U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended February 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-10984-LA
TUFCO INTERNATIONAL, INC.
(Name of Small Business Issuer as specified in its charter)
Nevada 95-4071623
----------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Pioneer Lane, Gentry, AR 72734
-----------------------------------------
(Address of principal executive offices)
Registrant's telephone no., including area code: (501) 736-2201
---------------------------------------------------------------
No Change
----------------------------------
Former name, former address, and former fiscal year, if changed
since last report.
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No .
Common Stock outstanding at June 30, 1996 - 7,777,800 shares of $.001 par
value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
[PAGE]
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
TUFCO INTERNATIONAL, INC.
For the Quarter Ended February 29, 1996.
The following financial statements and schedules of the registrant and
its consolidated subsidiaries are submitted herewith:
PART I - FINANCIAL INFORMATION
Page of
Form 10-Q
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet--February 29, 1996 . . 3
Condensed Consolidated Statements of Income for the three
months and nine months ended February 29, 1996 and
February 28, 1995 . . . . . . . . . . . . . . . . . . . . . 5
Condensed Consolidated Statements of Cash Flows--for the
three months and nine months ended February 29, 1996 and
February 28, 1995 . . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial Statements. . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . 8
PART II - OTHER INFORMATION
Page
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6(a). Exhibits 10
Item 6(b). Reports on Form 8-K 10
[PAGE]
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
FEBRUARY 29, 1996
Unaudited
ASSETS
Current Assets:
Cash $ 9,667
Accounts and notes receivable, less
allowance for doubtful accounts
of $175,000
Trade 938,524
Affiliates 770,609
Inventories 517,064
Deferred income tax benefits 73,989
Other current assets 86,981
----------
2,396,834
----------
Property and equipment 1,119,652
Accumulated depreciation 395,892
----------
723,760
----------
Reacquired franchise territory 372,357
Accumulated amortization 211,868
----------
160,489
----------
Other assets 22,960
----------
$ 3,304,043
==========
3
[PAGE]
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 212,669
Trade accounts payable 1,191,231
Income taxes payable 311,270
Accrued expenses 75,156
----------
1,790,326
----------
Long-term debt 41,650
---------
Deferred compensation 82,683
---------
Common stockholders' equity:
Common stock, $.001 par value;
authorized 50,000,000 shares;
issued and outstanding 7,777,800
shares 7,778
Retained earnings 1,181,188
Other common stockholders equity 200,418
---------
1,389,384
---------
$ 3,304,043
=========
4
[PAGE]
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months and nine months ended February 29, 1996
and February 28, 1995
Unaudited
1996 1995
---------------------- ----------------------
3 months 9 months 3 months 9 months
--------- ---------- ---------- --------
Net Sales:
Trade $1,625,414 $ 4,077,168 $1,319,146 $3,485,968
Affiliates 464,763 1,356,422 363,798 1,105,685
---------- ----------- ---------- ---------
2,090,177 5,433,590 1,682,944 4,591,653
---------- ----------- ---------- ---------
Cost of sales 1,465,921 3,762,718 1,083,195 3,050,681
Selling expenses 163,684 509,432 190,110 556,806
General and administrative
expenses 272,807 736,473 199,342 611,181
Bad debts 125,000 125,000 115,529 115,529
Other (income) expense (9,441) (37,620) (6,119) (624)
---------- ---------- --------- ---------
2,017,971 5,096,003 1,582,057 4,333,573
---------- ---------- --------- ---------
Income (loss) before
income taxes 72,206 337,587 100,887 258,080
---------- ---------- --------- ---------
Provision (credit) for
income taxes
Current 83,378 191,135 44,923 124,950
Deferred (49,202) (53,122) (6,410) (22,142)
---------- ---------- --------- ---------
34,176 138,013 38,513 102,808
---------- ---------- --------- ---------
Net income (loss) $38,030 $199,574 $62,374 $155,272
========== ========== ========= ========
Income (loss) per share:
Net income (loss) $0.00489 $0.02566 $0.00802 $0.01996
========== ========== ======== ========
Weighted average number
of shares outstanding 7,777,800 7,777,800 7,777,800 7,777,800
========== ========== =========== ==========
5
[PAGE]
