MULTI COLOR Corp (Form: 10-Q, Received: 08/11/2014 11:26:42)

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UNITED STATES

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 June 30, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 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.)

4053 Clough Woods Dr.

Batavia, Ohio 45103

(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange 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 – 16,485,907 (as of July 31, 2014)

MULTI-COLOR CORPORATION

FORM 10-Q

CONTENTS


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)

	Condensed Consolidated Statements of Income for the Three Months Ended June 30, 2014 and June 30, 2013		3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended June 30, 2014 and June 30, 2013		4

	Condensed Consolidated Balance Sheets at June 30, 2014 and March 31, 2014		5

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2014 and June 30, 2013		6

	Notes to Condensed Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21

Item 4.	Controls and Procedures		22

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors		23

Item 6.	Exhibits		23

Signatures			24

Forward-Looking Statements

This report contains certain statements that are not historical facts that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and that 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. Such forward-looking statements speak 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 actions 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 by the Company to differ materially from these forward-looking statements include, without limitation: factors discussed in conjunction with a forward-looking statement; changes in general economic and business conditions; the ability to consummate and successfully integrate acquisitions; ability to recognize the benefits of acquisitions, including potential synergies and cost savings; failure of an acquisition or acquired company to achieve its plans and objectives generally; risk that proposed or consummated acquisitions may disrupt operations or pose difficulties in employee retention or otherwise affect financial or operating results; ability to manage foreign operations; currency exchange rate fluctuations; the success and financial condition of the Company’s significant customers; competition; acceptance of new product offerings; changes in business strategy or plans; quality of management; the Company’s ability to maintain an effective system of internal control; the Company’s ability to remediate our material weaknesses in our internal control over financial reporting; availability, terms and development of capital and credit; cost and price changes; raw material cost pressures; availability of raw materials; ability to pass raw material cost increases to its customers; business abilities and judgment of personnel; changes in, or the failure to comply with, government regulations, including U.S. environmental regulations, legal proceedings and developments; risk associated with significant leverage; increases in general interest rate levels affecting the Company’s interest costs; ability to manage global political uncertainty; and terrorism and political unrest. 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. In addition to the factors described in this paragraph, Part I, Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2014 contains a list and description of uncertainties, risks and other matters that may affect the Company.

PART I. FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements (unaudited)

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share data)


	Three Months Ended
	June 30, 2014		June 30, 2013
Net revenues	$	203,139	$	166,843
Cost of revenues		160,337		136,411

Gross profit		42,802		30,432
Selling, general and administrative expenses		16,704		14,333

Operating income		26,098		16,099
Interest expense		5,758		5,176
Other expense, net		136		386

Income before income taxes		20,204		10,537
Income tax expense		6,904		3,865

Net income	$	13,300	$	6,672

Weighted average shares and equivalents outstanding:
Basic		16,427		16,278
Diluted		16,663		16,527

Basic earnings per common share	$	0.81	$	0.41
Diluted earnings per common share	$	0.80	$	0.40
Dividends per common share	$	0.05	$	0.05

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands)


	Three Months Ended
	June 30, 2014			June 30, 2013
Net income	$	13,300		$	6,672
Other comprehensive income (loss):
Unrealized foreign currency translation gain (loss) (1)		3,174			(12,399	)
Unrealized (loss) gain on interest rate swaps, net of tax (2)		(29	)		803

Total other comprehensive income (loss)		3,145			(11,596	)

Comprehensive income (loss)	$	16,445		$	(4,924	)

(1)	Amount is not net of tax as the earnings are reinvested within foreign jurisdictions.

(2)	Amount is net of tax of $18 and $503 for the three months ended June 30, 2014 and 2013, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except per share data)


	June 30, 2014			March 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	13,385		$	10,020
Accounts receivable, net of allowance of $2,344 and $2,028 at June 30, 2014 and March 31, 2014, respectively		119,042			118,906
Other receivables		5,578			6,737
Inventories, net		58,834			56,296
Deferred income tax assets		11,317			11,144
Prepaid expenses and other current assets		9,144			10,321

Total current assets		217,300			213,424
Assets held for sale		—			60
Property, plant and equipment, net of accumulated depreciation of $137,605 and $130,193 at June 30, 2014 and March 31, 2014, respectively		198,201			194,589
Goodwill		394,874			391,690
Intangible assets, net		153,596			155,943
Deferred financing fees and other non-current assets		7,133			7,619
Deferred income tax assets		1,154			1,141

Total assets	$	972,258		$	964,466

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	44,327		$	42,648
Accounts payable		69,416			69,405
Accrued expenses and other liabilities		45,276			44,378

Total current liabilities		159,019			156,431
Long-term debt		422,402			435,554
Deferred income tax liabilities		58,097			56,561
Other liabilities		18,330			18,173

Total liabilities		657,848			666,719
Commitments and contingencies
Stockholders’ equity:
Preferred stock, no par value, 1,000 shares authorized, no shares outstanding		—			—
Common stock, no par value, stated value of $0.10 per share; 25,000 shares authorized, 16,643 and 16,571 shares issued at June 30, 2014 and March 31, 2014, respectively		1,002			994
Paid-in capital		134,314			132,344
Treasury stock, 188 and 161 shares at cost at June 30, 2014 and March 31, 2014, respectively		(4,743	)		(3,760	)
Restricted stock		(673	)		(717	)
Retained earnings		184,531			172,052
Accumulated other comprehensive loss		(21	)		(3,166	)

Total stockholders’ equity		314,410			297,747

Total liabilities and stockholders’ equity	$	972,258		$	964,466

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Three Months Ended
	June 30, 2014			June 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	13,300		$	6,672
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		7,351			6,903
Amortization of intangible assets		2,921			2,204
Amortization of deferred financing costs		624			495
Net loss on disposal of property, plant and equipment		59			51
Stock based compensation expense		536			335
Excess tax benefit from stock based compensation		(398	)		(91	)
Deferred income taxes, net		771			1,403
Net decrease in accounts receivable		62			2,146
Net increase in inventories		(2,187	)		(2,597	)
Net decrease in prepaid expenses and other assets		2,221			1,239
Net (decrease) increase in accounts payable		(199	)		3,958
Net increase (decrease) in accrued expenses and other liabilities		650			(4,231	)

Net cash provided by operating activities		25,711			18,487

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(10,520	)		(12,609	)
Investment in acquisitions, net of cash acquired		—			(7,495	)
Proceeds from sale of property, plant and equipment		112			77

Net cash used in investing activities		(10,408	)		(20,027	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving lines of credit		39,021			90,521
Payments under revolving lines of credit		(40,143	)		(86,425	)
Borrowings of long-term debt		—			1,751
Repayment of long-term debt		(10,859	)		(5,095	)
Proceeds from issuance of common stock		366			1,716
Excess tax benefit from stock based compensation		398			91
Dividends paid		(820	)		(813	)

Net cash (used in)/provided by financing activities		(12,037	)		1,746

Effect of foreign exchange rate changes on cash		99			(203	)

Net increase in cash and cash equivalents		3,365			3
Cash and cash equivalents, beginning of period		10,020			15,737

Cash and cash equivalents, end of period	$	13,385		$	15,740

See accompanying Notes to Condensed Consolidated Financial Statements.

See Note 16 for supplemental cash flow disclosures.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(in thousands, except per share data)

1.	Description of Business and Significant Accounting Policies

The Company

Multi-Color Corporation (Multi-Color, MCC, we, us, our or the Company), headquartered near Cincinnati, Ohio, is a leader in global label solutions supporting a number of the world’s most prominent brands including leading producers of home & personal care, wine & spirit, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in North, Central and South America, Europe, Australia, New Zealand, South Africa and China with a comprehensive range of the latest label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer.

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), 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. A description of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014 (the “2014 10-K”). These condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the 2014 10-K.

The information furnished in these condensed consolidated 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.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain prior period balances have been reclassified to conform to current year classifications.

Use of Estimates in Financial Statements

In preparing financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides revised guidance for revenue recognition. The standard’s core principle is that an entity should recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance provides five steps that should be applied to achieve that core principle. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, which for the Company is the fiscal year beginning April 1, 2017. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company’s consolidated financial statements.

2.	Earnings Per Common Share

Basic earnings per common share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income by the sum of the weighted average number of common shares outstanding during the period plus if dilutive, potential common shares outstanding during the period. Potential common shares outstanding during the period consist of restricted shares and the incremental common shares issuable upon the exercise of stock options and are reflected in diluted EPS by application of the treasury stock method.

The following is a reconciliation of the number of shares used in the basic EPS and diluted EPS computations:


	Three Months Ended
	June 30, 2014					June 30, 2013
	Shares		Per Share Amount			Shares		Per Share Amount
Basic EPS		16,427	$	0.81			16,278	$	0.41
Effect of dilutive stock options and restricted shares		236		(0.01	)		249		(0.01	)

Diluted EPS		16,663	$	0.80			16,527	$	0.40

The Company excluded 284 and 169 options to purchase shares in the three months ended June 30, 2014 and 2013, respectively, from the computation of diluted EPS because these shares would have an anti-dilutive effect.

3.	Inventories

The Company’s inventories consisted of the following:


	June 30, 2014			March 31, 2014
Finished goods	$	32,067		$	30,276
Work-in-process		7,975			7,539
Raw materials		22,376			21,503

Total inventories, gross		62,418			59,318
Inventory reserves		(3,584	)		(3,022	)

Total inventories, net	$	58,834		$	56,296

Debt

The components of the Company’s debt consisted of the following:


	June 30, 2014			March 31, 2014
U.S. Revolving Credit Facility, 4.06% and 3.93% weighted variable interest rate at June 30, 2014 and March 31, 2014, respectively, due in 2016	$	79,600		$	84,200
Term Loan Facility, 3.73% variable interest rate at June 30, 2014 and March 31, 2014, due in quarterly installments from 2015 to 2016		351,750			361,875
Australian Sub-Facility, 6.22% and 6.20% variable interest rate at June 30, 2014 and March 31, 2014, respectively, due in 2016		30,374			28,536
Capital leases		1,593			2,205
Other subsidiary debt		3,412			1,386

Total debt		466,729			478,202
Less current portion of debt		(44,327	)		(42,648	)

Total long-term debt	$	422,402		$	435,554

The following is a schedule of future annual principal payments as of June 30, 2014:


	Debt		Capital Leases		Total
July 2014 - June 2015	$	43,025	$	1,302	$	44,327
July 2015 - June 2016		50,957		291		51,248
July 2016 - June 2017		370,933		—		370,933
July 2017 - June 2018		189		—		189
July 2018 - June 2019		32		—		32

Total	$	465,136	$	1,593	$	466,729

On February 29, 2008, the Company executed a five year $200,000 credit agreement with a consortium of bank lenders (Credit Facility) with an original expiration date in 2013. In August 2011, the Company executed the third amendment to the Credit Facility. The third amendment extended the expiration date to August 2016 and increased the aggregate principal amount to $500,000 with an additional $315,000 term loan, which the Company drew down on in conjunction with the York Label Group acquisition in October 2011. In February 2014, the Company executed the seventh amendment to the Credit Facility to access $100,000 to fund the acquisition of the DI-NA-CAL label business (see Note 9). As a result of the first through seventh amendments, which were executed in fiscal 2011 through fiscal 2014, the following current provisions are in place for the Credit Facility.

consolidated leverage ratio of 4.25 to 1.00 and (iii) a minimum consolidated interest charge coverage ratio of 4.00 to 1.00. The maximum consolidated leverage ratio has scheduled step downs to 3.50 to 1.00 in future periods. The Credit Facility contains customary mandatory and optional prepayment provisions, customary events of default, and is secured by the capital stock of subsidiaries, intercompany debt and all of the Company’s property and assets, but excluding real property. The Company is in compliance with all covenants under the Credit Facility as of June 30, 2014.

