MULTI COLOR Corp (Form: 10-Q, Received: 11/09/2018 10:44:10)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2018

☐	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		(IRS Employer
Incorporation or Organization)		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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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


Large accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Common shares, no par value – 20,517,424 (as of October 31, 2018)

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 and Six Months Ended September 30, 2018 and 2017		4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended September 30, 2018 and 2017		5

	Condensed Consolidated Balance Sheets at September 30, 2018 and March 31, 2018		6

	Condensed Consolidated Statement of Stockholders’ Equity for the Six Months Ended September 30, 2018		7

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2018 and 2017		8

	Notes to Condensed Consolidated Financial Statements		9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		32

Item 4.	Controls and Procedures		32

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors		33

Item 6.	Exhibits		33

Signatures			34

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. All statements contained in this Form 10-Q other than statements of historical fact are forward-looking statements. Forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words “may,” “continue,” “estimate,” “intend,” “plan,” “will,” “believe,” “project,” “expect,” “anticipate” and similar expressions (as well as the negative versions thereof) may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. With respect to the forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 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 prospects or 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 or business prospects 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 global economic and business conditions; changes in business strategies or plans; raw material cost pressures; availability of raw materials; availability to pass raw material cost increases to our customers; interruption of business operations; changes in, or the failure to comply with, government regulations, legal proceedings and developments, including, but not limited to, tax law changes; acceptance of new product offerings, services and technologies; new developments in packaging; our ability to effectively manage our growth and execute our long-term strategy; our ability to manage foreign operations and the risks involved with them, including compliance with applicable anti-corruption laws; currency exchange rate fluctuations; tariffs and tradewars; our ability to manage global political uncertainty; terrorism and political unrest; increases in general interest rate levels and credit market volatility affecting our interest costs; competition within our industry; our ability to consummate and successfully integrate acquisitions; our 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; risk that some of our goodwill may be or later become impaired; the success and financial condition of our significant customers; our ability to maintain our relationships, arrangements and agreements with our significant customers on terms and conditions consistent with historical terms and conditions, including, without limitation, with respect to amounts of sales, pricing and margins; dependence on certain significant customers; dependence on information technology; our ability to market new products; our ability to maintain an effective system of internal control; ongoing claims, lawsuits and governmental proceedings, including environmental proceedings; availability, terms and developments of capital and credit; dependence on key personnel; quality of management; our ability to protect our intellectual property and the potential for intellectual property litigation; employee benefit costs; and risk associated with significant leverage. 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 and Part II, Item 1A of this Quarterly Report on Form 10-Q, Part I, Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2018 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					Six Months Ended
	September 30, 2018		September 30, 2017			September 30, 2018		September 30, 2017
Net revenues	$	434,913	$	256,034		$	891,044	$	498,474
Cost of revenues		348,128		204,260			716,249		397,243

Gross profit		86,785		51,774			174,795		101,231
Selling, general and administrative expenses		39,191		25,200			81,959		48,789
Facility closure expenses		114		95			141		129

Operating income		47,480		26,479			92,695		52,313
Interest expense		18,690		6,669			37,889		13,004
Other expense (income), net		1,860		(2,676	)		2,904		(1,477	)

Income before income taxes		26,930		22,486			51,902		40,786
Income tax expense		3,125		7,296			10,005		11,454

Net income		23,805		15,190			41,897		29,332
Less: Net income attributable to noncontrolling interests		50		—			3		36

Net income attributable to Multi-Color Corporation	$	23,755	$	15,190		$	41,894	$	29,296

Weighted average shares and equivalents outstanding:
Basic		20,464		17,015			20,453		16,983
Diluted		20,552		17,177			20,550		17,168

Basic earnings per common share	$	1.16	$	0.89		$	2.05	$	1.73
Diluted earnings per common share	$	1.16	$	0.88		$	2.04	$	1.71
Dividends per common share	$	0.05	$	0.05		$	0.10	$	0.10

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						Six Months Ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Net income	$	23,805		$	15,190		$	41,897		$	29,332
Other comprehensive income (loss):
Unrealized foreign currency translation gain (loss) (1)		(10,364	)		10,950			(94,297	)		30,014
Unrealized gain (loss) on derivative contracts, net of tax (2)		1,520			(4,556	)		18,278			(4,556	)

Total other comprehensive income (loss)		(8,844	)		6,394			(76,019	)		25,458

Comprehensive income (loss)		14,961			21,584			(34,122	)		54,790
Less: Comprehensive (loss) attributable to noncontrolling interests		(177	)		—			(1,637	)		(30	)

Comprehensive income (loss) attributable to Multi-Color Corporation	$	15,138		$	21,584		$	(32,485	)	$	54,820

(1)

The amounts for the three months ended September 30, 2018 and 2017 include tax impacts of $332 and $(168), respectively, related to the settlement of foreign currency denominated intercompany loans. The amounts for the six months ended September 30, 2018 and 2017 include tax impacts of $2,873 and $(452), respectively, related to the settlement of foreign currency denominated intercompany loans.

(2)	Amounts are net of tax of $(718) and $2,858 for the three months ended September 30, 2018 and 2017, respectively, and $(6,326) and $2,858 for the six months ended September 30, 2018 and 2017, 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)


	September 30, 2018			March 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	75,337		$	67,708
Accounts receivable, net of allowance of $3,046 and $2,704 at September 30, 2018 and March 31, 2018, respectively		292,968			306,542
Other receivables		21,646			16,589
Inventories, net		136,765			167,950
Prepaid expenses		19,804			24,926
Other current assets		45,934			17,468

Total current assets		592,454			601,183
Property, plant and equipment, net of accumulated depreciation of $255,829 and $235,980 at September 30, 2018 and March 31, 2018, respectively		542,709			510,002
Goodwill		1,098,785			1,196,634
Intangible assets, net		574,047			580,233
Other non-current assets		11,515			12,097
Deferred income tax assets		2,683			2,827

Total assets	$	2,822,193		$	2,902,976

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	23,773		$	20,864
Accounts payable		188,215			192,341
Accrued expenses and other liabilities		109,228			114,022

Total current liabilities		321,216			327,227
Long-term debt		1,542,346			1,577,821
Deferred income tax liabilities		165,535			149,950
Other liabilities		61,985			87,605

Total liabilities		2,091,082			2,142,603
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; 40,000 shares authorized, 20,819 and 20,753 shares issued at September 30, 2018 and March 31, 2018, respectively		1,407			1,403
Paid-in capital		405,434			402,252
Treasury stock, 309 and 307 shares at cost at September 30, 2018 and March 31, 2018, respectively		(11,701	)		(11,528	)
Retained earnings		428,962			384,671
Accumulated other comprehensive loss		(95,370	)		(19,241	)

Total stockholders’ equity attributable to Multi-Color Corporation		728,732			757,557
Noncontrolling interests		2,379			2,816

Total stockholders’ equity		731,111			760,373

Total liabilities and stockholders’ equity	$	2,822,193		$	2,902,976

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)


													Accumulated
	Common Stock												Other
	Shares Issued		Amount		Paid-In Capital		Treasury Stock			Retained Earnings			Comprehensive Loss			Noncontrolling Interests			Total
March 31, 2018		20,753	$	1,403	$	402,252	$	(11,528	)	$	384,671		$	(19,241	)	$	2,816		$	760,373
Net income		—		—		—		—			41,894			—			3			41,897
Topic 606 transition adjustment		—		—		—		—			2,701			—			—			2,701
ASU 2018-02 reclassification of stranded tax effects		—		—		—		—			1,750			(1,750	)		—			—
Other comprehensive income		—		—		—		—			—			(74,379	)		(1,640	)		(76,019	)
Constantia Labels acquisition		—		—		—		—			—			—			1,200			1,200
Issuance of common stock		42		4		1,169		—			—			—			—			1,173
Restricted stock grant		12		—		—		—			—			—			—			—
Conversion of restricted share units		12		—		—		—			—			—			—			—
Stock-based compensation		—		—		2,013		—			—			—			—			2,013
Shares acquired under employee plans		—		—		—		(173	)		—			—			—			(173	)
Common stock dividends		—		—		—		—			(2,054	)		—			—			(2,054	)

