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 28, 1997
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 July 31, 1997 - 6,965,800 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 28, 1997.
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 28, 1997...............3
Condensed Consolidated Statements of Income for the three months and nine
Months ended February 28, 1997 and February 29, 1996.................5
Condensed Consolidated Statements of Cash Flows--for the
three months and nine months ended February 28, 1997 and
February 29, 1996....................................................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 28, 1997
Unaudited
ASSETS
CURRENT ASSETS:
Cash $ 2,171
Accounts and notes receivable, less allowance
for doubtful accounts of $250,000
Trade 1,237,664
Affiliates 1,117,309
Inventories 555,081
Deferred income tax benefits 102,706
Other current assets 78,228
------------------
3,093,159
------------------
Property and equipment 1,316,718
Accumulated depreciation 477,812
------------------
838,906
------------------
Reacquired franchise territory 356,558
Accumulated amortization 240,326
------------------
116,232
------------------
Other assets 3,640
------------------
$ 4,051,937
==================
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
FEBRUARY 28, 1997
Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 464,750
Trade accounts payable 1,724,242
Income taxes payable 75,642
Deferred income tax 30,205
Accrued expenses 261,895
------------------
2,556,734
------------------
LONG-TERM DEBT 30,351
------------------
DEFERRED COMPENSATION 6,108
------------------
COMMON STOCKHOLDERS' EQUITY:
Common stock,$.001 par value; authorized 50,000,000
shares; issued and outstanding 7,777,800 shares 7,778
Retained earnings 1,219,052
Other common stockholders' equity 231,914
------------------
1,458,744
------------------
$ 4,051,937
==================
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months and nine months ended February 28, 1997 and February 29,
1996
Unaudited
1997 1996
-------------------------------------------------
3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
-------------------------------------------------
NET SALES:
Trade $1,619,428 $4,708,366 $1,625,414 $4,077,168
Affiliates 431,370 1,255,750 464,763 1,356,422
----------- ----------- ------------ ------------
2,050,798 5,964,116 2,090,177 5,433,590
----------- ----------- ------------ ------------
Cost of sales 1,515,190 4,305,998 1,465,921 3,762,718
Selling expenses 192,446 605,984 163,684 509,432
General and admin.expenses 400,768 1,005.061 272,807 736,473
Bad debts 86,103 86,103 125,000 125,000
Other income (3,748) (44,336) (9,441) (37,620)
----------- ----------- ------------ ------------
2,190,759 5,958,810 2,017,971 5,096,003
----------- ----------- ------------ ------------
Income (loss) before taxes (139,961) 5,306 72,206 337,587
----------- ----------- ------------ ------------
Provision (credit) for income taxes
Current (67,752) 540 83,378 191,135
Deferred 21,434 25,251 (49,202) (53,122)
----------- ----------- ------------ ------------
(46,318) 25,791 34,176 138,013
----------- ----------- ------------ ------------
Net Income (loss) $ (93,643) $ (20,485) $ 38,030 $ 199,574
=========== =========== ============ ============
INCOME (LOSS) PER SHARE:
Net income (loss) $ (0.01204) $(0.00263) $ 0.00489 $ 0.02566
=========== ========== ========== =========
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 nine months ended February 28, 1997 and February 29,
1996
Unaudited
1997 1996
-------------------------------------------------
3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
------------------------------------------------
NET CASH PROVIDED BY (USED IN)
Operating Activities $ 12,314 $ (7,606) $ 65,868 $ 92,419
----------- ----------- ---------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property
and equipment 10,000
Proceeds from sale of reacquired
franchise territory 7,120 6,715 25,554
Purchase of property and equipment (132,616) (63,367) (89,091)
----------- ----------- ---------- --------------
Net cash provided by (used in) (125,496) (56,652) (53,537)
investing activities ----------- ----------- ---------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on
long-term debt (11,590) (29,333) (8,846) (29,999)
Principal payments on short-term
bank notes (125,000)
Proceeds from long-term debt 275,000
----------- ----------- ----------- -------------
Net cash provided by (used in (11,590) 120,667 (8,846) (29,999)
financing activities
----------- ----------- ----------- -------------
INCREASE (DECREASE) IN CASH 724 (12,435) 370 8,883
CASH, BEGINNING OF PERIOD 1,447 14,606 9,297 784
----------- ----------- ------------ ------------
CASH, END OF PERIOD $ 2,171 $ 2,171 $ 9,667 $ 9,667
=========== =========== ============ ============
<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 nine months ended February 28, 1997 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 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 February 28, 1997 were $4,051,931 compared to $3,527,512
at the year ended May 31, 1996 an increase of approximately 14.5%. The Company's
cash position remains limited, $2,171 at February 28, 1997 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 $1,237,664 at February 28, 1997 an increase of approximately 17.83%. This
significant increase was primarily the result of decreased collections.
