SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)

  X   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, 1995 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                                       35-115073
(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 12, 1996 was $25,773,890.

The number of shares of the Registrant's  common stock outstanding as of January
12, 1996 was 5,426,082.

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. (the Company)  designs and produces  computer  numerical
control (CNC) systems and software and CNC-guided machine tools for sale through
its  own  distribution  system  to the  worldwide  machine  tool  industry.  The
Company's  proprietary  CNC  systems and related  software  products  are either
integrated with machine tools marketed by the Company,  sold to machine tool end
users or sold to other machine tool  manufacturers who integrate them with their
own products.

The  Company  pioneered  the  application  of   microprocessor   technology  and
conversational  programming  software to machine tool  controls  and,  since its
founding in 1968,  has been a leader in the  introduction  of CNC  systems  that
automate manufacturing processes and improve productivity in certain segments of
the   metalworking   industry.   The  Company  has   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  software  in the  Company's  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.

The Company's executive offices and principal design, engineering,  assembly and
distribution facilities are located in Indianapolis, Indiana. Additional product
design,  assembly and  warehouse  facilities  are located in  Farmington  Hills,
Michigan; and sales,  application engineering and service offices are located in
High Wycombe, England; Munich, Germany; Paris, France and Singapore.


(B)      FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The Company operates in one business segment,  which consists of CNC systems and
software and CNC-guided machine tools for cutting and forming metals.

(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 of a solid block of metal. Metal forming
machine tools  fabricate parts by shearing,  punching,  forming and bending flat
sheets of metal.





<PAGE>

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
the Company. CNC-guided milling machines automatically and precisely shape parts
by directing the movement of a cutting tool according to a program  specifically
designed for the desired part. Some CNC-guided milling machines,  referred to as
machining centers,  are equipped with automatic tool changers that allow several
different drills,  taps or mills to be used in a programmed sequence on the same
part without having to remove the part from the machine.

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 produced by the Company.

The  Company  has  pursued  a  strategy  that  is  focused  on  developing   and
distributing  to the  worldwide  machine  tool  market a  comprehensive  line of
leading-edge 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, the Company
has  adopted an open  systems  architecture  that  permits  its CNC  systems and
software to be used with a variety of hardware  platforms and has  emphasized an
"operator friendly" design that employs interactive  "conversational"  software.
To  increase  its margins  and  mitigate  the  potential  adverse  impact of the
recessionary  cycles and other  economic  forces  that  impact the  markets  for
capital  goods in general  and  machine  tools in  particular,  the  Company has
recently completed a comprehensive  restructuring of its operations, as a result
of  which  it  has  outsourced  almost  all of its  machine  tool  manufacturing
operations  to  independent  contract  manufacturers  and is  concentrating  its
resources on product research, development, design, marketing,  distribution and
service.


PRODUCTS

The Company's principal products consist of CNC systems and related software for
both metal  cutting  machine  tools and metal  forming  press  brakes as well as
complete  CNC-guided  milling  machines  and  machining  centers  into which the
Company's own CNC systems have been fully-integrated.  The Company also produces
and distributes control upgrades, accessories and replacement parts and provides
operator training and support services to its customers.











<PAGE>

The following table sets forth the  contribution of each of these product groups
to the Company's total revenues during each of the past three fiscal years:

                                              YEAR ENDED OCTOBER 31
                                              ---------------------
(Dollars in thousands)                 1995            1994            1993
                                       ----            ----            ----
CNC systems and software........ $19,027 (21.2%) $17,553 (24.2%) $15,869 (22.0%)
CNC-guided milling machines
   and machining centers........  55,711 (62.2%)  38,622 (53.2%)  39,857 (55.2%)
Service parts...................   9,073 (10.1%)  10,422 (14.3%)  10,465 (14.5%)
Service fees....................   5,821 ( 6.5%)   6,031 ( 8.3%)   6,039 ( 8.3%)
                                 -------         -------         -------
                                 $89,632         $72,628         $72,230
                                 =======         =======         =======


CNC SYSTEMS AND SOFTWARE

The Company's CNC systems and software are marketed under the tradenames ULTIMAX
(R),  DELTA (TM) and AUTOBEND  (R). The ULTIMAX (R) and DELTA (TM) product lines
are used to control metal cutting  machine  tools.  AUTOBEND (R) CNC systems are
used to control metal forming press brakes.

o    ULTIMAX

The Company's patented ULTIMAX  "conversational"  CNC system, which incorporates
an interactive and powerful "data block"  programming  methodology  supported by
extensive  geometric  and process data  calculation  software  tools,  enables a
machine tool 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  CNC in 1984,  the Company  has added  enhancements  related to operator
programming  productivity,  CAD  compatibility,  data processing  throughput and
motion control speed and accuracy.  In 1994,  the Company  introduced the latest
generation  of the ULTIMAX CNC, the ULTIMAX  3/486.  By  incorporating  Industry
Standard  Architecture  (ISA)  computer  platform  components,  this CNC product
offers  improved  performance  while  ensuring  access  to  the  most  effective
computing  hardware and software  technology.  In 1995, the Company introduced a
software  option  that  interprets  part  programs  written  for  the  worldwide
installed  base of  competitors'  CNCs;  this  software  option is  intended  to
increase the Company's access to the contract machining market. The Company also
developed a "Single  Screen"  version of its ULTIMAX CNC in 1995 to increase its
penetration  of the CNC milling  machine  market.  A  conversational  CNC system
similar to the ULTIMAX CNC system,  which is offered as an integral component of
the Company's own line of milling machines and machining  centers,  also will be
marketed in 1996 to other machine tool  manufacturers for integration with their
original  equipment  offerings and to retrofitters  for  integration  with older
models of machine tools.








<PAGE>

o    DELTA SERIES

The Company's DELTA series CNCs, which feature microprocessor-based  electronics
incorporating ISA computer platform  components to provide enhanced  performance
at lower cost, are designed for the worldwide metalworking industry and are used
on milling machines,  machining centers, turning centers and punching equipment.
The DELTA 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 CNCs are  designed  and  configured  as general  purpose
products,  which offer  flexibility,  reliability and ease of integration with a
wide  variety  of  machine  designs,  and are  marketed  to  original  equipment
manufacturers and retrofitters of a wide range of metal cutting machines.

Late in fiscal  1994,  the  Company  expanded  its DELTA  product  line with the
introduction of  PRECISIONSCAN  (TM), an advanced  continuous  trace  digitizing
system that, together with other software  peripherals,  is intended to meet the
needs of mold makers in the metal  cutting  industry.  The Company  will further
supplement its DELTA product line with the introduction in fiscal 1996 of a new,
low-cost, two-axis lathe control with "conversational" graphics.

o    AUTOBEND

AUTOBEND  CNC  systems  are  applied to press  brakes that form parts from metal
sheet and consist of a microprocessor-based  CNC and backgauge.  The Company has
manufactured and sold the AUTOBEND product line since 1968 and currently markets
four models of its press brake CNC and gauging systems  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  product  line was  expanded  in fiscal 1993 by the  introduction  of a
multi-axis CNC system that enhances the productivity of the press brake operator
by reducing  set-up  time.  The AUTOBEND  product  line was further  expanded in
October  1995 with the  introduction  of a low-cost  CNC system for simple press
brake applications.

o    CAM AND SOFTWARE PRODUCTS

In support of its CNC  product  lines,  the  Company  offers  metal  cutting and
forming software products for programming two and three  dimensional  parts. Its
two primary products are the ULTIMAX PC and PC+, off-line  programming  systems,
which  are  sold to  users  of the  large  installed  base of both  ULTIMAX  and
competitive CNC systems.  In fiscal 1993, the Company  released a computer-aided
design  (CAD)-compatible  data file  translation  software option to its ULTIMAX
off-line programming system. This unique product eliminates manual data entry of
part features by transferring AUTOCAD(TM) drawing files directly into the CNC or
the off-line  programming  system software,  substantially  increasing  operator
productivity.  And, in fiscal 1995, the Company  augmented its Autobend  product
line with the  introduction  of a  computer-aided  manufacturing  (CAM) software
package that enables the user to create and manipulate metal forming programs on
a personal computer.








<PAGE>
CNC MACHINE TOOL SYSTEMS

The Company  designs and  markets  complete  stand-alone  milling  machines  and
machining centers, each of which is equipped with a fully-integrated  ULTIMAX or
DELTA  CNC  system.   All  of  these   machines  are  built  to  the   Company's
specifications by independent contract manufacturers.  Its new ADVANTAGE(R) line
of machine tools,  which was introduced in the United States in late fiscal 1994
and in Europe  in the  second  half of  fiscal  1995,  is a  complete  family of
products offering different levels of performance  features for different market
applications  and  ranging in price  from  $39,000  to  $150,000.  Two series of
products are currently offered within the Advantage(R) product line -- the VALUE
SERIES and the PERFORMANCE SERIES -- each of which is marketed within a distinct
price range and includes  machines of differing sizes and power levels,  ranging
from a  five-horsepower  milling machine with an X-axis travel of 24 inches to a
twenty-horsepower machining center with 50 inches of X-axis travel.

The VALUE SERIES products are equipped with the DELTA CNC or the "Single Screen"
version of the ULTIMAX CNC system and are  intended  for use by the  independent
contract manufacturer requiring a low-cost product with basic capabilities.  The
PERFORMANCE  SERIES  products  employ the same  machine  tool frame as the VALUE
SERIES, but feature the more advanced ULTIMAX CNC system and software desired by
the precision tool, die and mold market, where fast programming of complex parts
is a key to competitiveness.

The  Company's  smaller  machines -- those with an X-axis travel of 30 inches or
less -- embody  the  Company's  proprietary  machine  tool  design.  The  larger
machines -- those with an X-axis travel of 40, 45, or 50 inches -- incorporate a
machine tool platform developed by one of the Company's contract  manufacturers.
During fiscal 1995,  approximately  69% of the machine tools sold by the Company
embodied its proprietary design;  these machines accounted for approximately 53%
of the Company's  total machine tool sales revenues for fiscal 1995. The Company
expects that during fiscal 1996  approximately 85% of the machine tools it sells
will embody its proprietary design.

PARTS AND SYSTEM SERVICE

The Company's service organization provides installation,  operator training and
customer  support for the  Company's  products.  The Company  also  provides CNC
upgrades, accessories, options and replacement parts for its products. Among the
options are software  programs and additional CNC features that allow a customer
to upgrade the performance of its milling  machines and machining  centers.  The
Company's  after-sale  parts and  service  business  helps  strengthen  customer
relationships  and  provides  continuous  information  concerning  the  evolving
requirements of end-users.

MARKETING AND DISTRIBUTION

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







<PAGE>

The Company sells its CNC systems and related  products (i) to  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. The Company's integrated  CNC-guided
milling machines and machining  centers are sold primarily to end-users.  During
fiscal 1995,  no single  end-user of the Company's  products  accounted for more
than 5% of its total revenues.

Sales are made  through  over 200  independent  agents  and  distributors  in 37
countries  throughout  North America,  Europe and Asia. The Company also has its
own direct  sales  forces in the United  States,  England,  France,  Germany and
Singapore,  which are considered to be among the world's  principal machine tool
consuming  countries.   During  fiscal  1995,  one  distributor   accounted  for
approximately 6% of the Company's total revenues; no other distributor accounted
for more than 5% of total revenues.  The Company has agreements with each of its
distributors,  but may terminate those agreements upon prior notice ranging from
30 days to 180 days.  Approximately  80% of the worldwide  demand for CNC-guided
machine tools and CNC systems comes from outside the U.S. and  accordingly,  the
Company  considers  its  international  market  presence  to be  critical to its
operations.

The Company believes the demand for CNC systems and CNC-guided  machine tools is
driven by several factors: (i) the declining supply of skilled machinists,  (ii)
the need to  continuously  improve  productivity,  (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 machine tools 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 its products on a worldwide
basis, the Company attempts to reduce the potential impact on its total revenues
of adverse changes in economic conditions in any particular geographic region.


COMPETITION

Numerous companies compete with the Company's product lines in the United States
and international markets. Many of these competitors are larger and have greater
financial resources than the Company. The Company strives to compete effectively
by  designing  into its  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 its products in a range of prices and  capabilities,  the
Company seeks to meet the needs of a broad  potential  market.  The Company also
believes that its competitiveness is aided by its reputation for reliability and
quality,  its strong  international sales and distribution  organization and its
extensive customer service organization.

In the CNC system  market,  the Company is a leader in providing  user-friendly,
"conversational"  programming  systems  for CNC machine  tools.  Many of its CNC
system  competitors,  such as Fanuc Ltd.,  Mitsubishi,  Dr. Johannes  Heidenhain
GmbH, Seimens,  Southwest Industries,  Bridgeport Machines.,  and Allen-Bradley,
also offer  "user-friendly"  programming  features.  Fanuc Ltd.  is the  world's
largest supplier of CNC systems.

<PAGE>

The  Company  believes  it is one of the  largest  manufacturers  of CNC gauging
systems  for press  brakes  in the  United  States.  Automec  Inc.,  a CNC gauge
manufacturer,  and Cybelec SA, a control  manufacturer,  are the Company's major
competitors  for these products in the United States.  The Company also competes
with Cybelec in Europe.

In the U.S. market for CNC milling  machines,  competition  comes primarily from
Bridgeport Machines, Inc., Tree Machine Tool Co., Inc., Miltronics Manufacturing
Co. and  Republic-Lagun  Machine Tool Co.  Competition in the United States with
respect to CNC machining  centers comes from Fadal  Engineering  Co., Inc., Haas
Automation,  Inc.  and  Cincinnati  Milacron,  Inc.  A large  number of  foreign
builders, including Okuma Machinery Works Ltd., Yamazaki Mazak Corporation, Mori
Seiki Co.,  Ltd.,  and  Matsuura  Machinery  Corporation  also  compete with the
Company in the United States as well as in international markets.

