION

Summary Compensation

The following table sets forth all  compensation  paid or accrued during each of
the last three fiscal years to the Chief Executive Officer and each of the other
four executive officers of Hurco (the Named Executive Officers) whose salary and
bonus exceeded $100,000 during fiscal 1999.
<TABLE>
                           Summary Compensation Table

                                                                                        Long-Term
                                                 Annual Compensation                   Compensation
                                    ------------------------------------------         ------------          All Other
Name and                 Fiscal     Salary         Bonus       Other Annual        Securities Underlying    Compensation
Principal Position         Year       ($)         ($)(1)      Compensation ($)           Options(2)            ($) (3)
------------------       ------     ------        ------      ----------------           ----------            -------
<S>                        <C>    <C>           <C>                    <C>                  <C>                 <C>
Brian D. McLaughlin        1999   $268,077          --                 --                   50,000              $52,206
President and CEO          1998    258,077       75,000                --                       --               52,206
                           1997    250,000      125,000                --                       --               51,726

Roger J. Wolf              1999   $165,946           --                                     25,000              $47,566
Sr. VP, Secretary          1998    160,039       50,000                --                       --               48,064
Treasurer and CFO          1997    156,000       60,000                --                       --               47,086

James D. Fabris            1999   $165,904           --                --                   35,000              $23,984
Executive Vice             1998    156,154       65,000                --                       --               24,054
President - Operations     1997    140,000       60,000                --                       --               23,504

Richard Blake              1999   $135,268           --                --                       --                   --
V.P. of Hurco and          1998    128,124       40,000                --                       --               $1,791
President Hurco Machine    1997    108,550       41,750                --                       --                4,633
Tool Products Division

David E. Platts            1999   $105,000           --                --                   10,000              $14,802
Vice President of          1998    104,038       10,000                --                       --               15,436
Research & Development     1997    100,000       45,000                --                       --               13,153
---------------------------

(1)    Represents cash bonuses earned and paid in the subsequent year.
(2)    Represents  shares of common  stock  underlying  grants of options  made  during the year.  We have not  granted any Stock
       Appreciation Rights (SARs).
(3)    Represents  our  contribution  to  defined  contribution  plans and split
       dollar  life  insurance  premiums.   During  fiscal  1997,  we  initiated
       Split-Dollar  Life Insurance  Agreements with certain  officers of Hurco.
       Under the terms of the  agreements,  we pay all of the premiums on behalf
       of the officers.  We will be repaid the premiums from the policies'  cash
       surrender  value when the policies are terminated in accordance  with the
       provisions of the agreements.

</TABLE>
<PAGE>



                        Defined Contribution Plan      Company paid Split-Dollar

Name                         Company Match              Life Insurance Premiums

Brian D. McLaughlin             $4,800                            $47,406
Roger J. Wolf                    4,800                             42,766
James D. Fabris                  4,800                             19,184
David E. Platts                  2,587                             12,215

Stock Options

The following table sets forth  information  related to options exercised during
fiscal 1999 and options held at fiscal year-end by the Named Executive Officers.
We do not have any outstanding SARs.
<TABLE>
                  Option Grants During Fiscal 1999 Fiscal Year

                                                    % of Total                                 Potential Realizable
                                      Number of      Options                                 Value at Assumed Annual
                                      Securities    Granted to                                 Rates of Stock Price
                                      Underlying    Employees     Exercise                   Appreciation for Option
                                       Options      in Fiscal       Price      Expiration             Term1
Name                                   Granted2        Year        ($/SH)         Date           5%($)        10%($)
----                                   --------        ----        ------         ----           -----      -------
<S>                                     <C>           <C>          <C>          <C>            <C>          <C>
Brian D. McLaughlin                     50,000        16.4%        $5.813       12/15/08       182,788      463,221
Roger J. Wolf                           25,000         8.2%        $5.813       12/15/08                    231,611
James D. Fabris                         35,000        11.5%        $5.813       12/15/08       127,952      324,255
David E. Platts                         10,000         3.3%        $5.813       12/15/08        36,558       92,644
</TABLE>
1 The potential  realizable value  illustrates value that might be realized upon
the exercise of the options  immediately prior to the expiration of their terms,
assuming the specified  compounded rates of appreciation of Hurco's common stock
from the date of grant through the term of the options.

