SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark One)

 X    Quarterly  report  pursuant  to  section  13 or  15(d)  of the  Securities
      Exchange  Act of  1934  for the  quarterly  period  ended  July  31,  1997
      Transition  report  pursuant  to  section  13 or 15(d)  of the  Securities
      Exchange Act of 1934 for the transition period from _________ to
      ---------.


Commission File No. 0-9143


                              HURCO COMPANIES, INC.
             (Exact name of registrant as specified in its charter)

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

       One Technology Way
       Indianapolis, Indiana                                 46268
   (Address of principal executive offices)                (Zip code)

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


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 the past 90 days:
                                                           Yes  X   No


The  number  of  shares  of the  Registrant's  common  stock  outstanding  as of
September 8, 1997 was 6,537,771.




                                                         



                              HURCO COMPANIES, INC.
                      July 1997 Form 10-Q Quarterly Report


                                Table of Contents



                        Part I - Financial Information



                                                                           Page
Item 1        Condensed Consolidated Financial Statements

              Condensed Consolidated Statement of Operations -
                  Three months and nine months ended July 31, 1997 and 1996...3

              Condensed Consolidated Balance Sheet -
                  As of July 31, 1997 and October 31, 1996 ...................4

              Condensed Consolidated Statement of Cash Flows -
                  Three months and nine months ended July 31, 1997 and 1996...5

              Notes to Condensed Consolidated Financial Statements ...........6


Item 2        Management's Discussion and Analysis of Financial
              Condition and Results of Operations ............................9



                           Part II - Other Information



Item 1        Legal Proceedings .............................................13

Item 4        Submission of Matters to a Vote of Security Holders............14

Item 6        Exhibits and Reports on Form 8-K ..............................15


Signatures ..................................................................15




                            PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                              HURCO COMPANIES, INC.

                  CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                      (In thousands, except per-share data)


                                  Three Months Ended          Nine Months Ended
                                        July 31,                   July 31,
                                        -------                    -------
                                    1997      1996             1997      1996
                                        -------                    -------
                                     (unaudited)                 (unaudited)

Sales and service fees ........... $24,637   $23,039         $69,495   $72,358

Cost of sales and service ........  17,462    16,051          48,992    51,664
                                   -------   -------         -------   -------

     Gross profit ................   7,175     6,988          20,503    20,694


Selling, general and
administrative expenses ..........   5,352     5,223          15,615    15,635
                                   -------   -------         -------   -------

     Operating income ............   1,823     1,765           4,888     5,059

Interest expense .................     473       712           1,533     2,631

License fee income, net ..........   1,221        16           7,396       324

Other expense, net ...............      34        62              84       115
                                   -------   -------         -------   -------

     Income before taxes .........   2,537     1,007          10,667     2,637

Provision for foreign income taxes       3        50             917        83
                                   -------   -------         -------   -------

Net income ....................... $ 2,534   $   957         $ 9,750   $ 2,554
                                   =======   =======         =======   =======

Earnings
     per common share ............ $   .38   $   .16         $  1.46   $   .45
                                   =======   =======         =======   =======

Weighted average common
     shares outstanding ..........   6,690     5,920           6,675     5,679
                                   =======   =======         =======   =======


The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.


                              HURCO COMPANIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                  (Dollars in thousands, except per share data)
                                                           July 31, October 31,
                                                            1997        1996
ASSETS ...............................................   (Unaudited) (Audited)
Current assets:
     Cash and cash equivalents .......................   $  2,117    $  1,877
     Accounts receivable .............................     15,140      17,162
     Inventories .....................................     25,838      24,215
     Other ...........................................        736         854
                                                         --------    --------
         Total current assets ........................     43,831      44,108
                                                         --------    --------
Long-term license fees receivable ....................      1,074       1,040
                                                         --------    --------
Property and equipment:
     Land ............................................        761         761
     Building ........................................      7,067       7,095
     Machinery and equipment .........................     11,483      12,662
     Leasehold improvements ..........................      1,164       1,002
         Less accumulated depreciation and amortization   (11,122)    (11,714)
                                                         --------    --------
                                                            9,353       9,806
                                                         --------    --------
Software development costs, less amortization ........      4,183       3,792
Other assets .........................................      1,553       1,004
                                                         --------    --------
                                                         $ 59,994    $ 59,750
                                                         ========    ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable ................................   $  9,483    $ 11,407
     Accrued expenses ................................      6,175       7,454
     Accrued warranty expenses .......................      1,534       1,425
     Current portion of long-term debt ...............      3,036       3,050
                                                         --------    --------
         Total current liabilities ...................     20,228      23,336
                                                         --------    --------
Non-current liabilities
     Long-term debt ..................................     12,950      19,060
     Deferred credits and other obligations ..........      1,400       1,213
                                                         --------    --------
            Total non-current liabilities ............     14,350      20,273
                                                         --------    -------- 
                                                                            
Shareholders' equity:
     Preferred stock:  no par value per share; 1,000,000
       shares authorized; no shares issued .............      --          --
     Common stock: no par value; $.10 stated value per
         share; 12,500,000 shares authorized; and 6,537,571
         and 6,531,871 shares issued , respectively ....     654         653
     Additional paid-in capital ........................  50,324      50,312
     Accumulated deficit ............................... (20,458)    (30,208)
     Foreign currency translation adjustment ...........  (5,104)     (4,616)
                                                        --------    --------
         Total shareholders' equity ....................  25,416      16,141
                                                        --------    --------
                                                        $ 59,994    $ 59,750
                                                        ========    ========

          The  accompanying notes  are  an  integral  part  of  the  condensed
consolidated financial statements. 

                                                          
                              HURCO COMPANIES, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                             (Dollars in thousands)

                                            Three Months Ended Nine Months Ended
                                                    July 31,         July 31,
                                                    --------         --------
                                                  1997    1996    1997     1996
                                                    --------         --------
                                                  (unaudited)       (unaudited)

Cash flows from operating activities:
   Net income ................................. $2,534  $  957   $9,750  $2,554
   Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation and amortization ............    502     517    1,433   2,075
     Change in assets and liabilities:
     (Increase) decrease in accounts receivable   (231)  1,617    1,290   2,683
     (Increase) decrease in inventories .......  1,379  (1,174)  (2,248)   (745)
     Increase (decrease) in accounts payable ..   (800)  1,144   (1,844)     99
     Increase (decrease) in accrued expenses ..    476     116     (807) (1,129)
     Other ....................................   (113)   (231)     449     216
                                               ------- ------- -------- --------
       Net cash provided by
       operating activities ...................  3,747   2,946    8,023   5,753
                                              -------- ------- -------- --------

Cash flows from investing activities:
   Proceeds from sale of equipment ............     23       1      106      33
   Purchase of property and equipment .........   (244)   (138)    (493)   (391)
   Software development costs .................   (270)   (397)    (997) (1,065)
   Other investments ..........................    (11)     (8)    (429)     66
                                               ------- ------- -------- --------
     Net cash provided by (used for)
     investing activities .....................   (502)   (542)  (1,813) (1,357)
                                               ------- ------- -------- --------

Cash flows from financing activities:
   Advances on bank credit facilities .........  7,222   7,820   25,279  37,885
   Repayment on bank credit facilities ........ (9,722)(11,482) (29,512)(42,632)
   Repayment of term debt .....................     --  (3,140)  (1,786) (5,090)
   Proceeds from the issuance of common stock
    and exercises of common stock options .....      5   4,830       13   4,830
                                               ------- ------- -------- --------
     Net cash provided by (used for)
     financing activities ..................... (2,495) (1,972) (6,006)  (5,007)
                                               ------- ------- -------- --------

Effect of exchange rate changes on cash .......    229      26      36      (51)
                                               ------- ------- -------- --------
     Net increase (decrease) in cash ..........    979     458     240     (662)

Cash and cash equivalents at beginning of period 1,138     952   1,877    2,072
                                              -------- ------- -------  --------

Cash and cash equivalents at end of period ..   $2,117  $1,410  $2,117   $1,410
                                              ======== ======= =======  ========

The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.



              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   GENERAL

The condensed consolidated financial statements as of July 31, 1997 and 1996 are
unaudited but include all adjustments which the Company considers  necessary for
a fair presentation of its financial  position at those dates and its results of
operations and cash flows for the three months and nine months then ended. It is
suggested  that these  condensed  consolidated  financial  statements be read in
conjunction with the financial  statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended October 31, 1996.


2.   LICENSE FEES


From time to time, the Company's wholly-owned subsidiary,  IMS Technology,  Inc.
("IMS")  enters into  agreements for the licensing of its  interactive  computer
numerical  control  (CNC)  patents.  License fees received in a lump sum under a
fully paid-up license are recognized in income, net of legal fees,  expenses and
foreign taxes,  if any, at the time the license  agreement is executed.  License
fees received in periodic  installments  that are contingent upon the continuing
validity  of a licensed  patent are  recognized  in income,  net of legal  fees,
expenses and foreign taxes, if any, over the life of the licensed patent.

During the third quarter ended July 31, 1997, the Company  recorded  license fee
income, net of expenses,  aggregating  approximately  $1,221,000,  nearly all of
which was  attributable  to two  license  agreements  entered  into  during  the
quarter.  Pursuant to those  agreements,  IMS granted a fully paid-up license of
its  interactive CNC patents to each of two  manufacturers  of machine tools and
CNC systems in exchange for a lump sum payment.  One of those  manufacturers had
been a defendant in the on-going  litigation  brought by IMS for infringement of
its  interactive  CNC patents  and the  license  was  entered  into as part of a
settlement with that manufacturer.

3.   PROVISION FOR FOREIGN INCOME TAXES

The  provision  for foreign  income taxes  includes  $896,000  which  represents
foreign  withholding  tax on a payment  received in the second fiscal quarter of
1997 for a license fee  settlement.  The  remainder of the expense is income tax
related to a foreign subsidiary.


