##### Table of Contents



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 June 30, 2006
 Commission file number 0-21018
 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
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
  o þ
  Class
    
    Outstanding as of August 14, 2006Common Stock, par value $0.01 per share
    
    4,535,244




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##### 



TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 INDEX
 PageNumberPART I: FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2006 and September 30, 2005
    
    
    3Condensed Consolidated Statements of Income for the three months and nine months ended June 30, 2006 and 2005
    
    
    4Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2006 and 2005
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4.
    
    Controls and Procedures
    
    
    17PART II: OTHER INFORMATIONItem 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    17Item 6.
    
    Exhibits
    
    
    18SIGNATURES
    
    
    19First Amendment to Credit AgreementCertification Pursuant to Rule 13a-14(a)/15d-14(a)Certification Pursuant to Rule 13a-14(a)/15d-14(a)Certification Pursuant to Section 906Certification Pursuant to Section 906
  2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Condensed Consolidated Financial Statements
 TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,2006
    
    
    September 30,(Unaudited)
    
    
    2005*AssetsCURRENT ASSETS:Cash and cash equivalents
    
    $
    156,440
    
    
    $
    5,672Accounts receivable-net
    
    
    15,101,000
    
    
    
    9,728,418Inventories
    
    
    16,237,848
    
    
    
    10,137,771Prepaid expenses and other current assets
    
    
    737,190
    
    
    
    170,555Income tax receivable
    
    
    
    
    
    
    585,390Deferred income taxes
    
    
    499,947
    
    
    
    499,947Total current assets
    
    
    32,732,425
    
    
    
    21,127,753PROPERTY, PLANT AND EQUIPMENT-Net
    
    
    18,976,592
    
    
    
    15,657,028GOODWILL
    
    
    7,211,575
    
    
    
    7,211,575OTHER ASSETS-Net
    
    
    194,622
    
    
    
    489,662TOTAL
    
    $
    59,115,214
    
    
    $
    44,486,018Liabilities and Stockholders EquityCURRENT LIABILITIES:Accounts payable
    
    $
    12,161,683
    
    
    $
    4,688,887Accrued payroll, vacation and payroll taxes
    
    
    594,247
    
    
    
    367,336Other current liabilities
    
    
    619,430
    
    
    
    662,963Income taxes payable
    
    
    400,943
    
    
    
    Total current liabilities
    
    
    13,776,303
    
    
    
    5,719,186LONG-TERM DEBT
    
    
    7,150,000
    
    
    
    1,112,636DEFERRED INCOME TAXES
    
    
    1,693,008
    
    
    
    1,737,317STOCKHOLDERS EQUITY:Common Stock: $.01 par value: 9,000,000 shares authorized; 4,708,341 shares
issued
    
    
    47,083
    
    
    
    47,083Additional paid-in capital
    
    
    25,210,948
    
    
    
    25,097,911Retained earnings
    
    
    12,379,678
    
    
    
    11,845,152Treasury stock, 173,097 and 161,197 common shares at cost,
respectively
    
    
    (1,141,806
    )
    
    
    (1,073,267
    )Total stockholders equity
    
    
    36,495,903
    
    
    
    35,916,879TOTAL
    
    $
    59,115,214
    
    
    $
    44,486,018
  
 *
    
    Condensed from audited financial statements 3




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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (UNAUDITED)
 THREE MONTHS ENDED
    
    
    NINE MONTHS ENDEDJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005NET SALES
    
    $
    27,428,347
    
    
    $
    18,612,243
    
    
    $
    71,830,435
    
    
    $
    59,831,681COST OF SALES
    
    
    25,777,027
    
    
    
    17,412,885
    
    
    
    67,818,562
    
    
    
    55,789,759GROSS PROFIT
    
    
    1,651,320
    
    
    
    1,199,358
    
    
    
    4,011,873
    
    
    
