<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Tufco Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
TUFCO TECHNOLOGIES, INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 16, 1999
---------------------
To Our Stockholders:
You are invited to attend the annual meeting of stockholders of Tufco
Technologies, Inc. to be held at the Doral Resort, Miami, Florida 33178 on
Tuesday, March 16, 1999, at 8:00 a.m., local time for the following purposes:
PROPOSAL 1. To elect seven directors to serve for a one-year term and
until their successors are elected and qualified.
PROPOSAL 2. To ratify the selection of Deloitte & Touche LLP as
independent auditors for the fiscal year ending September
30, 1999.
PROPOSAL 3. To transact such other business as may properly come before
the annual meeting or any adjournments thereof.
The record date for the annual meeting is February 1, 1999. Only
stockholders of record at the close of business on that date are entitled to
notice of and to vote at the annual meeting.
The Board of Directors hopes that you will find it convenient to attend the
annual meeting in person, but whether or not you plan to attend, please
complete, sign, date and return the enclosed Proxy to ensure that your shares of
common stock are represented at the annual meeting. Returning your Proxy does
not deprive you of the right to attend the annual meeting and vote your shares
in person.
Gregory L. Wilemon,
Secretary
February 8, 1999
<PAGE> 3
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MARCH 16, 1999
---------------------
Tufco Technologies, Inc.
4800 Simonton Road
Dallas, Texas 75244
The Board of Directors is soliciting proxies to be used at the 1999 annual
meeting of stockholders to be held at the Doral Resort, Miami, Florida 33178 on
Tuesday, March 16, 1999, at 8:00 a.m., local time. This Proxy Statement,
accompanying Proxy and Annual Report to Stockholders for the fiscal year ended
September 30, 1998 are first being mailed to stockholders on or about February
8, 1999. Although the Annual Report is being mailed to stockholders with this
Proxy Statement, it does not constitute part of this Proxy Statement.
WHO CAN VOTE
Only stockholders of record as of the close of business on February 1, 1999
are entitled to notice of and to vote at the annual meeting. As of February 1,
1999, Tufco had outstanding 3,786,223 shares of common stock, the only
outstanding class of stock entitled to vote. Each stockholder of record on the
record date is entitled to one vote for each share of common stock held.
HOW YOU CAN VOTE
Shares of common stock cannot be voted at the annual meeting unless the
holder of record is present in person or by proxy. All stockholders are urged to
complete, sign, date and promptly return the Proxy in the enclosed postage-paid
envelope after reviewing the information contained in this Proxy Statement and
in the Annual Report. Valid Proxies will be voted at the annual meeting and at
any postponements or adjournments thereof as you direct in the Proxy. If no
direction is given and the Proxy is validly executed, the Proxy will be voted
FOR the election of the nominees for the Board of Directors set forth in this
Proxy Statement and FOR the ratification of the selection of Deloitte & Touche
LLP as independent auditors for the fiscal year ending September 30, 1999. The
persons authorized under the Proxies will vote upon such other business as may
properly come before the annual meeting in accordance with their best judgment.
REVOCATION OF PROXIES
You may revoke your Proxy at any time prior to the start of the annual
meeting in three ways:
(1) by delivering a written notice of revocation to the Secretary of
Tufco;
(2) by submitting a duly executed Proxy bearing a later date; or
(3) by attending the annual meeting and expressing the desire to vote
your shares in person.
QUORUM
A majority of the outstanding shares of common stock on February 1, 1999
(1,893,112 shares), represented in person or by proxy, shall constitute a quorum
for the transaction of business at the annual meeting. However, if a quorum is
not present, the stockholders present at the meeting have the power to adjourn
the meeting until a quorum is present. At any such adjourned meeting at which a
quorum is present or represented, any business may be transacted that might have
been transacted at the original meeting. Broker
<PAGE> 4
non-votes (i.e., a nominee holding shares of common stock for a beneficial owner
has not received voting instructions from the beneficial owner with respect to a
particular matter and such nominee does not possess or choose to exercise
discretionary authority with respect thereto) will not be included in the
determination of the number of shares present at the annual meeting for quorum
purposes.