The Credit Facility may be used for working capital, capital expenditures and other corporate purposes. Loans under the U.S. Revolving Credit Facility and Term Loan Facility bear interest either at: (i) base rate (as defined in the credit agreement) plus the applicable margin for such loans which ranges from 1.00% to 2.50%; or (ii) the applicable London interbank offered rate, plus the applicable margin for such loans which ranges from 2.00% to 3.50% based on the Company’s leverage ratio at the time of the borrowing. Loans under the Australian Sub-Facility bear interest at the BBSY Rate plus the applicable margin for such loans, which ranges from 2.00% to 3.50% based on the Company’s leverage ratio at the time of the borrowing.

At June 30, 2014, the aggregate commitment amount of $546,750 under the Credit Facility is comprised of the following: (i) a $155,000 revolving Credit Facility that allows the Company to borrow in alternative currencies up to the equivalent of $50,000 (U.S. Revolving Credit Facility); (ii) the Australian dollar equivalent of a $40,000 revolving Credit Facility (Australian Sub-Facility); and (iii) a $351,750 term loan facility (Term Loan Facility) which amortizes quarterly based on an escalating percentage of the initial aggregate value of the Term Loan Facility. The Term Loan Facility amortizes quarterly based on the following schedule: (i) March 31, 2014 through December 31, 2015 - amortization of $10,125 and (ii) March 31, 2016 through June 30, 2016 - amortization of $15,188, with the balance due at maturity.

In the fourth quarter of fiscal 2014, the Company incurred $1,364 in debt issuance costs related to the debt modification that occurred as a result of the seventh amendment to the Credit Facility. We analyzed the new loan costs and the existing unamortized loan costs related to the prior agreement allocated to the amended revolving line of credit and term loan separately to determine the amount of costs to be capitalized and the amount to be expensed. As a result of the analysis, the Company recorded $99 to selling, general and administrative expenses in fiscal 2014 to expense certain third-party fees related to the modification of the term loan. The remaining new and unamortized deferred loan costs are being deferred and amortized over the term of the modified agreement.

The Company recorded $624 and $495 in interest expense for the three months ended June 30, 2014 and 2013, respectively, in the condensed consolidated statements of income to amortize deferred financing costs.

Available borrowings under the Credit Facility at June 30, 2014 consisted of $74,863 under the U.S. Revolving Credit Facility and $9,626 under the Australian Sub-Facility. The Company also has various other uncommitted lines of credit available at June 30, 2014 in the amount of $8,612.

Capital Leases

The present value of the net minimum payments on the capitalized leases is as follows:


	June 30, 2014			March 31, 2014
Total minimum lease payments	$	1,632		$	2,261
Less amount representing interest		(39	)		(56	)

Present value of net minimum lease payments		1,593			2,205
Current portion		(1,302	)		(1,728	)

Capitalized lease obligations, less current portion	$	291		$	477

The capitalized leases carry interest rates from 2.70% to 6.84% and mature from fiscal 2015 to fiscal 2016.

5.	Major Customers

During the three months ended June 30, 2014 and 2013, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 16% and 15%, respectively, of the Company’s consolidated net revenues. All of these sales were made to the Procter & Gamble Company.

In addition, accounts receivable balances from the Procter & Gamble Company approximated 6% of the Company’s total accounts receivable balance at June 30, 2014 and 7% at March 31, 2014. The loss or substantial reduction of the business of this major customer could have a material adverse impact on the Company’s results of operations and cash flows.

6.	Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction, various foreign jurisdictions and various state and local jurisdictions where the statutes of limitations generally range from three to five years. At June 30, 2014, the Company is no longer subject to U.S. federal examinations by tax authorities for years before fiscal 2010. The Company is no longer subject to state and local examinations by

tax authorities for years before fiscal 2009. In foreign jurisdictions, the Company is no longer subject to examinations by tax authorities for years before fiscal 1999.

The benefits of tax positions are not recorded unless it is more likely than not the tax position would be sustained upon challenge by the appropriate tax authorities. Tax benefits that are more likely than not to be sustained are measured at the largest amount of benefit that is cumulatively greater than a 50% likelihood of being realized.

As of June 30, 2014 and March 31, 2014, the Company had liabilities of $4,202 and $4,161, respectively, recorded for unrecognized tax benefits for U.S. federal, state and foreign tax jurisdictions. During the three months ended June 30, 2014 and 2013, the Company recognized $153 and $76, respectively, of interest and penalties in income tax expense in the condensed consolidated statements of income. The liability for the gross amount of interest and penalties at June 30, 2014 and March 31, 2014, was $1,462 and $1,306, respectively. The liability for unrecognized tax benefits is classified in other noncurrent liabilities on the condensed consolidated balance sheets for the portion of the liability where payment of cash is not anticipated within one year of the balance sheet date. During the three months ended June 30, 2014, the Company did not release any reserves, including interest and penalties, related to uncertain tax positions that have been settled. The Company believes that it is reasonably possible that $510 of unrecognized tax benefits as of June 30, 2014 could be released within the next 12 months due to lapse of statute of limitations and settlements of certain foreign income tax matters. The unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate are $4,202.

During the fourth quarter of fiscal year 2014, the IRS released Rev. Proc. 2014-16 and 2014-17 which provided transitional guidance related to the final tangible property regulations issued on September 13, 2013. These regulations are effective for Multi-Color’s fiscal year ending March 31, 2015. Multi-Color continues to review these regulations but does not believe there will be a material impact on the consolidated financial statements when they are fully adopted.

7.	Financial Instruments

Interest Rate Swaps

The Company uses interest rate swap agreements (Swaps) to minimize its exposure to interest rate fluctuations on variable rate debt borrowings. Swaps involve the exchange of fixed and variable rate interest payments and do not represent an actual exchange of the underlying notional amounts between the two parties.

In October 2011, in connection with the drawdown of the $315,000 term loan for the acquisition of York Label Group, the Company entered into three forward starting non-amortizing Swaps for a total notional amount of $125,000 to convert variable rate debt to fixed rate debt. The Swaps became effective October 2012 and expire in August 2016. The Swaps result in interest payments based on an average fixed rate of 1.396% plus the applicable margin per the requirements in the Credit Facility, which was 3.50% as of June 30, 2014.

The Swaps are designated as cash flow hedges, with the effective portion of gains and losses, net of tax, measured on an ongoing basis, recorded in accumulated other comprehensive income. If a hedge or a portion thereof were determined to be ineffective, any gains and losses would be recorded in interest expense in the condensed consolidated statements of income. The amount of gain (loss) on the interest rate swaps recognized in other comprehensive income (OCI) was as follows:


	Three Months Ended
	June 30, 2014			June 30, 2013
Gain (loss) recognized in OCI on interest rate swaps (effective portion)	$	(47	)	$	1,306

There was no hedge ineffectiveness related to the Swaps during the three months ended June 30, 2014 and 2013. During the next 12 months, the amount of the gains (losses) included in the June 30, 2014 accumulated OCI balance that is expected to be reclassified into the condensed consolidated statements of income is not material. The fair value of the Swaps was included in other long-term liabilities on the condensed consolidated balance sheets. See Note 10 for additional information on the fair value of the Swaps.

Foreign Currency Forward Contracts

Foreign currency exchange risk arises from our international operations in Australia, Europe, South America, Mexico, Canada, China and South Africa as well as from transactions with customers or suppliers denominated in currencies other than the U.S. dollar. The functional currency of each of the Company’s subsidiaries is generally the currency of the country in which the subsidiary operates. At times, the Company uses forward currency contracts to minimize the impact of fluctuations in currency exchange rates.

The Company has historically entered into multiple foreign currency forward contracts to fix the purchase price in U.S. dollars of foreign currency denominated firm commitments to purchase presses and other equipment. The forward contracts are designated as fair value hedges and changes in the fair value of the contracts are recorded in other income and expense in the condensed consolidated statements of income in the same period during which the related hedged items affect the condensed consolidated statements of income. No such foreign currency forward contracts were outstanding as of June 30, 2014. The amount of gain (loss) on the foreign currency forward contracts recognized in the condensed consolidated statements of income was as follows:


	Three Months Ended
	June 30, 2014		June 30, 2013
Gain (loss) on foreign currency forward contracts	$	—	$	46
Gain (loss) on related hedged items	$	—	$	(58	)

In fiscal 2014, the Company entered into a foreign currency forward contract to fix the U.S. dollar value of certain intercompany loan payments. The contract matured on April 1, 2014. This contract was not designated as a hedging instrument; therefore, changes in the fair value of the contract were immediately recognized in other income and expense in the condensed consolidated statements of income and were not material to the consolidated results of operations during the three months ended June 30, 2013.

The fair value of the contracts designated as hedging instruments was included in prepaid expenses and other current assets on the condensed consolidated balance sheets. The fair value of the contract not designated as a hedging instrument was included in accrued expenses and other liabilities. See Note 10 for additional information on the fair value of the contracts.

8.	Accrued Expenses and Other Liabilities

The Company’s accrued expenses and other liabilities consisted of the following:


	June 30, 2014		March 31, 2014
Accrued payroll and benefits	$	19,141	$	17,531
Accrued income taxes		3,836		2,366
Professional fees		707		391
Accrued taxes other than income taxes		1,123		1,210
Deferred lease incentive		340		453
Accrued interest		105		115
Accrued severance		966		1,123
Customer rebates		2,133		1,818
Deferred press payments		754		650
Plant consolidation costs (1)		27		744
Contingent consideration		10,923		10,307
Other		5,221		7,670

Total accrued expenses and other liabilities	$	45,276	$	44,378

(1)	The balance at June 30, 2014 and March 31, 2014 consisted of a liability related to severance and plant consolidation costs for the Company’s facility in El Dorado Hills, California, as further described in Note 13.

9.	Acquisitions

DI-NA-CAL Summary

On February 1, 2014, the Company acquired the assets of the DI-NA-CAL label business, based near Cincinnati, Ohio, from Graphic Packaging International, Inc., which was accounted for as a business combination. DI-NA-CAL operates manufacturing facilities near Cincinnati, Ohio and Greensboro, North Carolina and provides decorative label solutions primarily in the heat transfer label markets for home & personal care and food & beverage through long-standing relationships with blue chip national and multi-national customers. The acquisition extends Multi-Color’s position in the heat transfer label market and allows us to support a number of new customers with a broader range of label technologies. The results of DI-NA-CAL’s operations were included in the Company’s condensed consolidated financial statements beginning February 1, 2014.

The purchase price for DI-NA-CAL consisted of cash of $80,667, which was funded through borrowings under the Credit Facility (see Note 4 for details of the Credit Facility). Upon closing, $8,067 of the purchase price was deposited into an escrow account and is to be released to the seller on the 18 month anniversary of the closing date in accordance with the provisions of the escrow agreement. The escrow amount is to fund certain potential obligations of the seller with respect to the transaction. The Company spent $407 in acquisition expenses related to the DI-NA-CAL acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income, $102 in the first quarter of 2015 and $305 in fiscal 2014.

