What changed in this filing

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Item 1. Business

2025-01-10 compared with 2024-01-05 · 79 added, 58 removed, 326 unchanged (30% of the section changed)

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We design, manufacture, and sell computerized (i.e., Computer Numeric Control (“CNC”)) machine tools, consisting primarily of vertical machining centers (mills) and turning centers (lathes), to companies in the metal cutting industry through a worldwide sales, service, and distribution network.

Although the majority of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components.

Although most of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components.

Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products.

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The combination of microprocessor technology and patented interactive, conversational programming software in our proprietary computer control systems enables operators on the production floor to create a program quickly and easily to machine a particular part from a blueprint or computer aided design file, and immediately begin machining that part.

Our executive offices and principal design and engineering operations are headquartered in Indianapolis, Indiana, U.S.

We have sales, application engineering, and service subsidiaries in China, the Czech Republic, France, Germany, India, Italy, the Netherlands, Poland, Singapore, Taiwan, the United Kingdom, and the U.S.

We have manufacturing and assembly operations in Taiwan, the U.S., Italy, and China, and distribution facilities in the U.S., the Netherlands, and Taiwan.

Our strategy is to design, manufacture, and sell a comprehensive line of computerized machine tools that help customers in the worldwide metal cutting market increase productivity and profitability.

The majority of our machine tools employ proprietary, interactive computer control technology that increases productivity through ease of operation via interactive conversational and graphical programming software.

Most of our machine tools employ proprietary, interactive computer control technology that increases productivity through ease of operation via interactive conversational and graphical programming software.

All of our machine tools, regardless of brand, deliver high levels of machine performance (speed, accuracy and surface finish quality) that increase productivity.

We routinely expand our product offerings to meet customer needs, which has led us to design and manufacture more complex machining centers with advanced capabilities.

Our executive offices and principal design and engineering operations are headquartered in Indianapolis, Indiana, U.S.

We have manufacturing and assembly operations in Taiwan, the U.S., Italy, and China, and distribution facilities in the U.S., the Netherlands, and Taiwan.

We bring a disciplined approach to strategically enter new geographic markets, as appropriate.

Our strategic plans focus on market expansion to reach more customers with more products on a global basis.

We have made five acquisitions since 2013, and the products we have added through these acquisitions have given us more advanced products with significant improvements in our machine tool accuracy and precision, allow us to seek higher productivity in complex manufacturing environments, provide automation for machine tending solutions, and minimize dependencies associated with volatilities from economic and geographic cyclicality.

Our strategy also focuses on market expansion to reach more customers with more products on a global basis.

We have made five acquisitions since 2013, which:

(1) has given us more advanced products with significant improvements in our machine tool accuracy and precision, (2) allows us to seek higher productivity in complex manufacturing environments, (3) provides automation for machine tending solutions, and (4) minimizes dependencies associated with volatilities from economic and geographic cyclicality.

While the Hurco-branded computer control systems have been, and continue to be, our premium flagship product line, we have added other products to our portfolio that provide product diversity and market penetration opportunity priced from entry-level to high performance serving a variety of different industries.

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rather, we have enhanced this strategy through growth both organically and through acquisitions in an effort to attain long-term stability and profitability.

During fiscal year 2023, our sales and service fees were $227.8 million, a decrease of $23.0 million, or 9%, compared to fiscal year 2022 and included an unfavorable currency impact of $2.4 million, or 1%, when translating foreign sales to U.S.

We have seen the demand for machine tools fluctuate over the last three years.

Our industry has continued to face global headwinds due to changing economic conditions.

During fiscal year 2024, our sales and service fees were $186.6 million, a decrease of $41.2 million, or 18%, compared to fiscal year 2023 and included a favorable currency impact of $1.8 million, or less than 1%, when translating foreign sales to U.S.

dollars for financial reporting purposes.

Sales decreased year-over-year due primarily to a decreased volume of shipments of higher-performance Hurco, Takumi, and Milltronics machines across Europe, Asia Pacific, and the Americas.

