1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
FORM 8-K/A
Amendment No.1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 16, 1999
--------------------------------
Multi-Color Corporation
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Ohio 0-16148 31-1125853
- --------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
205 W. Fourth Street, Suite 1140, Cincinnati, Ohio 45202
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 513/381-1480
------------------------------
No change.
- --------------------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
This Amendment No.1 amends the current report on Form 8-K dated December 16,
1999 by adding Item 7, consisting of the financial statements of Buriot
International, Inc. and pro forma financial information.
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Item 7. Financial Statements and Exhibits
(a) Financial Statements of business acquired:
The following historical audited financial statements are attached hereto:
Buriot International, Inc. Page
- -------------------------- -----
i. Report of Clark, Shaefer, Hackett & Co. 4
ii. Balance Sheets as of May 31, 1999 and 1998 5
iii. Statements of Operations and Accumulated
Deficit for the Years ended May 31, 1999
and 1998 7
iv. Statements of Cash Flows for the years
ended May 31, 1999 and 1998 8
v. Notes to Consolidated Financial Statements 9
vi. Condensed Balance Sheet as of November 30, 1999
(unaudited) 14
vii. Condensed Statement of Operations for the six months
ended November 30, 1999 (unaudited) 15
(b) Pro Forma Consolidated (Unaudited) Financial Information
i. Basis of Presentation 16
ii. Pro Forma Consolidated Statement of Operations Data
for the year ended March 28, 1999 17
iii. Pro Forma Consolidated Statement of Operations Data
for the six months ended September 30, 1999 18
iv. Notes to Pro Forma Consolidated Statements of
Operations Data 19
v. Pro Forma Consolidated Balance Sheet as of
September 30, 1999 20
vi. Notes to Pro Forma Consolidated Balance Sheet 21
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SIGNATURE
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
By:/s/ Francis D. Gerace
---------------------
Name: Francis D. Gerace
Title: President/CEO
Date: February 29, 2000
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CLARK, SCHAEFER, HACKETT & CO.
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS
INDEPENDENT AUDITORS' REPORT
Stockholders
Buriot International, Inc.:
We have audited the accompanying balance sheets of Buriot International, Inc. as
of May 31, 1999 and 1998 and the related statements of operations and
accumulated deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Buriot International, Inc. as
of May 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company has incurred significant losses from
operations and is in violation of certain debt covenants. As described in Note
13, on December 1, 1999 the Company temporarily ceased operations. On December
3, 1999 a Receiver was appointed to operate the Company, and on December 4, 1999
essentially all assets of the Company were sold. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/Clark, Schaefer, Hackett & Co.
Cincinnati, Ohio
September 15, 1999
(except for Note 13, as to
which the date is December 4, 1999)
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BURIOT INTERNATIONAL, INC.
Balance Sheets
May 31, 1999 and 1998
Assets
------
1999 1998
---- ----
Current assets:
Cash and cash equivalents $ 65,553 $ -
Accounts receivable:
Trade 330,255 156,333
Stockholders - 79,485
Inventories 177,775 88,048
Prepaid expenses and deposits 16,101 78,284
---------- ---------
589,684 402,150
---------- ---------
Property and equipment:
Land 247,674 247,674
Buildings 2,329,833 2,329,833
Machinery and equipment 4,644,940 4,638,245
Office furniture and equipment 145,403 145,403
---------- ---------
7,367,850 7,361,155
Less accumulated depreciation 1,087,913 497,144
---------- ---------
6,279,937 6,864,011
---------- ---------
Other assets:
Restricted cash 2,034,990 -
Organization costs, net of amortization
of $26,096 - 113,218
Loan costs, net of amortization of $52,205
and $25,753 80,055 106,507
---------- ---------
2,115,045 219,725
---------- ---------
$ 8,984,666 $ 7,485,886
========== =========
See accompanying notes to financial statements.
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BURIOT INTERNATIONAL, INC.
