<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 December 31, 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 31-1125853
(State or other jurisdiction of (IRS Employer
incorporation or organization) 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 February 5, 1996)
----------------------------------------------------------------
-1-
<PAGE> 2
PART 1. FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements
- ----------------------------
MULTI-COLOR CORPORATION
-----------------------
Statements of Operations
(Prepared Without Audit)
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------
December 31, 1995 January 1, 1995
------------------ ---------------
<S> <C> <C>
NET SALES $ 12,822 $ 14,433
COST OF GOODS SOLD 10,872 14,503
-------- --------
Gross Profit $ 1,950 $ (70)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,457 1,567
RESTRUCTURING CHARGE (INCOME) - -
-------- --------
Operating Income (Loss) $ 493 $ (1,637)
OTHER EXPENSE (INCOME) (96) 25
INTEREST EXPENSE 358 355
-------- --------
Income (Loss) Before Taxes $ 231 $ (2,017)
PROVISION (CREDIT) FOR TAXES - (50)
-------- --------
NET INCOME (LOSS) $ 231 $ (1,967)
======== ========
NET EARNINGS (LOSS) PER SHARE $ 0.10 $ (0.91)
======== ========
AVERAGE NUMBER OF SHARES OUTSTANDING 2,329 2,168
======== ========
</TABLE>
The accompanying notes are an integral part of this financial information.
-2-
<PAGE> 3
PART 1. FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements (Continued)
- ----------------------------------------
MULTI-COLOR CORPORATION
-----------------------
Statements of Operations
(Prepared Without Audit)
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
---------------------
December 31, 1995 January 1, 1995
----------------- ---------------
<S> <C> <C>
NET SALES $41,487 $45,844
COST OF GOODS SOLD 35,717 43,111
------- -------
Gross Profit $ 5,770 $ 2,733
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 4,232 4,760
RESTRUCTURING CHARGE (INCOME) - (85)
------- -------
Operating Income (Loss) $ 1,538 $(1,942)
OTHER EXPENSE (INCOME) (96) 91
INTEREST EXPENSE 1,072 1,044
------- -------
Income (Loss) Before Taxes and Extraordinary Item $ 562 $(3,077)
PROVISION (CREDIT) FOR TAXES - (100)
------- -------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ 562 $(2,977)
------- -------
Extraordinary Item - Loss on Extinguishment of Debt - 225
------- -------
NET INCOME (LOSS) $ 562 $(3,202)
======= =======
NET EARNINGS (LOSS) PER SHARE BEFORE EXTRAORDINARY ITEM $ 0.24 $ (1.38)
------- -------
EXTRAORDINARY ITEM - 0.10
------- -------
NET EARNINGS (LOSS) PER SHARE $ 0.24 $ (1.48)
======= =======
AVERAGE NUMBER OF SHARES OUTSTANDING 2,329 2,168
======= =======
</TABLE>
The accompanying notes are an integral part of this financial information.
-3-
<PAGE> 4
Item 1. Financial Statements (Continued)
- ----------------------------------------
MULTI-COLOR CORPORATION
Balance Sheets
(Thousands)
ASSETS
------
<TABLE>
<CAPTION>
December 31,1995 April 2,1995
------------------ -----------------
(Derived from
(Prepared Without Audited Financial
Audit) Statements)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 24 $ 16
Accounts Receivable 4,184 7,635
Notes Receivable 106 67
Inventories
Raw Materials 1,565 2,061
Work in Progress 1,269 1,472
Finished Goods 2,784 3,129
Deferred Tax Benefit 604 604
Prepaid Expenses and Supplies 71 114
------- -------
Total Current Assets $10,607 $15,098
------- -------
SINKING FUND - IRB $ 1,269 $ 400
------- -------
PROPERTY, PLANT, AND EQUIPMENT $33,192 $33,398
ACCUMULATED DEPRECIATION (14,509) (13,609)
------- -------
$18,683 $19,789
------- -------
DEFERRED CHARGES, net $ 78 $ 149
------- -------
NOTE RECEIVABLE $ 314 $ 373
------- -------
NOTE RECEIVABLE FROM OFFICERS/SHAREHOLDERS $ 100 $ 150
------- -------
$31,051 $35,959
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-Term Debt $ 2,238 $ 4,105
Current portion of long-term debt 860 1,093
Convertible Subordinate Debt 514 -
Long-term Debt Subject to Acceleration 14,700 14,700
Accounts Payable 5,920 9,597
Accrued Expenses 2,428 2,634
------- -------
Total Current Liabilities $26,660 $32,129
------- -------
LONG-TERM DEBT, excluding current portion $ 6 $ 8
------- -------
DEFERRED TAXES $ 604 $ 604
------- -------
PENSION LIABILITY $ 220 $ 220
------- -------
Total Liabilities $27,490 $32,961
------- -------
SHAREHOLDERS' EQUITY
Common Stock, no par value $ 9,357 $ 9,357
Accumulated Deficit (5,337) (5,900)
Excess of Additional Pension Liability
Over Unrecognized Prior Service Cost (459) (459)
------- -------
Total Shareholders' Equity $ 3,561 $ 2,998
------- -------
$31,051 $35,959
======= =======
</TABLE>
The accompanying notes are an integral part of this financial information.