John Watson & Company Limited (Watson) Summary

On October 1, 2013, the Company acquired 100% of Watson based in Glasgow, Scotland. Watson is the leading glue-applied spirit label producer in the U.K. The business is ideally located for its key customers and is complementary to MCC’s existing business in Glasgow (formerly Labelgraphics), the leading pressure sensitive wine and spirit label producer in the same region. The results of Watson’s operations were included in the Company’s condensed consolidated financial statements beginning October 1, 2013.

The purchase price for Watson consisted of the following:


Cash from proceeds of borrowings	$	13,136
Contingent consideration		8,498

Purchase price, before cash acquired		21,634
Net cash acquired		(143	)

Total purchase price	$	21,491

The cash portion of the purchase price was funded through borrowings under the Credit Facility (see Note 4 for details of the Credit Facility). The purchase price includes a future performance based earnout of $8,498, estimated as of the acquisition date. The amount of the earnout is based on a comparison between EBITDA for the acquired business for fiscal 2013 and fiscal 2014 less certain adjustments and any claims to fund certain potential indemnification obligations of the seller with respect to the transaction. An additional $1,063 related to the earnout due to the sellers was accrued in the fourth quarter of fiscal 2014 based on better than estimated fiscal 2014 performance by the acquired company compared to estimates made at the time of the acquisition, which was recorded in other expense in the consolidated statements of income. In June 2014, the amount of the earnout was finalized and an additional $343 was accrued, which was recorded in other expense in the condensed consolidated statements of income. The earnout was paid in July 2014. The Company spent $284 in acquisition expenses related to the Watson acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income in fiscal 2014.

Flexo Print S.A. De C.V. (Flexo Print) Summary

On August 1, 2013, the Company acquired 100% of Flexo Print based in Guadalajara, Mexico. Flexo Print is a leading producer of home & personal care, food & beverage, wine & spirit and pharmaceutical labels in Latin America. The acquisition provides Multi-Color with significant growth opportunities in Mexico through our many common customers, technologies and suppliers. The results of Flexo Print’s operations were included in the Company’s condensed consolidated financial statements beginning August 1, 2013.

The purchase price for Flexo Print consisted of the following:


Cash from proceeds of borrowings	$	29,134
Deferred payment		2,713

Purchase price, before debt assumed		31,847
Net debt assumed		2,324

Total purchase price	$	34,171

The cash portion of the purchase price was funded through borrowings under the Credit Facility (see Note 4 for details of the Credit Facility). Assumed net debt includes $2,884 of bank debt less $560 of cash acquired. Upon closing, $3,058 of the purchase price was deposited into an escrow account, and an additional $1,956 of the purchase price was retained by MCC and is deferred until the third anniversary of the closing date, at which time it should be deposited into the escrow account. These combined escrow amounts are to be released to the seller on the fifth anniversary of the closing date in accordance with the purchase agreement. An additional $757 of the purchase price was retained by MCC at closing and is to be paid to the seller on the 3rd anniversary of the closing date in accordance with the purchase agreement. The combined escrow and retention amounts are to fund certain potential indemnification obligations of the seller with respect to the transaction. The Company spent $359 in acquisition expenses related to the Flexo Print acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income, $2 in the first quarter of fiscal 2015 and $357 in fiscal 2014.

In the fourth quarter of fiscal 2014, the Company reduced the deferred payment by $1,157 in settlement of an indemnification claim.

Purchase Price Allocation and Other Items

The determination of the final purchase price and its allocation to specific assets acquired and liabilities assumed for DI-NA-CAL, Watson and Flexo Print will be finalized prior to the end of January 2015, September 2014 and July 2014, respectively, once independent fair value appraisals of assets and liabilities and valuation of tax liabilities are finalized.

Based on fair value estimates, the final purchase prices for DI-NA-CAL, Watson and Flexo Print have been allocated to individual assets acquired and liabilities assumed as follows:


	DI-NA-CAL		Watson		Flexo Print
Assets Acquired:
Net cash acquired	$	—	$	143	$	—
Accounts receivable		7,589		4,606		7,930
Inventories		3,489		1,974		2,110
Property, plant and equipment		7,803		5,404		11,522
Intangible assets		37,700		4,090		5,367
Goodwill		28,792		10,085		16,185
Other assets		52		518		6,716

Total assets acquired		85,425		26,820		49,830

Liabilities Assumed:
Accounts payable		4,273		2,610		7,177
Accrued income taxes payable		—		316		247
Accrued expenses and other liabilities		485		728		5,010
Net debt assumed		—		—		2,324
Deferred tax liabilities		—		1,532		3,225
Total liabilities assumed		4,758		5,186		17,983

Net assets acquired	$	80,667	$	21,634	$	31,847

The estimated fair value of identifiable intangible assets and their estimated useful lives are as follows:


	DI-NA-CAL				Watson				Flexo Print
	Fair Value		Useful Lives		Fair Value		Useful Lives		Fair Value		Useful Lives
Customer relationships	$	34,550		21 years	$	4,090		20 years	$	5,367		17 years
Trademarks		—		—		—		—		—		—
Non-compete agreements		3,150		7 years		—		—		—		—

Total identifiable intangible assets	$	37,700			$	4,090			$	5,367

Identifiable intangible assets are amortized over their useful lives based on a number of assumptions including the estimated period of economic benefit and utilization. The weighted-average amortization period for identifiable intangible assets acquired in the DI-NA-CAL, Watson and Flexo Print acquisitions is 20, 20 and 17 years, respectively.

The goodwill for DI-NA-CAL is attributable to opportunities to expand business with new blue chip national and multi-national customers through multiple label technology offerings and the acquired workforce. The goodwill for Flexo Print is attributable to access to the Mexican label market and the acquired workforce. The goodwill for Watson is attributable to access to the UK spirit label market and the acquired workforce. None of the goodwill arising from the Watson or Flexo Print, acquisitions is deductible for income tax purposes. Approximately $28,792 of the goodwill arising from the DI-NA-CAL acquisition is deductible for income tax purposes. Below is a roll forward of the acquisition goodwill from acquisition date to June 30, 2014:


	DI-NA-CAL		Watson		Flexo Print
Balance at acquisition date	$	28,792	$	10,085	$	16,185
Foreign exchange impact		—		566		(305	)

Balance at June 30, 2014	$	28,792	$	10,651	$	15,880

The accounts receivable acquired as part of the DI-NA-CAL acquisition had a fair value of $7,589 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $7,626 and the estimated contractual cash flows that are not expected to be collected are $37. The accounts receivable acquired as part of the Watson acquisition had a fair value of $4,606 at the acquisition date. The gross contractual value of the receivables prior to any adjustment was $4,623 and the estimated contractual cash flows that are not

expected to be collected are $17. The accounts receivable acquired as part of the Flexo Print acquisition had a fair value of $7,930 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $8,258 and the estimated contractual cash flows that are not expected to be collected are $328.

Other Acquisition Activity

On October 1, 2013, the Company acquired Gern & Cie SA (Gern) in Neuchatel, Switzerland for $5,939. Gern is the premier wine label producer in Switzerland, with similar customer profiles and technologies as our existing French operations. On April 2, 2013, the Company completed acquisitions in Australia and France for $7,362. In Adelaide, Australia, MCC acquired Labelmakers Wine Division. In the Champagne region of France, MCC acquired Imprimerie Champenoise, which increases our ability to support local champagne producers in the region. The results of operations of these acquired businesses have been included in the consolidated financial statements since the date of acquisition and have been determined to be individually and collectively immaterial for further disclosure.

On April 2, 2012, the Company acquired 100% of Labelgraphics (Holdings) Ltd. (Labelgraphics), a wine & spirit label specialist located in Glasgow, Scotland, for $24,634 plus net debt assumed of $712. The purchase price includes a future performance based earnout of $3,461, estimated as of the acquisition date. The amount of the earnout is based on a comparison between EBITDA for the acquired business for fiscal 2012 and the average for fiscal 2013 and fiscal 2014 less certain adjustments and any claims to fund certain potential indemnification obligations of the seller with respect to the transaction. The accrual related to the earnout due to sellers was decreased to $500 in the fourth quarter of fiscal 2014 based upon the actual results of the acquired company for fiscal 2013 and 2014 compared to the estimates made at the time of acquisition and was paid in July 2014. The Company spent $394 in acquisition expenses related to the Labelgraphics acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income, $7 in the first quarter of 2014 and $387 in fiscal 2013.

10.

Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. To increase consistency and comparability in fair value measurements, the Company uses a three-level hierarchy that prioritizes the use of observable inputs. The three levels are:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

Level 3 - Unobservable inputs.

The determination of where an asset or liability falls in the hierarchy requires significant judgment.

Derivative Financial Instruments

The Company has three non-amortizing interest rate Swaps with a total notional amount of $125,000 at June 30, 2014 to convert variable interest rates on a portion of outstanding debt to fixed interest rates to minimize interest rate risk. The Company adjusts the carrying value of these derivatives to their estimated fair values and records the adjustment in accumulated other comprehensive income. See Note 7 for additional information on the Swaps.

In fiscal 2014, the Company entered into a foreign currency forward contract to fix the U.S. dollar value of certain intercompany loan payments. The contract matured on April 1, 2014. This contract was not designated as a hedging instrument; therefore, changes in the fair value of the contract were immediately recognized in other income and expense in the condensed consolidated statements of income. See Note 7 for additional information on the foreign currency forward contracts.

Financial liabilities for interest rate swaps are carried in other long term liabilities. Financial liabilities for foreign currency forward contracts are carried in accrued expenses and other liabilities.

At June 30, 2014, the Company carried the following financial liabilities at fair value:

Fair Value at

Fair Value Measurement Using

June 30, 2014

Level 1

Level 2

Level 3

Derivatives designated as hedging instruments:

Interest rate swap liabilities

(2,080

)

—

(2,080

)

—

At March 31, 2013, the Company carried the following financial liabilities at fair value:


	Fair Value at			Fair Value Measurement Using
	March 31, 2014			Level 1		Level 2			Level 3
Derivatives designated as hedging instruments:
Interest rate swap liabilities	$	(2,033	)	$	—	$	(2,033	)	$	—

The Company values interest rate Swaps using pricing models based on well recognized financial principles and available market data. The Company values foreign currency forward contracts by using spot rates at the date of valuation.

Other Fair Value Measurements

Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in goodwill, other intangible assets and long-lived assets impairment analyses, the valuation of acquired intangibles and in the valuation of assets held for sale. The Company tests goodwill for impairment annually, as of the last day of February of each fiscal year. Impairment is also tested when events or changes in circumstances indicate that the assets’ carrying values may be greater than the fair values. During fiscal 2015 (through June 30, 2014), the Company did not adjust goodwill to its fair value as a result of any impairment analyses. During the fourth quarter of fiscal 2014, the Company recorded a $13,475 goodwill impairment charge related to our Latin America Wine & Spirit reporting unit. See Note 12 for further information on the goodwill impairment. During fiscal 2015 (through June 30, 2014) and fiscal 2014, the Company did not adjust intangible assets to their fair values as a result of any impairment analyses. Goodwill and intangible assets are valued using Level 3 inputs.

As part of the recent acquisitions, the Company acquired presses that were appraised and adjusted to their fair value as part of the purchase price accounting. See Note 9 for further information regarding the acquisitions. The carrying value of cash and equivalents, accounts receivable, accounts payable and debt approximate fair value. The fair value of long-term debt is based on observable inputs, including quoted market prices for similar instruments (Level 2).

11.

