Tufco (TFCO) 10-Q 14 Feb 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Dec. 31, 2013	Feb. 14, 2014
Document Document And Entity Information [Line Items]	'	'
Entity Registrant Name	'TUFCO TECHNOLOGIES INC	'
Entity Central Index Key	'0000895329	'
Document Type	'10-Q	'
Document Period End Date	31-Dec-13	'
Amendment Flag	'false	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q1	'
Current Fiscal Year End Date	'--09-30	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	4,308,947

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (Unaudited) (USD $)	Dec. 31, 2013	Sep. 30, 2013
CURRENT ASSETS:	'	'
Cash	$134,516	$8,422
Accounts receivable-net	10,422,593	11,095,701
Inventories-net	14,964,558	14,872,765
Prepaid expenses and other current assets	551,141	287,676
Income taxes receivable	64,871	64,871
Deferred income taxes	606,354	606,354
Total current assets	26,744,033	26,935,789
PROPERTY, PLANT AND EQUIPMENT-Net	14,169,792	14,789,714
OTHER ASSETS-Net	140,648	138,603
TOTAL	41,054,473	41,864,106
CURRENT LIABILITIES:	'	'
Revolving line of credit	417,114	1,166,519
Current portion of note payable	294,700	290,504
Accounts payable	5,357,206	5,094,139
Accrued payroll, vacation and payroll taxes	345,693	754,674
Other current liabilities	1,026,225	779,622
Total current liabilities	7,440,938	8,085,458
LONG-TERM PORTION OF NOTE PAYABLE	127,869	203,136
DEFERRED INCOME TAXES	1,736,387	1,782,402
COMMITMENTS AND CONTINGENCIES	'	'
STOCKHOLDERS’ EQUITY:	'	'
Preferred stock, $.01 par value – 1,000,000 shares authorized and unissued	0	'
Additional paid-in capital	25,673,705	25,665,917
Retained earnings	8,185,944	8,237,563
Treasury stock – 399,794 common shares at cost	-2,157,457	-2,157,457
Total stockholders’ equity	31,749,279	31,793,110
TOTAL	41,054,473	41,864,106
Nonvoting Common Stock	'	'
STOCKHOLDERS’ EQUITY:	'	'
Common stock, value	0	'
Common Stock	'	'
STOCKHOLDERS’ EQUITY:	'	'
Common stock, value	$47,087	$47,087

Condensed_Consolidated_Balance1

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Common stock, par value	$0.01	$0.01
Common stock, shares authorized	9,000,000	9,000,000
Common stock, shares issued	4,708,741	4,708,741
Preferred stock, par value	$0.01	$0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	'	'
Treasury stock, shares	399,794	399,794
Nonvoting Common Stock	'	'
Common stock, par value	$0.01	$0.01
Common stock, shares authorized	2,000,000	2,000,000
Common stock, shares issued	'	'

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Statement Condensed Consolidated Statements Of Operations Unaudited [Line Items]	'	'
NET SALES	$22,028,841	$28,348,148
COST OF SALES	20,420,278	25,855,557
GROSS PROFIT	1,608,563	2,492,591
OPERATING EXPENSES:	'	'
Selling, general & administrative	1,676,445	1,261,859
OPERATING (LOSS) INCOME	-67,882	1,230,732
OTHER (EXPENSE) INCOME:	'	'
Interest expense	-20,766	-60,160
Interest income and other income	15	9,331
(LOSS) INCOME BEFORE INCOME TAXES	-88,633	1,179,903
INCOME TAX (BENEFIT) EXPENSE	-37,014	440,104
NET (LOSS) INCOME	($51,619)	$739,799
BASIC (LOSS) INCOME PER SHARE:	'	'
Net (Loss) Income	($0.01)	$0.17
DILUTED (LOSS) INCOME PER SHARE:	'	'
Net (Loss) Income	($0.01)	$0.17
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	'	'
Basic	4,308,947	4,308,947
Diluted	4,308,947	4,315,872

