Tufco (TFCO) 10-Q 2009 Q1 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

Washington, DC

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2008

Commission file number0-21018

TUFCO TECHNOLOGIES, INC.

Delaware	39-1723477
(State of other jurisdiction of incorporation of organization)	(IRS Employer ID No.)

PO BOX 23500 Green Bay, WI 54305

(Address of principal executive offices)(Zip code)

(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.

Yesþ Noo

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filero            Accelerated filero                      Non-accelerated filero                      Smaller reporting companyþ

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso Noþ

     Indicate the number of shares outstanding of each or the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of February 13, 2009
Common Stock, par value $0.01 per share	4,334,122

TUFCO TECHNOLOGIES, INC.

Index

		Page
		Number
PART I:	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of December 31, 2008 and September 30, 2008		3
	Condensed Consolidated Statements of Income for the three months ended December 31, 2008 and 2007		4
	Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2008 and 2007		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		13
Item 4.	Controls and Procedures		13
PART II:	OTHER INFORMATION
Item 1.	Legal Proceedings		13
Item 1A.	Risk Factors		13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		14
Item 3.	Defaults Upon Senior Securities		14
Item 4.	Submission of Matters to Vote for Security Holders		14
Item 5.	Other Information		14
Item 6.	Exhibits		15
SIGNATURES			16
EX-31.1
EX-31.2
EX-32.1
EX-32.2

2

PART I. FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements

TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	Dec. 31,
	2008			September 30,
	(Unaudited)			2008
Assets
CURRENT ASSETS:
Cash	$	6,767		$	68,397
Accounts receivable—net		12,242,684			11,770,981
Inventories — net		14,272,905			14,939,968
Prepaid expenses and other current assets		525,319			420,237
Income taxes receivable		118,991			118,991
Deferred income taxes		571,583			571,583
Total current assets		27,738,249			27,890,157
PROPERTY, PLANT AND EQUIPMENT—Net		18,042,669			18,036,764
GOODWILL		7,211,575			7,211,575
OTHER ASSETS—Net		122,549			122,297
TOTAL	$	53,115,042		$	53,260,793
Liabilities and Stockholders’ Equity
CURRENT LIABILITIES:
Accounts payable	$	7,398,220		$	8,320,011
Accrued payroll, vacation and payroll taxes		674,240			562,598
Other current liabilities		396,137			700,095
Total current liabilities		8,468,597			9,582,704
LONG-TERM DEBT		4,250,000			3,000,000
DEFERRED INCOME TAXES		2,894,481			2,896,002
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common Stock: $.01 par value: 9,000,000 shares authorized; 4,708,741 shares issued		47,087			47,087
Non-voting common stock, $.01 par value — 2,000,000 shares authorized and unissued		—			—
Preferred stock, $.01 par value — 1,000,000 shares authorized and unissued		—			—
Additional paid-in capital		25,378,090			25,374,211
Retained earnings		13,992,615			13,981,031
Treasury stock, 333,743 and 252,037 common shares at cost		(1,915,828	)		(1,620,242	)
Total stockholders’ equity		37,501,964			37,782,087
TOTAL	$	53,115,042		$	53,260,793

3

TUFCO TECHNOLOGIEES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	THREE MONTHS ENDED
	December 31,
	2008			2007
NET SALES	$	23,185,787		$	24,817,953
COST OF SALES		22,148,474			23,713,435
GROSS PROFIT		1,037,313			1,104,518
OPERATING EXPENSES:
Selling, general & administrative		1,026,595			969,615
Gain on asset sales		(37,500	)		—
OPERATING INCOME		48,218			134,903
OTHER INCOME (EXPENSE):
Interest expense		(42,606	)		(87,111	)
Interest income and other income (expense)		13,439			17,745
INCOME BEFORE INCOME TAXES		19,051			65,537
INCOME TAX EXPENSE		7,467			25,691
NET INCOME	$	11,584		$	39,846
BASIC EARNINGS PER SHARE:
Net Income	$	0.00		$	0.01
DILUTED EARNINGS PER SHARE:
Net Income	$	0.00		$	0.01
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		4,412,242			4,535,644
Diluted		4,412,242			4,552,607