Accumulated Other Comprehensive Income

The components of the Company’s accumulated other comprehensive income (loss) consisted of the following:


	June 30, 2014			March 31, 2014
Net unrealized foreign currency translation adjustments	$	1,494		$	(1,680	)
Net unrealized loss on interest rate swaps, net of tax		(1,273	)		(1,244	)
Minimum pension liability, net of tax		(242	)		(242	)

Accumulated other comprehensive loss	$	(21	)	$	(3,166	)

No material amounts were reclassified out of accumulated other comprehensive income (loss) into net income during the three months ended June 30, 2014 and 2013.

12.

Goodwill and Intangible Assets

Below is a roll-forward of the Company’s goodwill:


Balance at March 31, 2014	$	391,690
Adjustment to acquisitions		453
Currency translation		2,731

Balance at June 30, 2014	$	394,874

During the three months ended June 30, 2014, goodwill increased by $453 for purchase accounting adjustments related to prior year acquisitions. This increase is primarily due to the finalization of the valuation of deferred tax liabilities related to the intangible assets acquired in the John Watson acquisition.

During the fourth quarter of fiscal 2014, the Company recorded a $13,475 goodwill impairment charge related to our Latin America Wine & Spirit reporting unit. The impairment loss recorded is an estimate, as the fair value appraisals of the fixed assets and lease intangibles used in step 2 of the two-step goodwill impairment test were not completed prior to the filing date of the 2014 10-K or this Form 10-Q for the three months ended June 30, 2014. Once the final step 2 valuations are completed, any resulting adjustments will be recognized in the second quarter of fiscal 2015.

The Company’s intangible assets consisted of the following:


	June 30, 2014							March 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	182,594	$	(33,273	)	$	149,321	$	181,408	$	(30,069	)	$	151,339
Technologies		1,535		(1,389	)		146		1,561		(1,360	)		201
Trademarks		1,047		(1,047	)		—		1,019		(1,019	)		—
Licensing intangible		2,516		(2,012	)		504		2,474		(1,842	)		632
Non-compete agreements		4,097		(472	)		3,625		4,072		(301	)		3,771

Total	$	191,789	$	(38,193	)	$	153,596	$	190,534	$	(34,591	)	$	155,943

The amortization expense of intangible assets for the three months ended June 30, 2014 and 2013 was $2,921 and $2,204, respectively.

13.

Facility Closures

On October 16, 2013, the Company announced plans to consolidate our manufacturing facility located in El Dorado Hills, California, into the Napa, California facility. The transition was completed in the fourth quarter of fiscal 2014. In connection with the closure of the El Dorado Hills facility, the Company recorded initial charges in the third quarter of fiscal 2014 of $1,382 for employee termination benefits, including severance and relocation and other costs. These were recorded in selling, general and administrative expenses in the condensed consolidated statement of income. During the fourth quarter of fiscal 2014, the nature of the employee termination benefits was determined to be such that adjustments were made to reduce the pre-tax impact to the initial charge by $216. The total amount of charges related to closure for El Dorado Hills for fiscal 2014 was $1,166, which were recorded in selling, general and administrative expenses in the consolidated statement of income. The total costs incurred in connection with the closure is expected to be approximately $1,400. Below is a roll forward of the accrued (prepaid) severance and other termination benefits and relocation and other costs related to the El Dorado Hills facility:


	Balance at March 31, 2014		Amounts Expensed		Amounts Paid		Balance at June 30, 2014
Accrued (prepaid) severance and other termination benefits and relocation and other costs	$	744		66		872	$	(62	)

14.

Geographic Information

During fiscal 2014, the Company acquired the DI-NA-CAL label business, Watson, Gern, Flexo Print, Labelmakers Wine Division and Imprimerie Champenoise. All of these acquisitions expanded the Company’s geographic presence. For further information regarding these acquisitions, see Note 9 to the Company’s condensed consolidated financial statements. The Company now manufactures labels in the United States, Argentina, Australia, Canada, Chile, China, France, Italy, Mexico, Poland, Scotland, South Africa and Switzerland. Net revenues, based on the geographic area from which the product is shipped, for the three months ended June 30, 2014 and 2013 and long-lived assets by geographic area as of June 30, 2014 and March 31, 2014 are as follows:


	Three Months Ended
	June 30, 2014		June 30, 2013
Net revenues:
United States	$	129,814	$	108,926
Australia		15,107		17,293
Italy		16,132		14,377
Other International		42,086		26,247

Total	$	203,139	$	166,843


	June 30, 2014		March 31, 2014
Long-lived assets:
United States	$	394,013	$	394,997
Australia		101,512		100,467
Italy		63,294		60,882
Other International		194,985		193,555

Total	$	753,804	$	749,901

15.

Commitments and Contingencies

Litigation

The Company is subject to various legal claims and contingencies that arise out of the normal course of business, including claims related to commercial transactions, product liability, health and safety, taxes, environmental matters, employee matters and other matters. Litigation is subject to numerous uncertainties and the outcome of individual claims and contingencies is not predictable. It is possible that some legal matters for which reserves have or have not been established could result in an unfavorable outcome for the Company and any such unfavorable outcome could be of a material nature or have a material adverse effect on our financial condition, results of operations and cash flows.

16.

Supplemental Cash Flow Disclosures

Supplemental disclosures with respect to cash flow information and non-cash investing and financing activities are as follows:


	Three Months Ended
	June 30, 2014			June 30, 2013
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	5,123		$	4,324
Income taxes paid, net of refunds		3,454			632
Supplemental Disclosures of Non-Cash Activities:
Change in interest rate swap fair value		(47	)		1,306

Business combinations accounted for as a purchase:
Assets acquired (excluding cash)	$	(598	)	$	8,535
Liabilities assumed		598			(1,040	)

Net cash paid	$	—		$	7,495

17.

Subsequent Events

Effective July 1, 2014, the Company acquired 100% of Multiprint Labels Limited (Multiprint) in Dublin, Ireland. Multiprint specializes in pressure sensitive labels for the wine & spirit and beverage markets in Ireland and the UK.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information included in this Quarterly Report on Form 10-Q contains certain forward-looking statements that involve potential risks and uncertainties. Multi-Color Corporation’s future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed herein and those discussed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014 (the “2014 10-K”). Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date thereof. Results for interim periods may not be indicative of annual results.

Refer to “Forward-Looking Statements” following the index in this Form 10-Q. In the discussion that follows, all amounts are in thousands (both tables and text), except per share data and percentages.

Following is a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of the company’s financial condition and results of operations:

Executive Overview

We are a leader in global label solutions supporting a number of the world’s most prominent brands including leading producers of home & personal care, wine & spirit, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in North, Central and South America, Europe, Australia, New Zealand, South Africa and China with a comprehensive range of the latest label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer.

Results of Operations

Three Months Ended June 30, 2014 compared to the Three Months Ended June 30, 2013:

Net Revenues


					$ Change		% Change
	2014		2013		$ Change		% Change
Net revenues	$	203,139	$	166,843	$	36,296		22	%

Net revenues increased 22% to $203,139 from $166,843 in the prior year quarter. Acquisitions occurring after the beginning of fiscal 2014 account for 20% of the increase or $33,223. Organic revenues increased 3% in volume offset by a 1% decrease due to the unfavorable impact of sales mix and pricing.

Cost of Revenues and Gross Profit


							$ Change		% Change
	2014			2013			$ Change		% Change
Cost of revenues	$	160,337		$	136,411		$	23,926		18	%
% of Net revenues		78.9	%		81.8	%

Gross profit	$	42,802		$	30,432		$	12,370		41	%
% of Net revenues		21.1	%		18.2	%

Cost of revenues increased 18% or $23,926 compared to the prior year quarter primarily due to acquisitions occurring after the beginning of fiscal 2014 partially offset by unusually high costs related to press transfers and installations and charges for inventory write-offs in the prior year quarter.

Gross profit increased $12,370 or 41% compared to the prior year quarter. Acquisitions occurring after the beginning of fiscal 2014 contributed $7,468 to the increase. Gross margins increased to 21.1% of net revenues primarily due to improved operating efficiencies in North America and South America and acquisitions occurring after the beginning of fiscal 2014. Prior year quarter gross margins at 18.2% were impacted by unusually high costs related to press transfers and installations and charges for inventory write-offs.

Selling, General and Administrative Expenses


							$ Change		% Change
	2014			2013			$ Change		% Change
Selling, general and administrative expenses	$	16,704		$	14,333		$	2,371		17	%
% of Net revenues		8.2	%		8.6	%

Selling, general and administrative (SG&A) expenses increased $2,371 or 17% compared to the prior year quarter but decreased as a percentage of sales from 8.6% in the prior year quarter to 8.2% in the current year quarter. In the current quarter, the Company incurred $232 of acquisition expenses. In the prior year quarter, the Company incurred $999 of expense related to the integration of the Labelmakers Wine Division in Australia, as well as related acquisition expenses of $382.

Interest Expense and Other Expense, Net


					$ Change			% Change
	2014		2013		$ Change			% Change
Interest expense	$	5,758	$	5,176	$	582			11	%
Other expense, net	$	136	$	386	$	(250	)		(65	)%

Interest expense increased by $582 or 11% compared to the prior year quarter primarily due to an increase in debt borrowings to finance fiscal 2014 acquisitions. The Company had $466,729 of debt outstanding at June 30, 2014 compared to $400,899 outstanding at June 30, 2013.

Other expense was $136 in the current quarter compared to expense of $386 in prior year quarter. This was primarily due to realized gains and losses on foreign exchange, partially offset by an adjustment of $339 to the supplemental purchase price accrual related to the acquisition of the John Watson business.

Income Tax Expense


					$ Change		% Change
	2014		2013		$ Change		% Change
Income tax expense	$	6,904	$	3,865	$	3,039		79	%

Our effective tax rate decreased from 37% in the three months ended June 30, 2013 to 34% in the three months ended June 30, 2014 primarily due to the geographical mix of worldwide earnings. The Company expects its annual effective tax rate to be approximately 35% in fiscal year 2015.

Liquidity and Capital Resources

Comparative Cash Flow Analysis

Through the three months ended June 30, 2014, net cash provided by operating activities was $25,711 compared to $18,487 in the same period of the prior year. The cash provided by operating activities came from net income adjusted primarily for non-cash expenses of depreciation and amortization, stock-based compensation expense and changes in deferred taxes and working capital. The increase in cash provided by operating activities in the three months ended June 30, 2014, compared to the same period of the prior year, was primarily due to an increase in cash generated from earnings and depreciation and amortization and a decrease in changes in deferred taxes. Changes in working capital provided (used) cash from operating activities was $547 and $515 in the three months ended June 30, 2014 and 2013, respectively.

Through the three months ended June 30, 2014, net cash used in investing activities was $10,408 compared to $20,027 in the same period of the prior year. Investing activities in the current year include capital expenditures of $10,520. Cash used in investing activities in the prior year period included capital expenditures of $12,609 and investment in acquisitions of $7,495.

Capital expenditures in both periods were funded primarily from cash flows from operations and related primarily to the purchase of new presses. The projected amount of capital expenditures for fiscal year 2015 is approximately $35,000.

Through the three months ended June 30, 2014, net cash used in financing activities was $12,037 compared to net cash provided by financing activities of $1,746 in the same period of the prior year. During the three months ended June 30, 2014, we had net debt

payments of $11,981, proceeds from issuance of common stock of $366 and dividends paid of $820 compared to net debt additions of $752, proceeds from issuance of common stock of $1,716 and dividends paid of $813 in the same period of the prior year.

