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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 March 31, 2007
 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
 (920) 336-0054
  þ o
  o o þ
  o þ
  Class
    
    Outstanding as of May 15, 2007Common Stock, par value $0.01 per share
    
    4,535,644




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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
  
 Index
 PageNumberPART I: FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial StatementsCondensed Consolidated Balance Sheets as of
March 31, 2007 and September 30, 2006
    
    
    3Condensed Consolidated Statements of Income for the three months
and six months ended March 31, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows for the
six months ended March 31, 2007 and 2006
    
    
    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
    
    
    15Item 4. Controls and Procedures
    
    
    16PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 1a. Risk Factors
    
    
    16Item 6. Exhibits
    
    
    16SIGNATURES
    
    
    17Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)Certification Furnished Pursuant to 18 U.S.C. Section 1350Certification Furnished Pursuant to 18 U.S.C. Section 1350
 2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Condensed Consolidated Financial Statements
 TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,2007
    
    
    September 30,(Unaudited)
    
    
    2006*AssetsCURRENT ASSETS:Cash and cash equivalents
    
    $
    8,161
    
    
    $
    5,267Accounts receivable-net
    
    
    13,629,467
    
    
    
    15,078,707Inventories
    
    
    15,859,731
    
    
    
    14,125,417Prepaid expenses and other current assets
    
    
    1,128,378
    
    
    
    635,243Income tax receivable
    
    
    
    
    
    
    46,893Deferred income taxes
    
    
    490,637
    
    
    
    490,637Total current assets
    
    
    31,116,374
    
    
    
    30,382,164PROPERTY, PLANT AND
EQUIPMENT-Net
    
    
    19,602,376
    
    
    
    18,940,513GOODWILL
    
    
    7,211,575
    
    
    
    7,211,575OTHER ASSETS-Net
    
    
    138,019
    
    
    
    154,466TOTAL
    
    $
    58,068,344
    
    
    $
    56,688,718Liabilities and Stockholders EquityCURRENT LIABILITIES:Accounts payable
    
    $
    10,116,725
    
    
    $
    9,922,742Accrued payroll, vacation and payroll taxes
    
    
    547,635
    
    
    
    507,923Other current liabilities
    
    
    584,776
    
    
    
    542,366Income taxes payable
    
    
    79,889
    
    
    
    Total current liabilities
    
    
    11,329,025
    
    
    
    10,973,031LONG-TERM DEBT
    
    
    7,900,000
    
    
    
    7,073,011DEFERRED INCOME TAXES
    
    
    2,091,042
    
    
    
    2,102,950STOCKHOLDERS EQUITY:Common Stock: $.01 par value: 9,000,000 shares authorized;
4,708,341 shares issued
    
    
    47,083
    
    
    
    47,083Additional paid-in capital
    
    
    25,256,901
    
    
    
    25,226,526Retained earnings
    
    
    12,586,099
    
    
    
    12,407,923Treasury stock, 173,097 common shares at cost
    
    
    (1,141,806
    )
    
    
    (1,141,806
    )Total stockholders equity
    
    
    36,748,277
    
    
    
    36,539,726TOTAL
    
    $
    58,068,344
    
    
    $
    56,688,718
 
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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
 THREE MONTHS ENDED
    
    
    SIX MONTHS ENDEDMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006NET SALES
    
    $
    27,587,328
    
    
    $
    23,089,194
    
    
    $
    54,604,740
    
    
    $
    44,402,088COST OF SALES
    
    
    26,401,398
    
    
    
    21,729,053
    
    
    
    52,126,672
    
    
    
    42,041,535GROSS PROFIT
    
    
    1,185,930
    
    
    
    1,360,141
    
    
    
    2,478,068
    
    
    
    2,360,553OPERATING EXPENSES:Selling, general & administrative
    
    
    951,397
    
    
    
    1,044,116
    
    
    
    1,952,531
    
    
    
    2,011,587Gain on sale of property, plant and
equipment
    
    
    
    
    
    
    
    
    
    
    (145
    )
    
