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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 2003
-----------------
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the Transition Period from ______ to _______.
Commission file number 0-21018
TUFCO TECHNOLOGIES, INC.
Delaware 39-1723477
--------------------------------- ------------------------------------
(State of other jurisdiction (I.R.S. Employer Identification No.)
of incorporation of organization)
PO Box 23500, Green Bay, WI 54305-3500
--------------------------------------
(Address of principal executive offices)
(920) 336-0054
--------------
(Registrant's telephone number, including area code)
----------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of January 15, 2004
----- ----------------------------------
Common Stock, par value $0.01 per share 4,582,344
TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of
December 31, 2003 and September 30, 2003 3
Condensed Consolidated Statements of Operations for the
three months ended December 31, 2003 and 2002 4
Condensed Consolidated Statements of Cash Flows for the
three months ended December 31, 2003 and 2002 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
Item 4. Controls and Procedures 13
PART II: OTHER INFORMATION 14
SIGNATURES 15
2
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31,
2003 September 30,
(Unaudited) 2003*
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................................... $ 3,490,284 $ 2,930,416
Accounts receivable, net .......................................... 6,197,616 8,293,853
Inventories ....................................................... 5,488,445 3,891,083
Prepaid expenses and other current assets ......................... 585,853 388,319
Deferred income taxes ............................................. 515,918 515,918
------------ ------------
Total current assets ................................................. 16,278,116 16,019,589
PROPERTY, PLANT AND EQUIPMENT-Net .................................... 14,551,088 14,318,907
GOODWILL ............................................................. 7,211,575 7,211,575
OTHER ASSETS- Net .................................................... 447,574 475,688
------------ ------------
TOTAL ................................................................ $ 38,488,353 $ 38,025,759
============ ============
Liabilities and Stockholders' Equity
CURRENT LIABILITIES:
Accounts payable .................................................. $ 2,460,467 $ 1,829,414
Accrued payroll, vacation and payroll taxes ....................... 509,631 844,330
Other current liabilities ......................................... 457,956 531,681
Income taxes payable .............................................. 517,096 529,521
Current portion of long-term debt ................................. 250,000 250,000
------------ ------------
Total current liabilities ............................................ 4,195,150 3,984,946
LONG-TERM DEBT- Less current portion ................................. 500,000 500,000
DEFERRED INCOME TAXES ................................................ 53,395 53,395
STOCKHOLDERS' EQUITY:
Common Stock; $ 01 par value; 9,000,000 shares authorized;
4,706,341 shares issued ....................................... 47,063 47,063
Additional paid-in capital ........................................ 25,088,631 25,088,631
Retained earnings ................................................. 9,435,499 9,183,109
Treasury stock, 123,997 common shares, at cost .................... (831,385) (831,385)
------------ ------------
Total stockholders' equity ................................... 33,739,808 33,487,418
------------ ------------
TOTAL ............................................................. $ 38,488,353 $ 38,025,759
============ ============
See Notes to Condensed Consolidated Financial Statements
*Condensed from audited financial statements
3
TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
December 31,
2003 2002
------------ ------------
NET SALES ...................................... $ 13,045,610 $ 12,530,037
COST OF SALES .................................. 11,471,671 11,042,085
------------ ------------
GROSS PROFIT ................................... 1,573,939 1,487,952
OPERATING EXPENSES:
Selling, general & administrative .............. 1,119,009 1,000,051
Employee severance costs ....................... -- 46,284
Loss on asset sales ............................ 3,029 31,631
------------ ------------
OPERATING INCOME ............................... 451,901 409,986
OTHER INCOME (EXPENSE):
Interest expense ............................ (14,885) (98,133)
Interest income and other income(expense) ... (378) 4,555
------------ ------------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES ................. 436,638 316,408
INCOME TAX EXPENSE ............................. 184,248 133,309
------------ ------------
INCOME FROM CONTINUING OPERATIONS .............. 252,390 183,099
LOSS FROM DISCONTINUED OPERATIONS:
Loss from operations of discontinued
segment, net of income taxes ................. -- (15,944)
------------ ------------
NET INCOME ..................................... $ 252,390 $ 167,155
============ ============
BASIC EARNINGS PER SHARE:
Income from Continuing Operations .............. $ 0.05 $ 0.04
Loss from Operations of Discontinued
Segment ................................... $ -- $ 0.00
------------ ------------
Net Income ..................................... $ 0.05 $ 0.04
DILUTED EARNINGS PER SHARE:
Income from Continuing Operations .............. $ 0.05 $ 0.04
Loss from Operations of Discontinued
Segment ................................... $ -- $ 0.00
------------ ------------
Net Income ..................................... $ 0.05 $ 0.04
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic ...................................... 4,582,344 4,627,844
Diluted .................................... 4,589,852 4,627,844
See notes to condensed consolidated financial statements.