For fiscal year 2023, we reported net income of $4.4 million, or $0.66 per diluted share, compared to net income of $8.2 million, or $1.23 per diluted share, for fiscal year 2022.

Machine tool products are considered capital goods, which makes them part of an industry that has historically been highly cyclical.

Sales decreased year-over-year due primarily to a decreased volume of shipments of higher-performance Hurco, Takumi, and Milltronics machines in the Americas, Germany, the United Kingdom, Italy and China, as well as decreased shipments of electro-mechanical components and accessories manufactured by our wholly-owned subsidiary, LCM Precision Technology S.r.l.

For fiscal year 2024, we reported a net loss of $16.6 million, or $(2.56) per diluted share, compared to net income of $4.4 million, or $0.66 per diluted share, for fiscal year 2023.

The net loss for fiscal year 2024 included a non-cash tax valuation allowance of $8.6 million recorded in provision for income taxes.

Machine tool products are capital goods, which makes them part of an industry that has historically been highly cyclical.

Industry association data for the U.S.

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Manufacturers and suppliers of capital goods, such as our company, are often the first to experience these changes in demand.

Additionally, since build to stock and our typical order backlog is approximately 45 days, it is difficult to estimate demand with any reasonable certainty.

Additionally, since we build to stock and our typical order backlog is approximately 45 days, it is difficult to estimate demand with any reasonable certainty.

Therefore, we do not have the benefit of relying on the common leading indicators that other industries use for market analysis and forecasting purposes.

Our core products consist of general-purpose, computerized machine tools for the metal cutting industry, principally, vertical and horizontal machining centers (mills), turning centers (lathes), and toolroom machines.

The majority of our machine tools are equipped with our fully integrated computer control systems that are powered by our proprietary software, while the remaining machine tools are equipped with industry standard controls.

Most of our machine tools are equipped with our fully integrated computer control systems that are powered by our proprietary software, while the remaining machine tools are equipped with industry standard controls.

Additionally, we produce and distribute software options, control upgrades, hardware accessories, and replacement parts for our machine tool product lines, and we provide operator training and support services to our customers.

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Service Parts

† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine systems.

† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine tools.

Product Portfolio by Brand

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ProCobots, LLC (“ProCobots”) is our wholly-owned subsidiary that provides practical automation solutions, such as feeders, machine tending systems, and collaborative robots (cobots).

In addition, through our wholly-owned subsidiary LCM Precision Technology S.r.l.

(“LCM”), we produce high-value machine tool components and accessories.

In addition, through our wholly-owned subsidiary LCM, we produce high-value machine tool components and accessories.

The main product categories of each brand are outlined below.

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● integrate their business into the global supply chain of their customers by supporting small to medium lot sizes for “just in time” initiatives;

● connect equipment to intranet and extranets to facilitate collaboration, communication and monitoring.

Our Windows ® based Hurco control facilitates our ability to meet these customer needs.

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Our offering of Hurco machining centers, currently equipped with either a dual touch-screen console or a single touch-screen console, consists of the following product lines:

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† Windows ® is a registered trademark of Microsoft Corporation in the United States and other countries.

VMi Product Line

The VM product line consists of moderately priced vertical machining centers for the entry-level market, while still offering the advantage of our advanced control and motion systems.

The VM product line consists of moderately priced vertical machining centers for the entry-level market, and offer the advantage of our advanced control and motion systems.

The design premise of the machining center with a large work cube and a small footprint optimizes the use of available floor space.

The VM line consists of six models in four sizes with X-axis (horizontal) travels of 26 (three models), 30, 40, and 50 inches.

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† Windows ® is a registered trademark of Microsoft Corporation in the United States and other countries.

Most models are equipped with a belted spindle up to 12,000rpm, one model is equipped with an inline (direct drive) spindle, and one model includes motor spindle speeds up to 30,000rpm.