MANUFACTURING

The  Company  assembles  and  tests its CNC  systems  at its own  facilities  in
Indianapolis,  Indiana, and Farmington Hills,  Michigan using readily available,
industry-standard  personal computer  components (such as hard disk drives,  VGA
cards  and  motherboards)  as well as  proprietary  system  components  that are
produced to the Company's  specifications  by several  domestic  suppliers.  The
Company  believes that  alternative  sources for the proprietary  components are
readily available.

The Company's  CNC-guided machine tools and milling machines are manufactured to
its  specifications in Taiwan by several  independent  contractors,  of whom two
accounted  for  approximately  95% of the machines sold by the Company in fiscal
1995.  The Company  has worked  closely  with its  Taiwan-based  contractors  to
increase  their  production  capacity to meet the rising  demand for its machine
tool  products  and  believes  that  such  capacity  is  sufficient  to meet the
Company's  current and  projected  demand.  Although  the  Company is  exploring
additional  manufacturing  sources  for certain of its  machine  tool  products,
alternative sources are not readily obtainable and any significant  reduction in
capacity on the part of its  existing  machine  tool  manufacturing  contractors
could have a material adverse effect on its operations.

BACKLOG

Backlog  consists of firm  orders  received  from  customers  and  distributors.
Backlog was $16.1 million, $7.0 million and $7.7 million as of October 31, 1995,
1994, and 1993, respectively.  Fiscal 1995 orders were $98.8 million compared to
$71.9 million for fiscal 1994, and $74.1 million for fiscal 1993.

INTELLECTUAL PROPERTIES

The Company  considers  certain  features of its products to be proprietary  and
owns, directly or through a subsidiary, a number of patents that are significant
to its business.  The Company holds a non-exclusive license covering features of
the automatic tool changer offered with certain of its CNC machining centers. In
addition, IMS Technology,  Inc. (IMS), a wholly-owned subsidiary of the Company,
owns  various  domestic  and  foreign  patents  covering  the  machining  method
practiced  when a  machine  tool is  integrated  with an  interactive  CNC  (the
Interactive  Maching Patents).  In September 1995, the Company was awarded a new
patent on an object-oriented methodology for CNC software.



<PAGE>

In  October  1995,  IMS  initiated  infringement  actions  against  a number  of
enterprises  that it believes are  employing  or  practicing  machining  methods
covered by the Interactive  Machining  Patents.  These  enterprises  include 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.   See  Item  3.  LEGAL
PROCEEDINGS.

IMS is  actively  pursuing  a  program  to  license  the use of the  Interactive
Machining Patents.  On January 2, 1996, IMS entered into an agreement with a CNC
manufacturer and various of its subsidiaries, none of whom is a defendant in the
IMS patent  infringement  actions,  under which it has  granted a  non-exclusive
license to use the Interactive  Machining  Patents in exchange for certain fixed
payments  beginning  in  fiscal  1996 and  continuing  through  fiscal  2001 and
aggregating approximately $800,000, net of legal fees and expenses. In addition,
IMS  has  received  a  royalty-free  non-exclusive  license  (with  a  right  of
sublicense to the Company) under four of the licensee's patents. There can be no
assurance  that IMS will enter  into any other  license  agreements  or that the
terms of any future license  agreements  will be similar to those of the initial
license.

RESEARCH AND DEVELOPMENT

The  Company's  total  engineering,   research  and  development   expenditures,
including  amounts  funded by third  parties,  were $4.3 million in fiscal 1995,
$4.0 million in fiscal 1994 and $4.3 million in fiscal  1993.  These  activities
include development of new software and machine tool products, efforts to reduce
costs and improve quality for current products and routine product support.

Research and development  expenditures for new products and significant  product
improvements  were $1.4  million,  $1.0 million and $1.7 million in fiscal 1995,
1994, and 1993 respectively,  and $1.0 million,  $1.0 million,  and $1.6 million
respectively,  net of  third-party  reimbursements.  In  addition,  the  Company
capitalized  $1.2  million in 1995,  $.8 million in 1994 and $.7 million in 1993
related to software development projects.

EMPLOYEES

The Company and its  subsidiaries  had 352  employees at the end of fiscal 1995,
none of whom is covered by a collective-bargaining agreement or represented by a
union.  The Company has  experienced  no  employee-generated  work  stoppages or
disruptions and considers its employee relations to be satisfactory.


(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

The  following  represents  a  breakdown  of  Company  sales  to  the  indicated
geographic regions for the past three fiscal years (in thousands):

                                              1995     1994      1993
                                            -------   -------   -------

North America.......................        $49,005   $46,430   $46,402
Europe .............................         35,434    23,692    22,151
Asia and other......................          5,193     2,506     3,677
                                            -------   -------   -------
  Total ............................        $89,632   $72,628   $72,230
                                            =======   =======   =======
<PAGE>

Export sales from the United  States were $6.4 million in 1995,  $5.7 million in
1994 and $6.2 million in 1993.

Information  regarding  Total Sales,  Operating  Income (Loss) and  Identifiable
Assets by geographical  area is shown in Note 14 to the  Consolidated  Financial
Statements.

<TABLE>
ITEM 2.  PROPERTIES

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

     LOCATION                SQUARE FOOTAGE              PRINCIPAL USES
<CAPTION>
<S>                             <C>           <C>    
Indianapolis, Indiana           165,000<F1>   Corporate headquarters, design and
                                              engineering, product testing, CNC
                                              assembly, sales, application 
                                              engineering and customer service.

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

High Wycombe, England            45,000<F2>   Sales, application engineering,
                                              customer service.

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

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

Singapore                         1,200       Sales, application engineering
                                              customer service


--------------------- 
<FN>
<F1>  Approximately  65,000  square feet will be  available  for lease in fiscal
      1996.
<F2>  Approximately  24,000  square feet have been  sublet to a subtenant  since
      November 1995.
</FN>
</TABLE>



The Company owns the Indianapolis facility and leases the other facilities.  The
leases have terms  expiring  at various  dates  ranging  from  February  1997 to
February  2004.  The Company  believes that all of the its  facilities  are well
maintained and are adequate for its needs now and in the foreseeable future. The
Company does not believe that it would  experience  any  difficulty in replacing
any of the present  facilities if any of its current  leases were not renewed at
expiration.

<PAGE>
ITEM 3.  LEGAL PROCEEDINGS

On October 10, 1995, the Company's  wholly-owned  subsidiary,  IMS, commenced an
action in the United States District Court for the Northern District of Illinois
against Yamazaki Mazak Corporation;  Yamazaki Mazak Trading  Corporation;  Mazak
Corporation;  Machinery Systems,  Inc.; Fox Tool Co. Inc.; Okuma Machinery Works
Ltd.; Okuma America Corporation; Ellison Machinery Company of the Midwest, Inc.;
Apollo  Machine &  Manufacturing  Company,  Inc.;  Arpac  Corporation;  American
Control  Technology,  Inc.; Nissan Motor Co. Ltd.; Nissan Motor Car Carrier Co.,
Ltd.;  and Nissan Motor Corp.  USA,  Inc.  (collectively  the  Defendants).  The
Defendants include end-users of interactive CNCs, machine tool manufacturers who
incorporate  interactive  CNCs  in  their  products  and  manufacturers  of CNCs
designed to permit use of interactive methods when coupled to machine tools. IMS
has alleged that the  Defendants  have  infringed  IMS's  Interactive  Machining
Patents and is seeking monetary  damages from, and an injunction  against future
infringement by, each of the Defendants.

On January 10, 1996,  IMS was served  notice of an action  commenced on November
30,  1995  against  IMS in the  United  States  District  Court for the  Central
District of  Claifornia  by  Southwestern  Industries,  Inc.  (Southwestern),  a
manufacturer  of  CNCs  and  CNC-guided  machine  tools,  seeking  to  have  the
interactive  machining patents declared invalid. IMS has until February 10, 1996
to respond to the  complaint.  On January  11,  1996,  IMS  commenced  an action
against each of Southwestern  and Bridgeport  Machines,  Inc., a manufacturer of
CNCs  and  CNC-guided  machine  tools,  alleging  infringement  by each of these
companies of the Interactive  Machining Patents and seeking monetary damages and
injunctive relief.

Although IMS believes that the Interactive  Machining  Patents are valid and its
claims of patent  infringement  have substantial  merit, it is unable to predict
the outcome of any of these actions.

The Company is  involved in various  other  claims and  lawsuits  arising in the
normal  course of  business,  none of which,  in the opinion of  management,  is
expected  to  have a  material  adverse  effect  on its  consolidated  financial
position or results of operations.



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

None.

















<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below is certain information with respect to the executive officers of
the Company:
      NAME                AGE       POSITION(S) WITH THE COMPANY

Brian D. McLaughlin       53        President and Chief Executive Officer

Roger J. Wolf             55        Senior Vice-President, Secretary,
                                    Treasurer and Chief Financial Officer

David E. Platts           43        Vice-President, Research and Development

James D. Fabris           44        Vice President and
                                    President, Hurco Manufacturing Company

Richard Blake             37        Vice President,  Hurco Europe

Thomas L. Brown           39        Corporate Controller and Assistant Secretary

Brian D.  McLaughlin  has been  President  and Chief  Executive  Officer  of the
Company 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.

Roger J. Wolf was elected Senior Vice-President,  Secretary, Treasurer and Chief
Financial  Officer in January 1993.  Prior to joining the Company,  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   and   Vice-President,   Treasurer  of  Ransburg   Corporation,   an
international manufacturer of factory automation equipment.

David E. Platts has been  employed by the  Company  since 1982,  and was elected
Vice-President,  Research and Development in 1989. Prior to joining the Company,
Mr. Platts was a Research Engineer at the Delco Remy Division of General Motors.

James D. Fabris was elected Vice  President of the Company in February  1995 and
named President of Hurco  Manufacturing  Company, a division of the Company,  in
November  1993.  He served as  President of Acroloc,  Inc., a subsidiary  of the
Company,  from July 1991 to October 1993 and as  Vice-President of Operations of
Hurco Manufacturing  Company from 1988 to 1991. Prior to joining the Company, he
was employed in general  management and  manufacturing  management  positions at
various divisions of Ransburg Corporation.

Richard Blake was elected Vice President,  Hurco Europe, effective January 1996,
and Managing  Director,  Hurco  Europe,  Ltd., a subsidiary  of the Company,  in
December 1993. He served as U.K.  Marketing Manager for Hurco Europe,  Ltd. from
January  1993 to November  1993 and as a Sales  Manager for Hurco  Manufacturing
Company from  September  1989 to December  1992.  Prior to joining Hurco Europe,
Ltd. as a sales  engineer  in October  1987,  he worked for  Hitachi  Seiki as a
technical sales engineer for machine tool products.

Thomas L. Brown  joined the Company in January 1995 and was elected an executive
officer in February  1995.  Prior to joining the Company,  he was Assistant Vice
President,  Financial  Reporting and Analysis for Anacomp,  Inc., an information
management company providing  micrographics and magnetics products and services.
Prior to March 1991,  he was with  Deloitte & Touche,  an  international  public
accounting firm, for over 12 years.
<PAGE>

                                     PART II


ITEM 5.    MARKET FOR THE REGISTRANT'S EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's  Common Stock is traded in the NASDAQ National Market System 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 NASDAQ.

                                                   1995               1994
                                            ----------------    ----------------
QUARTER ENDED:..........................       HIGH     LOW       HIGH      LOW
-------------                               ----------------    ----------------
January 31..............................     $4-1/2   $3-3/4     $3-3/8   $2
April 30................................      4-3/8    2-3/4      3-3/4    2-5/8
July 31.................................      4-1/4    3-3/8      2-7/8    2-1/4
October 31..............................      7-1/8    3-1/2      4-3/4    2-1/4

The Company does not  currently pay dividends on its Common Stock and intends to
retain earnings for working capital, capital expenditures and debt reduction. In
addition,  the  Company's  agreements  with its principal  lenders  restrict its
ability to pay cash dividends.

The Company had  approximately  641 holders of record of its Common  Stock as of
January 12, 1996.


ITEM 6.  SELECTED FINANCIAL DATA

The  Selected  Financial  Data  presented  below  have  been  derived  from  the
Consolidated  Financial  Statements  of the Company for the years  indicated and
should be read in conjunction  with the  Consolidated  Financial  Statements and
related notes set forth elsewhere herein.
                                               YEAR ENDED OCTOBER 31,
                                               ----------------------
                                  1995     1994      1993       1992      1991
                                ------------------------------------------------
Statement of Operations Data:   (Dollars in thousands, except per share amounts)

Sales and service fees          $89,632   $72,628   $72,230   $87,828   $86,539

Selling, general and adminis-
  tration expenses              $19,002   $18,129   $22,001   $24,213   $20,623

Restructuring charge            $  --     $   --    $ 6,750   $ 1,070   $  --

Operating income (loss)         $ 4,468   $(2,564)  $(18,323) $(3,633)  $ 4,271

Net income (loss)               $   204   $(5,791)  $(21,144) $(5,789)  $ 2,337

Earnings (loss)
  per common share              $   .04   $ (1.07)  $  (3.89) $ (1.05)  $   .43

Common stock dividends
  per share                     $  --     $   --    $   --    $   .14   $   .20

Weighted average common
  shares outstanding              5,536     5,407      5,438    5,492     5,487
<PAGE>


                                        AS OF OCTOBER 31,
                                        -----------------
                          1995      1994      1993      1992      1991
                        -----------------------------------------------
Balance Sheet Data:                  (Dollars in thousands)

Current assets          $46,356   $43,096   $49,314   $61,532   $60,671

Current liabilities     $26,479   $16,985   $16,312   $15,349   $16,160

Working capital         $19,877   $26,111   $33,002   $46,183   $44,511

Current ratio               1.8       2.5       3.0       4.0       3.8

Total assets            $61,421   $59,558   $67,287   $84,332   $82,369

Long-term obligations   $27,459   $35,245   $37,888   $34,285   $23,451

Total debt              $33,599   $34,813   $37,540   $35,515   $24,020

Shareholders' equity    $ 7,483   $ 7,328   $13,087   $34,698   $42,758



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.