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
OPERATING ACTIVITIES	'	'
Net (loss) income	($51,619)	$739,799
Noncash items in net (loss) income:	'	'
Depreciation and amortization of property, plant and equipment	722,602	709,837
Deferred income taxes	-46,015	438,104
Gain on sale of assets	0	-2,784
Stock-based compensation expense	7,788	9,594
Changes in operating working capital:	'	'
Accounts receivable	673,108	4,580,182
Inventories	-91,793	537,853
Prepaid expenses and other assets	-265,510	-241,297
Accounts payable	344,658	-3,126,430
Accrued and other current liabilities	-162,378	-184,880
Net cash provided by operating activities	1,130,841	3,459,978
INVESTING ACTIVITIES	'	'
Additions to property, plant and equipment	-184,271	-804,702
Proceeds from disposals of assets	0	4,000
Net cash used in investing activities	-184,271	-800,702
FINANCING ACTIVITIES	'	'
Net repayments of revolving debt	-749,405	-2,591,661
Principal payments on note payable	-71,071	-67,110
Net cash used in financing activities	-820,476	-2,658,771
NET INCREASE IN CASH	126,094	505
CASH:	'	'
Beginning of period	8,422	8,320
End of period	134,516	8,825
NONCASH SUPPLEMENTAL INFORMATION:	'	'
Accounts payable incurred for the purchase of equipment	$23,211	$47,259

Basis_of_Presentation

Basis of Presentation	3 Months Ended
	Dec. 31, 2013
Basis of Presentation	'
	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, 2013 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 2013 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 December 31, 2013 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, 2013.

Financial_Instruments

Financial Instruments	3 Months Ended
	Dec. 31, 2013
Financial Instruments	'
	2.      Financial Instruments
	Financial instruments consist of cash, receivables, payables, debt, and letters of credit. Their carrying values are estimated to approximate their fair values unless otherwise indicated due to their short maturities, variable interest rates plus a margin applicable to the credit risk associated with the revolving line of credit and comparable borrowing costs for equipment loans.

Earnings_Per_Share

Earnings Per Share	3 Months Ended
	Dec. 31, 2013
Earnings Per Share	'
	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 6,925 shares for the three months ended December 31, 2013 and 2012, respectively. During the three months ended December 31, 2013 and 2012, options to purchase 95,050 and 166,350 shares, respectively, were excluded from the diluted earnings per share computation as the effects of including such options would have been anti-dilutive.

Inventories

Inventories	3 Months Ended
	Dec. 31, 2013
Inventories	'
	4.      Inventories
	Inventories consist of the following:
		December 31,		September 30,
		2013		2013
	Raw materials	$	10,990,288	$	11,015,680
	Finished goods		3,974,270		3,857,085
	Total inventories	$	14,964,558	$	14,872,765

Goodwill

Goodwill	3 Months Ended
	Dec. 31, 2013
Goodwill	'
	5.      Goodwill
	As previously disclosed, the Company tests goodwill annually at the reporting unit level for impairment as of July 1. The operating segments herein also represent the Company’s reporting units for goodwill purposes. The Company historically used a discounted cash flow analysis to estimate reporting unit fair values and also considered multiples of relevant companies. The Company continues to follow the guidance of ACS 820 for fair value measurement hierarchy, the objective of which is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants. Additionally, as previously disclosed, on December 20, 2013, the Company announced that it had signed a definitive merger agreement (the “Merger Agreement”) with Tufco Holdings, LLC, a Delaware limited liability company (“Parent”), and Packers Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Sub”), which are affiliates of Griffin Holdings, LLC at a price of $6.07 per share. The transaction is to be effected by a tender offer followed by a second step merger. The transaction is subject to customary closing conditions and there can be no assurance that the transaction will be consummated. Because the price paid pursuant to the Merger Agreement is less than the book value of the Company’s assets, the Company estimated a goodwill impairment of $7,211,575 for the fourth quarter of fiscal year 2013.