VMXi Product Line

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U Series models are offered with eight, ten, and 14-inch diameter rotary tables with either standard (belted) or direct drive (inline) spindles.

High-speed spindles (20,000 rpm) are offered as an option.

High-speed spindles (20,000rpm or 30,000rpm) are offered as an option.

SRTi/SWi Product Line

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The SW model utilizes the swivel head and a traditional machine table that can be then fitted with an A-axis rotary table to machine long five-axis parts.

These models are available in either 42 or 60-inch X-axis travels.

These models are available in 42-, 60-, or 84-inch X-axis travels.

Customers can choose between standard and high-speed spindles.

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The B-axis configuration of the VC/VCX Series provides greater undercut capability in both positive and negative directions, allowing users to access more part surface area for machining.

These cantilever machines are available with either a 20-inch or 23.6-inch pallet, moderately-priced models, or as a high speed, high performance model, with a torque motor-driven 23.6-inch-diameter rotary table.

These cantilever machines are available with either a 20-inch or 23.6-inch pallet, moderately-priced models or high performance model, with a torque motor-driven 23.6-inch-diameter rotary table.

High speed motor spindle (20,000rpm) is offered as option for high performance models.

BXi Product Line

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DCXi Product Line

The double column DCX series includes six models in four sizes.

Based on two, three, and four-meter X-axis travels, these machining centers are designed to facilitate production of large parts and molds often required by the aerospace, energy, and custom machinery industries.

The 3-meter model is available as a five-axis machine equipped with an articulating head.

The double column DCX series offers four different sizes, based on two, three, and four-meter X-axis travels and Y-axis travel.

These machining centers are designed to facilitate production of large parts and molds often required by the aerospace, energy, and custom machinery industries.

The 2- and 3-meter models offer two different spindle sizes to fit different applications.

The 3- and 4-meter models are available as five-axis machines equipped with two different types of articulating head for either high-speed cutting or high-torque cutting.

DCX machines are the largest models offered by Hurco that feature the powerful and flexible WinMax® control.

TMi/TM-Mi Product Line

The TM/TM-M product line of slant-bed lathes (horizontal turning centers) is designed for entry-level job shops and contract manufacturers seeking efficient processing of small to medium lot sizes.

There is one TM model in four sizes, measured by chuck size:

TMi Product Line

The TM product line of slant-bed lathes (horizontal turning centers) is designed for entry-level job shops and contract manufacturers seeking efficient processing of small to medium lot sizes.

The 2-axis turning TM models are in four sizes, measured by chuck size:

six, eight, ten, and 12 inches.

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TM8Mi, TM10Mi, and TM12Mi.

The newly introduced TM8MY and TM10MY models further expand productivity and flexibility by adding a Y-axis, making the models suitable for complex jobs.

TMXi Product Line

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There are six models in two sizes.

The TMX-MY models are equipped with an additional axis and motorized live tooling while the TMX-MYS models also have an additional spindle.

The TMX models have higher spindles and a more rigid frame, the TMX-MY models are equipped with an additional axis and motorized live tooling, and the TMX-MYS models also have an additional spindle.

These products are designed for customers who want to reduce part handling and complete complex components that require speed, accuracy, and superior surface finish in a single set-up.

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Since Hurco is the technology and innovation brand of our corporate portfolio, we have focused our attention on product enhancements of existing models in an effort to align the Hurco brand with the newest engineering innovations and components available to compete with other premium brands in the marketplace.

Examples of product enhancements completed in fiscal year 2023 include new HSK spindles for our entry level high-speed VM10HSi 3-axis and VM10UHSi 5-axis machines.

We also made background enhancements to our WinMax® software, focusing on bolstering reliability and optimizing resource management.

These improvements are designed to ensure a smoother user experience without interrupting workflow.

These efforts collectively enhance software performance and efficiency, providing a more dependable and responsive experience while using WinMax®.

Examples of product enhancements completed in fiscal year 2024 include a new and higher speed 20,000rpm motorized spindle for the HSi and Ui product lines.

