<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
COMMISSION FILE #0-16148
Multi-Color Corporation
(Exact name of Registrant as specified in its charter)
OHIO
(State or other jurisdiction of 31-1125853
incorporation or organization) (IRS Employer
Identification No.)
4575 EASTERN AVENUE, CINCINNATI, OHIO 45226
(Address of principal executive offices)
Registrant's telephone number - 513/321-5381
______________________________________
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X_ No. ___
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date.
COMMON SHARES, NO PAR VALUE - 2,172,569 (as of July 21, 1995)
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MULTI-COLOR CORPORATION
Statements of income
(Prepared Without Audit)
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------------
July 2, 1995 July 3, 1994
------------ ------------
<S> <C> <C>
NET SALES $ 15,507 $ 16,063
COST OF GOODS SOLD 13,439 14,609
-------- --------
Gross Profit 2,068 1,454
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,503 1,682
-------- --------
Operating income (Loss) $ 565 $( 228)
OTHER EXPENSE (INCOME) ( 25) 54
INTEREST EXPENSE 377 365
-------- --------
Income (Loss) Before Taxes and Extraordinary Item $ 213 $( 647)
PROVISION (CREDIT) FOR TAXES -0- -0-
-------- --------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ 213 $( 647)
-------- --------
Extraordinary Item - Loss on Extinguishment of Debt -0- $ 225
-------- --------
NET INCOME (LOSS) $ 213 $( 872)
======== ========
NET EARNINGS (LOSS) PER SHARE BEFORE EXTRAORDINARY ITEM $ 0.10 $( 0.30)
-------- --------
EXTRAORDINARY ITEM $ - $ 0.10
-------- --------
NET EARNINGS (LOSS) PER SHARE $ 0.10 $( 0.40)
======== ========
AVERAGE NUMBER OF SHARES OUTSTANDING 2,172 2,155
======== ========
<FN>
The accompanying notes are an integral part of this financial information.
</TABLE>
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
MULTI-COLOR CORPORATION
Balance Sheets
(Thousands)
ASSETS
------
<CAPTION>
July 2, 1995 April 2, 1995
----------------------- ---------------------
(Derived from Audited
(Prepared Without Audit) Financial Statements)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 25 $ 16
Accounts Receivable 5,981 7,635
Note Receivable 88 67
Inventories
Raw Materials 1,405 2,061
Work in Progress 1,475 1,472
Finished Goods 2,606 3,129
Deferred Tax Benefit 604 604
Prepaid Expenses and Supplies 40 114
-------- --------
Total Current Assets $ 12,224 $ 15,098
-------- --------
SINKING FUND - IRB $ 600 $ 400
-------- --------
PROPERTY, PLANT, AND EQUIPMENT $ 33,662 $ 33,398
ACCUMULATED DEPRECIATION (14,227) (13,609)
-------- --------
$ 19,436 $ 19,789
-------- --------
DEFERRED CHARGES, net $ 121 $ 149
-------- --------
NOTE RECEIVABLE $ 348 $ 373
-------- --------
NOTE RECEIVABLE FROM OFFICERS/SHAREHOLDERS $ 150 $ 150
-------- --------
$ 32,878 $ 35,959
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-Term Debt $ 2,633 $ 4,105
Current portion of long-term debt 1,015 1,093
Accounts Payable 7,336 9,597
Accrued Expenses 3,152 2,634
Long-Term Debt Subject to Acceleration 14,700 14,700
-------- --------
Total Current Liabilities $ 28,836 $ 32,129
-------- --------
LONG-TERM DEBT, excluding current portion $ 7 $ 8
-------- --------
DEFERRED TAXES $ 604 $ 604
-------- --------
DEFERRED COMPENSATION $ - $ -
-------- --------
PENSION LIABILITY $ 220 $ 220
-------- --------
Total Liabilities $ 29,667 $ 32,961
-------- --------
SHAREHOLDERS' EQUITY
Common Stock, no par value $ 9,357 $ 9,357
Retained Earnings (Accumulated Deficit) (5,687) (5,900)
Excess of Additional Pension Liability Over
Unrecognized Prior Service Cost (459) (459)
-------- --------
Total Shareholders' Equity 3,211 2,998
-------- --------
$ 32,878 $ 35,959
======== ========
<FN>
The accompanying notes are an integral part of this financial information.
</TABLE>
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
MULTI-COLOR CORPORATION
Statements of Cash Flows
(Prepared Without Audit)
(Thousands)
<CAPTION>
Thirteen Weeks Ended
---------------------------------------
July 2, 1995 July 3, 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 213 $( 872)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities -
Depreciation and amortization 640 690
Increase (decrease) in deferred income taxes - -
Increase (decrease) in deferred compensation - ( 288)
(Increase) decrease in notes receivable 4 ( 104)
Net (increase) decrease in accounts receivable,
inventories and prepaid expenses and supplies 2,894 ( 402)
Net increase (decrease) in accounts payable and
accrued liabilities ( 1,742) 886
Payment of restructuring liabilities - ( 151)
-------- --------
Net cash provided by (used in) operating activities $ 2,009 $( 241)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net $( 264) $( 454)
Sale of marketable securities 13 -
Treasury stock, net - -
-------- --------
Net cash used in investing activities $( 251) $( 454)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) of revolving loan, net $( 1,472) $ 658
(Increase) decrease in sinking fund ( 200)
Proceeds from issuance of common stock - 130
Addition (reductions) to long term debt, including current portion ( 78) ( 89)
-------- --------
Net cash provided by (used in) financing activities $( 1,750) $ 699
-------- --------
Net increase (decrease) in cash and cash equivalents $ 8 $ 4
CASH AND CASH EQUIVALENTS, beginning of period $ 17 $ 11
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 25 $ 15
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 377 $ 365
-------- --------
Income Taxes paid $ 7 $ 9
-------- --------
<FN>
The accompanying notes are an integral part of this finacial information.