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
revenues and the year-to-year  percentage changes in the dollar amounts of those
items.

                                PERCENTAGE OF REVENUES  YEAR-TO-YEAR % CHANGE
                                ----------------------  ---------------------
                               1995     1994      1993   95 VS. 94  94 VS. 93

Sales and service fees        100.0%   100.0%    100.0%     23.4%       .6%
Gross profit                   26.2     21.5      14.4      50.8      49.3
Selling, general and
  administrative expenses      21.2     25.0      30.5      (4.8)     17.6
Restructuring charge            --       --        9.3       --        --
Operating income (loss)         5.0     (3.5)    (25.4)    274.3      86.0
Interest expense                4.8      4.5       3.9     (28.8)    (16.7)
Net income (loss)                .2     (8.0)    (29.3)    103.5      72.6







<PAGE>

FISCAL 1995 COMPARED WITH FISCAL 1994

Total sales and service  fees of $89.6  million in fiscal  1995  represented  an
increase  of  $17.0  million  over  fiscal  1994,   inclusive  of  $2.5  million
attributable  to the effect of  stronger  European  currencies  when  converting
foreign currency revenues into U.S. dollars for financial reporting purposes. On
a worldwide basis, sales of CNC-guided  machine tools totaled $55.7 million,  an
increase of $17.1 million  (44%) over fiscal 1994,  and sales of CNC systems and
software  totaled  $19.0  million,  an increase of $1.5 million (8%) over fiscal
1994.  While the increases in both product lines  reflected  improvements in the
world's principal machine tool markets,  particularly Germany, the significantly
greater  percentage  increase  associated  with the sales of CNC-guided  machine
tools was  attributable  to the strong  demand for the  Company's  new ADVANTAGE
series of machine  tools as well as the  enhanced  availability  of products for
shipment   as  a  result  of  capacity   increases   on  the  part  of  contract
manufacturers. Revenues attributable to sales of parts and service fees declined
$1.6  million  (9%) from fiscal 1994  levels,  primarily  as a result of reduced
sales of parts for discontinued machine tool models.

In the United  States,  sales and  service  fees in fiscal 1995  increased  $3.5
million (7%) over fiscal  1994,  reflecting  increases of $4.0 million  (18%) in
sales of CNC-guided  machine tools and $1.4 million (9%) in sales of CNC systems
and software, offset by a decrease of $1.9 million (14%) in revenue from service
parts and fees. The improved sales were primarily  attributable  to increases in
unit volume, rather than pricing, due to enhanced demand for and availability of
the Company's  ADVANTAGE  product line and general  strengthening of the markets
for both fully-integrated machine tools and CNC systems.

In Europe,  sales and service fees in fiscal 1995 increased  $11.3 million (52%)
over fiscal 1994,  inclusive of the effects of currency conversion for financial
reporting purposes.  Net of  currency-translation  effects,  the improvement was
primarily  attributable  to a 25%  increase in unit volume and a 17% increase in
average  unit  prices  realized  for the  Company's  CNC-guided  machine  tools,
reflecting the  introduction  of the new ADVANTAGE  series in the second half of
fiscal 1995 as well as a significant  strengthening of the European machine tool
markets.  In Asia,  sales and service  fees  increased to $2.6 million in fiscal
1995 from  $400,000  recorded for fiscal 1994,  reflecting  the  Company's  more
competitive  pricing of the new ADVANTAGE series product line in that market. On
a combined  basis,  European  and Asian sales and service  fees in fiscal  1995,
exclusive of currency-translation  effects, accounted for 38% of total worldwide
revenues,  compared  with  30%  in  fiscal  1994,  due  primarily  to  the  more
significant  year-to-year  change in general market conditions in Europe than in
the United States,  as well as improvements  in the Company's  foreign sales and
marketing operations.

Demand for the Company's  products during fiscal 1995 was strong.  Worldwide new
order  bookings  for  fiscal  1995  increased  $26.9  million  (37%)  over 1994,
primarily due to the  introduction  of the new ADVANTAGE  series of machine tool
products  and  the  increased  production  capacity  of the  Company's  contract
manufacturers.  Backlog as of October 31, 1995,  was $16.1  million  compared to
$7.0 million as of October 31, 1994.  The Company is continuing to work with its
contract manufacturers to further increase their production capacity.






<PAGE>

Gross profit margin as a percentage of revenues  increased  from 21.5% in fiscal
1994 to 26.2% in 1995.  As  reflected in Note 13 to the  Consolidated  Financial
Statements, gross profit margins have steadily increased from 18.5% in the first
quarter of fiscal 1994 to 27.2% in the fourth quarter of fiscal 1995, reflecting
cost reductions achieved through the Company's  restructuring program as well as
the incremental  phase-in of higher-margin  products.  Also  contributing to the
enhancement  of  gross  profit  margins  was an  improved  mix of  higher-margin
European  sales  as a  percentage  of  total  worldwide  sales,  as  well as the
favorable currency-translation effects associated with foreign sales.

Selling,  general and  administrative  (SG&A)  expenses in fiscal 1995 increased
$873,000  (5%)  over  fiscal  1994  primarily  because  of  favorable   currency
translation  effects  ($502,000) and increased selling expenses  associated with
increased unit volume. SG&A expenses, as a percentage of sales and service fees,
was 21% in fiscal 1995 compared to 25% in fiscal 1994.

The Company  generated $4.5 million of operating  income in fiscal 1995 compared
to a $2.5 million  operating  loss in fiscal  1994, a $7.0 million  improvement.
This return to operating  profitability after three years of losses reflects the
benefits  of  the  Company's   restructuring   program,   the  phase-in  of  new
higher-margin products and improved market conditions worldwide.

Interest  expense in fiscal 1995  increased  $949,000  (29%) over  fiscal  1994.
Included in  interest  expense  for fiscal  1995 is a $400,000  incremental  fee
payable to the Company's lenders under its credit agreements,  which provide for
additional fees when certain gross profit levels are achieved. As of October 31,
1995, the maximum fee became fully due. The remaining  $240,000  incremental fee
payable to the  lenders as of October 31,  1995,  will be  amortized  to expense
during fiscal 1996. The remainder of the increase in interest  expense  reflects
the  impact  of  higher  interest  rates on the  Company's  floating  rate  bank
borrowings, despite a $1.2 million reduction in total debt during the year.

No income  tax  expense  has been  provided  for  fiscal  1995.  The  income tax
liability  incurred in certain tax  jurisdictions  was offset by the reversal of
valuation   allowance   reserves   against  the  Company's  net  operating  loss
carryforwards.  Net operating  loss  carryforwards  available to offset  pre-tax
income in future periods are discussed in Note 6 to the  Consolidated  Financial
Statements.

The Company  manages its foreign  currency  exposure  through the use of foreign
currency forward  exchange  contracts as described in Note 1 to the Consolidated
Financial  Statements.  The Company does not speculate in the financial  markets
and,  therefore,  does not enter into these contracts for trading purposes.  The
Company  also  moderates  its  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 potential  adverse effect
of currency  fluctuations  on the costs of  purchased  products.  The results of
these programs achieved management's objectives for 1995.


FISCAL 1994 COMPARED WITH FISCAL 1993

The results of operations for fiscal 1994 are not directly comparable with those
for  fiscal  1993 due to the  impact on fiscal  1993  results  of  non-recurring
charges  that  aggregated  $10.2  million.  In  addition,  sales in fiscal  1993
included  approximately $4.8 million  attributable to certain product lines that
were discontinued in fiscal 1994.

<PAGE>

Although total sales and service fees in fiscal 1994 were  relatively  unchanged
from those for fiscal 1993,  sales of continuing  product lines  increased  $5.2
million  (8%)  substantially  offsetting  the  negative  impact  on sales of the
discontinuance  of certain  product lines that had  accounted for  approximately
$4.8  million of sales in fiscal  1993.  Sales of  continuing  product  lines in
Europe increased $3.3 million (19%) over fiscal 1993,  reflecting a 13% increase
in unit volume and a 5% increase in average  unit  prices.  The increase in unit
volume resulted primarily from general improvement in economic conditions in the
United Kingdom and Germany.  The improvement in average unit prices  reflected a
reduction in price discounting  within the machine tool market generally as well
as an upgrading in the Company's total product mix. Changes in currency exchange
rates were not a material factor in the year-to-year increase.

In the United  States,  sales and  service  fees in fiscal 1994  decreased  $1.1
million (2%) from fiscal 1993. Sales of CNC systems and software  increased $1.9
million  (15%),  reflecting  improved  conditions  in those  machine tool market
segments in which these products are sold. This increase was offset, however, by
a decrease in sales of CNC-guided machine tools, as well as associated parts and
service fees,  reflecting the adverse effect of shortages in the availability of
certain of the Company's  product lines for immediate  shipment during the first
six months of fiscal 1994, the restructuring of the Company's domestic sales and
marketing organization throughout the year, the early phase-out of certain older
machine  tool  models and a decline in customer  orders for  certain  continuing
product offerings in anticipation of the expected  introduction of the ADVANTAGE
series of machine tools in the fourth fiscal quarter.

New orders in fiscal 1994 decreased $2.2 million (3%) from fiscal 1993.  Backlog
as of October 31, 1994 was $7.0 million  compared to $7.7 million at October 31,
1993. In September  1994,  the Company  introduced  its new Advantage  series of
machine tools and several new open  architecture-based  CNC systems and software
products,  resulting  in near  record  orders for that month.  Although  the new
machine tool products were not available for shipment until the first quarter of
fiscal 1995 in the United States, and later in Europe, new domestic machine tool
orders in September  and October  1994  reflected an increase of 37% compared to
the same months in 1993.

Gross profit margin as a percentage of revenues  increased  from 19.2% in fiscal
1993 (exclusive of non-recurring charges) to 21.5% in fiscal 1994, the effect of
which is approximately  $1.7 million.  Gross profit margins increased from 18.5%
in the  first  quarter  of  fiscal  1994 to 23.8%  in the  fourth  quarter.  The
improvements  in gross profit margins  reflected the benefits of cost reductions
achieved through the implementation of the Company's  restructuring  program and
the incremental phase-in of higher-margin products.

Selling,  general,  and  administrative  expenses in fiscal 1994  decreased $3.9
million,  or 18%,  from  fiscal 1993  primarily  as a result of  facilities  and
personnel reductions under the restructuring program.

As a result of the  improvements  in gross profit  margins and the  reduction of
selling, general and administrative expenses, the fiscal 1994 operating loss was
$5.6 million  (69%) less than that  reported for fiscal 1993  (exclusive  of the
non-recurring charges).

Interest  expense in fiscal 1994  increased  $473,000 (17%) over the fiscal 1993
amount notwithstanding a $2.7 million reduction in outstanding debt, as a result
of higher interest rates and fees payable to the Company's lenders.


<PAGE>

In fiscal  1994,  the Company  entered into foreign  currency  forward  exchange
contracts  to  hedge  against  foreign  currency   fluctuations  on  receivables
denominated in foreign  currencies and net investments in foreign  subsidiaries,
principally working capital.  These contracts were typical forward contracts and
were not  entered  into for  trading  purposes.  Hedge  gains  and  losses  were
effectively  matched with corresponding  transaction gains and losses on foreign
currency  receivables  and  corresponding  translation  gains and  losses on net
investments. The net effect of this activity was not significant during 1994.


LIQUIDITY AND CAPITAL RESOURCES

At October 31, 1995,  the Company had cash and cash  equivalents of $2.1 million
compared  to $1.1  million at October 31,  1994.  Cash  provided  by  operations
totaled $3.7  million in fiscal  1995,  compared to $4.0 million in fiscal 1994.
Accounts  receivable  increased by $3.1 million because of substantially  higher
sales volume in the fourth quarter of fiscal 1995 than in the comparable quarter
of fiscal 1994.  Inventories  decreased by $1.0 million primarily due to focused
efforts to sell  discontinued  CNC  machine  tool  products  and  related  parts
inventories.  This reduction offset increased inventory  requirements related to
higher production  capacity at the Company's  contract  manufacturers.  Accounts
payable and accrued expenses  increased by $3.0 million primarily because of the
increased inventory requirements and the higher sales volume.

Working capital was $19.9 million at October 31, 1995, compared to $26.1 million
at October 31, 1994. The decrease in working  capital is primarily  attributable
to the  classification  of term debt payable on or before  September 30, 1996 as
current liabilities.  During fiscal 1995, total debt was reduced by $1.2 million
through  the  application  of cash  provided  by  operations.  This  compares to
decreased borrowings of $2.7 million in fiscal 1994.

Capital expenditures for property and equipment were $551,000 in fiscal 1995 and
represented   normal   improvements  and  replacements.   Capitalized   software
development  costs were $1.1  million in fiscal 1995 and  represented  continued
activity  in  developing  new  software  features  and  options for both new and
existing CNC system products.

As discussed in Note 3 to the Consolidated Financial Statements, the Company has
approximately  $3.2 million in inventories of  discontinued  products,  inactive
parts and  excess/slow-moving  parts which it expects to liquidate in the normal
course of operations. Management expects the results of such liquidation in 1996
to be sufficient to offset any  increases in inventory  requirements  related to
continuing products and to provide an additional source of cash from operations.