4
TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
--------------------------
2003 2002
----------- -----------
OPERATING ACTIVITIES
Income from continuing operations ............................... $ 252,390 $ 183,099
Noncash items in net income from continuing operations:
Depreciation and amortization of property, plant and
equipment .................................................. 556,786 600,253
Amortization ................................................. 23,369 68,107
Loss on asset disposals-net .................................. 3,029 31,631
Changes in operating working capital:
Accounts receivable .......................................... 2,096,237 374,683
Inventories .................................................. (1,597,362) 325,338
Prepaid expenses and other assets ............................ (192,789) (208,993)
Accounts payable ............................................. 631,053 (461,893)
Accrued and other current liabilities ........................ (408,424) (430,736)
Income taxes payable/receivable .............................. (12,425) 121,167
----------- -----------
Net cash provided by operations activities from
continuing operations ......................................... 1,351,864 602,656
INVESTING ACTIVITIES
Additions to property, plant and equipment ................... (810,016) (2,010,258)
Proceeds from disposals of property, plant and equipment ..... 18,020 31,625
Advances to directors and former owners ...................... -- (9,764)
----------- -----------
Net cash used by investing activities
from continuing operations .................................... (791,996) (1,988,397)
FINANCING ACTIVITIES
Repayment of long-term debt .................................. -- (193,182)
Issuance of long-term debt ................................... -- 2,749,475
----------- -----------
Net cash provided by financing activities from continuing
operations .................................................... -- 2,556,293
Net cash used by activities of discontinued operations ............. -- (1,159,701)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS .......................... 559,868 10,851
CASH AND CASH EQUIVALENTS:
Beginning of period ............................................. 2,930,416 251,346
----------- -----------
End of period ................................................... $ 3,490,284 $ 262,197
=========== ===========
See notes to condensed consolidated financial statements.
5
TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared by Tufco Technologies, Inc., (the "Company") pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC")
and, in the opinion of the Company, include all adjustments necessary
for a fair statement of results for each period shown (unless otherwise
noted herein, all adjustments are of a normal recurring nature).
Operating results for the three-month period ended December 31, 2003
are not necessarily indicative of results expected for the remainder of
the year. Certain information and note disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed
or omitted pursuant to such SEC rules and regulations. The Company
believes that the disclosures made are adequate to prevent the
financial information given from being misleading. The Company's fiscal
2003 Annual Report on Form 10-K contains a summary of significant
accounting policies which includes the consolidated financial
statements and the notes to the consolidated financial statements. The
same accounting policies are followed in the preparation of interim
reports. The Company's condensed consolidated balance sheet at
September 30, 2003 was derived from the audited consolidated balance
sheet. It is suggested that these condensed consolidated financial
statements be read in conjunction with the audited consolidated
financial statements and notes thereto for the fiscal year ended
September 30, 2003.
RECLASSIFICATIONS
Certain amounts previously reported have been reclassified to conform
to the current presentation.
EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number
of common shares outstanding. Diluted earnings per share includes
common equivalent shares from dilutive stock options outstanding during
the year, the effect of which was 7,508 and zero shares for the three
months ended December 31, 2003 and 2002, respectively. During the three
months ended December 31, 2003 and 2002, options to purchase 364,967
shares and 501,400 shares, respectively, were excluded from the diluted
earnings per share computation as the effects of such options would
have been anti-dilutive.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
STOCK BASED COMPENSATION
Stock option grants to employees are accounted for by the intrinsic
value method under Accounting Principles Board ("APB") Opinion No. 25
and related interpretations. SFAS No. 123, Accounting for Stock-Based
Compensation, encourages (but does not require) the cost of stock
options and other stock-based compensation arrangements with employees
to be measured based on the fair value of the equity instrument
awarded. The following table illustrates the effect on income from
continuing operations and related earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123 to
stock-based compensation, for the three months ended December 31, 2003
and 2002.
Three Months Ended
December 31,
2003 2002
----------- -----------
Income from continuing operations as reported $ 252,390 $ 183,099
Deduct: Total stock-based employee compensation expense determined under
fair value based method of all awards, net of related tax effects (17,700) (20,022)
----------- -----------
Pro forma income from continuing operations $ 234,690 $ 163,077
=========== ===========
Earnings per share:
Basic - as reported
Basic - pro forma $ 0.05 $ 0.04
$ 0.05 $ 0.04
Diluted - as reported
Diluted - pro forma $ 0.05 $ 0.04
$ 0.05 $ 0.04
2. INVENTORIES
Inventories consist of the following:
December 31, September 30,
2003 2003
---------- ----------
Raw materials .................... $4,498,337 $3,042,120
Finished goods ................... 990,108 848,963
---------- ----------
Total inventories ................ $5,488,445 $3,891,083
========== ==========
3. SEVERANCE COSTS
There were no costs associated with employee severance in the three
months ended December 31, 2003. For the three months ended December 31,
2002, severance costs were $46,284 which included costs related to the
elimination of several salary positions.
4. DISCONTINUED OPERATIONS
On January 27, 2003, the Company's Board of Directors approved a plan
to dispose of the operations of the Paint Sundries segment. The Company
sold the assets and business of the Paint Sundries segment for
approximately $12.2 million in cash to Trimaco, LLC and its affiliate.
The sale included all Paint Sundries segment assets, including the
stock of Foremost Manufacturing Company and the Manning, South Carolina
manufacturing facility. Accordingly, the operating results of the Paint
Sundries segment have been reported separately from continuing
operations and reported as a separate line item in the statement of
operations. The Company has also restated its prior year statement of
operations to present the earnings of the Paint Sundries segment as a
discontinued operation. Interest expense was not allocated to the
discontinued segment.
7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Operating results from discontinued operations were as follows:
Three Months Ended
December 31,
2002
----------
Net sales $5,889,089
Loss before income tax (27,553)
Income tax benefit 11,609
----------
Loss from discontinued segment $ (15,944)
==========
5. COMPREHENSIVE INCOME (LOSS)
Comprehensive Income for the three months ended December 31, 2003 was
$252,390 compared to Comprehensive Income of $179,428 for the three
months ended December 31, 2002.
Components of Comprehensive Income are as follows:
Three Months Ended
December 31,
2003 2002
-------- --------
Net income (loss) $252,390 $167,155
Other comprehensive income, net of tax:
Changes in fair value
of interest rate
swap contract 0 12,273
-------- --------
Comprehensive income (loss) $252,390 $179,428
======== ========
6. SEGMENT INFORMATION
The Company manufactures and distributes business forms, custom
paper-based non-woven products, and provides contract manufacturing,
specialty printing and related services on these types of products. In
the second quarter of fiscal 2003, the Company sold its Paint Sundries
segment, and presented the financial information related to this
segment as discontinued operations. Prior period amounts have been
restated, including the corporate and other information to reflect the
sale of this business. The Company separates its current operations and
prepares information for management use by the market segments aligned
with the Company's products and services. Such market information is
summarized below. The Contract Manufacturing segment provides services
to large national consumer products companies while the Business
Imaging segment manufactures and distributes printed and unprinted
business imaging paper products for a variety of business needs.
