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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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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
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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.)
205 W. Fourth Street, Suite 1140, Cincinnati, Ohio 45202
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(Address of principal executive offices)
Registrant's telephone number - (513)381-1480
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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
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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 - 2,467,728 (as of November 13, 2000)
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FORM 10-Q
CONTENTS
PART I - FINANCIAL INFORMATION (Unaudited)
Page
Condensed Consolidated Balance Sheets at September 30, 2000 and March 31, 2000............................................3
Condensed Consolidated Statements of Income for the Three Months
Ended September 30, 2000 and September 30, 1999...........................................................................4
Condensed Consolidated Statements of Income for the Six Months
Ended September 30, 2000 and September 30, 1999...........................................................................5
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended September 30, 2000 and September 30, 1999...........................................................................6
Notes to Condensed Consolidated Financial Statements......................................................................7
Management's Discussions and Analysis of Financial Condition and Results of Operations....................................8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...............................................................................................10
Item 2. Changes in Securities...........................................................................................10
Item 3. Defaults upon Senior Securities.................................................................................10
Item 4. Submission of Matters to a Vote of Security Holders..........................................................10-11
Item 5. Other Information...............................................................................................10
Item 6. Exhibits and Reports on Form 8-K................................................................................11
Signature................................................................................................................12
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ITEM 1. FINANCIAL STATEMENTS
MULTI-COLOR CORPORATION
Condensed Consolidated Balance Sheets
(Thousands)
September 30, 2000 March 31, 2000
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ASSETS (Derived from
(Prepared Audited Financial
Without Audit) Statements)
CURRENT ASSETS
Cash $ -- $ 2
Accounts Receivable 5,751 5,051
Inventories 5,096 4,721
Deferred Tax Benefit 448 448
Prepaid Expenses and Other 45 102
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Total Current Assets 11,340 10,324
PROPERTY, PLANT AND EQUIPMENT, net 26,000 24,148
GOODWILL AND OTHER INTANGIBLES, net 4,647 71
DEFERRED TAX ASSET 1,286 2,128
OTHER 132 480
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TOTAL ASSETS $ 43,405 $ 37,151
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Revolving Bank Loan $ 1,492 $ 3,456
Current Portion of Long-term Debt 2,883 1,519
Current Portion of Capital Lease Obligations 113 169
Accounts Payable 3,475 3,650
Accrued Expenses 1,988 1,811
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Total Current Liabilities 9,951 10,605
LONG-TERM DEBT, excluding current portion 18,361 12,996
CAPITAL LEASE OBLIGATIONS, excluding current portion 4,248 4,295
DEFERRED COMPENSATION 164 119
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Total Liabilities 32,724 28,015
SHAREHOLDERS' INVESTMENT
Common Stock, no par value 247 245
Paid-in Capital 10,174 9,978
Treasury stock, at cost (51) (51)
Retained Earnings (Accumulated Deficit) 311 (1,036)
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Total Shareholders' Investment 10,681 9,136
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TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $ 43,405 $ 37,151
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The accompanying notes are an integral part of this financial information.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUE)
MULTI-COLOR CORPORATION
Condensed Consolidated Statements of Income
(Prepared Without Audit)
(Thousands except per share amounts)
Three Months Ended
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September 30, 2000 September 30, 1999
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NET SALES $16,841 $12,497
COST OF GOODS SOLD 13,660 10,568
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Gross Profit 3,181 1,929
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,279 844
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Operating Income 1,902 1,085
OTHER EXPENSE 121 15
INTEREST EXPENSE 571 268
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Income Before Taxes 1,210 802
INCOME TAX EXPENSE 477 19
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NET INCOME $ 733 $ 783
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Preferred Stock Dividends -- $ 68
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Net Income Applicable to Common Shares $ 733 $ 715
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Basic Earnings per share $ 0.30 $ 0.31
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Diluted Earnings per share: $ 0.28 $ 0.26
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Average Number of Common Shares Outstanding
Basic 2,464 2,305
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Diluted 2,590 3,002