    
    OPERATING INCOME
    
    
    234,533
    
    
    
    316,025
    
    
    
    525,682
    
    
    
    348,966OTHER INCOME (EXPENSE):Interest expense
    
    
    (158,408
    )
    
    
    (64,773
    )
    
    
    (249,449
    )
    
    
    (84,801
    )Interest income and other income
    
    
    428
    
    
    
    41,034
    
    
    
    16,815
    
    
    
    66,336INCOME BEFORE INCOME TAXES
    
    
    76,553
    
    
    
    292,286
    
    
    
    293,048
    
    
    
    330,501INCOME TAX EXPENSE
    
    
    30,010
    
    
    
    94,520
    
    
    
    114,875
    
    
    
    109,500NET INCOME
    
    $
    46,543
    
    
    $
    197,766
    
    
    $
    178,173
    
    
    $
    221,001BASIC EARNINGS PER SHARE:Net Income
    
    $
    0.01
    
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.05DILUTED EARNINGS PER SHARE:Net Income
    
    $
    0.01
    
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.05WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:Basic
    
    
    4,535,244
    
    
    
    4,535,353
    
    
    
    4,535,244
    
    
    
    4,541,036Diluted
    
    
    4,563,171
    
    
    
    4,543,219
    
    
    
    4,558,411
    
    
    
    4,547,865
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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS  (Unaudited)
 SIX MONTHS ENDEDMarch 31,2007
    
    
    2006OPERATING ACTIVITIESNet Income
    
    $
    178,173
    
    
    $
    221,001Noncash items in net income:Depreciation and amortization of property, plant and
equipment
    
    
    1,071,212
    
    
    
    917,732Amortization
    
    
    10,572
    
    
    
    10,572Non-monetary reimbursement of cost
    
    
    (515,000
    )
    
    
    Deferred income taxes
    
    
    (11,908
    )
    
    
    (15,400
    )Gain on sale of property, plant and equipment
    
    
    (145
    )
    
    
    Stock-based compensation expense
    
    
    30,378
    
    
    
    39,288Changes in operating working capital:Accounts receivable
    
    
    1,449,240
    
    
    
    (1,660,875
    )Inventories
    
    
    (1,734,314
    )
    
    
    (3,141,687
    )Prepaid expenses and other assets
    
    
    (487,260
    )
    
    
    (73,915
    )Accounts payable
    
    
    594,901
    
    
    
    2,714,796Accrued and other current liabilities
    
    
    82,122
    
    
    
    (105,598
    )Income taxes payable/receivable
    
    
    126,782
    
    
    
    616,941Net cash provided (used) by operating activities
    
    
    794,753
    
    
    
    (477,145
    )INVESTING ACTIVITIESAdditions to property, plant and equipment
    
    
    (1,218,430
    )
    
    
    (3,057,154
    )Proceeds from disposals of property, plant and equipment
    
    
    500
    
    
    
    Payment of
construction payable
    
    
    (400,918
    )
    
    
    (309,249
    )Net cash used by investing activities
    
    
    (1,618,848
    )
    
    
    (3,366,403
    )FINANCING ACTIVITIESNet borrowings of long-term debt
    
    
    826,989
    
    
    
    3,912,812Purchase of treasury stock
    
    
    
    
    
    
    (68,538
    )Net cash provided by financing activities
    
    
    826,989
    
    
    
    3,844,274NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    2,894
    
    
    
    726CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    5,267
    
    
    
    5,672End of period
    
    $
    8,161
    
    
    $
    6,398NONCASH SUPPLEMENTAL INFORMATION:Construction payable
    
    
    
    
    
    
    149,086
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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARY
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three months and six months ended March 31, 2007 and 2006
 (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 six-month periods ended March 31, 2007 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 2006
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, 2006 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, 2006.2.
    