2 Options may be exercised in five annual  installments  commencing on the first
anniversary of the date of grant.
<PAGE>
<TABLE>
                                 Aggregated Option Exercises in Fiscal 1999 and Year-End Option Values

                                                                                                  Value of

                                                                  Number of                      Unexercised
                             Shares                         Securities Underlying                In-the-Money
                            Acquired                        Unexercised Options                    Options
                              on            Value               at FY-End (#)                 at FY-End ($) (1)
                                                          ------------------------        ---------------------
                           Exercise       Realized         Exer-           Unexer-          Exer-      Unexer-
Name                         (#)            ($)          cisable           cisable        cisable      cisable
----                       ---------     ---------       -------           -------        -------      -------
<S>                           <C>            <C>         <C>                <C>           <C>               <C>
Brian D. McLaughlin           --             --          125,000            50,000        $70,000           --
Roger J. Wolf                 --             --           50,000            25,000          7,000           --
James D. Fabris               --             --           36,000            39,000         33,250           --
Richard Blake                 --             --           17,000             4,000          7,875           --
David E. Platts               --             --           28,000            12,000         20,625           --
</TABLE>
-----------------------------------------
(1)  Value is calculated  based on the closing  market price of the common stock
     on October 31, 1999 ($ 3.50) less the option exercise price.

Compensation of Directors

During 1999,  each director who is not a full-time  employee of Hurco received a
fee of $1,500 for each meeting of the Board of Directors  attended and each such
director  also  received  $5,000 per  quarter.  Directors  are also  entitled to
receive  reimbursement  for travel and other expenses incurred in attending such
meetings.  Mr. Niner received annual compensation of $72,000 for his services as
Chairman of the Executive Committee of the Board of Directors.

Employment Contracts

Brian D.  McLaughlin  entered into an employment  contract on December 14, 1987.
The  contract  term  is  month-to-month.   Mr.  McLaughlin's  salary  and  bonus
arrangements  are set annually by the Board of  Directors.  Other  compensation,
such as stock option grants,  is awarded  periodically  at the discretion of the
Board of Directors.  As part of that contract,  Mr. McLaughlin is entitled to 12
months'  salary if his  employment is terminated for any reason other than gross
misconduct.

Roger J. Wolf  entered  into an  employment  contract  on January  8, 1993.  The
contract term is unspecified.  Mr. Wolf's salary and bonus  arrangements are set
annually by the Board of  Directors.  Other  compensation,  such as stock option
grants, is awarded periodically at the discretion of the Board of Directors.  As
part of that  contract,  Mr.  Wolf  is  entitled  to 12  months'  salary  if his
employment is terminated without just cause.

James D. Fabris  entered into an employment  contract on November 18, 1997.  The
contract term is unspecified.  Mr. Fabris' salary and bonus  arrangement are set
annually by the Board of  Directors.  Other  compensation,  such as stock option
grants, is awarded periodically at the discretion of the Board of Directors.  As
part of the  contract,  Mr.  Fabris  is  entitled  to 12  months'  salary if his
employment is terminated for any reason other than gross misconduct.
<PAGE>
Richard  Blake  entered  into an  employment  contract  on April 21,  1999 which
extends through December 31, 2000. Mr. Blake's salary and bonus arrangements are
set annually by the Board of Directors. Other compensation, such as stock option
grants, is awarded periodically at the discretion of the Board of Directors.  As
part of the  contract,  Mr.  Blake is  entitled to  continuation  of base salary
through  December 31, 2000, if his employment is terminated  without cause.  Mr.
Blake may voluntarily resign in which case Hurco has no further obligation.

Compensation Committee Interlocks and Insider Participation

During fiscal 1999, the members of the Compensation  Committee were Hendrik
J. Hartong, Jr., O. Curtis Noel and Charles E. Mitchell Rentschler.  None of the
Committee  members is a current or former officer or employee of Hurco or any of
its subsidiaries.