YOUR PROXY VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING. IF YOU PLAN TO ATTEND THE ANNUAL MEETING TO VOTE IN PERSON AND
YOUR SHARES ARE REGISTERED WITH TUFCO'S TRANSFER AGENT (STOCKTRANS, INC.) IN THE
NAME OF A BROKER OR BANK, YOU MUST SECURE A PROXY FROM THE BROKER OR BANK
ASSIGNING VOTING RIGHTS TO YOU FOR YOUR SHARES.
PROPOSAL ONE -- ELECTION OF DIRECTORS
Tufco's Bylaws provide that the Board of Directors will consist of one to
twelve directors, as determined from time to time by resolution of the Board.
The Board of Directors has set the number of directors at seven, all of whom are
to be elected at the annual meeting. Each director will serve until the 2000
annual meeting and until his successor has been elected and qualified or until
the director's earlier death, resignation or removal. Each nominee has consented
to being named in this Proxy Statement and to serve if elected.
We have no reason to believe that any of the nominees will not serve if
elected, but if any of them should become unavailable to serve as a director,
and if the Board of Directors designates a substitute nominee, the persons named
in the accompanying Proxy will vote for the substitute nominee designated by the
Board of Directors, unless a contrary instruction is given in the Proxy.
Each stockholder is entitled to cast one vote for each share of common
stock held on February 1, 1999. The majority vote of the shares represented in
person or by proxy at the annual meeting is required to elect each director.
Votes may be cast in favor or withheld. Votes that are withheld will be excluded
entirely from the vote and will have no effect. Votes that are withheld for a
particular nominee will be excluded from the vote for that nominee only.
NOMINEES
The persons nominated to be directors are listed below. All of the nominees
listed below are currently directors and have been since 1992, except Mr.
LeCalsey, who became a director in September 1996.
During fiscal year 1998, the Board of Directors held four meetings. No
director attended less than 75% of the meetings held by the Board of Directors
and the committees on which he served.
The following information as of February 2, 1999 is submitted concerning
the nominees named for election as directors:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH TUFCO
- ---- --- -------------------
<S> <C> <C>
Robert J. Simon(1)(2)(3).............. 40 Chairman of the Board of Directors
Samuel J. Bero(1)(3).................. 63 Director
C. Hamilton Davison, Jr............... 39 Director
Patrick J. Garland(1)(3).............. 67 Director
Louis LeCalsey III.................... 59 Director, President and Chief
Executive Officer
Edward A. Leinss(2)................... 57 Director
William J. Malooly(2)................. 56 Director
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
2
<PAGE> 5
Robert J. Simon -- Mr. Simon has been Chairman of the Board of Directors of
Tufco since February 1992. Mr. Simon has been a Senior Managing Director of
Bradford Ventures Ltd., a private investment firm, since 1992 (and an officer
since 1984) and a General Partner of Bradford Associates since 1989. Mr. Simon
is Chairman of the Board of Holopak Technologies, Inc. a public company. Mr.
Simon is either Chairman of the Board or a director of Ampco Metal, Inc.,
Overseas Private Investors Ltd., Overseas Equity Investors Ltd., Pamarco
Technologies, Inc., Paramount Cards Inc., FoodServ Equipment & Supply Inc.,
Overseas Callander Fund and several other privately held companies.
Samuel J. Bero -- Mr. Bero had been President and Chief Executive Officer
of Tufco from November 1993 until he retired in July 1995, Executive Vice
President since November 1992, and General Manager of Tufco Industries, Inc.
(the "Predecessor") since 1974, when he co-founded the Predecessor with Mr.
Garland and two other individuals. Mr. Bero has been a director of Tufco since
it was founded in 1992 and has over 34 years of experience in the converting
industry.
C. Hamilton Davison, Jr. -- Mr. Davison has been a director of Tufco since
it was founded in 1992. Mr. Davison has been an executive officer and director
of Paramount Cards Inc. since 1988, serving as its President from 1988 through
1996, and as President and Chief Executive Officer from 1996 to the present. Mr.