</TABLE>
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
MULTI-COLOR CORPORATION
Notes to Financial Information
FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although certain information and footnote
disclosures, normally included in financial statements prepared in accordance
with generally accepted accounting principles, have been condensed or omitted
pursuant to such rules and regulations, the Company believes that the
disclosures are adequate to make the information presented not misleading.
These condensed financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
Annual Report on Form 10-K.
The information furnished in these financial statements reflects all estimates
and adjustments which are, in the opinion of management, necessary to present
fairly the results for the interim periods reported, and all adjustments and
estimates are of a normal recurring nature.
RESTRUCTURING PLAN
In the Second Quarter of fiscal 1994, the Company announced a $1,777,000
restructuring charge which was reported as a separate charge for the twenty
six weeks ended September 26, 1993. The restructuring charge primarily
included the costs associated with consolidating operations and closing and
disposing of the Lockport, Illinois facility. In August, 1994, the Company
completed the sale of its Lockport facility and the restructuring plan was
essentially completed as of October 2, 1994.
EXTRAORDINARY CHARGE
The Company entered into a new financing agreement in July, 1994. Accordingly,
the prepayment fees associated with the previous financing agreement have been
expensed.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
Thirteen Weeks Ended July 2, 1995 Compared to Thirteen Weeks Ended July 3, 1994
Net sales decreased $556,000, or 3.4%, in the first quarter as compared to the
same quarter of the previous year. The decrease in sales was due primarily to
a 13% ($1,260,000) increase in in-mold sales offset by a 20% ($1,400,000)
decrease in conventional label business and lower cylinder sales ($209,000).
Higher levels of in-mold sales are expected to continue in future periods due
to higher volumes to existing customers and new business. The decrease in
conventional business was due primarily to lost business in the gum label and
detergent cleaning product areas. The decline in the conventional label
business is expected to continue.
5
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Gross profit increased $614,000 as compared to the previous year. Gross
profit was favorably impacted by record performance at the Scottsburg
Division. The Graphics and Cincinnati Divisions gross profits were negatively
impacted by lower sales.
Selling, general, and administrative expenses decreased $179,000 as compared
to the same prior year period. The decrease was attributable to implemented
cost cutting initiatives offset by the utilization of an outside consulting
firm to assist with the Company's renegotiation of its loan agreement
($133,000).
Interest expense increased $12,000 as compared to the same prior year. This
was the result of higher interest rates on the Company's borrowings.
The net income for the period was $213,000 [$.10 per share] as compared to a
net loss of $872,000 [$(.40) per share] in the same prior year period.
LIQUIDITY AND CAPITAL RESOURCES
In July 1994, the Company entered into a new Credit Agreement with PNC Bank,
Ohio, National Association, and Star Bank, National Association extending
through July 1997. This Agreement was to provide available borrowings under
the revolving line of credit of up to a maximum of $5 million, subject to
certain borrowing base limitations, and to provide for up to an additional
$1.4 million of long-term financing for capital expenditures. During fiscal
1995, the Company was in violation of certain of its financial covenants and
received waivers from its lenders with respect to these violations until
April 2, 1995. In connection with the waivers, the Credit Agreement was
amended to restrict the borrowing base and increase the interest rate and
fees applicable to the borrowings under the Credit Agreement. Additionally,
the $1.4 million term loan and lease lines are available only on a case by
case basis with bank approval. As of July 2, 1995, approximately $900,000 was
available for borrowing under the revolving line of credit.
The Company remains in violation of certain covenants; however, management is
continuing negotiations with its lenders to amend or restructure its financing
agreements with the objective of agreeing on a long-term loan agreement. In
addition, the Company is exploring other alternatives to enable the Company to
increase its capital available for operations and investment. In the
short-term, management also intends to continue its focus on working capital
management and reducing unprofitable conventional label operations and other
expenses to provide liquidity.
Through the first quarter ended July 2, 1995, net cash provided by operating
activities was $2,009,000 as compared to $241,000 of net cash used in
operating activities through the first quarter ended July 3, 1994. Net cash
provided by operations was favorably impacted by net income and reductions
in accounts receivable and inventory.
At July 2, 1995, the Company's net working capital (deficit) and current
ratio were ($16,612,000) and .42 to 1, respectively, as compared to a net
working capital (deficit) of ($17,031,000) and .47 to 1 as of April 2, 1995.
