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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)
Thirteen Weeks Ended
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July 2, 1995 July 3, 1994
------------ ------------
NET SALES $ 15,507 $ 16,063
COST OF GOODS SOLD 13,439 14,609
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Gross Profit 2,068 1,454
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,503 1,682
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Operating income (Loss) $ 565 $( 228)
OTHER EXPENSE (INCOME) ( 25) 54
INTEREST EXPENSE 377 365
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Income (Loss) Before Taxes and Extraordinary Item $ 213 $( 647)
PROVISION (CREDIT) FOR TAXES -0- -0-
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NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ 213 $( 647)
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Extraordinary Item - Loss on Extinguishment of Debt -0- $ 225
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NET INCOME (LOSS) $ 213 $( 872)
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NET EARNINGS (LOSS) PER SHARE BEFORE EXTRAORDINARY ITEM $ 0.10 $( 0.30)
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EXTRAORDINARY ITEM $ - $ 0.10
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NET EARNINGS (LOSS) PER SHARE $ 0.10 $( 0.40)
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AVERAGE NUMBER OF SHARES OUTSTANDING 2,172 2,155
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<FN>
The accompanying notes are an integral part of this financial information.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
MULTI-COLOR CORPORATION
Balance Sheets
(Thousands)
ASSETS
------
July 2, 1995 April 2, 1995
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(Derived from Audited
(Prepared Without Audit) Financial Statements)
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
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Total Current Assets $ 12,224 $ 15,098
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SINKING FUND - IRB $ 600 $ 400
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PROPERTY, PLANT, AND EQUIPMENT $ 33,662 $ 33,398
ACCUMULATED DEPRECIATION (14,227) (13,609)
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$ 19,436 $ 19,789
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DEFERRED CHARGES, net $ 121 $ 149
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NOTE RECEIVABLE $ 348 $ 373
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NOTE RECEIVABLE FROM OFFICERS/SHAREHOLDERS $ 150 $ 150
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$ 32,878 $ 35,959
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LIABILITIES AND SHAREHOLDERS' EQUITY
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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
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Total Current Liabilities $ 28,836 $ 32,129
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LONG-TERM DEBT, excluding current portion $ 7 $ 8
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DEFERRED TAXES $ 604 $ 604
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DEFERRED COMPENSATION $ - $ -
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PENSION LIABILITY $ 220 $ 220
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Total Liabilities $ 29,667 $ 32,961
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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)
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Total Shareholders' Equity 3,211 2,998
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$ 32,878 $ 35,959
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<FN>
The accompanying notes are an integral part of this financial information.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
MULTI-COLOR CORPORATION
Statements of Cash Flows
(Prepared Without Audit)
(Thousands)
Thirteen Weeks Ended
---------------------------------------
July 2, 1995 July 3, 1994
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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)
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Net cash provided by (used in) operating activities $ 2,009 $( 241)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net $( 264) $( 454)
Sale of marketable securities 13 -
Treasury stock, net - -
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Net cash used in investing activities $( 251) $( 454)
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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)
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Net cash provided by (used in) financing activities $( 1,750) $ 699
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Net increase (decrease) in cash and cash equivalents $ 8 $ 4
CASH AND CASH EQUIVALENTS, beginning of period $ 17 $ 11
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CASH AND CASH EQUIVALENTS, end of period $ 25 $ 15
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 377 $ 365
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Income Taxes paid $ 7 $ 9
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<FN>
The accompanying notes are an integral part of this finacial information.
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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.
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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.
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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
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William R. Cochran
Vice President, Chief Financial
Officer
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