Capital Resources

The Credit Facility contains customary representations and warranties as well as customary negative and affirmative covenants which require the Company to maintain the following financial covenants at June 30, 2014: (i) a minimum consolidated net worth; (ii) a maximum consolidated leverage ratio of 4.25 to 1.00 and (iii) a minimum consolidated interest charge coverage ratio of 4.00 to 1.00. The maximum consolidated leverage ratio has scheduled step downs to 3.50 to 1.00 in future periods. The Credit Facility contains customary mandatory and optional prepayment provisions, customary events of default, and is secured by the capital stock of subsidiaries, intercompany debt and all of the Company’s property and assets, but excluding real property. The Company is in compliance with all covenants under the Credit Facility as of June 30, 2014.

We believe that we have both sufficient short and long-term liquidity and financing at this time. We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We had a working capital position of $58,281 and $56,993 at June 30, 2014 and March 31, 2014, respectively, and were in compliance with our loan covenants and current in our principal and interest payments on all debt.

Contractual Obligations

The following table summarizes the Company’s contractual obligations as of June 30, 2014:


	Total		Year 1		Year 2		Year 3		Year 4		Year 5		More than 5 years
Long-term debt	$	465,136	$	43,025	$	50,957	$	370,933	$	189	$	32	$	—
Capital leases		1,593		1,302		291		—		—		—		—
Interest on long-term debt (1)		47,094		22,043		21,503		3,537		9		2		—
Rent due under operating leases		69,114		13,142		10,500		8,918		7,258		6,270		23,026
Unconditional purchase obligations		1,285		1,285		—		—		—		—		—
Pension and post retirement obligations		1,074		21		34		50		63		118		788
Unrecognized tax benefits (2)		—		—		—		—		—		—		—
Deferred purchase price		14,623		10,923		1,117		1,963		—		620		—

Total contractual obligations	$	599,919	$	91,741	$	84,402	$	385,401	$	7,519	$	7,042	$	23,814

(1)	Interest on floating rate debt was estimated using projected forward LIBOR and BBSY rates as of June 30, 2014.

(2)	The table excludes $4,202 of liabilities related to unrecognized tax benefits as the timing and extent of such payments are not determinable.

Recent Acquisitions

On February 1, 2014, the Company acquired the assets of the DI-NA-CAL label business, based near Cincinnati, Ohio, from Graphic Packaging International, Inc. for $80,667. DI-NA-CAL operates manufacturing facilities near Cincinnati, Ohio and Greensboro, North Carolina and provides decorative label solutions primarily in the heat transfer label markets for home & personal care and food & beverage through long-standing relationships with blue chip national and multi-national customers. The acquisition extends Multi-Color’s position in the heat transfer label market and allows us to support a number of new customers with a broader range of label technologies.

On October 1, 2013, the Company acquired John Watson & Company Limited (Watson), based in Glasgow, Scotland, for $21,634 less net cash acquired of $143. Watson is the leading glue-applied spirit label producer in the U.K. The business is ideally located for its key customers and is complementary to MCC’s existing business in Glasgow (formerly Labelgraphics), the leading pressure sensitive wine and spirit label producer in the same region.

On October 1, 2013, the Company acquired Gern & Cie SA (Gern), the premier wine label producer in Switzerland, located in Neuchatel, Switzerland for $5,939. Gern has similar customer profiles and technologies as our existing French operations.

On August 1, 2013, the Company acquired Flexo Print S.A. De C.V., based in Guadalajara, Mexico, for $31,847 plus net debt assumed of $2,324. Flexo Print is a leading producer of home & personal care, food & beverage, wine & spirit and pharmaceutical labels in Latin America. The acquisition provides Multi-Color with significant growth opportunities in Mexico through our many common customers, technologies and suppliers.

On April 2, 2013, the Company acquired Labelmakers Wine Division in Adelaide, Australia and Imprimerie Champenoise in the Champagne region of France for $7,362.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We continually evaluate our estimates, including, but not limited to, those related to revenue recognition, bad debts, inventories and any related reserves, income taxes, fixed assets, goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the facts and circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies and estimates are discussed in the “Critical Accounting Policies and Estimates” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2014 10-K. In addition, our significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements included in our 2014 10-K.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company has no material changes to the disclosures made in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2014. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2014 due to the material weaknesses identified in our internal control over financial reporting described below.

As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2014, we identified the following material weaknesses in the Company’s internal control over financial reporting: (1) failure to maintain a sufficient complement of corporate accounting and finance personnel to design and execute an effective system of internal controls in accordance with an appropriate framework; (2) failure to adequately restrict our general information technology controls intended to ensure that access to applications and data, and the ability to place program changes into production for such applications and data to the appropriate personnel resulting from inadequate segregation of duties; and (3) inappropriate design and ineffective operation of our internal controls over the accounting for restructuring activities, loss contingencies, business combinations, inventory, cost of sales, the sale and leaseback of equipment, and accounting for the valuation of long-lived assets, including property, plant equipment, amortizing intangible assets and goodwill, as well as failure to maintain sufficient documentary evidence of the controls’ operating effectiveness to demonstrate that the controls, as designed, would detect a material misstatement in the Company’s consolidated financial statements.

As a result of these material weaknesses, there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The Company has implemented and continues to implement changes to its internal control over financial reporting to remediate the control deficiencies that gave rise to the material weaknesses. Since the end of the fiscal year, we have taken steps, including the following, to begin the remediation of the material weaknesses described above: (1) Completed an evaluation of the complement of corporate accounting and finance personnel. The need for additional personnel, including a separate Chief Accounting Officer, was identified, and recruitment for those positions began in July 2014. (2) Evaluated the roles and responsibilities of information technology personnel to ensure proper segregation of duties is maintained within our information technology environments. System changes have been made to remediate some of the segregation of duties issues identified, and we continue to make the necessary adjustments to specific personnel access and implement additional controls to properly segregate duties across our general information technology environments. (3) An evaluation of our system of internal controls is in process. Several controls have been added to ensure the Company’s internal controls are complete and suitably designed to address the relevant control objectives for all significant financial statement assertions and are designed at an appropriate level of precision such that they would detect a material misstatement in the consolidated financial statements. We are working to complete our evaluation, fully implement these controls and identify the appropriate level of documentation to be maintained to evidence the effectiveness of these controls.

We believe the remediation measures will strengthen our internal control over financial reporting and remediate the material weaknesses identified. However, as we are still assessing the design and operating effectiveness of these measures, the identified material weaknesses have not been fully remediated as of June 30, 2014. We will continue to monitor the effectiveness of these remediation measures and will make any changes and take such other actions that we deem appropriate.

We assessed the material weaknesses’ impact to the consolidated financial statements to ensure they were prepared in accordance with GAAP and present fairly the consolidated financial position, financial results of operations and cash flows as of and for the three months ended June 30, 2014. Based on these additional procedures and assessment, we concluded that the consolidated financial statements included in this Form 10-Q present fairly, in all material aspects, our financial position, results of operations and cash flows for the periods presented.

Changes in Internal Control Over Financial Reporting

Except as described above in regards to the remediation process described above, there were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A.

Risk Factors

The Company had no material changes to the Risk Factors disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014.

Item 6.

Exhibits



10.1		Employment Agreement between Multi-Color Corporation and Sharon Birkett effective as of July 1, 2014

31.1		Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification by the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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 11, 2014	By:	/s/ Sharon E. Birkett
		Sharon E. Birkett
		Vice President, Chief Financial and Accounting Officer, Secretary

Exhibit 10.1

EMPLOYMENT AGREEMENT

BETWEEN

MULTI-COLOR CORPORATION

AND

SHARON BIRKETT

Effective as of July 1, 2014

TABLE OF CONTENTS


	Page

1. Employment		1

2. Term of Agreement		1

3. Scope of Employment; Location		1

4. Compensation		2

4.1 Base Salary		2

4.2 Bonus		2

4.3 Stock Option Awards		2

4.4 Retirement Plan		2

4.5 Welfare and Other Benefit Plans		2

4.6 Expenses		2

4.7 Automobile Allowance		3

4.8 Vacation		3

4.9 Indemnity		3

5. Confidentiality, Non-competition and Other Covenants		3

5.1 Non-Disclosure of Confidential Materials, Information and Intellectual Property		3

5.2 Non-Solicitation of the Company’s Employees		4

5.3 Covenant Against Unfair Competition		4

5.4 Return of Confidential Materials and Information		4

5.5 Irreparable Harm		4

5.6 Cumulative Remedies; Enforceability		5

5.7 Reasonableness of Scope and Duration		5

5.8 Future Employer		5

5.9 Time Periods		5

6. Termination of Employment		6

6.1 Termination		6

6.2 Date of Termination		8

6.3 Notice of Termination		9

7. Obligations of the Company Upon Termination		9

7.1 Termination for Other Than Cause and Executive’s Death or Disability; and for Good Reason		9

-i-

TABLE OF CONTENTS

(continued)


	Page

7.2 Termination for Cause; or Other Than for Good Reason		11

7.3 Termination Due to Executive’s Death		11

7.4 Termination Due to Executive’s Disability		12

8. Arbitration		12

9. Miscellaneous Provisions		13

9.1 Binding Effect; Delegation of Duties Prohibited; Survival		13

9.2 Amendment; Waiver		13

9.3 Entire Agreement		14

9.4 Exemption from, or Compliance with, Section 409A		14

9.5 Governing Law		14

9.6 Headings; Section References; Construction		14

9.7 Notices		14

9.8 Policies, Regulations and Guidelines for Executives		15

9.9 Severability and Reformation of Provisions		15

9.10 Taxes		15

9.11 Full Settlement		15

-ii-

GLOSSARY OF DEFINED TERMS


Defined Term	Section
Annual Base Salary		4.1
Board		3
Bonus		4.2
Cause		6.1(c)
Change in Control		6.1(c)(6)
Company		Preamble
Company Document		9.3
Confidential Materials and Information		5.1
Customer		5.4
Date of Termination		6.20
Disability		6.1(b)
Disability Commencement Date		6.1(b)
Executive		Preamble
Good Reason		6.1(d)
Notice of Termination		6.3
Prospect		5.4
Separation Pay Exemption Amount		7.1(c)
Term		2

iii

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is effective the 1 ^st day of July, 2014 by and between Multi-Color Corporation, an Ohio corporation (“Company”), and Sharon Birkett, an individual (“Executive”).

R ECITALS :

A. Company desires to retain the services of Executive as its Chief Financial Officer, and Executive desires to render such services to the Company.

B. The parties hereto desire to set forth the terms and conditions of the employment relationship between the Executive and the Company.

A GREEMENT :

N OW , T HEREFORE , the parties hereby agree as follows:

1. E MPLOYMENT . The Company hereby employs Executive for the “Term” (as defined in Section 2), and Executive accepts employment by the Company and agrees to serve the Company during the Term, upon the terms and conditions hereinafter set forth.

2. T ERM OF A GREEMENT . This Agreement shall commence on July 1, 2014 and shall continue until terminated in accordance with this Agreement. This Agreement shall be terminable at will, at any time, by either party, with or without cause, subject to the provisions set forth in Section 5, below. Unless otherwise expressly provided herein, upon the termination of Employee’s employment, the Company shall pay Employee her salary earned through the Termination Date, Employee shall be entitled to all benefits accrued or vested through the Termination Date pursuant to all fringe benefit plans set forth in this Agreement, and the Company shall not be obligated to pay, and Employee shall not be entitled to receive, any other compensation, payments or consideration of any kind or nature. The “Term” shall refer to the period of time during which the Executive is employed pursuant to this Agreement.