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Current portion of long-term debt $ 6,600,000 $ 7,000,000
Notes payable - directors 3,000 3,000
Note payable - trade 107,387 -
Accounts payable:
Trade 821,670 242,327
Related party 3,481,776 7,530
Accrued expenses 229,176 350,397
-------------- ------------
11,243,009 7,603,254
-------------- ------------
Long-term liabilities:
Convertible bonds 950,000 950,000
-------------- ------------
Stockholders' deficit:
Common stock; no par value; 15,000 shares
authorized, 5,340 shares issued and outstanding 1,335,000 1,335,000
Accumulated deficit (4,543,343) (2,402,368)
-------------- ------------
(3,208,343) (1,067,368)
-------------- ------------
$ 8,984,666 $ 7,485,886
============== ============
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BURIOT INTERNATIONAL, INC.
Statements of Operations and Accumulated Deficit
Years Ended May 31, 1999 and 1998
1999 1998
---- ----
Sales $ 1,957,610 $ 359,608
Cost of sales 2,428,072 925,931
------------- -----------
Gross profit (470,462) (566,323)
Selling, general and administrative expenses 1,127,587 1,099,883
------------- -----------
Loss from operations (1,598,049) (1,666,206)
------------- -----------
Other income (expense):
Interest income 26,166 68,227
Interest expense and bank fees (455,874) (449,220)
------------- -----------
(429,708) (380,993)
------------- -----------
Loss before provision for income tax
and cumulative effect of change
in accounting principle (2,027,757) (2,047,199)
Provision for income tax - -
------------- -----------
Net loss before cumulative effect of
change in accounting principle (2,027,757) (2,047,199)
Cumulative effect on prior years of change
in accounting for start-up costs (113,218) -
------------- -----------
Net loss (2,140,975) (2,047,199)
Accumulated deficit - beginning of period (2,402,368) (355,169)
------------- -----------
Accumulated deficit - end of period $ (4,543,343) $ (2,402,368)
============= ===========
See accompanying notes to financial statements.
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BURIOT INTERNATIONAL, INC.
Statements of Cash Flows
Years Ended May 31, 1999 and 1998
1999 1998
---- ----
Cash flows from operating activities:
Net loss $ (2,140,975) $ (2,047,199)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 590,769 487,290
Amortization 26,452 38,275
Cumulative effect of change in accounting principle 113,218 -
Effects of change in operating assets and liabilities:
Accounts receivable (94,437) (151,833)
Inventories (89,727) (44,413)
Prepaid expenses and deposits 62,183 (78,284)
Accounts payable and accrued expenses 602,307 365,032
----------- ----------
Net cash used by operating activities (930,210) (1,431,132)
----------- ----------
Cash flows from investing activities:
Capital expenditures (6,695) -
Increase in restricted cash (2,034,990) -
Capitalized organization and loan costs - (203,886)
----------- ----------
Net cash used by investing activities (2,041,685) (203,886)
----------- ----------
Cash flows from financing activities:
Proceeds (repayments) - Industrial Development Bonds (400,000) 445,184
Proceeds from convertible bonds - 310,458
Proceeds from notes payable - directors - 3,000
Repayments of notes payable - trade (36,798) -
Proceeds from accounts payable - related party 3,474,246 -
Proceeds from issuance of common stock - 615,972
----------- ----------
Net cash provided by financing activities 3,037,448 1,374,614
----------- ----------
Net increase (decrease) in cash and cash equivalents 65,553 (260,404)
Cash and cash equivalents - beginning of year - 260,404
----------- ----------
Cash and cash equivalents - end of year $ 65,553 $ -
=========== ==========
Interest and bank fees paid $ 504,923 $ 271,823
=========== ==========
Supplemental Schedule of Non Cash Investing and Financing Activities:
- ---------------------------------------------------------------------
In 1999, the Company converted $144,185 of accounts payable into notes payable -
trade.
In 1998 the Company acquired property and equipment with a cost of $6,554,816
using proceeds from Industrial Development Revenue Bonds. The Company also
issued common stock in exchange for $79,485 in accounts receivable.
See accompanying notes to financial statements.
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BURIOT INTERNATIONAL, INC.
Notes to Financial Statements
1. Summary of Significant Accounting Policies:
-------------------------------------------
The following accounting principles and practices of the Company are set
forth to facilitate the understanding of data presented in the financial
statements:
Business activity
-----------------
The Company's principal business activity is the manufacture of
injection in-mold labels for sale primarily to the consumer products
industry throughout the United States.
Organization
------------
The Company was incorporated in the State of Ohio on November 20, 1996.
