##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 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, 2010
 Commission file number 0-21018
 TUFCO TECHNOLOGIES, INC.
 Delaware
    
    39-1723477(State of other jurisdiction 
of incorporation of organization)
    
    (IRS Employer ID No.)
 (Address of principal executive offices)(Zip code)
 (Registrants telephone number, including area code)
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company þ
  o þ
  Class
    
    
    Outstanding as of August 16, 2010Common Stock, par value $0.01 per share
    
    
    4,308,947




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##### 



TUFCO TECHNOLOGIES, INC.
 Index
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2010
and September 30, 2009
    
    
    3Condensed Consolidated Statements of Operations for the
three and nine months ended June 30, 2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the
nine months ended June 30, 2010 and 2009
    
    
    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
    
    
    16PART II: OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 3. Defaults Upon Senior Securities
    
    
    17Item 4. [Removed and Reserved]
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    17SIGNATURES
    
    
    18EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Condensed Consolidated Financial Statements
 TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS  (Unaudited)
 June 30,
    
    
    September 30,2010
    
    
    2009AssetsCURRENT ASSETS:Cash
    
    $
    4,665
    
    
    $
    4,092Accounts receivable-net
    
    
    13,803,277
    
    
    
    11,077,258Inventories-net
    
    
    13,780,121
    
    
    
    10,645,168Prepaid expenses and other current assets
    
    
    330,659
    
    
    
    245,534Income taxes receivable
    
    
    569,338
    
    
    
    604,144Deferred income taxes
    
    
    381,661
    
    
    
    381,661Total current assets
    
    
    28,869,721
    
    
    
    22,957,857PROPERTY, PLANT AND EQUIPMENT-Net
    
    
    19,032,941
    
    
    
    17,892,453GOODWILL
    
    
    7,211,575
    
    
    
    7,211,575OTHER ASSETS-Net
    
    
    134,820
    
    
    
    128,684TOTAL
    
    $
    55,249,057
    
    
    $
    48,190,569Liabilities and Stockholders EquityCURRENT LIABILITIES:Revolving line of credit
    
    $
    5,635,195
    
    
    $
    1,270,099Current portion of note payable
    
    
    239,944
    
    
    
    Accounts payable
    
    
    8,617,705
    
    
    
    6,861,167Accrued payroll, vacation and payroll taxes
    
    
    732,873
    
    
    
    542,534Other current liabilities
    
    
    645,379
    
    
    
    463,736Total current liabilities
    
    
    15,871,096
    
    
    
    9,137,536LONG-TERM PORTION OF NOTE PAYABLE
    
    
    1,090,582
    
    
    
    DEFERRED INCOME TAXES
    
    
    2,280,255
    
    
    
    2,611,572COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common Stock: $.01 par value: 9,000,000 shares authorized;
4,708,741 shares issued
    
    
    47,087
    
    
    
    47,087Non-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
    
    
    25,456,540
    
    
    
    25,421,007Retained earnings
    
    
    12,660,954
    
    
    
    13,130,824Treasury stock, 399,794 common shares at cost
    
    
    (2,157,457
    )
    
    
    (2,157,457
    )Total stockholders equity
    
    
    36,007,124
    
    
    
    36,441,461TOTAL
    
    $
    55,249,057
    
    
    $
    48,190,569
 3




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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)
 THREE MONTHS ENDED
    
    
    NINE MONTHS ENDEDJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009NET SALES
    
    $
    24,354,879
    
    
    $
    22,026,229
    
    
    $
    65,271,598
    
    
    $
    64,666,838COST OF SALES
    
    
    23,057,635
    
    
    
    20,777,381
    
    
    
    61,910,038
    
    
    
    61,865,456GROSS PROFIT
    
    
    1,297,244
    
    
    
    1,248,848
    
    
    
    3,361,560
    
    
    
    2,801,382OPERATING EXPENSES:Selling, general & administrative
    
    
    1,387,687
    
    
    
    1,249,019
    
    
    
    4,021,222
    
    
    
    3,845,333Gain on asset sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,500
    )OPERATING LOSS
    
    
    (90,443
    )
    
    
    (171
    )
    
    
    (659,662
    )
    