3. S COPE OF E MPLOYMENT ; L OCATION . During the Term of this Agreement, Executive shall serve as Chief Financial Officer of the Company and agrees to devote her full attention and time to the business and affairs of the Company as may be assigned by the Company’s Chief Executive Officer or the Board of Directors (“Board”) and to use the Executive’s best efforts to perform such responsibilities in a professional manner. Executive shall have all authority, duties and responsibilities customarily exercised by an individual serving as Chief Financial Officer in a corporation of the size and nature of the Company and such other authority, duties and responsibilities as are delegated to her by the Board or the Company’s Chief Executive Officer from time to time. Notwithstanding the foregoing, it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, trade association, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (C) manage personal investments and affairs, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement. During the Term of this Agreement, Executive

shall principally perform her duties at the Company’s headquarters’ office located in Batavia, Ohio, except in the event Executive agrees in writing to another location.

4. C OMPENSATION .

4.1 Base Salary. During the Term of this Agreement, the Executive shall receive an Annual Base Salary. Executive’s beginning Annual Base Salary shall be Four Hundred Thousand Dollars (U.S.$400,000). The Annual Base Salary shall be evaluated and reviewed by the Compensation Committee of the Board annually. The Annual Base Salary shall be reviewed by the Compensation Committee of the Board annually based upon Executive’s performance, pertinent salary survey information and such other information as the Compensation Committee deems appropriate, but may not be adjusted downward without the Executive’s written consent. After any such adjustment, the term “Annual Base Salary” as used in this Agreement shall thereafter refer to such amount as adjusted. The Annual Base Salary shall be paid no less frequently than in equal bi-weekly installments.

4.2 Bonus. During the Term of this Agreement, Executive will continue to be eligible to participate in the Management Incentive Compensation Program, subject to the terms and conditions as specified in the plan. The incentive compensation program is based on meeting certain financial targets as established by, and in the sole discretion of, the Board or by the Compensation Committee of the Board on an annual basis. The bonus target, as a percent of base annual salary, is 50%, with a bonus range between 25% and 75% of salary. If financial targets are met between the minimum, target and maximum brackets, the payout is calculated on a prorated basis between the two brackets that apply. Executive shall be paid her Bonus when other executives of the Company are paid their annual bonuses, but in no event beyond the last day on which such payment would qualify as a short-term deferral under Treasury Regulation § 1.409A 1(b)(4).

4.3 Stock Option Awards. Executive may receive future restricted stock or stock option awards, as determined by the Board or its committees from time to time.

4.4 Retirement Plan. During the Term of this Agreement, the Executive shall be eligible to participate in all savings and retirement plans, practices, policies and programs to the extent applicable generally to other executives of the Company, including, without limitation, 401(k) retirement savings, or any other supplemental retirement compensation plans.

4.5 Welfare and Other Benefit Plans. During the Term of this Agreement, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all other benefits (except for those benefits which have otherwise been provided to Executive herein) under welfare, fringe, incentive and other similar benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription drug, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other executives of the Company.

4.6 Expenses. During the Term of this Agreement, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by the

Executive and documented as required by regulations of the Internal Revenue Service and policies of the Company.

4.7 Automobile Allowance. During the Term of this Agreement, the Executive shall be paid each month an automobile allowance of Five Hundred Dollars ($500.00).

4.8 Vacation. During the Term of this Agreement, the Executive shall be entitled to earn and use vacation pursuant to the Company’s vacation policy as in effect from time to time for executives of the Company.

4.9 Indemnity. The Executive shall be indemnified and held harmless by the Company against claims arising in connection with the Executive’s status as an employee, officer, director or agent of the Company or any of its subsidiaries or affiliates. Such indemnification shall be established to the level of the greatest indemnification permitted by Ohio law for corporate employees, officers or directors, and such indemnification shall continue as to the Executive even if he has ceased to be an employee, officer, director or agent of the Company or other entity and shall inure to the benefit of the Executive’s heirs and legal representatives. In furtherance of this protection, during the Executive’s employment and for a period of at least six years thereafter, the Company shall continue to provide officers’ and directors’ liability insurance covering Executive in at least the amount of coverage in fiscal 2014 for such purposes and in any event provide at least as much coverage for the Executive as the Company provides for its other executives or directors of the Company. Nothing in this Agreement shall operate to limit or extinguish any right to indemnification, advancement of expenses or contribution that the Executive (or her heirs and legal representatives) would otherwise have (including, without limitation, by agreement or under applicable law).

5. C ONFIDENTIALITY , N ON - COMPETITION AND O THER C OVENANTS . In consideration of Company’s employment of Executive, Executive does covenant and agree with the Company as follows:

5.1 Non-Disclosure of Confidential Materials, Information and Intellectual Property. The Executive acknowledges that as a leader in the highly-competitive businesses of printing labels, including but not limited to, inmold, pressure sensitive, heat transfer, cut and stack and shrink sleeve label technologies, the Company has developed, acquired and implemented confidential intellectual property, materials and information, proprietary strategies and programs, which it has taken steps to protect as trade secrets (as defined in Ohio’s Uniform Trade Secrets Act, Ohio Rev. Code §§ 1333.61—1333.69) and which include copyrighted materials, patent materials, expansion plans, market research, sales systems, marketing programs, product development strategies, budgets, pricing and cost strategies, identity and requirements of accounts, and other non-public proprietary information regarding customers and the employees of the Company or of its customers or non public proprietary information regarding the Company’s business or the business of the Company’s customers (collectively “Confidential Materials and Information”). In performing duties for the Company, the Executive regularly will be exposed to and work with the Company’s Confidential Materials and Information. The Executive acknowledges that such Confidential Materials and Information are critical to the Company’s success and that the Company has invested substantial money in developing the Company’s Confidential Materials and Information. While the Executive is employed by the Company, and after such employment ends for any reason, the Executive will

not reproduce, publish, disclose, use, reveal, show, or otherwise communicate to any person or entity any Confidential Materials and Information of the Company unless specifically assigned or directed by the Company to do so or unless it shall have become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). The covenant in this Section 5.1 has no temporal, geographical or territorial restriction or limitation, and it applies wherever the Executive may be located.

5.2 Non-Solicitation of the Company’s Employees. For a period of twenty-four (24) months after the termination of her employment, the Executive will not actively solicit, either directly or indirectly through any third person, any other employee of the Company to terminate his or her employment with the Company without the written consent of the Chairman of the Board.

5.3 Covenant Against Unfair Competition. While the Executive is employed by the Company, and for twelve (12) months after Executive’s employment ends for any reason, the Executive will not, either directly or indirectly: (a) work for any individual or entity, or own, control, or invest in any entity, that provides similar services as the Company or is a competitor of the Company and its businesses; or (b) call on, solicit or communicate with any of the Company’s customers or prospects for the purpose of obtaining such customer’s or prospect’s business in violation of the restrictions on competition contained in clause (a) of this Section 5.3, other than for the benefit of the Company. As used in this Agreement, the term “customer” means a business entity (including representatives of such business entity) to which the Company provided goods or services at any time in the prior twenty-four (24) months before the termination or expiration of this Agreement, and the term “prospect” means a business entity (including representatives of such business entity) to which, at any time in the previous twenty-four (24) months before the termination or expiration of this Agreement, the Company made a written proposal for providing goods or services. Ownership, for personal investment purposes only, of not in excess of two percent (2%) of the voting stock of any publicly held corporation, shall not constitute a violation hereof.

5.4 Return of Confidential Materials and Information. The Executive agrees that whenever the Executive’s employment with the Company ends for any reason, all documents, including information stored in electronic format, containing or referring to the Company’s Confidential Materials and Information that may be in the Executive’s possession, or over which the Executive may have control, will be delivered by the Executive to the Company immediately, with no request being required.

5.5 Irreparable Harm. The Executive agrees that a breach of any covenant in this Section 5 will cause the Company irreparable injury and damage for which the Company has no adequate monetary remedy, and the Executive further agrees that if the Company claims a breach of any such covenant, the Company will be entitled to seek an immediate restraining order and injunction to prevent such violation or continued violation.

5.6 Cumulative Remedies; Enforceability .

(a) In the event of Executive’s breach or threatened breach of the covenants set forth in this Section 5, the parties acknowledge that the Company will suffer irreparable harm and the Company will be entitled to an injunction restraining Executive from committing such breach. Executive affirmatively waives any requirement that the Company post any bond, demonstrate the likelihood of irreparable harm to the Company, or demonstrate that any actual damages will be suffered by the Company or any other entity seeking enforcement hereof as a result of Executive’s breach of any of the covenants set forth in this Section 5.

(b) The covenants and agreements contained in this Section 5 will be construed as independent of each other, and the existence of any claim or cause of action by Executive against the Company, whether predicated on this Agreement or otherwise, will not constitute a defense to the Company’s enforcement of such covenants, and they shall be construed as separate covenants and agreements. If any court shall finally determine that the restraints provided for in any such covenants and agreements exceed the maximum area, activity or time such court deems reasonable and enforceable, said area, activity or time shall be deemed to become and thereafter shall be the maximum area, activity or time which such court deems reasonable and enforceable, and such covenants and agreements shall be enforced as to such reduced area, activity or time.

(c) Nothing herein contained will be construed as prohibiting the Company from pursuing any other remedies available to it at law or in equity for such breach or threatened breach, including the recovery of money damages.

5.7 Reasonableness of Scope and Duration. Executive acknowledges that the restrictions contained in this Section 5 are reasonable and necessary to protect the legitimate interests of the Company and that the Company would not have entered into this Agreement in the absence of such restrictions. Executive understands and agrees that the covenants and agreements contained in this Section 5 are, taken as a whole, reasonable in connection with the activities covered, their geographic scope and duration. Executive understands that the provisions of this Agreement have been carefully designed to restrict Executive’s activities to the minimum extent which is consistent with the Company’s requirements. Executive has carefully considered these restrictions, and Executive confirms that they will not unduly restrict Executive’s ability to obtain a livelihood.

5.8 Future Employer. If applicable, Executive shall inform any prospective or future employer of all of the restrictive covenants and agreements contained in this Agreement, and provide such employer with a copy of such provisions, prior to the commencement of that employment.

5.9 Time Periods. All time periods set forth in this Section 5 shall be extended by the duration of any period during which Executive is in violation of any provision of this Section 5.

6. T ERMINATION OF E MPLOYMENT

6.1 Termination. Executive’s employment with the Company shall terminate upon the occurrence of the first of the following events:

(a) Death . Upon the death of Executive.

(b) Disability . If the Disability of the Executive has occurred during the Executive’s employment, the Company may give written notice to the Executive in accordance with this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the Disability Commencement Date. As used in this Agreement, “Disability” shall mean that the Executive, (i) in the opinion of a physician, is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company, or (iii) is determined to be totally disabled by the Social Security Administration, or (iv) is determined to be disabled in accordance with a disability insurance program, provided that the definition of disability applied under such disability insurance program complies with the requirements of (i) or (ii) above. Additionally, as used in this Agreement, “Disability Commencement Date” shall be the thirtieth (30 ^th ) day after notice is received by Executive pursuant to this Section 6.1(b) that he is under a Disability, provided that, within the thirty (30) days after such receipt, the Executive shall not have returned to perform her duties hereunder.