We also refreshed the design of the TM-Mi and TMXi product lines to take advantage of higher performance live turret with options of either BMT or VDI tooling.

We introduced the TM8MY and TM10MY multi-axis live tooling lathes models.

Additionally, we made background enhancements to our WinMax® software, focusing on bolstering reliability and optimizing resource management.

These improvements are designed to ensure smoother user experience without interrupting workflow.

These efforts collectively enhance software performance and efficiency, providing more dependable and responsive experience while using WinMax®.

Milltronics CNC Machine Tools

Our Milltronics line of CNC machine tools is designed for excellent value with more standard features for the price versus competitors.

We manufacture and sell these machine tools with a fully integrated interactive computer control system called the Milltronics 9000 Series DGI CNC.

We manufacture and sell these machine tools with a fully integrated interactive computer control system.

The INSPIRE+ control console, launched in 2024, is an upgrade from the previous system, Milltronics 9000 Series DGI CNC, with enhanced hardware and graphics features.

The control is compatible with G & M Code programs (generated from CAD/CAM software) and also features onboard conversational visual aid programming.

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TRQ/TRM Product Line

Products with the TRQ or TRM designation are part of the tool room bed mill category, which are machines that are available without an enclosure (also referred to as open bed machines), that provide easy access to the worktable.

Products with the TRQ or TRM designation are part of the toolroom bed mill category, which are machines that are available without an enclosure (also referred to as open bed machines), that provide easy access to the worktable.

Typical applications for these machines include general machining, job shops, prototype, or maintenance and repair.

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The 60-inch model is also available with a high-torque option.

Most toolroom models feature box way construction for rigidity and are designed to absorb vibrations.

VM General Purpose (GP) Product Line

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Models include X-axis travels of 30, 42, 50, or 60 inches.

Many of these models have extended Y-axis travels.

VM Extra Power (XP) Product Line

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The BR product line consists of high-speed bridge mills that are used in pattern shops and the aerospace industry, in addition to job shops, due to the large table and travels that support a wide range of part sizes.

BR machines have inline spindles and are available in six models with up to 200 inches in X-axis travel by 80 inches in Y-axis travel.

BR machines have inline spindles and are available with 150 inches in X-axis travel and 60 inches in Y-axis travel.

ML Product Line

The ML product line consists of combination lathes that the customer can configure for either tool room or production applications with the option to add live tooling.

The ML product line consists of combination lathes that the customer can configure for either toolroom or production applications with the option to add live tooling.

There are 17 models available in a variety of thru hole sizes and in the following six swing-over bed diameters:

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Product Development

In fiscal year 2023, Milltronics introduced the new Inspire CNC control, leveraging patented Hurco intellectual property to enhance cutting precision and surface finish on Milltronics machine tools.

Features like rapid retract, leadscrew compensation, and squareness compensation enable customers to maximize their Milltronics machine tool's performance, while the Inspire control offers users a familiar user interface for seamless interaction with the machine.

In fiscal year 2024, Milltronics introduced the new INSPIRE+ control console, with a modern look, increased display size, and ergonomic input.

The new control console leverages patented Hurco intellectual property to enhance cutting precision and surface finish on Milltronics machine tools.

Features like rapid retract and leadscrew and squareness compensations enable customers to maximize their Milltronics machine tool's performance.

Additionally, Milltronics introduced two new product lines, the TRL toolroom flatbed lathes and the X5 five-axis integrated machines.

The X5 line is available in both belted and in-line spindle models, featuring a 200- or 250-millimeter trunnion table.

Takumi CNC Machine Tools

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The VC Series vertical machining centers are fast, three-axis linear guide machining centers designed for customers doing a variety of different parts, including die and mold, medical, automotive, and job shops.

The VC machines are available in four sizes with X-axis travels of 34, 42, 50, and 60 inches.

The VC machines are available in five sizes with X-axis travels of 34, 42, 47, 50, and 60 inches.

An extended Y-axis travel version of the 42-inch model is offered for mold shops making square mold bases.