-4-
<PAGE> 5
Item 1. Financial Statements (Continued)
MULTI-COLOR CORPORATION
Statements of Cash Flows
(Prepared Without Audit)
(Thousands)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
December 31, 1995 January 1, 1995
----------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 562 $(3,202)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities -
Depreciation and amortization 1,742 2,079
Increase (decrease) in deferred income taxes - 56
Increase (decrease) in deferred compensation - (288)
(Increase) decrease in notes receivable 69 (109)
Net (increase) decrease of accounts receivable,
inventories and prepaid expenses and supplies 4,530 170
Net increase (decrease) in accounts payable and
accrued liabilities (3,883) (804)
Accrual of restructuring liabilities - (85)
Payment of restructuring liabilities - (241)
------- -------
Net cash provided by (used in) operating activities $ 3,020 $(2,424)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures, net $ (985) $ (717)
Marketable Securities sold (purchased) net 13 -
Proceeds from sale of assets 414 -
------- -------
Net cash used in investing activities $ (558) $ (717)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) of revolving loan including,
non-current portion, net $(1,867) $ 3,658
Increase (decrease) in convertible subordinated note 514
(Increase) decrease in sinking fund (869) (200)
Proceeds from issuance of common stock - 129
Addition (reductions) to long term debt, including
current portion (233) (233)
Capitalized bank fees - (199)
------- -------
Net cash provided by (used in) financing
activities $(2,455) $ 3,155
------- -------
Net increase (decrease) in cash and cash
equivalents $ 7 $ 14
CASH AND CASH EQUIVALENTS, beginning of period $ 16 $ 11
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 23 $ 25
------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 1,071 $ 1,044
------- -------
Income Taxes paid $ 46 $ 16
------- -------
</TABLE>
The accompanying notes are an integral part of this financial information.
-5-
<PAGE> 6
MULTI-COLOR CORPORATION
Notes to Financial Information
Item 1. 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 December 31, 1995 Compared to the Thirteen Weeks Ended
January 1, 1995
Net sales decreased $1,611,000, or 11.2%, in the third quarter as
compared to the same quarter of the previous year. The decrease in
sales was due primarily to a 33% ($2,273,000) decrease in conventional
label business. A year ago, the Company decided to eliminate some
unprofitable activities and also experienced a partial loss of
business with one major customer. The Company has not experienced any
significant declines during fiscal year 1996 in conventional label
business and is focusing on growing this market.
In-mold sales increased 9.3% ($661,000) in the third quarter as
compared to the same quarter of the previous year. Higher levels of
in-mold sales are expected to continue in future periods due to higher
volumes to existing customers and new business.
Gross profit increased by $2,020,000 as compared to the previous year
and was favorably impacted by the continued cost cutting within the
operations coupled with improved performance at the Scottsburg and
Graphics Divisions due to higher sales volumes and improved
manufacturing efficiencies. Additionally, the comparative gross
profit improvement was adversely impacted by a $1,400,000 accrual for
blocking of labels during the third quarter of fiscal year 1995. The
Company has successfully resolved the blocking issues which also
accounts for the improvement in gross profit.
-6-
<PAGE> 7
Selling, general, and administrative expenses decreased $110,000 as
compared to the same prior year period. The decrease was attributable
to implemented cost cutting initiatives.
Other income and expense was favorably impacted by gains on fixed
asset sales which were not in-service totalling $85,000.
Interest expense increased $3,000 as compared to the same prior year
period. This was the result of higher interest rates on the Company's
IRB's offset by lower borrowings against the revolving loan.
The net income for the period was $231,000 [$.10 per share] as
compared to a net loss of ($1,967,000) [$(.91) per share] in the same
prior year period.