As of October 31, 1995,  the Company had  unutilized  credit  facilities of $5.9
million available for either direct borrowings or commercial letters of credit.

As noted  under Item 1.  BUSINESS  --  INTELLECTUAL  PROPERTIES,  the  Company's
subsidiary, IMS Technology,  Inc., entered into a patent license agreement under
which it will  receive  payments,  net of legal fees and  expenses,  aggregating
approximately  $800,000 throughout January 2001, of which approximately $357,000
will be included in income during fiscal 1996.






<PAGE>

Under the terms of the Company's agreements with its lenders, which were amended
and  restated  effective  January  26,  1996,  as  described  in  Note  4 to the
Consolidated  Financial  Statements,  $6.2 million of term loan payments are due
and payable in fiscal 1996, including  approximately $3.2 million in installment
payments which were deferred from February 1, 1996 to July 31, 1996.  Management
believes that  anticipated  cash flow from  operations,  together with available
borrowings  under the Company's  bank credit  facilities,  will be sufficient to
enable the Company to meet its anticipated  cash  requirements  for fiscal 1996,
including scheduled debt amortization payments.  However,  should cash flow from
operations be less than  currently  anticipated,  the Company may be required to
limit planned  investments in new products,  equipment and business  development
opportunities.  In order to provide additional liquidity and working capital, as
well as a basis for ultimately  refinancing  its outstanding  indebtedness,  the
Company is considering  opportunities for raising  approximately $5.0 million of
additional  capital through the issuance and sale of equity or subordinated debt
securities.  The Company has no present agreements or arrangements for obtaining
such additional capital and there can be no assurance that it will be obtainable
on  acceptable  terms.  Although the Company has no obligation to seek or obtain
such additional  capital,  if it is not obtained,  the Company may be subject to
increased  fees to its  lenders,  as  discussed  in  Note 4 to the  Consolidated
Financial Statements.


                                   


































<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, 1995 and 1994,
and the related consolidated statements of operations,  changes in shareholders'
equity and cash flows for the years then ended.  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 and
schedule 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, 1995 and 1994,  and the  consolidated
results  of their  operations  and their  cash flows for the years then ended 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
Commission's  rules  and is not part of the  basic  financial  statements.  This
schedule has been subjected to the auditing  procedures  applied in the audit 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, 1995 except with 
respect to the matters discussed
in Notes 4 and 12 as to which the
date is January 26, 1996




<PAGE>


                                                       

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We  have  audited  the  consolidated   statements  of  operations,   changes  in
shareholders'  equity and cash flows of Hurco  Companies,  Inc. and subsidiaries
for the  year  ended  October  31,  1993.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

The Company  incurred  significant  losses from  operations in 1993. The Company
entered  into  new loan  agreements  to cure  certain  violations  of  financial
covenants and implemented a plan for  restructuring  its operations as discussed
in Notes 2 and 4 to the consolidated financial statements.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  results of the operations and the cash
flows of Hurco  Companies,  Inc. and subsidiaries for the year ended October 31,
1993, in conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements described above taken as a whole. The schedule listed in Item 14(a) 2
is  presented  for  purposes  of  complying  with the  Securities  and  Exchange
Commission's  rules  and is not part of the  basic  financial  statements.  This
schedule has been subjected to the auditing  procedures  applied in the audit 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.




                                                             COOPERS & LYBRAND

Indianapolis, Indiana
December 10, 1993







<PAGE>


                              HURCO COMPANIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                     YEAR ENDED OCTOBER 31,
                                                     ----------------------
(In thousands, except per share amounts)         1995       1994        1993
                                                 ----       ----        ----



SALES AND SERVICE FEES                         $89,632   $ 72,628    $ 72,230

Cost of sales and service                       66,162     57,063      61,802
                                              --------    --------    -------

     GROSS PROFIT                               23,470     15,565      10,428

Selling, general and administrative expenses    19,002     18,129      22,001

Restructuring charge                              --         --         6,750
                                              --------    --------    -------

     OPERATING INCOME (LOSS)                     4,468     (2,564)    (18,323)

Interest expense                                 4,250      3,301       2,828

Other (income) expense, net                         14        (74)         (7)
                                               --------    --------    -------

     Income (loss) before income taxes             204     (5,791)    (21,144)

Income tax expense (benefit)                       --         --          --
                                               --------    --------    -------

NET INCOME (LOSS)                              $   204   $ (5,791)   $(21,144)
                                              ========    ========    =======


EARNINGS (LOSS) PER COMMON SHARE               $   .04    $ (1.07)   $ (3.89)
                                              ========    ========    =======


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING       5,536      5,407       5,438
                                              ========    ========    =======








THE  ACCOMPANYING  NOTES  ARE AN  INTEGRAL  PART OF THE  CONSOLIDATED  FINANCIAL
STATEMENTS.


<PAGE>


                              HURCO COMPANIES, INC.
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                              AS OF OCTOBER 31,
                                                              -----------------
(Dollars in thousands, except per share amounts)                1995      1994
                                                                ----      ----
CURRENT ASSETS:
   Cash and cash equivalents                                 $  2,072  $  1,101
   Accounts receivable, less allowance for
    doubtful accounts of $1,070 in 1995
    and $1,046 in 1994                                         17,809    14,555
   Inventories                                                 25,238    26,341
   Other                                                        1,237     1,099
                                                             --------  --------
     Total current assets                                      46,356    43,096
                                                             --------  --------

PROPERTY AND EQUIPMENT:
   Land                                                           761       761
   Building                                                     7,122     6,979
   Machinery and equipment                                     13,489    13,886
   Leasehold improvements                                         996     1,060
                                                             --------  --------
                                                               22,368    22,686
   Less accumulated depreciation and
    amortization                                              (11,739)  (10,799)
                                                             --------  --------
                                                               10,629    11,887

Software development costs, less amortization                   3,513     3,234
Other assets                                                      923     1,341
                                                             --------  --------
                                                             $ 61,421  $ 59,558
                                                             ========  ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable                                          $ 10,570  $  8,438
   Accrued expenses                                             8,161     7,233
   Accrued warranty expenses                                    1,391     1,170
   Current portion of long-term debt                            6,357       144
                                                             --------  --------
     Total current liabilities                                 26,479    16,985
                                                             --------  --------

NON-CURRENT LIABILITIES:
   Long-term debt                                              27,242    34,669
   Other long-term obligations                                    217       576
                                                             --------  --------
                                                               27,459    35,245





<PAGE>

COMMITMENTS AND CONTINGENCIES (NOTES 4, 10 AND 11)

SHAREHOLDERS' EQUITY:
   Preferred stock: $100 par value per share;
     40,000 shares authorized; no shares issued                  --        --
   Common stock: no par value; $.10 stated
     value per share; 7,500,000 shares
     authorized; 5,425,302 and 5,413,682
     shares issued and outstanding in 1995 and
     1994, respectively                                           543       541
   Additional paid-in capital                                  45,573    45,546
   Accumulated deficit                                        (34,472)  (34,676)
   Foreign currency translation adjustment                     (4,161)   (4,083)
                                                             --------  --------
     Total shareholders' equity                                 7,483     7,328
                                                             --------  --------
                                                             $ 61,421  $ 59,558
                                                             ========  ========




THE  ACCOMPANYING  NOTES  ARE AN  INTEGRAL  PART OF THE  CONSOLIDATED  FINANCIAL
STATEMENTS.


































<PAGE>                                                            
                              HURCO COMPANIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
                                                                                         YEAR ENDED OCTOBER 31,
                                                                                         ----------------------
   (Dollars in thousands)                                                           1995         1994          1993
                                                                                    ----         ----          ----
<S>                                                                             <C>          <C>          <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss).......................................................     $    204     $ (5,791)    $ (21,144)
   Adjustments to reconcile net income (loss) to
   net cash provided by (used for) operating activities:
     Depreciation and amortization.........................................        2,861        3,019         3,556
     Provision for restructuring costs.....................................           --           --         6,750
     Unrealized gains on foreign currency transactions.....................          (59)        (361)           --
     Change in asset/liabilities net of provision for restructuring costs:
      (Increase) decrease in accounts receivable...........................       (3,148)         893         6,184
      (Increase) decrease in inventories...................................        1,004        6,528         3,333
      Increase (decrease) in accounts payable..............................        2,118        2,095            14
      Increase (decrease) in accrued expenses..............................          902       (1,634)           57
      Other................................................................         (156)        (795)           93
                                                                                 -------         ----       -------
         NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES..............        3,726        3,954        (1,157)
                                                                                   -----        -----         -----
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of equipment.........................................           99          327         1,067
   Purchase of property and equipment......................................         (551)        (408)         (915)
   Software development costs..............................................       (1,066)        (853)         (748)
   Other investments.......................................................          134         (152)           --
   Gain (loss) on foreign currency contracts...............................          (48)        (388)           --
                                                                                 -------         ----       -------
         NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES..............       (1,432)      (1,474)         (596)
                                                                                   ------       -----          ----
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net short-term (repayment) borrowings...................................           (1)        (141)        3,324
   Proceeds from long-term borrowings......................................       68,625       39,275         2,808
   Repayment of long-term borrowings.......................................      (69,996)     (42,142)       (3,882)
   Proceeds from exercise of common stock options..........................           29           41           152
   Common stock dividends paid.............................................           --           --          (107)
                                                                                 -------     --------         -----
         NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES..............       (1,343)      (2,967)        2,295
                                                                                   ------       ------        -----
EFFECT OF EXCHANGE RATE CHANGES ON CASH....................................           20          102            94
                                                                                  ------        -------      ------
         NET INCREASE (DECREASE) IN CASH...................................          971         (385)          636

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............................        1,101        1,486           850
                                                                                   -----        -----         -----

CASH AND CASH EQUIVALENTS AT END OF YEAR...................................     $  2,072     $  1,101    $    1,486
                                                                                   =====        =====         =====

SUPPLEMENTAL DISCLOSURES:
   Cash paid for:
      Interest.............................................................     $  3,656     $  3,814     $   2,680
      Income taxes.........................................................           --           --             4
</TABLE>
THE  ACCOMPANYING  NOTES  ARE AN  INTEGRAL  PART OF THE  CONSOLIDATED  FINANCIAL
STATEMENTS.
<PAGE>


                                                            
                              HURCO COMPANIES, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY



<TABLE>

                                                                                                                 
                                                               COMMON STOCK 
                                                         -----------------------   ADDITIONAL     CURRENCY       FOREIGN
                                                         SHARES ISSUED              PAID-IN      ACCUMULATED   TRANSLATION
(DOLLARS IN THOUSANDS)                                   & OUTSTANDING    AMOUNT    CAPITAL        DEFICIT      ADJUSTMENT
<S>                                                         <C>            <C>     <C>          <C>             <C>      
BALANCES, OCTOBER 31, 1992...........................       5,372,366      $ 537   $ 45,408     $  (7,741)      $(3,506)

Net loss.............................................                                             (21,144)
Translation of foreign currency financial
     statements and related hedging activities.......                                                              (579)
Exercise of common stock options.....................          27,033          3        109
                                                          -----------    -------   --------       --------       -------    
BALANCES, OCTOBER 31, 1993...........................       5,399,399        540     45,517       (28,885)       (4,085)


Net loss.............................................                                              (5,791)
Translation of foreign currency financial
   statements and related hedging activities.........                                                                 2
Exercise of common stock options.....................          14,283          1         29
                                                           ----------     ------   --------       --------       -------       

BALANCES, OCTOBER 31, 1994...........................       5,413,682        541     45,546       (34,676)       (4,083)


Net income...........................................                                                 204
Translation of foreign currency financial
   statements and related hedging activities.........                                                               (78)
Exercise of common stock options.....................          11,620          2         27       
                                                           ----------     ------   --------       --------       ------- 

BALANCES, OCTOBER 31, 1995...........................       5,425,302      $ 543    $45,573      $(34,472)      $(4,161)
                                                            =========       ====    =======      =========      ========


</TABLE>










THE  ACCOMPANYING  NOTES  ARE AN  INTEGRAL  PART OF THE  CONSOLIDATED  FINANCIAL
STATEMENTS.

<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  its  wholly-owned  and
controlled  subsidiaries (the Company). A 15% ownership interest in an affiliate
is  carried  at  cost  and is  included  in  Other  Assets  on the  accompanying
Consolidated  Balance Sheets.  Intercompany  accounts and transactions have been
eliminated.

STATEMENTS OF CASH FLOWS.  The Company  considers 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.  The Company enters into foreign currency  forward  exchange  contracts
periodically  to  provide  a  hedge  against  the  effect  of  foreign  currency
fluctuations   on  receivables   denominated  in  foreign   currencies  and  net
investments  in  foreign  subsidiaries.  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  Statement of Operations.  Gains and losses related to
contracts  designated as hedges of net investments in foreign  subsidiaries  are
accrued as exchange  rates change and are  recognized  in the "Foreign  currency
translation  adjustment"  portion of  Shareholders'  equity on the  Consolidated
Balance Sheet.

The Company  also enters into foreign  currency  forward  exchange  contracts to
hedge  certain  firm  intercompany  sale  commitments   denominated  in  foreign
currencies (primarily pound sterling and German marks) for which the Company has
firm purchase  commitments.  The purpose of these  instruments is to protect the
Company 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.

The U.S.  dollar  equivalent  notional  amount of outstanding  foreign  currency
forward exchange contracts was approximately  $18,879,000 as of October 31, 1995
($16,833,000  related to firm intercompany  sales commitments) and $8,489,000 as
of October 31,  1994.  Deferred  losses  related to hedges of these future sales
transactions  were  approximately  $265,000  as of October 31,  1995.  Contracts
outstanding at October 31, 1995,  mature at various times through June 26, 1996.
The  Company  does not enter into these  contracts  for  trading  purposes.  All
contracts are for the sale of currency.