    
    (1,006,451
    )OTHER (EXPENSE) INCOME:Interest expense
    
    
    (48,711
    )
    
    
    (23,414
    )
    
    
    (105,327
    )
    
    
    (91,933
    )Interest income and other income
    
    
    125
    
    
    
    (41
    )
    
    
    15,596
    
    
    
    13,562LOSS BEFORE INCOME TAXES
    
    
    (139,029
    )
    
    
    (23,626
    )
    
    
    (749,393
    )
    
    
    (1,084,822
    )INCOME TAX BENEFIT
    
    
    (51,858
    )
    
    
    (9,262
    )
    
    
    (279,523
    )
    
    
    (425,252
    )NET LOSS
    
    $
    (87,171
    )
    
    $
    (14,364
    )
    
    $
    (469,870
    )
    
    $
    (659,570
    )BASIC LOSS PER SHARE:Net Loss
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    (0.11
    )
    
    $
    (0.15
    )DILUTED LOSS PER SHARE:Net Loss
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    (0.11
    )
    
    $
    (0.15
    )WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:Basic
    
    
    4,308,947
    
    
    
    4,314,587
    
    
    
    4,308,947
    
    
    
    4,356,547Diluted
    
    
    4,308,947
    
    
    
    4,314,587
    
    
    
    4,308,947
    
    
    
    4,356,547
  4




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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)
 NINE MONTHS ENDEDJune 30,2010
    
    
    2009OPERATING ACTIVITIESNet loss
    
    $
    (469,870
    )
    
    $
    (659,570
    )Noncash items in net loss:Depreciation and amortization of property, plant and
equipment
    
    
    2,000,663
    
    
    
    1,782,251Deferred income taxes
    
    
    (331,317
    )
    
    
    (9,467
    )Gain on sale of property, plant and equipment
    
    
    
    
    
    
    (37,500
    )Stock-based compensation expense
    
    
    35,533
    
    
    
    24,149Changes in operating working capital:Accounts receivable
    
    
    (2,726,019
    )
    
    
    924,139Inventories
    
    
    (3,134,953
    )
    
    
    3,181,031Prepaid expenses and other assets
    
    
    (91,261
    )
    
    
    359,409Accounts payable
    
    
    1,726,746
    
    
    
    (975,282
    )Accrued and other current liabilities
    
    
    371,982
    
    
    
    (136,860
    )Income taxes receivable
    
    
    34,806
    
    
    
    (446,392
    )Net cash (used in) provided by operating activities
    
    
    (2,583,690
    )
    
    
    4,005,908INVESTING ACTIVITIESAdditions to property, plant and equipment
    
    
    (1,761,359
    )
    
    
    (1,622,760
    )Proceeds from disposals of property, plant and equipment
    
    
    
    
    
    
    37,500Net cash used in investing activities
    
    
    (1,761,359
    )
    
    
    (1,585,260
    )FINANCING ACTIVITIESNet borrowings of revolving debt
    
    
    4,365,096
    
    
    
    (1,958,493
    )Purchase of treasury stock
    
    
    
    
    
    
    (525,671
    )Principal payments on note payable
    
    
    (19,474
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    4,345,622
    
    
    
    (2,484,164
    )NET INCREASE (DECREASE) IN CASH
    
    
    573
    
    
    
    (63,516
    )CASH:Beginning of period
    
    
    4,092
    
    
    
    68,397End of period
    
    $
    4,665
    
    
    $
    4,881NONCASH SUPPLEMENTAL INFORMATION:Note payable incurred for the purchase of equipment
    
    $
    1,350,000
    
    
    $
    Change in construction payable
    
    
    29,792
    
    
    
    17,330
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TUFCO TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  For the three months and nine months ended June 30, 2010 and 2009

(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, 2010 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 2009 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, 2009 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, 2009.
 2.
    

    Financial InstrumentsFinancial 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 and variable interest rates.
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Notes to condensed consolidated financial statements(continued)
 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. During the three months ended June 30, 2010 and
2009, options to purchase 314,650 and 302,650 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, 2010 and 2009, options to purchase
319,650 and 284,650 shares, respectively, were excluded from the diluted earnings per share
computation.
 4.
    