    4,041,922OPERATING EXPENSES:Selling, general & administrative
    
    
    1,100,623
    
    
    
    1,140,497
    
    
    
    3,112,209
    
    
    
    3,476,413Gain on sale of property, plant and
equipment
    
    
    
    
    
    
    (25,889
    )
    
    
    
    
    
    
    (441,670
    )OPERATING INCOME
    
    
    550,697
    
    
    
    84,750
    
    
    
    899,664
    
    
    
    1,007,179OTHER INCOME (EXPENSE):Interest expense
    
    
    (106,213
    )
    
    
    (23,760
    )
    
    
    (191,014
    )
    
    
    (45,338
    )Interest income and other income
(expense)
    
    
    (4,476
    )
    
    
    5,987
    
    
    
    61,859
    
    
    
    25,495INCOME BEFORE INCOME TAXES
    
    
    440,008
    
    
    
    66,977
    
    
    
    770,509
    
    
    
    987,336INCOME TAX EXPENSE
    
    
    126,483
    
    
    
    14,176
    
    
    
    235,983
    
    
    
    387,036NET INCOME
    
    $
    313,525
    
    
    $
    52,801
    
    
    $
    534,526
    
    
    $
    600,300BASIC EARNINGS PER SHARE:Net Income
    
    $
    0.07
    
    
    $
    0.01
    
    
    $
    0.12
    
    
    $
    0.13DILUTED EARNINGS PER SHARE:Net Income
    
    $
    0.07
    
    
    $
    0.01
    
    
    $
    0.12
    
    
    $
    0.13WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:Basic
    
    
    4,535,244
    
    
    
    4,549,811
    
    
    
    4,539,105
    
    
    
    4,568,477Diluted
    
    
    4,553,085
    
    
    
    4,557,468
    
    
    
    4,549,605
    
    
    
    4,591,224
  4




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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 NINE MONTHS ENDEDJune 30,2006
    
    
    2005OPERATING ACTIVITIESNet Income
    
    $
    534,526
    
    
    $
    600,300Noncash items in net income:Depreciation and amortization of property, plant and
equipment
    
    
    1,441,170
    
    
    
    1,506,385Amortization
    
    
    15,858
    
    
    
    15,858Deferred income taxes
    
    
    (44,309
    )
    
    
    81,826Gain on sale of property, plant and equipment
    
    
    
    
    
    
    (441,670
    )Stock compensation expense
    
    
    113,037
    
    
    
    Changes in operating working capital:Accounts receivable
    
    
    (5,372,582
    )
    
    
    3,552,667Inventories
    
    
    (6,100,077
    )
    
    
    (2,233,706
    )Prepaid expenses and other assets
    
    
    (287,453
    )
    
    
    (31,457
    )Accounts payable
    
    
    7,514,451
    
    
    
    (1,286,028
    )Accrued and other current liabilities
    
    
    183,378
    
    
    
    (527,421
    )Income taxes payable/receivable
    
    
    986,333
    
    
    
    (227,715
    )Net cash (used) provided by operating activities
    
    
    (1,015,668
    )
    
    
    1,009,039INVESTING ACTIVITIESAdditions to property, plant and equipment
    
    
    (4,760,734
    )
    
    
    (871,339
    )Change in construction payables
    
    
    (41,655
    )
    
    
    (61,000
    )Proceeds from disposals of property, plant and equipment
    
    
    
    
    
    
    647,042Net cash (used) by investing activities
    
    
    (4,802,389
    )
    
    
    (285,297
    )FINANCING ACTIVITIESRepayment of long-term debt
    
    
    
    
    
    
    (2,500,000
    )Borrowings of long-term debt
    
    
    6,037,364
    
    
    
    2,000,000Purchase of treasury stock
    
    
    (68,539
    )
    
    
    (224,972
    )Net cash provided (used) by financing activities
    
    
    5,968,825
    
    
    
    (724,972
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    150,768
    
    
    
    (1,230
    )CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    5,672
    
    
    
    7,692End of period
    
    $
    156,440
    
    
    $
    6,462NONCASH SUPPLEMENTAL INFORMATION:Deferred gain on sale of equipment
    
    $
    
    
    
    $
    95,000
  5




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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three months and nine months ended June 30, 2006 and 2005
(Unaudited)
 1.
    