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The accompanying notes are an integral part of this financial information.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
MULTI-COLOR CORPORATION
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Condensed Consolidated Statements of Income
(Prepared Without Audit)
(Thousands except per share amounts)
Six Months Ended
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September 30, 2000 September 30, 1999
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NET SALES $ 31,032 $ 26,576
COST OF GOODS SOLD 25,201 22,486
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Gross Profit 5,831 4,090
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,428 1,857
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Operating Income 3,403 2,233
OTHER EXPENSE (INCOME) 124 (33)
INTEREST EXPENSE 1,047 527
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Income Before Taxes 2,232 1,739
INCOME TAX EXPENSE 886 42
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NET INCOME $ 1,346 $ 1,697
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Preferred Stock Dividends -- $ 136
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Net Income Applicable to Common Shares $ 1,346 $ 1,561
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Basic Earnings per share $ 0.55 $ 0.68
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Diluted Earnings per share: $ 0.53 $ 0.57
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Average Number of Common Shares Outstanding
Basic 2,452 2,305
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Diluted 2,553 2,987
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The accompanying notes are an integral part of this financial information.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
MULTI-COLOR CORPORATION
Condensed Consolidated Statements of Cash Flows
(Prepared Without Audit)
(Thousands)
Six Months Ended
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September 30, 2000 September 30, 1999
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,401 $ 1,650
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures, net (1,596) (926)
Acquisition of Business, net of cash received (6,407) (77)
Proceeds from sale of property, plant and equipment 1 1,875
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Net cash provided by (used in) investing activities (8,002) 872
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease of revolving bank loan (1,963) (569)
Preferred Stock Dividend Payments -- (482)
Sinking fund withdrawals 425 (98)
Repayment of long-term debt, including current portion (1,075) (1,201)
Proceeds from issuance of long term debt 7,200 --
Repayment of Capital Lease Obligations (101) (178)
Proceeds from issuance of common stock 199 --
Capitalized Bank Fees (86) --
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Net cash provided by (used in) financing activities 4,599 (2,528)
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Net decrease in cash (2) (6)
CASH, beginning of period 2 10
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CASH, end of period $ -- $ 4
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 847 $ 403
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Income Taxes paid $ 30 $ --
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Acquisition accounted for as a Purchase:
Assets acquired $ 9,286 $ --
Liabilities assumed (1,479) --
Cash acquired (800) --
Note payable (600) --
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Net cash paid $ 6,407 $ --
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The accompanying notes are an integral part of this financial information.
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MULTI-COLOR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Amounts in Thousands)
Item 1. FINANCIAL STATEMENTS (CONTINUED)
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1. Basis of Presentation:
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.
2. Net Income Per Share Data:
The following is a reconciliation of the number of shares used in the
Basic Earnings Per Share ("EPS") and Diluted EPS computations (shares
in thousands):
Three Months Ended Six Months Ended
September 30, September 30,
2000 1999 2000 1999
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Basic EPS 2,463,519 2,305,460 2,452,408 2,305,460
Effect of dilutive
stock options 126,448 52,182 101,044 37,506
Convertible shares - 644,180 - 644,180
Diluted EPS 2,589,967 3,001,822 2,553,452 2,987,146
Preferred stock dividends of $68 for the quarter ended September 30,
1999, have been deducted from the net income generated to arrive at
the income available to common stockholders for the calculation of
basic EPS. As of March 31, 2000 all preferred stock was either
redeemed or converted into common stock.
3. Inventories:
Inventories are stated at the lower of cost (First-in-First-out) or
market and are comprised of the following:
September 30, 2000 March 31, 2000
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Finished Goods $2,143 $2,650
Work in Process 697 820
Raw Materials 2,256 1,251
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$5,096 $4,721
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS (AMOUNTS IN THOUSANDS)
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Results of Operations
Three Months Ended September 30, 2000 Compared to the Three Months Ended
September 30, 1999
Net sales increased $4,344 or 35%, for the three months ended
September 30, 2000 as compared to the same period in the prior year.
The large increase in sales was due to several reasons. First, the
Company's acquisition, in June 2000, of Uniflex, a heat shrink label
manufacturer, contributed $2,584 in sales for the three months ended
September 30, 2000. Second, several of the Company's global
consumer product customers launched new products during the
three months ended September 30, 2000. Lastly, new customers
contributed to the sales increase as well.