The deterioration in the negative working capital was primarily attributable
to the classification of the otherwise long-term debt as short-term debt as a
result of the Company's violation of certain covenants as discussed above. At
July 2, 1995, the Company was current in its principal and interest payments
on all debt.
6
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PART II. OTHER INFORMATION
Item 3. DEFAULTS UPON SENIOR SECURITIES
As indicated in the previous management discussions, the Company
was in violation of the Current Ratio, Leverage Ratio, and Cash Flow
Coverage Ratio covenants under the Credit Agreement at certain
measurement dates during the first quarter ending July 2, 1995, as well
as at the end of that fiscal quarter. Accordingly, long-term debt has
been classified as short-term debt.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Third Amendment dated July 5, 1995 to the Credit Reimbursement and
Security agreement dated as of July 15, 1994.
(b) None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Multi-Color Corporation
(Registrant)
Date: August 2, 1995 By: /s/ William R. Cochran
------------------------------
William R. Cochran
Vice President, Chief Financial
Officer
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<PAGE> 1
THIRD AMENDMENT TO CREDIT,
REIMBURSEMENT AND SECURITY AGREEMENT
MULTI-COLOR CORPORATION, an Ohio corporation (the "Company"), PNC BANK, OHIO,
NATIONAL ASSOCIATION and STAR BANK, NATIONAL ASSOCIATION (each individually a
"Lender" and collectively the "Lenders") and PNC BANK, OHIO, NATIONAL
ASSOCIATION, as agent for the Lenders (the "Agent"), hereby agree as follows
effective as of _______________, 1995 ("Effective Date"):
1. RECITALS.
1.1 On July 15, 1994 the Company, the Lenders and the Agent entered into
a Credit, Reimbursement and Security Agreement which has been amended by a First
Amendment and Waiver Agreement and Second Amendment and Waiver Agreement (as
amended, the "Credit Agreement"). Capitalized terms used herein and not
otherwise defined herein will have the meanings given such terms in the Credit
Agreement.
1.2 The Company has requested that the Lenders amend the Credit Agreement
to include a Standby Letter of Credit Facility and the Lenders are willing to
do so subject to and in accordance with the terms of this Third Amendment to
Credit, Reimbursement and Security Agreement (the "Third Amendment").
2. AMENDMENTS. The Credit Agreement is hereby amended as follows:
2.1 Section 1 of the Credit Agreement is amended in part as follows:
1.1.20 "Borrowing Base" will equal the lesser of (a) the sum of
eighty percent (80%) of the Eligible Accounts Receivable plus fifty percent
(50%) of Eligible Inventories, less $2,000,000, less the aggregate face amount
of all outstanding Standby Letters of Credit, or (b) the Total Revolving
Commitment.
1.1.30 "Commitment" or "Commitments" will mean the Revolving
Commitment, Equipment Line Commitment, Letter of Credit Commitment and Standby
Letter of Credit Commitment, as adjusted from time to time pursuant to Section
2.8, below.
1.1.84 "Letter of Credit Facilities" will mean the Credit
Facilities described in Sections 2.10 and 2.19 of this Credit Agreement.
1.1.85 "Letter of Credit Obligations" will mean an amount equal
to the sum of (a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and Standby Letters of Credit, plus (b) the
aggregate amount of drawings under Letters of Credit and Standby Letters of
Credit that have not then been reimbursed by the Company.
1.1.101 "Obligations" will mean an include all loans, advances,
debts, liabilities, obligations, covenants and duties owing to the Agent and/or
any or all of the Lenders from the Company of any kind or nature arising under
this Credit Agreement, the Letters of
<PAGE> 2
Credit, the Standby Letters of Credit, the Letter of Credit Documents, the
Notes or any of the Loan Documents, whether direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, and all charges, expenses, fees, including but not limited to
attorneys fees, and any other sums chargeable to the Company under of the
Obligations.
2.2 Section 2 of the Credit Agreement is amended to include a new Section
2.19 as follows:
2.19 STANDBY LETTER OF CREDIT FACILITY.
2.19.1 STANDBY LETTER OF CREDIT COMMITMENT. The Agent
agrees to issue and renew, and the other Lenders hereby authorize the Agent to
issue and renew, subject to the terms and conditions set forth in this Section
2.19, Standby Letters of Credit for the account of the Company from time to
time on any Business Day from the Effective Date until thirty (30) days before
the Termination Date; PROVIDED that (a) at the time of, and after giving effect
to, any such requested Standby Letter of Credit, all Revolving Conditions are
satisfied; (b) the requested amount of such Standby Letter of Credit after
taking into account, and aggregating therewith, the face amount of all other
Standby Letters of Credit theretofore issued, does not exceed the Standby
Letter of Credit Commitment; (c) the term of such Standby Letter of Credit does
not exceed one hundred eighty (180) days; and (d) the requested Standby Letter
of Credit satisfies the requirements of Section 2.19.2, below. Each Lender's
Revolving Commitment shall be deemed utilized by an amount equal to such
Lender's Ratable Portion (based on such Lender's Revolving Commitment) of the
maximum amount available to be drawn under each Standby Letter of Credit
(assuming compliance with all conditions to drawing the maximum amount
available under such Standby Letter of Credit). Immediately upon the issuance
of each Standby Letter of Credit, the Agent shall be deemed to have sold and
transferred to each Lender, and each Lender shall be deemed to have purchased
and received from the Agent, in each case irrevocably and without any further
action by any party, an undivided interest and participation in such Standby
Letter of Credit, each drawing thereunder and the Obligations of the Company
under this Credit Agreement related to such Standby Letter of Credit in an
amount equal to the Ratable Portion of such Lender therein (based on such
Lender's Revolving Commitment), to the end that all of the Lenders shall share
the obligations and risks as to Standby Letters of Credit in accordance with
their respective Ratable Portions (based on their Revolving Commitments). Each
Lender irrevocably agrees to pay to the Agent upon demand at any time that
Agent is required to make a Standby Letter of Credit Disbursement (prior to the
making of a Revolving Loan in refunding of any Letter of Credit Obligations)
the amount of such Lender's participation in such Standby Letter of Credit
Obligation.