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months and nine months ended February 29, 1996
and February 28, 1995
Unaudited
1996 1995
---------------------- --------------------
3 months 9 months 3 months 9 months
--------- ---------- ---------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $65,868 $92,419 $66,589 $20,151
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sale of property
property and equipment 0 10,000 0 10,000
Proceeds from sale of reacquired
franchise territory 6,715 25,554 8,785 23,785
Purchase of property and
equipment (63,367) (89,091) (41,088) (67,540)
------- -------- -------- --------
Net cash provided by (used in)
investing activities (56,652) (53,537) (32,303) (33,755)
------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES
Principal payments on long-term
debt (8,846) (29,999) (11,606) (46,692)
Principal payments on short-
term bank notes 0 0 (20,000) (35,033)
Proceeds from stock issued for
future income rights 0 0 0 5,000
------- ------- ------- -------
Net cash used in financing
activities (8,846) (29,999) (31,606) (76,725)
------- ------- ------- -------
INCREASE (DECREASE) IN CASH 370 8,883 2,680 (90,329)
CASH, BEGINNING OF PERIOD 9,297 784 1,058 94,067
------- ------ ------- -------
CASH, END OF PERIOD $9,667 $9,667 $ 3,738 $3,738
======= ======= ======= =======
6
[PAGE]
TUFCO INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
NOTE 1: BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are presented in
accordance with the requirements of Form 10-QSB and consequently do not include
all of the disclosures normally required by generally accepted accounting
principles for complete financial statements or those normally made in the
Company's annual Form 10-KSB filing. Accordingly, the reader of these
financial statements may wish to refer to the Company's financial statements
for the year ended May 31, 1995 included in the Company's Form 10-KSB for
further information.
The financial information has been prepared in accordance with generally
accepted accounting principles and has not been audited. In the opinion of
management, the information presented reflects all adjustments necessary for a
fair statement of interim results. All such adjustments are of a normal and
recurring nature. The condensed consolidated results of operations for the
three months and nine months ended February 29, 1996 are not necessarily
indicative of the operating results for the full year.
7
[PAGE]
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is engaged in the business of selling and installing
industrial flooring, ceiling and wall systems. The following Management's
Discussion and Analysis should be read in conjunction with the Management's
Discussion and Analysis included in the Company's Form 10-KSB for the year
ended May 31, 1995.
Financial Condition
Total assets at February 29, 1996 were $3,304,043 compared to $2,617,157 at
the year ended May 31, 1995 an increase of 26%. The Company's cash position
remains limited, $9,667 at February 29, 1996. During the last several years,
the Company's cash position has been limited and its ability to expand its
operations in a meaningful way is restricted by its limited cash position.
Receivables from non-affiliates increased from $677,680 at May 31, 1995 to
$938,524 at February 29, 1996 an increase of 38%. This significant increase
was primarily the result of an increase in revenues for the first three
quarters of fiscal year 1995. Receivables from affiliates were up from
$460,563 at May 31, 1995 to $770,609 at February 29, 1996.
Inventories increased to $517,064 at February 29, 1996 compared to $427,079
at May 31, 1995. The increase of inventory was primarily the result of a build
up of inventory for installations to be performed in the last quarter of fiscal
year 1995.
The Company does not currently have any lines of credit and has
historically borrowed short term funds from its affiliates and from commercial
banks for working capital. At February 29, 1996, the Company had total
liabilities to banks of $212,669, which is classified as current debt. This
loan has historically been renewed in June of each year. This loan is secured
by the Company's real property and is guaranteed by Donald L. Cox and Lucille
M. Cox, officers and directors of the Company.
At February 29, 1996, total liabilities were $1,914,659 compared to
$1,435,134 at May 31, 1995 an increase of 33%. During this same period, there
was an increase of 38 % in total assets. During the same period, stockholder's
equity increased from $1,182,023 to $1,389,384 an increase of approximately 18%.