Gross profit increased $1,252 as compared to the same period in the
prior year. The Company's recent acquisition contributed $1,024 to
gross profit for the three months ended September 30, 2000. The
additional increase in gross profit was attributable to the volume
increase and the continued improvement of efficiencies and waste
reduction realized at the Scottsburg, Indiana manufacturing facility.
Selling, general, and administrative expenses increased $435 as
compared to the same prior year period. The increase was primarily
attributable to additional expenses incurred as a result of the
companies acquired in 1999 and 2000.
Interest expense increased $303 as compared to the same period in the
prior year and was the result of higher average interest rates and
increased debt levels. The Company increased debt in connection with
the acquisitions in 1999 and 2000 by $14,050.
Income tax expense totaled $477 for the three months ended September
30, 2000. There was minimal income tax expense recorded for the same
period in the prior year. The Company now records income tax expense
as the Company expects to fully utilize net operating loss
carryforwards and no longer requires a valuation allowance to be
recorded against tax assets recorded on the Company's balance sheet.
The net income for the period was $733 ($.28 per diluted share) as
compared to net income of $783 ($.26 per diluted share after payment
of preferred stock dividends) in the same period in the prior year.
Six Months Ended September 30, 2000 Compared to the Six Months Ended September
30, 1999
Net sales increased $4,456 or 17%, in the first six months of fiscal
2001 compared to the same period of the prior year. The increase in
sales was due to several reasons. First, the Company's recent
acquisition of Uniflex contributed $3,466 in sales for the six months
ended September 30, 2000. Second, several of the Company's global
consumer product customers launched new products during the three
months ended September 30, 2000. Lastly, new customers contributed to
the sales increase as well. These sales increases were offset by
several of the Company's customers working off inventories during the
three months ended June 30, 2000 that were built up in 1999 in
anticipation of potential Y2K interruptions.
Gross profit increased $1,741 or 43% as compared to the same period in
the prior year. Gross profit margin for the first six months of fiscal
2001 was 19% as compared to 15% for the same period in the prior year.
The increase in gross profit margin was attributable to the Company's
recent acquisition as well as the continued improvement of
efficiencies and waste reduction realized at the Scottsburg, Indiana
facility.
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Selling, general and administrative expenses increased $571 as
compared to the same period in the prior year. The increase was
attributable to additional expenses incurred as a result of the
companies acquired in 1999 and 2000.
Interest expense increased $520 as compared to the same period in the
prior year and was the result of higher average interest rates and
increased debt levels. The Company increased debt in connection with
the acquisitions in 1999 and 2000.
Income tax expense increased $844 as compared to the same period in
the prior year. There was minimal income tax expense recorded for the
same period in the prior year. The Company now records income tax
expense as the Company expects to fully utilize net operating loss
carryforwards and no longer requires a valuation allowance to be
recorded against tax assets recorded on the Company's balance sheet.
The net income for the period was $1,346 ($.53 per diluted share) as
compared to net income of $1,697 ($.57 per diluted share) in the same
period in the prior year.
Liquidity and Capital Resources
The Company is dependent on availability under its Revolving Credit
Agreement, approximately $3,500 at September 30, 2000, and its
operations to provide for cash needs. The Company entered into a new
credit agreement with PNC Bank, Ohio, National Association and another
lender on June 6, 2000 which is a restatement of its prior credit
agreements. The new credit agreement provides for available borrowings
under a revolving line of credit up to a maximum of $5,000. It also
provides for a $7,200 acquisition facility, which was utilized in June
2000 in connection with the Company's acquisition of Uniflex.
Under the terms of the new credit agreement, the Company is subject to
a number of financial covenants. Additionally, the Company is
prohibited from paying dividends on its outstanding stock.
Earnings before Interest, Taxes, Depreciation and Amortization
("EBITDA") was $2,525 for the three months ended September 30, 2000,
compared to $1,590 for the same period in the prior year. This
increase is due to the increased operating income incurred for the
three months ended September 30, 2000.