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,
	2008			2007
OPERATING ACTIVITIES
Net income	$	11,584		$	39,846
Noncash items in net income:
Depreciation and amortization of property, plant and equipment		568,400			548,752
Non-monetary reimbursement of cost		—			(100,000	)
Deferred income taxes		(1,521	)		(4,782	)
Gain on sale of property, plant and equipment		(37,500	)		—
Stock-based compensation expense		3,879			12,199
Changes in operating working capital:
Accounts receivable		(471,703	)		3,656,085
Inventories		667,062			(1,155,291	)
Prepaid expenses and other assets		(105,333	)		(246,432	)
Accounts payable		(1,028,610	)		(2,173,212	)
Accrued and other current liabilities		(199,303	)		114,500
Income taxes payable/receivable		6,988			(153,929	)
Net cash (used) provided by operating activities		(586,057	)		537,736
INVESTING ACTIVITIES
Additions to property, plant and equipment		(467,487	)		(190,476	)
Proceeds from disposals of property, plant and equipment		37,500			—
Payment of construction payable		—			(25,823	)
Net cash used in investing activities		(429,987	)		(216,299	)
FINANCING ACTIVITIES
Net borrowings (repayments) of debt		1,250,000			(320,579	)
Purchase of treasury stock		(295,586	)		—
Net cash provided (used) by financing activities		954,414			(320,579	)
NET (DECREASE) INCREASE IN CASH		(61,630	)		858
CASH:
Beginning of period		68,397			6,663
End of period	$	6,767		$	7,521
NONCASH SUPPLEMENTAL INFORMATION:
Construction payable	$	106,819			—

5

TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended December 31, 2008 and 2007

(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, 2008 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 2008 Annual Report on Form 10-K contains a summary of significant accounting policies and 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, 2008 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, 2008.
2.	Recently Issued Accounting Standards
	On October 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. However, the FASB issued FSP SFAS No. 157-2 which deferred the effective date of SFAS No. 157, until the beginning of our 2010 fiscal year, as it relates to fair value measurement requirements for nonfinancial assets and liabilities that are not remeasured at fair value on a recurring basis. The Company determined that the adoption of SFAS No. 157 did not have a material effect on its consolidated financial statements.
	The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1:	Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2:	Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:	Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The Company currently does not have any Level 1, Level 2 or Level 3 financial instruments. Substantially all of the Company’s cash and cash equivalents are held in demand deposits with its bank. The fair value of these assets is determined by deposit values and interest earned based on stated bank rates.

6

	Notes to condensed consolidated financial statements—(continued)
3.	Earnings Per Share
	Basic earnings per share is computed using the weighted average number of common shares outstanding. Diluted earnings per share includes common stock equivalents from dilutive stock options outstanding during the year, the effect of which was zero and 16,963 shares for the three months ended December 31, 2008 and 2007, respectively. During the three months ended December 31, 2008 and 2007, options to purchase 300,150 and 154,350 shares, respectively, were excluded from the diluted earnings per share computation as the effects of including such options would have been anti-dilutive.
4.	Inventories
	Inventories consist of the following:

	December 31,		September 30,
	2008		2008
Raw materials	$	11,239,365	$	11,407,472
Finished goods		3,033,540		3,532,496
Total inventories	$	14,272,905	$	14,939,968

5.	Stock Repurchase Plan
	In February 2008, the Company’s Board of Directors approved a program for open market stock repurchases through December 31, 2008 for up to 100,000 shares of its common stock at prevailing market prices after concluding that the Company’s cash and debt position would enable these purchases without impairment to the Company’s capital. On October 15, 2008, the Company’s Board of Directors approved an extension of its February 2008 stock repurchase program through June 2009 and an increase in the number of shares from 100,000 to 200,000. A total of 160,646 shares were purchased under the plan for an aggregate purchase price of $0.8 million from approval of the plan through December 31, 2008. For the three months ended December 31, 2008, a total of 81,706 shares were purchased under the plan for an aggregate purchase price of $0.3 million. On January 22, 2009 the Company’s Board of Directors approved a further extension of its February 2008 stock repurchase program through September 2009 and an increase in the number of shares from 200,000 to 300,000.
6.	Segment Information
	The Company operates in a single industry since it manufactures and distributes custom paper-based and nonwoven products, and provides contract manufacturing, specialty printing and related services on these types of products. The Company does, however, separate its operations and prepares information for management use by the market segment aligned with the Company’s products and services. Corporate costs, such as interest income, interest expense and income tax expense are recorded under the Corporate and Other segment. Such market segment information is summarized below. The Contract Manufacturing segment provides services to multinational consumer products companies while the Business Imaging segment manufactures and distributes printed and unprinted business imaging paper products for a variety of business needs.
	Substantially all of the Company’s revenues are attributed to domestic external customers. There are no long-lived assets located outside of the United States.