    Basis of PresentationThe 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 and nine-month periods ended June 30, 2006 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 2005
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 except for
the adoption of Statement of Financial Accounting Standard (SFAS) 123 Revised Share Based
Payments. The Companys condensed consolidated balance sheet at September 30, 2005 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, 2005.2.
    
    Recent Accounting PronouncementsIn July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
No. 48, Accounting For Uncertainty in Income Taxes-an interpretation of FASB Statement No.
109(FIN 48), which clarifies the accounting for uncertainty in tax positions. This
Interpretation requires that the Company recognize in its financial statements, the impact of
a tax position, if that position is more likely than not of being sustained on audit, based
on the technical merits of the position. The accounting provisions of FIN 48 will be
effective for the Company beginning October 1, 2007, with the cumulative effect of the change
in accounting principle recorded as an adjustment to opening retained earnings. The Company
is in the process of determining the effect, if any, the adoption of FIN 48 will have on its
financial statements.3.
    
    Earnings Per ShareBasic 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 17,841 and 7,657 shares
for the three months ended June 30, 2006 and 2005, respectively. For the nine months ended
June 30, 2006 and 2005, the common stock equivalents from dilutive stock options outstanding
were 10,500 and 22,747, respectively. During the three months ended June 30, 2006 and 2005,
options to purchase 255,750 and 422,767 shares, respectively, were excluded from the diluted
earnings per share computation as the effects of including such options would have been
anti-dilutive. For the nine months ended June 30, 2006 and 2005, options to purchase 295,750
and 278,906 shares, respectively, were excluded from the diluted earnings per share
computation.
 6




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Notes to condensed consolidated financial statements  (continued)
 4.
    
    InventoriesInventories consist of the following:
 June 30,
    
    
    September 30,2006
    
    
    2005Raw materials
    
    $
    13,331,680
    
    
    $
    7,470,774Finished goods
    
    
    2,906,168
    
    
    
    2,666,997Total inventories
    
    $
    16,237,848
    
    
    $
    10,137,771
 5.
    
    Stock Based CompensationThe Company has an incentive stock plan under which the Board of Directors may grant
non-qualified stock options to employees. Additionally, the Company has a Non-Qualified
Stock Option Plan for Non-Employee Directors, under which shares are available for grant.
The options have an exercise price equal to the fair market value of the underlying stock at
the date of grant. Employee stock options vest ratably over a three-year period and
non-employee director stock options vest immediately. Options issued under these plans
generally expire ten years from the date of grant. Approximately 0.3 million shares are
available for future grants.Effective October 1, 2005, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 123(R), Share Based Payment. In accordance with this standard, the Company has
elected to recognize the compensation cost of all share-based awards on a straight-line basis
over the vesting period of the award. Total stock compensation expense recognized by the
Company during the three months ended June 30, 2006, was $73,749, or $44,839 net of taxes.
For the nine months ended June 30, 2006, the total stock compensation expense recognized by
the Company was $113,037, or $68,726 net of taxes. The Company expects that total stock
compensation expense for the year ending September 30, 2006 will be approximately $80,000 to
$100,000 on an after-tax basis. As of June 30, 2006, total unrecognized compensation costs
related to share-based compensation awards was approximately $50,035, net of estimated
forfeitures, which we expect to recognize over a weighted average period of approximately one
and one quarter years.The Company adopted the fair value recognition provisions of SFAS No. 123(R), using the
modified-prospective-transition method. Under that transition method, compensation cost
recognized in fiscal 2006 includes: (a) compensation cost for all share-based payments
granted prior to, but not yet vested as of October 1, 2005, based on the grant date fair
value estimated in accordance with the original provisions of SFAS No. 123, and (b)
compensation cost for all share-based payments granted subsequent to October 1, 2005, based
on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R).
Results for prior periods have not been restated.Prior to October 1, 2005, the Company accounted for employee stock-based compensation under
the intrinsic value method prescribed by Accounting Principles Board Opinion (APB) No. 25,
Accounting for Stock Issued to Employees. Under APB No. 25, no employee stock-option based
compensation expense was recorded in the income statement prior to October 1, 2005.The following table illustrates the effect on net income and related earnings per share if
the Company had applied the fair value recognition provisions of SFAS No. 123(R) to
stock-based compensation, for the three and nine months ended June 30, 2005.
 7