<PAGE>


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

               AND MANAGEMENT

The following  table sets forth  information  as of January 15, 2000,  regarding
beneficial  ownership of our common stock by each  director and Named  Executive
Officer,  by all  directors and  executive  officers as a group,  and by certain
other  beneficial  owners of more than 5% of the common stock.  Each such person
has sole voting and investment power with respect to such securities,  except as
otherwise noted.
<TABLE>
                                                                                     Shares Beneficially Owned

Name and Address                                                                Number                   Percent
                                               Other Beneficial Owners
<S>                                                                           <C>                          <C>
Wellington Management Co.                                                     646,900 (1)                  10.9%
75 State Street
Boston, Massachusetts  02109

The Prudential Insurance Company of America                                    489,364                      8.2%
4 Gateway Center
Newark, New Jersey 07102

The TCW Group, Inc.                                                           324,800 (2)                   5.5%
865 South Figueroa Street
Los Angeles, California  90017

Brynwood Partners II L.P., et al                                              762,561 (3)                  12.0%
Two Soundview Avenue
Greenwich, Connecticut  06830

Dimensional Fund Advisors                                                      380,700                      6.4%
1299 Ocean Avenue
Santa Monica, CA  90401

FMR Corporation                                                                379,028 (4)                  6.4%
82 Devonshire Street
Boston, Massachusetts 02109
                                          Directors and Executive Officers

Hendrik J. Hartong, Jr.                                                        346,013 (3,5)                5.4%
Andrew L. Lewis IV                                                              34,000 (5)                  0.5%
Brian D. McLaughlin                                                            183,586 (6,7)                2.9%
E. Keith Moore                                                                  38,010 (8)                  0.6%
Richard T. Niner                                                               694,549 (3,5)               10.9%
O. Curtis Noel                                                                  25,000 (5)                  0.4%
Charles E. Mitchell Rentschler                                                  45,000 (5,9)                0.7%
Roger J. Wolf                                                                   68,492 (10)                 1.1%
James D. Fabris                                                                 43,500 (11)                 0.7%
Richard Blake                                                                   18,000 (12)                 0.3%
David E. Platts                                                                 31,700 (13)                 0.5%
Executive officers and directors                                             1,254,849 (14)                19.7%
as a group (12 persons)
</TABLE>
<PAGE>


(1)      According to the most recent public filings,  Wellington Management Co.
         has shared voting power for all shares.

(2)      According to the most recent public filings, the TCW Group, Inc. has
         shared voting power for all shares.

(3)      Represents shares owned by a group,  consisting of Brynwood Partners II
         L.P. ("Brynwood II"), its general partner, Brynwood Management II, L.P.
         ("Brynwood  Management  II"), and the partners of Brynwood  Management,
         Hendrik J. Hartong,  Jr., and Richard T. Niner.  Brynwood Management II
         has  shared  voting and  dispositive  power over  278,001  shares;  Mr.
         Hartong has sole voting and  dispositive  power over 68,012  (including
         25,000 shares subject to the exercise of non-qualified  options) shares
         and shared voting and dispositive power over 278,001 shares;  Mr. Niner
         has sole voting and dispositive  power over 416,548  (including  25,000
         shares  subject to the exercise of  non-qualified  options)  shares and
         shared voting and dispositive power over 278,001 shares.  The shares in
         the table for Mr. Hartong and Mr. Niner include those shares over which
         they have voting and investment power.

(4)      According to most recent public filings, FMR Corporation has no voting
         power for any of the shares.

(5)      Includes 25,000 shares subject to the exercise of non-qualified options
         that are exercisable within 60 days.

(6)      Includes 135,000 subject to options held by Mr. McLaughlin that are
         exercisable within 60 days.

(7)      Includes  10,986  shares  owned by Mr.  McLaughlin's  wife and
         children,  as to which  he may be  deemed  to have  beneficial
         ownership.

(8)      Includes 11,000 shares subject to options that are exercisable within
         60 days.