4.   HEDGING


The U.S.  dollar  equivalent  notional  amount of outstanding  foreign  currency
forward exchange contracts was approximately  $8,501,450 as of July 31, 1997 and
$12,645,000  as of  October  31,  1996.  Deferred  gains  related  to  hedges of
intercompany sales commitments were approximately  $200,000 as of July 31, 1997.
Contracts  outstanding at July 31, 1997 mature at various times through February
28, 1998.

5.   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 stock method.  Such common stock equivalents
totaled  154,000 and 141,000  shares for the three and nine month  periods ended
July 31, 1997, respectively.

In February,  1997, the Financial  Accounting Standards Board released Statement
of Accounting  Standards No. 128, "Earnings Per Share" (SFAS 128), which changes
the method of computation of earnings per share (EPS). SFAS 128 replaces Primary
EPS with Basic EPS and replaces  Fully Diluted EPS with Diluted EPS.  Basic EPS,
unlike  Primary  EPS,  does  not  consider  dilution  for  potentially  dilutive
securities. Diluted EPS uses an average share price for the period whereas Fully
Diluted EPS uses the greater of the average share price or  end-of-period  share
price.  SFAS 128 is  effective  for  fiscal  1998 and  earlier  adoption  is not
permitted. Basic EPS computed under SFAS 128 for the three and nine months ended
July 31, 1997 was $.39 and $1.49, respectively.  Diluted EPS computed under SFAS
128 for the  three  and nine  months  ended  July 31,  1997 was $.38 and  $1.46,
respectively.

6.   ACCOUNTS RECEIVABLE

The  allowance  for  doubtful  accounts  was  $733,000  as of July 31,  1997 and
$785,000 as of October 31, 1996.


7.   INVENTORIES


Inventories, priced at the lower of cost (first-in, first-out method) or market 
are summarized below (in thousands):
                                               July 31, 1997   October 31, 1996
    Purchased parts and sub-assemblies         $   11,011         $  12,354
    Work-in-Process                                 1,189             1,942
    Finished Goods                                 13,638             9,919
                                               ----------          --------
                                               $   25,838         $  24,215
                                               ==========         =========


8.   SUBSEQUENT EVENTS


Subsequent  to July  31,  1997,  IMS  granted  a fully  paid-up  license  of its
interactive CNC patent to each of three manufacturers of CNC systems in exchange
for  lump  sum  payments,  as a  result  of which  the  Company  will  recognize
additional license fee income, net of legal fees and foreign  withholding taxes,
of  approximately  $1.7 million in the fourth quarter of fiscal 1997. One of the
parties was a defendant in the ongoing IMS patent infringement litigation.

Effective  September 8, 1997,  the  Company's  Bank Credit  Agreement and Senior
Notes  Agreement  were  amended  and  restated.  The  principal  terms  of those
agreements, as amended and restated, are set forth below:

     a)  Bank Credit Agreement

         The Company's bank credit agreement provides for a revolving, unsecured
         credit facility expiring May 1, 2000, which permits borrowings,  at any
         one time outstanding,  of up to $22.5 million (inclusive of outstanding
         letters of credit of up to $12.0 million).  Of such  borrowings,  up to
         $5.0  million  may be  drawn in  designated  European  currencies.  The
         agreement  also provides for the  continuation  of the  Company's  term
         loan,  of which a balance of $1.25 million (the final  installment)  is
         due and payable on  September  30,  1997.  Interest on all  outstanding
         borrowings will be payable at LIBOR plus an amount ranging from .75% to
         2.0% based on a prescribed formula, or at the Company's option, prime.

         The agreement  requires the Company to maintain a specified minimum net
         worth  and  establishes  maximum  leverage  and fixed  charge  coverage
         ratios.  Cash dividends and  redemptions of capital stock are permitted
         subject to certain  limitations.  The  Company is  required to maintain
         consolidated  tangible  net worth (as  defined)  of not less than $20.0
         million plus (i) 50% of cumulative  net income  subsequent to April 30,
         1997 and (ii) 75% of the net  proceeds  from  sales of  capital  stock.
         Total   consolidated   debt  may  not   exceed   50%  of   consolidated
         capitalization  (defined as total debt plus  consolidated  tangible net
         worth).



     b)  Senior Notes

         At July 31,  1997,  the  Company  had  outstanding  approximately  $7.1
         million of unsecured Senior Notes,  bearing an interest rate of 10.87%,
         of which  approximately $1.8 million is due on December 1, 1997 and the
         balance is due in equal annual installments through 2000.

         Effective  September 8, 1997, the interest rate on the Senior Notes was
         reduced to 10.37% and the financial  covenants  were amended to conform
         to those  contained in the  Company's  amended and restated bank credit
         agreement.



Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The  following  discussion  should  be read in  conjunction  with the  Condensed
Consolidated  Financial Statements and Notes thereto appearing elsewhere herein.
Certain   statements  made  in  this  report  may  constitute   "forward-looking
statements".   For  a  description  of  risks  and   uncertainties   related  to
forward-looking statements, see the Company's Annual Report on Form 10-K for the
year ended October 31, 1996.

RESULTS OF OPERATIONS

Three Months Ended July 31, 1997 Compared to Three Months Ended July 31, 1996

Sales and  service  fees for the third  quarter of fiscal  1997  increased  $1.6
million, or 7.0%, from the corresponding quarter of fiscal 1996, notwithstanding
the approximately  $935,000 negative impact of a strengthening  U.S. dollar when
translating  foreign currency revenues into U.S. dollars for financial reporting
purposes.

Sales of CNC-operated  machine tools in the third quarter of fiscal 1997 totaled
$16.4 million,  an increase of $2.1 million,  or 14.5%,  from the  corresponding
1996 period. Sales of CNC systems and software (which do not include systems and
software  that are sold as an  integral  part of a machine  tool)  totaled  $4.4
million in the third quarter of 1997, a decline of $174,000,  or 3.7%,  from the
corresponding 1996 period. Sales of service parts and service fees declined 7.3%
from the  corresponding  1996 period,  which is  attributable to improvements in
recent years in the quality of the Company's  products  along with a transfer to
the Company's  distributors in the United States of  responsibility  for certain
servicing activities.

The  increase  in sales  of  CNC-operated  machine  tools  occurred  both in the
domestic  market  where the  increase  totaled  $896,000,  or 17.0%,  and in the
European market,  where the increase totaled $2.1 million, or 26.9%, in spite of
the unfavorable  effect of translating  foreign currency sales.  These increases
were offset, however, by a decrease of $932,000, or 78.7%, in South East Asia as
a result of adverse economic conditions in that region.


Gross profit as a percentage  of sales for the third  quarter of fiscal 1997 was
29.1% compared to 30.3% for the corresponding period in fiscal 1996. A reduction
in  the  effective  margin  on  foreign  sales  due to the  negative  impact  of
translating  foreign  currencies  into  U.S.  dollars  for  financial  reporting
purposes  was  substantially  offset by the  combined  effects  of an  increased
percentage of  higher-margin  European  sales in the total sales mix,  increased
domestic and European sales of higher-margin  products  introduced in the latter
part of fiscal 1996, and increased sales of software  options in connection with
sales of machine tools.

Interest  expense for the third quarter of fiscal 1997  decreased  approximately
$239,000,  or 33.5%, from the amount reported for the corresponding  1996 period
primarily due to a substantial reduction in outstanding borrowings.

License  fee income  for the third  quarter of fiscal  1997,  which  represented
approximately  48.1% of income before taxes during that period  compared to 1.5%
in the corresponding  period in fiscal 1996, was attributable almost entirely to
two  agreements  entered into during the quarter by the  Company's  wholly-owned
subsidiary,  IMS  Technology,  Inc.  (IMS),  pursuant to which it granted  fully
paid-up licenses of its interactive CNC patent in exchange for lump sum payments
by the licensees.  The Company also expects to recognize  additional license fee
income  of  approximately  $1.7  million,  net of  legal  expenses  and  foreign
withholding  taxes in the  fourth  quarter  of fiscal  1997 as a result of three
additional patent license  agreements entered into by IMS subsequent to July 31,
1997,  all of which  provide for lump sum payments to IMS.  Also, as of July 31,
1997,  additional license fees of approximately $1.2 million, net of legal fees,
related  to  previous  license  agreements,  have  been  deferred  and  will  be
recognized in income over the four-year  remaining life of the licensed  patent.
Further,  under a license  agreement with Siemens A.G., a principal  supplier to
the Company, approximately $650,000 is expected to be received in future periods
in the form of discounts on purchases by the Company, which will be reflected as
a  reduction  of the cost of such  purchases.  Although  settlements  have  been
reached with several of the  defendants in the on-going IMS patent  infringement
litigation,  as a result of which those  defendants  have  entered  into license
agreements with IMS, the remaining  defendants are continuing to contest the IMS
claims.  IMS is  continuing  to pursue  the  litigation  and is also  engaged in
licensing discussions with other companies that are not in the litigation. There
can be no assurance that IMS will enter into license  agreements with any of the
remaining  defendants  or any other  companies,  or that the terms of any future
license agreements will be similar to those previously entered into.

Net  income  increased  by $1.6  million,  and was  approximately  2.6 times the
corresponding 1996 period, due primarily to increased  revenues,  the receipt of
license fees and a significant reduction in interest expense.

New order  bookings  during the third quarter of fiscal 1997 were $25.7 million,
an increase of  approximately  $1.8  million,  or 7.6%,  from the  corresponding
period of fiscal 1996.  The amount of new orders  during the 1997 third  quarter
was negatively impacted by approximately $713,000 due to the translation effects
of a stronger U.S. dollar on orders expressed in foreign currencies but compares
favorably to the $21.2 million and $22.9 million of new orders  reported for the
first and  second  quarters  of fiscal  1997,  respectively.  Although  domestic
machine tool orders during the 1997 third quarter decreased slightly compared to
the corresponding  1996 period, the decrease was more than offset by an increase
in orders in the European market. International orders represented approximately
45% of new order  bookings for the third  quarter of fiscal 1997 compared to 50%
for the  immediately  preceding  fiscal quarter and 42% for the third quarter of
fiscal 1996.  Backlog at July 31, 1997 was $8.3 million compared to $7.5 million
at April 30, 1997.