Davison served as the 1996 president of the greeting card industry trade
association and continues to serve as a director and a member of its executive
committee. Mr. Davison is also a director of Valley Resources, Inc. and FoodServ
Equipment & Supply Inc.
Patrick J. Garland -- Mr. Garland has been a director of Tufco since it was
founded in 1992. Mr. Garland was the President of Tufco from 1974, when he
co-founded the Predecessor with Mr. Bero and two other individuals, until
November 1993. Mr. Garland retired from Tufco in February 1994 when his
employment agreement expired. He continues to serve as a director of Tufco and
has over 34 years of experience in the converting industry.
Louis LeCalsey III -- Mr. LeCalsey has been a director, President and Chief
Executive Officer of Tufco since September 19, 1996. He served as President of
the Predecessor from April 1996 through September 18, 1996, and as Vice
President of Worldwide Logistics for Scott Paper Co. from 1992 through March
1996.
Edward A. Leinss -- Mr. Leinss has been a director of Tufco since it was
founded in 1992. Mr. Leinss has been President and Chief Executive Officer of
Ahlstrom Filtration, Inc., a manufacturer of filtration media, since 1989 and of
its predecessor, Filtration Sciences, Inc., from 1981 to 1989.
William J. Malooly -- Mr. Malooly has been a director of Tufco since it was
founded in 1992. Mr. Malooly has been the Chairman of Bank One, Green Bay since
1977.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION OF DIRECTORS AS SET FORTH IN PROPOSAL ONE.
3
<PAGE> 6
COMMITTEES OF THE BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
<TABLE>
<S> <C>
Functions: Serves in the event action must be taken by the Board of
Directors at a time when convening a meeting of the entire
Board of Directors is not feasible.
May exercise all of the authority of the Board of Directors
in the business and affairs of Tufco with certain
exceptions.
Members: Samuel J. Bero
Robert J. Simon
Patrick J. Garland
Number of Meetings in 1998: None.
AUDIT COMMITTEE
Functions: Reviews proposals of Tufco's independent auditors regarding
annual audits.
Recommends the engagement or discharge of the auditors.
Reviews recommendations of the auditors concerning
accounting principles and the adequacy of internal controls
and accounting procedures and practices.
Reviews the scope of the annual audit.
Approves or disapproves each professional service or type of
service other than standard auditing services to be provided
by the auditors.
Reviews and discusses the audited financial statements with
the auditors.
Members: Robert J. Simon
Edward A. Leinss
William J. Malooly
Number of Meetings in 1998: One.
COMPENSATION COMMITTEE
Functions: Reviews annual salaries and bonuses and determines the
recipients of, and time of granting of, stock options.
Determines the exercise price of each option and the number
of shares to be issued upon the exercise of each stock
option.
Members: Samuel J. Bero
Robert J. Simon
Patrick J. Garland
Number of Meetings in 1998: One.
</TABLE>
DIRECTOR COMPENSATION
Directors of Tufco who are not employees of Tufco receive:
- an annual fee of $6,000,
- a payment of $1,000 for each Board meeting attended, and
- a payment of $1,000 for each committee meeting attended.
In addition, upon election or reelection to the Board of Directors at the annual
meeting, each non-employee director receives an option to acquire 2,000 shares
of common stock under Tufco's 1993 Non-Employee Director Stock Option Plan. The
stock options are exercisable immediately at an exercise price equal to the fair
market value of the common stock on the date of the annual meeting.
4
<PAGE> 7
MANAGEMENT
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Louis LeCalsey III........................ 59 Director, President and Chief Executive
Officer
Gregory L. Wilemon........................ 38 Chief Financial Officer, Chief Operating
Officer, Secretary and Treasurer
</TABLE>
Louis LeCalsey III -- Set forth under "Proposal One -- Election of
Directors."
Gregory L. Wilemon -- Mr. Wilemon has been Chief Financial Officer since
September 18, 1995 and was appointed Secretary/Treasurer by the Board of
Directors effective November 12, 1995 and Chief Operating Officer in September
1996. Mr. Wilemon had been Chief Operating Officer at Executive Roll
Manufacturing from 1991 until May 1993. From 1993 until he rejoined Tufco, Mr.