September 30, 2018		20,819	$	1,407	$	405,434	$	(11,701	)	$	428,962		$	(95,370	)	$	2,379		$	731,111

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Six Months Ended
	September 30, 2018			September 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	41,897		$	29,332
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		28,439			17,406
Amortization of intangible assets		22,663			7,435
Loss on sale of Southeast Asian durables business		—			512
Amortization of deferred financing costs		2,550			808
Net (gain)/loss on disposal of property, plant and equipment		(194	)		349
Net (gain) on derivative contracts		(489	)		(3,011	)
Stock-based compensation expense		2,013			1,797
Deferred income taxes, net		(1,797	)		2,199
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		4,925			(4,664	)
Inventories		830			(2,067	)
Prepaid expenses and other assets		(8,238	)		(219	)
Accounts payable		12,436			4,349
Accrued expenses and other liabilities		1,202			(10,012	)

Net cash provided by operating activities		106,237			44,214

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(53,941	)		(26,262	)
Investment in acquisitions, net of cash acquired		—			(21,383	)
Net proceeds from sale of Southeast Asian durables business		—			3,620
Proceeds from sale of property, plant and equipment		1,590			253

Net cash (used in) investing activities		(52,351	)		(43,772	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving lines of credit		187,284			140,021
Payments under revolving lines of credit		(217,534	)		(128,844	)
Repayment of long-term debt		(8,508	)		(1,478	)
Payment of acquisition related deferred payments		(1,104	)		(206	)
Proceeds from issuance of common stock		1,004			2,432
Debt issuance costs		—			(1,636	)
Dividends paid		(2,048	)		(1,977	)

Net cash (used in)/provided by financing activities		(40,906	)		8,312

Effect of foreign exchange rate changes on cash		(5,351	)		1,645

Net increase in cash and cash equivalents		7,629			10,399
Cash and cash equivalents, beginning of period		67,708			25,229

Cash and cash equivalents, end of period	$	75,337		$	35,628

See accompanying Notes to Condensed Consolidated Financial Statements.

See Note 15 for supplemental cash flow disclosures.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(in thousands, except for statistical and 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 & spirits, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in the North American, Latin American, EMEA (Europe, Middle East and Africa) and Asia Pacific regions with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve, Heat Transfer, Roll Fed, and Aluminum Labels.

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, 2018 (the “2018 10-K”). These condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the 2018 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 controlled 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 the first quarter of fiscal 2019, we adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all related amendments, which provides revised guidance for revenue recognition. We adopted this guidance using the modified retrospective transition method, which means that periods beginning in fiscal 2019 are reported under this guidance while prior periods continue to be reported under previous guidance. See Note 2.

In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220),” which permits the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income (AOCI) to retained earnings. This new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. Early adoption is permitted, and the update must be applied either at the beginning of the period of adoption or retrospectively to each period in which the effects of the Tax Act related to items remaining in AOCI are recognized. The Company elected to early adopt this update in the second quarter of fiscal 2019. As part of this adoption, the Company elected to reclassify $1,750 of stranded income tax effects of the Tax Act from AOCI to retained earnings at the beginning of the second quarter of fiscal 2019.

In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other,” which simplifies the accounting for goodwill impairment. This update removes step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, which for the Company is any annual or interim goodwill impairment tests performed after April 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of this update on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations,” which revises the definition of a business. The FASB’s new framework assists entities in evaluating whether a set (integrated set of assets and activities) should be accounted for as an acquisition of a business or a group of assets. The framework adds an initial screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If that screen is met, the set is not a business. This update was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company

was the fiscal year beginning April 1, 2018. The Company adopted this update effective April 1, 2018, and its adoption did not have an impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The specific issues addressed include debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination and separately identifiable cash flows and application of the predominance principle. This update was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2018. The Company adopted this update effective April 1, 2018, and its adoption did not have an impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires that lessees recognize almost all leases on the balance sheet as right-of-use assets and lease liabilities. For income statement purposes, leases will be classified as either finance leases or operating leases. This update is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. In March 2018, the FASB approved an alternative transition method to the modified retrospective approach, which eliminates the requirement to restate prior period financial statements and requires the cumulative effect of the retrospective allocation to be recorded as an adjustment to the opening balance of retained earnings at the date of adoption. We are currently evaluating which transition method we will adopt and the impact this guidance will have on our consolidated financial statements. The Company is currently accumulating its lease data in order to evaluate the impact of this standard on its consolidated financial statements, which will include an increase in both assets and liabilities relating to its leasing activities.

No other new accounting pronouncement issued or effective during the six months ended September 30, 2018 had or is expected to have a material impact on the condensed consolidated financial statements.

Supply Chain Financing

The Company has entered into supply chain financing agreements with certain customers and factoring arrangements with certain banks. The receivables for the agreements are sold without recourse to the customers’ banks and are accounted for as sales of accounts receivable. Losses on the sale of these receivables are included in selling, general and administrative expenses in the condensed consolidated statements of income. Losses of $484 and $230 were recorded for the three months ended September 30, 2018 and 2017, respectively, and losses of $994 and $465 were recorded for the six months ended September 30, 2018 and 2017, respectively.

2. Revenue Recognition

On April 1, 2018, we adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all related amendments, which provides revised guidance for revenue recognition. The standard’s core principle is that an entity should recognize the revenue for 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 and services. The standard defines a five-step process to recognize revenue and requires more judgment and estimates within the revenue recognition process than required under previous U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation.

We adopted the standard by applying the modified retrospective method to all contracts that were not completed as of the adoption date. The aggregate effect of any modifications to those contracts was reflected in identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the price to the satisfied and unsatisfied performance obligations as of the adoption date. Accordingly, the comparative statement of income and comparative balance sheet have not been restated.

Adjustments due to ASU 2014-09 were as follows:


	Balance at March 31, 2018			Adjustments			Balance at April 1, 2018
Assets:
Accounts receivable, net	$	306,542		$	253		$	306,795
Inventories, net		167,950			(18,286	)		149,664
Other current assets		17,468			21,657			39,125

Liabilities and Stockholders’ Equity:
Accrued expenses and other liabilities	$	114,022		$	(215	)	$	113,807
Deferred income tax liabilities		149,950			1,125			151,075
Accumulated other comprehensive loss		(19,241	)		13			(19,228	)
Retained earnings		384,671			2,701			387,372

Revenue is generated through the sale of products created to meet the packaging needs of our customers, culminating in a single performance obligation to produce labels with no alternate use, and revenue is recorded in an amount that reflects the net consideration

that we expect to receive. Prices for our products are based on agreed upon rates with customers and do not include financing components or noncash consideration. The amount of consideration we receive and revenue we recognize is variable for certain customers and is impacted by incentives, including rebates, which are generally tied to achievement of certain sales volume levels.

We recognize revenue when obligations under the terms of a contract with our customer are satisfied, in an amount that reflects the consideration we expect to receive in exchange for the product. Depending on the terms of the agreement with the customer, we recognize revenue either at a point-in-time (at shipment or delivery depending on agreed upon terms) or over-time when the Company has an enforceable right to payment for performance completed to date.

We believe the costs incurred method is the best method to recognize our over-time revenue as costs incurred are proportionate to progress achieved in satisfying our performance obligations.