Nine Months Ended July 31, 1997 Compared to Nine Months Ended July 31, 1996

Sales and service fees for the first nine months of fiscal 1997  decreased  $2.9
million, or 4.0%, compared with the corresponding  period in fiscal 1996. Of the
total decrease,  $1.7 million  reflected the net effects of translating  foreign
currency revenues into U.S. dollars for financial reporting purposes.

Sales of  CNC-operated  machine tools,  which totaled $43.9 million in the first
nine months of fiscal 1997,  were 6.5% below the $47.0 million  recorded  during
the corresponding  fiscal 1996 period. The decrease occurred in the U.S. market,
with a decline of $2.3 million,  or 11.8%,  as well as in S. E. Asia,  where the
decline  of $1.5  million,  or 68.8%,  was most  pronounced  and  reflected  the
economic turmoil in that region.  Sales of CNC-operated  machine tools in Europe
increased $771,000,  or 3.1%, in spite of the adverse impact of foreign currency
translation.  In comparing the fiscal 1997 and 1996  results,  it also should be
recognized  that the first half of fiscal 1996 was marked by an  unusually  high
level  of  shipments,  as the  increasing  availability  of  products  from  the
Company's contract manufacturers  permitted an accelerated reduction of the high
backlog that had resulted from the combined  effects of a strengthening  machine
tool market, the introduction of the Company's  Advantage(R) series product line
and capacity  constraints  on the part of the Company's  contract  manufacturers
during  fiscal  1995.  Sales of CNC systems and  software  (which do not include
systems  and  software  that are sold as an  integral  part of a  machine  tool)
increased during the first half of fiscal 1997 by $603,000,  or 4.4%,  primarily
due to  increased  shipments  of  Autobend(R)  control  products  in response to
improved  worldwide  market  demand.  Sales of service  parts and  service  fees
decreased  by  $417,000,  or 3.6%,  compared  to the first nine months of fiscal
1996.

As a  percentage  of sales,  gross  profit  increased to 29.5% in the first nine
months of fiscal 1997, compared to 28.6% for the corresponding  period in fiscal
1996. The improvement in margin is  attributable  to the combined  effects of an
increased percentage of higher-margin European shipments in the total sales mix,
increased domestic and European shipments of higher-margin  products  introduced
in the latter part of fiscal  1996 and  increased  sales of software  options in
connection with sales of machine tools.

Interest expense for the first half of fiscal 1997 decreased  approximately $1.1
million,  or 41.8%,  from the amount  reported for the  corresponding  period in
fiscal 1996, primarily due to a substantial reduction in outstanding  borrowings
and the payment during the 1996 period of $240,000 of  nonrecurring  fees to the
Company's lenders.

License fee income for the first nine months of fiscal 1997 was almost  entirely
attributable  to new licensing  agreements  relating to the IMS  interactive CNC
patent.  The  provision  for  income  tax is  primarily  the  result of foreign
withholding taxes related to one of these agreements.

Primarily as a result of the  substantial  licensing fee income  received during
the period,  net income for the first nine months of fiscal  1997  increased  by
approximately $7.2 million compared to the corresponding  period in fiscal 1996.
The increase also reflected the benefits of improved margins and the substantial
reduction in interest expense.

New order  bookings  during  the first  nine  months of fiscal  1997 were  $69.9
million,  an increase of 3.1% from the $67.8 million reported for the first nine
months of fiscal 1996,  primarily  as a result of a 5.9%  increase in orders for
machine  tools.  Backlog at April 30,  1997 was $8.3  million  compared  to $9.0
million at October 31, 1996.

The Company  manages its foreign  currency  exposure  through the use of foreign
currency  forward  exchange  contracts.  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 the
first nine months of fiscal 1997 and fiscal  1996.  See Note 4 to the  Condensed
Consolidated Financial Statements.







LIQUIDITY AND CAPITAL RESOURCES

At July 31,  1997,  the Company had cash and cash  equivalents  of $2.1  million
compared  to $1.9  million at October 31,  1996.  Cash  provided  by  operations
totaled  $3.7  million in the third  quarter of fiscal  1997,  compared  to $2.9
million  in the same  period of fiscal  1996.  Cash  flow  from  operations  was
enhanced by  approximately  $1.2  million of license fee income  received in the
third  quarter.  In light of an  increased  level of  finished  product  on hand
available for shipment,  the company has reduced scheduled  purchases of machine
tool  products  from  its  contract   manufacturers  to  reduce  finished  goods
inventories  in the fourth  quarter of fiscal  1997 and the first half of fiscal
1998, which will favorably impact future cash flow from operations.

Working capital was $23.6 million at July 31, 1997, compared to $20.8 million at
October 31, 1996.  Outstanding  borrowings under the Company's  revolving credit
facilities  were reduced by $2.5 million during the third quarter of fiscal 1997
and $4.2 million for the nine months,  primarily as a result of repayments  made
with cash flow from operations,  including license fees. At July 31, 1997, $13.4
million was available to the Company for either direct  borrowings or commercial
letters of credit.

Capital  investments  for the  quarter  and nine  months  ended  July  31,  1997
consisted  principally  of  expenditures  for  property,  equipment and software
development  projects.  Other  investments  for the nine-month  period  included
$190,000 in the second  fiscal  quarter with respect to Hurco  Automation,  Ltd.
(HAL). As of July 31, 1997, the Company has a commitment to invest an additional
$364,000 in HAL through fiscal 1999. The Company's investment activities for the
nine months ended July 31, 1997 were funded through cash flow from operations.

Effective  September 8, 1997,  the  Company's  Bank Credit  Agreement and Senior
Notes  Agreement  were  amended  and  restated.  The  principal  terms  of those
agreements as amended and restated are set forth below:

     a)  Bank Credit Agreement

         The Company's bank credit agreement provides for a revolving, unsecured
         credit facility expiring May 1, 2000, which permits borrowings,  at any
         one time outstanding,  of up to $22.5 million (inclusive of outstanding
         letters of credit of up to $12.0 million).  Of such  borrowings,  up to
         $5.0  million  may be  drawn in  designated  European  currencies.  The
         agreement  also provides for the  continuation  of the  Company's  term
         loan,  of which a balance of $1.25 million (the final  installment)  is
         due and payable on  September  30,  1997.  Interest on all  outstanding
         borrowings will be payable at LIBOR plus an amount ranging from .75% to
         2.0% based on a prescribed formula, or at the Company's option, prime.

         The agreement  requires the Company to maintain a specified minimum net
         worth  and  establishes  maximum  leverage  and fixed  charge  coverage
         ratios.  Cash dividends and  redemptions of capital stock are permitted
         subject to certain  limitations.  The  Company is  required to maintain
         consolidated  tangible  net worth (as  defined)  of not less than $20.0
         million plus (i) 50% of cumulative  net income  subsequent to April 30,
         1997 and (ii) 75% of the net  proceeds  from  sales of  capital  stock.
         Total   consolidated   debt  may  not   exceed   50%  of   consolidated
         capitalization  (defined as total debt plus  consolidated  tangible net
         worth).




     b)  Senior Notes

         At July 31,  1997,  the  Company  had  outstanding  approximately  $7.1
         million of unsecured Senior Notes,  bearing an interest rate of 10.87%,
         of which  approximately $1.8 million is due on December 1, 1997 and the
         balance is due in equal annual installments through 2000.

         Effective  September 8, 1997, the interest rate on the Senior Notes was
         reduced to 10.37% and the financial  covenants  were amended to conform
         to those  contained in the  Company's  amended and restated bank credit
         agreement.


Under the terms of the  Company's  credit  facilities,  as amended and restated,
$3.0  million of loan  payments are due and payable over the twelve month period
ending July 31, 1998.  Management  believes that cash flow from  operations  and
borrowings under its credit  facilities will be sufficient to meet the Company's
working capital needs for the foreseeable future.

The Company was in compliance with all loan covenants at July 31, 1997.




                           PART II - OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS

As previously  reported,  IMS and the Company are parties to a number of pending
legal proceedings  involving patent  infringement and other claims in connection
with an IMS patent for certain interactive CNC technology  originally  developed
by the Company (the IMS actions). Since  March  1997,  the  Company  has 
completed  settlements  with three parties to the IMS  actions,  Fanuc,  Ltd. 
Southwestern  Industries,  Inc.  and Bridgeport  Machines,  Inc.  IMS has 
agreed to dismiss all  infringement  claims against Fanuc, Southwestern and 
Bridgeport.

On July 3, 1997,  IMS  commenced  an action in the U.S.  District  Court for the
Eastern  District  of Virginia  alleging  infringement  of the IMS  patent.  IMS
amended its complaint on August 11, 1997,  naming Haas  Automation,  Inc.,  
Allen-Bradley,  Inc. and Fidia S.p.A., controls and machine tool manufacturers,
as defendants in this action.  IMS also named three machine tool end-users in 
the action. The complaint seeks unspecified damages, attorneys' fees and costs
and injunctive relief.

The Company is  involved in various  other  claims and  lawsuits  arising in the
ordinary  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

The  Company's  annual  meeting of  shareholders  was held May 29, 1997.  At the
meeting,  the following  seven persons were elected to the Board of Directors by
the votes indicated:

                           For  Against or Withheld Abstentions Broker Non-Votes
Hendrik J. Hartong, Jr. 5,988,553       840           288,047         --
Andrew L. Lewis IV      5,989,393                     288,047         --   
Brian D. McLaughlin     5,987,953     1,440           288,047         --
E. Keith Moore          5,989,093       300           288,047         --   
Richard T. Niner        5,989,393                     288,047         --
O. Curtis Noel          5,988,393     1,000           288,047         --
Charles E. M. Rentschler5,989,093       300           288,047         --


Shareholders  also approved an amendment of the  Company's  Amended and Restated
Articles of  Incorporation  which,  among other things,  increased the number of
authorized shares of common stock and preferred stock. The results of the voting
with respect to the amendment were as follows:

           For       Against or Withheld     Abstentions       Broker Non-Votes

         4,800,111       1,173,552             19,739               284,038


Shareholders  also approved the Company's 1997 Stock Option and Incentive  Plan.
The results of the voting with respect to the plan were:

           For       Against or Withheld     Abstentions       Broker Non-Votes

         4,717,894         407,416             36,179              1,115,951








Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

  3.1    Amended and Restated Articles of Incorporation.

10.52    1997 Stock Option and Incentive Plan.