(c) Cause . The Company terminates the Executive for Cause or for any reason other than for Cause. As used in this Agreement, “Cause” with respect to Executive’s termination from employment, shall mean any of the following:

(1) the Executive’s failure to cure the Executive’s material breach of this Agreement or any Company policy, regulation or guideline;

(2) the Executive’s appropriation of a material business opportunity of the Company, including securing any material personal profit in connection with any transaction entered into on behalf of the Company. This provision shall not include opportunities communicated by the Executive to the Company which were rejected or on which the Company took no timely action;

(3) the Executive’s misappropriation of any of the Company’s funds or property;

(4) the Executive’s conviction of or entering of a guilty plea or a plea of no contest with respect to, a felony, or

any other crime which materially and adversely affects the business of the Company or Executive’s ability to carry out her duties hereunder and with respect to which imprisonment for a term in excess of six (6) months is a possible punishment;

(5) the Executive’s conduct, or lack thereof, which results in material economic damage to the Company or its reputation. It is expressly understood that if Executive’s good faith belief was that her conduct or lack thereof was in, or not opposed to, the best interest of the Company, then “Cause” shall not be satisfied hereunder; or

(6) in the event there is a Change in Control (as used in this Agreement, a “Change in Control” shall have the meaning ascribed thereto in the Company’s 2012 Stock Incentive Plan as in effect on the date this Agreement becomes effective), for a period of twelve (12) months following the date of such Change in Control, the term “Cause” shall not include items (1) through (5) above and shall only mean the following:

(A) the Executive materially violates any Company policy, regulation or guideline which Executive fails to cure within sixty (60) days following written notice of such violation by the Company to the Executive; or

(B) the Executive’s conviction or entering of a guilty plea or a plea of no contest with respect to fraudulent or illegal activities which are materially injurious to the Company, monetarily or otherwise.

No termination of the Executive’s employment hereunder by the Company for Cause shall be effective as a termination for Cause unless the provisions of this paragraph shall first have been complied with. The Executive shall be given a Notice of Termination by the Board. The Executive shall have sixty (60) days after receipt of such notice to cure such alleged violation. If he fails to cure such alleged violation within such sixty (60)-day period, the Executive shall then be entitled to a hearing before the Board. If after such hearing, the Board gives a second Notice of Termination to the Executive confirming that a majority of the members of the Board that are not then employed as employees of the Company voted after the hearing to terminate him for Cause, the Executive’s employment shall thereupon be terminated for Cause.

(d) Good Reason . The Executive terminates employment for Good Reason within two (2) years following the initial existence of the condition constituting Good Reason or for any other reason (including without Good Reason). As used in this Agreement, “Good Reason” with respect to the termination from employment of Executive shall mean any of the following:

(1) the Company’s material breach of this Agreement;

(2) the Company materially altering or materially impairing the Executive’s authority, duties or responsibilities without her written consent;

(3) any reduction in Executive’s then current Annual Base Salary, reduction in Executive’s target Bonus opportunity to a level below fifty percent (50%) of the then current Annual Base Salary, or material diminution of benefits provided under Company plans which are applicable to Executive without her written consent;

(4) the Company requiring the Executive to be based at any office or location other than Batavia, Ohio (or other agreed upon location) without the Executive’s prior written consent; or

(5) in the event there is a Change in Control, for a period of twelve (12) months following the date of such Change in Control, the term “Good Reason” shall include, in addition to items (1) through (6) above, the following:

(A) (i) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive’s position, authority or responsibilities, or (ii) any other material adverse change in such position, including title, authority or responsibilities in each case without the prior written consent of Executive; or

(B) failure of the Company to obtain the assumption in writing of its obligations under this Agreement by any successor to all or substantially all of the business or assets of the Company no later than the closing of such transaction, unless such assumption occurs by operation of law.

No termination of the Executive’s employment hereunder by the Executive for Good Reason shall be effective as a termination for Good Reason unless the provisions of this paragraph shall first have been complied with. The Board shall be given a Notice of Termination by the Executive within ninety (90) days of the initial existence of the violation. The Company shall have sixty (60) days after receipt of the Notice of Termination to fully cure such alleged violation.

6.2 Date of Termination. As used in this Agreement, “Date of Termination” means: (i) if the Executive’s employment is terminated by the Company for Cause, the Date of Termination shall be the date on which the Executive receives the Notice of Termination described in Section 6.1(c) that a majority of the members of the Board that are not then employees of the Company voted after the hearing to terminate him for Cause; (ii) if the Executive’s employment is terminated by the Executive for Good Reason, the Date of Termination shall be the date on which the Notice of Termination is received by the Company, or such later date as may be specified therein, unless the Company has fully cured all grounds for such termination within sixty (60) days after the Executive gives such notice; (iii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the

Date of Termination shall be the date on which the Company notifies the Executive of such termination; (vi) if the Executive’s employment is terminated by the Executive for other than Good Reason, the Date of Termination shall be the date on which the Company receives the Notice of Termination; and (v) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Commencement Date.

6.3 Notice of Termination. As used in this Agreement, “Notice of Termination” shall mean a written notice which: (i) indicates the specific termination provision in this Agreement relied upon; (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated; and (iii) if the Date of Termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice).

7. O BLIGATIONS OF THE C OMPANY U PON T ERMINATION .

7.1 Termination for Other Than Cause and Executive’s Death or Disability; and for Good Reason. If the Executive’s employment is terminated (i) by the Company for any reason other than Cause or as a result of the Executive’s death or Disability; or (ii) by the Executive for Good Reason: The Company shall pay, or commence to be paid, as applicable, to the Executive within thirty (30) days after the Date of Termination Executive’s Annual Base Salary through the Date of Termination to the extent not previously paid, in a single lump sum in cash;

(a) The Company shall pay, or commence to be paid, as applicable, to the Executive any compensation previously deferred by the Executive and any other non-qualified benefit plan balances to the extent not previously paid, in accordance with the terms of deferral or the other non-qualified plan, as applicable;

(b) The Company shall pay an amount, paid in accordance with the Company’s regular payroll processing cycle, commencing on the next payroll date after the Executive’s Date of Termination, equal to one (1) times the Executive’s Annual Base Salary. Notwithstanding the foregoing provisions of this Subsection (c), to the extent the amounts payable under this Subsection do not exceed the Separation Pay Exemption Amount (defined below), such amounts shall be paid in accordance with the foregoing provisions of this Subsection (c). The amount payable that is in excess of the Separation Pay Exemption Amount shall be paid as follows: (i) no portion of the excess amount may be paid, or commence to be paid, earlier than six (6) months after the date the Executive separates from service, and (ii) the installment payments that would have otherwise been paid during such six (6) month period shall be accumulated and paid on the first day of the seventh month following the date the Employee separates from service and the remaining installments shall be paid in accordance with the foregoing provisions of this Subsection (c). For purposes of this Subsection (c), the term “Separation Pay Exemption Amount” means an amount equal to two (2) times the lesser of (x) the sum of the Executive’s annualized compensation based upon the annual rate of pay for services provided to the Company for the Executive’s taxable year preceding the taxable year in which the Executive separates from service (adjusted for any increase during that year that was expected to continue indefinitely if the Executive had not

separated from service); or (y) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Internal Revenue Code for the year in which the Executive separates from service. In consideration of Executive’s receipt of severance benefits as described in this Section 7.1(c), Executive agrees, not later than 60 days following the Executive’s Date of Termination, to execute and deliver a separation agreement and release in form and substance reasonably satisfactory to the Company (the “Release”). If Executive fails to execute and deliver the Release, as required, the severance payments provided in this Section 7.1(c) shall cease;

(c) Except as otherwise prohibited in the applicable option/incentive plans, all stock option and restricted stock awards that were outstanding immediately prior to the Date of Termination shall become fully and immediately exercisable and/or vested, as the case may be, with no further restrictions on sale or transferability other than those mandated by law, and each nonqualified stock option (including already vested nonqualified stock options) shall remain exercisable through the latest date upon which the nonqualified stock option could have expired by its original terms, and each incentive stock option (including already vested incentive stock options) shall remain exercisable for 90 days following the Date of Termination unless such stock option no longer qualifies as an incentive stock option as a result of such accelerated vesting and exercisability, in which case the portion of the such stock option that no longer qualifies shall remain exercisable through the latest date upon which the stock option could have expired by its original terms;

(d) For thirty (30) days after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide those benefits to the Executive and/or the Executive’s family that would have been provided to them in accordance with the welfare plans, programs, practices and policies described in Section 4.5 of this Agreement if the Executive’s employment had not been terminated; provided, however, that the benefits shall be offset by any benefits provided by any subsequent employment of Executive (determined on a benefit-by-benefit basis). Executive agrees to describe all benefits which her subsequent employer has agreed to provide him, including any changes to such benefits during the thirty (30) day period described in this Subsection 7.1(d). To the extent any of the foregoing benefits are not exempt from the requirements of Section 409A of the Internal Revenue Code, the amount of expenses eligible for reimbursement (other than the reimbursement of expenses referred to in Section 105(b) of the Internal Revenue Code (relating to medical reimbursement arrangements)), or in-kind benefits provided, during the Executive’s taxable year may not affect the expenses eligible for reimbursement, or the in-kind benefits to be provided, in any other taxable year;

(e) The Company shall reimburse the Executive for all reasonable out-of-pocket costs and expenses incurred by Executive to return Executive, her family, and their household goods to Australia, subject to the policies and procedures of the Company as are adopted from time to time; and

(f) To the extent not previously paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is entitled to receive under any plan, program, policy, contract or agreement of the Company.

7.2 Termination for Cause; or Other Than for Good Reason. If the Executive’s employment is terminated (i) by the Company for Cause; or (ii) by the Executive without Good Reason, this Agreement shall terminate without further obligations to the Executive other than all of the following:

(a) The Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the Executive’s Annual Base Salary through the Date of Termination to the extent not previously paid.

(b) The Company shall pay, or commence to be paid, as applicable, to the Executive any compensation previously deferred by the Executive and any other non-qualified benefit plan balances to the extent not previously paid, in accordance with the terms of deferral or the other non-qualified plan, as applicable.

(c) If the Executive terminates employment without Good Reason through a plan of retirement acceptable to the Company, which will not be unreasonably withheld, except as otherwise prohibited in the applicable option/incentive plans, all stock option and restricted stock awards that were outstanding immediately prior to the Date of Termination shall become fully and immediately exercisable and/or vested, as the case may be, with no further restrictions on sale or transferability other than those mandated by law, and each nonqualified stock option (including already vested nonqualified stock options) shall remain exercisable through the latest date upon which the nonqualified stock option could have expired by its original terms, and each incentive stock option (including already vested incentive stock options) shall remain exercisable for 90 days following the Date of Termination unless such stock option no longer qualifies as an incentive stock option as a result of such accelerated vesting and exercisability, in which case the portion of the such stock option that no longer qualifies shall remain exercisable through the latest date upon which the stock option could have expired by its original terms; and

(d) The Company shall reimburse the Executive for all reasonable out-of-pocket costs expenses incurred by Executive to return Executive, her family, and their household goods to Australia, subject to the policies and procedures of the Company as are adopted from time to time; and

(e) To the extent not previously paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is entitled to receive under any plan, program, policy or practice or contract or agreement of the Company.

