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, 2004
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 incorporation or organization) |
(IRS Employer Identification No.) |
425 Walnut Street, Suite 1300, Cincinnati, Ohio 45202
(Address of principal executive offices)
Registrant’s telephone number – (513) 381-1480
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x
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 – 6,342,696 (as of February 3, 2005)
FORM 10-Q
CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION (Unaudited) | ||
| Condensed Consolidated Balance Sheets at December 31, 2004 and March 31, 2004 |
3 | |
| 4 | ||
| 5 | ||
| 6 | ||
| 7 | ||
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | |
| 17 | ||
| 17 | ||
| Item 1. Legal Proceedings |
18 | |
| Item 2. Changes in Securities |
18 | |
| Item 3. Defaults upon Senior Securities |
18 | |
| 18 | ||
| Item 5. Other Information |
18 | |
| Item 6. Exhibits and Reports on Form 8-K |
18 | |
| 19 | ||
2
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Thousands)
| December 31, 2004 |
March 31, 2004 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash |
$ | 6,774 | $ | 1,464 | ||||
| Accounts receivable, net |
14,154 | 15,431 | ||||||
| Inventories |
8,655 | 7,719 | ||||||
| Deferred tax asset |
556 | 455 | ||||||
| Prepaid and refundable income taxes |
— | 931 | ||||||
| Prepaid expenses and other |
675 | 461 | ||||||
| Total current assets |
30,814 | 26,461 | ||||||
| Property, plant and equipment, net |
34,439 | 33,207 | ||||||
| Goodwill |
11,759 | 11,759 | ||||||
| Intangible assets, net |
650 | 879 | ||||||
| Other |
58 | 141 | ||||||
| Total assets |
$ | 77,720 | $ | 72,447 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term debt |
$ | 4,079 | $ | 5,913 | ||||
| Current portion of capital lease obligations |
4 | 9 | ||||||
| Accounts payable |
6,223 | 8,666 | ||||||
| Accrued liabilities |
4,886 | 3,990 | ||||||
| Total current liabilities |
15,192 | 18,578 | ||||||
| Long-term debt, excluding current portion |
17,353 | 15,553 | ||||||
| Capital lease obligations, excluding current portion |
4 | — | ||||||
| Deferred tax liability |
5,131 | 4,919 | ||||||
| Deferred compensation |
477 | 428 | ||||||
| Total liabilities |
38,157 | 39,478 | ||||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Common stock, no par value, $.10 stated value |
311 | 291 | ||||||
| Additional paid-in capital |
14,230 | 12,740 | ||||||
| Treasury stock, at cost |
(119 | ) | (119 | ) | ||||
| Accumulated other comprehensive loss |
(16 | ) | — | |||||
| Retained earnings |
25,157 | 20,057 | ||||||
| Total shareholders’ equity |
39,563 | 32,969 | ||||||
| Total liabilities and shareholders’ equity |
$ | 77,720 | $ | 72,447 | ||||
See accompanying Notes to Consolidated Financial Statements.
3
Item 1. Financial Statements (continued)
Condensed Consolidated Statements of Income
(Unaudited)
(Thousands except per share amounts)
| Three Months Ended |
||||||||
| December 31, 2004 |
December 31, 2003 |
|||||||
| Net sales |
$ | 33,687 | $ | 33,029 | ||||
| Cost of goods sold |
26,962 | 27,217 | ||||||
| Gross profit |
6,725 | 5,812 | ||||||
| Selling, general and administrative expenses |
2,818 | 2,666 | ||||||
| Plant closure costs |
— | 39 | ||||||
| Impairment loss on long - lived assets |
— | 199 | ||||||
| Operating income |
3,907 | 2,908 | ||||||
| Other (income) expense, net |
(20 | ) | (38 | ) | ||||
| Interest expense |
218 | 231 | ||||||
| Income before income taxes |
3,709 | 2,715 | ||||||
| Income taxes |
1,403 | 1,098 | ||||||
| Net income |
$ | 2,306 | $ | 1,617 | ||||
| Basic earnings per share |
$ | 0.36 | $ | 0.27 | ||||
| Diluted earnings per share |
$ | 0.35 | $ | 0.24 | ||||
| Average number of common shares outstanding: |
||||||||
| Basic |
6,338 | 6,019 | ||||||
| Diluted |
6,619 | 6,651 | ||||||
Certain prior year amounts have been conformed to the current year presentation.