11       Statement re: Computation of Per Share Earnings

27       Financial Data Schedule (electronic filing only).


(b)      Reports on Form 8-K:       None







                                   SIGNATURES


Pursuant  to the  requirements  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.



                                                     HURCO COMPANIES, INC.


                                             By:      /s/ Roger J. Wolf
                                                      Roger J. Wolf
                                                      Senior Vice President and
                                                       Chief Financial Officer



                                          By:      /s/ Stephen J. Alesia
                                                   Stephen J. Alesia
                                                   Corporate Controller and
                                                   Principal Accounting Officer







September 10, 1997








                                                          

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

  3.1    Amended and Restated Articles of Incorporation.

10.52    1997 Stock Option and Incentive Plan.



11       Statement re: Computation of Per Share Earnings

27       Financial Data Schedule (electronic filing only).


(b)      Reports on Form 8-K:       None







                                   SIGNATURES


Pursuant  to the  requirements  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.



                                             HURCO COMPANIES, INC.


                                          By:________________________
                                                   Roger J. Wolf
                                                   Senior Vice President and
                                                   Chief Financial Officer



                                          By:________________________
                                                   Stephen J. Alesia
                                                   Corporate Controller and
                                                   Principal Accounting Officer









 September 10, 1997

                                  
                                   Exhibit 3.1




                              AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION


                              AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF
                              HURCO COMPANIES, INC.
                        (As Amended Through June 2, 1997)


                                    ARTICLE I

                                      Name

                  The name of the Corporation is HURCO COMPANIES, INC.


                                   ARTICLE II

                                    Purposes

                  The purposes  for which the  Corporation  is organized  are to
engage in,  either  alone or as a partner,  joint  venturer  or  otherwise,  the
invention,  design,  manufacture,  production,  sale and lease of  products  and
equipment of all types to be used in the metal working  industry,  and to engage
in and transact any and all other lawful business for which  corporations may be
incorporated  under the Indiana Business  Corporation Law, as the same may, from
time to time, be amended (the "Corporation Law").


                                   ARTICLE III

                                Term of Existence

                  The period  during  which the  Corporation  shall  continue is
perpetual.


                                   ARTICLE IV

                                Number of Shares

                  The total  number of shares which the  Corporation  shall have
authority  to issue is  13,500,000  consisting  of  12,500,000  shares of Common
Stock,  no par value (the "Common  Stock"),  and  1,000,000  shares of Preferred
Stock, no par value (the "Preferred Stock").








                                                      

                                    ARTICLE V

                           Terms of Authorized Shares

Section 1.  Designation.  The authorized shares of the Corporation shall be
divided into two (2)classes, as follows:

                  (i)      12,500,000  shares of  Common  Stock.  The  shares of
                           Common  Stock shall be  identical  with each other in
                           all respects.

                  (ii)     1,000,000 shares of Preferred Stock, which shares may
                           hereafter be issued in one or more series as provided
                           in Section 2.

                  Section 2. Rights, Privileges, Limitations and Restrictions of
Preferred Stock.  Except as otherwise  provided in these Articles,  the Board of
Directors is vested with  authority to determine and state the  designation  and
the relative preferences,  limitations,  voting rights, if any, and other rights
of each series of Preferred  Stock by the adoption and filing in accordance with
the  Corporation  Law,  before  the  issuance  of any  shares of such  series of
Preferred   Stock,   of  an  amendment  or  amendments  to  these   Articles  of
Incorporation,  as the same may, from time to time, be amended,  determining the
terms of such series of Preferred  Stock.  All shares of Preferred  Stock of the
same series shall be identical with each other in all respects. Without limiting
the generality of the foregoing, the Board of Directors shall have the authority
to determine the following:

                  (i)      The designation of such series,  the number of shares
                           which shall initially  constitute such series and the
                           stated value thereof if different  from the par value
                           thereof;

                  (ii)     Whether the shares of such  series  shall have voting
                           rights,  in addition to any voting rights provided by
                           law,  and,  if so, the terms of such  voting  rights,
                           which may be  special,  conditional  or limited or no
                           voting rights except as required by law;

                   (iii)   The  rate or  rates  and the  time or  times at which
                           dividends  and other  distributions  on the shares of
                           such  series  shall  be  paid,  the  relationship  or
                           priority of such dividends to those payable on Common
                           Stock or to other  series  of  Preferred  Stock,  and
                           whether   or  not  any   such   dividends   shall  be
                           cumulative;

                   (iv)    The amount  payable  on the shares of such  series in
                           the   event   of   the   voluntary   or   involuntary
                           liquidation, dissolution or winding up of the affairs
                           of the Corporation,  and the relative priorities,  if
                           any, to be accorded such payments in liquidation;

                    (v)    The  terms  and  conditions  upon  which  either  the
                           Corporation  may exercise a right to redeem shares of
                           such  series or upon which the holder of such  shares
                           may  exercise a right to require  redemption  of such
                           shareholder's Preferred Stock, including any premiums
                           or penalties applicable to exercise of such rights;

                   (vi)    Whether or not a sinking  fund  shall be created  for
                           the redemption of the shares of such series,  and the
                           terms and conditions of any such fund;

                  (vii)    Rights, if any, to convert any shares of such series,
                           either  into  shares  of Common  Stock or into  other
                           series of Preferred Stock and the prices, premiums or
                           penalties,  ratios and other terms  applicable to any
                           such conversion;

                 (viii)    Restrictions on acquisition,  rights of first refusal
                           or other limitations on transfer as may be applicable
                           to such series,  including any series  intended to be
                           offered to a special class or group; and

                  (ix)     Any other relative rights, preferences,  limitations,
                           qualifications  or  restrictions  on such  series  of
                           Preferred Stock, including rights and remedies in the
                           event of default in connection with dividends,  other
                           distributions or redemptions.

                  Section 3. Liquidation  Rights.  In the event of any voluntary
or involuntary  liquidation,  dissolution or winding up of the Corporation,  the
holders  of the  shares of Common  Stock  shall be  entitled,  after  payment or
provision for payment of the debts and other  liabilities of the Corporation and
any preferential amounts to be distributed to holders of the Preferred Stock and
any other class or series of stock then  outstanding  having a priority over the
Common Stock, in the event of voluntary or involuntary liquidation,  dissolution
or winding up, to share ratably in the remaining net assets of the Corporation.

                  Section 4.  Issuance  of Shares.  The Board of  Directors  has
authority to authorize and direct the issuance by the  Corporation  of shares of
Preferred  Stock  and  Common  Stock at such  times,  in such  amounts,  to such
persons,  for such  considerations and upon such terms and conditions as it may,
from  time  to  time,   determine  upon,   subject  only  to  the  restrictions,
limitations,  conditions and requirements  imposed by the Corporation Law, other
applicable law and these Articles of  Incorporation,  as the same may, from time
to time, be amended.

                  Section 5.  Distributions  Upon Shares. The Board of Directors
has authority to authorize and direct the payment of dividends and the making of
other  distributions by the Corporation in respect of the issued and outstanding
shares of Preferred Stock and Common Stock (i) at such times, in such amount and
forms, from such sources and upon such terms and conditions as it may, from time
to  time,  determine  upon,  subject  only  to  the  restrictions,  limitations,
conditions and requirements imposed by the Corporation Law, other applicable law
and these  Articles of  Incorporation,  as the same may,  from time to time,  be
amended;  and (ii) in  shares  of the same  class or  series or in shares of any
other class or series  without  obtaining  the  affirmative  vote or the written
consent of the holders of the shares of the class or series in which the payment
or distribution is to be made.

                  Section 6.  Acquisition of Shares.  The Board of Directors has
authority to authorize  and direct the  acquisition  by the  Corporation  of the
issued and outstanding shares of Preferred Stock and Common Stock at such times,
in such amounts,  from such persons, for such consideration,  from such sources,
and upon such terms and conditions as it may, from time to time, determine upon,
subject  only to the  restrictions,  limitations,  conditions  and  requirements
imposed by the  Corporation  Law,  other  applicable  law and these  Articles of
Incorporation, as the same may, from time to time, be amended.

                  Section 7. No  Pre-emptive  Rights.  The holders of the Common
Stock  and the  holders  of any  series of the  Preferred  Stock  shall  have no
pre-emptive  rights to  subscribe  to or  purchase  any shares of Common  Stock,
Preferred Stock, or other securities of the Corporation.

                  Section  8.  Record   Ownership  of  Shares  or  Rights.   The
Corporation,  to the extent  permitted  by law,  shall be  entitled to treat the
person in whose name any share or right of the  Corporation is registered on the
books of the Corporation as the owner thereof for all purposes, and shall not be
bound to  recognize  any  equitable  or any other claim to, or interest in, such
share or right on the part of any other person,  whether or not the  Corporation
shall have notice thereof.


                                   ARTICLE VI

                             Voting Rights of Shares

         The shares of the Corporation shall have the following voting rights.

                  Section 1. Common Stock.  Except as otherwise  provided by the
Corporation  Law or by these  Articles,  the record  holder of each  authorized,
issued and  outstanding  share of Common Stock shall be entitled to one (1) vote
for each such share on all matters submitted to shareholders for a vote.

                  Section 2. Preferred Stock. Except as specifically provided in
the  Corporation  Law,  holders of outstanding  shares of Preferred Stock of any
series shall have such voting  rights,  if any, as provided in the  amendment or
amendments  to these  Articles of  Incorporation  determining  the terms of such
series of Preferred Stock.





                                   ARTICLE VII

         Directors

                  Section 1. Number.  The number of directors  may be fixed from
time to time by the By-Laws of the Corporation at any number not less than three
(3). In the absence of a by-law fixing the number of directors, the number shall
be nine (9).