Wilemon was Vice President of Finance at Great North American Companies. Prior
to his earlier tenure with Tufco, Mr. Wilemon was a Senior Business Planner with
PepsiCo from 1987 to 1991.
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the compensation paid by Tufco for each of
the fiscal years ended September 30, 1998, 1997 and 1996 to the Chief Executive
Officer and the other most highly compensated executive officers who received a
total annual salary and bonus in excess of $100,000 in fiscal year 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES ALL
-------------------- OTHER ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- --------------------------- ----------- --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Louis LeCalsey III(1)..... 1998 $215,000 $ -- -- 30,000 --
Director, President and 1997 200,000 95,000 -- 50,000 $78,621(2)
Chief Executive Officer 1996 94,627 21,700 -- 9,569 --
Gregory L. Wilemon(3)..... 1998 161,250 -- -- 13,500 --
Chief Financial Officer, 1997 150,000 71,251 -- 10,000 --
Chief Operating Officer, 1996 125,000 48,750 -- 17,908 --
Secretary and Treasurer
</TABLE>
- ---------------
(1) Mr. LeCalsey became a Director, President and Chief Executive Officer
effective October 1, 1997. Information regarding Mr. LeCalsey's employment
agreement with Tufco is provided under "Employment Agreements." Mr. LeCalsey
served as President of the Predecessor from April 1996 until he assumed his
current position with Tufco.
(2) Represents reimbursed moving costs.
(3) Mr. Wilemon became Chief Financial Officer on September 18, 1995. See
"Employment Agreements."
EMPLOYMENT AGREEMENTS
Mr. LeCalsey entered into an employment agreement with Tufco effective
September 19, 1996, under which Mr. LeCalsey serves as the President and Chief
Executive Officer for an initial term of three years with successive one-year
renewal terms. If Tufco terminates Mr. LeCalsey's employment for cause, or as a
result of his death or disability, Tufco's obligation to compensate him
immediately terminates. If Mr. LeCalsey is terminated without cause, Tufco is
obligated to compensate him for the remaining term of the agreement or for a
period of one year, whichever is greater. The employment agreement prohibits Mr.
LeCalsey from competing with Tufco while employed by Tufco (or while receiving
severance pay from Tufco) and for one
5
<PAGE> 8
year after termination of his employment with Tufco. Mr. LeCalsey's employment
agreement provides for an initial annual base salary of $200,000, an annual
bonus and various fringe benefits. Mr. LeCalsey's bonus is based upon a budget
for pre-tax income determined by the Board of Directors.
Mr. Wilemon entered into an employment agreement with Tufco effective
October 1, 1996, under which Mr. Wilemon served as Chief Financial Officer,
Chief Operating Officer, Secretary and Treasurer for an initial term of two
years. The agreement provides for successive one-year renewal terms. On October
1, 1998, the Tufco Board renewed his employment agreement for one year. If Tufco
terminates Mr. Wilemon's employment for cause, or as a result of his death or
disability, Tufco's obligation to compensate him immediately terminates. If Mr.
Wilemon is terminated without cause, Tufco will be obligated to compensate him
for the remaining term of the agreement or for a period of one year, whichever
is greater. The employment agreement prohibits Mr. Wilemon from competing with
Tufco while employed by Tufco (or while receiving severance pay from Tufco) and
for one year thereafter. Mr. Wilemon's employment agreement provides for an
initial annual base salary of $150,000, an annual bonus and various fringe
benefits. Mr. Wilemon's bonus is based upon a budget for pre-tax income
determined by the Board of Directors.
OPTION TABLES
OPTION GRANTS
The following table sets forth the stock option grants made in fiscal year
1998 to each of Tufco's executive officers described above in the "Summary
Compensation Table." The following table also sets forth the hypothetical gains
that would exist for the options at the end of their five-year terms after
vesting, assuming compound rates of stock appreciation of 5% and 10%. The actual
future value of the options will depend on the market value of Tufco's common
stock. All option exercise prices are based on market price on the grant date.