7

Notes to condensed consolidated financial statements—(continued)

Three Months Ended	Contract		Business		Corporate
December 31, 2008	Manufacturing		Imaging		and Other			Consolidated
Net sales	$	17,436,202	$	5,749,585	$	—		$	23,185,787
Gross profit		799,116		238,197		—			1,037,313
Operating income (loss)		253,651		9,695		(215,128	)		48,218
Depreciation and amortization expense		515,141		52,666		593			568,400
Capital expenditures		467,487		—		—			467,487
Three Months Ended	Contract		Business		Corporate
December 31, 2007	Manufacturing		Imaging		and Other			Consolidated
Net sales	$	19,098,813	$	5,719,140	$	—		$	24,817,953
Gross profit		729,255		375,263		—			1,104,518
Operating income (loss)		124,224		199,667		(188,988	)		134,903
Depreciation and amortization expense		492,135		55,044		1,573			548,752
Capital expenditures		165,844		24,632		—			190,476
	Contract		Business		Corporate
December 31, 2008	Manufacturing		Imaging		and Other			Consolidated
Assets:
Inventories—net	$	10,798,070	$	3,474,835	$	—		$	14,272,905
Property, plant and equipment—net		15,998,206		2,037,807		6,656			18,042,669
Accounts receivable and other (including goodwill)		14,410,435		5,569,143		819,890			20,799,468
Total assets	$	41,206,711	$	11,081,785	$	826,546		$	53,115,042
	Contract		Business		Corporate
September 30, 2008	Manufacturing		Imaging		and Other			Consolidated
Assets:
Inventories—net	$	12,209,659	$	2,730,309	$	—		$	14,939,968
Property, plant and equipment—net		15,939,041		2,090,473		7,250			18,036,764
Accounts receivable and other (including goodwill)		13,425,593		5,977,200		881,268			20,284,061
Total assets	$	41,574,293	$	10,797,982	$	888,518		$	53,260,793

8

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

Management’s discussion of the Company’s fiscal 2009 results in comparison to fiscal 2008 contains forward-looking statements regarding current expectations, risks and uncertainties for future periods. The actual results could differ materially from those discussed herein due to a variety of factors such as changes in customer demand for its products, cancellation of production agreements by significant customers including two Contract Manufacturing customers it depends upon for a significant portion of its business, its ability to renew its production agreements with one of these customers, the effects of the economy in general including the recent economic decline, material increases in the cost of base paper stock, competition in the Company’s product areas, an inability of management to successfully reduce operating expenses including labor and waste costs in relation to net sales, the Company’s ability to increase sales and earnings as a result of new projects, the Company’s ability to successfully install new equipment on a timely basis, the Company’s ability to produce new products, the Company’s ability to continue to improve profitability, the Company’s ability to successfully attract new customers through its sales initiatives and the Company’s ability to improve the run rates for its products. Therefore, the financial data for the periods presented may not be indicative of the Company’s future financial condition or results of operations.

General Information:

Tufco is a leader in providing diversified contract wet and dry wipes converting and printing, as well as specialty printing services and business imaging products. The Company’s business strategy is to continue to place our wipes converting at the leading edge of existing and emerging wipes growth opportunities. 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 wide web flexographic printing, wet and dry wipe converting, hot melt adhesive lamination, folding, integrated downstream packaging and quality and microbiological process management and the manufacture and distribution of business imaging paper products.

The Company has manufacturing operations in Green Bay, WI, which is ISO certified, and Newton, NC. The Company’s corporate headquarters, including corporate support services, are located in Green Bay, WI.

9

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Continued

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
	2008			2007			$			%
Net Sales	$	23,186		$	24,818		$	(1,632	)		(7	)
Gross Profit		1,037			1,105			(68	)		(6	)
		4.5	%		4.5	%
Operating Expenses		989			970			19			2
		4.3	%		3.9	%
Operating Income		48			135			(87	)		(64	)
		0.2	%		0.5	%
Interest Expense		43			87			(44	)		(51	)
		0.2	%		0.4	%
Income Before Income Taxes		19			66			(47	)		(71	)
		0.1	%		0.3	%
Income Tax Expense		7			26			(19	)		(73	)
		0.0	%		0.1	%
Net Income	$	12		$	40			(28	)		(70	)
		0.1	%		0.2	%