                  Section 2.  Qualification.  Directors shall be American 
citizens and may, but need not be, shareholders of the Corporation.

                  Section  3.  Staggered  Terms.  If there  are nine (9) or more
directors, the By-Laws of the Corporation may provide for staggering their terms
by dividing the total number of directors into two (2) or three (3) groups, with
each group containing one-half (l/2) or one-third (1/3) of the total, as near as
may be.

                  Section  4.   Removal  of   Directors.   At  any   meeting  of
shareholders  of the Corporation  called for the purpose of removing  directors,
the shareholders may remove any director for cause, by a majority vote of shares
entitled to vote,  and may remove any director  without cause by a  seventy-five
percent (75%) vote of shares  entitled to vote.  Record  holders of  outstanding
shares of Common Stock and Preferred  Stock of the  Corporation may only vote in
respect to the removal of directors elected by said class of stock.


                                  ARTICLE VIII

                      Provisions for Regulation of Business
                      and Conduct of Affairs of Corporation

                  Section  1.   Meetings  of   Shareholders.   Meetings  of  the
shareholders of the Corporation  shall be held at such place,  within or without
the State of Indiana,  as may be specified in the By-Laws of the  Corporation or
in the respective  notices or waivers of notice thereof.  Any action required or
permitted to be taken at a meeting of the  shareholders  may be taken  without a
meeting if a consent in writing  setting  forth the action so taken is signed by
all of the  shareholders  entitled to vote with respect thereto and such written
consent is filed with the minutes of the proceedings of the shareholders.

                  Section 2. Meetings of Directors. Meetings of the directors of
the  Corporation  shall be held at such  place,  within or without  the State of
Indiana,  as may  be  specified  in the  By-Laws  of the  Corporation  or in the
respective  notices,  or waivers  of notice,  thereof.  Any action  required  or
permitted  to be taken at any  meeting  of the  Board  of  Directors,  or of any
committee  thereof,  may be taken  without a meeting  if a  consent  in  writing
setting  forth the  action so taken is signed by all  members of the Board or of
such  committee,  as the case may be, and such written consent is filed with the
minutes of the proceedings of such Board or committee.
                  Section 3. By-Laws.  The Board of Directors of the Corporation
shall  have  power,  without  the assent or vote of the  shareholders,  to make,
alter, amend or repeal the By-Laws of the Corporation,  but the affirmative vote
of two-thirds (2/3) of the members of the Board of Directors,  if it consists of
more  than  nine (9)  members,  or a  majority  of the  members  of the Board of
Directors,  if it  consists  of nine (9) or fewer  members,  for the time being,
shall be necessary to effect any alteration, amendment or repeal.

                  Section 4. Special  Transactions.  The affirmative vote of the
holders of not less than three-fourths (3/4) of all outstanding shares of Common
Stock of this  Corporation  shall be required  for the  approval of any proposal
that (1) this  Corporation  merge or consolidate  with any other  corporation or
entity if such other  corporation or entity or any of its affiliates,  singly or
in the aggregate,  are directly or indirectly the beneficial owners of more than
five  percent  (5%) of the total  outstanding  shares  of  Common  Stock of this
Corporation  (such other  corporation or entity being herein  referred to as the
"Related  Corporation");  or that (2) this  Corporation  sell or exchange all or
substantially all of its assets or business to or with such Related Corporation;
or that (3) this  Corporation  issue or deliver any stock or other securities of
its issue in exchange or payment for any  properties  or assets of such  Related
Corporation or securities issued by such Related Corporation;  or (4) involves a
merger  of  any  affiliate  of  this  Corporation  with  or  into  such  Related
Corporation  or any of  its  affiliates,  and to  effect  such  transaction  the
approval of  shareholders  of this  Corporation  is required by law; or (5) this
Corporation be merged or consolidated  into a subsidiary  which does not have in
its  Articles of  Incorporation  the  provisions  contained  in this  Section 7;
provided,  however,  that the  foregoing  shall  not  apply to any such  merger,
consolidation,  sale or  exchange,  or  issuance  or  delivery of stock or other
securities  which was (i)  approved  by  resolution  of the  Board of  Directors
adopted by the affirmative  vote of not less than  two-thirds  (2/3) of the then
authorized  number of directors;  or (ii) approved by resolution of the Board of
Directors prior to the acquisition of the beneficial ownership of more than five
percent (5%) of the total voting power of all  outstanding  shares of the voting
stock of the Corporation by such Related Corporation and its affiliates. For the
purposes  hereof,  an  "affiliate"  is  any  person  (including  a  corporation,
partnership,  trust,  estate or individual) who directly,  or indirectly through
one or more  intermediaries,  controls,  or is controlled by, or is under common
control with, the person specified; "control" means the possession,  directly or
indirectly,  of the power to direct or cause the direction of the management and
policies of a person,  whether  through the ownership of voting  securities,  by
contract or otherwise;  and in computing the  percentage of  outstanding  Common
Stock  beneficially  owned by any person the shares  outstanding  and the shares
owned  shall  be  determined  as of the  record  date  fixed  to  determine  the
stockholders  entitled to vote or express consent with respect to such proposal.
The  shareholder  vote, if any,  required for mergers,  consolidation,  sales or
exchanges  of assets or  issuances of stock or other  securities  not  expressly
provided  for  in  this  Article,  shall  be  such  as may  be  required  by the
Corporation Law.

                  Section  5.  Amendment  of  Articles  of  Incorporation.   The
Corporation  reserves  the  right to  increase  or  decrease  the  number of its
authorized  shares, or any class or series thereof,  and to reclassify the same,
and to amend, alter, change or repeal any provisions contained in these Articles
of  Incorporation  or in any  amendment  hereto,  or to add any provision to the
Articles  of  Incorporation  or to any  amendment  hereto,  in the manner now or
hereafter prescribed or permitted by the Corporation Law or any other applicable
laws, and all rights and powers conferred upon shareholders in these Articles of
Incorporation, or any amendment hereto, are granted subject to this reservation.
Notwithstanding  the  foregoing,  however,  Article VII and  Sections 3 and 4 of
Article  VIII hereof may not be amended or  appealed in any respect  unless such
repeal or amendment is approved by the affirmative vote of  three-fourths  (3/4)
of the outstanding shares of Common Stock.


                                  Exhibit 10.52




                      1997 STOCK OPTION AND INCENTIVE PLAN



                              HURCO COMPANIES, INC.
                      1997 STOCK OPTION AND INCENTIVE PLAN

                  1. Plan  Purpose.  The  purpose of the Plan is to promote  the
long-term interests of the Company and its shareholders by providing a means for
attracting  and  retaining  officers  and key  employees  of the Company and its
Affiliates.

                  2.  Definitions.  The following  definitions are applicable to
the Plan:

                  "Affiliate" -- means any "parent  corporation"  or "subsidiary
corporation"  of the Company as such terms are defined in Code  sections  424(e)
and (f), respectively.

                  "Affiliated  SAR" -- means a SAR that is granted in connection
with a related Option, and which automatically will be deemed to be exercised at
the same time that the related  Option is exercised.  The deemed  exercise of an
Affiliated SAR shall not necessitate a reduction in the number of Shares subject
to the related Option.

                  "Award" -- means the grant by the Committee of Incentive Stock
Options,  Non-Qualified  Stock Options,  SARs,  Restricted  Shares,  Performance
Shares or any combination thereof, as provided in the Plan.

                  "Award Agreement" -- means the written agreement setting forth
the terms and provisions applicable to each Award granted under the Plan.

                  "Base  Price" -- means the amount over which the  appreciation
in value of a Share will be measured upon exercise of an SAR.

                  "Board" -- means the Board of Directors of the Company.

                  "Change in Control" -- means each of the events  specified  in
the  following  clauses (i) through  (iii):  (i) any third  person,  including a
"group" as defined in Section 13(d)(3) of the Exchange Act after the date of the
adoption of the Plan by the Board,  first becomes the beneficial owner of shares
of the Company  with  respect to which 25% or more of the total  number of votes
for the election of the Board of Directors of the Company may be cast, (ii) as a
result of, or in connection with, any cash tender offer,  exchange offer, merger
or  other  business  combination,  sale of  assets  or  contested  election,  or
combination  of the  foregoing,  the persons who were  directors  of the Company
shall cease to constitute a majority of the Board of Directors of the Company or
(iii) the  shareholders  of the Company  shall  approve an  agreement  providing
either for a  transaction  in which the Company will cease to be an  independent
publicly owned entity or for a sale or other disposition of all or substantially
all the assets of the Company; provided,  however, that the occurrence of any of
such  events  shall  not be  deemed  a  Change  in  Control  if,  prior  to such
occurrence,  a resolution specifically approving such occurrence shall have been
adopted by at least a majority of the Board of Directors of the Company.

                  "Code" -- means the Internal Revenue Code of 1986, as amended.
                                                      
                 "Committee"  -- means  the  Committee  appointed  by the Board
pursuant to Section 3 of the Plan.

                  "Company" -- means Hurco Companies, Inc., an Indiana
 corporation.

                  "Continuous  Service" -- means the absence of any interruption
or termination of service as an Employee of the Company or an Affiliate. Service
shall not be considered interrupted in the case of sick leave, military leave or
any  other  leave  of  absence  approved  by the  Company  or in the case of any
transfer between the Company and an Affiliate or any successor to the Company.

                  "Director" -- means any individual who is a member of the
Board.

                  "Disability"  --  means  total  and  permanent  disability  as
determined by the Committee pursuant to Code section 22(e)(3).

                  "Employee" --  means any person,  including an officer or
Director,  who is employed by the Company or
any Affiliate.

                  "Exchange Act" -- means the Securities Exchange Act of 1934, 
as amended.

                  "Exercise  Price"  -- means  the  price per Share at which the
Shares subject to an Option may be purchased upon exercise of the Option.

                  "Freestanding SAR" -- means a SAR that is granted
independently of any Option.