    Recently Issued Accounting StandardsIn February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS No. 159). SFAS No. 159 permits entities to choose to measure
many financial instruments and certain other items at fair value at specified election dates.
Under SFAS No. 159, a business entity shall report unrealized gains and losses on items for
which the fair value option has been elected in earnings (or another performance indicator if
the business entity does not report earnings) at each subsequent reporting date. SFAS No. 159
also establishes presentation and disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes for similar types of assets and
liabilities. This Statement is effective for fiscal years beginning after November 15, 2007.
The Company is in the process of determining the effect, if any, the adoption of SFAS No. 159
will have on its consolidated financial statements.In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin
No. 108 (SAB No. 108), Considering the Effects of Prior Year Misstatements in the Current
Year Financial Statements. SAB No. 108 addresses how the effects of prior year uncorrected
misstatements should be considered when quantifying misstatements in current year financial
statements. SAB No. 108 requires an entity to evaluate misstatements using a balance sheet
and income statement
approach and evaluate whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative factors. The requirements of SAB
No. 108 are effective for fiscal years ending after November 15, 2006. The Company is in the
process of determining the effect, if any, the adoption of SAB No. 108 will have on its
consolidated financial statements.In 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
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Notes to condensed consolidated financial statements(continued)
 opening retained earnings. The Company is in the process of determining the
effect, if any, the adoption of FIN 48 will have on its consolidated financial statements.In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair
Value Measurements (SFAS No. 157). SFAS No. 157 clarifies the principle that fair value
should be based on the assumptions market participants would use when pricing an asset or
liability and establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. Under the standard, fair value measurements would be separately
disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for the
Company beginning October 1, 2008, with early adoption permitted. The Company is in the
process of evaluating SFAS No. 157.3.
    
    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 27,927 and 7,866 shares
for the three months ended March 31, 2007 and 2006, respectively. For the six months ended
March 31, 2007 and 2006, the common stock equivalents from dilutive stock options outstanding
were 23,167 and 6,829, respectively. During the three months ended March 31, 2007 and 2006,
options to purchase 52,500 and 331,950 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 six months ended March 31, 2007 and 2006, options to purchase 67,500
and 295,750 shares, respectively, were excluded from the diluted earnings per share
computation.4.
    
    ReclassificationsCertain prior year amounts have been reclassified to conform to the current year
presentation.5.
    
    InventoriesInventories consist of the following:
 March 31,
    
    
    September 30,2007
    
    
    2006Raw materials
    
    $
    12,252,839
    
    
    $
    11,021,598Finished goods
    
    
    3,606,892
    
    
    
    3,103,819Total inventories
    
    $
    15,859,731
    
    
    $
    14,125,417
 6.
    
    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 336,000 shares are
available for future grants as of March 31, 2007.The Company adopted the fair value recognition provisions
of SFAS No. 123(R) using the modified-prospective-transition
method as of October 1, 2005. Compensation expense is recognized only for share-based payments expected to vest. The
Company estimates forfeitures at the date of grant based on the Companys historical
experience and future expectations. The Company recognizes
compensation expense on a straight-line basis.
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Notes to condensed consolidated financial statements(continued)
 A summary of stock option activity under the Companys share-based compensation plan for the
six months ended March 31, 2007 is presented below:
 WeightedAverageExerciseShares
    
    
    PriceOutstanding at September 30, 2006
    
    
    460,950
    
    
    $
    7.47New grants
    
    
    2,000
    
    
    
    6.76Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (181,250
    )
    
    
    8.72Outstanding at March 31, 2007
    
    
    281,700
    
    
    $
    6.67Exercisable at March 31, 2007
    
    
    271,867
    
    
    $
    6.63
 The following table summarizes the Companys share-based compensation awards during the six
months ended March 31, 2007 and 2006:
 2007
    
    2006Total pre-tax share-based compensation
    
    $
    30,378
    
    
    $
    39,288Weighted-average grant date fair value
    
    $
    3.88
    
    
    
    Total unrecognized compensation cost
    
    $
    18,102
    
    
    $
    65,613Remaining weighted-average period cost
will be recognized over
    
    6 Months
    
    18 Months
 7.
    
    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, at which time it
expired. A total of 49,100 shares were purchased under the plan through June 30, 2006.8.
    