FISCAL YEAR 1998 OPTION GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF STOCK
NUMBER OF PRICE APPRECIATION AT
SHARES % OF TOTAL END OF FIVE YEAR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM(1)
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME GRANTED(2) FISCAL YEAR 1998 SHARE DATE 5% 10%
---- ---------- ---------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Louis LeCalsey III........ 30,000 43% $9.50 10/1/2003 $78,740 $173,995
Gregory L. Wilemon........ 13,500 19% 9.50 10/1/2003 $35,433 $ 78,298
</TABLE>
- ---------------
(1) "Potential Realizable Value" is disclosed in response to Securities and
Exchange Commission rules, which require such disclosure for illustrative
purposes only, and is based on the difference between the potential market
value of shares issuable (based upon assumed appreciation rates) upon
exercise of such options and the exercise price of such options. The values
disclosed are not intended to be, and should not be interpreted as,
representations or projections of future value of Tufco's stock or of the
stock price.
(2) Stock option grants vest in equal increments on each of the first three
anniversaries of their date of grant.
6
<PAGE> 9
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning the value of
the unexercised options as of September 30, 1998 held by the executive officers.
No options were exercised in fiscal year 1998 by any of the executive officers.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1998 AND
FISCAL 1998 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL 1998 IN-THE-MONEY OPTIONS AT
YEAR-END FISCAL 1998 YEAR-END(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Louis LeCalsey III............................ 49,712 39,857 -- --
Gregory L. Wilemon............................ 27,685 13,723 $33,512 $833
</TABLE>
- ---------------
(1) The fair market value on September 30, 1998 of the common stock underlying
the options was $7.00 per share.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Tufco's executive compensation is supervised by the compensation committee
of the Tufco Board. The functions of the compensation committee are to review
general compensation policies and to review recommendations made regarding the
salaries of executive officers. Tufco seeks to provide executive compensation
that will support the achievement of Tufco's financial goals while attracting
and retaining talented executives and rewarding superior performance. In
performing this function, the compensation committee reviews executive
compensation surveys and other available information and may from time to time
consult with independent compensation consultants.
In general, Tufco compensates its executive officers through base salary,
but may also consider cash bonuses and long-term incentive compensation. In
addition, executive officers participate in benefit plans that are generally
available to Tufco's employees.
The compensation committee's compensation policies for executive officers
follow Tufco's compensation policy for all employees. This policy emphasizes the
principle that compensation should be commensurate with performance of the
individual and Tufco. With regard to the Chief Executive Officer, the
compensation committee considers a broad array of factors in establishing his
base salary and bonus, including the salary and bonus payments for Chief
Executive Officers at companies in similar businesses. For fiscal year 1998,
Tufco's Chief Executive Officer had an employment agreement with Tufco that
provided for a minimum base salary of $200,000.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deduction that may be claimed by a public company for total compensation in
excess of $1 million paid to the chief executive officer or to any of the other
four most highly compensated officers except to the extent that any compensation
in excess of $1 million is paid pursuant to a performance-based plan. This
provision became effective January 1, 1994 with respect to Tufco. After
considering the application of Section 162(m) to its compensation policies, the
committee has determined that the provisions of Section 162(m) would not affect
the compensation of any of the officers named above. To the extent that this
might not continue to be the case, the committee would consider any changes
necessary to conform to the provisions of Section 162(m).
7
<PAGE> 10
The compensation committee determined the salary for Tufco's Chief
Executive Officer for fiscal year 1998 based on the foregoing factors.
Respectfully submitted,
Compensation Committee:
Samuel J. Bero
Patrick J. Garland
Robert J. Simon
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Bero and Mr. Simon serve on Tufco's compensation committee. Mr. Bero
was an officer of Tufco from November 1993 until his retirement in June 1995 and
Mr. Simon currently is a general partner of Bradford Associates.
Tufco leases one of its facilities from a partnership in which Samuel J.