The Company also has bill and hold arrangements with certain customers. For these arrangements, control over the product occurs when the product is ready for physical transfer to the customer, as we have a present right to payment, the customer can direct the use of the product (i.e., request shipment to its facility), and legal title has passed to the customer. Revenue is recognized at the time the product is produced and we have transferred control to the customer.

Payment terms typically range from 30-90 days, based upon agreed upon terms with the customer.

Taxes assessed by a governmental authority that we collect from our customers that are both imposed on and concurrent with our revenue producing activities (such as sales tax, value-added tax, and excise taxes) are excluded from revenue. Shipping and handling costs incurred after control of the product is transferred to our customers are treated as fulfillment costs and not a separate performance obligation.

MCC records contract assets when revenue is recognized but we have not yet invoiced the customer. This occurs when costs are incurred for the production of labels for over-time customers but the associated revenues have not been billed to the customer or when prepress costs related to fulfillment and completion of labels are incurred but the associated revenues for those labels have not been billed to the customer. Contract liabilities are recorded for expected shipping and handling charges for revenue recognized from over-time customers and billings to customers for prepress items to be utilized in the fulfilment and completion of labels that have not yet been fully utilized in the production process.


	Balance sheet location	September 30, 2018			April 1, 2018
Contract assets	Other current assets	$	33,803		$	31,001
Contract liabilities	Accrued expenses and other liabilities		(8,529	)		(7,442	)

Net contract assets and liabilities		$	25,274		$	23,559

MCC recognized revenues of $4,704 and $7,442 during the three and six months ended September 30, 2018, respectively, that were included in contract liabilities as of March 31, 2018 and fully expects the $8,529 of contract liabilities as of September 30, 2018 to be recognized as revenue within six months.

We elected the practical expedient to disregard the possible existence of a significant financing component related to payment on contracts as part of the adoption of ASU 2014-09, as we expect that customers will pay for the products within one year. Additionally, as all contracts are expected to have an original duration of one year or less, we elected the practical expedient to exclude disclosure of information regarding the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period.

The following table summarizes the September 30, 2018 condensed consolidated statement of income and condensed consolidated balance sheet as if ASU 2014-09 had not been adopted and the adjustment required upon adoption of ASU 2014-09.

Three Months Ended September 30, 2018

As Reported

Adjustments

Previous Standard

Condensed Consolidated Statement of Income:

Net revenues

434,913

543

435,456

Cost of revenues

348,128

440

348,568

Gross profit

86,785

103

86,888

Selling, general and administrative expenses

39,191

39,202

Operating income

47,480

47,572

Income tax expense

3,125

3,147

Net income

23,805

23,875

Six Months Ended September 30, 2018

As Reported

Adjustments

Previous Standard

Condensed Consolidated Statement of Income:

Net revenues

891,044

(415

)

890,629

Cost of revenues

716,249

(336

)

715,913

Gross profit

174,795

(79

)

174,716

Selling, general and administrative expenses

81,959

)

81,951

Operating income

92,695

(71

)

92,624

Income tax expense

10,005

(19

)

9,986

Net income

41,897

(52

)

41,845

As of September 30, 2018

As Reported

Adjustments

Previous Standard

Condensed Consolidated Balance Sheet:

Assets:

Accounts receivable, net

292,968

(261

)

292,707

Inventories, net

136,765

18,587

155,352

Other current assets

45,934

(21,933

)

24,001

Liabilities and Stockholders’ Equity:

Accrued expenses and other liabilities

109,228

294

109,522

Deferred income tax liabilities

165,535

(1,144

)

164,391

Accumulated other comprehensive loss

(95,370

)

(95,374

)

Retained earnings

428,962

(2,753

)

426,209

The following table presents our net revenues disaggregated by region and timing of revenue recognition for the three and six months ended September 30, 2018.

Three Months Ended September 30, 2018

Six Months Ended September 30, 2018

Point-in-time

Over-time

Point-in-time

Over-time

North America

136,651

58,657

285,415

116,722

Europe

168,744

921

349,019

1,974

Asia Pacific and Africa

62,696

1,261

123,528

1,996

South America

5,983

—

12,390

—

Total

374,074

60,839

770,352

120,692

3. Earnings Per Common Share

Basic earnings per common share (EPS) is computed by dividing net income attributable to Multi-Color Corporation by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Multi-Color Corporation 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, restricted share units, 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									Six Months Ended
	September 30, 2018				September 30, 2017					September 30, 2018					September 30, 2017
			Per Share				Per Share					Per Share					Per Share
	Shares		Amount		Shares		Amount			Shares		Amount			Shares		Amount
Basic EPS		20,464	$	1.16		17,015	$	0.89			20,453	$	2.05			16,983	$	1.73
Effect of dilutive securities		88		—		162		(0.01	)		97		(0.01	)		185		(0.02	)

Diluted EPS		20,552	$	1.16		17,177	$	0.88			20,550	$	2.04			17,168	$	1.71

The Company excluded 310 and 114 options to purchase shares in the three months ended September 30, 2018 and 2017, respectively, from the computation of diluted EPS because these shares would have an anti-dilutive effect. The Company excluded 294 and 69 options to purchase shares in the six months ended September 30, 2018 and 2017, respectively, from the computation of diluted EPS because these shares would have an anti-dilutive effect.

4. Inventories

The Company’s inventories consisted of the following:


	September 30, 2018		March 31, 2018
Finished goods	$	57,511	$	80,845
Work-in-process		18,129		21,156
Raw materials		61,125		65,949

Total inventories, net	$	136,765	$	167,950

5. Debt

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


	September 30, 2018									March 31, 2018
				Unamortized			Debt Less						Unamortized			Debt Less
				Debt Issuance			Unamortized Debt						Debt Issuance			Unamortized Debt
	Principal			Costs			Issuance Costs			Principal			Costs			Issuance Costs
6.125% Senior Notes (1)	$	250,000		$	(2,810	)	$	247,190		$	250,000		$	(3,148	)	$	246,852
4.875% Senior Notes (1)		600,000			(9,059	)		590,941			600,000			(9,699	)		590,301
Credit Agreement
Term Loan A Facility (2)		144,375			(3,561	)		140,814			148,125			(3,996	)		144,129
Term Loan B Facility (3)		496,250			(5,803	)		490,447			498,750			(6,280	)		492,470
U.S. Revolving Credit Facility (4)		22,000			(4,848	)		17,152			56,945			(5,442	)		51,503
Australian Revolving Sub-Facility (4)		32,878			(539	)		32,339			33,033			(605	)		32,428
Capital leases		40,332			—			40,332			36,288			—			36,288
Other subsidiary debt		6,904			—			6,904			4,714			—			4,714

Total debt		1,592,739			(26,620	)		1,566,119			1,627,855			(29,170	)		1,598,685
Less current portion of debt		(23,773	)		—			(23,773	)		(20,864	)		—			(20,864	)

Total long-term debt	$	1,568,966		$	(26,620	)	$	1,542,346		$	1,606,991		$	(29,170	)	$	1,577,821

(1)	The 6.125% Senior Notes are due on December 1, 2022. The 4.875% Senior Notes are due on November 1, 2025.

(2)	The Company is required to make mandatory principal payments on the outstanding borrowings under the Term Loan A Facility. The principal payments are due on the last day of March, June, September and December of each year, commencing on March 31, 2018 through the maturity date of October 31, 2022.

(3)	The Company is required to make mandatory principal payments on the outstanding borrowings under the Term Loan B Facility. The principal payments are due on the last day of March, June, September and December of each year, commencing on March 31, 2018 through the maturity date of October 31, 2024.

(4)	Borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility mature on October 31, 2022.