Cash and cash equivalents
-------------------------
Cash equivalents consist of money market accounts and cash in daily
investment accounts. For purposes of the balance sheet and the
statement of cash flows, the Company considers all highly liquid
interest-bearing investments with original maturities of three months
or less to be cash equivalents.
Restricted Cash
---------------
Restricted cash consists of a short-term certificate of deposit held by
KeyBank as collateral for repayment of Industrial Development Revenue
Bonds.
Inventories
-----------
Inventories are stated at the lower of cost, determined using the FIFO
(first-in, first-out) method, or market and consist primarily of raw
materials.
Property and equipment
----------------------
Property and equipment is recorded at cost. Depreciation is provided on
the straight-line method over the estimated useful lives of the
respective assets.
Organization costs
------------------
At May 31, 1998, legal and other fees incurred with respect to the
Company's organization are recorded at cost and are being amortized
using the straight-line method over five years.
Loan costs
----------
Bank and professional fees incurred with respect to the Company's
Industrial Development Revenue Bonds issued by Clermont County, Ohio
are recorded at cost and are being amortized using the straight-line
method over five years.
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Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Concentration of credit risk
----------------------------
The Company sells products to customers and extends credit based on an
evaluation of the customer's financial condition, without collateral.
Exposure to losses on receivables is principally dependent on each
customer's financial condition. The Company monitors its exposure to
credit losses and maintains allowance for anticipated losses. No
allowance for doubtful accounts was considered necessary by management
at May 31, 1999 or 1998.
Two customers represent approximately 83% of accounts receivable -
trade at May 31, 1999. The Company's top three customers represented
approximately 60% of sales for the year ended May 1999.
The Company at times maintains cash deposits, with financial
institutions, which may be in excess of FDIC insurance limits.
Change in accounting principle
------------------------------
Pursuant to Statement of Position 98-5, Reporting on costs of Start-Up
Activities, issued by the American Institute of Certified Public
Accountants in 1998, the Company elected to write-off unamortized
start-up and organization costs of $113,218 as of June 1, 1998. The
adjustment was recorded as the cumulative effect of a change in
accounting principle.
Reclassifications
-----------------
Certain items in the 1998 financial statements have been reclassified
to conform to the current year presentation.
2. Notes Payable - Directors:
--------------------------
Notes payable - directors consists of an unsecured, non-interest bearing
amount due to a member of the Company's Board of Directors. The obligation
is due upon demand.
3. Note Payable - Trade:
---------------------
Note payable - trade consists of an unsecured short-term note payable to a
trade vendor due in monthly installments of $10,232, including interest at
9.5% through maturity April 15, 2000.
4. Convertible Bonds:
------------------
Convertible bonds were issued to certain stockholders in exchange for
amounts loaned to the Company. These bonds require annual, interest only,
payments at 4% per annum, with annual principal repayments of 20% of the
original note due to begin November 2001. The bonds may be converted into
an equal amount of common stock at the rate of 20% per year at an option
price of $250 per share. Scheduled principle repayments for the years
ending May 31 are as follows: 2003 - $612,500, 2004 - $337,500.
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5. Long-Term Debt:
---------------
Long-term debt consists of Multi-Mode Variable Rate Industrial Development
Revenue Bonds, Series 1997, in the original aggregate amount of $7,000,000.
Interest is payable quarterly and accrues at a variable rate based upon the
weekly bond rate as determined by the Trustee, Banc One. At May 31, 1999
this rate was 3.50%. At May 31, 1999, $6,600,000 is still outstanding.
The bonds are secured by an Irrevocable Letter of Credit issued by KeyBank
N.A. for the principal amount of the bonds, plus an amount equal to 110
days' interest on the bonds at ten percent. This agreement expires June 22,
2000. Until November 1998, the bonds were also secured by a $2,300,000
Irrevocable Standby Letter of Credit issued by Credit Lyonnais in favor of
KeyBank N.A. In November 1998, KeyBank N.A. presented this letter of
credit, which was honored by Credit Lyonnais.
Buriot, SA, a stockholder owned by the Company's majority stockholder,
guaranteed the Credit Lyonnais letter of credit. After payment of the
letter of credit, Buriot, SA advanced funds to cover the amount. Prior to
the payment of the letter of credit, a commitment fee of .5% of the
outstanding letter of credit was payable annually. Also, the Company was
required to reimburse the guarantor 1% of the outstanding letter of credit
paid by the guarantor on their behalf.