Bero and Patrick J. Garland are partners with two others. The lease has a
five-year term that expires on February 28, 2001. Tufco has options to renew the
lease for an additional three-year term at a negotiable rental rate. Tufco paid
total rent of $111,060 to the partnership that is the lessor of this facility
for fiscal year 1998. Tufco believes that the terms of this lease are at least
as favorable to Tufco as could have been obtained from an unaffiliated party.
Tufco has made interest-free advances to Messrs. Bero and Garland and two
other former stockholders of Tufco Industries, Inc., to purchase life insurance
policies on their lives. The policies are collectively assigned to Tufco as
security for the advances. As of September 30, 1998, the only outstanding
advances in excess of $60,000 were $150,247 to Mr. Garland and $80,770 to Mr.
Bero.
Upon completion of the acquisition of Executive Converting Corporation in
January 1994, Tufco amended an agreement with Bradford Ventures, Ltd.
("Bradford"), an affiliate of Bradford Venture Partners, L.P. ("BVP"), a
stockholder of Tufco, and Mr. Simon, under which Bradford provides various
financial consulting services to Tufco for an initial term of ten years, with
successive automatic renewal terms of one year each unless terminated by either
party. Under this agreement, Bradford has assisted Tufco in structuring its
initial public offering and the Executive Converting Corporation acquisition and
restructuring its long-term obligations. Tufco expects to use the services of
Bradford in the future for similar services as well as in any major transaction,
such as loans, subsequent public offerings and acquisitions. Tufco is obligated
to pay Bradford an annual fee of $239,245 under the agreement, subject to a 5%
annual increase, plus reasonable out-of-pocket expenses. During fiscal year
1998, Tufco paid Bradford $239,245 in fees. Tufco believes that the terms of the
agreement with Bradford are at least as favorable to Tufco as could be obtained
from an unaffiliated party.
8
<PAGE> 11
PERFORMANCE GRAPH
SEC rules require the presentation of a line graph comparing, over a period
of five years (or such shorter period that a class of securities has been
registered under Section 12 of the Securities Exchange Act of 1934), the
cumulative total stockholder return to a performance indicator of a broad equity
market index and either a nationally recognized industry index or a peer group
index constructed by Tufco.
The graph below compares the performance of Tufco's common stock with the
performance of the NASDAQ Market Index and the MG Paper Products Group Index
from January 21, 1994, when Tufco's common stock became publicly traded, through
September 30, 1998. The comparison assumes $100 was invested on January 21, 1994
in Tufco's common stock and in each of the aforementioned indices and assumes
reinvestment of dividends.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG TUFCO TECHNOLOGIES, INC.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
TUFCO
MEASUREMENT PERIOD TECHNOLOGIES, MG GROUP NASDAQ
(FISCAL YEAR COVERED) INC. INDEX MARKET INDEX
<S> <C> <C> <C>
01/21/94 100.00 100.00 100.00
9/30/94 61.54 94.56 99.24
9/30/95 48.72 99.90 120.49
9/30/96 64.10 96.28 140.67
9/30/97 106.41 109.94 191.20
9/30/98 71.79 71.97 198.70
</TABLE>
9
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the common stock as of January 15, 1999 by (1) each person known by
Tufco to own beneficially more than 5% of its outstanding common stock, (2) each
current director of Tufco, (3) each current named executive officer, and (4) all
current directors and current named executive officers of Tufco as a group.
Unless otherwise indicated, the shares listed in the table are owned directly by
the individual or entity, or by both the individual and the individual's spouse.
The individual or entity has sole voting and investment power as to shares shown
or, in the case of the individual, such power is shared with the individual's
spouse.
