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 August 31, 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
(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 December 27, 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 August 31, 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--August 31, 1996... 3
Condensed Consolidated Statements of Income for the three months
ended August 31, 1996 and August 21, 1995............. 5
Condensed Consolidated Statements of Cash Flows--for the
three months ended August 31, 1996 and August 31, 1995 6
Notes to Condensed Consolidated Financial Statements.... 7
Item 2Management'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
AUGUST 31, 1996
Unaudited
ASSETS
CURRENT ASSETS:
Cash $ 651
Accounts and notes receivable, less allowance
for doubtful accounts of $175,000
Trade 1,419,196
Affiliates 850,113
Inventories 458,018
Deferred income tax benefits 73,989
Other current assets 63,763
------------------
2,865,730
------------------
Property and equipment 1,258,109
Accumulated depreciation 433,232
------------------
824,877
------------------
Reacquired franchise territory 360,151
Accumulated amortization 226,685
------------------
133,466
------------------
Other assets 23,838
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$ 3,847,911
==================
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank $ 125,000
Current maturities of long-term debt 203,067
Trade accounts payable 1,451,710
Income taxes payable 397,116
Accrued expenses 75,780
------------------
2,252,673
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LONG-TERM DEBT 36,719
------------------
DEFERRED COMPENSATION 81,361
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COMMON STOCKHOLDERS' EQUITY:
Common stock,$.001 par value; authorized 50,000,000
shares; issued and outstanding 7,777,800 shares 7,778
Retained earnings 1,263,226
Other common stockholders' equity 206,154
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1,477,158
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$ 3,847,911
==================
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months ended August 31, 1996 and 1995
Unaudited
1996 1995
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NET SALES:
Trade $ 1,666,022 $ 1,371,585
Affiliates 329,450 552,765
---------------- ------------------
1,995,472 1,924,350
---------------- ------------------
Cost of sales 1,437,806 1,291,856
Selling expenses 221,707 178,484
General and administrative expenses 310,149 225,657
Other income (27,437) (20,938)
---------------- ------------------
1,942,225 1,675,059
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Income before taxes 53,247 249,291
---------------- ------------------
Provision for income taxes
Current 25,160 101,588
Deferred 4,398 (4,946)
---------------- ------------------
29,558 96,642
---------------- ------------------
Net Income $ 23,689 $ 152,649
================ ==================
EARNINGS PER SHARE:
Net income $ 0.00305 $ 0.01963
=============== ===================
Weighted average number of
shares outstanding 7,777,800 7,777,800
=============== ===================
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended August 31, 1996 and 1995
Unaudited
1996 1995
----------------- -----------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 66,172 $ (13,697)
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equip nt (74,007)
Proceeds from sale of property
and equipment 0 10,000
Proceeds from sale of reacquired
franchise territory 3,528 13,139
---------------- -----------------
Net cash provided by (used in)
investing activities (70,479) 23,139
---------------- -----------------
CASH FLOWS FROM FINANCIAL ACTIVITIES
Principal payments on long-term debt (9,648) (9,573)
---------------- -----------------
Net cash used in financing
activities (9,648) (9,573)
---------------- ----------------
DECREASE IN CASH (13,955) (131)
CASH, BEGINNING OF PERIOD 14,606 784
---------------- ----------------
CASH, END OF PERIOD $ 651 $ 653
================ ================
<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 ended August 31, 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 August 31, 1996 were $3,847,911 compared to $3,527,512 at
the year ended May 31, 1996 an increase of approximately 9%. The Company's cash
position remains limited, $651 at August 31, 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 significantly from $1,050,421 at
May 31, 1996 to $1,419,196 at August 31, 1996 an increase of approximately 35%.
This significant increase was primarily the result of decreased collections.
Receivables from affiliates were down slightly from $864,371 at May 31, 1996 to
$850,113 at August 31, 1996.
Inventories decreased to $458,018 at August 31, 1996 compared to $487,566
at May 31, 1996.
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 August 31, 1996, the Company had total liabilities
to banks of $328,067 which is classified as current
8
<PAGE>
debt compared to $478,956. Of this amount, $203,678 is the current portion of
long-term debt. 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 August 31, 1996, total liabilities were $2,370,753 compared to
$2,076,904 at May 31, 1996 an increase of approximately 14%. The increase was
primarily due to decreased collections in accounts receivable. During this same
period, there was an increase of approximately 9% in total assets. During the
same period, stockholder's equity increased from $1,450,608 to $1,477,158 an
increase of approximately 1.83%.
9
<PAGE>
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 August 31, 1996, were
$1,995,472 compared to $1,924,350 for the three month period ended August 31,
1995, an increase of approximately 3.70%. 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 August 31, 1996, sales of Arcoplast
Ceilings and Wall Systems were approximately 5% of total sales.
Operating Expenses. Cost of sales during the three month period ended
August 31, 1996 was 72% of total sales as compared to 67% for the three month
period ended August 31, 1995. The increase is attributable to higher
installation costs incurred.
For the three month period ended August 31, 1996, total general and
administrative expenses were $310,149 (approximately 16% of total sales)
compared to $225,657 (12% of total sales)for the three month period ended August
31, 1995. The increase is attributable to an increase in Research and
Development costs and a general increase in expenditures.
For the three month period ended August 31, 1996, total selling expenses
were $221,707 (approximately 11% of total sales) as compared to $178,484 (9%of
total sales) for the three month period ended August 31, 1995. The increase is
attributable to increased costs for advertising of approximately $50,000 for new
videos and brochures for Arcoplast Ceilings and wall systems.
10
<PAGE>
Total cost of sales and operating expenses for the three month period
ended August 31, 1996 were $1,969,662 (99% of total sales) compared to
$1,679,997 (88% of total sales) for the three month period ended August 31,
1995.
Net Income. For the three month period ended August 31, 1996, the Company
had net income of $23,689 compared to net income of $96,642 for the three month
period ended August 31, 1995, a decrease of approximately 75%.
Inflation
The Company's business and operations have not been materially affected by
inflation during the past year and the current fiscal year.
11
<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
12
<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: January __, 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
13
<PAGE>
<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> 651
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<EXCHANGE-RATE> 1
<CASH> 651
<SECURITIES> 0
<RECEIVABLES> 2,269,309
<ALLOWANCES> 175,000
<INVENTORY> 458,018
<CURRENT-ASSETS> 2,865,730
<PP&E> 1,258,109
<DEPRECIATION> 433,232
<TOTAL-ASSETS> 3,847,911
<CURRENT-LIABILITIES> 2,252,673
<BONDS> 0
0
0
<COMMON> 1,477,158
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,847,911
<SALES> 1,995,472
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<CGS> 1,437,806
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 504,419
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 53,247
<INCOME-TAX> 29,558
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,689
<EPS-PRIMARY> .003
<EPS-DILUTED> 0
</TABLE>