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Notes to condensed consolidated financial statements  (continued)
 Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2005
    
    
    2005Net income as reported
    
    $
    52,801
    
    
    $
    600,300Less total stock-based employee compensation expense
determined under fair value based method of all
awards, net of related tax effects
    
    
    (56,286
    )
    
    
    (152,640
    )Pro forma net income
    
    $
    (3,485
    )
    
    $
    447,660Earnings per share:Basic  as reported
    
    $
    0.01
    
    
    $
    0.13Basic  pro forma
    
    $
    0.00
    
    
    $
    0.10Diluted  as reported
    
    $
    0.01
    
    
    $
    0.13Diluted  pro forma
    
    $
    0.00
    
    
    $
    0.10
   Expected option life (in years)
    
    
    7Expected volatility
    
    
    50.6
    %Dividend yield
    
    
    0
    %Risk-free interest rate
    
    
    5.07
    %
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at September 30, 2005
    
    
    541,800
    
    
    $
    7.40New grants
    
    
    15,000
    
    
    $
    6.60Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (95,850
    )
    
    $
    6.90Outstanding at June 30, 2006
    
    
    460,950
    
    
    $
    7.47
    
    
    
    3.6
    
    
    $
    3,445,346Exercisable at June 30, 2006
    
    
    429,217
    
    
    $
    7.51
    
    
    
    3.3
    
    
    $
    3,221,668
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Notes
to condensed consolidated financial statements  (continued)
 6.
    
    Stock Repurchase PlanIn March 2005, the Companys Board of Directors approved the purchase by the Company of up
to 300,000 of its shares of common stock given that the Companys cash and debt position
would enable these purchases without impairment to the Companys capital. On December 16,
2005, the Companys Board of Directors extended the plan through
June 30, 2006. No shares were purchased under the plan during the quarter ended June
30, 2006. A total of 49,100 shares were purchased under the
plan from approval of the plan through June 30, 2006.7.
    
    Segment InformationThe Company operates in a single industry since it manufactures and distributes business
forms, 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. Such market segment 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.
 Three Months Ended
    
    Contract
    
    
    Business
    
    
    CorporateJune 30, 2006
    
    Manufacturing
    
    
    Imaging
    
    
    and Other
    
    
    ConsolidatedNet sales
    
    $
    21,050,865
    
    
    $
    6,377,482
    
    
    $
    
    
    
    $
    27,428,347Gross profit
    
    
    1,014,881
    
    
    
    636,439
    
    
    
    
    
    
    
    1,651,320Operating income (loss)
    
    
    385,825
    
    
    
    390,751
    
    
    
    (225,879
    )
    
    
    550,697Depreciation and
amortization expense
    
    
    428,741
    
    
    
    58,458
    
    
    
    41,525
    
    
    
    528,724Capital expenditures
    
    
    1,509,066
    
    
    
    45,428
    
    
    
    
    
    
    
    1,554,494Assets:Inventories
    
    
    13,623,106
    
    
    
    2,614,742
    
    
    
    
    
    
    
    16,237,848Property, plant and
equipment-net
    
    
    16,506,061
    
    
    
