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 November 30, 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 January 20, 1998 - 6,965,800 shares of $.001 par
value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
1
<PAGE>
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
TUFCO INTERNATIONAL, INC.
For the Quarter Ended November 30, 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--November 30, 1997. 3
Condensed Consolidated Statements of Income for the three months
and six months ended November 30, 1997 and 1996. 5
Condensed Consolidated Statements of Cash Flows--for the
three months and six months ended November 30, 1997 and 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 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6(a).Exhibits 11
Item 6(b).Reports on Form 8-K 11
2
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 1997
Unaudited
ASSETS
CURRENT ASSETS:
Cash $ 30,748
Accounts and notes receivable, less allowance
for doubtful accounts of $185,000
Trade 1,100,277
Affiliates 748,331
Inventories 507,785
Deferred income tax benefits 79,606
Other current assets 46,708
------------------
2,513,455
------------------
Property and equipment 1,230,734
Accumulated depreciation 491,744
------------------
738,990
------------------
Reacquired franchise territory 356,558
Accumulated amortization 260,788
------------------
95,770
------------------
Other assets 4,190
------------------
$ 3,352,405
==================
3
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 441,675
Trade accounts payable 1,466,473
Income taxes payable 32,257
Accrued expenses 82,793
------------------
2,023,198
------------------
LONG-TERM DEBT 20,261
------------------
DEFERRED INCOME TAXES 34,703
------------------
COMMON STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; authorized
50,000,000 shares; issued and outstanding
6,965,800 shares 6,966
Retained earnings 1,097,429
Other common stockholders' equity 169,848
------------------
1,274,243
------------------
$ 3,352,405
==================
4
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months and six months ended November 30,1997 and 1996
Unaudited
1997 1996
-------------------------------------------------
3 MONTHS 6 MONTHS 3 MONTHS 6 MONTHS
-------------------------------------------------
NET SALES:
Trade $ 1,066,269 $ 2,479,468 $ 1,422,916 $ 3,088,938
Affiliates 379,005 703,788 494,930 824,380
--------------------------------------------------
1,445,274 3,183,256 1,917,846 3,913,318
--------------------------------------------------
Cost of sales 1,030,778 2,228,357 1,353,002 2,790,808
Selling expenses 116,233 217,704 191,831 413,538
General and administrative
expenses 286,846 585,091 294,144 604,293
Bad debts 8,453 8,453
Other income (28,885) (58,356) (13,151) (40,588)
--------------------------------------------------
1,413,425 2,981,249 1,825,826 3,768,051
--------------------------------------------------
Income before taxes 31,849 202,007 92,020 145,267
--------------------------------------------------
Provision for income taxes
Current (14,998) 48,009 43,132 68,292
Deferred 27,231 28,359 (581) 3,817
--------------------------------------------------
12,233 76,368 42,551 72,109
--------------------------------------------------
Net Income $ 19,616 $ 125,639 $ 49,469 $ 73,158
==================================================
EARNINGS PER SHARE:
Net income $ 0.0028 $ 0.0180 $ 0.0063 $ 0.00941
==================================================
Weighted average number of
shares outstanding 6,965,800 6,965,800 7,777,800 7,777,800
==================================================
5
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months and six months ended November 30, 1997 and 1996
Unaudited
1997 1996
--------------------------------------------------
3 MONTHS 6 MONTHS 3 MONTHS 6 MONTHS
--------------------------------------------------
NET SALES PROVIDED BY (USED IN)
Operating Activities $ 44,233 $ 37,546 $ (86,092) $ (19,920)
--------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 20,500
and equipment
Proceeds from sale of reacquired 3,592 7,120
franchise territory
Purchase of property and (2,458) (26,768) (58,609) (132,616)
equipment --------------------------------------------------
Net cash provided by (used (2,458) (6,268) (55,017) (125,496)
in) investing activities --------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on
long-term debt (11,878) (21,927) (8,095) (17,743)
Principal payments on short- (125,000) (125,000)
term bank notes
Proceeds from long-term debt 275,000 275,000
--------------------------------------------------
Net cash provided by (used (11,878) (21,927) 141,905 132,257
in) financing activities
--------------------------------------------------
INCREASE (DECREASE) IN CASH 29,897 9,351 796 (13,159)
CASH, BEGINNING OF PERIOD 851 12,397 651 14,606
--------------------------------------------------
CASH, END OF PERIOD $ 30,748 $ 30,748 $ 1,447 $ 1,447
==================================================
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, 1997 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, 1997 and 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 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, 1997.