The KeyBank letter of credit is secured by a UCC security interest in all
assets of the Company and an open-end mortgage on real estate. At the
option of the issuer, collateral may be released as the Company makes
principal and interest payments. Effective on the annual anniversary of the
agreement, the Bank may, at its discretion, extend the expiration of the
letter of credit for an additional one-year period.
An annual commitment fee of 1% of the outstanding letter of credit is
payable in advance on June 1 of each year. The agreement contains certain
restrictions on capital expenditures and additional indebtedness, and
requires maintenance of minimum tangible net worth, debt service, and
leverage ratios. At May 31, 1999, these covenants have not been met and
waivers have not been granted. Accordingly, the bonds have been classified
as current.
In connection with the variable interest rate the Company entered into a
swap agreement with KeyBank, fixing the interest rate at 4.64% for $1.75
million of bonds amortizing through March 1, 2003, and 4.72% for $1.75
million of bonds amortizing through March 1, 2008. This agreement was
terminated in June 1999.
6. Operating Lease Commitment:
---------------------------
The Company leases certain manufacturing equipment under a noncancelable
lease agreement that expires in May 2003.
The Company also leases a slitter under terms of an agreement that expires
in March 2004. The slitter has not been placed into service since the
inception of the lease. A limited personal guarantee of the Company
President secures this lease.
Minimum annual rentals under current lease arrangements for the years
ending May 31 are as follows:
2000 $ 40,420
2001 40,420
2002 40,420
2003 40,420
2004 27,189
------------
$188,869
============
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Rental expense under terms of these lease arrangements charged to
operations was approximately $20,000 in 1999 and approximately $25,000 in
1998.
7. Income Taxes:
-------------
Deferred income taxes are comprised of the following at May 31:
1999 1998
----------------- ----------------
Deferred tax assets: $ 1,807,000 $ 923,000
Net operating loss carryforward 22,000 22,000
----------------- ----------------
Reserves and accruals 1,829,000 945,000
Valuation allowance on deferred tax assets (1,478,000) (840,000)
----------------- ----------------
351,000 105,000
----------------- ----------------
Deferred tax liabilities:
Tax over book basis of depreciation (351,000) (105,000)
----------------- ----------------
Net deferred tax asset (liability) $ - $ -
================= ================
The Company has operating loss carryforwards of approximately $5.3 million
that expire primarily in 2013 and 2014. The Company has been granted
refundable tax credits from the State of Ohio based on certain job creation
and retention criteria through 2003. The Company has been granted a 60%
exemption from personal property taxes through 2007.
A valuation allowance has been recorded to offset net deferred tax assets
at May 31, 1999 and 1998. Realization of the asset is dependent on
generating sufficient taxable income prior to the expiration dates of
operating loss carryforwards. It is reasonably possible that the deferred
tax asset will not be realized.
The Company was assessed taxes, penalty and interest totaling approximately
$13,000 by the State of Texas for underpayment of tax. The Company believes
the assessment to be without merit and no provision for tax exposure has
been made in the financial statements.
8. Retirement Plan:
----------------
The Company maintains a 401(k) profit sharing plan (the Plan) which covers
substantially all employees 20 1/2 years of age or older with at least
three months of service. The Plan provides for employee contributions
through salary reduction elections and a discretionary Company
contribution. There were no contributions by the Company in 1999 or 1998.
9. Related Party Transactions:
---------------------------
Accounts payable includes $3,481,776 due to the majority stockholder of the
Company.
The Company has an agreement to pay royalties of 5% of printing sales to a
stockholder, in exchange for the use of proprietary technology and
technical assistance. Approximately $85,000 and $7,500 was expensed under
terms of this agreement in 1999 and 1998, respectively.
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10. Marketing Agreement:
--------------------
In September 1998 the Company entered into an agreement with Multi-Color
Corporation (MCC) to jointly sell and market IML labels and other products.
The term of the agreement is for a period of three years until September
30, 2001. The agreement may terminate at any time with a three-month notice
and a six-month phase out period. In return for production capabilities
provided by the Company, MCC agrees to provide an annual level of
$3,000,000 in blow mold IML sales. This level is to be achieved by 2000.
The Company agrees to purchase key ingredients from MCC. In consideration,
MCC has the first right to purchase the Company in the event of a sale of
the business.