7.3 Termination Due to Executive’s Death. If the Executive’s employment is terminated by reason of the Executive’s death, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than all of the following:

(a) The Company shall pay to the Executive’s legal representative in a lump sum in cash within 30 days after the Date of Termination the aggregate of Executive’s Annual Base Salary through the Date of Termination to the extent not previously paid;

(b) The Company shall pay, or commence to be paid, as applicable, to the Executive’s legal representative any compensation previously deferred by the Executive and any other non-qualified benefit plan balances to the extent not previously paid, in accordance with the terms of deferral or the other non-qualified plan, as applicable.

(d) For thirty (30) days after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide those benefits to the Executive’s family that would have been provided to them in accordance with the welfare plans, programs, practices and policies described in Section 4.5 of this Agreement if the Executive’s employment had not been terminated. To the extent any of the foregoing benefits are not exempt from the requirements of Section 409A of the Internal Revenue Code, the amount of expenses eligible for reimbursement (other than the reimbursement of expenses referred to in Section 105(b) of the Internal Revenue Code (relating to medical reimbursement arrangements)), or in-kind benefits provided, during the Executive’s taxable year may not affect the expenses eligible for reimbursement, or the in-kind benefits to be provided, in any other taxable year;

(e) To the extent not previously paid or provided, the Company shall timely pay or provide to the Executive’s applicable beneficiaries any other amounts or benefits required to be paid or provided or which the Executive is entitled to receive under any plan, program, policy or practice or contract or agreement of the Company; and

(f) Any other death benefits then in effect for Company employees or executives and their beneficiaries.

7.4 Termination Due to Executive’s Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability, the Company shall have all of the obligations set forth in the preceding Section 7.3 except that (i) any reference in Section 7.3(a), (b) and (c) to the “Executive’s legal representative” shall refer to the “Executive,” (ii) the reference in Section 7.3(d) to the “Executive’s family” shall refer to the “Executive and/or the Executive’s family,” (iii) the reference in Section 7.3(e) to the “Executive’s applicable beneficiary” shall refer to the “Executive” and (iv) Section 7.3(f) shall read: “Any other long-term disability benefits then in effect for Company employees or executives and their beneficiaries.”

8. A RBITRATION . Except as provided in Section 5 or a party’s right to seek injunctive or other equitable relief, if any dispute shall arise between the Executive and the Company in any way connected to or arising from this Agreement, the dispute shall be exclusively determined, and the dispute shall be settled, by arbitration in accordance with the CPR Rules for Non-

Administered Arbitration (or such other independent dispute resolution body to which the parties shall mutually agree) (“ Arbitration Forum ”). The arbitration shall be held in Cincinnati, Ohio before a single arbitrator, who shall be chosen from a panel of arbitrators selected by the Arbitration Forum. The decision of the arbitrator shall be final and binding upon the Executive and the Company and judgment upon such award may be entered in any court of competent jurisdiction. The costs of the arbitrator and of the arbitration shall be borne equally by each of the parties. The costs of each party’s counsel, accountants, etc., as well as any costs solely for their benefit, shall be borne separately by each party. E ACH OF THE PARTIES HEREBY ACKNOWLEDGES THAT THIS PROVISION CONSTITUTES A WAIVER OF THEIR RIGHT TO COMMENCE A LAWSUIT IN ANY JURISDICTION WITH RESPECT TO THE MATTERS WHICH ARE REQUIRED TO BE SETTLED BY ARBITRATION AS PROVIDED IN THIS S ECTION 8.

9. M ISCELLANEOUS P ROVISIONS .

9.1 Binding Effect; Delegation of Duties Prohibited; Survival. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns, heirs and legal representatives, including any entity with which the Company may merge or consolidate, or to which all or substantially all of its assets may be transferred, provided, the Company may assign this Agreement to any affiliate, but no such assignment shall relieve the Company of its obligations hereunder. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. The duties and covenants of Executive under this Agreement, being personal, may not be delegated, but the Executive’s rights to compensation and benefits provided hereunder may be transferred only by will or operation of law. Except as otherwise set forth in this Agreement, to the extent necessary to carry out the intentions of the parties hereunder the respective rights and obligations of the parties hereunder shall survive any termination of the Executive’s employment.

9.2 Amendment; Waiver. This Agreement may be amended, modified or superseded only by a written instrument that expressly refers to this Agreement and that is signed by all of the parties to this Agreement. No party shall be deemed to have waived compliance by another party of any provision of this Agreement unless such waiver is contained in a written instrument signed by the waiving party and no waiver that may be given by a party will be applicable except in the specific instance for which it is given. The failure of any party to enforce at any time any of the provisions of this Agreement or to exercise any right or option contained in this Agreement or to require at any time performance of any of the provisions of this Agreement, by any of the other parties shall not be construed to be a waiver of such provisions and shall not affect the validity of this Agreement or any of its provisions or the right of such party thereafter to enforce each provision of this Agreement. No course of dealing shall operate as a waiver or modification of any provision of this Agreement or otherwise prejudice such party’s rights, powers and remedies.

9.3 Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties related to the subject matter and supersedes all prior proposals, understandings, agreements, correspondence, arrangements and contemporaneous oral agreements relating to subject matter of this Agreement. No representation, promise, inducement or statement of intention has been made by any party which has not been embodied in this Agreement. In the event of any inconsistency between any provision of this Agreement and any provision of any plan, employee handbook, personnel manual, program, policy, arrangement or agreement of the Company or any of its affiliates (“Company Documents”), the provisions of this Agreement shall control; provided, however, to the extent any Company Document provides for additional benefits to be afforded the Executive, such additional benefits will also be provided to the Executive in accordance with the terms of such Company Document.

9.4 Exemption from, or Compliance with, Section 409A. The payment of amounts and the provision of benefits under this Agreement are intended to be exempt from, or compliant with, Section 409A of the Internal Revenue Code. Accordingly, the payment of any amount under this Agreement subject to Section 409A shall be made in strict compliance with the provisions hereof, and no such amounts payable hereunder may be accelerated or deferred beyond the periods provided herein. This Agreement shall be performed and construed in a manner that is consistent with the foregoing intention.

9.5 Governing Law. This Agreement shall be governed by, and shall be construed, performed and enforced in accordance with, its express terms, and otherwise in accordance with the laws of State of Ohio, applicable to contracts to be wholly performed within such state without giving effect to any conflict of law, rule or principle of such state.

9.6 Headings; Section References; Construction. Section headings or captions contained in this Agreement are inserted only as a matter of convenience and reference and in no way define, limit, extend or describe the scope of this Agreement, or the intent of any provision hereof. All references herein to Sections shall refer to Sections of this Agreement unless the context clearly otherwise requires. Unless the context clearly states otherwise, the use of the singular or plural in this Agreement shall include the other and the use of any gender shall include all others. The parties have participated jointly in the negotiation and drafting of this Agreement. If any ambiguity or question of intent or interpretation arises, no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

9.7 Notices. All notices, requests, consents, approvals, waivers, demands and other communications required or permitted to be given or made under this Agreement shall be in writing and shall be deemed delivered to the parties (a) on the date of personal delivery against a written receipt, or (b) on the first business day following the date of delivery to a nationally recognized overnight courier service, or (c) on the third business day following the date of deposit in the United States Mail, postage prepaid, by certified mail, in each case addressed as follows, or to such other address, person or entity as any party may designate by notice to the others in accordance herewith:

To Executive to the residence of the Executive as reflected in the Company’s books and records.

To Company:

Multi-Color Corporation

4053 Clough Woods Drive

Batavia, OH 45103

Attention: Chief Executive Officer

with a required copy to:

Keating Muething & Klekamp PLL

One East Fourth Street, Suite 1400

Cincinnati, OH 45202

Attn: Michael J. Moeddel

9.8 Policies, Regulations and Guidelines for Executives. The Company may, from time to time, issue policies, rules, regulations, guidelines, procedures or other informational material, whether in the form of handbooks, memoranda or otherwise, relating to the Company’s Executives. Executive acknowledges and agrees that such materials are general guidelines for Executive’s information and shall not be construed to alter, modify or amend this Agreement for any purpose whatsoever.

9.9 Severability and Reformation of Provisions. If a court in any final, unappealable proceeding holds any provision of this Agreement or its application to any person or circumstance invalid, illegal or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it was held to be invalid, illegal or unenforceable, shall not be affected, and shall be valid, legal and enforceable to the fullest extent permitted by law, but only if and to the extent such enforcement would not materially and adversely frustrate the parties’ essential objectives as expressed in this Agreement. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties intend that the court add to this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be valid and enforceable, so as to effect the original intent of the parties to the greatest extent possible.

9.10 Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

9.11 Full Settlement. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment, except for the offset described in Section 7.1(d).

THIS AGREEMENT CONTAINS VERY IMPORTANT TERMS GOVERNING EXECUTIVE’S EMPLOYMENT WITH THE COMPANY. SECTION 5 CONTAINS

PROVISIONS WHICH AFFECT EXECUTIVE’S ABILITY TO TAKE CERTAIN ACTIONS FOLLOWING THE TERMINATION OF EXECUTIVE’S EMPLOYMENT. EXECUTIVE SHOULD FEEL FREE TO SEEK ADVICE FROM HER ATTORNEY REGARDING ANY MATTER RELATING TO THIS AGREEMENT. BY EXECUTING THIS AGREEMENT, EXECUTIVE IS AFFIRMING THAT THE EXECUTIVE HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND TO CONSULT WITH HIS ATTORNEY, THAT EXECUTIVE UNDERSTANDS THE MEANING AND SIGNIFICANCE OF ALL OF ITS PROVISIONS, THAT NO REPRESENTATIONS OR PROMISES HAVE BEEN MADE TO EXECUTIVE REGARDING HIS EMPLOYMENT WHICH ARE NOT SET FORTH IN THIS AGREEMENT, AND THAT EXECUTIVE IS FREELY SIGNING THIS AGREEMENT TO CONTINUE HIS EMPLOYMENT WITH THE COMPANY.

[R EMAINDER OF P AGE I NTENTIONALLY L EFT B LANK —S IGNATURE P AGE TO F OLLOW ]

I N W ITNESS W HEREOF , the parties have entered into this Agreement effective as of the date first written above.


M ULTI -C OLOR C ORPORATION

By:	/s/ Nigel Vinecombe
Title: CEO
Date: June 12, 2014

W ITNESS :		/ S / K AREN A. P OWELL

(“Company”)

/s/ Sharon Birkett
S HARON B IRKETT

Date: June 12, 2014
(“Executive”)

W ITNESS :		/ S / K AREN A. P OWELL

[Signature Page to Birkett Employment Agreement]

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Nigel A. Vinecombe, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Multi-Color Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2014


By:		/s/ Nigel A. Vinecombe
		Nigel A. Vinecombe
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Sharon E. Birkett, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Multi-Color Corporation;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2014


By:		/s/ Sharon E. Birkett
		Sharon E. Birkett
		Vice President, Chief Financial and Accounting Officer, Secretary

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Nigel A. Vinecombe, President and Chief Executive Officer of Multi-Color Corporation (the “Company”), certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2014 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2014


By:		/s/ Nigel A. Vinecombe
		Nigel A. Vinecombe
		President and Chief Executive Officer

A signed original of this written statement will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Sharon E. Birkett, Vice President, Chief Financial and Accounting Officer, Secretary of Multi-Color Corporation (the “Company”), certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2014 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2014


By:		/s/ Sharon E. Birkett
		Sharon E. Birkett
		Vice President, Chief Financial and Accounting Officer, Secretary

A signed original of this written statement will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Large accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller reporting company