    InventoriesInventories consist of the following:
 June 30,
    
    
    September 30,2010
    
    
    2009Raw materials
    
    $
    10,721,024
    
    
    $
    8,182,736Finished goods
    
    
    3,059,097
    
    
    
    2,462,432Total inventories
    
    $
    13,780,121
    
    
    $
    10,645,168
 5.
    

    Long-Term DebtThe Company replaced its credit agreement on March 15, 2010 with a new $8.0 million unsecured
revolving line of credit facility that expires January 31, 2011. Borrowings under the new
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.Availability under the facility is based upon specified percentages of eligible accounts
receivable and inventory. The credit agreement is unsecured. The credit agreement contains
certain restrictive covenants, including requirements to maintain a minimum tangible net
worth and net income (or net loss) within specified levels.In June 2010, the Company entered into a long-term note for the purchase of a second
W&H 8-color press for $1.3 million, previously accounted
for as an operating lease. The note which has a five-year term, bears interest at a rate of 5.75% per annum with payments,
including principal and interest, of approximately $26,000 per month. The note is
secured by the press.
 6.
    

    Stock Based CompensationDuring the three months ended June 30, 2010, Messrs. Robert J. Simon, Samuel J. Bero, C.
Hamilton Davison, Brian Kelly, Richard M. Segel and William R. Ziemendorf, in conjunction
with their re-election to serve on the Tufco Technologies, Inc. Board of Directors, each
received a grant on May 18, 2010 to acquire 3,000 shares of common stock under Tufcos 2004
Non-Employee Director Stock Option Plan at an exercise price of $4.20 per share, the closing
price of the Companys common stock on the NASDAQ market as of that date. The grant date
fair value of these options was estimated at $2.65 using the Black-Scholes option-pricing
model with the following assumptions: risk-free interest rate of 0.76%, expected volatility
of 126.4%, no dividend yield and an expected life of two years.
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Notes to condensed consolidated financial statements(continued)
 During the nine months ended June 30, 2010, employees of Tufco Technologies, Inc. received
discretionary grants on November 30, 2009 to acquire 14,000 shares of common stock under
Tufcos 2003 Non-Qualified Stock Option Plan at an exercise price of $3.19 per share, the
closing price of the Companys common stock on the NASDAQ market as of that date. The grant
date fair value of these options was estimated at $2.26 using the Black-Scholes option-pricing model with the following assumptions: risk-free
interest rate of 0.67%, expected volatility of 121.4%, no dividend yield and an expected life
of three years.
 7.
    

    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 (benefit) 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.As previously disclosed, the Company tests goodwill annually at the reporting unit level for
impairment as of June 30. The operating segments herein also represent the Companys
reporting units for goodwill purposes. The Company uses a discounted cash flow analysis to
estimate reporting unit fair values and also considers multiples of relevant companies.
Management has completed the Companys annual impairment test and determined there were no
changes in the carrying amount of goodwill by reporting unit for the three months and nine
months ended June 30, 2010. However, there can be no assurance that valuation multiples will
not decline, growth rates will not be lower than expected, discount rates will not increase,
or the projected cash flows of the individual reporting units will not decline. For example,
lower than expected growth or an increase to the discount rate due to changes in risk
premiums or other factors may suggest that an impairment has occurred under Step 1 and
require the Company to proceed to Step 2 to measure the fair value of assets and liabilities
of the reporting units. At the annual measurement date of June 30, 2010, the estimated fair
value of Contract Manufacturing exceeded its carrying value by approximately 30%. The
estimated fair value of Business Imaging exceeded its carrying value by approximately 63% at
June 30, 2010. The current discount rate would need to increase 1.7% for Contract
Manufacturing and increase 4.5% for Business Imaging before the Company would be required to
proceed to Step 2.The Company recognizes that its common stock regularly trades below book value per share and
will continue to monitor the relationship of its market capitalization to both its book value
and tangible book value. While management plans to return the Companys business
fundamentals to levels that support the book value per share, there is no assurance that the
plan will be successful, or that the market price of the common stock will increase to such
levels in the foreseeable future.
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Notes to condensed consolidated financial statements(continued)
 Three Months Ended
    