Financial Condition
Total assets at November 30, 1997 were $3,352,405 compared to $3,298,429
at the year ended May 31, 1997. The Company's cash position remains limited,
$30,748 at November 30, 1997 compared to $21,397 at May 31, 1997. 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 $900,123 at May 31, 1997 to
$1,100,277 at November 30, 1997 an increase of approximately 22.24%. This
significant increase was primarily the result of decreased collections.
Receivables from affiliates were down slightly from $756,874 at May 31, 1997 to
$748,331 at November 30, 1997. Total receivables were down $332,266 from total
receivables at August 31, 1997.
Inventories decreased slightly to $507,785 at November 30, 1997 compared
to $535,155 at May 31, 1997.
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, 1997, the Company had total
liabilities to banks of which $428,632 was classified as current debt. At May
31, 1997, the Company had total liabilities to banks of $444,323 which was
classified as current debt. The Company's bank 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, 1997, total liabilities were $2,078,162 compared to
$2,150,657 at May 31, 1997.
8
<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. 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 November 30, 1997, were
$1,445,274 compared to $ 1,917,846 for the three month period ended November 30,
1996, a decrease of approximately 24.64%. Total net sales for the six month
period ended November 30, 1997, were $3,183,256 compared to $3,913,318 for the
six month period ended November 30, 1996, a decrease of approximately 18.66%.
The reduction in sales was primarily attributable to a reduction in
installations by the company and the elimination of the Arcoplast Division.
Operating Expenses. Cost of sales during the three month periods ended
November 30, 1997 and November 30, 1996 were 71% of total net sales. Cost of
sales during the six month period ended November 30, 1997 was 70% of total sales
compared to 71% for the six month period ended November 30, 1996.
For the three month period ended November 30, 1997, total general and
administrative expenses were $286,846 (approximately 20% of total sales)
compared to $294,144 (15% of total sales) for the three month period ended
November 30, 1996. For the six month period ended November 30, 1997, total
general and administrative expenses were $585,091 (approximately 18% of total
sales) compared to $604,293 (15% of total sales) for the six month period ended
November 30, 1996.
Selling expenses were down for both the three month period and six month
period ended November 30, 1997 from $191,831 and $413,538 respectively for the
three months and six months ended November 30, 1996 to $116,233 and $217,704 for
the three months and six months ended November 30, 1997.
Total cost of sales and operating expenses for the three month period
ended November 30, 1997 were $1,413,425 (98% of total sales) compared to
$1,825,826 (95% of total sales) for the three month period ended November 30,
1996. Total cost of sales and operating expenses for the six month period ended
November 30, 1997 were $2,981,249 (94% of total sales) compared to $3,768,051
(96% of total sales) for the six month period ended November 30, 1996. The
decrease in selling expenses of $120,236 for the quarter ended November 30, 1997
compares to November 30, 1996 as the primary reason for the decrease in cost of
goods sold and operating expenses as a percentage of revenue.
Net Income. For the three month period ended November 30, 1997, the Company
had net income of $19,616 compared to net income of $49,469 for the three month
period ended November
9
<PAGE>
30, 1996. For the six month period ended November 30, 1997, the Company had net
income of $125,639 compared to net income of $73,158 for the six month period
ended November 30, 1996.
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: January __, 1998 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
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> NOV-30-1997
<CASH> 30,478
<SECURITIES> 0
<RECEIVABLES> 2,033,608
<ALLOWANCES> 185,000
<INVENTORY> 507,785
<CURRENT-ASSETS> 2,513,455
<PP&E> 1,230,734
<DEPRECIATION> 491,744
<TOTAL-ASSETS> 3,352,405
<CURRENT-LIABILITIES> 2,023,198
<BONDS> 0
0
0
<COMMON> 6,966
<OTHER-SE> 1,267,277
<TOTAL-LIABILITY-AND-EQUITY> 3,352,405
<SALES> 1,445,274
<TOTAL-REVENUES> 1,445,274
<CGS> 1,030,778
<TOTAL-COSTS> 1,413,425
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 31,849
<INCOME-TAX> 12,233
<INCOME-CONTINUING> 19,616
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,616
<EPS-PRIMARY> .00282
<EPS-DILUTED> 0
</TABLE>
