U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended November 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-10984-LA
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TUFCO INTERNATIONAL, INC.
(Name of Small Business Issuer as specified in its charter)
Nevada 95-4071623
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(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 April 17, 1997 - 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 November 30, 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--November 30, 1996. 3
Condensed Consolidated Statements of Income for the three months and six
Months ended November 30, 1996 and November 30, 1995 5
Condensed Consolidated Statements of Cash Flows--for the
three months and six months ended November 30, 1996 and November 30, 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 FINANCIAL STATEMENTS
NOVEMBER 30, 1996
UNAUDITED
ASSETS
CURRENT ASSETS:
Cash $ 1,447
Accounts and notes receivable, less allowance
for doubtful accounts of $175,000
Trade 1,184,316
Affiliates 1,032,004
Inventories 577,759
Deferred income tax benefits 73,989
Other current assets 54,674
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2,924,189
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Property and equipment 1,316,718
Accumulated depreciation 455,215
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861,503
------------------
Reacquired franchise territory 356,558
Accumulated amortization 233,506
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123,052
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Other assets 23,587
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$ 3,932,331
==================
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 473,120
Trade accounts payable 1,583,334
Income taxes payable 143,394
Accrued expenses 83,179
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2,283,027
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LONG-TERM DEBT 33,571
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DEFERRED COMPENSATION 87,484
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COMMON STOCKHOLDERS' EQUITY:
Common stock,$.001 par value; authorized 50,000,000
shares; issued and outstanding 7,777,800 shares 7,778
Retained earnings 1,312,694
Other common stockholders' equity 207,777
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1,528,249
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$ 3,932,331
=================
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months and six months ended November 30,1996 and 1995
Unaudited
1996 1995
------------------------ ------------------------
3 MONTHS 6 MONTHS 3 MONTHS 6 MONTHS
------------------------ ------------------------
NET SALES:
Trade $ 1,422,916 $ 3,088,938 $ 1,080,169 $ 2,451,754
Affiliates 494,930 824,380 338,894 891,659
------------ ----------- ------------ -----------
1,917,846 3,913,318 1,419,063 3,343,413
------------ ----------- ------------ -----------
Cost of sales 1,353,002 2,790,808 1,004,941 2,296,797
Selling expenses 191,831 413,538 167,264 345,748
General and admin. expenses 294,144 604,293 238,009 463,666
Other income (13,151) (40,588) (7,241) (28,179)
------------ ----------- ------------ ----------
1,825,826 3,768,051 1,402,973 3,078,032
------------ ----------- ------------ ----------
Income before taxes 92,020 145,267 16,090 265,381
------------ ----------- ------------ ----------
Provision for income taxes
Current 43,132 68,292 6,169 107,757
Deferred (581) 3,817 1,026 (3,920)
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42,551 72,109 7,195 103,837
------------ ----------- ------------ ----------
Net Income $ 49,469 $ 73,158 $ 8,895 $ 161,544
============ =========== ============ ==========
EARNINGS PER SHARE:
Net income $ 0.00636 $ 0.00941 $ 0.00114 $ 0.02077
=========== ========== ============ ==========
Weighted average number of
shares outstanding 7,777,800 7,777,800 7,777,800 7,777,800
=========== ========== ============ ==========
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months and six months ended November 30, 1996 and 1995
Unaudited
<TABLE>
<CAPTION>
1996 1995
-----------------------------------------------------------------------------------------
3 MONTHS 6 MONTHS 3 MONTHS 6 MONTHS
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES PROVIDED BY (USED IN)
Operating Activities $ (86,092) $ (19,920) $ 40,248 $ 26,551
----------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 10,000
and equipment
Proceeds from sale of reacquired 3,592 7,120 5,700 18,839
franchise territory
Purchase of property and equipment (58,609) (132,616) (25,724) (25,724)
----------- ---------- ---------- ---------
Net cash provided by (used in) (55,017) (125,496) (20,024) 3,115
investing activities ----------- ---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (8,095) (17,743) (11,580) (21,153)
Principal payments on short-term (125,000) (125,000)
bank notes
Proceeds from long-term debt 275,000 275,000
----------- ---------- ----------- -----------
Net cash provided by (used in 141,905 132,257 (11,580) (21,153)
financing activities
----------- ---------- ----------- -----------
INCREASE (DECREASE) IN CASH 796 (13,159) 8,644 8,513
CASH, BEGINNING OF PERIOD 651 14,606 653 784
----------- ---------- ----------- ----------
CASH, END OF PERIOD $ 1,447 $ 1,447 $ 9,297 $ 9,297
=========== ========== =========== ==========
</TABLE>
<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, 1996 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 six months ended November 30, 1996 are not necessarily indicative of
the operating results for the full year.
<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, 1996.