Through the six months ended September 30, 2000, net cash provided by
operating activities was $3,401 compared to net cash provided of
$1,650 through the same period of the prior year. The increase was due
to an increase in operating income as well as a decrease in accounts
receivable and inventories (exclusive of the recent acquisition) and a
decrease in the deferred tax asset as a result of expected utilization
of the Company's net operating loss carry-forwards. Through the six
months ended September 30, 2000, net cash used in investing activities
was $8,002 compared to net cash provided of $872 through the same
period of the prior year. The change is due to the acquisition of
Uniflex Corporation on June 5, 2000. In the same period of the prior
year, the Scottsburg, Indiana facility was sold to a third party in a
sale leaseback transaction. Through the six months ended September 30,
2000, net cash provided by financing activities was $4,599 compared to
net cash used of $2,528 through the same period of the prior year. The
increase was due to the loan incurred in connection with the
acquisition of Uniflex.
On October 19, 2000 the Board authorized the repurchase of up to
$250,000 per year of the Company's outstanding common shares subject
to market conditions and other investment opportunities.
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The Company believes it has both sufficient short and long term
liquidity financing. The Company had a positive working capital
position of $1,389 and $133 at September 30, 2000 and 1999,
respectively. At September 30, 2000 the Company was in compliance with
its loan covenants and current in its principal and interest payments
on all debt.
The Company intends to make capital expenditures of approximately
$2,500 during fiscal 2001. The Company believes that cash flow from
operations and availability under the revolving line of credit are
sufficient to meet its capital requirements and debt service
requirements for the next twelve months. From time to time the Company
has reviewed potential acquisitions of businesses. While the Company
has no present commitments to acquire any businesses, such an
acquisition may require the Company to issue additional equity or
incur additional debt.
Forward Looking Statements
Certain statements contained in this report that are not historical
facts constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, and are intended to
be covered by the safe harbors created by that Act. Reliance should
not be placed on forward-looking statements because they involve known
and unknown risks, uncertainties and other factors which may cause
actual results, performance or achievements to differ materially from
those expressed or implied. Any forward-looking statement speaks only
as of the date made. The Company undertakes no obligation to update
any forward-looking statements to reflect events or circumstances
after the date on which they are made.
Statements concerning expected financial performance, on-going
business strategies, and possible future action which the Company
intends to pursue in order to achieve strategic objectives constitute
forward-looking information. Implementation of these strategies and
the achievement of such financial performance are each subject to
numerous conditions, uncertainties and risk factors. Factors which
could cause actual performance to differ materially from these forward
looking statements include, without limitation, factors discussed in
conjunction with a forward-looking statement; changes in general
economic conditions; the success of its significant customers;
acceptance of new product offerings; changes in business strategy or
plans; availability, terms and development of capital; availability of
raw materials; business abilities and judgment of personnel; changes
in, or the failure to comply with, government regulations;
competition; the ability to achieve cost reductions; and increases in
general interest rates levels affecting the Company's interest costs.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - The annual
meeting of shareholders was held on August 17, 2000. At such meeting,
the shareholders votes on the following items:
1. Election of the following directors:
Gordon B. Bonfield, 2,290,392 votes for and 46,600 withheld.
Charles B. Connolly, 2,290,392 votes for and 46,600 withheld.
Francis D. Gerace, 2,336,092 votes for and 900 withheld.
Lorrence T. Kellar, 2,336,092 votes for and 900 withheld.
Roger A. Keller, 2,332,092 votes for and 4,900 withheld.
Burton D. Morgan, 2,333,532 votes for and 3,460 withheld.
David H. Pease, Jr. 2,332,092 votes for and 4,900 withheld.
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2. Ratification of the appointment of Grant Thornton LLP as the
Company's independent public accountants for fiscal 2001. (2,336,392 votes for;
600 votes against; 0 abstentions.
Item 5.Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
Exhibit Number 27 - Financial Data Schedule
(b) Reports on Form 8-K - A Form 8-K/A was filed on August 18, 2000 which
included the required financial statements relating to the acquisition
of Uniflex
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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: November 13, 2000 By: /s/ Dawn H. Bertsche
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Dawn H. Bertsche
Vice President-Finance,
Chief Financial Officer
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