The carrying value of debt under the Credit Agreement approximates fair value. The fair value of the Senior Notes is based on observable inputs, including quoted market prices (Level 2). The fair values of the 4.875% Senior Notes and 6.125% Senior Notes were approximately $561,000 and $256,250, respectively, as of September 30, 2018. The fair values of the 4.875% Senior Notes and 6.125% Senior Notes were approximately $564,000 and $258,750, respectively, as of March 31, 2018.

The following is a schedule of future annual principal payments as of September 30, 2018:


	Debt		Capital Leases		Total
October 2018 - September 2019	$	18,985	$	4,788	$	23,773
October 2019 - September 2020		15,473		4,128		19,601
October 2020 - September 2021		19,205		3,743		22,948
October 2021 - September 2022		25,733		2,879		28,612
October 2022 - September 2023		401,761		2,930		404,691
Thereafter		1,071,250		21,864		1,093,114

Total	$	1,552,407	$	40,332	$	1,592,739

Senior Secured Credit Facility

In conjunction with the Constantia Labels acquisition, effective October 31, 2017 the Company entered into a credit agreement (the “Credit Agreement”) with various lenders. The Credit Agreement replaced the Company’s previous credit agreement and consists of (i) a senior secured first lien term loan A facility (the “Term Loan A Facility”) in an aggregate initial principal amount of $150,000 with a five year maturity, (ii) a senior secured first lien term loan B facility (the “Term Loan B Facility”) in an aggregate initial principal amount of $500,000 with a seven year maturity, and (iii) a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount up to $400,000, comprised of a $360,000 U.S. revolving credit facility (the “U.S. Revolving Credit Facility“) and a $40,000 U.S. Dollar equivalent Australian sub-facility (the “Australian Revolving Sub-Facility”), each with a five year maturity.

The Credit Agreement contains customary mandatory and optional prepayment provisions and customary events of default. The Credit Agreement’s Term Loan A Facility, Term Loan B Facility and U.S. Revolving Credit Facility (together, the “U.S. facilities”) are guaranteed by substantially all of the Company’s direct and indirect wholly owned domestic subsidiaries, and such guarantors pledged substantially all their assets as collateral to secure the U.S. facilities. The Australian Revolving Sub-Facility is secured by substantially all of the assets of the Australian borrower and its direct and indirect subsidiaries.

The Credit Agreement can be used for working capital, capital expenditures and other corporate purposes and to fund permitted acquisitions (as defined in the Credit Agreement). Loans under the Credit Agreement bear interest at variable rates plus a margin, based on the Company’s consolidated secured net leverage ratio.

The weighted average interest rates on the Company’s borrowings are as follows:


	September 30, 2018			March 31, 2018
Term Loan A Facility		4.24	%		4.13	%
Term Loan B Facility		4.49	%		4.13	%
U.S. Revolving Credit Facility		4.15	%		4.42	%
Australian Revolving Sub-Facility		3.93	%		4.13	%

The Credit Agreement contains customary representations and warranties as well as customary negative and affirmative covenants, which require the Company to maintain the following financial covenants at the end of each quarter: (i) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.50 to 1.00 for the fiscal quarters ended during the period of March 31, 2017 through, and including June 30, 2019 and (ii) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.25 to 1.00 for the fiscal quarters ended during the period of September 30, 2019 and thereafter.

The Credit Agreement, the indenture governing the 4.875% Senior Notes (the “4.875% Senior Notes Indenture”) and the indenture governing the 6.125% Senior Notes (the “6.125% Senior Notes Indenture”) and together with the 4.875% Senior Notes Indenture, (the “Indentures”) limit the Company’s ability to incur additional indebtedness. Additional covenants contained in the Credit Agreement and the Indentures, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, make restricted payments, create liens, make equity or debt investments, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Under the Credit Agreement and the Indentures, certain changes in control of the Company could result in the occurrence of an Event of Default. In addition, the Credit Agreement limits the ability of the Company to modify terms of

the Indentures. As of September 30, 2018, the Company was in compliance with the covenants in the Credit Agreement and the Indentures.

Available borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility were $332,016 and $7,122, respectively, at September 30, 2018. The Company also has various other uncommitted lines of credit available at September 30, 2018 in the aggregate amount of $22,209.

Subsequent to September 30, 2018, the Company amended its Term Loan B Facility. See Note 16 for additional details.

4.875% Senior Notes

The $600,000 aggregate principal amount of 4.875% Senior Notes due 2025 (the “4.875% Senior Notes”) were issued in October 2017 to fund the acquisition of Constantia Labels. The 4.875% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 4.875% Senior Notes on May 1st and November 1st of each year beginning May 1, 2018 until the maturity date of November 1, 2025. The Company’s obligations under the 4.875% Senior Notes are guaranteed by certain of the Company’s existing direct and indirect wholly-owned domestic subsidiaries.

6.125% Senior Notes

The $250,000 aggregate principal amount of 6.125% Senior Notes due 2022 (the “6.125% Senior Notes”) were issued in November 2014. The 6.125% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 6.125% Senior Notes on June 1st and December 1st of each year beginning June 1, 2015 until the maturity date of December 1, 2022. The Company’s obligations under the 6.125% Senior Notes are guaranteed by certain of the Company’s existing direct and indirect wholly-owned domestic subsidiaries.

Debt Issuance Costs

In conjunction with the issuance of the Credit Agreement, the Company incurred $16,331 in debt issuance costs, which are being deferred and amortized over the term of the Term A Loan Facility, Term Loan B Facility and Revolving Credit Facility. In conjunction with terminating the Company’s prior credit agreement, $660 in unamortized debt issuance costs related to a debt extinguishment were written-off to interest expense during the three months ended December 31, 2017. The remaining unamortized fees under the prior credit agreement related to a debt modification and are being amortized over the term of the Revolving Credit Facility.

The Company incurred $10,338 in debt issuance costs associated with the issuance of the 4.875% Senior Notes, which are being deferred and amortized over the term of the 4.875% Senior Notes.

The Company recorded $1,275 and $404 in interest expense for the three months ended September 30, 2018 and 2017, respectively, in the condensed consolidated statements of income to amortize deferred financing costs. The Company recorded $2,550 and $808 in interest expense for the six months ended September 30, 2018 and 2017, respectively, in the condensed consolidated statements of income to amortize deferred financing costs.

Capital Leases

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


	September 30, 2018			March 31, 2018
Total minimum lease payments	$	49,968		$	49,521
Less amount representing interest		(9,636	)		(13,233	)

Present value of net minimum lease payments		40,332			36,288
Current portion		(4,788	)		(4,191	)

Capitalized lease obligations, less current portion	$	35,544		$	32,097

The capitalized leases carry interest rates from 0.97% to 12.25% and mature from fiscal 2019 to fiscal 2032.

6. Major Customers

During the three months ended September 30, 2018 and 2017, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 10% and 17%, respectively, of the Company’s consolidated net revenues. All of these sales were made to The Procter & Gamble Company.

During the six months ended September 30, 2018 and 2017, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 10% and 17%, 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 3% of the Company’s total accounts receivable balance at September 30, 2018 and March 31, 2018. 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.

7. 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 September 30, 2018, the Company is no longer subject to U.S. federal examinations by tax authorities for years before fiscal 2015. The Company is no longer subject to state and local examinations by tax authorities for years before fiscal 2014. In foreign jurisdictions, the Company is no longer subject to examinations by tax authorities for years before fiscal 1999.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. As the Company has a March 31 fiscal year-end, a U.S. statutory federal rate of 21% applies to the fiscal year beginning April 1, 2018. The Tax Act eliminates the domestic manufacturing deduction and implements certain transitional impacts to the Company.

The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The Company made an estimate at March 31, 2018 on the impact of the Tax Act. During the second quarter ended September 30, 2018 the Company recorded a provisional discrete net tax benefit of $328 related to an adjustment of the estimated net deferred tax benefit due to the rate change.