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* Fanuc® is a registered trademark of G E Fanuc Automation Americas, Inc.

Siemens® is a registered trademark of Siemens AG.

Mitsubishi® is a registered trademark of Mitsubishi Electric Corporation.

Heidenhain® is a registered trademark of HEIDENHAIN CORPORATION, a wholly-owned subsidiary of the German company DR.

JOHANNES HEIDENHAIN GmbH.

The V Series vertical machining centers are heavy-duty, box-way machines built for tough applications such as roughing cast iron.

These three-axis, massive machines feature belt or geared spindles to provide maximum torque.

These massive three-axis machines feature belt or geared spindles to provide maximum torque.

The V Series product line includes eight models with X-axis travels of 39, 43, 47, 60, 70, 78, 86, and 126 inches.

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These machines are specifically targeted for die and mold and aerospace customers.

Designed with trunnion tables or swivel heads, these five-axis simultaneous machining centers provide versatility, as well as reduce setup time and process time.

________________________

* Fanuc® is a registered trademark of G E Fanuc Automation Americas, Inc.

Siemens® is a registered trademark of Siemens AG.

Mitsubishi® is a registered trademark of Mitsubishi Electric Corporation.

Heidenhain® is a registered trademark of HEIDENHAIN CORPORATION, a wholly-owned subsidiary of the German company DR.

JOHANNES HEIDENHAIN GmbH.

Designed with trunnion tables or swivel heads, these five-axis simultaneous machining centers provide versatility, as well as reduced setup time and process time.

Most models are offered with a double-column structure for superior stability and performance.

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These models include twin pallets to maximize cutting time along with very fast pallet exchange times and rapid traverse rates.

Available in 400, 500, and 630 mm pallet sizes, they can also be fitted with expandable automatic tool changers that hold up to 220 tools.

Available in 400-, 500-, and 630-millimeter pallet sizes, they can also be fitted with expandable automatic tool changers that hold up to 220 tools.

The HMX500 model is available in either #40 or #50 taper spindles.

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Product Development

In fiscal year 2023, Takumi introduced a #50 taper version of the HMX500 horizontal machining center, for applications that require heavy cutting and more power.

Additionally, a new 60” X-travel VC1500 was introduced to the marketplace.

In fiscal year 2024, Takumi introduced a new UVC600 five-axis machine with a 600-millimeter cantilever table.

This machine features faster rapids with a 15,000rpm direct drive spindle for production of high accuracy and complex parts.

The UA400 five-axis model was also introduced and has a 15,000rpm direct drive spindle with a trunnion table mounted 90 degrees on the front of the machine for ease of part loading and provision to integrate automation.

Finally, Takumi developed three intelligent thermal compensation levels, iSPIN-TC, which, depending on the application, greatly reduces spindle thermal deviation.

Other Computer Control Systems and Software Products

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Solid Model Import with 3D DXF Technology automatically uses geometry from a 3D CAD model to easily create conversational programs for 2D and 3D parts or even 3+2 and 5-sided parts.

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* AutoCAD® is a registered trademark of Autodesk, Inc., and/or its subsidiaries/ affiliates in the U.S.

and/or other countries.

Designed to take advantage of the Internet of Things, UltiMonitor is a web-based productivity, management, and service tool that enables customers to monitor, inspect, and receive notifications about their Hurco machines from any location where they can access the internet.

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This “on-machine” technique improves the throughput of the measurement process when compared to traditional “off-machine” approaches.

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* AutoCAD® is a registered trademark of Autodesk, Inc., and/or its subsidiaries/ affiliates in the U.S.

and/or other countries.

The Tool and Material Library option stores the tool and material information with the machine instead of storing it with each individual part program.

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CNC Rotary Tables

LCM has introduced a new generation of trunnion tables that are common across various machine models.

These trunnion tables have faster rpm feedrates, interchangeable platter diameters, the ability to add power work holding devices and provision to easily incorporate rotary union.