    Segment InformationThe 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 large 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.
 8




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Notes to condensed consolidated financial statements(continued)
 Three Months Ended
    
    Contract
    
    Business
    
    CorporateMarch 31, 2007
    
    Manufacturing
    
    Imaging
    
    and Other
    
    ConsolidatedNet sales
    
    $
    21,730,623
    
    
    $
    5,856,705
    
    
    
    
    
    
    $
    27,587,328Gross profit
    
    
    706,441
    
    
    
    479,489
    
    
    
    
    
    
    
    1,185,930Operating income (loss)
    
    
    36,624
    
    
    
    224,354
    
    
    
    (26,445
    )
    
    
    234,533Depreciation and amortization expense
    
    
    481,145
    
    
    
    54,988
    
    
    
    15,165
    
    
    
    551,298Capital expenditures
    
    
    752,700
    
    
    
    14,527
    
    
    
    
    
    
    
    767,227
 Three Months Ended
    
    Contract
    
    Business
    
    CorporateMarch 31, 2006
    
    Manufacturing
    
    Imaging
    
    and Other
    
    ConsolidatedNet sales
    
    $
    16,528,068
    
    
    $
    6,561,126
    
    
    $
    
    
    
    $
    23,089,194Gross profit
    
    
    751,349
    
    
    
    608,792
    
    
    
    
    
    
    
    1,360,141Operating income (loss)
    
    
    164,955
    
    
    
    380,427
    
    
    
    (229,357
    )
    
    
    316,025Depreciation and
amortization expense
    
    
    364,271
    
    
    
    59,306
    
    
    
    48,190
    
    
    
    471,767Capital expenditures
    
    
    1,924,189
    
    
    
    29,989
    
    
    
    
    
    
    
    1,954,178
 Six Months Ended
    
    Contract
    
    Business
    
    CorporateMarch 31, 2007
    
    Manufacturing
    
    Imaging
    
    And Other
    
    ConsolidatedNet sales
    
    $
    42,310,810
    
    
    $
    12,293,930
    
    
    $
    
    
    
    $
    54,604,740Gross profit
    
    
    1,558,733
    
    
    
    919,335
    
    
    
    
    
    
    
    2,478,068Operating income (loss)
    
    
    303,119
    
    
    
    414,409
    
    
    
    (191,846
    )
    
    
    525,682Depreciation and
amortization expense
    
    
    941,695
    
    
    
    109,760
    
    
    
    30,329
    
    
    
    1,081,784Capital expenditures
    
    
    1,184,551
    
    
    
    33,879
    
    
    
    
    
    
    
    1,218,430
 Six Months Ended
    
    Contract
    
    Business
    
    CorporateMarch 31, 2006
    
    Manufacturing
    
    Imaging
    
    And Other
    
    ConsolidatedNet sales
    
    $
    31,065,323
    
    
    $
    13,336,765
    
    
    $
    
    
    
    $
    44,402,088Gross profit
    
    
    1,179,759
    
    
    
    1,180,794
    
    
    
    
    
    
    
    2,360,553Operating income (loss)
    
    
    112,088
    
    
    
    731,184
    
    
    
    (494,306
    )
    
    
    348,966Depreciation and
amortization expense
    
    
    705,415
    
    
    
    120,125
    
    
    
    102,764
    
    
    
    928,304Capital expenditures
    
    
    3,171,133
    
    
    
    35,107
    
    
    
    
    
    
    
    3,206,240
 9




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Notes to condensed consolidated financial statements(continued)
 Three Months Ended
    
    Contract
    
    
    Business
    
    
    CorporateMarch 31, 2007
    
    Manufacturing
    
    
    Imaging
    
    
    and Other
    
    
    ConsolidatedAssets:Inventories
    
    $
    13,418,829
    
    
    $
    2,440,902
    
    
    $
    
    
    
    $
    15,859,731Property, plant and
equipment-net
    
    
    17,312,981
    
    
    
    2,265,919
    
    
    
    23,476
    
    
    