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,  which
includes  capitalized  interest  incurred during the construction  period of the
asset.  No interest  was  capitalized  during the three years ended  October 31,
1995.  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.  Revenue from  maintenance  contracts is
deferred and  recognized  in earnings on a pro rata basis over the period of the
agreement.

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.  Expenditures and related  third-party  reimbursements for
the last three years were (in thousands):
                                                      YEAR ENDED OCTOBER 31,
                                                      ----------------------
                                                     1995      1994      1993
                                                    ------    ------    ------
Research and development expenditures               $1,362    $1,001    $1,667
Less: amounts reimbursed by third parties              354        14        33
                                                    ------    ------    ------
  Net research and development expenses            $ 1,008    $  987    $1,634
                                                    ======    ======    ======

Costs incurred to develop computer software to be sold or otherwise marketed are
capitalized,  after technological feasibility is established,  and are amortized
on a straight-line basis over the estimated product life of the related software
which  ranges  from three to five  years.  Amortization  expense  was  $864,000,
$749,000 and $648,000, respectively, for the three years ended October 31, 1995.

EARNINGS PER SHARE. Earnings per share of common stock are based on the weighted
average  number of common  shares  outstanding,  which  includes  the effects of
outstanding stock options computed using the treasury method.  Such common stock
equivalents  totaled 118,000 for the twelve month period ended October 31, 1995.
Fully diluted  earnings per share are the same as primary earnings per share for
this period.  No effect has been given to options  outstanding for 1994 and 1993
as no dilution would result from their exercise.







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

INCOME TAXES.  Effective November 1, 1993, the Company adopted the provisions of
the Statement of Financial Accounting  Standards (SFAS) No.109,  "Accounting for
Income Taxes".  The Company adopted this new statement as a cumulative effect of
a change in accounting principle with no restatement of prior periods.  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.

ESTIMATES.  The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires  management  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.  The Company designs and produces computer numerical control
(CNC) systems and software and CNC-guided machine tools for sale through its own
distribution  system to the  worldwide  machine  tool  industry.  The  Company's
proprietary CNC systems and related software products are either integrated with
machine tools marketed by the Company, sold to machine tool end users or sold to
other machine tool manufacturers who integrate them with their own products.

The end market for the Company's  products consists primarily of precision tool,
die and mold  manufacturers,  independent job shops and  specialized  production
applications  within large corporations.  Industries served include:  aerospace,
defense, medical equipment, energy,  transportation and computer industries. The
Company's products are sold through over 200 independent agents and distributors
in 37 countries  throughout  North  America,  Europe and Asia.  The Company also
maintains direct sales forces in the United States, England, France, Germany and
Singapore.

CREDIT RISK.  The Company sells  products to customers  located  throughout  the
world.  The  Company  performs  ongoing  credit  evaluations  of  customers  and
generally does not require  collateral.  Allowances are maintained for potential
credit losses, and such losses have been within management's 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.

SIGNIFICANT  VENDORS.  The Company  contracts  principally with two machine tool
builders  located in Taiwan for the manufacture and assembly of CNC machine tool
systems,  based on the  Company's  designs  and  specifications,  utilizing  CNC
systems  provided by the Company.  Any  interruption  from these  sources  would
restrict the  availability  of the Company's  machine tools,  which would affect
operating results adversely.  The Company has negotiations in process with other
manufacturing  sources to  increase  its  capacity  and  continuously  evaluates
alternative sources of supply.

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

RESTRUCTURING.  In fiscal 1995, the Company  completed a  restructuring  program
initiated in 1992. Completed actions associated with the restructuring  included
consolidation  of  certain  operations,   increased  contract  manufacturing  of
substantially  all  machine  tools,  including  the related  integration  of CNC
systems,  discontinuance  of certain product lines, and the design,  development
and  introduction  of a new line of machine  tools and  related  CNC systems and
software products.  These actions resulted in reduced operating expenses in 1994
compared  to  1993,  improved  gross  profit  margins  in 1995  and  1994 and an
operating profit in 1995 compared to prior operating losses. Unaudited quarterly
results for 1995 and 1994 are set forth in Note 12.

The Company recorded a restructuring  charge of $6,750,000  ($1.24 per share) in
fiscal 1993  consisting of reserves of $1,482,000 for revaluation of inventories
of discontinued  products;  $2,465,000 for write-downs or loss on disposition of
certain assets; and $2,803,000 for accrued  liabilities  related  principally to
employee   severance   costs  and  lease   obligations   related  to   redundant
manufacturing  and office space.  During fiscal 1994 and 1995, the reserves were
used for their intended purposes.

3. INVENTORIES

Inventories as of October 31, 1995 and 1994 are summarized below (in thousands):

                                                         1995           1994
                                                      -------        -------

Purchased parts and sub-assemblies ...............    $17,380        $15,252
Work-in-process ..................................      3,523          3,929
Finished goods ...................................      4,335          7,160
                                                      -------        -------
                                                      $25,238        $26,341
                                                      =======        =======


Inventories  are  recorded  net of reserves of  $2,831,000  and  $3,061,000  for
obsolescence  and market  value  adjustments  as of October  31,  1995 and 1994,
respectively.

At October 31, 1995,  approximately  $3,200,000  of  inventories  represent  the
expected net  realizable  value for  discontinued  products,  inactive parts and
excess/slow-moving  parts.  Management has a program in place to liquidate these
inventories  in the normal  course of  operations  and  believes no  significant
losses will be incurred upon disposition.  No estimate can be made of a range of
amounts  of  loss  that  are  reasonably  possible  should  the  program  not be
successful.

The loss  reported for fiscal 1993  included  the effect of a special  inventory
charge of $3.4  million.  $1.7  million of the  special  charge  represented  an
adjustment  to inventory  related to  manufacturing  operations of the Company's
Indianapolis  operations  based on physical  inventories  priced at  established
standard  costs.  $0.5  million of the  special  charge  represented  a physical
inventory adjustment related to certain discontinued  operations.  The remaining
adjustment of $1.2 million  represented an adjustment to reflect current lowered
manufacturing  costs,  as well as  increases in reserves for excess and obsolete
inventories resulting primarily from various product rationalization programs.
<PAGE>

                           HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


4.  DEBT AGREEMENTS

Long-term debt as of October 31, 1995 and 1994, consisted of (in thousands):
                                                           1995         1994
                                                        -------      -------
Bank revolving credit facilities ....................   $16,078      $16,964
Bank term loan ......................................     3,996        4,117
11.12% Senior Notes .................................    12,402       12,448
Economic Development Revenue Bonds, Series 1990 .....     1,000        1,000
Other ...............................................       123          284
                                                        -------      -------
                                                         33,599       34,813
Less current portion and amount classified as current     6,357          144
                                                        -------      -------
                                                        $27,242      $34,669
                                                        =======      =======

As of October 31, 1995, long-term debt was payable as follows (in thousands):

Fiscal 1996 ........................................    $ 6,357
Fiscal 1997 ........................................      3,036
Fiscal 1998 ........................................     24,206
                                                        -------
                                                        $33,599
                                                        =======

As of October 31, 1995,  the Company had  unutilized  credit  facilities of $5.9
million available for either direct borrowings or commercial  letters of credit.
As of October 31, 1995 and 1994,  the Company  had  $6,648,000  and  $4,696,000,
respectively,  of outstanding letters of credit issued to non-U.S. suppliers for
inventory purchase commitments.

Interest was payable at 9.0% and 8.0% on the bank revolving  credit facility and
term loan as of October 31, 1995 and 1994, respectively. Interest was payable on
the  European  credit  authorization  at rates  ranging  from 7.3% to 9.4% as of
October 31, 1995 and from 8.0% to 8.1% as of October 31, 1994.

The Company's  obligations to its lending banks,  as well as its  obligations to
the holders of its outstanding 11.12% Senior Notes, are secured by substantially
all of the Company's assets.

Effective  January  26,  1996,  the  agreements   covering  the  Company's  bank
indebtedness and 11.12% Senior Notes were amended.  The principal terms of those
agreements, as so amended are set forth below.










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


       (a)   BANK INDEBTEDNESS.

          The Company's bank agreements  provide for a revolving credit facility
          expiring  May 1, 1997  (subject  to  extension  in  certain  events to
          November 1, 1997),  permitting  borrowings at any one time outstanding
          of up to $27.0 million (inclusive of outstanding  letters of credit of
          up to $9.5  million).  Of such  borrowings,  up to $5.0 million may be
          drawn in designated European currencies.  In addition,  the agreements
          permit the Company to obtain up to $2.0 million of additional  letters
          of credit  without  reduction of the borrowing  limit.  The agreements
          also provide for a term loan of $4.0 million,  of which  approximately
          $1.5  million is  repayable on July 31, 1996 and the balance is due in
          two equal installments on September 30, 1996 and 1997. Interest on all
          outstanding  borrowings  is payable on a floating  rate basis at prime
          plus 1/4%.
             
          The  agreements  condition  the  banks'  lending  obligations  on  the
          Company's  maintenance of a prescribed  working capital borrowing base
          and require  the  Company to  maintain a specified  minimum net worth,
          establish maximum leverage and fixed charge coverage ratios,  restrict
          capital  expenditures and investments and prohibit the payment of cash
          dividends or the redemption of capital  stock.  The net worth covenant
          requires that Consolidated Tangible Net Worth (as defined) be not less
          than $6.75 million plus (i) 50% of cumulative net income subsequent to
          November  1, 1995 and (ii) 85% of the net  proceeds  of any  equity or
          subordinated debt financings subsequent to November 1, 1995. The ratio
          of total consolidated  indebtedness  (excluding  subordinated debt) to
          Consolidated  Tangible  Net Worth may not exceed  4.5-to-1 at July 31,
          1996 or 4.0-to-1 from October 31, 1996 through the  expiration  of the
          facility;  provided,  that if the Company  receives net proceeds of at
          least $3.0  million  from any equity or  subordinated  debt  financing
          prior to July 31, 1996,  the maximum ratio will be 3.55-to-1 from July
          30, 1996  through  January 30,  1997,  3.0-to-1  from January 31, 1997
          through October 30, 1997 and 2.5-to-1 at October 31, 1997. The amended
          agreements also provide for a contingent  monthly fee of not less than
          $60,000 nor more than  $100,000 (but in no event more than $320,000 in
          the  aggregate)  for each month,  if any, on or after July 31, 1996 in
          respect of which Consolidated  Tangible Net Worth at month end is less
          than $12.0 million.

       (b)   11.12% SENIOR NOTES.

          At October 31, 1995, the Company had outstanding  approximately  $12.4
          million  of its  11.12%  Senior  Notes,  of which  approximately  $1.8
          million  was  repaid on  December  1,  1995.  Of the  remaining  $10.6
          million,  approximately  $1.7  million is due on July 31, 1996 and the
          balance is due in equal annual installments  through 2000. Interest is
          payable monthly.  Until October 31, 1997, the financial covenants with
          respect to the Senior Notes are  identical to those  applicable to the
          Company's  bank  indebtedness.  The  note  holders  participate,  on a
          pro-rata basis, in the contingent  monthly fee described above (not to
          exceed $89,000 in the aggregate).


<PAGE>


                              HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


  
             Commencing  November  1,  1997,  the  covenants  will  become  more
             restrictive  and the  Company  may be unable  to  comply  with such
             covenants.  Accordingly,  installment  payments due in fiscal years
             1998 through 2000 have been  classified  as payable in fiscal 1998,
             pending future refinancing or negotiation of modified covenants for
             periods  beyond October 31, 1997. It will be an event of default if
             the  Company  does not have a working  capital  commitment  45 days
             prior  to  any  termination  date  of  the  bank  revolving  credit
             facility.

The  agreements in effect at October 31, 1995 provided for a contingent fee (not
to exceed  $500,000  to the  banks and a  pro-rata  amount  to the  senior  note
holders)  based on the  amount,  by which  the  Company's  actual  gross  profit
exceeded  projected amounts in fiscal years 1995 through 1997. As of October 31,
1995,  the maximum fee became  fully due and payable in December  1995.  Of this
fee, $400,000 has been included in interest expense for fiscal 1995 ($360,000 in
the fourth  quarter) and the  remainder of $240,000  will be amortized in fiscal
1996.

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  $1,060,000  by the bank.  The letter of credit
renews  annually and expires in September  1996.  If the letter of credit is not
renewed,   the  bank  agreements  provide  for  deferral  of  the  reimbursement
obligation  under the letter of credit until the maturity  date of the revolving
credit  facility.  Accordingly,  the $1,000,000 has been  classified  payable in
fiscal 1998.  The Bond's  interest  rates  adjust  weekly and, as of October 31,
1995, interest was accruing at a rate of 4.0% (3.55% as of October 31, 1994).
























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

5. FINANCIAL INSTRUMENTS

The carrying  amounts for trade  receivables  and payables are  considered to be
their fair values.  The carrying  amounts and fair values of the Company's other
recorded  financial   instruments  at  October  31,  1995  are  as  follows  (in
thousands):
<TABLE>
                                                        October 31, 1995
                                                        ----------------

                                                      Carrying      Fair
(IN THOUSANDS)                                         Amount      Value<F1>
                                                       ------      --------

Long-Term Debt:
<S>                                                   <C>         <C>    
Bank revolving credit facilities .................    $16,078     $16,078

Bank term loan ...................................      3,996       3,996

Senior Notes .....................................     12,402      12,567

Economic Development Revenue Bonds ...............      1,000       1,000


<FN>
<F1> The estimated fair values of Long-Term Debt are based on discounted  future
cash flows using current  interest rates  available to the Company with the same
remaining maturities.
</FN>
</TABLE>

The Company also has  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   $18,879,000   and   $18,918,000,
respectively,  at October 31, 1995.  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 the Company to
be material.