8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
THREE MONTHS ENDED CONTRACT BUSINESS CORPORATE
DECEMBER 31, 2003 MANUFACTURING IMAGING AND OTHER CONSOLIDATED
------------- ------------- ------------- -------------
Net Sales $ 6,982,195 $ 6,063,415 $ -- $ 13,045,610
Gross Profit 1,103,449 938,873 (468,383) 1,573,939
Operating Income 105,072 237,076 109,753 451,901
Depreciation and
amortization expense 260,577 129,527 190,051 580,155
Capital expenditures 741,412 68,604 -- 810,016
Assets:
Inventories 2,879,589 2,608,856 -- 5,488,445
Property, plant and
equipment-net 10,491,582 3,073,827 985,679 14,551,088
Accounts receivable
and other
(including goodwill) 7,250,149 6,011,995 5,186,676 18,448,820
------------- ------------- ------------- -------------
Total assets $ 20,621,320 $ 11,694,678 $ 6,172,355 $ 38,488,353
============= ============= ============= =============
THREE MONTHS ENDED CONTRACT BUSINESS CORPORATE
DECEMBER 31, 2002 MANUFACTURING IMAGING AND OTHER CONSOLIDATED
------------- ------------- ------------- -------------
Net Sales $ 6,392,965 $ 6,223,375 $ (86,303) $ 12,530,037
Gross Profit 952,342 885,156 (349,546) 1,487,952
Employee Severance -- -- 46,284 46,284
Operating Income (loss) 91,746 (53,700) 371,940 409,986
Depreciation and
amortization expense 273,839 127,992 266,529 668,360
Capital expenditures 2,022,425 29,854 (42,021) 2,010,258
Assets:
Inventories 1,243,581 2,097,030 2,894,350 6,234,961
Property, plant and
equipment-net 9,769,776 3,494,955 4,635,900 17,900,631
Accounts receivable
and other
(including goodwill) 7,298,503 5,871,247 11,450,376 24,620,126
------------- ------------- ------------- -------------
Total assets $ 18,311,860 $ 11,463,232 $ 18,980,626 $ 48,755,718
============= ============= ============= =============
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL INFORMATION:
The Company has manufacturing operations in Green Bay, WI and Newton,
NC. The Company's corporate headquarters, including corporate support
services, are located in Green Bay, WI.
Tufco performs contract manufacturing and specialty printing services
and manufactures and distributes business imaging paper products. The
Company's strategy is to provide services and manufacture and
distribute products in niche markets, relying on close customer contact
and high levels of quality and service. The Company works closely with
its contract manufacturing clients to develop products or perform
services which meet or exceed the customers' quality standards, and
then uses the Company's operating efficiencies and technical expertise
to supplement or replace its customers' own production and distribution
functions.
The Company's technical proficiencies include folding, packaging,
coating, slitting and rewinding, sheeting, multi-color flexographic
printing and laminating.
RESULTS OF OPERATIONS:
CONDENSED OPERATING DATA, PERCENTAGES OF NET SALES AND PERIOD-TO-PERIOD CHANGES
IN THESE ITEMS ARE AS FOLLOWS (DOLLARS IN THOUSANDS):
Three Months Ended Period-to-Period
December 31, Change
------------------------------ ------------------------------
2003 2002 $ %
------------- ------------- ------------- -------------
Net Sales $ 13,046 $ 12,530 516 4
Gross Profit 1,574 1,488 86 6
12.1% 11.9%
Operating Expenses 1,122 1,078 44 4
8.6% 8.6%
Operating Income 452 410 42 10
3.5% 3.3%
Interest Expense 15 98 (83) -85
0.1% 0.8%
Income from Continuing
Operations Before Income Taxes 437 314 123 39
3.3% 2.5%
Income Tax Expense 184 133 51 38
1.4% 1.1%
Loss from Discontinued
Operations, Net of Tax -- (16) 16 -100
-- -0.1%
Net Income (Loss) $ 252 $ 167 85 51
1.9% 1.3%
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS --CONTINUED
The components of net sales and gross profit are summarized in the
table below (dollars in thousands):
Three Months Ended
December 31,
----------------------------------------------------------
2003 2002
--------------------------- ---------------------------
% of % of Period-to-Period Change
Amount Total Amount Total $ %
------------ ------------ ------------ ------------ ------------ ------------
Net Sales
Contract manufacturing and printing $ 6,982 54% $ 6,393 51% $ 589 9%
Business imaging paper products 6,063 46 6,223 49 -160 -3
------------ ------------ ------------ ------------ ------------ ------------
Net sales $ 13,045 100% $ 12,616 100% $ 429 3%
============ ============ ============ ============ ============ ============