Financial Condition
Total assets at November 30, 1996 were $3,932,331 compared to $3,527,512
at the year ended May 31, 1996 an increase of approximately 11.5%. The Company's
cash position remains limited, $1,447 at November 30, 1996 compared to $14,606
at May 31, 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 $1,050,421 at May 31, 1996
to $1,184,316 at November 30, 1996 an increase of approximately 12.75%. This
significant increase was primarily the result of decreased collections.
Receivables from affiliates were up from $864,371 at May 31, 1996 to $1,032,004
at November 30, 1996 and increase of approximately 19.40%. The reason for this
increase was increased sales and decreased collections.
Inventories increased to $577,759 at November 30, 1996 compared to
$487,566 at May 31, 1996.
8
<PAGE>
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 November 30, 1996, the Company had total
liabilities to banks of $460,949 which is classified as current debt compared to
$478,956 at May 31, 1996. This long term debt 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 November 30, 1996, total liabilities were $2,404,082 compared to
$2,076,904 at May 31, 1996 an increase of approximately 15.75%. The increase was
primarily due to decreased collections in accounts receivable. During this same
period, there was an increase of approximately 11.5% in total assets. During the
same period, stockholder's equity increased from $1,450,608 to $1,528,249 an
increase of approximately 5.35%.
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.
Total net sales for the three month period ended November 30, 1996, were
$1,917,846 compared to $1,419,063 for the three month period ended November 30,
1995, an increase of approximately 35.15%. Total net sales for the six month
period ended November 30, 1996, were $3,913,318 compared to $3,343,413 for the
six month period ended November 30, 1995, an increase of approximately 17.05%.
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 November 30, 1996, sales of Arcoplast Ceilings and Wall Systems
were approximately 19% of total sales.
Operating Expenses. Cost of sales during the three month period ended
November 30, 1996 was 71% of total sales the same as the cost of goods sold for
the three month period ended
9
<PAGE>
November 30, 1995. Cost of sales during the six month period ended November 30,
1996 was 71% of total sales compared to 69% for the six month period ended
November 30, 1995. The increase is attributable to higher installation costs
incurred.
For the three month period ended November 30, 1996, total general and
administrative expenses were $294,144 (approximately 15% of total sales)
compared to $238,009 (17% of total sales)for the three month period ended
November 30, 1995. For the six month period ended November 30, 1996, total
general and administrative expenses were $604,293 (approximately 15% of total
sales) compared to $463,666 (14% of total sales)for the six month period ended
November 30, 1995.
For the three month period ended November 30, 1996, total selling expenses
were $191,831 (approximately 10% of total sales) as compared to $167,264 (12%of
total sales) for the three month period ended November 30, 1995. For the six
month period ended November 30, 1996, total selling expenses were $413,538
(approximately 11% of total sales) as compared to $345,748 (10%of total sales)
for the six month period ended November 30, 1995.
Total cost of sales and operating expenses for the three month period
ended November 30, 1996 were $1,838,977 (96% of total sales) compared to
$1,410,214 (99% of total sales) for the three month period ended November 30,
1995. Total cost of sales and operating expenses for the six month period ended
November 30, 1996 were $3,808,639 (96% of total sales) compared to $3,106,211
(93% of total sales) for the six month period ended November 30, 1995.
Net Income. For the three month period ended November 30, 1996, the
Company had net income of $49,469 compared to net income of $8,895 for the three
month period ended November 30, 1995, an increase of approximately 75%. For the
six month period ended November 30, 1996, the Company had net income of $73,158
compared to net income of $161,544 for the six month period ended November 30,
1995, a decrease of approximately 55%.
10
<PAGE>
Inflation
The Company's business and operations have not been materially affected by
inflation during the past year and the current fiscal year.
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
11
<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: April 23, 1997 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
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
TUFCO INTERNATIONAL, INC.'S FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> 1,447
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,447
<SECURITIES> 0
<RECEIVABLES> 2,041,320
<ALLOWANCES> 175,000
<INVENTORY> 577,759
<CURRENT-ASSETS> 54,674
<PP&E> 1,316,718
<DEPRECIATION> 455,215
<TOTAL-ASSETS> 3,932,331
<CURRENT-LIABILITIES> 2,283,027
<BONDS> 0
0
0
<COMMON> 7,778
<OTHER-SE> 207,777
<TOTAL-LIABILITY-AND-EQUITY> 3,932,331
<SALES> 1,917,846
<TOTAL-REVENUES> 1,917,846
<CGS> 1,353,002
<TOTAL-COSTS> 1,825,826
<OTHER-EXPENSES> 485,975
<LOSS-PROVISION> 42,551
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 92,020
<INCOME-TAX> 42,551
<INCOME-CONTINUING> 43,132
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,469
<EPS-PRIMARY> .001
<EPS-DILUTED> .001
</TABLE>