11. Consulting Agreement:
---------------------
In February 1999, the Company entered into an agreement for consulting
services to be provided by an entity controlled by its former technical
director. Terms of the agreement, which expires in February 2000, provide
for consulting services to be rendered to the Company in exchange for an
amount not less than $4,200 per month. Other discretionary bonuses and
incentives may be paid. In addition, for the term of the agreement, the
consultant expressly agrees not to compete. The Company may terminate the
agreement, without cause, subject to a declining penalty clause based upon
the remaining months of the agreement. At May 31, 1999, this penalty
payment would have been approximately $28,000.
12. Going Concern Evaluation:
-------------------------
As shown in the accompanying financial statements, the Company incurred a
net loss of $2,140,975 during the year ended May 31, 1999, and as of that
date has stockholders' deficit of $3,208,343. These factors, as well as the
absence of waivers for letter of credit covenant violations (Note 5), and
events described in Note 13, raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
13. Subsequent Event:
-----------------
On December 1, 1999, the Company temporarily ceased operations. On December
3, 1999, KeyBank, N.A. commenced a foreclosure action that led to the
appointment of a Receiver for the Company. Effective December 4, 1999,
MCC-Batavia, LLC (MCC) entered into an asset purchase agreement with the
Receiver. Under the terms of this agreement, MCC acquired substantially all
of the Company's assets in exchange for the assumption of all the
liabilities associated with the Industrial Development Revenue Bonds,
including the KeyBank letter of credit obligation, and accrued payroll and
related employee costs as of December 3, 1999.
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BURIOT INTERNATIONAL, INC.
Condensed Balance Sheet as of November 30, 1999 (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ -
Restricted Cash 2,330,333
Accounts receivable, net:
Trade 23,635
Related 86,748
Note receivable -
Inventories 75,960
------------------------
Total current assets 2,516,343
PROPERTY, PLANT AND EQUIPMENT 7,464,655
ACCUMULATED DEPRECIATION (1,377,037)
------------------------
NET PROPERTY, PLANT AND EQUIPMENT 6,087,618
------------------------
TOTAL ASSETS $ 8,603,961
========================
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current portion of long-term debt $ 107,387
Accounts payable 898,102
Accounts payable related 3,538,806
Accounts payable other 632,458
Accrued liabilities:
Payroll benefits and related taxes 32,439
Real Estate and personal property taxes 15,000
------------------------
Total current liabilities 5,224,192
LONG-TERM DEBT 6,949,081
------------------------
Total liabilities 12,173,273
COMMITMENTS AND CONTINGENCIES
Stockholders' deficit
Common stock; no par value; 15,000 shares authorized,
5,340 shares issued and outstanding 1,335,000
Paid-in capital 389,107
Accumulated deficit (5,293,419)
------------------------
Total stockholders' deficit (3,569,312)
------------------------
TOTAL LIABILITIES
AND STOCKHOLDERS' DEFICIT $ 8,603,961
========================
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BURIOT INTERNATIONAL, INC.
Condensed Statement of Operations
For the six months ended November 30, 1999 (Unaudited)
Net sales $ 1,140,132
Cost of goods sold 1,173,993
-------------------------
GROSS PROFIT (LOSS) (33,861)
Selling, general and administrative 503,897
-------------------------
OPERATING LOSS (537,758)
Interest Expense 212,268
-------------------------
LOSS BEFORE INCOME TAXES (750,026)
Income Taxes (50)
-------------------------
NET LOSS $ (750,076)
=========================
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BASIS OF PRESENTATION
PRO FORMA CONSOLIDATED (UNAUDITED) FINANCIAL INFORMATION
Pro forma consolidated statement of operations data and other data for
the year ended March 28, 1999 and for the six months ended September 30, 1999
include the completed acquisition of Buriot International, Inc. by Multi-Color
Corporation as if this event had occurred at the beginning of the respective
periods.
The pro forma consolidated balance sheet as of September 30, 1999 gives
effect to the acquisition of Buriot International, Inc. as if this event had
occurred on September 30, 1999.
The acquisition is accounted for using the purchase method of
accounting. The total costs of such acquisition is allocated to the tangible and
intangible assets acquired and liabilities assumed based upon their respective
fair values. The allocation of the purchase price included in the pro forma
financial statements is preliminary. We do not expect that the final allocation
of the purchase price will significantly differ from the preliminary allocation.