    2,393,071
    
    
    
    77,460
    
    
    
    18,976,592Accounts receivable
and other (including
goodwill)
    
    
    16,517,571
    
    
    
    5,795,004
    
    
    
    1,588,199
    
    
    
    23,900,774Total assets
    
    $
    46,646,738
    
    
    $
    10,802,817
    
    
    $
    1,665,659
    
    
    $
    59,115,214
 9




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Notes
to condensed consolidated financial statements  (continued)
 Three Months Ended
    
    Contract
    
    
    Business
    
    
    CorporateJune 30, 2005
    
    Manufacturing
    
    
    Imaging
    
    
    And Other
    
    
    ConsolidatedNet sales
    
    $
    12,380,342
    
    
    $
    6,231,901
    
    
    $
    
    
    
    $
    18,612,243Gross profit
    
    
    700,192
    
    
    
    499,166
    
    
    
    
    
    
    
    1,199,358Operating income (loss)
    
    
    110,812
    
    
    
    308,985
    
    
    
    (335,047
    )
    
    
    84,750Depreciation and
amortization expense
    
    
    346,794
    
    
    
    76,484
    
    
    
    70,271
    
    
    
    493,549Capital expenditures
    
    
    370,966
    
    
    
    10,150
    
    
    
    10,773
    
    
    
    391,889Assets:Inventories
    
    
    9,397,856
    
    
    
    2,460,813
    
    
    
    
    
    
    
    11,858,669Property, plant and
equipment-net
    
    
    12,528,048
    
    
    
    2,595,083
    
    
    
    270,786
    
    
    
    15,393,917Accounts receivable
and other (including
goodwill)
    
    
    10,335,639
    
    
    
    5,962,658
    
    
    
    1,191,659
    
    
    
    17,489,956Total assets
    
    $
    32,261,543
    
    
    $
    11,018,554
    
    
    $
    1,462,445
    
    
    $
    44,742,542
 Nine Months Ended
    
    Contract
    
    Business
    
    CorporateJune 30, 2006
    
    Manufacturing
    
    Imaging
    
    And Other
    
    ConsolidatedNet sales
    
    $
    52,116,188
    
    
    $
    19,714,247
    
    
    $
    
    
    
    $
    71,830,435Gross profit
    
    
    2,194,640
    
    
    
    1,817,233
    
    
    
    
    
    
    
    4,011,873Operating income (loss)
    
    
    497,913
    
    
    
    1,121,935
    
    
    
    (720,184
    )
    
    
    899,664Depreciation and
amortization expense
    
    
    1,134,156
    
    
    
    178,583
    
    
    
    144,289
    
    
    
    1,457,028Capital expenditures
    
    
    4,680,199
    
    
    
    80,535
    
    
    
    
    
    
    
    4,760,734
 Nine Months Ended
    
    Contract
    
    Business
    
    CorporateJune 30, 2005
    
    Manufacturing
    
    Imaging
    
    And Other
    
    ConsolidatedNet sales
    
    $
    41,936,216
    
    
    $
    17,895,465
    
    
    $
    
    
    
    $
    59,831,681Gross profit
    
    
    2,665,022
    
    
    
    1,376,900
    
    
    
    
    
    
    
    4,041,922Operating income (loss)
    
    
    1,293,554
    
    
    
    788,218
    
    
    
    (1,074,593
    )
    
    
    1,007,179Depreciation and
amortization expense
    
    
    1,055,714
    
    
    
    239,344
    
    
    
    227,185
    
    
    
    1,522,243Capital expenditures
    
    
    765,884
    
    
    
    94,682
    
    
    
    10,773
    
    
    
    871,339
 10




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements:
  General Information:
    11




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##### Table of Contents



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
    
    Nine Months Ended
    
    Period-to-PeriodJune 30,
    
    Change
    
    June 30,
    
    Change2006
    
    2005
    
    $
    
    %
    
    2006
    
    2005
    
    $
    
    %Net Sales
    
    $
    27,428
    
    
    $
    18,612
    
    
    $
    8,816
    
    
    