2.19.2 TERMS OF STANDBY LETTERS OF CREDIT. All
Standby Letters of Credit shall be issued on the Agent's standard forms
therefor (or in such other form as the Agent and the Authorized Employee may
agree) for the account of the Company and shall be, unless otherwise agreed by
the Agent in its discretion, determined in Dollars. Unless the Majority
Lenders otherwise agree, no Standby Letter of Credit shall be issued or renewed
unless
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its expiration date shall be no later than the earlier of (a) eighteen (18)
months after the date of issuance or renewal thereof or (b) thirty (30) days
prior to the Termination Date. The Standby Letters of Credit shall be governed
by the terms of this Credit Agreement and of the Letter of Credit Documents.
2.19.3 PROCEDURE FOR LETTERS OF CREDIT. An Authorized Employee
shall give the Agent written notice (or telephone advice thereof promptly
confirmed in writing but in no event later than 5:00 p.m. Cincinnati time on
the day on which such telephonic notice is given) at least two (2) Business
Days prior to the date on which a Standby Letter of Credit is requested to be
issued of its request for a Standby Letter of Credit. Such notice shall be
accompanied by all Letter of Credit Documents required by the Agent, duly
executed, and shall specify: (a) the name and address of the beneficiary of
the Standby Letter of Credit, (b) the amount of the Standby Letter of Credit,
such supporting information regarding the related contract, payments and
similar matters as the Agent may require, (c) whether the Standby Letter of
Credit is revocable or irrevocable, (d) the Business Day on which the Standby
Letter of Credit is to be issued and the date on which the Standby Letter of
Credit is to expire, (e) the terms of payment of any draft or drafts which may
be drawn under the Standby Letter of Credit, and (f) any other terms or
provisions the Company desires to be contained in the Standby Letter of Credit.
In the event of any conflict between the provisions of this Credit Agreement
and the provisions of any applicable Letter of Credit Documents, the provisions
of this Credit Agreement shall prevail and control unless otherwise expressly
provided in the Letter of Credit Documents. If the requested form of such
Standby Letter of Credit is acceptable to the Agent in its sole discretion, the
Agent will, subject to the terms and conditions of this Credit Agreement, make
such Standby Letter of Credit available to the Company at the Agent's office.
2.19.4 DRAWING AND REIMBURSEMENT. The payment by the Agent of a
draft drawn under any Standby Letter of Credit shall constitute for all
purposes of this Agreement the making by the Agent of a Revolving Credit Loan,
which shall be a Base Rate Advance, in the amount of such draft (but without
any requirement for compliance with the provisions of Sections 2.1 or 7
hereof). On the first Business Day following a drawing under a Standby Letter
of Credit, the Agent shall promptly notify each other Lender. Upon receipt of
such notice each such Lender shall immediately (but in any event not later than
the first Business Day following such notification) make a Revolving Loan,
which shall be a Base Rate Advance, in an amount equal to the amount of its
participation in such drawing for application to reimburse the Agent (but
without any requirement for compliance with the provisions of Sections 2.1 or 7
hereof; PROVIDED that the making of such Revolving Loan shall not constitute a
waiver of any such provision) and shall make available for the account of its
Applicable Lending Office to the Agent for the account of the Agent, by deposit
to the Agent's Account, in same day funds, the amount of such Revolving Loan.
If and to the extent that any Lender shall not have so made the amount of such
Revolving Loan available to the Agent, such Lender and the Company severally
agree to pay to the Agent forthwith on demand such amount together with
interest thereon, for each day from the date of such notification by the Agent
(in the case of such Lender) or the dates such drawing was paid by the Agent
(in the case of the Company) until the date such amount is paid to the Agent,
at (i) in the case of the Company, the Default Rate and (ii) in the case of
such Lender, two percent (2%) in excess of the Federal Funds Rate.
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<PAGE> 4
If such Lender shall pay to the Agent such amount, such amount so paid shall
constitute such Lender's Advance for purposes of this Agreement.