	Three Months Ended
	December 31,
	2008					2007
			% of					% of			Period-to-Period Change
	Amount		Total			Amount		Total			$			%
Net Sales
Contract Manufacturing and printing	$	17,436		75	%	$	19,099		77	%	$	(1,663	)		(9	%)
Business Imaging paper products		5,750		25	%		5,719		23	%		31			0.5	%
Net Sales	$	23,186		100	%	$	24,818		100	%	$	(1,632	)		(7	%)

	2008					2007
			Margin					Margin			Period-to-Period Change
	Amount		%			Amount		%			$			%
Gross Profit
Contract Manufacturing and printing	$	799		5	%	$	729		4	%	$	70			10	%
Business Imaging paper products		238		4	%		376		7	%		(138	)		(37	%)
Gross Profit	$	1,037		4	%	$	1,105		4	%	$	(68	)		(6	%)

10

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Continued

Net Sales:

Consolidated net sales decreased $1.6 million (7%) to $23.2 million in the first quarter of fiscal 2009, when compared to the same period last year. This was due to a decrease of $1.7 million (9%) in the Contract Manufacturing segment partially offset by a slight increase of $31,000 (0.5%) in the Business Imaging segment.

The Company depends on two Contract Manufacturing customers for a significant portion of its business. One customer accounted for 27% of the Company’s total net sales in the first quarter of fiscal 2009 compared to 39% for the same period in fiscal 2008. The second customer accounted for 37% of the Company’s total net sales in the first quarter of fiscal 2009 compared to 30% for the same period in fiscal 2008.

In Contract Manufacturing, the decrease in revenues was primarily related to a drop in sales of a product which benefited from a market launch in the first quarter of fiscal 2008. In addition, sales of an existing product were lost due to a customer required packaging conversion which was outside of Tufco’s then current capabilities. These decreases were partially offset by increases in consumer demand for other existing products and business from new customers. The Business Imaging segment remained relatively flat for the first three months primarily due to continued strong price competition for the segment’s products. Both segments were affected by the overall slowdown in the economic environment.

Gross Profit:

Consolidated gross profit decreased $68,000 (6%) for the first quarter of fiscal 2009 when compared to the first quarter of fiscal 2008. This was due to an increase of $70,000 (10%) in the Contract Manufacturing segment and a decrease of $138,000 (37%) in the Business Imaging segment.

In Contract Manufacturing, the increase in gross profit for the three months was primarily due to operational gains made as a result of the Company’s continuing LEAN Manufacturing and Six Sigma initiatives. In addition, other operational expenses were reduced to reflect the decrease in net sales. In Business Imaging, the decrease in gross profit for the three months was largely due to strong price competition for the segment’s products. The effect of the overall economic slowdown had a negative impact on both segments.

Operating Expenses:

Selling, general and administrative expenses increased $57,000 (6%) for the first quarter of fiscal 2009 when compared to the same period in fiscal 2008, due to an increase in sales staffing and the filling of the General Manager position for the Business Imaging sector. Operating expenses for the three months ended December 31, 2008 were reduced by $37,500, reflecting the gain on the sale of a bag sealer and case packer that was completed in the first quarter of fiscal 2009.

Interest Expense and Other Income (Expense) net:

Interest expense decreased $44,000 to $43,000 for the first quarter of fiscal 2009 compared to the same period in fiscal 2008 due to lower average debt outstanding and lower interest rates on borrowings.

11

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Continued

Net Income:

The Company reported net income of $12,000 (per share: $0.00 basic and diluted) for the first quarter of fiscal 2009, versus net income of $40,000 (per share: $0.01 basic and diluted) for the same period in fiscal 2008.

Liquidity and Capital Resources:

Cash flows (used in) operations were $0.6 million through the first three months of fiscal 2009, compared to cash provided by operations of $0.5 million for the same period last year. Cash used in operations for the first three months of fiscal 2009 resulted from an increase in accounts receivable of $0.5 million. Accounts payable decreased $1.0 million in the first three months of fiscal 2009 compared to the same period last year, primarily due to the decrease in materials purchased. Inventories decreased $0.7 million as a result of efforts to reduce average on hand inventory levels for major raw material components and decreases in net sales. Depreciation was $0.6 million for the first three months.

Net cash used in investing activities was $0.4 million for the first three months of fiscal 2009, primarily related to capital expenditures to support ongoing operational needs and for payments on a canister line and associated packaging equipment to support the Company’s growth in the expanding disposable nonwovens wipes market.