(9)      Includes 1,000 shares owned by Mr. Rentschler's wife, as to which he
         may be deemed to have beneficial ownership.

(10)     Includes 55,000 shares subject to options that are exercisable within
         60 days.

(11)     Includes 43,000 shares subject to options that are exercisable within
         60 days.

(12)     Includes 17,000 shares subject to options that are exercisable within
         60 days.

(13)     Includes 30,000 shares subject to options that are exercisable within
         60 days.

(14)     Includes 421,000 shares subject to options that are exercisable within
         60 days.


<PAGE>


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Hurco and Air Express  International  (AEI) are related parties because a common
group of shareholders  held a significant  ownership  interest in both companies
during fiscal 1999. AEI provides  freight  forwarding and shipping  services for
us. The cost of these  freight  services are  negotiated on an arms length basis
and amounted to $4.3 million during fiscal 1999.

PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
<TABLE>
(a)  1.  Financial  Statements.  The following  consolidated  financial
         statements of Registrant  are included  herein under
         Item 8 of Part II:
         ---------------------

                                                                          Page
         <S>                                                              <C>
         Reports of Independent Accountants...............................20
         Consolidated Statements of Operations - years
           ended October 31, 1999, 1998 and 1997..........................21
         Consolidated Balance Sheets - as of October 31, 1999 and 1998....22
         Consolidated Statements of Cash Flows - years
           ended October 31, 1999, 1998 and 1997..........................23
         Consolidated Statements of Changes in Shareholders' Equity -
           years ended October 31, 1999, 1998 and 1997....................24
         Notes to Consolidated Financial Statements.......................25




     2.  Financial Statement Schedules.  The following financial statement
         schedule is included in this Item.
         -----------------------------
                                                                          Page

         Schedule II - Valuation and Qualifying

           Accounts and Reserves..........................................48


     All other  financial  statement  schedules are omitted because they are not
     applicable  or the  required  information  is included in the  consolidated
     financial statements or notes thereto.

(b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the three months ended October 31,
1999.

(c)  Exhibits

     Exhibits are filed with this Form 10-K or incorporated  herein by reference
as listed on Pages 49 and 50.
</TABLE>
<PAGE>

<TABLE>
            Schedule II - Valuation and Qualifying Accounts and Reserves

               for the years ended October 31, 1999, 1998 and 1997

                             (Dollars in thousands)

                                        Balance at         Charged to      Charged                               Balance
                                        Beginning           Costs and      to Other                               at End
Description                             of Period           Expenses       Accounts          Deductions         of Period
-----------                             ----------         -----------     --------          ----------         ---------
<S>                                     <C>                  <C>            <C>               <C>               <C>
Allowance for doubtful accounts for the year ended:

   October 31, 1999                     $     769            $    231       $     --          $     313 3       $     687
                                         ========             =======        =======           ========          ========

   October 31, 1998                     $     757            $    280       $     --          $     268 2       $     769
                                         ========             =======        =======           ========          ========

   October 31, 1997                     $     785            $     73       $     --          $     101 1       $     757
                                         ========             ========       =======           ========          ========




Accrued warranty expenses for the year ended:

   October 31, 1999                     $   1,060            $    533       $     --          $     625         $     968
                                         ========             =======        =======           ========          ========

   October 31, 1998                     $   1,452            $    503       $     --          $     895         $   1,060
                                         ========             =======        =======           ========          ========

   October 31, 1997                     $   1,425            $  1,321       $     --          $   1,294         $   1,452
                                         ========             =======        =======           ========          ========




Accrued restructuring expenses for the year ended:

     October 31, 1999                   $     690            $  (103)       $    --           $     224         $     363
                                         ========             =======       ========           ========          ========

    October 31, 1998                    $    --              $  1,162       $   471           $      --         $     690
                                         ========             =======       ========           ========         =========
</TABLE>

1  Receivable  write-offs  of  $106,000,  net of  cash  recoveries  on  accounts
previously  written off of $5,000. 2 Receivable  write-offs of $280,000,  net of
cash  recoveries  on accounts  previously  written off of $12,000.  3 Receivable
write-offs of $337,000, net of cash recoveries on account previously written off
of $24,000.
<PAGE>
EXHIBITS INDEX

Exhibits Filed.  The following exhibits are filed with this report:
--------------

10.1          The third amendment to the amended and restated credit  agreement
              and amendment to  reimbursement  agreement  between the
              Registrant and Bank One, Indiana National  Association and Bank
              One,  Michigan  (formerly known as NBD Bank) dated August
              17, 1999.