    19,602,376Accounts receivable
and other (including
goodwill)
    
    
    15,261,567
    
    
    
    5,479,475
    
    
    
    1,865,195
    
    
    
    22,606,237Total assets
    
    $
    45,993,377
    
    
    $
    10,186,296
    
    
    $
    1,888,671
    
    
    $
    58,068,344
 Twelve Months Ended
    
    Contract
    
    
    Business
    
    
    CorporateSeptember 30, 2006
    
    Manufacturing
    
    
    Imaging
    
    
    and Other
    
    
    ConsolidatedAssets:Inventories
    
    $
    12,162,242
    
    
    $
    1,963,175
    
    
    $
    
    
    
    $
    14,125,417Property, plant and
equipment-net
    
    
    16,556,278
    
    
    
    2,341,799
    
    
    
    42,436
    
    
    
    18,940,513Accounts receivable
and other (including
goodwill)
    
    
    16,519,894
    
    
    
    5,770,388
    
    
    
    1,332,506
    
    
    
    23,622,788Total assets
    
    $
    45,238,414
    
    
    $
    10,075,362
    
    
    $
    1,374,942
    
    
    $
    56,688,718
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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
  General Information:
    11




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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
    
    Six Months Ended
    
    Period-to-PeriodMarch 31,
    
    Change
    
    March 31,
    
    Change2007
    
    2006
    
    $
    
    %
    
    2007
    
    2006
    
    $
    
    %Net Sales
    
    $
    27,587
    
    
    $
    23,089
    
    
    $
    4,498
    
    
    
    19
    
    
    $
    54,605
    
    
    $
    44,402
    
    
    $
    10,203
    
    
    
    23Gross Profit
    
    
    1,186
    
    
    
    1,360
    
    
    
    (174
    )
    
    
    (13
    )
    
    
    2,478
    
    
    
    2,361
    
    
    
    117
    
    
    
    54.3
    %
    
    
    5.9
    %
    
    
    
    
    
    
    
    
    
    
    4.5
    %
    
    
    5.3
    %Operating Expenses
    
    
    951
    
    
    
    1,044
    
    
    
    (93
    )
    
    
    (9
    )
    
    
    1,952
    
    
    
    2,012
    
    
    
    (60
    )
    
    
    (3
    )3.4
    %
    
    
    4.5
    %
    
    
    
    
    
    
    
    
    
    
    3.6
    %
    
    
    4.5
    %Operating Income
    
    
    235
    
    
    
    316
    
    
    
    (81
    )
    
    
    (26
    )
    
    
    526
    
    
    
    349
    
    
    
    177
    
    
    
    510.9
    %
    
    
    1.4
    %
    
    
    
    
    
    
    
    
    
    
    1.0
    %
    
    
    0.8
    %Interest Expense
    
    
    158
    
    
    
    65
    
    
    
    93
    
    
    
    143
    
    
    
    250
    
    
    
    85
    
    
    
    165
    
    
    
    1940.6
    %
    
    
    0.3
    %
    
    
    
    
    
    
    
    
    
    
    0.5
    %
    
    
    0.2
    %Income
Before Income Taxes
    
    
    77
    
    
    
    292
    
    
    
    (215
    )
    
    
    (74
    )
    
    
    293
    
    
    
    331
    
    
    
    (38
    )
    
    
    (11
    )0.3
    %
    
    
    1.3
    %
    
    
    
    
    
    
    
    
    
    
    0.5
    %
    
    
    0.7
    %Income Tax Expense
    
    
    30
    
    
    
    95
    
    
    
    (65
    )
    
    
    (68
    )
    
    
    115
    
    
    
    110
    
    
    
    5
    
    
    
    50.1
    %
    
    
    0.4
    %
    
    
    
    
    
    
    
    
    
    
    0.2
    %
    
    
    0.2
    %Net Income
    
    $
    47
    
    
    $
    198
    
    
    
    (151
    )
    
    
    (76
    )
    
    $
    178
    
    
    $
    221
    
    
    
    (43
    )
    