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 off-setting  valuation  allowance.  The
Company's  total deferred tax assets and  corresponding  valuation  allowance at
October  31,  1995  and  October  31,  1994,  consisted  of  the  following  (in
thousands):
<PAGE>

                              HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

<TABLE>
                                                                        OCTOBER 31,
                                                                        -----------
<S>                                                               <C>         <C>
                                                                      1995        1994
Tax effects of future tax deductible items related to:
     Accrued restructuring costs ..............................   $   --      $    462
     Accrued obsolescence reserves ............................        671         487
     Accrued warranty expenses ................................        360         314
     Other accrued expenses ...................................      1,024       1,097
                                                                  --------    --------
         Total deferred tax assets ............................      2,055       2,360
                                                                  --------    --------

Tax effects of future taxable differences related to:
     Accelerated tax depreciation and other tax over book
       deductions related to property and equipment ...........       (257)       (447)
     Other ....................................................       (577)       (605)
                                                                  --------    --------
         Total deferred tax liabilities .......................       (834)     (1,052)
                                                                  --------    --------

         Net tax effects of temporary differences .............      1,221       1,308
                                                                  --------    --------

Tax effects of carryforward benefits:
     U.S. federal net operating loss carryforwards,
       expiring 2001-2009 .....................................     10,319       8,790
     Foreign net tax benefit carryforwards
       with no expiration .....................................      2,612       3,403
     U.S. federal general business tax credits,
       expiring 2001-2009 .....................................      1,555       1,505
                                                                  --------    --------
         Tax effects of carryforwards .........................     14,486      13,698
                                                                  --------    --------

         Tax effects of temporary differences and carryforwards     15,707      15,006
         Less valuation allowance .............................    (15,707)    (15,006)
                                                                  --------    --------
         Net deferred tax asset ...............................   $   --      $   --
                                                                  ========    ========
</TABLE>

The Company's  carryforwards  expire at specific future dates and utilization of
certain  carryforwards is limited to specific amounts each year.  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, the Company has established a full valuation allowance against
these carryforward benefits and is recognizing the benefits only as reassessment
demonstrates they are realizable. 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 the
Company's  income tax expense.  During fiscal 1995, the valuation  allowance was
reduced by $791 to offset foreign income tax expenses.
<PAGE>


                              HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Income (loss) before income taxes were (in thousands):
                                                  YEAR ENDED OCTOBER 31,
                                                  ----------------------
                                              1995        1994         1993
Domestic .....................             $(1,786)    $(3,240)     $(13,407)
Foreign ......................               1,990      (2,551)       (7,737)
                                            -------     -------      --------
                                           $   204     $ (5,791)    $(21,144)
                                            =======     ========     ========


Differences  between the  effective  tax rate and
U.S. federal income tax rate were (in thousands):
Tax (benefit) at U.S. Statutory Rate.....  $    71     $ (2,027)    $ (7,400)

Effect of losses without a current
  year tax benefit.......................      625        2,027        7,400

Utilization of net operating loss 
  carryforwards..........................     (696)         --            --
                                              -----       -----        -----
Income tax provision (benefit)             $    --     $    --      $     --
                                             ======      ======       =======



7.  EMPLOYEE RETIREMENT BENEFITS

The  Company  has  defined  contribution  plans that  include a majority  of its
employees worldwide,  under which Company  contributions are discretionary.  The
purpose of these defined  contribution  plans is generally to provide additional
financial security during retirement by providing employees with an incentive to
save throughout their employment.  Company  contributions to the plans are based
on employee  contributions or compensation.  These Company contributions totaled
$213,000, $214,000, and $323,000 for the years ended October 31, 1995, 1994, and
1993,  respectively.  The Company offers no other retirement or  post-retirement
benefit plans.















<PAGE>


                              HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


8.  STOCK OPTIONS

Stock options may be granted to key employees to purchase shares of common stock
at a price not less  than the fair  market  value at the date of grant.  Vesting
periods are determined at the discretion of the Board of Directors and currently
range  from 3-5 years.  Stock  option  activity  during  1995,  1994 and 1993 is
summarized below (number of shares):

                                                     YEAR ENDED OCTOBER 31,
                                                     ----------------------
                                                    1995      1994      1993
Outstanding at beginning of year ..............    354,900   330,717   347,217
     Granted ..................................     62,700   171,500    54,500
     Canceled .................................    (19,080)  (48,534)  (41,167)
     Expired ..................................     (6,200)  (84,500)   (2,800)
     Exercised ................................    (11,620)  (14,283)  (27,033)
                                                  --------  --------  --------
Outstanding at end of year ....................    380,700   354,900   330,717
                                                  ========  ========  ========

Exercisable at end of year ....................    138,600   101,720   152,734
                                                  ========  ========  ========

Available for future grants ...................    140,014   188,634   336,367
                                                  ========  ========  ========


The option  price per share  ranges for the  outstanding  options  and the price
ranges  at which the  options  were  exercised  during  1995,  1994 and 1993 are
summarized below:

                                             YEAR ENDED OCTOBER 31,
                                             ----------------------
                                       1995            1994             1993
Option price .................    $2.13 - $7.50     $2.13-$7.50     $3.00-$10.50
Exercise price ...............    $2.13 - $2.88        $2.13        $3.13- $3.38


As of October 31, 1995 and 1994, the Company had outstanding options for certain
members of the Board of  Directors to purchase  25,000 and 35,000  shares of the
Company's common stock, respectively,  at prices ranging from $6.75 to $7.00 per
share.  All were exercisable as of October 31, 1995 and 1994. The options expire
at various dates between 1998 and 1999.

9.  RELATED PARTY TRANSACTIONS

The Company and Air Express  International  (AEI) are related  parties because a
common  group of  shareholders  hold a  substantial  ownership  interest in both
companies.  AEI  provides  freight  forwarding  and  shipping  services  for the
Company.  The cost of these  freight  services are  negotiated on an arms length
basis and  amounted  to  $1,438,000,  $323,000  and  $97,000 for the years ended
October  31,  1995,  1994 and 1993,  respectively.  Trade  payables  to AEI were
$27,000 and $3,000 at October 31, 1995 and 1994, respectively.
<PAGE>


                              HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


During 1994,  the Company  acquired an  approximate  15% ownership in one of its
Taiwanese-based suppliers. This investment is carried at cost and is included in
Other Assets.  Purchases of product from this supplier are negotiated on an arms
length basis and totaled  $4,369,000  and $1,178,000 for the years ended October
31, 1995 and 1994, respectively.  Trade payables to this supplier at October 31,
1995,  were  $1,519,000 of which  $1,161,000  was supported by letters of credit
that will be funded by the  Company's  bank through  December  31,  1995.  Trade
payables to this supplier at October 31, 1994 were $195,000.

10.      LITIGATION AND CONTINGENCIES

On October 10, 1995, the Company's wholly-owned subsidiary, IMS Technology, Inc.
(IMS),  commenced an action in the United States District Court for the Northern
District of Illinois against Yamazaki Mazak Corporation;  Yamazaki Mazak Trading
Corporation;  Mazak  Corporation;  Machinery  Systems,  Inc.; Fox Tool Co. Inc.;
Okuma Machinery Works Ltd.; Okuma America Corporation; Ellison Machinery Company
of the Midwest,  Inc.;  Apollo  Machine &  Manufacturing  Company,  Inc.;  Arpac
Corporation;  American Control  Technology,  Inc.; Nissan Motor Co. Ltd.; Nissan
Motor Car Carrier Co., Ltd.; and Nissan Motor Corp. USA, Inc.  (collectively the
Defendants).  The Defendants include end-users of interactive CNCs, machine tool
manufacturers   who   incorporate   interactive   CNCs  in  their  products  and
manufacturers of CNCs designed to permit use of interactive methods when coupled
to machine  tools.  IMS has alleged that the  Defendants  have  infringed  IMS's
Interactive  Machining  Patents and is seeking  monetary  damages  from,  and an
injunction against future infringement by, each of the Defendants.

On January 10, 1996,  IMS was served  notice of an action  commenced on November
30,  1995  against  IMS in the  United  States  District  Court for the  Central
District of  California  by  Southwestern  Industries,  Inc.  (Southwestern),  a
manufacturer  of  CNCs  and  CNC-guided  machine  tools,  seeking  to  have  the
interactive  machining patents declared invalid. IMS has until February 10, 1996
to respond to the  complaint.  On January  11,  1996,  IMS  commenced  an action
against each of Southwestern  and Bridgeport  Machines,  Inc., a manufacturer of
CNCs  and  CNC-guided  machine  tools,  alleging  infringement  by each of these
companies of the Interactive  Machining Patents and seeking monetary damages and
injunctive relief.

Although IMS believes that the Interactive  Machining  Patents are valid and its
claims of patent  infringement  have substantial  merit, it is unable to predict
the outcome of any of these actions.

On November 21, 1995, a civil action entitled CALDWELL TRUCKING PRP GROUP V. ADT
AUTOMOTIVE,  INC., ET AL was filed in the United States  District  Court for the
District  of New Jersey by a group of nine  companies  who have  entered  into a
Consent  Decree  with the  United  States  Environmental  Protection  Agency  to
remediate a site in Fairfield,  New Jersey (the Site).  The complaint names over
95 defendants,  one of whom is the Company,  as  "successor-in-interest"  to two
entities from whom the Company  purchased  certain  assets in February 1990. The
complaint alleges that the defendants are responsible for contributing hazardous
substances to the Site as former customers of Caldwell Trucking or are otherwise
potentially  responsible  parties and seeks  recovery of  remediation  and other


<PAGE>


                              HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


associated  costs.  Although the  complaint  estimates  total  cleanup  costs at
approximately $30 million, no apportionment of alleged liability among the group
which filed the complaint (who are also potentially  responsible parties) or the
group of defendants has been  indicated at this time. The defendants  have until
April 1, 1996 to respond  to the  complaint.  Although  the  Company  intends to
vigorously  defend this  claim,  based upon the  limited  amount of  information
available at this time, the Company is unable to determine the likelihood or the
possible amount of any losses related to this action.  Accordingly, no provision
for any  liability  that may  result  has been  recognized  in the  Consolidated
Financial Statements.

The Company is  involved in various  other  claims and  lawsuits  arising in the
normal  course of  business,  none of which,  in the opinion of  management,  is
expected  to  have a  material  adverse  effect  on its  consolidated  financial
position or results of operations.
11.      OPERATING LEASES

The Company leases facilities and vehicles under operating leases that expire at
various dates through 2002.  Future payments  required under operating leases as
of October 31, 1995, are summarized as follows (in thousands):

1996 .............................................    $2,118
1997 .............................................     1,649
1998 .............................................     1,322
1999 .............................................     1,094
2000 .............................................       878
Later Years ......................................     1,197
                                                      ------
Total ............................................    $8,258
                                                      ======

Rental  expense  for the  years  ended  October  31,  1995,  1994,  and 1993 was
$1,976,000, $1,820,000, and $2,260,000, respectively.


12.      SUBSEQUENT EVENT

IMS is actively  pursuing a program to license the use of interactive  machining
patents.  On  January  2,  1996,  IMS  entered  into  an  agreement  with  a CNC
manufacturer and various of its subsidiaries, none of whom is a defendant in the
IMS patent  infringement  actions  discussed in Note 10 above. IMS has granted a
non-exclusive  license to use the interactive  machining patents in exchange for
certain fixed  payments  beginning in fiscal 1996 and  continuing  through 2001.
Over the term of the license, IMS will receive  approximately  $800,000,  net of
legal fees and expenses, of which $357,000 is expected to be reflected in income
for fiscal 1996.  IMS has also received a  royalty-free,  non-exclusive  license
(with a  right  of  sublicense  to the  Company)  under  four of the  licensee's
patents.  There can be no assurance  that IMS will enter into any other  license
agreements or that the terms of any future license agreements will be similar to
those of the initial license.