Results of Operations
The Company's revenues are primarily attributed to the sale of flooring
components to franchisees and licensees, the sale and installation of complete
flooring jobs by the Company and the sale and installation of interior ceiling
and wall systems.
8
[PAGE]
Total net sales for the three month period ended February 29, 1996, were
$2,090,177 compared to $1,682,944 for the three month period ended February 28,
1995, an increase of approximately 24%. Total net sales for the nine months
ended February 29, 1996 were $5,433,590 compared to $4,591,653 for the three
months ended February 28, 1995, an increase of approximately 18%. The increase
in sales was attributable to an increase in sales to franchisees. During the
past year, several franchise territories have been divided into smaller
territories and the Company has added several new franchises. These new
franchises have helped to increase the revenue of the Company. During the
quarter ended February 29, 1996, sales of Arcoplast Ceilings and Wall Systems
were approximately 7% of total sales.
Operating Expenses. Cost of sales during the three month and nine month
period ended February 29, 1996 was 70% and 69% respectively of total sales
as compared to 64% and 66% for the three month and nine month period ended
February 28, 1995.
For the three month period ended February 29, 1996, total general and
administrative expenses were $272,807 compared to $199,342 for the three month
period ended February 28, 1995. For the nine month period ended February 29,
1996, total general and administrative expenses were $736,473 (14% of total
sales) compared to $611,181 for the nine months ended February 28, 1995 (13%
of total sales).
For the three month period ended February 29, 1996, total selling expenses
were $163,684 (8% of total sales) as compared to $190,110 (11% of total sales)
for the three month period ended February 28, 1995. For the nine month period
ended February 29, 1996, selling expenses were $509,432 (9% of total sales)
compared to $556,806 for the nine months ended February 28, 1995 (12% of total
sales).
Total cost of sales and operating expenses for the three month period ended
February 29, 1996 were $2,017,971 (97% of total sales) compared to $1,582,057
(94% of total sales) for the three month period ended February 28, 1995. Total
cost of sales and operating expenses for the nine months ended February 29,
1996 were $5,096,003 (94% of total sales) compared to $4,333,573 for the nine
months ended February 28, 1995 (94% of total sales).
Net Income. For the three month period ended February 29, 1996, the
Company had net income of $38,030 compared to net income of $62,374 for the
three month period ended February 28, 1995. For the nine month period ended
February 29, 1996, net income was $199,574 compared to $155,272 for the nine
months ended February 28, 1995, a decrease of approximately 11%.
Inflation
The Company's business and operations have not been materially affected by
inflation during the past year and the current fiscal year.
9
[PAGE]
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information.
Item 6(a). Exhibits. None.
Item 6(b). Reports on Form 8-K. None
10
[PAGE]
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Dated: July __, 1996 TUFCO INTERNATIONAL, INC.
By /s/ Donald L. Cox
______________________________________
Donald L. Cox
President
Principal Executive Officer
By /s/ Brent E. Mills
______________________________________
Brent E. Mills
Controller
Principal Financial Officer
11
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> FEB-29-1996
<CASH> $9,667
<SECURITIES> 0
<RECEIVABLES> 1,709,133
<ALLOWANCES> 0
<INVENTORY> 517,064
<CURRENT-ASSETS> 2,396,834
<PP&E> 1,119,652
<DEPRECIATION> 395,892
<TOTAL-ASSETS> 3,304,043
<CURRENT-LIABILITIES> 1,790,326
<BONDS> 0
<COMMON> 1,181,188
0
0
<OTHER-SE> 200,418
<TOTAL-LIABILITY-AND-EQUITY> 3,304,043
<SALES> 2,090,177
<TOTAL-REVENUES> 2,090,177
<CGS> 1,465,921
<TOTAL-COSTS> 561,491
<OTHER-EXPENSES> (9,441)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 72,206
<INCOME-TAX> 34,176
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,030
<EPS-PRIMARY> 00489
<EPS-DILUTED> 0
</TABLE>