2.19.5 REIMBURSEMENT OBLIGATION OF COMPANY FOR STANDBY LETTER OF
CREDIT DISBURSEMENTS. The Company hereby promises to pay to the order of the
Agent in Dollars the following (each a "Standby Letter of Credit Disbursement"
and which are herein called collectively the "Standby Letter of Credit
Disbursements") immediately upon or before notification by the Agent to the
Authorized Employee of the amount of a Standby Letter of Credit Disbursement:
(a) the amount which the Agent has paid or will be
required to pay in respect of any Standby Letter of Credit;
(b) any and all reasonable charges and expenses
(including, without limitation, reasonable attorneys' fees
and expenses) which the Agent may pay or incur relative to
any Standby Letter of Credit and/or drafts related
thereto, or the prosecution or defense of any action
growing out of, or in connection with, any Standby Letter
of Credit, including, without limitation, any and all
costs and expenses in connection with the defense of any
and all actions to enjoin full or partial payment of any
draft drawn or purported to be drawn under the Standby
Letter of Credit; and
(c) interest on the amounts described in (a) and (b),
above, not paid by the Company as and when due and payable
under the provisions of (a) and (b), above, from the day
paid or incurred by the Agent until reimbursed in full at
the Default Rate in effect from time to time.
2.19.6 COMPANY'S OBLIGATIONS ABSOLUTE.
(a) The Company's obligations to pay Standby Letter of
Credit Disbursements to the Agent shall be absolute,
unconditional and irrevocable under any and all
circumstances and irrespective of:
(i) any lack of validity or enforceability of
any Standby Letter of Credit;
(ii) the existence of any claim, setoff,
defense or other right which the Company or any
other Person may at any time have against the
beneficiary of any Standby Letter of Credit or the
Agent (other than the defense of payment in
accordance with the terms of this Credit Agreement
or a defense based on the gross negligence or wilful
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<PAGE> 5
misconduct of the Agent), each other, or any other Person in
connection with this Credit Agreement or any other agreement or
transaction;
(iii) any draft or other document presented under a Standby Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect; PROVIDED that payment by the Agent under such Standby Letter
of Credit against presentation of such draft or document shall not
have constituted gross negligence or wilful misconduct;
(iv) payment by the Agent under a Standby Letter of Credit against
presentation of a draft or other document which does not comply with
the terms of such Standby Letter of Credit; PROVIDED that such payment
shall not have constituted gross negligence or wilful misconduct; and
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; PROVIDED that such other circumstance
or event shall not have been the result of gross negligence or wilful
misconduct of the Agent.
(b) It is understood that in making any payment under a Standby
Letter of Credit (x) the Agent's exclusive reliance on the documents
presented to it under such Standby Letter of Credit as to any and all
matters set forth therein, including, without limitation, reliance on
the amount of any draft presented under such Standby Letter of Credit,
whether or not the amount due to the beneficiary equals the amount of
such draft and whether or not any document presented pursuant to such
Standby Letter of Credit proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not any
other statement or any other document presented pursuant to such Standby
Letter of Credit proves to be forged or invalid or any statement therein
proves to be inaccurate or untrue in any respect whatsoever and (y) any
noncompliance in any immaterial respect of the documents presented under
a Standby Letter of Credit with the terms thereof shall, in each case,
not be deemed wilful misconduct or gross negligence of the Agent.
(c) The Agent may accept or honor as complying with any Standby
Letter of Credit any draft or other document otherwise in order which
has been signed or issued by or to the administrator, executor or
trustee in bankruptcy of or any receiver
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<PAGE> 6
for any of the property of any party designated in any of the Standby
Letters of Credit or in any of Company's instructions, in the place of
the name, signature or act of such party.
2.19.7 COLLATERAL IN THE EVENT OF DEFAULT. If the Credit Facilities
terminate or expire for any reason or the Agent accelerates the entire
principal and interest and all other amounts due from the Company pursuant to
this Credit Agreement as a result of any Event of Default, then the Company
shall, on demand of the Agent, deposit with the Agent in cash, for deposit in
the Cash Collateral Account, an amount equal to the Standby Letter of Credit
Obligations as of such date. The Agent shall have no obligation to make any of
such funds available to the Company pursuant to Section 3.2, below. The Agent
may also deposit to the Cash Collateral Account any payments received by it
from the collection of the Obligations and the sale or other disposition of the
Collateral which the Agent, in its discretion, designates as being held against
Standby Letter of Credit Obligations and other Obligations related thereto.