    Contract
    
    
    Business
    
    
    CorporateJune 30, 2010
    
    Manufacturing
    
    
    Imaging
    
    
    and Other
    
    
    ConsolidatedNet sales
    
    $
    17,979,347
    
    
    $
    6,375,532
    
    
    $
    
    
    
    $
    24,354,879Gross profit
    
    
    716,907
    
    
    
    580,337
    
    
    
    
    
    
    
    1,297,244Operating income (loss)
    
    
    289,081
    
    
    
    254,114
    
    
    
    (633,638
    )
    
    
    (90,443
    )Depreciation and
amortization expense
    
    
    618,344
    
    
    
    31,338
    
    
    
    419
    
    
    
    650,101Capital expenditures
    
    
    253,089
    
    
    
    21,066
    
    
    
    
    
    
    
    274,155
 Three Months Ended
    
    Contract
    
    
    Business
    
    
    CorporateJune 30, 2009
    
    Manufacturing
    
    
    Imaging
    
    
    and Other
    
    
    ConsolidatedNet sales
    
    $
    16,597,231
    
    
    $
    5,428,998
    
    
    $
    
    
    
    $
    22,026,229Gross profit
    
    
    945,524
    
    
    
    303,324
    
    
    
    
    
    
    
    1,248,848Operating income (loss)
    
    
    624,791
    
    
    
    (5,234
    )
    
    
    (619,728
    )
    
    
    (171
    )Depreciation and
amortization expense
    
    
    557,066
    
    
    
    51,381
    
    
    
    593
    
    
    
    609,040Capital expenditures
    
    
    402,676
    
    
    
    
    
    
    
    
    
    
    
    402,676
 Nine Months Ended
    
    Contract
    
    
    Business
    
    
    CorporateJune 30, 2010
    
    Manufacturing
    
    
    Imaging
    
    
    And Other
    
    
    ConsolidatedNet sales
    
    $
    47,107,717
    
    
    $
    18,163,881
    
    
    $
    
    
    
    $
    65,271,598Gross profit
    
    
    1,895,826
    
    
    
    1,465,734
    
    
    
    
    
    
    
    3,361,560Operating income (loss)
    
    
    722,111
    
    
    
    505,037
    
    
    
    (1,886,810
    )
    
    
    (659,662
    )Depreciation and
amortization expense
    
    
    1,864,453
    
    
    
    134,616
    
    
    
    1,594
    
    
    
    2,000,663Capital expenditures
    
    
    1,691,514
    
    
    
    69,845
    
    
    
    
    
    
    
    1,761,359
 Nine Months Ended
    
    Contract
    
    
    Business
    
    
    CorporateJune 30, 2009
    
    Manufacturing
    
    
    Imaging
    
    
    And Other
    
    
    ConsolidatedNet sales
    
    $
    48,262,594
    
    
    $
    16,404,244
    
    
    $
    
    
    
    $
    64,666,838Gross profit
    
    
    1,902,511
    
    
    
    898,871
    
    
    
    
    
    
    
    2,801,382Operating income (loss)
    
    
    923,449
    
    
    
    (49,277
    )
    
    
    (1,880,623
    )
    
    
    (1,006,451
    )Depreciation and
amortization expense
    
    
    1,624,220
    
    
    
    156,251
    
    
    
    1,780
    
    
    
    1,782,251Capital expenditures
    
    
    1,592,222
    
    
    
    30,538
    
    
    
    
    
    
    
    1,622,760
 9




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Notes to condensed consolidated financial statements(continued)
 Contract
    
    
    Business
    
    
    CorporateJune 30, 2010
    
    Manufacturing
    
    
    Imaging
    
    
    and Other
    
    
    ConsolidatedAssets:Inventories-net
    
    $
    11,067,774
    
    
    $
    2,712,347
    
    
    $
    
    
    
    $
    13,780,121Property, plant and
equipment-net
    
    
    17,176,030
    
    
    
    1,853,629
    
    
    
    3,282
    
    
    
    19,032,941Accounts receivable
(including
goodwill)
    
    
    15,028,590
    
    
    
    6,316,921
    
    
    
    1,090,484
    
    
    