Margin Margin Period-to-Period Change
Amount % Amount % $ %
------------ ------------ ------------ ------------ ------------ ------------
Gross Profit (loss)
Contract manufacturing and printing $ 1,103 16% $ 952 15% $ 151 16%
Business imaging paper products 939 15 885 14 54 6
------------ ------------ ------------ ------------ ------------ ------------
Gross profit $ 2,042 16% $ 1,837 15% $ 205 11%
============ ============ ============ ============ ============ ============
NET SALES:
Consolidated net sales increased $0.5 million (4%) to $13.0 million in the first
quarter of fiscal 2004, when compared to the same period last year. This is due
to an increase of $0.6 million or 9% in the Contract Manufacturing segment and a
decrease of $0.2 million or 3% in the Business Imaging segment. The increase in
the Contract Manufacturing segment was mainly due to increased sales from newly
contracted projects. The Company had a major customer choose to take products
representing approximately 20% of the Company's fiscal 2003 revenue into their
own facilities for manufacture. Subsequently, the Company has signed contracts
with new customers which the Company believes will replace those revenues from
the projects lost. However, in the first quarter, the Company was in the process
of transitioning out of the projects leaving Tufco for the customer's plant.
That transition will be completed in the second quarter. The decrease in the
Business Imaging segment was due to a decrease in engineering paper sales
resulting from reduced demand.
GROSS PROFIT:
Gross profit increased $86,000 (6%) for first quarter of fiscal 2004 when
compared to the first quarter of fiscal 2003. The Contract Manufacturing segment
increased $0.2 million (16%) due to higher capacity utilization, particularly on
the wet converting equipment. This was offset by an increase in indirect
salaries and wages primarily due to start-up and training costs associated with
the Company's new dry/wet converting lines.
OPERATING EXPENSES:
Operating expenses increased $44,000 for first quarter of fiscal 2004 when
compared to the same period of fiscal 2003. This increase for the quarter
results from increases in legal and audit costs (150%) primarily resulting from
the transfer of corporate services from Dallas to Green Bay and in selling
expenses (21%). This was somewhat offset by a decrease in loan fees (66%).
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS --CONTINUED
INTEREST EXPENSE AND OTHER INCOME (EXPENSE)-NET:
Interest expense decreased $83,000 to $15,000 compared to last year due to
decreased borrowings. Effective with the sale of the Paint Sundry segment, the
Company repaid approximately $5.4 million of outstanding debt on which interest
was being paid.
NET INCOME AND EARNINGS PER SHARE:
The Company reported net income of $0.3 million (per share: $0.05 basic and
diluted) for first quarter of fiscal 2004, versus net income of $0.2 million
(per share: $0.04 basic and diluted) for the same period one year ago. Income
from continuing operations was $0.3 million (per share: $0.05 basic and diluted)
for the first quarter of 2004 compared to $0.2 million (per share: $0.04 basic
and diluted) for 2003.
LIQUIDITY AND CAPITAL RESOURCES:
The Company generated $1.4 million in cash from continuing operations through
the first three months of fiscal 2004, compared to cash flow from continuing
operations of $0.6 million for the same period last year. Increases in
inventories ($1.6 million) primarily represented materials purchased for new
projects. Cash was provided by a reduction of accounts receivable ($2.1 million)
as outstanding receivables were collected from a major customer.
Net cash used in investing activities was $0.8 million for the first quarter of
fiscal 2004. On December 4, 2003 the Company announced it had signed significant
contracts with new and existing customers for both printing and contract
manufacturing. To satisfy the manufacturing requirements of the new contracts,
the Company is undertaking a capital equipment expansion program aggregating
approximately $3.6 million for fiscal 2004. Included in this expansion program
is doubling the capacity for wet wipes production, a new flat pack folder, and a
rebuild of an existing quarter folder. The Company anticipates such amounts will
be funded by cash from operations and bank borrowings.