2.19.8 LIABILITY AND INDEMNIFICATION OF THE AGENT.
(a) Any action taken or omitted by the Agent, any Affiliate of the
Agent, or any branch or correspondent bank or confirming bank, under or
in connection with the Standby Letters of Credit or drafts or documents
relating thereto, if taken or omitted without gross negligence or
willful misconduct, will be binding upon the Company and will not result
in the Agent, any Affiliate, any branch or any correspondent or
confirming bank being under any liability to the Company. The Agent,
any Affiliate, branch, correspondent bank or confirming bank or any of
their officers, directors or employees will not be liable or responsible
for: (a) the use which may be made of the Standby Letters of Credit or
for any acts or omissions of any beneficiaries or any transferees in
connection therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement(s) thereon, even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) if through the actions of shippers or any
other party, any documents fail to reach their destination in due time;
(d) the kind, quality, quantity, delivery or existence of property
represented by any documents; (e) the sufficiency, coverage or validity
of any insurance, the financial standing or responsibility of any
insurer, or any other risk associated with insurance on any property;
(f) delay in giving or the failure to give notice of arrival or any
other notice; (g) failure of any draft to bear any reference or adequate
reference to any of the Standby Letters of Credit; (h) any delay or
deviation from instructions in regard to shipment or payment; (i) any
variation between invoices and insurance documents or between invoices
and bills of lading, warehouse
- 6 -
<PAGE> 7
receipts or other documents; (j) any negligence or fraud of any shipper,
inspector, forwarding agent or other party; (k) errors, omissions,
interruptions or delays in transmission or delivery of any messages or
documents by mail, telex or other means; or (l) any other circumstances
whatsoever in making or failing to make payment under any of the Standby
Letters of Credit, except only damages which the Company proves were
caused by the Agent, any Affiliate, branch, correspondent bank or
confirming bank or any of their officers, directors or employees under
either of the following circumstances in those cases the Company will
have a claim only against the entity or its officers, directors or
employees that actually committed the acts giving rise to such claim:
(i) gross negligence or willful misconduct in determining whether a
draft or other documents presented under any Standby Letter of Credit
complies with the terms of the Standby Letter of Credit or (ii) the
willful or grossly negligent failure to pay under a Standby Letter of
Credit after the presentation to it by any beneficiary or transferee of
a draft and documents strictly complying with the terms and conditions
of the Standby Letter of Credit. In furtherance of and not in
limitation of the foregoing, (a) the Agent, its Affiliates, branches,
correspondent banks and confirming banks may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary
and any action taken or omitted in good faith in connection with any of
the Standby Letters of Credit or any documents or property related to
any of the Standby Letters of Credit will be binding on the Company and
will not result in any liability of the Agent, its Affiliates, branches,
correspondent banks and confirming banks, and (b) the Agent and its
Affiliates, branches, correspondent banks and confirming banks will not
be liable for any failure or inability to perform in accordance with the
terms of any of the Standby Letters of Credit by reason of any
censorship, law, control or restriction rightfully or wrongfully
exercised by any de facto or de jure government or group exercising or
exerting governmental powers, or for any other act or omission for which
banks are relieved of responsibility under applicable law and/or the
Uniform Customs, as that term is defined below.
(b) The Company hereby agrees at all times to indemnify, defend and
hold harmless the Agent and its Affiliates, branches, correspondent
banks and confirming banks, all directors, officers, employees, agents
and attorneys thereof, from and against any and all claims, suits and
other legal proceedings, and from and against any and all demands,
liabilities, judgments, losses, claims, liabilities, damages, attorney
fees, court costs, interest and
- 7 -
<PAGE> 8
penalties, costs and other expenses which the Agent or any such
indemnified party jointly or severally may, at any time, sustain or
incur by reason of or in consequence of or arising out of this Credit
Agreement or any of the Standby Letters of Credit or the use (or the
proposed or potential use) of the proceeds of any drawing under any of
the Standby Letters of Credit, or any act hereunder or thereunder,
including but not limited to any of the foregoing arising out of any
legal proceeding seeking to enjoin or require any payment under any of
the Standby Letters of Credit; PROVIDED that the Company is not required
to indemnify the Agent, Affiliates, branches, correspondent banks or
confirming banks for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (a) the
willful misconduct or gross negligence of such entity in determining
whether a draft or other documents presented under any of the Standby
Letters of Credit complied with the terms of the Standby Letter of
Credit or (b) the willful or grossly negligent failure of such entity to
pay under any of the Standby Letters of Credit after the presentation to
it by the beneficiary or any transferee of a draft and documents
strictly complying with the terms and conditions of any of the Standby
Letters of Credit.
2.19.9 GENERAL PROVISIONS.
(a) Any Standby Letter of Credit may be amended, modified or
revoked only upon the receipt by the Agent from the Company and the
beneficiary (including any transferee(s) and/or assignee(s) of the
original beneficiary), of a written consent and request therefor, and
then only such terms and conditions as the Agent may prescribe.
(b) If any law, order of Court and/or ruling or regulation of any
agency of government of the United States (or any state thereof) and/or
any country other than the United States, requires or permits a
beneficiary under a Standby Letter of Credit to require the Agent and/or
its branches, affiliates and/or correspondents to pay drafts under or
purporting to be under a Standby Letter of Credit after the expiration
date of the Standby Letter of Credit, the Company immediately shall
reimburse the Agent for any such payment (and such obligation will be
deemed to be included within the meaning of the term "Standby Letter of
Credit Disbursement(s)").
(c) Except as may otherwise be specifically provided in a Standby
Letter of Credit or Standby Letter of Credit Document, the Standby
Letters of Credit are issued and subject to the Uniform
- 8 -
<PAGE> 9
Customs and Practices for Documentary Credits published by the
International Chamber of Commerce (the "Uniform Customs"), and the
version of the Uniform Customs applicable to any particular Standby
Letter of Credit shall be the most current revision in effect on the
date of issuance of such Standby Letter of Credit. In the event of a
conflict between the Uniform Customs and Practice for Documentary
Credits and the Laws of the State of Ohio, the Laws of the State of Ohio
shall prevail.