                  "Incentive Stock Option" -- means an option to purchase Shares
granted by the Committee  pursuant to the terms of the Plan which is intended to
qualify under Code section 422.

                  "Market  Value" -- means the last  reported  sale price on the
date in question  (or, if there is no  reported  sale on such date,  on the last
preceding  date on  which  any  reported  sale  occurred)  of one  Share  on the
principal exchange on which the Shares are listed for trading,  or if the Shares
are not listed for trading on any  exchange,  the average  trading  price of one
share on the date in question as reported on the Nasdaq  National  Market or any
similar  system  then in use,  or, if the  Shares  are not  listed on the Nasdaq
National Market,  the mean between the closing high bid and low asked quotations
of one Share on the date in question as reported by Nasdaq or any similar system
then in use, or, if no such  quotations are available,  the fair market value on
such date of one Share as the Committee shall determine.

                  "Non-Qualified  Stock  Option" -- means an option to  purchase
Shares granted by the Committee  pursuant to the terms of the Plan, which option
is not intended to qualify under Code section 422.

                  "Option" -- means an Incentive Stock Option or a Non-Qualified
 Stock Option.
                  "Participant"  -- means any Employee of the Company or any 
Affiliate who is selected by the Committee to receive an Award.

                  "Performance Cycle" -- means the period of time,  designated
by the Committee,  over which Performance Shares may be earned.

                  "Performance  Shares"  -- means  Shares  awarded  pursuant  to
Section 12 of the Plan.

                  "Plan" -- means the Hurco Companies, Inc., 1997 Stock Option 
and Incentive Plan.

                  "Reorganization"  -- means the  liquidation  or dissolution of
the Company or any merger,  consolidation  or  combination of the Company (other
than a  merger,  consolidation  or  combination  in  which  the  Company  is the
continuing  entity  and which does not result in the  outstanding  Shares  being
converted into or exchanged for different securities,  cash or other property or
any combination thereof).

                  "Restricted  Period" -- means the period of time  selected  by
the Committee for the purpose of  determining  when  restrictions  are in effect
under Section 10 of the Plan with respect to Restricted Shares.

                  "Restricted   Shares"   --  means   Shares   which  have  been
contingently   awarded  to  a  Participant  by  the  Committee  subject  to  the
restrictions referred to in Section 10 of the Plan, so long as such restrictions
are in effect.

                  "Retirement" -- means a Participant's  cessation of Continuous
Service  on or after  age 65 or such  other  age as set  forth in the  Company's
retirement policy as in effect from time to time.

                  "Stock Appreciation  Right" or "SAR" -- means an Award,  
granted alone or in connection with a related Option, pursuant to Section 11 of
the Plan.

                  "Securities Act" -- means the Securities Act of 1933, as 
amended.

                  "Shares" -- means the shares of common stock, no par value, 
of the Company.

                  "Tandem SAR" -- means a SAR that is granted in connection with
a related Option, the exercise of which shall require forfeiture of the right to
purchase an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the same extent).

                  3.  Administration.  The  Plan  shall be  administered  by the
Committee, which shall consist of two or more members of the Board, each of whom
shall be a "non-employee  director" as provided under Rule 16b-3 of the Exchange
Act,  and an "outside  director"  as provided  under Code  section  162(m).  The
members of the Committee  shall be appointed by the Board.  Except as limited by
the express  provisions of the Plan, the Committee  shall have sole and complete
authority  and  discretion  to (a) select  Participants  and grant  Awards;  (b)
determine  the number of Shares to be subject to types of Awards  generally,  as
well as to individual Awards granted under the Plan; (c) determine the terms and
conditions  upon which Awards shall be granted under the Plan; (d) prescribe the
form and terms of Award Agreements; (e) establish procedures and regulations for
the  administration  of the  Plan;  (f)  interpret  the  Plan;  and (g) make all
determinations deemed necessary or advisable for the administration of the Plan.

                  A majority of the Committee shall constitute a quorum, and the
acts of a majority  of the  members  present at any meeting at which a quorum is
present,  or acts approved in writing by all members of the Committee  without a
meeting,  shall be acts of the Committee.  All determinations and decisions made
by the  Committee  pursuant  to the  provisions  of the  Plan  shall  be  final,
conclusive, and binding on all persons, and shall be given the maximum deference
permitted by law.

                  4.  Participants.  The  Committee may select from time to time
Participants in the Plan from those officers and key Employees of the Company or
its  Affiliates  who, in the opinion of the  Committee,  have the  capacity  for
contributing  in a  substantial  measure to the  successful  performance  of the
Company or its Affiliates.

                  5. Shares Subject to Plan,  Limitations on Grants and Exercise
Price. Subject to adjustment by the operation of Section 13 hereof:

                           (a) The maximum  number of Shares which may be issued
                  with respect to Awards made under the Plan is 500,000  Shares.
                  The Shares with  respect to which Awards may be made under the
                  Plan may either be authorized and unissued  shares or unissued
                  shares heretofore or hereafter reacquired and held as treasury
                  shares. Any Award which expires,  terminates or is surrendered
                  for cancellation or with respect to Restricted Shares which is
                  forfeited (so long as any cash  dividends  paid on such Shares
                  are also  forfeited),  may be subject to new Awards  under the
                  Plan  with  respect  to the  number  of  Shares  as to which a
                  termination or forfeiture has occurred.

                           (b) The number of Shares  which may be granted  under
                  the Plan to any Participant  during the term of the Plan under
                  all forms of Awards shall not exceed 100,000 Shares.

                           (c)  Notwithstanding  any other  provision  under the
                  Plan,  the Exercise  Price for any Incentive  Stock Option and
                  the Base Price for any  Tandem or  Affiliated  SAR  granted in
                  connection  with an Incentive  Stock Option  awarded under the
                  Plan may not be less than the  Market  Value of the  Shares on
                  the date of grant.

                  6. General  Terms and  Conditions  of Options.  The  Committee
shall have full and  complete  authority  and  discretion,  except as  expressly
limited by the Plan, to grant Options and to prescribe the terms and  conditions
(which need not be identical  among  Participants)  of the Options.  Each Option
shall be evidenced by an Award  Agreement that shall  specify:  (a) the Exercise
Price,  (b) the number of Shares subject to the Option,  (c) the expiration date
of the Option,  (d) the  manner,  time and rate  (cumulative  or  otherwise)  of
exercise  of the  Option,  (e) the  restrictions,  if any, to be placed upon the
Option or upon Shares which may be issued upon  exercise of the Option,  (f) the
conditions,  if any, under which a Participant  may transfer or assign  Options,
and (g) any other terms and conditions as the Committee, in its sole discretion,
shall  determine.  The  Committee  may, as a condition  of granting  any Option,
require that a  Participant  agree to  surrender  for  cancellation  one or more
Options previously granted to such Participant.

                  7.       Exercise of Options.

                           (a)  Except  as  provided  in  Section  16, an Option
                  granted  under  the  Plan  shall  be  exercisable  during  the
                  lifetime  of the  Participant  to whom such Option was granted
                  only by such Participant,  and except as provided in Section 8
                  of the Plan, no Option may be exercised unless at the time the
                  Participant   exercises  the  Option,   the   Participant  has
                  maintained  Continuous  Service since the date of the grant of
                  the Option.

                           (b)  To  exercise  an  Option  under  the  Plan,  the
                  Participant must give written notice to the Company specifying
                  the number of Shares  with  respect  to which the  Participant
                  elects to exercise  the Option  together  with full payment of
                  the Exercise Price.  The date of exercise shall be the date on
                  which the notice is  received by the  Company.  Payment may be
                  made either (i) in cash (including  check, bank draft or money
                  order),   (ii)  by  tendering  Shares  already  owned  by  the
                  Participant  and having a Market Value on the date of exercise
                  equal to the  Exercise  Price,  (iii) by  requesting  that the
                  Company  withhold  Shares issuable upon exercise of the Option
                  having a Market Value equal to the Exercise  Price, or (iv) by
                  any  other  means  determined  by the  Committee  in its  sole
                  discretion.

                  8.  Termination  of  Options.  Unless  otherwise  specifically
provided by the  Committee  in the Award  Agreement  or any  amendment  thereto,
Options shall terminate as provided in this Section.

                           (a) Unless sooner  terminated under the provisions of
                  this Section,  Options shall expire on the earlier of the date
                  specified in the Award Agreement or the expiration of ten (10)
                  years from the date of grant.

                           (b) If the  Continuous  Service of a  Participant  is
                  terminated for cause,  or voluntarily by the  Participant  for
                  any reason other than death,  Disability  or  Retirement,  all
                  rights  under any  Options  granted to the  Participant  shall
                  terminate  immediately  upon the  Participant's  cessation  of
                  Continuous Service.

                           (c) If the  Continuous  Service of a  Participant  is
                  terminated  by  reason  of  Retirement  or  terminated  by the
                  Company   without   cause,   the   Participant   may  exercise
                  outstanding  Options to the extent  that the  Participant  was
                  entitled to exercise  the Options at the date of  cessation of
                  Continuous  Service,  but only  within the period of three (3)
                  months immediately  succeeding the Participant's  cessation of
                  Continuous  Service,  and in no  event  after  the  applicable
                  expiration dates of the Options.

                           (d)  In  the  event  of the  Participant's  death  or
                  Disability,  the Participant or the Participant's beneficiary,
                  as the case may be, may  exercise  outstanding  Options to the
                  extent that the  Participant  was  entitled  to  exercise  the
                  Options at the date of cessation of  Continuous  Service,  but
                  only within the one-year  period  immediately  succeeding  the
                  Participant's  cessation  of  Continuous  Service by reason of
                  death or  Disability,  and in no event  after  the  applicable
                  expiration date of the Options.