    22,435,995Total assets
    
    $
    43,272,394
    
    
    $
    10,882,897
    
    
    $
    1,093,766
    
    
    $
    55,249,057
 Contract
    
    
    Business
    
    
    CorporateSeptember 30, 2009
    
    Manufacturing
    
    
    Imaging
    
    
    and Other
    
    
    ConsolidatedAssets:Inventories-net
    
    $
    8,642,397
    
    
    $
    2,002,771
    
    
    $
    
    
    
    $
    10,645,168Property, plant and
equipment-net
    
    
    15,969,177
    
    
    
    1,918,400
    
    
    
    4,876
    
    
    
    17,892,453Accounts receivable
and other
(including
goodwill)
    
    
    12,334,332
    
    
    
    6,200,035
    
    
    
    1,118,581
    
    
    
    19,652,948Total assets
    
    $
    36,945,906
    
    
    $
    10,121,206
    
    
    $
    1,123,457
    
    
    $
    48,190,569
 10




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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
    
    
    Nine Months Ended
    
    
    Period-to-PeriodJune 30,
    
    
    Change
    
    
    June 30,
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %
    
    
    2010
    
    
    2009
    
    
    $
    
    
    %Net Sales
    
    $
    24,355
    
    
    $
    22,026
    
    
    $
    2,329
    
    
    
    11
    %
    
    $
    65,272
    
    
    $
    64,667
    
    
    $
    605
    
    
    
    1
    %Gross Profit
    
    
    1,297
    
    
    
    1,249
    
    
    
    48
    
    
    
    4
    
    
    
    3,362
    
    
    
    2,801
    
    
    
    561
    
    
    
    205.3
    %
    
    
    5.7
    %
    
    
    
    
    
    
    
    
    
    
    5.2
    %
    
    
    4.3
    %Operating Expenses
    
    
    1,388
    
    
    
    1,249
    
    
    
    139
    
    
    
    11
    
    
    
    4,021
    
    
    
    3,808
    
    
    
    213
    
    
    
    65.7
    %
    
    
    5.7
    %
    
    
    
    
    
    
    
    
    
    
    6.2
    %
    
    
    5.9
    %Operating Loss
    
    
    (90
    )
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    (660
    )
    
    
    (1,006
    )
    
    
    346
    
    
    
    (34
    )(0.4
    %)
    
    
    0
    %
    
    
    
    
    
    
    
    
    
    
    (1.0
    %)
    
    
    (1.6
    %)Interest and Other-Net
    
    
    49
    
    
    
    23
    
    
    
    26
    
    
    
    113
    
    
    
    90
    
    
    
    78
    
    
    
    12
    
    
    
    150.2
    %
    
    
    0.1
    %
    
    
    
    
    
    
    
    
    
    
    0.1
    %
    
    
    0.1
    %Loss Before Income Taxes
    
    
    (139
    )
    
    
    (24
    )
    
    
    (115
    )
    
    NM
    
    
    (749
    )
    
    
    (1,085
    )
    
    
    336
    
    
    
    (31
    )(0.6
    %)
    
    
    (0.1
    %)
    
    
    
    
    
    
    
    
    
    
    (1.1
    %)
    
    
    (1.7
    %)Income Tax Benefit
    
    
    (52
    )
    
    
    (9
    )
    
    
    (43
    )
    
    NM
    
    
    (280
    )
    
    
    (425
    )
    
    
    145
    
    
    
    (34
    )(0.2
    %)
    
    
    0
    %
    
    
    
    
    
    
    
    
    
    
    (0.4
    %)
    
    
    (0.7
    %)Net Loss
    
    $
    (87
    )
    
    $
    (14
    )
    
    
    (73
    )
    
    NM
    
    $
    (470
    )
    
    $
    (660
    )
    
    
    190
    
    
    
    (29
    )(0.4
    %)
    
    
    (0.1
    %)
    
    
    
    
    
    
    
    
    
    
    (0.7
    %)
    
    
    (1.0
    %)Basic and Diluted Loss
Per Share
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    
    
    
    
    
    
    
    
    $
    (0.11
    )
    
    $
    (0.15
    )
 