(d) The Company hereby irrevocably consents and agrees to, at its
expense, being joined, impleaded or otherwise brought in as third-party
defendants in any action or proceeding brought by any Person against the
Agent or any of the Lenders or otherwise naming the Agent or any of the
Lenders as a party as a result of, arising out of or in connection with,
any Standby Letter of Credit and/or any of the provisions of any Standby
Letter of Credit Document, including, but not limited to, any action
brought by a beneficiary, their successors, assigns or transferees
against the Agent or any of the Lenders as a result of any dishonor by
the Agent or any of the Lenders of drafts under or purporting to be
under a Standby Letter of Credit.
(e) Equivalent Dollar amounts, to the extent applicable, will be
determined at the selling rate of exchange then offered by the Agent at
the time of payment for cable transfers to the place of payment, plus
any payments made by the Agent to comply with any applicable
governmental exchange regulations.
(f) The Company will insure against the usual risks, as the Agent
may reasonably require, all goods shipped under any of the Standby
Letters of Credit, which insurance will be with companies and under
policies meeting the requirements of Section 9.13 hereof and in all
respects satisfactory to the Agent. On the demand of the Agent, the
Company will deposit with the Agent policies or certificates of such
insurance. The Company will sign and deliver to the Agent upon the
request of the Agent trust receipts or similar instruments, financing
statements or other documents reasonably requested by the Agent to
perfect any liens or security interests granted by the Company to the
Agent in connection with Standby Letters of Credit. The Company will
promptly procure any necessary licenses for the importing, exporting or
shipping of all property in connection with the Standby Letters of
Credit, comply will all governmental laws and regulations affecting the
shipment or financing of such property and furnish to the Agent such
documents as the Agent may reasonably require.
- 9 -
<PAGE> 10
2.19.10 STANDBY LETTER OF CREDIT FEES. The Company will pay to the
Agent an issuance fee computed at a rate per annum equal to the
following percentages of the Aggregate Standby Letter of Credit stated
amounts (the "Standby Letter of Credit Fee"), which fee will be computed
and payable quarterly in advance beginning on the date of issuance and
on the first Business Day of each quarter thereafter:
<TABLE>
<CAPTION>
Leverage Ratio Letter of Credit Fee
-------------- --------------------
<S> <C>
0 < 1.70 1.25%
-
> 1.70 < 2.25 1.50%
-
> 2.25 < 2.75 2.00%
-
> 2.75 and above 2.50%
</TABLE>
2.3 OTHER STANDBY LETTER OF CREDIT FACILITY DEFINITIONS.
"Standby Letter of Credit Commitment" will mean the Commitment of the
Agent on behalf of the Lenders to issue Standby Letters of Credit in the
aggregate not exceeding (a) the Available Commitment or (b) $500,000.
"Standby Letter of Credit Conditions" will mean the conditions
specified in Section 2.19.1 of this Credit Agreement.
"Standby Letter of Credit Disbursements" will have the meaning given
that term in Section 2.19.5 of this Credit Agreement.
"Standby Letter of Credit Facility" will mean the Credit Facility
described in Section 2.19 of this Credit Agreement.
"Standby Letter of Credit" will mean Standby Letters of Credit issued
pursuant to Section 2.19 of this Credit Agreement to support the contingent
obligation of the Company to pay a supplier amounts due under a purchase
contract.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. To induce the
Lenders and the Agent to enter into this Third Amendment, the Company
represents and warrants as follows:
3.1 The representations and warranties of the Company contained in
Section 8 of the Credit Agreement are deemed to have been made again on and as
of the date of execution of this Third Amendment and are true and correct as of
the date of the execution of this Third Amendment.
3.2 No Event of Default (as such term is defined in Section 11 of the
Credit Agreement) or event or condition which with the lapse of time or giving
of notice or both would constitute an Event of Default exists on the date
hereof, except for defaults that had been waived
- 10 -
<PAGE> 11
in accordance with the First Amendment and Waiver Agreement and the Second
Amendment and Waiver Agreement.
3.3 The person executing this Third Amendment is a duly elected and
acting officer of the Company and is duly authorized by the Board of Directors
of the Company to execute and deliver this Third Amendment on behalf of the
Company.
4. CLAIMS AND RELEASE OF CLAIMS BY THE COMPANY. The Company represents and
warrants that the Company does not have any claims, counterclaims, setoffs,
actions or causes of actions, damages or liabilities of any kind or nature
whatsoever whether at law or in equity, in contract or in tort, whether now
accrued or hereafter maturing (collectively, "Claims") against the Lenders or
the Agent, their respective direct or indirect parent corporations or any
direct or indirect affiliates of such parent corporation, or any of the
foregoing's respective directors, officers, employees, agents, attorneys and
legal representatives, or the successors or assigns of any of them
(collectively, "Lender Parties") that directly or indirectly arise out of, are
based upon or are in any manner connected with any Prior Related Event. As an
inducement to the Lenders and the Agent to enter into this Third Amendment, the
Company on behalf of itself, and all of its successors and assigns hereby
knowingly and voluntarily releases and discharges all Lender Parties from any
and all Claims, whether known or unknown, that directly or indirectly arise out
of, are based upon or are in any manner connected with any Prior Related Event.