Receivables from affiliates were up from $864,371 at May 31, 1996 to $1,117,309
at February 28, 1997 and increase of approximately 29.26%. The reason for this
increase was also primarily the result of the decreased collections.
Inventories increased to $555,081 at February 28, 1997 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 February 28, 1997, the Company had total
liabilities to banks of $452,298 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.
8
<PAGE>
At February 28, 1997, total liabilities were $2,593,193 compared to
$2,076,904 at May 31, 1996 an increase of approximately 24.86%. The increase was
primarily due to decreased collections in accounts receivable. During this same
period, there was an increase of approximately 14.5% in total assets. During the
same period, stockholder's equity increased slightly from $1,450,608 to
$1,458,744.
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. Effective March 1, 1997, the Company discontinued
the sale and installation of interior ceiling and wall systems. The Company
discontinued the product line to concentrate on Tufco flooring.
Total net sales for the three month period ended February 28, 1997, were
$2,050,798 compared to $2,090177 for the three month period ended February 29,
1996, a decrease of approximately 1.88%. Total net sales for the nine month
period ended February 28, 1997, were $5,964,116 compared to $5 433,590 for the
nine month period ended February 29, 1996, an increase of approximately 9.76%.
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.
Operating Expenses. Cost of sales during the three month period ended
February 28, 1997 was 74% of total sales compared to 70% for the three month
period ended February 29, 1996. Cost of sales during the nine month period ended
February 28, 1997 was 72% of total sales compared to 69% for the nine month
period ended February 29, 1996. The increase is attributable to higher
installation costs incurred.
For the three month period ended February 28, 1997, total general and
administrative expenses were $400,768 (approximately 20% of total sales)
compared to $272,807 (13% of total sales)for the three month period ended
February 29, 1996. The increase was primarily attributable to an ESOP
contribution of approximately $62,000. The Company established an ESOP (Employee
Stock Ownership Plan) effective January 31, 1997. For the nine month period
9
<PAGE>
ended February 28, 1997, total general and administrative expenses were
$1,005,061 (approximately 17% of total sales) compared to $736,473 (14% of total
sales)for the nine month period ended February 29, 1996.
For the three month period ended February 28, 1997, total selling expenses
were $192,446 (approximately 9% of total sales) as compared to $163,684 (10%of
total sales) for the three month period ended February 29, 1996. For the nine
month period ended February 28, 1997, total selling expenses were $605,984
(approximately 11% of total sales) as compared to $509,432 (9%of total sales)
for the nine month period ended February 29, 1996.
Total cost of sales and operating expenses for the three month period
ended February 28, 1997 were $2,190,759 (107% of total sales) compared to
$2,017,971 (97% of total sales) for the three month period ended February 29,
1996. Total cost of sales and operating expenses for the nine month period ended
February 28, 1997 were $5,958,810 (99.9% of total sales) compared to $5,096,003
(94% of total sales) for the nine month period ended February 29, 1996.
Net Income. For the three month period ended February 28, 1997, the
Company had a loss of $93,643 compared to net income of $38,030 for the three
month period ended February 29, 1996. For the nine month period ended February
28, 1997, the Company had a net loss of $20,485 compared to net income of
$199,574 for the nine month period ended February 29, 1996, a decrease of
approximately 98.43%
Inflation
The Company's business and operations have not been materially affected by
inflation during the past year and the current fiscal year.
10
<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
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: August 11, 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> 2,171
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<EXCHANGE-RATE> 1
<CASH> 2,171
<SECURITIES> 0
<RECEIVABLES> 2,354,973
<ALLOWANCES> 0
<INVENTORY> 555,081
<CURRENT-ASSETS> 3,093,159
<PP&E> 1,316,718
<DEPRECIATION> 477,812
<TOTAL-ASSETS> 4,051,937
<CURRENT-LIABILITIES> 2,556,734
<BONDS> 0
0
0
<COMMON> 7,778
<OTHER-SE> 231,914
<TOTAL-LIABILITY-AND-EQUITY> 4,051,937
<SALES> 2,050,798
<TOTAL-REVENUES> 2,050,798
<CGS> 1,515,190
<TOTAL-COSTS> 2,190,759
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (139,961)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> (46,318)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (93,643)
<EPS-PRIMARY> .001
<EPS-DILUTED> .001
</TABLE>