 NM =
    
    Not Meaningful 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 30,2010
    
    
    2009
    
    
    Period-to-Period% of
    
    
    
    
    
    
    % of
    
    
    ChangeAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    $
    
    
    %Net SalesContract Manufacturing and printing
    
    $
    17,979
    
    
    
    74
    %
    
    $
    16,597
    
    
    
    75
    %
    
    $
    1,382
    
    
    
    8
    %Business Imaging paper products
    
    
    6,376
    
    
    
    26
    
    
    
    5,429
    
    
    
    25
    
    
    
    947
    
    
    
    17
    %Net Sales
    
    $
    24,355
    
    
    
    100
    %
    
    $
    22,026
    
    
    
    100
    %
    
    $
    2,329
    
    
    
    11
    %
 2010
    
    
    2009
    
    
    Period-to-Period% of
    
    
    
    
    
    
    Margin
    
    
    ChangeAmount
    
    
    Total
    
    
    Amount
    
    
    %
    
    
    $
    
    
    %Gross ProfitContract Manufacturing and printing
    
    $
    717
    
    
    
    4
    %
    
    $
    946
    
    
    
    6
    %
    
    $
    (229
    )
    
    
    (24
    %)Business Imaging paper products
    
    
    580
    
    
    
    9
    %
    
    
    303
    
    
    
    6
    %
    
    
    277
    
    
    
    91
    %Gross Profit
    
    $
    1,297
    
    
    
    5
    %
    
    $
    1,249
    
    
    
    6
    %
    
    $
    48
    
    
    
    4
    %
 Nine Months EndedJune 30,2010
    
    
    2009
    
    
    Period-to-Period% of
    
    
    
    
    
    
    % of
    
    
    ChangeAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    $
    
    
    %Net SalesContract Manufacturing and printing
    
    $
    47,108
    
    
    
    72
    %
    
    $
    48,263
    
    
    
    75
    %
    
    $
    (1,155
    )
    
    
    (2
    %)Business Imaging paper products
    
    
    18,164
    
    
    
    28
    
    
    
    16,404
    
    
    
    25
    
    
    
    1,760
    
    
    
    11
    %Net Sales
    
    $
    65,272
    
    
    
    100
    %
    
    $
    64,667
    
    
    
    100
    %
    
    $
    605
    
    
    
    1
    %
 2010
    
    
    2009
    
    
    Period-to-Period% of
    
    
    
    
    
    
    Margin
    
    
    ChangeAmount
    
    
    Total
    
    
    Amount
    
    
    %
    
    
    $
    
    
    %Gross ProfitContract Manufacturing and printing
    
    $
    1,896
    
    
    
    4
    %
    
    $
    1,902
    
    
    
    4
    %
    
    $
    (6
    )
    
    
    (0.3
    %)Business Imaging paper products
    
    
    1,466
    
    
    
    8
    %
    
    
    899
    
    
    
    5
    %
    
    
    567
    
    
    
    63
    %Gross Profit
    
    $
    3,362
    
    
    
    5
    %
    
    $
    2,801
    
    
    
    4
    %
    
    $
    561
    
    
    
    20
    %
 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 :
  14




---



##### Table of Contents



ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations-Continued
 Interest Expense and Other Income (Expense) net :
  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
    Off Balance Sheet Arrangements:
  
 ITEM 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  
 ITEM 4.
    
    Controls and Procedures
    
 PART II. OTHER INFORMATION
 
 ITEM 1.
    
    Legal Proceedings
  
 ITEM 1A.
    
    Risk Factors
  
 ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  16




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##### Table of Contents



ITEM 3.
    
    Defaults Upon Senior Securities
  
 ITEM 4.
    
    [Removed and Reserved]
 
 ITEM 5.
    
    Other Information
  
 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
 17




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##### Table of Contents



SIGNATURES
  TUFCO TECHNOLOGIES, INC.Date:         August 16, 2010
    /s/ Louis LeCalsey, IIILouis LeCalsey, IIIPresident and Chief Executive OfficerDate:         August 16, 2010
    /s/ Michael B. WheelerMichael B. WheelerExecutive Vice President, Chief Financial Officer and
Chief Operating Officer 18