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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 February 29, 2000
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
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(Address of principal executive offices)
Registrant's telephone no., including area code: (501) 736-2201
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No Change
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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 February 10, 2000 - 6,965,800 shares of $.001 par
value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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<PAGE>
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
TUFCO INTERNATIONAL, INC.
For the Quarter Ended February 29, 2000
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, 2000. 3
Condensed Consolidated Statements of Income for the three
and nine months ended February 29, 2000 and February 28, 1999 5
Condensed Consolidated Statements of Cash Flows--for the
three and nine months ended February 29, 2000 and February 28, 1999 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
FEBRUARY 29, 2000
Unaudited
ASSETS
CURRENT ASSETS:
Cash $ 9,388
Accounts and notes receivable, less allowance
for doubtful accounts of $235,000
Trade 1,213,177
Affiliates 417,133
Inventories 563,572
Deferred income tax benefits 98,230
Other current assets 41,197
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2,342,697
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Property and equipment 1,178,778
Accumulated depreciation 517,894
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660,884
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Reacquired franchise territory 356,558
Accumulated amortization 356,558
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0
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Other assets 64,564
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$ 3,068,145
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3
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 42,779
Trade accounts payable 1,169,458
Income taxes payable 179,280
Accrued expenses 33,318
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1,424,835
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LONG-TERM DEBT 407,476
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DEFERRED INCOME TAXES 29,328
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COMMON STOCKHOLDERS' EQUITY:
Common stock,$.001 par value; authorized 50,000,000
shares; issued and outstanding 6,965,800 shares 6,966
Retained earnings 1,423,108
Other common stockholders' equity (223,568)
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1,206,506
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$ 3,068,145
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4
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months and nine months ended
February 29, 2000 and February 28, 1999
Unaudited
2000 1999
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3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
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NET SALES:
Trade $ 1,722,145 $4,833,475 $1,223,405 $3,929,563
Affiliates 163,092 427,224 88,650 332,136
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1,885,237 5,260,699 1,312,055 4,261,699
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Cost of sales 1,237,794 3,493,556 885,706 2,873,395
Selling expenses 80,768 262,582 70,947 205,046
General and administrati 384,249 989,066 342,377 913,706
Bad debts 18,691 68,497 37,019 37,019
Other income (3,679) (81,086) (36,463) (106,024)
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1,717,823 4,732,615 1,299,586 3,923,142
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Income before income taxes 167,414 528,084 12,469 338,557
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Provision (credit) for income taxes
Current (45,170) 119,111 (27,447) 110,595
Deferred 20,090 931 (535) (2,711)
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(25,080) 120,042 (27,982) 107,884
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Net Income $ 192,494 $ 408,042 $ 40,451 $ 230,673
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EARNINGS PER SHARE:
Net income (loss) $ 0.02763 $ 0.05858 $ 0.00581 $ 0.03312
=================================================
Weighted average number of
shares outstanding 6,965,800 6,965,800 6,965,800 6,965,800
=================================================
5
<PAGE>
TUFCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months and nine months ended
February 29, 2000 and February 28, 1999
Unaudited
<TABLE>
<CAPTION>
2000 1999
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3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
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<S> <C> <C> <C> <C>
NET SALES PROVIDED BY (USED IN)
Operating Activities $ 172,534 $ 252,971 $ 93,094 $252,971
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (20,397) (74,088)
Proceeds from sale of property and equipment 5,000 18,500
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Net cash provided by (used in) (20,397) (69,088) 18,500
investing activities --------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 467,187
Principal payments on long-t (15,029) (509,921) (12,614) (37,302)
Collection of capital contributions receivable 2,000 4,500
Net employer advances for purchase 131,145 (78,472) 57,393 (86,264)
of ESOP shares
Dividends paid (278,632) (278,632) (139,316) (139,316)
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Net cash used in financing activities (162,516) (399,838) (92,537) (258,382)
--------------------------------------------
INCREASE (DECREASE) IN CASH (10,379) (260) 557 13,089
CASH, BEGINNING OF PERIO 19,767 9,648 13,669 1,137
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CASH, END OF PERIOD $ 9,388 $ 9,388 $14,226 $ 14,226
============================================
</TABLE>
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, 1999 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 six
months and nine months ended February 29, 2000 and February 28, 1999 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, 1999.
Financial Condition
Total assets at February 29, 2000 were $3,068,145 compared to $2,851,885
at the year ended May 31, 1999. The Company's cash position remains limited,
$9,388 at February 29, 2000 compared to $9,648 at May 31, 1999. 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 slightly from $1,176,403 at May
31, 1999 to $1,213,177 at February 29, 2000 an increase of approximately 3.13%.
Receivables from affiliates were up from $313,636 at May 31, 1999 to $417,133 at
February 29, 2000.
Inventories increased to $563,572 at February 29, 2000 compared to
$509,473 at May 31, 1999.
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, 2000, the Company had total
liabilities to banks of $436,242 which $34,785 was classified as current debt.