Certain of the shares listed below are deemed to be owned beneficially by
more than one stockholder under SEC rules. Accordingly, the sum of the ownership
percentages listed exceeds 100%.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP CLASS
-------------------- ----------
<S> <C> <C>
OVER 5% STOCKHOLDERS
Robert J. Simon(1)(2)(3)(6)(7).............................. 2,634,543 55.6%
Barbara M. Henagan(1)(2)(3)(5).............................. 2,629,345 55.5
Bradford Venture Partners, L.P.(1)(2)....................... 1,909,870 40.3
Overseas Equity Investors Partners(3)(4)(8)................. 709,870 15.0
OTHER DIRECTORS AND EXECUTIVE OFFICERS
Patrick J. Garland(9)(10)................................... 188,841 4.0
Samuel J. Bero(11)(12)...................................... 206,000 4.3
Louis LeCalsey III(13)...................................... 129,374 2.7
C. Hamilton Davison, Jr.(7)................................. 13,842 *
Edward A. Leinss(7)......................................... 19,605 *
William J. Malooly(7)....................................... 13,000 *
Gregory L. Wilemon(14)...................................... 36,202 *
Directors and Executive Officers as a Group (8
persons)(1)(3)(15)........................................ 3,241,407 68.4
</TABLE>
- ---------------
* Less than one percent.
(1) The amounts shown for Mr. Simon and Ms. Henagan include the shares owned of
record by BVP, as to which they may be deemed to share beneficial ownership
due to their having voting and dispositive power over such shares. Bradford
Associates, a general partnership of which such two persons are the
partners, is the sole general partner of BVP and, as such, holds a 1%
interest in that partnership.
(2) The address of the stockholder is 44 Nassau Street, Princeton, New Jersey
08542.
(3) The amounts shown for Mr. Simon and Ms. Henagan includes the shares owned
of record by Overseas Equity Investors Partners ("OEIP"), as to which they
may be deemed to share beneficial ownership due to their having voting
power over such shares. Mr. Simon serves as Chairman of the Board of
Directors of the corporation that acts as the managing partner of OEIP.
Bradford Associates holds a 1% partnership interest in OEIP, which may
increase upon the satisfaction of certain contingencies related to the
overall performance of OEIP's investment portfolio, and also acts as an
investment advisor for OEIP.
(4) OEIP holds non-voting common stock of Tufco. Non-voting common stock is not
entitled to vote on any matters except as a separate class on any amendment
to the Tufco's Certificate of Incorporation adversely affecting OEIP's
rights. The non-voting common stock is substantially equivalent to the
common stock except for voting rights and the fact that non-voting common
stock is convertible into common stock at any time on a one-for-one basis.
Therefore, OEIP is deemed to be a beneficial owner of the common stock for
purposes of the ownership table and, accordingly, the ownership percentage
of OEIP reflects OEIP's stock ownership as if the non-voting common stock
was converted into common stock. OEIP is the sole holder of non-voting
common stock of Tufco.
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<PAGE> 13
(5) The amount shown for Ms. Henagan includes 3,842 shares that she owns of
record as trustee under two trusts for the benefit of a nephew and a niece
of Ms. Henagan.
(6) The stockholder is also a director of Tufco.
(7) The amount shown includes 10,000 shares that may be acquired under options
that are currently exercisable.
(8) The address of the stockholder is Clarendon House, Church Street, Hamilton
5-31, Bermuda.
(9) The amount shown includes 8,000 shares that may be acquired under options
that are currently exercisable.
(10) The address of the stockholder is 3319 Capri Court, Green Bay, Wisconsin
54301.
(11) The amount shown includes 6,000 shares that may be acquired under options
that are currently exercisable.
(12) The address of the stockholder is 3322 New Plank Road, DePere, WI 54115.
(13) The amount shown includes 49,712 shares that may be acquired under options
that are currently exercisable.
(14) The amount shown includes 27,685 shares that may be acquired under options
currently exercisable.
(15) The amount shown includes an aggregate of 131,397 shares that may be
acquired under options that are currently exercisable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Tufco's
officers and directors, and persons who own more than 10% of a registered class
of Tufco's equity securities, to file reports of ownership and changes in
ownership of such securities with the SEC. Officers, directors and greater than
10% beneficial owners are required by applicable regulations to furnish Tufco
with copies of all Section 16(a) forms they file.
Based solely upon a review of the reports furnished to Tufco with respect
to fiscal year 1998, no person failed to disclose on a timely basis reports
required by Section 16(a).