10.2          Third amendment to European facility between the Registrant and
              The First National Bank of Chicago dated August 17, 1999.

10.3          Employment agreement between the Registrant and Richard Blake
              dated April 21, 1999.

10.4          Form of Director  Non-Qualified  Stock Option  Agreement  between
              the Registrant and Hendrick J. Hartong,  Jr., Andrew L.
              Lewis IV, Richard T. Niner, O. Curtis Noel and Charles E. Mitchell
              Rentschler.

11            Statement re: computation of per share earnings

21            Subsidiaries of the Registrant

23            Consent of the Independent Public Accountants - Arthur Andersen
              LLP.

27            Financial Data Schedule (electronic filing only)


Exhibits Incorporated by Reference.
-----------------------------------
The following exhibits are incorporated into this report:

3.1           Amended and  Restated  Articles of  Incorporation  of the
              Registrant,  incorporated  by reference to Exhibit 3.1, to the
              Registrant's Quarterly Report on Form 10-Q for the quarter ended
              July 31, 1997.

3.2           Amended and Restated  By-Laws of the Registrant  dated  September
              12, 1995,  incorporated by reference to Exhibit 3.3, to
              the Registrant's Quarterly Report on Form 10-Q for the quarter
              ended January 31, 1996.

10.1          The Underlease  between  Dikappa  (Number 220) Limited and
              Northern & London  Investment  Trust Limited dated December 2,
              1982,  incorporated by reference to Exhibit 10.13, to its
              Registration  Statement on Form S-1,  No.2-82804 dated April 1,
              1983.

10.2          Non-Qualified Stock Option Agreement between the Registrant and O.
              Curtis Noel effective, March 3, 1993, incorporated by reference to
              Exhibit 10.44, to the Registrant's  Annual Report on Form 10-K for
              the year ended October 31, 1993.
<PAGE>
10.3          Employment  Agreement  between the  Registrant  and Roger J. Wolf
              dated  January 8, 1993,  incorporated  by  reference to
              Exhibit 10.45, to the Registrant's Annual Report on Form 10-K for
              the year ended October 31, 1993.

10.4          Non-qualified  Stock  Option  Agreement  between the  Registrant
              and Hendrik J.  Hartong,  Jr.,  effective  July 8, 1996
              incorporated by reference to Exhibit 10.47 to the Registrant's
              Report on Form 10-K for the year ended October 31, 1996.

10.5          Non-qualified  Stock Option  Agreement  between the Registrant and
              Andrew  L.  Lewis  IV,  effective  July 8,  1996  incorporated  by
              reference to Exhibit 10.48 to the Registrant's Report on Form 10-K
              for the year ended October 31, 1996.

10.6          Non-qualified Stock Option Agreement between the Registrant and
              Richard T. Niner,  effective July 8, 1996 incorporated by
              reference to Exhibit 10.49 to the Registrant's Report on Form 10-K
              for the year ended October 31, 1996.

10.7          Non-qualified  Stock Option Agreement  between the Registrant and
              O. Curtis Noel,  effective July 8, 1996 incorporated by
              reference to Exhibit 10.50 to the Registrant's Report on Form 10-K
              for the year ended October 31, 1996.

10.8          Non-qualified  Stock Option  Agreement  between the Registrant and
              Charles   E.   Mitchell   Rentschler,   effective   July  8,  1996
              incorporated  by  reference to Exhibit  10.51 to the  Registrant's
              Report on Form 10-K for the year ended October 31, 1996.

10.9          1997 Stock Option and Incentive  Plan,  effective May 29, 1997,
              incorporated  by reference to Exhibit 10.52 in Form 10-Q
              for the quarter ended July 31, 1997.