Net cash provided by financing activities was $1.0 million for the first three months of fiscal 2009 as a result of the Company borrowing from its revolving credit line to fund a portion of its increased working capital and equipment needs. In February 2008, the Company’s Board of Directors approved a program for open market stock repurchases through December 31, 2008 for up to 100,000 shares of its common stock at prevailing market prices after concluding that the Company’s cash and debt position would enable these purchases without impairment to the Company’s capital. On October 15, 2008, the Company’s Board of Directors approved an extension of its February 2008 stock repurchase program through June 2009 and an increase in the number of shares from 100,000 to 200,000. A total of 160,646 shares were purchased under the plan for an aggregate purchase price of $0.8 million from approval of the plan through December 31, 2008. For the three months ended December 31, 2008, a total of 81,706 shares were purchased under the plan for an aggregate purchase price of $0.3 million. On January 22, 2009 the Company’s Board of Directors approved a further extension of its February 2008 stock repurchase program through September 2009 and an increase in the number of shares from 200,000 to 300,000.

The Company’s primary need for capital resources is to finance inventories, accounts receivable and capital expenditures. As of December 31, 2008, cash recorded on the balance sheet was $6,767.

The credit agreement governing the Company’s revolving credit line, as amended on February 9, 2007 and March 18, 2008, includes a $14.0 million revolving line of credit facility as well as a $1.0 million swing line available for overdrafts and expires on May 18, 2010.

As of February 13, 2008, the Company had approximately $10.8 million available and $4.2 million outstanding under the revolving credit line pursuant to its credit agreement. According to the terms of the credit agreement, the Company is subject to certain financial and operational covenants. As of December 31, 2008, the Company was in compliance with all of its covenants under the credit agreement.

Management believes that the Company’s operating cash flow, together with amounts available under its credit agreement, are adequate to service the Company’s long term obligations as of December 31, 2008 and any budgeted capital expenditures.

The Company intends to retain earnings to finance future operations and expansion and does not expect to pay any dividends within the foreseeable future.

Off Balance Sheet Arrangements:

The Company has no Off Balance Sheet Arrangements (as defined in Item 303(a)(4) of Regulation S-K).

12

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

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.

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, 2008.

There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

The Company is subject to lawsuits, investigations, and potential claims arising out of the ordinary conduct of its business. The Company is not currently involved in any material litigation.

ITEM 1A. Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

13

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table presents the number of shares purchased monthly under the Company’s stock repurchase program for the three-month period ended December 31, 2008.

			Total Number of	Maximum Number
			Shares Purchased	Of Shares That
	Total Number		as Part of	May Yet Be
	Of Shares	Average Price	Publicly	Purchased Under
Period	Purchased	Paid per Share	Announced Plan	The Plan
October
(10/1/08 — 10/31/08)	34,396	$4.14	34,396	86,664
November
(11/1/08 — 11/30/08)	23,520	$3.51	23,520	63,144
December
(12/1/08 — 12/31/08)	23,790	$2.97	23,790	39,354
Total	81,706	$3.62	81,706	39,354(1)

⁽¹⁾ Does not give effect to the increase in the number of shares approved in January 2009, as described below.

On February 14, 2008, the Company announced that its Board of Directors had approved a program for open market stock repurchases through December 31, 2008 for up to 100,000 shares of its common stock at prevailing market prices after concluding that the Company’s cash and debt position would enable these purchases without impairment to the Company’s capital. On October 15, 2008, the Company’s Board of Directors approved an extension of its February 2008 stock repurchase program through June 2009 and an increase in the number of shares from 100,000 to 200,000. A total of 160,646 shares were purchased under the plan for an aggregate purchase price of $0.8 million from approval of the plan through December 31, 2008. For the three months ended December 31, 2008, a total of 81,706 shares were purchased under the plan for an aggregate purchase price for $0.3 million. On January 22, 2009 the Company’s Board of Directors approved a further extension of its February 2008 stock repurchase program through September 2009 and an increase in the number of shares from 200,000 to 300,000.

ITEM 3. Defaults Upon Senior Securities

None

ITEM 4. Submission of Matters to a Vote of Security Holders

None

ITEM 5. Other Information

None

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ITEM 6.	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

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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, 2009	/s/ Louis LeCalsey, III
		Louis LeCalsey, III
		President and Chief Executive Officer
Date:	February 13, 2009	/s/ Michael B. Wheeler
		Michael B. Wheeler
		Executive Vice President, Chief Financial Officer and Chief Operating Officer

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