Thirty-Nine Weeks Ended December 31, 1995 Compared to the Thirty-Nine Weeks
Ended January 1, 1995.
Net sales decreased $4,357,000 or 9.5% during the first nine months as
compared to the same prior year period. The decrease in sales was due
primarily to a 29.8% ($6,068,000) decrease in conventional label
business offset by a 9.3% ($2,149,000) increase in in-mold sales. A
year ago, the Company decided to eliminate some unprofitable
conventional label activities and also experienced a partial loss of
business with one major customer. The Company has not experienced any
significant declines during fiscal year 1996 in conventional label
business and is focusing on growing this market. In-mold sales
increased during the first nine months as compared to the same prior
year period and are expected to continue in future periods due to
higher volumes to existing customers and new business.
Gross profit increased $3,037,000 during the first nine months as
compared to the same prior year period. Gross profit was favorably
impacted by higher levels of in-mold sales, improved performance at
Scottsburg, a $300,000 supplier claim settlement, and the cost cutting
programs initiated at Cincinnati to handle the lower levels of
conventional label sales. Additionally, the comparative gross profit
improvement was adversely impacted by a $1,400,000 accrual for
blocking of labels during the third quarter of fiscal year 1995. The
Company has successfully resolved the blocking issues which also
accounts for the improvement in gross profit. The Graphics Division's
gross profit was negatively impacted by lower sales.
Selling, general, and administrative expenses decreased $528,000
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 ($213,000).
Interest expense increased $28,000 as compared to the same prior year.
This was the result of higher interest rates on the Company's IRB's.
The net income for the period was $562,000 [$.24 per share] as
compared to a net loss of $3,202,000 [$(1.48) 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 December 31,
1995, approximately $800,000 was available for borrowing under the
revolving line of credit.
-7-
<PAGE> 8
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 reaching a
long-term agreement.
During the first three quarters of fiscal 1996, the Company
experienced the need for additional cash and as part of an effort to
improve the Company's cash and liquidity needs, raised $500,000 from
certain members of the Company's Board of Directors and another
individual through the sale of the Company's Subordinated Convertible
Promissory Notes due March 31, 1996. Said notes are mandatorily
convertible into the Company's Common Stock at a conversion rate equal
to 80% of the value of the Company's Common Stock as measured at
certain dates. The Company is exploring other alternatives to enable
the Company to increase its capital available for operations and
investment. In the short-term, management intends to continue its
focus on working capital management and reducing unprofitable
conventional label operations and other expenses to provide operating
liquidity. On a long term basis, the Company has engaged Hambro
America Securities, Inc. to review the Company's business strategy and
capital structure, including the possibility of privately placing
$3,000,000 to $5,000,000 of equity or equity equivalent securities.
Through the third quarter ended December 31, 1995, net cash provided
by operating activities was $3,020,000 as compared to ($2,424,000) of
net cash used in operating activities through the third quarter ended
January 1, 1995. Net cash provided by operations was favorably
impacted by net income and reductions in accounts receivable and
inventory.
At December 31, 1995, the Company's net working capital (deficit) and
current ratio were ($16,053,000) and .40 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 at the end of the third quarter ended December 31, 1995. At
December 31, 1995, the Company was current in its principal and
interest payments on all debt.
-8-
<PAGE> 9
Part II. Other Information
--------------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) List of Exhibits
Description
-----------
Exhibit Number
--------------
27 Financial Data Schedule
-9-
<PAGE> 10
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: February 12, 1996
By:
----------------------------------
William R. Cochran
Vice President, Chief Financial Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 24,000
<SECURITIES> 0
<RECEIVABLES> 4,184,000
<ALLOWANCES> 0
<INVENTORY> 5,618,000
<CURRENT-ASSETS> 10,607,000
<PP&E> 33,192,000
<DEPRECIATION> 14,509,000
<TOTAL-ASSETS> 31,051,000
<CURRENT-LIABILITIES> 26,660,000
<BONDS> 0
<COMMON> 9,357,000
0
0
<OTHER-SE> (5,796,000)
<TOTAL-LIABILITY-AND-EQUITY> 31,051,000
<SALES> 12,822,000
<TOTAL-REVENUES> 12,822,000
<CGS> 10,872,000
<TOTAL-COSTS> 12,329,000
<OTHER-EXPENSES> (96,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 358,000
<INCOME-PRETAX> 231,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 231,000
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