The pro forma adjustments are based upon available information and upon
certain assumptions that we believe are reasonable. The pro forma consolidated
financial information should be read in conjunction with Buriot International's
financial statements and notes thereto and Multi-Color Corporation's financial
statements and notes thereto included in the reports on Form 10-Q and 10-K. The
pro forma consolidated financial information is not necessarily indicative of
what our results of operations would have been had the acquisition been
completed as of the beginning of the periods presented or of our future results
of operations.
The periods presented conform to the fiscal year of Multi-Color Corporation.
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MULTI-COLOR CORPORATION
Pro Forma Consolidated Statements of Operations Data (Unaudited)
For the year ended:
Multi-Color Buriot
Corporation International
March 28, 1999 May 31,1999 Adjustments Total
-------------- ------------ -------------- -------------
Net sales $ 49,785,886 $ 1,957,610 (655,367) (a) $ 51,088,129
Cost of goods sold 42,856,800 2,428,072 (655,367) (a) 44,314,631
(314,874) (b)
------------- ------------ ------------- -------------
GROSS PROFIT (LOSS) 6,929,086 (470,462) (314,874) 6,773,498
Selling, general and administrative 4,764,312 1,127,587 (47,051) (b) 5,844,848
------------- ------------ ------------- -------------
OPERATING INCOME (LOSS) 2,164,774 (1,598,049) 361,925 928,650
Interest Expense 1,121,565 455,874 (38,000) (c) 1,539,439
Minority interest in losses of subsidiary (33,385) - - (33,385)
Other (Income) (182,866) (26,166) - (209,032)
------------- ------------ ------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 1,259,460 (2,027,757) 399,925 (368,372)
Income Taxes - - - -
------------- ------------ ------------- -------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT 1,259,460 (2,027,757) 399,925 (368,372)
OF A CHANGE IN ACCOUNTING PRINCIPLE
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (224,392) 113,218 - (111,174)
------------- ------------ ------------- -------------
NET INCOME (LOSS) $ 1,483,852 $ (2,140,975) $ 399,925 $ (257,198)
============= ============ ============= =============
Preferred stock dividends 275,183 - - 275,183
------------- ------------ ------------- -------------
Net income (loss) applicable to common shares $ 1,208,669 $ (2,140,975) $ 399,925 $ (532,381)
============= ============ ============= =============
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MULTI-COLOR CORPORATON
Pro Forma Consolidated Statements of Operations Data (Unaudited)
For the six months ended:
Multi-Color Buriot
Corporation International
September 30, 1999 November 30, 1999 Adjustments Total
------------------ ----------------- ------------- --------------
Net sales $ 26,576,000 $ 1,140,132 $ (443,746) (a) $ 27,272,386
Cost of goods sold 22,486,000 1,173,993 (443,746) (a) 23,063,763
(152,484) (b)
------------- ------------- ----------- --------------
GROSS PROFIT (LOSS) 4,090,000 (33,861) 152,484 4,208,623
Selling, general and administrative 1,857,000 503,897 (22,785) (b) 2,338,112
------------- ------------- ----------- --------------
OPERATING INCOME (LOSS) 2,233,000 (537,758) 175,269 1,870,511
Interest Expense 527,000 212,268 (19,000) (c) 720,268
Other (Income) (33,000) - - (33,000)
------------- ------------- ----------- --------------
INCOME (LOSS) BEFORE INCOME TAXES 1,739,000 (750,026) 194,269 1,183,243
Income Taxes 42,000 (50) - 42,050
------------- ------------- ----------- --------------
NET INCOME (LOSS) $ 1,697,000 $ (750,076) $ 194,269 $ 1,141,193
============= ============= =========== ==============
Preferred stock dividends 136,000 - - 136,000
------------- ------------- ----------- --------------
Net income (loss) applicable to common shares $ 1,561,000 $ (750,076) $ 194,269 $ 1,005,193
============= ============= =========== ==============
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19
Notes to Pro Forma Consolidated Statements of Operations Data
(a) To eliminate sales from Buriot International, Inc. to Multi-Color
Corporation.
(b) To reduce depreciation expense resulting from the purchase accounting
treatment of the acquisition of the assets of Buriot International,
Inc. by Multi-Color Corporation.