<PAGE>


                              HURCO COMPANIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

<TABLE>

13. QUARTERLY HIGHLIGHTS (UNAUDITED)

1995 (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                         FIRST QUARTER     SECOND QUARTER     THIRD QUARTER      FOURTH QUARTER
<S>                                                      <C>               <C>                <C>                 <C>    

Sales and service fees...............................      $18,872            $20,687            $22,764            $27,309

Gross profit.........................................        4,658              5,389              5,986              7,437

Gross profit margin percentage.......................         24.7%              26.1%              26.3%              27.2%

Selling, general and administrative  expenses........        4,246              4,616              4,558              5,582

Operating income (loss)..............................          412                773              1,428              1,855

Net income (loss)....................................         (473)              (239)               428<F1>            488<F1>

Earnings (loss) per common share.....................      $  (.09)           $  (.04)           $   .08            $   .09


1994 (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                         FIRST QUARTER     SECOND QUARTER     THIRD QUARTER      FOURTH QUARTER

Sales and service fees...............................      $18,579            $16,209            $17,144            $20,696

Gross profit.........................................        3,444              3,378              3,820              4,923

Gross profit margin percentage.......................         18.5%              20.8%              22.3%              23.8%

Selling, general and administrative  expenses........        4,745              4,402              4,325              4,657

Operating income (loss)..............................       (1,301)            (1,024)              (505)               266

Net income (loss)....................................       (2,168)            (1,786)            (1,215)              (622)

Earnings (loss) per common share.....................      $  (.40)           $  (.33)           $  (.22)           $  (.11)



<FN>

<F1> Net income in the third and fourth  quarters of fiscal 1995 includes higher
     interest expense due to $40 and $360 of fees,  respectively,  payable under
     the terms of the debt agreements for exceeding  certain gross profit goals.
     An additional  $240 fee payable to the lenders as of October 31, 1995, will
     be expensed ratably during fiscal 1996.
</FN>

</TABLE>


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

14.  BUSINESS SEGMENT AND INTERNATIONAL OPERATIONS

The  Company  operates  in one  business  segment  which  consists  of  computer
numerical  control (CNC) systems and software and  CNC-guided  machine tools for
cutting and forming metals. Summarized information about activities in different
geographical areas from which sales are made follows (in thousands):

                                                 UNITED STATES    EUROPE        ASIA        ELIMINATIONS    CONSOLIDATED
1995
<S>                                                 <C>          <C>            <C>          <C>            <C>  
Sales to unaffiliated customers.............        $54,172       $32,881       $2,579       $     --       $89,632

Transfers between geographic areas..........         18,374           880          --         (19,254)          --
                                                   --------    ----------    ----------       -------       --------

Total sales.................................        $72,546       $33,761       $2,579       $(19,254)      $89,632
                                                   ========     =========     ========        =======       ========

Operating income (loss).....................        $ 2,570       $ 1,607       $  291                      $ 4,468
                                                   ========     =========     ========                      =======

Identifiable assets as of
     October 31, 1995.......................        $45,255       $15,404       $  762                      $ 61,421
                                                   ========     =========     ========                      ========
1994
Sales to unaffiliated customers.............        $50,682       $21,584       $  362       $   --         $ 72,628

Transfers between geographic areas..........         10,013         1,744          --         (11,757)           --
                                                   --------     ---------     ---------       -------        -------

Total sales.................................        $60,695       $23,328       $  362       $(11,757)      $ 72,628
                                                   ========     =========     ========        =======       ========

Operating loss..............................        $  (346)      $(2,057)      $ (161)                     $ (2,564)
                                                   ========     =========     ========                      =========

Identifiable assets as of  
     October 31, 1994.......................        $44,490       $14,641       $  427                      $59,558
                                                   ========     =========     ========                      ========
1993
Sales to unaffiliated customers.............        $51,426       $20,099       $  705       $   --         $72,230

Transfers between geographic areas..........          4,681         6,449          --         (11,130)          --
                                                  ---------     ---------    ----------     ---------       --------

Total sales.................................        $56,107       $26,548       $  705       $(11,130)      $72,230
                                                   ========     =========     ========      ==========      =======

Operating loss..............................       $(11,110)      $(7,036)      $ (177)                     $(18,323)
                                                   ========     =========     ========                      ========

Identifiable assets as of
     October 31, 1993.......................        $50,355       $16,044       $  888                      $67,287
                                                   ========     =========     ========                      =======
</TABLE>
<PAGE>



ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURES

Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS OF THE REGISTRANT

The following information sets forth the name of each director,  his age, tenure
as a director,  principal  occupation and business  experience for the last five
years:
                                           SERVED AS A 
NAME                             AGE      DIRECTOR SINCE

Hendrik J. Hartong, Jr           56             1986

Andrew L. Lewis IV               39             1988

Brian D. McLaughlin              53             1987

E. Keith Moore                   73             1990

Richard T. Niner                 56             1986

O. Curtis Noel                   60             1993

Charles E. Mitchell Rentschler   56             1986


Hendrik J. Hartong, Jr. has been a general partner of Brynwood  Management,  the
general  partner of Brynwood  Partners  Limited  Partnership,  since  1984.  Mr.
Hartong has also  served as  Chairman of the Board of Air Express  International
Corporation since 1985.

Andrew L. Lewis IV has served as Chief Executive  Officer of KRR Partners,  L.P.
since July 1993.  Beginning in 1990,  Mr.  Lewis has also been a consultant  for
USPCI  of  Pennsylvania,  Inc.  Mr.  Lewis  is also a  director  of Air  Express
International Corporation.

Brian D.  McLaughlin  has been  President  and Chief  Executive  Officer  of the
Company since December, 1987.

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

Richard T. Niner has been a general partner of Brynwood Management,  the general
partner of Brynwood Partners Limited Partnership,  since 1984. Mr. Niner is also
a director of Air Express  International  Corporation  and Arrow  International,
Inc.



<PAGE>

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.

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

For  a  description  of  transactions   between  the  Company  and  Air  Express
International  Corporation,  see  Item 13.  CERTAIN  RELATIONSHIPS  AND  RELATED
TRANSACTIONS.

Each director of the Company serves for a term of one year, which expires at the
next annual meeting of  shareholders  of the Company when his successor has been
elected.  There are no family  relationships  between  any of the  directors  or
executive officers of the Company.


EXECUTIVE OFFICERS OF THE REGISTRANT

Information  regarding the executive  officers of the Company  appears in Part I
under the caption, "Executive Officers of the Registrant".

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
directors  and  executive  officers,  and  persons who own more than ten percent
(10%) of the Company's  common stock,  to file initial  reports of ownership and
reports of changes in ownership of common stock and other equity  securities  of
the Company with the Securities and Exchange Commission.

To the Company's knowledge, based solely upon a review of copies of such reports
furnished to the Company  during and  pertaining to its most recent fiscal year,
and certain written representations, all Section 16(a) filings applicable to the
Company's  executive  officers,  directors  and greater  than ten percent  (10%)
beneficial  owners were made on a timely  basis  during the most  recent  fiscal
year.






















<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
most highly compensated  executive officers of the Company based on salaries and
bonuses  earned  during  fiscal 1995 (the Named  Executive  Officers).  No other
executive  officer earned more than $100,000 in salary and bonuses during fiscal
1995.
<TABLE>

                           SUMMARY COMPENSATION TABLE

                                                                                          Long-Term           
                                                Annual Compensation                      Compensation         
                                    --------------------------------------------         ------------          All Other
                                                                                                                Compen-
Name and                 Fiscal     Salary         Bonus        Other Annual        Securities Underlying       sation
Principal Position        Year        ($)         ($)<F1>      Compensation ($)           Option<F2>           ($)  <F3>
------------------       ------     ------       ---------     ----------------           ----------           ---------
<S>                        <C>    <C>           <C>               <C>                       <C>                  <C>
Brian D. McLaughlin        1995   $226,936      $75,000                --                   10,000               $3,234
President and CEO          1994    220,000           --                --                   70,000<F4>            2,302
                           1993    220,000           --                --                       --                3,036

Roger J. Wolf              1995    139,731       45,000                 --                  15,000                3,063
Sr. VP, Secretary          1994    135,000        7,000           $16,308<F5>                7,000                1,934
Treasurer and CFO          1993     98,654<F6>    5,000<F7>            --                   25,000<F7>              872

James D. Fabris            1995    107,885       45,000                --                    5,000                2,210
Vice President and         1994     98,335           --                --                   13,000                1,295
Pres. Hurco Mfg. Co.       1993     85,150           --             8,935<F8>                7,500                1,864
---------------------------
<FN>

<F1> Represents cash bonuses earned and paid in the subsequent  year, other than
specified below.
<F2> Represents options granted under the stock option plan related to the prior
year's performance,  other than specified below. The Company has not granted any
Stock Appreciation Rights (SARs).
<F3> Represents the Company's  contribution  to the 401-K  Retirement Plan under
the Company matching program.
<F4>  Represents  options granted under the stock option plan to replace options
that had expired  during the fiscal year.  
<F5>  Represents  amounts  reimbursed
during the fiscal year for the payment of taxes related to relocation expenses.
<F6> Represents compensation for January 25, 1993 through October 31, 1993. 
<F7> Represents guaranteed bonus and options granted under the stock option plan
in connection with initial employment.
<F8> Represents  amounts reimbursed during the fiscal year related to relocation
expenses. 
</FN>
</TABLE>




<PAGE>

STOCK OPTIONS

The following  table sets forth  information  related to options  granted to the
Named  Executive  Officers  during the 1995  fiscal  year.  The  Company has not
granted any Stock Appreciation Rights (SARs).
<TABLE>

                      OPTION GRANTS DURING 1995 FISCAL YEAR

                                                     Individual Grants                           
                            ------------------------------------------------------------          Potential
                                                                                              Realizable Value at
                                             % of Total                                         Assumed Annual
                              Number of       Options                                         Rates of Stock Price
                             Securities     Granted to                                         Appreciation for
                             Underlying      Employees          Exercise                        Option Term <F1>
                              Options        in Fiscal           Price        Expiration     --------------------
Name                          Granted          Year              ($/SH)          Date         5% ($)        10%($)
----                          -------          ----              ------          ----         ------        ------
<S>                           <C>                <C>             <C>            <C>            <C>          <C>
Brian D. McLaughlin           10,000<F2>         16%             $3.875         12/11/04       63,120       100,508
Roger J. Wolf                 15,000<F2>         24%             $3.875         12/11/04       94,680       150,762
James D. Fabris                5,000<F3>          8%             $3.875         12/11/04       31,560        50,254

----------------------------
<FN>
<F1> 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 on the Company's
common  stock  from the date of grant  through  the term of the  options.  These
numbers do not take into account  provisions  that may result in  termination of
the options following  termination of employment or the vesting periods of three
years.
<F2>  Options may be  exercised  in three equal  annual  installments,  or parts
thereof, commencing on the first anniversary date of the grant.
<F3>  Options  may be  exercised  in five equal  annual  installments,  or parts
thereof, commencing on the first anniversary date of the grant.
</FN>
</TABLE>



















<PAGE>

The following table sets forth  information  related to options exercised during
the 1995 fiscal year and options held at fiscal  year-end by the Named Executive
Officers. The Company does not have any outstanding SARs.
<TABLE>

      AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND YEAR-END OPTION VALUES
                                                                                                 Value of
                                                                  Number of                     Unexercised
                                                           Securities Underlying               In-the-Money
                            Shares                           Unexercised Options                 Options
                           Acquired                             at FY-End (#)               at FY-End ($)<F1>
                              on            Value        -------------------------        --------------------
                           Exercise       Realized         Exer-           Unexer-          Exer-      Unexer-
NAME                         (#)            ($)          cisable           cisable        cisable      cisable
----                       ---------     ---------       -------           -------        -------      -------
<S>                           <C>            <C>          <C>               <C>            <C>         <C>
Brian D. McLaughlin           --             --           52,100            62,900         72,188      164,063
Roger J. Wolf                 --             --           12,310            34,690          7,219       40,906
James D. Fabris               --             --            9,500            20,500         33,025       62,100

-----------------------------------------
<FN>
<F1> Value is calculated  based on the closing  market price of the common stock
on October 31, 1995 ($5.625) less the option exercise price.
</FN>
</TABLE>


COMPENSATION OF DIRECTORS

Each director who is not an employee of the Company receives a fee of $1,000 for
each meeting of the Board of Directors  attended,  and each such  director  also
receives   $3,000  per  quarter.   Directors   are  also   entitled  to  receive
reimbursement for travel and other expenses incurred in attending such meetings.
Employee  directors  receive no fees. Mr. Niner received annual  compensation of
$72,000 for his services as Chairman of the Executive  Committee of the Board of
Directors.  Directors  are also  eligible  to receive  stock  options in amounts
specified in the Plan.


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.


<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 1995,  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 the Company or
any of its subsidiaries.  Mr. Hartong is a director of Air Express International
(AEI).  Mr. Hartong is also a general partner of Brynwood  Management,  which is
the  general  partner  of  Brynwood  Partners  Limited  Partnership,  which  has
substantial  ownership  interest in AEI. AEI  provides  freight  forwarding  and
shipping  services  for the  Company.  The cost of these  freight  services  are
negotiated on an  arms-length  basis and amounted to  $1,438,000  for the fiscal
year ended October 31, 1995.  None of the Committee  members are involved in any
other relationships requiring disclosure as an interlocking officer / director.













































<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

The following  table sets forth  information  as of January 10, 1996,  regarding
beneficial  ownership of the  Company's  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>   
Brynwood Partners Limited Partnership            1,390,001             25.6%
Two Soundview Avenue
Greenwich, Connecticut 06830

Wellington Management Co.                          527,700<F1>           9.7%
75 State Street
Boston, Massachusetts 02109

The TCW Group, Inc.                                448,000               8.3%
865 South Figueroa Street
Los Angeles, California 90017


                        DIRECTORS AND EXECUTIVE OFFICERS

Hendrik J. Hartong, Jr                           1,408,915<F2><F3><F4> 26.0%

Andrew L. Lewis IV                                  12,500<F3>          0.2%

Brian D. McLaughlin                                 86,633<F5><F6>      1.6%

E. Keith Moore                                      48,790<F7><F8>      0.9%

Richard T. Niner                                 1,415,301<F2><F3>     26.0%

O. Curtis Noel                                       5,000<F3>          0.1%

Charles E. Mitchell Rentschler                      17,500<F3><F9>      0.3%

Roger J. Wolf                                       25,260<F10>         0.5%

James D. Fabris                                     14,800<F11>         0.3%

Executive officers and directors                 1,664,598<F2><F12>    30.7%
as a group (12 persons)





<PAGE>
<FN>
<F1> Wellington Management Co. (WMC), a registered investment advisor, is deemed
to have  beneficial  ownership of 527,700 shares of the Company's  common stock,
which is owned by various  advisory  clients of WMC. WMC has no voting power for
105,000  shares and  shared  voting  power for  422,700  shares.  WMC has shared
investment power for all shares.

<F2>  Includes the shares owned by Brynwood  Partners  Limited  Partnership,  of
which the sole general partner is Brynwood  Management,  a general  partnership.
Mr.  Hartong and Mr.  Niner are general  partners  of  Brynwood  Management  and
accordingly  may be deemed to have beneficial  ownership of these shares.  These
shares have shared voting and investment power.