As used herein, the term "Prior Related Event" means any transaction, event,
circumstance, action, failure to act, occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted or begun at any
time prior to the Effective Date or occurred, existed, was taken, was permitted
or begun in accordance with, pursuant to or by virtue of any of the terms of
the Credit Agreement or any documents executed in connection with the Credit
Agreement or which was related to or connected in any manner, directly or
indirectly to the Notes, the Standby Letters of Credit or Letters of Credit.
5. CONDITIONS. The Lenders' and Agent's obligations pursuant to this Third
Amendment are subject to the following conditions:
5.1 The Agent shall have been furnished copies, certified by the
Secretary or assistant Secretary of the Company, of resolutions of the Board of
Directors of the Company authorizing the execution of this Third Amendment and
all other documents executed in connection herewith.
5.2 The representations and warranties of the Company in Section 3,
above, shall be true.
5.3 The Company shall pay all expenses and attorneys fees incurred by the
Lender in connection with the preparation, execution and delivery of this Third
Amendment and related documents.
5.4 The Company shall pay an amendment fee of $2,000 and the Standby
Letter of Credit Fee to the Agent, to be shared pro rata by the Lenders.
- 11 -
<PAGE> 12
6. GENERAL.
6.1 Except as expressly modified herein, the Credit Agreement, as
amended, is and remains in full force and effect.
6.2 Nothing contained herein will be construed as waiving any default or
Event of Default under the Credit Agreement or will affect or impair any right,
power or remedy of the Lenders or the Agent under or with respect to the Credit
Agreement, as amended, or any agreement or instrument guaranteeing, securing or
otherwise relating to the Credit Agreement.
6.3 This Third Amendment will be binding upon and inure to the benefit of
the Company, the Lenders and the Agent and their successors and assigns.
6.4 All representations, warranties and covenants made by the Company
herein will survive the execution and delivery of this Third Amendment.
6.5 This Third Amendment will in all respects be governed and construed
in accordance with the laws of the State of Ohio.
6.6 This Third Amendment may be executed in one or more counterparts,
each of which will be deemed an original and all of which together will
constitute one and the same instrument.
Executed as of the Effective Date.
MULTI-COLOR CORPORATION,
as Company
By: _____________________________________
Print Name: _____________________________
Title: __________________________________
PNC BANK, OHIO,
NATIONAL ASSOCIATION,
on its own behalf as Lender and as Agent
By: _____________________________________
Print Name: _____________________________
Title: __________________________________
- 12 -
<PAGE> 13
STAR BANK,
NATIONAL ASSOCIATION,
as Lender
By: _____________________________________
Print Name: _____________________________
Title: __________________________________
- 13 -
<PAGE> 14
CERTIFICATE OF THE SECRETARY
OF
MULTI-COLOR CORPORATION
The undersigned, Secretary of Multi-Color Corporation ("Corporation") hereby
certifies to PNC Bank, Ohio, National Association, as Agent, as follows:
1. The following Resolution was duly adopted and is a binding resolution of
the Corporation:
RESOLVED, that the Corporation enter into an amendment to the Credit,
Reimbursement and Security Agreement ("Credit Agreement") by and between
the Corporation and PNC Bank, Ohio, National Association, as Agent and
Lender and Star Bank, National Association, as Lender, dated July 15,
1994, and the Note and Security Documents executed in connection
therewith, to (i) amend certain provisions of the Credit Agreement and
(ii) release any claims the Corporation may have against the Lenders or
the Agent and certain other persons and/or entities, and that the
President or any Vice President, or any one of them, be and they each
hereby are, authorized to execute any and all documents to effect the
same, which documents shall contain such terms, conditions, waivers,
releases or other agreements as any one of such officers in his or her
sole discretion deems appropriate.
2. The following is a complete and accurate list of the Officers of the
Corporation as of this date:
<TABLE>
<S> <C>
President . . . . . . . . . . . _________________________________________
Vice President . . . . . . . . . _________________________________________
Vice President . . . . . . . . . _________________________________________
Vice President . . . . . . . . . _________________________________________
Secretary . . . . . . . . . . . _________________________________________
Chief Financial Officer . . . . _________________________________________
</TABLE>
_____________________________________________
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUL-02-1995
<CASH> 25,000
<SECURITIES> 0
<RECEIVABLES> 5,981,000
<ALLOWANCES> 0
<INVENTORY> 5,486,000
<CURRENT-ASSETS> 12,224,000
<PP&E> 33,662,000
<DEPRECIATION> 14,227,000
<TOTAL-ASSETS> 32,878,000
<CURRENT-LIABILITIES> 28,836,000
<BONDS> 0
<COMMON> 9,357,000
0
0
<OTHER-SE> (6,146,000)
<TOTAL-LIABILITY-AND-EQUITY> 32,878,000
<SALES> 15,507,000
<TOTAL-REVENUES> 15,507,000
<CGS> 13,439,000
<TOTAL-COSTS> 14,942,000
<OTHER-EXPENSES> (25,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 377,000
<INCOME-PRETAX> 213,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 213,000
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