Revolving_Line_of_Credit_and_N

Revolving Line of Credit and Note Payable	3 Months Ended
	Dec. 31, 2013
Revolving Line of Credit and Note Payable	'
	6.      Revolving Line of Credit and Note Payable
	The Company amended its credit agreement effective December 20, 2013 to extend its maturity date to December 31, 2014 and modified the required level of after tax net income under its financial covenant in fiscal year 2014. However, there can be no assurances that the Company will be able to extend or refinance its credit facility upon expiration or maintain such a specified minimum level of after tax net income in such year. The credit agreement also includes a minimum tangible net worth covenant. The amount available for borrowing under the revolving line of credit facility is $10.5 million subject to borrowing base limitations as defined in the agreement. The Company’s revolving line of credit is classified as a current liability on the accompanying balance sheets because provisions in the credit agreement include deposit account requirements and a material adverse effect covenant which is subjective in nature. Borrowings under the credit facility bear interest at a rate equal to LIBOR plus 2.50%. The Company is required to pay a non-usage fee of .50% per annum on the unused portion of the facility.
	As of December 31, 2013, the Company had approximately $10.1 million available and $0.4 million outstanding under its revolving credit line pursuant to its credit agreement.

Income_Taxes

Income Taxes	3 Months Ended
	Dec. 31, 2013
Income Taxes	'
	7.      Income Taxes
	Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due, if any, plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences that will either be deductible or taxable when the assets and liabilities are recovered or settled.  Deferred tax assets will include recognition of operating losses that are available to offset future taxable income and tax credits that are available to offset future income taxes. When applicable, valuation allowances are recognized to limit recognition of deferred tax assets where appropriate.  Such allowances may be reversed when circumstances provide evidence that the deferred tax assets will more likely than not be realized.
	The Company has not recorded a valuation allowance against its deferred tax assets as of December 31, 2013 based on its evaluation of the available evidence, which includes consideration of reversal patterns for long-term deferred tax liabilities and the expected taxable income generated in future periods. The assessment of a valuation allowance is an estimate and changes in future taxable income or loss can result in change in the assessment of a valuation allowance. In addition, if net operating loss carryforwards will not reverse and be realized over the same long-term period as the difference primarily for depreciation on property and equipment, a change in the assessment of a valuation allowance could occur. The Company’s effective tax rate approximates the statutory tax rates in the jurisdictions in which it files.

Segment_Information

Segment Information	3 Months Ended
	Dec. 31, 2013
Segment Information	'
	8.      Segment Information
	The Company 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 separates 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 (benefit) expense are recorded under the Corporate and Other segment. Such market segment information is summarized below. The Contract Manufacturing segment provides a variety of products and services to multinational consumer products companies. The Business Imaging segment manufactures and distributes printed and unprinted business imaging paper products for a variety of business needs.
	External customer revenues attributed to foreign countries were approximately 3% of total sales for the first quarter of fiscal 2014 and 2013. The revenues are attributed to countries in Europe and to Japan. There are no long-lived assets located outside of the United States at December 31, 2013 and 2012.
	Three Months Ended December 31, 2013	Contract		Business		Corporate			Consolidated
		Manufacturing		Imaging		and Other
	Net sales	$	16,946,125	$	5,082,716	$	—		$	22,028,841
	Gross profit		1,173,482		435,081		—			1,608,563
	Operating income (loss)		735,586		156,217		(959,685	)		(67,882	)
	Depreciation and amortization expense		689,755		32,847		—			722,602
	Capital expenditures		175,234		9,037		—			184,271
	Three Months Ended December 31, 2012	Contract		Business		Corporate			Consolidated
		Manufacturing		Imaging		and Other
	Net sales	$	22,272,565	$	6,075,583	$	—		$	28,348,148
	Gross profit		2,106,330		386,261		—			2,492,591
	Operating income (loss)		1,758,960		145,061		(673,289	)		1,230,732
	Depreciation and amortization expense		676,329		33,508		—			709,837
	Capital expenditures		804,702		—		—			804,702
	December 31, 2013	Contract		Business		Corporate			Consolidated
		Manufacturing		Imaging		and Other
	Assets:
	Inventories-net	$	9,251,554	$	5,713,004	$	—		$	14,964,558
	Property, plant and equipment-net		12,415,314		1,754,478		—			14,169,792
	Accounts receivable and other		8,727,654		2,246,079		946,390			11,920,123
	Total assets	$	30,394,522	$	9,713,561	$	946,390		$	41,054,473
	September 30, 2013	Contract		Business		Corporate			Consolidated
		Manufacturing		Imaging		and Other
	Assets:
	Inventories-net	$	9,563,155	$	5,309,610	$	—		$	14,872,765
	Property, plant and equipment-net		13,009,375		1,778,288		2,051			14,789,714
	Accounts receivable and other		9,250,757		2,132,620		818,250			12,201,627
	Total assets	$	31,823,287	$	9,220,518	$	820,301		$	41,864,106