At May 31, 1999, the Company had total liabilities to banks of $450,255 of which
$42,779 was classified as current debt. This loan is secured by the Company's
real property and is guaranteed by Brent Mills, officer and director of the
Company.
At February 29, 2000, total liabilities were $1,861,639 compared to
$1,680,848 at May 31, 1999.
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.
Total net sales for the six month period ended February 29, 2000, were
$1,885,237 compared to $1,312,055 for the six month period ended February 29,
2000, an increase of approximately 43.691%. The increase in sales was
attributable to an increase in both installations performed by the Company and
its franchises. Total net sales for the nine months
8
<PAGE>
ended February 29, 2000 were $5,260,699 compared to $4,261,699 for the nine
months ended February 29, 2000, an increase of 23.44%.
Operating Expenses. Cost of sales during the three month period ended
February 29, 2000 was 66% compared to 68% for the three month period ended
February 28, 1999. Cost of sales during the nine month period ended February 29,
2000 was 66%, compared to 67% for the nine month period ended February 28, 1999.
For the three month period ended February 29, 2000, total general and
administrative expenses were $384,249 (approximately 20% of total sales)
compared to $342,377 (26% of total sales) for the three month period ended
February 28, 1999. For the nine month period ended February 29, 2000, total
general and administrative expenses were $989,066 (approximately 19% of total
sales), compared to $913,706 for the nine months ended February 28, 1999 (21% of
total sales).
Selling expenses increased for the three month period ended February 29,
2000 to $80,768 (4% of total sales) compared to $70,947 (5% of total sales) for
the three months ended February 28, 1999. Selling expenses for the nine month
period ended February 29, 2000 were $262,582 (5% of total sales) compared to
$205,046 for the nine month period ended February 28, 1999 (5% of total sales).
Total cost of sales and operating expenses for the three month period
ended February 29, 2000 were $1,717,823 (91% of total sales) compared to
$1,299,586 (99% of total sales) for the three month period ended February 28,
1999. For the nine month period ended February 29, 2000, total cost of sales and
operating expenses were $4,732,615 (90% of total sales) compared to $3,923,142
(92% of total sales) for the nine month period ended February 28, 1999.
Net Income. For the three month period ended February 29, 2000, the
Company had net income of $192,494 compared to net income of $40,451 for the
three month period ended February 28, 1999. For the nine month period ended
February 29, 2000, the Company had net income of $408,042 compared to $230,673
for the nine month ended February 28, 1999.
Inflation
The Company's business and operations have not been materially affected by
inflation during the past year and the current fiscal year.
Year 2000
The Company has not experienced any system failures relating to Y2K and
does not anticipate future problems from internal systems or the systems of its
major suppliers or customers. The Company has experienced some payment delays
from customers but does not anticipate any significant long term delays.
9
<PAGE>
Forward-looking Statements
The foregoing discussions in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contain forward-looking
statements, within the meaning of section 27a of the Securities Act of 1933 and
section 21e of the Securities Act, which reflect Management's current views with
respect to the future events and financial performance. Such forward looking
statements may be deemed to include, among other things, statements relating to
anticipated growth, and increased profitability, as well as to statements
relating to the Company's strategic plan, including plans to develop and
increase factored receivables, loan originations, and to selectively acquire
other companies. These forward-looking statements are subject to certain risks
and uncertainties, including, but not limited to, future financial performance
and future events, competitive pricing for services, costs of obtaining capital
as well as national, regional and local economic conditions. Actual results
could differ materially from those addressed in the forward looking statement.
Due to such uncertainties and risks, readers are cautioned not to place undue
reliance on such forward-looking statements, which speak only of the date
hereof.
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. None.
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: May 19, 2000. TUFCO INTERNATIONAL, INC.
By /s/ Brent E. Mills
-------------------------------
Brent E. Mills
President
Principal Executive 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> 9,388
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> DEC-01-1999
<PERIOD-END> FEB-28-2000
<EXCHANGE-RATE> 1
<CASH> 9,388
<SECURITIES> 0
<RECEIVABLES> 1,865,310
<ALLOWANCES> 235,000
<INVENTORY> 563,572
<CURRENT-ASSETS> 2,342,697
<PP&E> 1,178,778
<DEPRECIATION> 517,894
<TOTAL-ASSETS> 3,068,145
<CURRENT-LIABILITIES> 1,424,835
<BONDS> 0
0
0
<COMMON> 6,966
<OTHER-SE> 1,199,540
<TOTAL-LIABILITY-AND-EQUITY> 3,068,145
<SALES> 5,260,699
<TOTAL-REVENUES> 5,260,699
<CGS> 3,493,556
<TOTAL-COSTS> 4,732,615
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 528,084
<INCOME-TAX> 120,042
<INCOME-CONTINUING> 408,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 408,042
<EPS-BASIC> .06
<EPS-DILUTED> 0
</TABLE>