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 September 30, 2018 and March 31, 2018, the Company had liabilities of $5,670 and $7,038, respectively, recorded for unrecognized tax benefits for U.S. federal, state and foreign tax jurisdictions. During the three months ended September 30, 2018 and 2017, the Company recognized $(1,312) and $117, respectively, of interest and penalties in income tax expense in the condensed consolidated statements of income. During the six months ended September 30, 2018 and 2017, the Company recognized $(1,174) and $62, 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 September 30, 2018 and March 31, 2018 was $1,724 and $2,641, 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 and six months ended September 30, 2018, the Company released $3,063 and $3,063, respectively, of reserves, including interest and penalties, related to uncertain tax positions for which the statutes of limitations have lapsed. The Company believes that it is reasonably possible that $1,625 of unrecognized tax benefits as of September 30, 2018 could be released within the next 12 months due to the lapse of statute of limitations and settlements of certain foreign and domestic income tax matters. The unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate are $5,118.

8. Risk Management Activities and Financial Instruments

The Company is exposed to market risks, both directly and indirectly, such as currency fluctuations and interest rate movement. To the extent the Company deems it to be appropriate, derivative instruments and hedging activities are used as a risk management tool to mitigate the potential impact of certain risks, primarily foreign currency exchange risk and interest rate risk.

The Company uses various types of derivative instruments including, but not limited to, forward contracts and swaps. The Company formally assesses, designates, and documents as a hedge of an underlying exposure each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, the Company assesses, both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transactions are effective at offsetting changes in either the fair values or cash flows of the underlying exposures.

Interest Rate Risk Management

The Company uses interest rate swap agreements (the “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 conjunction with entering into the Credit Agreement (see Note 5), the Company entered into two spot non-amortizing Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt. These Swaps became effective October 2017, expire in

October 2018, and will result in interest payments of 1.5625% plus the applicable margin per the requirements in the Credit Agreement. The Company also entered into two forward starting non-amortizing Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt. These Swaps will become effective in October 2018, will expire in October 2022, and will result in interest payments of 2.1345% plus the applicable margin per the requirements in the Credit Agreement.

Upon inception, the Swaps were designated as cash flow hedges under ASU 2017-12, with gains and losses, net of tax, measured on an ongoing basis, recorded in accumulated other comprehensive income (loss) (“AOCI”).

Foreign Currency Risk Management

Foreign currency exchange risk arises from our international operations 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 or the U.S. Dollar. At times, the Company uses foreign currency forward contracts to minimize the impact of fluctuations in currency exchange rates.

The Company periodically enters into foreign currency forward contracts to fix the purchase price of foreign currency denominated firm commitments. In addition, the Company periodically enters into short-term foreign currency forward contracts to fix the U.S. Dollar value of certain intercompany loan payments, which typically settle in the following quarter. During the six months ended September 30, 2018 and 2017, certain of the Company’s forward contracts were not designated as hedging instruments; therefore, changes in the fair value of the contracts were immediately recognized in other income and expense in the consolidated statements of income.

The Company periodically enters into foreign exchange forward contracts to fix the purchase price in U.S. Dollars of a foreign currency denominated firm commitment to purchase presses. Certain of these 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 consolidated statements of income in the same period during which the related hedged items affect the consolidated statements of income.

In June 2018, the Company entered into foreign exchange forward contracts to fix the purchase price in U.S. Dollars of foreign currency denominated raw materials. These forward contracts are designated as cash flow hedges with gains and losses, net of tax, measured on an ongoing basis, recorded in AOCI.

Net Investment Hedging

In September 2017, as a means of managing foreign currency risk related to our significant operations in Europe, the Company executed four fixed-for-fixed cross currency swaps, in which the Company will pay Euros and receive U.S. Dollars with a combined notional amount of €400,000, which mature in November 2025. This will effectively convert U.S. Dollar denominated debt to Euro denominated debt. The Company designated €205,000 of swap notional as a net investment hedge of the Company’s net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. Changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized in AOCI to offset changes in the values of the net investments being hedged.

The remaining €195,000 of swap notional was not designated as an accounting hedge in September 2017. Therefore, changes in fair value of the derivative instruments were recognized in other income and expense in the consolidated statements of income. In November 2017, the Company formally designated the remaining €195,000 of swap notional as a net investment hedge under ASU 2017-12, bringing the total designated notional value to €400,000. Effective November 1, 2017, hedge accounting was applied to the newly designated swap notional of €195,000.

Disclosures about Derivative Instruments

All of the Company’s derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. The Company determines the fair values of its derivatives based on valuation models which project future cash flows and discount the future amounts to a present value using market based observable inputs including interest rate curves, foreign currency rates, futures and basis point spreads, as applicable. The fair values of qualifying and non-qualifying instruments used in hedging transactions as of September 30, 2018 are as follows:


		Fair Value
Derivatives Designated as Hedging Instruments	Balance Sheet Location	September 30, 2018		March 31, 2018
Assets:
Cross currency swaps (Net investment hedges)	Other current assets	$	4,808	$	4,295
Interest rate swaps (Cash flow hedges)	Other current assets		1,532		920
Foreign exchange forward contracts (Fair value hedges)	Other current assets		—		127
Foreign exchange forward contracts (Cash flow hedges)	Other current assets		5		—
Interest rate swaps (Cash flow hedges)	Other long-term assets		7,779		4,956
Liabilities:
Interest rate swaps (Cash flow hedges)	Other current liabilities	$	10	$	—
Foreign exchange forward contracts (Fair value hedges)	Other current liabilities		44		190
Foreign exchange forward contracts (Cash flow hedges)	Other current liabilities		536		—
Cross currency swaps (Net investment hedges)	Other long-term liabilities		28,108		50,019

		Fair Value
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	September 30, 2018		March 31, 2018
Assets:
Foreign exchange forward contracts	Other current assets	$	187	$	—
Liabilities:
Foreign exchange forward contracts	Other current liabilities	$	27	$	127

The amounts of gains and (losses) recognized in AOCI net of reclassifications into earnings, during the three and six months ended September 30, 2018 and 2017 are as follows:


	Three Months Ended						Six Months Ended
Derivatives Designated as Hedging Instruments	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Cross currency swaps (Net investment hedges) (1)	$	821		$	(4,556	)	$	16,463		$	(4,556	)
Interest rate swaps		1,341			—			2,571			—
Foreign exchange forward contracts		(642	)		—			(756	)		—

(1)	The net gain of $16,463 recognized in OCI on the cross currency swaps in a net investment hedge as of September 30, 2018 is comprised of an excluded component loss of $(6,105) and an undiscounted spot gain of $28,040, net of tax of $(5,472).

The amounts of gains and (losses) reclassified from AOCI into earnings for the three and six months ended September 30, 2018 and 2017 are as follows:

Three Months Ended

Six Months Ended

Derivatives Designated as Hedging Instruments

September 30, 2018

September 30, 2017

September 30, 2018

September 30, 2017

Cross currency swaps (1)

2,407

—

4,732

—

Interest rate swaps (2)

394

—

665

—

Foreign exchange forward contracts (2)

(171

)

—

(171

)

—

(1)	The Company had a $2,407 and $4,732 excluded component gain in AOCI which was recognized into income during the three and six months ended September 30, 2018, respectively.

(2)	During the next 12 months, $989 of net gains included in the September 30, 2018 AOCI balance are expected to be reclassified into interest expense.