See accompanying Notes to Consolidated Financial Statements.
4
Item 1. Financial Statements (continued)
Condensed Consolidated Statements of Income
(Unaudited)
(Thousands except per share amounts)
| Nine Months Ended |
||||||||
| December 31, 2004 |
December 31, 2003 |
|||||||
| Net sales |
$ | 94,172 | $ | 93,705 | ||||
| Cost of goods sold |
77,094 | 76,538 | ||||||
| Gross profit |
17,078 | 17,167 | ||||||
| Selling, general and administrative expenses |
8,324 | 7,847 | ||||||
| Plant closure costs |
— | 39 | ||||||
| Impairment loss on long - lived assets |
— | 199 | ||||||
| Operating income |
8,754 | 9,082 | ||||||
| Other (income) expense, net |
(80 | ) | (57 | ) | ||||
| Interest expense |
634 | 928 | ||||||
| Income before income taxes |
8,200 | 8,211 | ||||||
| Income taxes |
3,097 | 3,302 | ||||||
| Net income |
$ | 5,103 | $ | 4,909 | ||||
| Basic earnings per share |
$ | 0.81 | $ | 0.82 | ||||
| Diluted earnings per share |
$ | 0.77 | $ | 0.75 | ||||
| Average number of common shares outstanding: |
||||||||
| Basic |
6,278 | 5,980 | ||||||
| Diluted |
6,607 | 6,584 | ||||||
Certain prior year amounts have been conformed to the current year presentation.
See accompanying Notes to Consolidated Financial Statements.
5
Item 1. Financial Statements (continued)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Thousands)
| Nine Months Ended |
||||||||
| December 31, 2004 |
December 31, 2003 |
|||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES |
$ | 8,958 | $ | 4,857 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Capital expenditures |
(4,461 | ) | (4,166 | ) | ||||
| Acquisition of business, net of cash received |
— | (500 | ) | |||||
| Proceeds from sale of property, plant and equipment |
18 | 202 | ||||||
| Net cash used in investing activities |
(4,443 | ) | (4,464 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Repayment of long-term debt |
(3,684 | ) | (3,700 | ) | ||||
| Proceeds from issuance of long-term debt |
3,650 | 3,600 | ||||||
| Repayment of capital lease obligations |
(1 | ) | (4,227 | ) | ||||
| Payment in lieu of fractional shares for stock split |
(4 | ) | ||||||
| Proceeds relating to issuance of common stock, net |
830 | 193 | ||||||
| Net cash provided by (used in) financing activities |
795 | (4,138 | ) | |||||
| Net increase (decrease) in cash |
5,310 | (3,745 | ) | |||||
| Cash, beginning of period |
1,464 | 4,109 | ||||||
| Cash, end of period |
$ | 6,774 | $ | 364 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
||||||||
| Interest paid |
$ | 363 | $ | 650 | ||||
| Income taxes paid |
$ | 88 | $ | 2,334 | ||||
| Acquisition accounted for as a purchase: |
||||||||
| Assets acquired |
$ | — | $ | 1,151 | ||||
| Liabilities assumed |
— | — | ||||||
| Note payable |
— | (651 | ) | |||||
| Net cash paid |
$ | — | $ | 500 | ||||
See accompanying Notes to Consolidated Financial Statements.
6
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollars in Thousands)
Item 1. Financial Statements (continued)
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 December 31, |
Nine Months Ended December 31, | |||||||
| 2004 |
2003 |
2004 |
2003 | |||||
| Basic EPS |
6,338 | 6,019 | 6,278 | 5,980 | ||||
| Effect of dilutive stock options |
281 | 632 | 329 | 604 | ||||
| Diluted EPS |
6,619 | 6,651 | 6,607 | 6,584 | ||||
3. Inventories:
Inventories are stated at the lower of FIFO (first-in, first-out) cost or market and are comprised of the following:
| December 31, 2004 |
March 31, 2004 | |||||
| Raw Materials |
$ | 3,993 | $ | 2,378 | ||
| Work in Process |
734 | 1,046 | ||||
| Finished Goods |
3,928 | 4,295 | ||||
| $ | 8,655 | |||||