PROPOSAL TWO -- RATIFICATION OF INDEPENDENT AUDITORS
The stockholders are asked to ratify the appointment by the Board of
Directors of Deloitte & Touche LLP as independent auditors for the fiscal year
ending September 30,1999. The selection was based upon the recommendation of the
Audit Committee.
Representatives of Deloitte & Touche LLP will be available by
teleconference at the annual meeting to respond to appropriate questions from
stockholders and to make a statement if they desire.
Adoption of Proposal Two requires approval by the holders of a majority of
shares of common stock present in person or represented by proxy, and entitled
to vote at the annual meeting. Abstentions may be specified on this proposal to
ratify the selection of the independent auditors. Abstentions will be considered
present and entitled to vote at the annual meeting but will not be counted as
votes cast in the affirmative. Abstentions will have the effect of a negative
vote for this proposal to ratify the selection of the independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS FOR FISCAL 1999.
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder for presentation at Tufco's
2000 annual meeting and received by Tufco's corporate secretary at Tufco's
principal executive office no later than October 10, 1999 will be included in
the Proxy Statement and Proxy related to the 2000 annual meeting.
11
<PAGE> 14
OTHER BUSINESS
Tufco's management knows of no other business that will be presented at the
annual meeting. If other matters requiring a vote of the stockholders properly
comes before the annual meeting, the persons authorized under the Proxies will
vote and act according to their best judgment.
EXPENSES
The expense of preparing, printing, and mailing proxy materials to Tufco's
stockholders will be borne by Tufco. In addition to the solicitation of Proxies
by use of the mail, Proxies may be solicited personally or by telephone or
facsimile by directors, officers and regularly engaged employees of Tufco, none
of whom will receive additional compensation therefor. Brokerage houses,
nominees and other similar record holders will be requested to forward proxy
materials to the beneficial owners of the common stock and will be reimbursed by
Tufco upon request for their reasonable out-of-pocket expenses.
ANNUAL REPORT
Tufco has provided without charge a copy of the Annual Report to
Stockholders for fiscal year 1998 to each person being solicited by this Proxy
Statement. UPON THE WRITTEN REQUEST BY ANY PERSON BEING SOLICITED BY THIS PROXY
STATEMENT, TUFCO WILL PROVIDE WITHOUT CHARGE A COPY OF THE ANNUAL REPORT ON FORM
10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (EXCLUDING EXHIBITS,
FOR WHICH A REASONABLE CHARGE SHALL BE IMPOSED). All such requests should be
directed to: Gregory L. Wilemon, Corporate Secretary, Tufco Technologies, Inc.,
4800 Simonton Road, Dallas, Texas 75244.
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<PAGE> 15
TUFCO TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS, MARCH 16, 1999
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
TUFCO TECHNOLOGIES, INC.
The undersigned hereby appoints ROBERT J. SIMON and GREGORY L. WILEMON,
and each of them, jointly and severally, as proxies, each with full power of
substitution, to vote all of the undersigned's shares of Common Stock held of
record on February 1, 1999, at the 1999 Annual Meeting of Stockholders or at any
postponements or adjournments thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked below to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(Samuel J. Bero, C. Hamilton Davison, Jr., Patrick J. Garland, Louis LeCalsey
III, Edward A. Leinss, William J. Malooly and Robert J. Simon)
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME ABOVE.
2. RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS FOR THE 1999 FISCAL YEAR.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR
ADJOURNMENTS THEREOF.
<PAGE> 16
This Proxy, when properly executed, will be voted in accordance with the
directions made on the reverse side. If no direction is made, this Proxy will be
voted FOR the first two proposals. The proxies will vote with respect to the
third proposal according to their best judgment.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
Dated , 1999
-----------------------------
-----------------------------------------
Signature
-----------------------------------------
Signature if shares held in more than one name
Please sign exactly as name appears below.
When shares are held in more than one name,
all parties should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If a
corporation, please sign in full corporate
name by an authorized officer. If a
partnership, please sign in partnership name
by an authorized person.