    
    (19
    )0.2
    %
    
    
    0.9
    %
    
    
    
    
    
    
    
    
    
    
    0.3
    %
    
    
    0.5
    %
 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 EndedMarch 31,2007
    
    
    2006
    
    
    Period-to-Period% of
    
    
    
    
    
    
    % of
    
    
    ChangeAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    $
    
    
    %Net SalesContract Manufacturing and printing
    
    $
    21,730
    
    
    
    79
    %
    
    $
    16,528
    
    
    
    72
    %
    
    $
    5,202
    
    
    
    31
    %Business Imaging paper products
    
    
    5,857
    
    
    
    21
    
    
    
    6,561
    
    
    
    28
    
    
    
    (704
    )
    
    
    (11
    %)Net Sales
    
    $
    27,587
    
    
    
    100
    %
    
    $
    23,089
    
    
    
    100
    %
    
    $
    4,498
    
    
    
    19
    %
 2007
    
    
    2006
    
    
    Period-to-PeriodMargin
    
    
    
    
    
    
    Margin
    
    
    ChangeAmount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    $
    
    
    %Gross ProfitContract Manufacturing and printing
    
    $
    706
    
    
    
    3
    %
    
    $
    751
    
    
    
    5
    %
    
    $
    (45
    )
    
    
    (6
    %)Business Imaging paper products
    
    
    480
    
    
    
    8
    %
    
    
    609
    
    
    
    9
    %
    
    
    (129
    )
    
    
    (21
    %)Gross Profit
    
    $
    1,186
    
    
    
    4
    %
    
    $
    1,360
    
    
    
    6
    %
    
    $
    (174
    )
    
    
    (13
    %)
 Six Months EndedMarch 31,2007
    
    
    2006
    
    
    Period-to-Period% of
    
    
    
    
    
    
    % of
    
    
    ChangeAmount
    
    
    Change
    
    
    Amount
    
    
    Total
    
    
    $
    
    
    %Net SalesContract Manufacturing and printing
    
    $
    42,311
    
    
    
    77
    %
    
    $
    31,065
    
    
    
    70
    %
    
    $
    11,246
    
    
    
    36
    %Business Imaging paper products
    
    
    12,294
    
    
    
    23
    
    
    
    13,337
    
    
    
    30
    
    
    
    (1,043
    )
    
    
    (8
    %)Net Sales
    
    $
    54,605
    
    
    
    100
    %
    
    $
    44,402
    
    
    
    100
    %
    
    $
    10,203
    
    
    
    23
    %
 2007
    
    
    2006
    
    
    Period-to-PeriodMargin
    
    
    
    
    
    
    Margin
    
    
    ChangeAmount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    $
    
    
    %Gross ProfitContract Manufacturing and printing
    
    $
    1,559
    
    
    
    4
    %
    
    $
    1,180
    
    
    
    4
    %
    
    $
    379
    
    
    
    32
    %Business Imaging paper products
    
    
    919
    
    
    
    7
    %
    
    
    1,181
    
    
    
    9
    %
    
    
    (262
    )
    
    
    (22
    %)Gross Profit
    
    $
    2,478
    
    
    
    5
    %
    
    $
    2,361
    
    
    
    5
    %
    
    $
    117
    
    
    
    5
    %
 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 :
  Net Income
   14




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations  Continued
 Liquidity and Capital Resources:
        
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
  15




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##### Table of Contents



ITEM 4. Controls and Procedures
    
 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
 The Company has not identified any material changes from risk factors as previously
disclosed in the Companys Annual Report on Form 10-K as filed with the Securities and
Exchange Commission for the year ended September 30, 2006.
 
 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 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
 16




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##### Table of Contents



SIGNATURES
  TUFCO TECHNOLOGIES, INC.Date: May 15, 2007
    
    /s/ Louis LeCalsey, IIILouis LeCalsey, IIIPresident and Chief Executive OfficerDate: May 15, 2007
    
    /s/ Michael B. WheelerMichael B. WheelerExecutive Vice President, Chief Financial Officer andChief Operating Officer
 17