LCM has several lines of CNC rotary tables for both horizontal and vertical-horizontal positioning.

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These non-Hurco branded products are sold by our wholly-owned distributors and are comprised primarily of other general-purpose vertical machining centers and lathes, laser cutting machines, waterjet cutting machines, CNC grinders, compact horizontal machining centers, metal cutting saws, and CNC Swiss lathes.

We also offer select models of Milltronics branded machines as OEM ready machines that can be branded and sold under a private label by independent third parties.

Parts and Service

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The LCM line of electro-mechanical components and accessories for machine tools is designed and manufactured in Italy.

Our facility in Indianapolis, Indiana, also conducts final assembly operations for certain Hurco VMX machines, Milltronics IL/XP models, and Milltronics bridge mills for the American market and manufactures certain electro-spindle components for LCM.

Our facility in Indianapolis, Indiana, also conducts final assembly operations for certain Hurco VMX machines, Milltronics IL/XP models, Milltronics bridge mills for the American market, certain electro-spindle components for LCM, and automation systems for ProCobots.

We have a contract manufacturing agreement for computer control systems with Hurco Automation, Ltd.

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Most of our competitors are larger and have greater financial resources than us.

Major worldwide competitors include DMG Mori Seiki Co., Ltd., Mazak Corporation, Haas Automation, Inc., DN Solutions (formerly Doosan Corporation), Okuma Machinery Works, Ltd., Fryer Machine Systems Inc., ProtoTRAK CNC Machines, Quick Jet Machine, Co., Ltd., Gentiger Machinery Industrial, Co., Ltd., and Yeong Chin Machinery Industries, Co., Ltd.

Major worldwide competitors include DMG Mori Seiki Co., Ltd., Mazak Corporation, Haas Automation, Inc., Smart Machine Tool, DN Solutions (formerly Doosan Corporation), Okuma Machinery Works, Ltd., Fryer Machine Systems Inc., ProtoTRAK CNC Machines, Quick Jet Machine, Co., Ltd., Gentiger Machinery Industrial, Co., Ltd., and Yeong Chin Machinery Industries, Co., Ltd.

Through our subsidiary LCM, we compete with manufacturers of machine tool components and accessories such as IBAG, Kessler, Peron Speed International, GSA Technology Co., Ltd., and Duplomatic Automation.

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As of October 31, 2024, Hurco had approximately 688 full-time employees, of which approximately 30% were in the Americas and 70% were in other global regions.

As a global industrial technology company, a large number of our employees are engineers or trained trade or technical workers focusing on advanced manufacturing, and many of them hold masters’, doctorate, or equivalent advanced degrees.

As a global industrial technology company, a large number of our employees are engineers, trained trade, or technical workers focusing on advanced manufacturing, and many of them hold masters’, doctorate, or equivalent advanced degrees, or are veterans of the armed services.

Hurco emphasizes a number of measures and objectives in managing its human capital assets, including, among others, employee safety and wellness, talent acquisition and retention, employee engagement, development, and training, diversity and inclusion, and compensation and pay equity.

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We also foster a strong corporate culture that promotes high standards of ethics and compliance for our businesses, including policies that set forth principles to guide employee, officer, director, and vendor conduct, such as our Code of Business Conduct and Ethics.

We also maintain a whistleblower policy and anonymous hotline for the confidential reporting of any suspected policy violations or unethical business conduct on the part of our businesses, employees, officers, directors, or vendors and provide training and education to our global workforce with respect to our Code of Business Conduct and Ethics and anti-corruption and anti-bribery policies.

We also maintain a whistleblower policy and anonymous hotline for the confidential reporting of any suspected policy violations or unethical business conduct on the part of our businesses, employees, officers, directors, or vendors, and we provide training and education to our global workforce with respect to our Code of Business Conduct and Ethics and anti-corruption and anti-bribery policies.

We intend to disclose any amendment to, or a waiver from, a provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions by posting such information on our website at www.hurco.com .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business