                  9.  Incentive  Stock Options.  Incentive  Stock Options may be
granted only to  Participants  who are Employees.  Any provisions of the Plan to
the contrary  notwithstanding,  (a) no  Incentive  Stock Option shall be granted
more than ten years  from the  earlier  of the date the Plan is  adopted  by the
Board of Directors of the Company or approved by the Company's Shareholders, (b)
no Incentive Stock Option shall be exercisable more than ten years from the date
the Incentive  Stock Option is granted,  (c) the Exercise Price of any Incentive
Stock  Option shall not be less than the Market Value per Share on the date such
Incentive  Stock Option is granted,  (d) any Incentive Stock Option shall not be
transferable  by the  Participant to whom such Incentive Stock Option is granted
other  than  by will or the  laws of  descent  and  distribution  and  shall  be
exercisable during such Participant's lifetime only by such Participant,  (e) no
Incentive  Stock Option shall be granted  which would  permit a  Participant  to
acquire,  through the exercise of Incentive  Stock Options in any calendar year,
under all plans of the Company and its  Affiliate,  Shares  having an  aggregate
Market Value  (determined as of the time any Incentive  Stock Option is granted)
in excess of $100,000 (determined by assuming that the Participant will exercise
each  Incentive  Stock  Option  on the  date  that  such  Option  first  becomes
exercisable), and (f) no Incentive Stock Option may be exercised more than three
(3) months after the Participant's cessation of Continuous Service (one (1) year
in the case of Disability) for any reason other than death.  Notwithstanding the
foregoing, in the case of any Participant who, at the date of grant, owns shares
possessing  more than 10% of the total  combined  voting power of all classes of
capital  stock  of the  Company  or any  Affiliate,  the  Exercise  Price of any
Incentive Stock Option shall not be less than 110% of the Market Value per Share
on the date such  Incentive  Stock  Option is granted and such  Incentive  Stock
Option  shall  not be  exercisable  more  than  five  years  from the date  such
Incentive Stock Option is granted.
                  10. Terms and Conditions of Restricted  Shares.  The Committee
shall have full and complete authority,  subject to the limitations of the Plan,
to grant Awards of Restricted  Shares and to prescribe the terms and  conditions
(which  need not be  identical  among  Participants)  in respect of the  Awards.
Unless the Committee otherwise specifically provides in the Award Agreement,  an
Award of Restricted Shares shall be subject to the following provisions:

                           (a) At the time of an Award of Restricted Shares, the
                  Committee  shall  establish for each  Participant a Restricted
                  Period  during  which,  or at the  expiration  of  which,  the
                  Restricted Shares shall vest. Subject to paragraph (e) of this
                  Section,  the  Participant  shall  have  all the  rights  of a
                  shareholder with respect to the Restricted  Shares,  including
                  but not limited to, the right to receive all dividends paid on
                  the  Restricted  Shares  and the right to vote the  Restricted
                  Shares.  The  Committee  shall  have  the  authority,  in  its
                  discretion,  to accelerate the time at which any or all of the
                  restrictions shall lapse with respect to any Restricted Shares
                  prior to the expiration of the Restricted Period, or to remove
                  any or all  restrictions,  whenever it may determine that such
                  action is  appropriate  by reason of changes in applicable tax
                  or other  laws or other  changes  in  circumstances  occurring
                  after the commencement of the Restricted Period.

                           (b) If a Participant  ceases  Continuous  Service for
                  any reason, including death, before the Restricted Shares have
                  vested,  a  Participant's  rights with respect to the unvested
                  portion  of  the  Restricted  Shares  shall  terminate  and be
                  returned to the Company.
                           (c) Each certificate  issued in respect to Restricted
                  Shares shall be registered in the name of the  Participant and
                  deposited  by the  Participant,  together  with a stock  power
                  endorsed  in  blank,  with  the  Company  and  shall  bear the
                  following (or a similar) legend:

                           "The  transferability  of  this  certificate  and the
                  shares  represented  hereby  are  subject  to  the  terms  and
                  conditions (including  forfeiture) contained in the 1997 Stock
                  Option and Incentive  Plan of Hurco  Companies,  Inc.,  and an
                  Award Agreement  entered into between the registered owner and
                  Hurco  Companies,  Inc. Copies of the Plan and Award Agreement
                  are on file in the office of the Secretary of the Company."

                           (d) At the time of an Award of Restricted Shares, the
                  Participant  shall  enter  into an  Award  Agreement  with the
                  Company in a form  specified by the Committee  agreeing to the
                  terms and conditions of the Award.


                           (e) At the time of an Award of Restricted Shares, the
                  Committee may, in its  discretion,  determine that the payment
                  to the  Participant  of  dividends  declared  or  paid  on the
                  Restricted  Shares  by the  Company,  or a  specified  portion
                  thereof,  shall be deferred  until the earlier to occur of (i)
                  the lapsing of the  restrictions  imposed  with respect to the
                  Restricted  Shares,  or (ii) the forfeiture of such Restricted
                  Shares under paragraph (b) of this Section,  and shall be held
                  by the Company for the account of the  Participant  until such
                  time. In the event of deferral, there shall be credited at the
                  end of each year (or portion  thereof)  interest on the amount
                  of the  account  at the  beginning  of the  year at a rate per
                  annum as the  Committee,  in its  discretion,  may  determine.
                  Payment of deferred dividends, together with accrued interest,
                  shall  be  made  upon  the  earlier  to  occur  of the  events
                  specified in (i) and (ii) of this paragraph.

                           (f) At the expiration of the restrictions  imposed by
                  this Section,  the Company shall  redeliver to the Participant
                  the  certificate(s) and stock power deposited with the Company
                  pursuant  to  paragraph  (c) of this  Section  and the  Shares
                  represented  by  the  certificate(s)  shall  be  free  of  all
                  restrictions.

                           (g)      No Award of  Restricted  Shares may be 
assigned,  transferred  or encumbered.

                  11. Grant of SARs.  Subject to the terms and conditions of the
Plan, a SAR Award may be made to  Participants at any time and from time to time
as shall be determined by the Committee,  in its sole discretion.  The Committee
may grant Affiliated SARs,  Freestanding  SARs,  Tandem SARs, or any combination
thereof as follows:

                           (a) The Committee,  subject to the limitations of the
                  Plan, shall have complete discretion to determine the Exercise
                  Price and other terms and conditions of SARs granted under the
                  Plan.  Each SAR Award shall be evidenced by an Award Agreement
                  specifying  the terms and  conditions of the Award,  including
                  its term, the Base Price and the conditions of exercise.

                           (b) The Base Price of Shares with respect to a Tandem
                  or Affiliated  SAR Award shall equal the Exercise Price of the
                  Shares under the related Option.

                           (c) Tandem SARs may be  exercised  for all or part of
                  the Shares subject to the related Option upon the surrender of
                  the right to exercise  the  equivalent  portion of the related
                  Option. A Tandem SAR may be exercised only with respect to the
                  Shares for which its related Option is then exercisable.  With
                  respect  to  a  Tandem  SAR  granted  in  connection  with  an
                  Incentive  Stock  Option:  (i) the Tandem SAR shall  expire no
                  later than the  expiration of the underlying  Incentive  Stock
                  Option;  (ii) the  value of the  payout  with  respect  to the
                  Tandem  SAR  shall  be for no more  than one  hundred  percent
                  (100%) of the  difference  between the  Exercise  Price of the
                  underlying  Incentive Stock Option and the Market Value of the
                  Shares subject to the underlying Incentive Stock Option at the
                  time the  Tandem  SAR is  exercised;  and (iii) the Tandem SAR
                  shall be exercisable  only when the Market Value of the Shares
                  subject to the  Incentive  Stock  Option  exceeds the Exercise
                  Price of the Incentive Stock Option.

                           (d) Upon  exercise of a SAR, a  Participant  shall be
                  entitled  to  receive  payment  from the  Company in an amount
                  determined by multiplying:

                                    (i) The difference  between the Market Value
                           of a Share  on the  date of  exercise  over  the Base
                           Price; times

                                    (ii) The  number of Shares  with  respect to
                           which the SAR Award is exercised.

                           At the discretion of the Committee, payment for a SAR
                  may be in cash, Shares or a combination thereof.

                  12. Performance Shares. The Committee, in its sole discretion,
may from  time to time  authorize  the  grant  of  Performance  Shares  upon the
achievement of performance goals (which may be cumulative and/or alternative) as
may be  established,  in  writing,  by the  Committee  based  on any  one or any
combination  of the following  business  criteria:  (a) earnings per Share;  (b)
return on equity;  (c) return on assets;  (d)  operating  income;  or (e) Market
Value per Share.  At the time as it is certified,  in writing,  by the Committee
that the  performance  goals  established by the Committee have been attained or
otherwise  satisfied within the Performance Cycle, the Committee shall authorize
the payment of cash in lieu of Performance Shares or the issuance of Performance
Shares  registered in the name of the Participant,  or a combination of cash and
Shares.  The grant of an Award of  Performance  Shares  shall be evidenced by an
Award  Agreement  containing the terms and conditions of the Award as determined
by the Committee. To the extent required under Code Section 162(m), the business
criteria under which  performance goals are determined by the Committee shall be
resubmitted to shareholders  for reapproval no later than the first  shareholder
meeting that occurs in the fifth year  following the year in which  shareholders
previously approved the Plan.

                  If the Participant ceases Continuous Service before the end of
a Performance Cycle for any reason other than Retirement,  Disability, or death,
the Participant shall forfeit all rights with respect to any Performance  Shares
that were being earned during the Performance Cycle. The Committee,  in its sole
discretion,  may establish  guidelines  providing  that if a Participant  ceases
Continuous  Service  before  the  end  of  a  Performance  Cycle  by  reason  of
Retirement,  Disability,  or  death,  the  Participant  shall be  entitled  to a
prorated  payment with respect to any Performance  Shares that were being earned
during the Performance Cycle.