The amounts of gains and (losses) included in earnings from qualifying and non-qualifying financial instruments used in hedging transactions for the three and six months ended September 30, 2018 and 2017 are as follows:


		Three Months Ended						Six Months Ended
Derivatives Not Designated as Hedging Instruments	Statement of Income Location	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Foreign currency contract-Constantia purchase price	Other income (expense), net	$	—		$	8,822		$	—		$	8,822
Foreign currency contracts-Other	Other income (expense), net		1,201			(83	)		6,233			284
Gain (loss) on underlying hedged items	Other income (expense), net		(263	)		100			(5,227	)		(275	)
Cross currency swaps	Interest expense		246			(5,811	)		489			(5,811	)

		Three Months Ended						Six Months Ended
Derivatives Designated as Hedging Instruments	Statement of Income Location	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Foreign exchange forward contracts (Fair value hedges)	Other income (expense), net	$	32		$	—		$	198		$	—
Gain (loss) on underlying hedged itesm	Other income (expense), net		(32	)		—			(198	)		—

9. Accrued Expenses and Other Liabilities

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


	September 30, 2018		March 31, 2018
Accrued payroll and benefits	$	43,988	$	45,418
Accrued income taxes		6,844		13,838
Professional fees		1,654		1,965
Accrued taxes other than income taxes		3,647		4,682
Accrued interest		14,027		16,480
Customer rebates		5,065		2,578
Exit and disposal costs related to facility closures		47		457
Deferred payments		9,231		9,735
Deferred revenue		12,133		11,887
Derivative liabilities		617		317
Other		11,975		6,665

Total accrued expenses and other liabilities	$	109,228	$	114,022

10. Acquisitions

Constantia Labels Summary

On October 31, 2017, the Company completed its acquisition pursuant to the Sale and Purchase Agreement (as amended) with Constantia Flexibles Germany GmbH, Constantia Flexibles International GmbH, Constantia Flexibles Group GmbH and GPC Holdings B.V. (collectively, “Constantia Flexibles”), acquiring 100% of the Labels Division of Constantia Flexibles (“Constantia Labels”). Constantia Labels, headquartered in Vienna, Austria, is a leader in label solutions serving the food, beverage and consumer packaging goods industries. Constantia Labels has approximately 2,800 employees globally and 24 production plants across 14 countries, with major operations across Europe, Asia and North America. The acquisition included a 75% controlling interest in certain label operations in South Africa.

The Company believes the combination of Constantia Labels’ food & beverage business with Multi-Color’s existing platforms, particularly in home & personal care and wine & spirits and emerging position in healthcare, will create a company with significant scale and geographic, end-market, customer and product diversification and additional growth opportunities. The results of Constantia Labels’ operations were included in the Company’s consolidated financial statements beginning on October 31, 2017.

The purchase price for Constantia Labels consisted of the following:


Cash from proceeds of borrowings	$	1,048,656
MCC common stock issued		237,820
Deferred payments		3,901
Contingent consideration		9,026

Purchase price, before cash acquired		1,299,403
Net cash acquired		(10,118	)

Total purchase price	$	1,289,285

The Company issued 3,383 shares of its common stock to Constantia Flexibles as part of the consideration for the purchase of Constantia Labels. The Sale and Purchase Agreement provides for restrictions on the transfer of the shares issued to Constantia Flexibles and certain registration rights with respect to the shares. The fair value of the shares issued of $237,820 was calculated using the Company share price of $82.70, which was the closing price on October 31, 2017, discounted to reflect the temporary lack of liquidity.

The cash portion of the purchase price was funded through the 4.875% Senior Notes due 2025 and funds from the Credit Agreement (see Note 5). The purchase price included deferred payments with a total fair value of $3,901, estimated as of the acquisition date, of which $807 was paid during the three months ended June 30, 2018 with the remaining to be paid out within 90 days after December 31, 2018, 2019 and 2020. In addition, the purchase price includes future performance based earnouts with a total fair value of $9,026, estimated as of the acquisition date. The future value of the earnouts is dependent upon whether the Verstraete in Mould Labels N.V. (Verstraete) business, which was acquired in conjunction with the Constantia Labels’ acquisition, meets or exceeds certain agreed upon EBITA (earnings before interest, taxes, and amortization) metrics over the three to five year period following the acquisition. The earnouts have a minimum future payout of zero, and the maximum amount of the future payout is based on the amount of EBITA growth achieved relative to calendar 2017. The earnouts may be paid out within 90 days after December 31, 2020, 2021 or 2022. Net cash acquired includes $49,725 of cash acquired less $39,607 of assumed bank debt and capital leases. The Company spent $17,379 in acquisition expenses related to the Constantia Labels acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income as follows: $18 in the third quarter of fiscal 2017, $744 in the first quarter of fiscal 2018, $3,545 in the second quarter of fiscal 2018, $11,299 in the third quarter of fiscal 2018, $632 in the fourth quarter of fiscal 2018, $1,246 in the first quarter of fiscal 2019, and a credit of $(105) in the second quarter of fiscal 2019.

Purchase Price Allocation and Other Items

The determination of the purchase price allocation to specific assets acquired and liabilities assumed is incomplete for Constantia Labels. The purchase price allocation may change in future periods as the fair value estimates of assets and liabilities (including, but not limited to, accounts receivable, inventory, property, plant and equipment, intangibles, accounts payable, accrued liabilities, debt and non-controlling interests) and the valuation of the related tax assets and liabilities are completed. Based on fair value estimates, the purchase price for Constantia Labels has been allocated to individual assets acquired and liabilities assumed as follows:


	Constantia Labels
Assets Acquired:
Net cash acquired	$	10,118
Accounts receivable		117,399
Inventories		82,525
Property, plant and equipment		250,943
Intangible assets		432,400
Goodwill		675,707
Other assets		16,945

Total assets acquired		1,586,037

Liabilities Assumed:
Accounts payable		93,335
Accrued income taxes payable		8,014
Accrued expenses and other liabilities		39,651
Deferred tax liabilities		143,334

Total liabilities assumed		284,334

Net assets acquired		1,301,703

Noncontrolling interests		(2,300	)

Net assets acquired attributable to Multi-Color Corporation	$	1,299,403

The liabilities assumed in the Constantia Labels acquisition included a contingent liability of $9,671, estimated as of the acquisition date based on the Company’s best estimate. The contingent liability, payable to the pre-Constantia Flexibles owners of the respective entities, was based on future earnings of certain entities acquired. In the fourth quarter of fiscal 2018, $7,523 of the contingent liability was paid. The remaining contingent liability may be paid no later than December 31, 2020.

The fair value of the noncontrolling interests for Constantia Labels was estimated based on market valuations performed by an independent third party using a combination of: (i) an income approach based on expected future discounted cash flows; and (ii) an asset approach. During the second quarter of fiscal 2019, the Company increased its valuation of the noncontrolling interests for Constantia Labels by $1,200.

During the second quarter of fiscal 2019, goodwill decreased by $31,917 related to measurement period adjustments for the Constantia Labels acquisition. The measurement period adjustments primarily consisted of increases of $34,222, $22,400, $14,807 and $5,997 to the valuation of property, plant and equipment, intangible assets, deferred tax liabilities and capital leases, respectively.

During the second quarter of fiscal 2019, a $(5,769) credit to depreciation expense and $1,456 of amortization expense were recognized that would have been recognized in previous periods if the adjustments to provisional amounts were recognized as of the Constantia Labels acquisition date of October 31, 2017. We recognized income of $(1,594), $(1,550) and $(1,169) that would have been recognized in the third quarter of fiscal 2018, fourth quarter of fiscal 2018 and first quarter of fiscal 2019, respectively, if the adjustments to provisional amounts were recognized as of the acquisition date.

During the first quarter of fiscal 2019, goodwill increased by $291 related to measurement period adjustments for the Constantia Labels acquisition. The measurement period adjustments primarily consisted of a $2,538 and $261 increase in the valuation of other assets and accrued expenses, respectively, offset by a $2,507 and $151 decrease in the valuation of inventory and property, plant and equipment, respectively.