Inventories_Tables

Inventories (Tables)	3 Months Ended
	Dec. 31, 2013
Inventories	'
	Inventories consist of the following:
		December 31,		September 30,
		2013		2013
	Raw materials	$	10,990,288	$	11,015,680
	Finished goods		3,974,270		3,857,085
	Total inventories	$	14,964,558	$	14,872,765

Segment_Information_Tables

Segment Information (Tables)	3 Months Ended
	Dec. 31, 2013
Consolidated Financial Statements	'
	Three Months Ended December 31, 2013	Contract		Business		Corporate			Consolidated
		Manufacturing		Imaging		and Other
	Net sales	$	16,946,125	$	5,082,716	$	—		$	22,028,841
	Gross profit		1,173,482		435,081		—			1,608,563
	Operating income (loss)		735,586		156,217		(959,685	)		(67,882	)
	Depreciation and amortization expense		689,755		32,847		—			722,602
	Capital expenditures		175,234		9,037		—			184,271
	Three Months Ended December 31, 2012	Contract		Business		Corporate			Consolidated
		Manufacturing		Imaging		and Other
	Net sales	$	22,272,565	$	6,075,583	$	—		$	28,348,148
	Gross profit		2,106,330		386,261		—			2,492,591
	Operating income (loss)		1,758,960		145,061		(673,289	)		1,230,732
	Depreciation and amortization expense		676,329		33,508		—			709,837
	Capital expenditures		804,702		—		—			804,702
	December 31, 2013	Contract		Business		Corporate			Consolidated
		Manufacturing		Imaging		and Other
	Assets:
	Inventories-net	$	9,251,554	$	5,713,004	$	—		$	14,964,558
	Property, plant and equipment-net		12,415,314		1,754,478		—			14,169,792
	Accounts receivable and other		8,727,654		2,246,079		946,390			11,920,123
	Total assets	$	30,394,522	$	9,713,561	$	946,390		$	41,054,473
	September 30, 2013	Contract		Business		Corporate			Consolidated
		Manufacturing		Imaging		and Other
	Assets:
	Inventories-net	$	9,563,155	$	5,309,610	$	—		$	14,872,765
	Property, plant and equipment-net		13,009,375		1,778,288		2,051			14,789,714
	Accounts receivable and other		9,250,757		2,132,620		818,250			12,201,627
	Total assets	$	31,823,287	$	9,220,518	$	820,301		$	41,864,106

Earnings_Per_Share_Details_Tex

Earnings Per Share (Details Textual)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Earnings Per Share (Additional Textual) [Abstract]	'	'
Share outstanding as effect of Diluted earnings per share	0	6,925
Stock Options	'	'
Earnings Per Share (Textual) [Abstract]	'	'
Options to purchase shares	95,050	166,350

Inventories_Details

Inventories (Details) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Inventories	'	'
Raw materials	$10,990,288	$11,015,680
Finished goods	3,974,270	3,857,085
Total inventories	$14,964,558	$14,872,765