<F3> Includes  5,000 shares  subject to options that are  exercisable  within 60
days.

<F4> Includes 100 shares owned by Mr.  Hartong's wife, as to which shares he may
be deemed to have  beneficial  ownership;  also includes 3,000 shares which have
shared voting and investment power.

<F5> Includes  58,433 shares subject to options held by Mr.  McLaughlin that are
exercisable  within 60 days;  excludes 56,567 shares subject to options that are
not exercisable within the next 60 days.

<F6> Includes 2,100 shares owned by Mr.  McLaughlin's  wife and children,  as to
which shares he may be deemed to have beneficial ownership.

<F7>  Includes  10,800  shares  subject  to options  held by Mr.  Moore that are
exercisable within 60 days;  excludes 200 shares subject to options that are not
exercisable within the next 60 days.

<F8> Includes 1,320 shares owned by Mr.  Moore's wife and children,  as to which
shares he may be deemed to have beneficial ownership.

<F9> Includes 5,000 shares owned by Mr. Rentschler's wife, as to which he may be
deemed to have beneficial ownership.

<F10> Includes 22,260 shares subject to options that are  exercisable  within 60
days;  excludes 24,740 shares subject to options that are not exercisable within
the next 60 days.

<F11> Includes 14,300 shares subject to options that are  exercisable  within 60
days;  excludes 15,700 shares subject to options that are not exercisable within
the next 60 days.
<F12> Includes 148,993 shares subject to options that are exercisable  within 60
days.
</FN>
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company  and Air Express  International  (AEI) are related  parties  because
Brynwood Partners Limited Partnership holds a substantial  ownership interest in
both  companies.  Two of the Company's  directors,  Hendrik J. Hartong,  Jr. and
Richard T. Niner,  are general  partners  of Brynwood  Management,  which is the
general partner of Brynwood Partners Limited  Partnership.  AEI provides freight
forwarding  and shipping  services for the  Company.  The cost of these  freight
services are  negotiated on an arms length basis and amounted to $1,438,000  the
year ended October 31, 1995.
<PAGE>



                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. FINANCIAL STATEMENTS.  The following consolidated financial statements of
       Registrant are included herein under Item 8 of Part II:

                                                                        
                                                                        
         Reports of Independent Accountants  
         Consolidated Statements of Operations - years
           ended October 31, 1995, 1994 and 1993   
         Consolidated Balance Sheets - as of October 31, 1995 and 1994   
         Consolidated Statements of Cash Flows - years
           ended October 31, 1995, 1994 and 1993   
         Consolidated Statements of Changes in Shareholders' Equity -
           years ended October 31, 1995, 1994 and 1993  
         Notes to Consolidated Financial Statements

     2.  FINANCIAL  STATEMENT  SCHEDULES.   The  following  financial  statement
         schedule is included in this Item.
                                                                       
                                                                       
         Schedule II - Valuation and Qualifying
           Accounts and Reserves


     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,
     1995.

(c)  EXHIBITS

     Exhibits are filed with this Form 10-K or incorporated herein by reference.

















<PAGE>


          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
               FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
                             (Dollars in thousands)
<TABLE>


                                        Balance at         Charged to      Charged                              Balance
                                        Beginning           Costs and      to Other                               at End
Description                             of Period           Expenses       Accounts          Deductions         of Period
-----------                             ---------           --------       --------          ----------         ---------
Allowance for doubtful accounts for the year ended:
   <S>                                  <C>                  <C>            <C>               <C>                <C>    
   October 31, 1995                     $ 1,046              $     31       $     --         $        7<F1>      $   1,070
                                        =======              ========       =========         =========          =========

   October 31, 1994                     $    979             $     78       $     --         $       11<F2>      $   1,046
                                        ========             ========       =========         =========          =========

   October 31, 1993                     $    892             $    216       $     --         $      129<F3>      $     979
                                        ========             ========       =========         =========          =========


Accrued warranty expenses for the year ended:
   October 31, 1995                     $ 1,170              $  1,541       $    --          $    1,320          $   1,391
                                        =======              ========       ========          =========          =========

   October 31, 1994                     $ 1,084              $  1,539       $    --          $    1,453          $   1,170
                                        =======              ========       ========         ==========          =========

   October 31, 1993                     $ 1,074              $  1,054       $    --          $    1,044          $   1,084
                                        =======              ========       =========        ==========          =========


----------
<FN>
<F1>  Receivable  write-offs  of  $42,000,  net of cash  recoveries  on accounts
previously written off of $35,000.
<F2>Receivable  write-offs  of  $20,000,  net of  cash  recoveries  on  accounts
previously written off of $9,000.  
<F3>Receivable write-offs of $129,000. There were no cash recoveries on accounts
previously written off.
</FN>
</TABLE>














<PAGE>


                                 EXHIBITS INDEX


EXHIBITS FILED.  The following exhibits are filed with this Report:

10.20.15      First Amendment to the Credit  Agreement,  dated January 31, 1995,
              between the Registrant  and NBD Bank (formerly  known as NBD Bank,
              N.A.)

10.20.16      Second Amendment to Letter Agreement  (European  Facility),  dated
              January 31, 1995, among the Registrant's  foreign subsidiaries and
              NBD Bank.

10.20.17      Amendment to Intercreditor,  Agency and Sharing  Agreement,  dated
              January 31, 1995, among the Registrant, NBD Bank, Principal Mutual
              Life Insurance Company and NBD Bank as Agent.

10.20.18      Second Amendment to the  Credit  Agreement,  dated  May  31, 1995,
              between the Registrant and NBD Bank.

10.20.19      Third Amendment to Letter Agreement (European Facility), dated May
              31, 1995,  among the  Registrant's  foreign  subsidiaries  and NBD
              Bank.

10.20.20      Second Amendment to Intercreditor,  Agency and Sharing  Agreement,
              dated May 31,  1995,  among the  Registrant,  NBD Bank,  Principal
              Mutual Life Insurance Company and NBD Bank as Agent.

10.20.21      Third  Amendment to  the Credit  Agreement,  dated  July 31, 1995,
              between the Registrant and NBD Bank.

10.20.22      Fourth Amendment to Letter Agreement  (European  Facility),  dated
              August 1, 1995,  among the Registrant's  foreign  subsidiaries and
              NBD Bank.

10.20.23      Third Amendment to  Intercreditor,  Agency and Sharing  Agreement,
              dated July 31, 1995,  among the  Registrant,  NBD Bank,  Principal
              Mutual Life Insurance Company and NBD Bank as Agent.

10.20.24      Fourth Amendment to the Credit Agreement, dated December 22, 1995,
              between the Registrant and NBD Bank.

10.20.25      Fourth Amendment to Intercreditor,  Agency and Sharing  Agreement,
              dated December 22, 1995, among the Registrant, NBD Bank, Principal
              Mutual Life Insurance Company and NBD Bank as Agent.

10.42.4       Amendment  and Notes  Modification  Agreement,  dated  January 31,
              1995,  between the Registrant and Principal  Mutual Life Insurance
              Company.

10.42.5       Amendment to Amended and Restated  Note  Agreement,  dated May 31,
              1995,  between the Registrant and Principal  Mutual Life Insurance
              Company.

10.42.6       Third Amendment to Amended and Restated Note Agreement, dated July
              31,  1995,  between  the  Registrant  and  Principal  Mutual  Life
              Insurance Company.
<PAGE>
11            Statement re: computation of per share earnings.

21            Subsidiaries of the Registrant.

23            Consent of Independent Public Accountants - Arthur Andersen LLP.

23.1          Consent of Independent Public Accountants - Coopers & Lybrand 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  the Registrant's Annual  Report on
              Form 10-K for the year ended October 31, 1989.

3.2           Amended and Restated By-Laws of  the  Registrant, incorporated  by
              reference to the  Registrant's  Annual Report on Form 10-K for the
              year ended October 31, 1990.

4.1           Stock  Purchase   Agreement  dated  June  16,  1986,  between  the
              Registrant and Brynwood Partners Limited Partnership, incorporated
              by reference to the Registrant's Quarterly Report on Form 10-Q for
              the quarter ended May 4, 1986.

4.3           Stock  Purchase  Agreement  between  the  Registrant  and Brynwood
              Partners Limited Partnership, dated  April 30, 1987,  incorporated
              by reference to the Registrant's Quarterly Report on Form 10-Q for
              the quarter ended April 30, 1987.

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

10.14         Amended and  Restated  1983 Stock  Option Plan of the  Registrant,
              effective  January  1,  1987,  incorporated  by  reference  to the
              Registrant's  Quarterly  Report on Form 10-Q for the quarter ended
              April 30, 1987.

10.20.1       Term  Loan  Agreement  dated   September  9,  1991,   between  the
              Registrant and NBD Bank,  N.A.,  incorporated  by reference to the
              Registrant's Annual Report on Form 10-K for the year ended October
              31, 1991.

10.20.5       Letter Agreement  (European Facility) dated June 17, 1993, between
              the Registrant's  subsidiaries and NBD Bank, N.A., incorporated by
              reference to the  Registrant's  Annual Report on Form 10-K for the
              year ended October 31, 1993.

10.20.8       Credit  Agreement  and  Amendment to the Term Loan  Agreement  and
              Reimbursement   Agreement  dated  March  24,  1994,   between  the
              Registrant and NBD Bank,  N.A.,  incorporated  by reference to the
              Registrant's Current Report on Form 8-K dated August 1, 1994.

10.20.9       Amendment to Letter Agreement  (European Facility) dated March 24,
              1994, between the Registrant's  foreign subsidiaries and NBD Bank,
              N.A., incorporated by reference to the Registrant's Current Report
              on Form 8-K dated August 1, 1994.
<PAGE>

10.20.10      Intercreditor,  Agency and Sharing Agreement dated March 24, 1994,
              between the  Registrant,  NBD Bank,  N.A.,  Principal  Mutual Life
              Insurance   Company  and  NBD  Bank,  N.A.  as  collateral  agent,
              incorporated  by reference to the  Registrant's  Current Report of
              Form 8-K dated August 1, 1994.

10.20.11      Security  Agreement  dated March 24, 1994,  between the Registrant
              and NBD Bank, N.A. as collateral agent,  incorporated by reference
              to the  Registrant's  Current  Report on Form 8-K dated  August 1,
              1994.

10.20.13      Guaranty   Agreement  dated  March  24,  1994,   between   Autocon
              Technologies, Inc. and NBD Bank, N.A., incorporated bY reference 
              to the  Registrant's Current  Report  on Form  8-K dated August 1,
              1994.

10.20.14      Pledge Agreement dated March 24, 1994,  between the Registrant and
              NBD Bank, N.A. as collateral  agent,  incorporated by reference to
              the Registrant's Current Report on Form 8-K dated August 1, 1994.

10.34         Employment   Agreement   between  the   Registrant  and  Brian  D.
              McLaughlin,  dated December 14, 1987, incorporated by reference to
              the  Registrant's  Annual  Report on Form 10-K for the year  ended
              October 31, 1987.

10.39         Non-qualified  Stock Option  Agreement  between the Registrant and
              Andrew L. Lewis IV, effective  November 17, 1988,  incorporated by
              reference to its Registration Statement on Form S-8 dated February
              16, 1989.

10.42.2       Amended and Restated Note Agreement dated March 24, 1994,  between
              the  Registrant  and  Principal  Mutual  Life  Insurance  Company,
              incorporated  by reference to the  Registrant's  Current Report on
              Form 8-K dated August 1, 1994.

10.42.3       Guaranty   Agreement   dated  March  24,  1994,   between  Autocon
              Technologies,  Inc. and Principal  Mutual Life Insurance  Company,
              incorporated  by reference to the  Registrant's  Current Report on
              Form 8-K dated August 1, 1994.

10.44         Non-Qualified Stock Option Agreement between the Registrant and O.
              Curtis Noel effective, March 3, 1993, incorporated by reference to
              the  Registrant's  Annual  Report on Form 10-K for the year  ended
              October 31, 1993.

10.45         Employment  Agreement  between  the  Registrant  and Roger J. Wolf
              dated   January  8,  1993,   incorporated   by  reference  to  the
              Registrant's Annual Report on Form 10-K for the year ended October
              31, 1993.









<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 29 day of January,
1996.

                                      HURCO COMPANIES, INC.


                                      By:/S/ROGER J. WOLF
                                      -------------------
                                         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


/S/BRIAN D. MCLAUGHLIN                               January 29, 1996
----------------------                       
Brian D. McLaughlin, Director,
President and Chief Executive Officer
of Hurco Companies, Inc.
(Principal Executive Officer)


/S/ROGER J. WOLF                                     January 29, 1996
----------------                    
Roger J. Wolf
Senior Vice-President,
Secretary, Treasurer and
Chief Financial Officer
of Hurco Companies, Inc.
(Principal Financial Officer)


/S/THOMAS L. BROWN                                   January 29, 1996
------------------                       
Thomas L. Brown
Corporate Controller
of Hurco Companies, Inc.
(Principal Accounting Officer)





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/S/HENDRIK J. HARTONG                                January 29, 1996
---------------------            
Hendrik J. Hartong, Jr., Director


/S/ANDREW L. LEWIS                                   January 29, 1996
------------------              
Andrew L. Lewis, IV, Director


/S/KEITH MOORE                                       January 29, 1996
--------------            
E. Keith Moore, Director


/S/RICHARD T. NINER                                  January 29, 1996
-------------------                                  
Richard T. Niner, Director


/S/O. CURTIS NOEL                                    January 29, 1996
-----------------              
O. Curtis Noel, Director


/S/CHARLES E.M. RENTSCHLER                           January 29, 1996
--------------------------           
Charles E.M. Rentschler, Director