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


	Constantia Labels
	Fair Value		Useful Lives
Customer relationships	$	407,300		19 years
Technology		20,700		4 years
Trade name		4,400		4 years

Total identifiable intangible assets	$	432,400

Identifiable intangible assets are amortized over their useful lives based upon 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 Constantia Labels acquisition is 18 years.

The goodwill for Constantia Labels is attributable to combining Constantia Labels’ food & beverage business with Multi-Color’s existing platforms, particularly in home & personal care and wine & spirits and emerging position in healthcare, thereby creating additional growth opportunities for both businesses utilizing the expanded global footprint and the acquired workforce. Goodwill arising from the Constantia Labels acquisition is not deductible for income tax purposes.

The accounts receivable acquired as part of the Constantia Labels acquisition had a fair value of $117,399 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $119,883 and the estimated contractual cash flows that are not expected to be collected are $2,484.

Pro Forma Information

The following table provides the unaudited pro forma results of operations for the three and six months ended September 30, 2017 as if Constantia Labels had been acquired as of the beginning of fiscal year 2018. However, pro forma results do not include any anticipated synergies from the combination of the companies, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that may result in the future.


	Three Months Ended		Six Months Ended
	September 30, 2017		September 30, 2017
Net revenues	$	435,146	$	857,913
Net income attributable to Multi-Color		17,759		39,739
Diluted earnings per share		0.86		1.93

The following is a reconciliation of actual net revenues and net income attributable to Multi-Color Corporation to unaudited pro forma net revenues and net income:


	Three Months Ended					Six Months Ended
	September 30, 2017					September 30, 2017
	Net revenues		Net income attributable to Multi-Color			Net revenues		Net income attributable to Multi-Color
Multi-Color Corporation actual results	$	256,034	$	15,190		$	498,474	$	29,296
Constantia Labels actual results (1)		179,112		8,058			359,439		23,941
Pro forma adjustments		—		(5,489	)		—		(13,498	)

Pro forma results	$	435,146	$	17,759		$	857,913	$	39,739

(1)	Constantia Labels actual results include the six months pre-acquisition in fiscal 2018.

The following table identifies the unaudited pro forma adjustments:


	Three Months Ended			Six Months Ended
	September 30, 2017			September 30, 2017
Constantia Labels financing costs	$	4,261		$	8,454
Acquisition transaction costs		3,545			4,289
Incremental depreciation and amortization costs		(3,381	)		(7,469	)
Incremental interest costs		(12,380	)		(24,836	)
Tax effect of adjustments		2,466			6,064

Pro forma adjustments	$	(5,489	)	$	(13,498	)

Other Acquisition Activity

On October 11, 2017, the Company acquired 100% of TP Label Limited, the labels business of Tanzania Printers Limited (Tanzania Printers), and TP Kenya Limited (collectively, “TP Label”), which is located in Dar es Salaam, Tanzania with a sales and distribution center located in Nairobi, Kenya, for $15,929 less net cash acquired of $397. The purchase price included $9,557, which was retained by MCC at closing and was used to repay the indebtedness of TP Label Limited and Tanzania Printers during the three months ended March 31, 2018. The purchase price also included an indemnification holdback of $1,593 to fund certain potential obligations of the sellers with respect to the transaction, which is deferred for one year after the closing date. TP Label is primarily a pressure sensitive and cut and stack label business, serving customers in the food and beverage market.

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed is incomplete for TP Label. The purchase price allocations may change in future periods as the fair value estimates of assets and liabilities (including, but not limited to, accounts receivable, inventory, property, plant and equipment, intangibles and debt) and the valuation of the related tax assets and liabilities are completed.

On August 3, 2017, the Company acquired 100% of GEWA Etiketten GmbH (GEWA), including the remaining 2.4% of the common shares of GIP (see below), for $21,846 plus net debt assumed of $5,228. Upon closing, $2,185 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 purchase agreement. The escrow amount is to fund certain potential indemnification obligations of the seller with respect to the transaction. GEWA is located in Bingen am Rhein, Germany and specializes in producing pressure sensitive labels for the wine and spirits market.

On January 3, 2017, the Company acquired 100% of Graphix Labels and Packaging Pty Ltd. (Graphix) for $17,261. The purchase price included $1,631 that is deferred for two years after the closing date. Graphix is located in Melbourne, Victoria, Australia and specializes in producing labels for both the food & beverage and wine & spirits markets.

In January 2017, the Company acquired an additional 67.6% of the common shares of GIP for $2,084 plus net debt assumed of $862. The purchase price included a deferred payment of $208 that was paid during the three months ended March 31, 2018. The Company acquired 30% of GIP as part of the Barat acquisition in fiscal 2016. Immediately prior to obtaining a controlling interest in GIP, the Company recognized a gain of $690 as a result of re-measuring our equity interest to its fair value of $771 based on the most recent share activity. In August 2017, the Company acquired the remaining 2.4% of the common shares of GIP in conjunction with the GEWA acquisition (see above). GIP is located in the Bordeaux region of France and specializes in producing labels for the wine & spirits market.

On July 6, 2016, the Company acquired 100% of Industria Litografica Alessandrina S.r.l. (I.L.A.) for $6,301 plus net debt assumed of $3,547. The purchase price included $819 that is deferred for three years after the closing date. I.L.A. is located in the Piedmont region of

Italy and specializes in production of premium self-adhesive and wet glue labels primarily for the wine & spirits market and also services the food industry.

On July 1, 2016, the Company acquired 100% of Italstereo Resin Labels S.r.l. (Italstereo) for $3,342 less net cash acquired of $181. The purchase price included a deferred payment of $201 that was paid in the three months ended September 30, 2017 and a deferred payment of $133 that was paid in the three months ended September 30, 2018. Italstereo is located near Lucca, Italy and specializes in producing pressure sensitive adhesive resin coated labels, seals and emblems.

The results of operations of the acquisitions described above within this “Other Acquisition Activity” section have been included in the condensed consolidated financial statements since the respective dates of acquisition and have been determined to be immaterial for purposes of additional disclosure.

Sale of Southeast Asian durables business

On July 3, 2017, the Company sold its 60% controlling interest in its Southeast Asian durables business to its minority shareholders for $3,620 in net cash proceeds. The Company recognized a loss of $512 on the sale of the business, which was recognized in other expense in the consolidated statements of income.

11. Accumulated Other Comprehensive Loss

The changes in the Company’s accumulated other comprehensive loss by component consisted of the following:


	Foreign			Gains and (losses)			Defined benefit
	currency			on derivative			pension
	items			contracts			items			Total
Balance at March 31, 2018	$	6,335		$	(25,408	)	$	(168	)	$	(19,241	)
OCI before reclassifications		(92,657	)		22,157			—			(70,500	)
Amounts reclassified from AOCI		—			(3,879	)		—			(3,879	)

Net current period OCI		(92,657	)		18,278			—			(74,379	)
ASU 2018-02 reclassification of stranded tax effects		(244	)		(1,506	)					(1,750	)

Balance at September 30, 2018	$	(86,566	)	$	(8,636	)	$	(168	)	$	(95,370	)

Reclassifications out of accumulated other comprehensive loss consisted of the following:


	Three Months Ended			Six Months Ended
	September 30, 2018			September 30, 2018
Cross currency swaps (1)	$	(2,407	)	$	(4,732	)
Interest rate swaps (1)		(394	)		(665	)
Foreign exchange forward contracts (2)		171			171
Tax		699			1,347

Net of tax	$	(1,931	)	$	(3,879	)

(1)	Reclassified from AOCI into interest expense in the condensed consolidated statements of income. See Note 8.