    47
    
    
    $
    71,830
    
    
    $
    59,832
    
    
    $
    11,998
    
    
    
    20Gross Profit
    
    
    1,651
    
    
    
    1,199
    
    
    
    452
    
    
    
    38
    
    
    
    4,012
    
    
    
    4,042
    
    
    
    (30
    )
    
    
    (1
    )6.0
    %
    
    
    6.4
    %
    
    
    
    
    
    
    
    
    

    
    5.6
    %
    
    
    6.8
    %Operating Expenses
    
    
    1,101
    
    
    
    1,115
    
    
    
    (14
    )
    
    
    (1
    )
    
    
    3,112
    
    
    
    3,035
    
    
    
    77
    
    
    
    34.0
    %
    
    
    6.0
    %
    
    
    
    
    
    
    
    
    
    
    4.3
    %
    
    
    5.1
    %Operating Income
    
    
    551
    
    
    
    85
    
    
    
    466
    
    
    
    548
    
    
    
    900
    
    
    
    1,007
    
    
    
    (107
    )
    
    
    (11
    )2.0
    %
    
    
    0.5
    %
    
    
    
    
    
    
    
    
    
    
    1.3
    %
    
    
    1.7
    %Interest Expense
    
    
    106
    
    
    
    24
    
    
    
    82
    
    
    
    342
    
    
    
    191
    
    
    
    45
    
    
    
    146
    
    
    
    3240.4
    %
    
    
    0.1
    %
    
    
    
    
    
    
    
    
    
    
    0.3
    %
    
    
    0.1
    %Income Before Income Taxes
    
    
    440
    
    
    
    67
    
    
    
    373
    
    
    
    557
    
    
    
    771
    
    
    
    987
    
    
    
    (216
    )
    
    
    (22
    )1.6
    %
    
    
    0.4
    %
    
    
    
    
    
    
    
    
    
    
    1.1
    %
    
    
    1.6
    %Income Tax Expense
    
    
    126
    
    
    
    14
    
    
    
    112
    
    
    
    800
    
    
    
    236
    
    
    
    387
    
    
    
    (151
    )
    
    
    (39
    )0.5
    %
    
    
    0.1
    %
    
    
    
    
    
    
    
    
    
    
    0.3
    %
    
    
    0.6
    %Net Income
    
    $
    314
    
    
    $
    53
    
    
    
    261
    
    
    
    492
    
    
    $
    535
    
    
    $
    600
    
    
    
    (65
    )
    
    
    (11
    )1.1
    %
    
    
    0.3
    %
    
    
    
    
    
    
    
    
    
    
    0.7
    %
    
    
    1.0
    %
 12




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations  Continued
 Three Months EndedJune 30,2006
    
    
    2005
    
    
    Period-to-Period% of
    
    
    
    
    
    
    % of
    
    
    ChangeAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    $
    
    
    %Net
SalesContract Manufacturing and printing
    
    $
    21,051
    
    
    
    77
    %
    
    $
    12,380
    
    
    
    67
    %
    
    $
    8,671
    
    
    
    70
    %Business Imaging paper products
    
    
    6,377
    
    
    
    23
    
    
    
    6,232
    
    
    
    33
    
    
    
    145
    
    
    
    2
    %Net
Sales
    
    $
    27,428
    
    
    
    100
    %
    
    $
    18,612
    
    
    
    100
    %
    
    $
    8,816
    
    
    
    47
    %
 2006
    
    
    2005
    
    
    Period-to-PeriodMargin
    
    
    
    
    
    
    Margin
    
    
    ChangeAmount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    $
    
    
    $Gross
ProfitContract Manufacturing and printing
    
    $
    1,015
    
    
    
    5
    %
    
    $
    700
    
    
    