(c) To reduce interest expense as a result of debt obligations that were
not assumed by Multi-Color Corporation in the acquisition.
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20
MULTI-COLOR CORPORATION
Pro Forma Consolidated Balance Sheet (Unaudited)
Multi-Color Buriot
Corporation International
September 30, 1999 November 30, 1999 Adjustments Pro Forma
------------------ ----------------- -------------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,000 $ - $ - $ 4,000
Restricted Cash - 2,330,000 (174,849) (a) 2,155,151
Accounts receivable, net: -
Trade 4,588,000 23,635 26,153 (a) 4,637,788
Related - 86,748 (86,748) (c) -
Note receivable - - - -
Inventories 3,518,000 75,960 6,800 (a) 3,600,760
Deferred tax benefit 408,000 - - 408,000
Prepaid expenses, supplies, pension and other 203,000 - - 203,000
----------- ------------ ------------- -----------
Total current assets 8,721,000 2,516,343 (228,644) 11,008,699
PROPERTY, PLANT AND EQUIPMENT 32,539,000 7,464,655 (3,354,102) (a) 36,649,553
ACCUMULATED DEPRECIATION (12,306,000) (1,377,037) 1,377,037 (a) (12,306,000)
----------- ------------ ------------- -----------
NET PROPERTY, PLANT AND EQUIPMENT 20,233,000 6,087,618 (1,977,065) 24,343,553
SINKING FUND DEPOSITS 2,382,000 - - 2,382,000
DEFERRED CHARGES, NET 73,000 - - 73,000
GOODWILL 75,000 - - 75,000
----------- ------------ ------------- -----------
TOTAL ASSETS $31,484,000 $ 8,603,961 $(2,205,709) $37,882,252
=========== ============ ============= ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Revolving Bank Loan $ 2,685,000 $ - $ - $ 2,685,000
Current portion of long-term debt 800,000 107,387 467,613 (a) 1,375,000
Current portion of capital lease obligations 345,000 - - 345,000
Accounts payable 3,248,000 898,102 (898,102) (b) 3,161,252
(86,748) (c)
Accounts payable related - 3,538,806 (3,538,806) (b) -
Accounts payable other - 632,458 (427,458) (b) 205,000
Accrued liabilities:
Payroll benefits and related taxes - 32,439 (2,439) (b) 30,000
Deferred compensation - - - -
Real Estate and personal property
taxes - 15,000 (15,000) (b) -
Interest and other 1,510,000 - - 1,510,000
----------- ------------ ------------- -----------
Total current liabilities 8,588,000 5,224,192 (4,500,940) 9,311,252
LONG-TERM DEBT 9,700,000 6,949,081 (1,274,081) (a) 15,375,000
CAPITAL LEASE OBLIGATIONS 4,594,000 - - 4,594,000
DEFERRED INCOME TAXES 408,000 - - 408,000
DEFERRED COMPENSATION 381,000 - - 381,000
----------- ------------ ------------- -----------
Total liabilities 23,671,000 12,173,273 (5,775,021) 30,069,252
----------- ------------ ------------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' INVESTMENT
Preferred stock Series B, no par value 477,000 - - 477,000
Preferred stock Series A, no par value 2,418,000 - - 2,418,000
Common stock, no par value 226,000 1,335,000 (1,335,000)(a,b) 226,000
Paid -in capital 9,617,000 389,107 (389,107)(a,b) 9,617,000
Accumulated deficit (4,925,000) (5,293,419) 5,293,419 (a,b) (4,925,000)
----------- ------------ ------------- -----------
Total shareholders' investment 7,813,000 (3,569,312) 3,569,312 7,813,000
----------- ------------ ------------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $31,484,000 $8,603,961 $(2,205,709) $37,882,252
=========== ============ ============= ===========
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21
Notes to Pro Forma Consolidated Balance Sheet
(a) To record the allocation of the purchase price related to the
acquisition of Buriot International, Inc. This acquisition is being
accounted for using the purchase method of accounting. The net purchase
price of $4,095,000 was determined based on the assumption of
$6,250,000 of industrial revenue bond debt and the receipt of cash of
$2,155,000.
(b) To remove the assets of Buriot International, Inc. not acquired and
liabilities not assumed.
(c) To eliminate accounts receivable from Multi-Color Corporation on the
books of Buriot International, Inc.
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