                  13. Adjustments Upon Changes in  Capitalization.  In the event
of any change in the outstanding  Shares subsequent to the effective date of the
Plan by reason  of any  reorganization,  recapitalization,  stock  split,  stock
dividend, combination or exchange of shares, merger, consolidation or any change
in the  corporate  structure  or Shares of the  Company,  the maximum  aggregate
number and class of shares as to which Awards may be granted  under the Plan and
the number and class of shares with  respect to which  Awards  theretofore  have
been granted under the Plan shall be appropriately  adjusted by the Committee to
prevent the dilution or diminution of Awards. The Committee's determination with
respect to any adjustments  shall be conclusive.  Any shares or other securities
received, as a result of any of the foregoing,  by a Participant with respect to
Restricted   Shares  shall  be  subject  to  the  same   restrictions   and  the
certificate(s)  or other  instruments  representing  or evidencing the shares or
other  securities shall be legended and deposited with the Company in the manner
provided in Section 10 of this Agreement.

                  14. Effect of Reorganization. Unless otherwise provided by the
Committee in the Award Agreement, Awards will be affected by a Reorganization as
follows:

                           (a)  If  the   Reorganization  is  a  dissolution  or
                  liquidation  of the  Company  then  (i)  the  restrictions  on
                  Restricted Shares shall lapse and (ii) each outstanding Option
                  or SAR Award shall terminate, but each Participant to whom the
                  Option or SAR was  granted  shall have the right,  immediately
                  prior to the dissolution or liquidation to exercise the Option
                  or SAR in full,  notwithstanding  the provisions of Section 9,
                  and the Company  shall notify each  Participant  of such right
                  within a reasonable period of time prior to any dissolution or
                  liquidation.

                           (b)   If   the   Reorganization   is  a   merger   or
                  consolidation,  other  than a Change  in  Control  subject  to
                  Section  15 of  this  Plan,  upon  the  effective  date of the
                  Reorganization  (i) each Participant  shall be entitled,  upon
                  exercise of an Option in accordance  with all of the terms and
                  conditions of the Plan,  to receive in lieu of Shares,  shares
                  or other  securities or consideration as the holders of Shares
                  shall be  entitled  to  receive  pursuant  to the terms of the
                  Reorganization;  and (ii)  each  holder of  Restricted  Shares
                  shall  receive  shares or other  securities  as the holders of
                  Shares received which shall be subject to the restrictions set
                  forth in Section 10 unless the Committee accelerates the lapse
                  of  such   restrictions  and  the   certificate(s)   or  other
                  instruments  representing  or  evidencing  the shares or other
                  securities shall be legended and deposited with the Company in
                  the manner provided in Section 10 of this Plan.

                  The  adjustments  contained  in this Section and the manner of
application of such provisions shall be determined solely by the Committee.

                  15. Effect of Change of Control.  If the Continuous Service of
any Participant of the Company or any Affiliate is involuntarily terminated, for
whatever  reason,  at any time within  twelve  months after a Change in Control,
unless the Committee shall have otherwise  provided in the Award Agreement,  (a)
any Restricted  Period with respect to an Award of Restricted Shares shall lapse
upon the  Participant's  termination  of  Continuous  Service  and all Shares of
Restricted Shares shall become fully vested in the Participant to whom the award
was made; and (b) with respect to Performance  Shares,  the Participant shall be
entitled  to receive a prorata  payment  of Shares to the same  extent as if the
Participant  ceases Continuous  Service by reason of Retirement under Section 12
of the Plan. If a tender offer or exchange  offer for Shares (other than such an
offer by the Company) is commenced, or if the event specified in clause (iii) of
the definition of a Change in Control contained in Section 2 shall occur, unless
the Committee shall have otherwise  provided in the Award Agreement,  all Option
and SAR  Awards  theretofore  granted  and not fully  exercisable  shall  become
exercisable  in  full  upon  the  happening  of  such  event  and  shall  remain
exercisable in accordance with their terms; provided, however, that no Option or
SAR shall be  exercisable  by a director  or officer of the  Company  within six
months of the date of grant of the  Option or SAR and no Option or SAR which has
previously been exercised or otherwise terminated shall become exercisable.

                  16. Assignments and Transfers.  Except as otherwise  expressly
authorized  by the  Committee in the Award  Agreement or any  amendment  thereto
during the  lifetime  of a  Participant  no Award nor any right or interest of a
Participant  in any  Award  under  the  Plan  may  be  assigned,  encumbered  or
transferred otherwise than by will or the laws of descent and distribution.

                  17.  Employee  Rights Under the Plan. No officer,  Employee or
other person shall have a right to be selected as a Participant nor, having been
so selected,  to be selected again as a Participant and no officer,  Employee or
other person shall have any claim or right to be granted an Award under the Plan
or under any other  incentive or similar  plan of the Company or any  Affiliate.
Neither  the Plan nor any  action  taken  under the Plan shall be  construed  as
giving any Employee any right to be retained in the employ of the Company or any
Affiliate.

                  18.  Delivery  and  Registration  of  Shares.   The  Company's
obligation  to deliver  Shares with respect to an Award shall,  if the Committee
requests,  be  conditioned  upon  the  receipt  of a  representation  as to  the
investment intention of the Participant to whom such Shares are to be delivered,
in such form as the  Committee  shall  determine to be necessary or advisable to
comply with the provisions of the Securities Act or any other applicable federal
or state securities laws. It may be provided that any representation requirement
shall  become  inoperative  upon a  registration  of the Shares or other  action
eliminating  the necessity of the  representation  under the  Securities  Act or
other state  securities  laws.  The Company shall not be required to deliver any
Shares  under the Plan prior to (i) the  admission  of such Shares to listing on
any stock  exchange or system on which  Shares may then be listed,  and (ii) the
completion of any  registration or other  qualification  of the Shares under any
state or federal law, rule or regulation,  as the Company shall  determine to be
necessary or advisable.

                  19.  Withholding  Tax.  Prior to the delivery of any Shares or
cash pursuant to an Award,  the Company shall have the right and power to deduct
or  withhold,  or require the  Participant  to remit to the  Company,  an amount
sufficient  to  satisfy  all  applicable  tax  withholding   requirements.   The
Committee,  in its sole  discretion  and pursuant to such  procedures  as it may
specify from time to time, may permit or require a Participant to satisfy all or
part of the tax  withholding  obligations  in  connection  with an  Award by (a)
having the Company withhold otherwise  deliverable  Shares, or (b) delivering to
the  Company  Shares  already  owned  having a Market  Value equal to the amount
required to be  withheld.  The amount of the  withholding  requirement  shall be
deemed to include any amount which the Committee  determines,  not to exceed the
amount  determined by using the maximum federal,  state or local marginal income
tax rates  applicable to the  Participant  with respect to the Award on the date
that the amount of tax to be withheld is to be  determined  for these  purposes.
For these purposes, the value of the Shares to be withheld or delivered shall be
equal to the  Market  Value as of the date  that the taxes  are  required  to be
withheld.

                  20. Termination, Amendment and Modification of Plan. The Board
may at any time terminate,  and may at any time and from time to time and in any
respect  amend  or  modify,  the  Plan;  provided  however,  that to the  extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act or Code
section 422 (or any other applicable law or regulation,  including  requirements
of any stock exchange or quotation system on which the Company's common stock is
listed or quoted)  shareholder  approval of any Plan amendment shall be obtained
in  the  manner  and to the  degree  as is  required  by the  applicable  law or
regulation; and provided further, that no termination, amendment or modification
of the Plan shall in any manner affect any Award theretofore granted pursuant to
the Plan without the consent of the Participant to whom the Award was granted or
transferee of the Award.

                  21.  Effective  Date and Term of Plan.  The Plan shall  become
effective upon its adoption by the Board of Directors,  subject to  ratification
by the  shareholders  of the  Company  at the next  annual  meeting,  and  shall
continue  in effect  for a term of ten years  from the date of  adoption  by the
Board of Directors unless sooner terminated under Section 20 of the Plan.

                  22.  Governing  Law.  The Plan and Award  Agreements  shall be
construed in accordance with and governed by the laws of the State of Indiana.

                  23.  Awards to Foreign  Nationals  and  Employees  Outside the
United States.  To the extent the Committee  deems it necessary,  appropriate or
desirable  to comply with  foreign law or practice and to further the purpose of
this Plan, the Committee may, without amending this Plan, (a) establish  special
rules  applicable to Awards granted to Participants  who are foreign  nationals,
are employed  outside the United States,  or both,  including  rules that differ
from those set forth in this Plan, and (b) grant Awards to such  Participants in
accordance with those rules.

                      Adopted by the Board of Directors of
                                            Hurco Companies, Inc.
                                            as of March 6, 1997


                         Adopted by the Shareholders of
                                            Hurco Companies, Inc.
                                            as of May 29, 1997





                                   Exhibit 11


                       COMPUTATION OF PER SHARE EARNINGS




                                    Exhibit 11
                        Statement Re: Computation of Per Share Earnings

                                Three Months Ended         Nine Months Ended
                                      July 31,                  July 31,
                               -------------------        ------------------   
                               1997           1996        1997         1996
                              ------        ------       ------       ------  
                          Fully           Fully           Fully           Fully
                 Primary Diluted Primary Diluted Primary Diluted Primary Diluted

(in thousands, except per share amount)                                  

Net income .............   $2,534 $2,534  $957  $957 $9,750 $9,750 $2,554 $2,554

Weighted average shares
  outstanding ..........    6,536  6,536 5,759 5,759  6,535  6,535  5,538  5,538

Assumed issuances under
  stock options plans ..      154    164   161   161    140    164    141    141
                            -----  ----- ----- -----  -----  -----  -----  -----
                            6,690  6,700 5,920 5,920  6,675  6,699  5,679  5,679
                            =====  ===== ===== =====  =====  =====  =====  =====

Earnings per common share   $0.38  $0.38 $0.16 $0.16  $1.46  $1.46  $0.45  $0.45
                            =====  ===== ===== =====  =====  =====  =====  =====

 


5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT 10-Q FOR THE PERIOD ENDED JULY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000315374 SONJA BUCKLES 1,000 US DOLLARS 9-MOS OCT-31-1997 NOV-1-1996 JUL-31-1997 1 2,117 0 15,873 733 25,838 43,831 20,475 11,122 59,994 20,228 0 0 0 654 24,762 59,994 69,495 69,495 48,992 48,992 (7,312) 0 1,533 10,667 917 9,750 0 0 0 9,750 1.46 1.46