Goodwill_Details_Textual

Goodwill (Details Textual) (USD $)	3 Months Ended
	Sep. 30, 2013	Dec. 20, 2013
		Griffin Holdings, LLC
Goodwill (Textual) [Abstract]	'	'
Business acquisition, share price	'	$6.07
Goodwill impairment estimated value	$7,211,575	'

Revolving_Line_of_Credit_and_N1

Revolving Line of Credit and Note Payable (Details Textual) (USD $)	3 Months Ended
In Millions, unless otherwise specified	Dec. 31, 2013
Revolving Line of Credit and Note Payable (Textual) [Abstract]	'
Maturity Date of Credit Agreement	31-Dec-14
Borrowings under the revolving line of Credit	$0.40
Revolving Credit Facility	'
Revolving Line of Credit and Note Payable (Textual) [Abstract]	'
Amount available for borrowing under the revolving line of credit facility	10.5
Interest on borrowing credit facility	'LIBOR plus 2.50%
Bear interest at a rate equal to LIBOR plus	2.50%
Pay a non-usage fee on the unused portion of the facility	0.50%
Revolving credit line pursuant to its credit agreement available	$10.10

Income_Taxes_Details_Textual

Income Taxes (Details Textual) (USD $)	Dec. 31, 2013
Income Tax (Textual) [Abstract]	'
Valuation allowance	$0

Segment_Information_Details_Te

Segment Information (Details Textual) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Segment Information (Textual) [Abstract]	'	'
Percentage of external customer revenues attributed to foreign countries	3.00%	3.00%
Foreign Countries	'	'
Segment Information (Textual) [Abstract]	'	'
Long-lived assets located outside	0	0

Segment_Information_Details

Segment Information (Details) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2013
Segment Reporting Information [Line Items]	'	'	'
Net sales	$22,028,841	$28,348,148	'
Gross profit	1,608,563	2,492,591	'
Operating income (loss)	-67,882	1,230,732	'
Depreciation and amortization expense	722,602	709,837	'
Capital expenditures	184,271	804,702	'
Assets:	'	'	'
Inventories-net	14,964,558	'	14,872,765
Property, plant and equipment-net	14,169,792	'	14,789,714
Accounts receivable and other	11,920,123	'	12,201,627
Total assets	41,054,473	'	41,864,106
Contract Manufacturing	'	'	'
Segment Reporting Information [Line Items]	'	'	'
Net sales	16,946,125	22,272,565	'
Gross profit	1,173,482	2,106,330	'
Operating income (loss)	735,586	1,758,960	'
Depreciation and amortization expense	689,755	676,329	'
Capital expenditures	175,234	804,702	'
Assets:	'	'	'
Inventories-net	9,251,554	'	9,563,155
Property, plant and equipment-net	12,415,314	'	13,009,375
Accounts receivable and other	8,727,654	'	9,250,757
Total assets	30,394,522	'	31,823,287
Business Imaging	'	'	'
Segment Reporting Information [Line Items]	'	'	'
Net sales	5,082,716	6,075,583	'
Gross profit	435,081	386,261	'
Operating income (loss)	156,217	145,061	'
Depreciation and amortization expense	32,847	33,508	'
Capital expenditures	9,037	0	'
Assets:	'	'	'
Inventories-net	5,713,004	'	5,309,610
Property, plant and equipment-net	1,754,478	'	1,778,288
Accounts receivable and other	2,246,079	'	2,132,620
Total assets	9,713,561	'	9,220,518
Corporate and Other	'	'	'
Segment Reporting Information [Line Items]	'	'	'
Net sales	0	0	'
Gross profit	0	0	'
Operating income (loss)	-959,685	-673,289	'
Depreciation and amortization expense	0	0	'
Capital expenditures	0	0	'
Assets:	'	'	'
Inventories-net	0	'	0
Property, plant and equipment-net	0	'	2,051
Accounts receivable and other	946,390	'	818,250
Total assets	$946,390	'	$820,301