10.10         Amended  and   Restated   Credit   Agreement   and   Amendment  to
              Reimbursement  Agreement,  effective September 8, 1997 between the
              Registrant  and NBD  Bank,  N.A.  and  NBD  Bank  incorporated  by
              reference to Exhibit 10.10 in Form 10-K for the year ended October
              31, 1997.

10.11         Second  Amended and  Restated  Senior Note  Agreement  between the
              Registrant and Principal Mutual Life Insurance  Company  effective
              September 8, 1997  incorporated  by reference to Exhibit  10.11 in
              Form 10-K for the year ended October 31, 1997.

10.12         Letter  Agreement  (European  Facility)  dated  September 8, 1997,
              between  Registrant's  subsidiaries and The First National Bank of
              Chicago  incorporated  by reference to Exhibit  10.12 in Form 10-K
              for the year ended October 31, 1997.

10.13         Guaranty Agreement dated September 8, 1997, between the Registrant
              and The First National Bank of Chicago  incorporated  by reference
              to Exhibit 10.13 in Form 10-K for the year ended October 31, 1997.

10.14         Guaranty  Agreement dated September 8, 1997,  between Autocon
              Technologies,  Inc. and The First National Bank of Chicago
              incorporated by reference to Exhibit 10.14 in Form 10-K for the
              year ended October 31, 1997.
<PAGE>
10.15         Employment  agreement  between the  Registrant and James D. Fabris
              dated  November  18,  1997,  incorporated  by reference as exhibit
              10.15 to the  Registrant's  Quarterly  Report of Form 10-Q for the
              quarter ended January 31, 1998.

10.16         The first amendment to the amended and restated  credit  agreement
              and amendment to  reimbursement  agreement  between the Registrant
              and NBD Bank  N.A.  dated  September  29,  1998,  incorporated  by
              reference as Exhibit  10.1 to the  Registrant's  Annual  Report on
              Form 10-K for the year ended October 31, 1998.

10.17         The second  amendment to the amended and restated credit agreement
              and amendment to  reimbursement  agreement  between the Registrant
              and NBD  Bank  N.A.  dated  December  19,  1998,  incorporated  by
              reference as Exhibit 10.1 to the Registrant's  Quarterly Report of
              Form 10Q for the quarter ended January 31, 1999.

10.18         Sublease between Autocon Technologies, Inc. and Robert Bosch
              Corporation dated April 30, 1999, incorporated by reference
              as Exhibit 10.1 to the Registrant's Annual Report on Form 10-Q for
              the quarter ended April 30, 1999.


<PAGE>


SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned,  thereunto duly authorized, this 27th day of January,
2000.

                                      HURCO COMPANIES, INC.


                                      By:_____________________
                                         Roger J. Wolf
                                         Senior Vice-President,
                                         Secretary, Treasurer and
                                         Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated:

Signature and Title(s)                                    Date

______________________________                       January 27, 2000
Brian D. McLaughlin, Director,
President and Chief Executive Officer
of Hurco Companies, Inc.
(Principal Executive Officer)


_________________                                    January 27, 2000
-------------------------------------------
Roger J. Wolf
Senior Vice-President,
Secretary, Treasurer and
Chief Financial Officer
of Hurco Companies, Inc.

(Principal Financial Officer)


_____________________                                January 27, 2000
--------------------------------------
Stephen J. Alesia
Corporate Controller
of Hurco Companies, Inc.

(Principal Accounting Officer)



<PAGE>




____________________________                         January 27, 2000
------------------------------
Hendrik J. Hartong, Jr., Director

______________________                               January 27, 2000
--------------------------------------
Andrew L. Lewis, IV, Director

__________________                                   January 27, 2000
------------------------------------------
E. Keith Moore, Director

____________________                                 January 27, 2000
-----------------------------------------
Richard T. Niner, Director

_________________                                    January 27, 2000
---------------------------------------------
O. Curtis Noel, Director

____________________________                         January 27, 2000
---------------------------------
Charles E. M. Rentschler, Director