There was no net cash provided or used by discontinued operations for the first
quarter of 2004. For 2003, discontinued operations used $1.2 million of cash.
As of February 13, 2004, the Company had approximately $6.0 million available
under its revolving credit line. According to the terms of its credit facility
with its lender, the Company is required to maintain certain financial and
operational covenants. As of December 31, 2003, the Company was in compliance
with all of its debt covenants under the credit facility.
The Company intends to retain earnings to finance future operations and
expansion and does not expect to pay any dividends within the foreseeable
future.
STOCK REPURCHASE PLAN:
In March 2003, the Company's Board of Directors approved the purchase by the
Company of up to 100,000 of its shares of common stock given that the cash and
debt position would enable these purchases without impairment to the Company's
capital. The purchase plan began in April, 2003 and expired in December, 2003. A
total of 45,500 shares were purchased under the plan.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS --CONTINUED
CRITICAL ACCOUNTING POLICIES:
The condensed consolidated financial statements have been prepared in accordance
with generally accepted accounting principles which require the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the condensed consolidated financial statements and
revenues and expenses during the periods reported. Actual results could differ
from those estimates. Information with respect to the Company's critical
accounting policies which the Company believes could have the most significant
effect on the Company's reported results and require subjective or complex
judgments by management is contained on pages 17-18 in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, of the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
2003. The Company has not made any changes in estimates or assumptions that have
had a significant effect on the reported amounts.
FORWARD LOOKING STATEMENTS:
Management's discussion and analysis of financial condition and results of
operations, including management's discussion of the Company's 2004 quarterly
periods in comparison to fiscal 2003 contains forward-looking statements
regarding current expectations, risks and uncertainties for fiscal 2004 and
beyond. The actual results could differ materially from those discussed here. As
well as those factors discussed in this report, other factors that could cause
or contribute to such differences include, among other items, the general
economic and business conditions affecting the contract manufacturing, specialty
printing services, imaging paper products, significant changes in the cost of
base paper stock, competition in the Company's product areas, or an inability of
management to successfully reduce operating expenses in relation to net sales
without damaging the long-term direction of the Company. Therefore, the selected
financial data for the periods presented may not be indicative of the Company's
future financial condition or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information with respect to the Company's exposure to interest rate risk,
foreign currency risk, commodity price risk and other relevant market risks is
contained on page 19 in Item 7A, Management's Discussion and Analysis of
Financial Condition and Results of Operations, of the Company's Annual Report on
Form 10-K for the year ended September 30, 2003. Management believes that as of
December 31, 2003, there has been no material change to this information.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in its reports filed pursuant
to the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
13
ITEM 4. CONTROLS AND PROCEDURES--CONTINUED
The Company carried out an evaluation, under the supervision and with the
participation of its management, including its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act) were effective as of the end of the
Company's fiscal quarter ended December 31, 2003.
There have been no changes in the Company's internal control over financial
reporting during the first fiscal quarter ended December 31, 2003 that have
materially affected, or are reasonably likely to materially affect the Company's
internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
31.1 Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934
31.2 Certification pursuant to Rule 13a-14 (a) or Rule 15d-14 (a) of
the Securities Exchange Act of 1934.
32.1 Certification furnished pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification furnished Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) REPORTS ON FORM 8-K.
The Company filed Current Report on Form 8-K on December 5, 2003
regarding the Company's fourth fiscal quarter.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
TUFCO TECHNOLOGIES, INC.
Date: February 13, 2004 /s/ Louis LeCalsey, III
-------------------------------------------
Louis LeCalsey, III
President and Chief Executive Officer
Date: February 13, 2004 /s/ Michael B. Wheeler
-------------------------------------------
Michael B. Wheeler
Vice President and Chief Financial Officer
15
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
31.1 Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934
31.2 Certification pursuant to Rule 13a-14 (a) or Rule 15d-14 (a) of
the Securities Exchange Act of 1934.
32.1 Certification furnished pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification furnished Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002