    6
    %
    
    $
    315
    
    
    
    45
    %Business Imaging paper products
    
    
    636
    
    
    
    10
    %
    
    
    499
    
    
    
    8
    %
    
    
    137
    
    
    
    27
    %Gross Profit
    
    $
    1,651
    
    
    
    6
    %
    
    $
    1,199
    
    
    
    6
    %
    
    $
    452
    
    
    
    38
    %
 Nine Months EndedJune 30,2006
    
    
    2005
    
    
    Period-to-Period% of
    
    
    
    
    
    
    % of
    
    
    ChangeAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    $
    
    
    %Net
SalesContract Manufacturing and printing
    
    $
    52,116
    
    
    
    73
    %
    
    $
    41,936
    
    
    
    70
    %
    
    $
    10,180
    
    
    
    24
    %Business Imaging paper products
    
    
    19,714
    
    
    
    27
    
    
    
    17,896
    
    
    
    30
    
    
    
    1,818
    
    
    
    10
    %Net Sales
    
    $
    71,830
    
    
    
    100
    %
    
    $
    59,832
    
    
    
    100
    %
    
    $
    11,998
    
    
    
    20
    %
 2006
    
    
    2005
    
    
    Period-to-PeriodMargin
    
    
    
    
    
    
    Margin
    
    
    ChangeAmount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    $
    
    
    %Gross
ProfitContract Manufacturing and printing
    
    $
    2,195
    
    
    
    4
    %
    
    $
    2,665
    
    
    
    6
    %
    
    $
    (470
    )
    
    
    (18
    %)Business Imaging paper products
    
    
    1,817
    
    
    
    9
    %
    
    
    1,377
    
    
    
    8
    %
    
    
    440
    
    
    
    32
    %Gross Profit
    
    $
    4,012
    
    
    
    6
    %
    
    $
    4,042
    
    
    
    7
    %
    
    $
    (30
    )
    
    
    (1
    %)
 13




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Continued
 Net Sales :
    Gross Profit :
   Operating Expenses :
   Interest Expense and Other Income (Expense) net :
  14




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##### Table of Contents



Income Tax Expense :
  Net Income
    Liquidity and Capital Resources:
      15




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 
Continued
     Stock Repurchase Plan :
  Critical Accounting Policies:
  Off Balance Sheet Arrangements:
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
  16




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##### Table of Contents



ITEM 4. Controls and Procedures
    
 PART II. OTHER INFORMATION
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 (a)
    
    The Annual Meeting of Shareholders of the Company was held on May 16, 2006.(b)
    
    See the response to Item 4(c) below.(c)
    
    At the Annual Meeting, shareholders elected the following individuals to the
Board of Directors for one-year terms:
 Director
    
    For
    
    
    WithheldRobert J. Simon
    
    
    4,573,720
    
    
    
    63,636Samuel J. Bero
    
    
    4,572,639
    
    
    
    64,717C. Hamilton Davison, Jr.
    
    
    4,619,967
    
    
    
    17,389Louis LeCalsey, III
    
    
    4,579,339
    
    
    
    58,017William J. Malooly
    
    
    4,613,912
    
    
    
    23,444Seymour S. Preston, III
    
    
    4,620,093
    
    
    
    17,263
 (d)
    
    Not applicable
 17




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##### Table of Contents



ITEM 6. Exhibits
 10.1
    
    First Amendment to the Credit Agreement dated May 22, 2006.31.1
    
    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 200232.2
    
    Certification furnished Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 18




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##### Table of Contents



SIGNATURES
  TUFCO TECHNOLOGIES, INC.Date: August 14, 2006
    /s/ Louis LeCalsey, IIILouis LeCalsey, IIIPresident and Chief Executive OfficerDate: August 14, 2006
    /s/ Michael B. WheelerMichael B. WheelerExecutive Vice President, Chief Financial Officer and
Chief Operating Officer 19