(2)	Reclassified from AOCI into cost of revenues in the condensed consolidated statements of income. See Note 8.

12. Goodwill and Intangible Assets

The changes in the Company’s goodwill consisted of the following:


Balance at March 31, 2018:
Goodwill, gross	$	1,210,179
Accumulated impairment losses		(13,545	)

Goodwill, net		1,196,634
Activity during the year:
Adjustments to prior year acquisitions		(32,333	)
Currency translation		(65,516	)
Balance at September 30, 2018:
Goodwill, gross		1,111,217
Accumulated impairment losses		(12,432	)

Goodwill, net	$	1,098,785

The Company’s intangible assets consisted of the following:


	September 30, 2018							March 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	657,212	$	(103,734	)	$	553,478	$	648,273	$	(87,560	)	$	560,713
Technologies		22,254		(6,175	)		16,079		21,721		(3,586	)		18,135
Trademarks		4,521		(1,138	)		3,383		99		(66	)		33
Non-compete agreements		3,836		(2,729	)		1,107		3,880		(2,528	)		1,352

Total	$	687,823	$	(113,776	)	$	574,047	$	673,973	$	(93,740	)	$	580,233

The amortization expense of intangible assets for the three months ended September 30, 2018 and 2017 was $12,253 and $3,831, respectively. The amortization expense of intangible assets for the six months ended September 30, 2018 and 2017 was $22,663 and $7,435, respectively.

13. Facility Closures

Merignac, France

During the three months ended September 30, 2017, the Company announced plans to consolidate our manufacturing facility located in Merignac, France into our existing facility in Libourne, France. The transition was substantially completed in the third quarter of fiscal 2018.

Below is a summary of the total contractual termination benefits and exit and disposal costs related to the closure of the Merignac facility:

Total costs
expected to be
incurred

Total costs incurred

Cumulative costs
incurred as of
September 30, 2018

Three Months Ended
September 30, 2018

Six Months Ended
September 30, 2018

Severance and other termination benefits

703

—

703

Other associated costs

500-750

440

Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved to other manufacturing facilities, and ongoing costs related to the leased facility until expiration or early termination of the related lease agreement.

Below is a reconciliation of the beginning and ending liability balances related to the contractual termination benefits and exit and disposal costs:


	Balance at March 31, 2018		Amounts Expensed		Amounts Paid			Balance at September 30, 2018
Severance and other termination benefits	$	457		—		(410	)	$	47
Other associated costs		—		93		(93	)		—

During the three months ended September 30, 2018, the Company recorded a non-cash loss on the disposal of property, plant and equipment of $48 related to assets that were not transferred from Merignac to Libourne and were sold or abandoned.

The cumulative costs incurred in conjunction with the closure as of September 30, 2018 are $1,256, which were recorded in facility closure expenses in the condensed consolidated statements of income. The cumulative costs incurred include the exit and disposal and fixed asset disposal costs above as well as $125 in non-cash impairment charges and $42 in net loss on the sale related to property, plant and equipment at the Merignac facility, which were recorded in facility closure expenses during the three months ended March 31, 2018. In addition, the Company reversed $102 in accrued pension related to employees that were terminated in conjunction with the closure, which were recorded to facility closure expenses during the three months ended March 31, 2018.

Dormans, France

During the three months ended June 30, 2017, the Company announced plans to close our manufacturing facility located in Dormans, France. Production at the facility ceased during the first quarter of fiscal 2018.

Below is a summary of the exit and disposal costs related to the closure of the Dormans facility:


	Total costs expected to be incurred		Total costs incurred				Cumulative costs incurred as of September 30, 2018
	Total costs expected to be incurred		Three Months Ended September 30, 2017		Six Months Ended September 30, 2017		Cumulative costs incurred as of September 30, 2018
Severance and other termination benefits	$	106	$	72	$	106	$	106
Other associated costs		23		23		23		23

Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved to other manufacturing facilities.

The cumulative costs incurred in conjunction with the closure as of September 30, 2018 are $260, which were recorded in facility closure expenses in the condensed consolidated statements of income. The cumulative costs incurred include the exit and disposal costs above as well as non-cash impairment charges of $25 related to the land and building that was previously held for sale at the Dormans facility, which was recorded in facility closure expenses during the three months ended December 31, 2017. In addition, the Company recorded a net loss on the disposal of property, plant and equipment of $59 related to assets in Dormans that were not transferred to other facilities and were sold or abandoned and wrote-off $47 in raw materials that were not transferred to other facilities during the three months ended March 31, 2018.

14. 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.

15. Supplemental Cash Flow Disclosures

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


	Six Months Ended
	September 30, 2018			September 30, 2017
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	42,332		$	12,027
Income taxes paid, net of refunds		15,733			17,413
Supplemental Disclosures of Non-Cash Activities:
Capital expenditures incurred but not yet paid	$	5,095		$	2,354
Capital lease obligations incurred		1,771			—
Change in derivative contract fair value - asset position		4,013			13,473
Change in derivative contract fair value - liability position		21,611			(17,876	)
Business combinations accounted for as a purchase:
Assets acquired (excluding cash)	$	22,244		$	40,425
Liabilities assumed		(21,044	)		(19,042	)
Noncontrolling interests		(1,200	)		—

Net cash paid	$	—		$	21,383

16. Subsequent Events

On October 16, 2018, the Company amended the terms of its $496,250 Term Loan B Facility provided pursuant to the terms and conditions of its Credit Agreement to lower the applicable margin payable on LIBOR indexed loans thereunder from 225 bps to 200 bps. The reduction of the applicable margin on the Term Loan B Facility is expected to result in an annual interest savings of $1,200 over the remaining life of the Term Loan B Facility. The maturity date for the Term Loan B Facility remains October 31, 2024 and all other material provisions of the Credit Agreement remain unchanged. The Company paid $650 in arrangement fees in conjunction with the amendment.

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 Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (the “2018 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 statistical data, 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 & spirits, food & beverage, healthcare and specialty consumer products. MCC serves national and international brand owners in the North, Central, and South America, Europe, Africa, China, Southeast Asia, Australia and New Zealand with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack, In-Mold, Shrink Sleeve, Heat Transfer, Roll Fed, and Aluminum Labels.

The softer revenues from some of our major customers, particularly in North America, is expected to continue in the remainder of fiscal 2019 and increase in fiscal 2020 resulting primarily from downward pressure on pricing. We will continue to focus on organic growth and internal improvement opportunities in an effort to offset this softness.

Results of Operations

Three Months Ended September 30, 2018 compared to the Three Months Ended September 30, 2017:

Net Revenues


					$		%
	2018		2017		Change		Change
Net revenues	$	434,913	$	256,034	$	178,879		70	%

Net revenues increased 70% to $434,913 compared to $256,034 in the prior year quarter. Acquisitions occurring after the beginning of the second quarter of fiscal 2018 accounted for a 70% increase in revenues. Organic revenues increased 2% led by strong organic growth in developing markets offset by lower growth in developed markets, primarily in North America, which experienced softer volumes in the second half of the quarter. Foreign exchange led to a 2% decrease in revenues primarily driven by depreciation of the Australian dollar and Latin American currencies quarter over quarter.

Cost of Revenues and Gross Profit


							$		%
	2018			2017			Change		Change
Cost of revenues	$	348,128		$	204,260		$	143,868		70	%
% of Net revenues		80.0	%		79.8	%
Gross profit	$	86,785		$	51,774		$	35,011		68	%
% of Net revenues		20.0	%		20.2	%

Cost of revenues increased 70% or $143,868 compared to the prior year quarter. Acquisitions occurring after the beginning of the second quarter of fiscal 2018 contributed 71% or $144,006 to cost of revenues, benefitting from lower depreciation in relation to purchase accounting valuations for the fixed assets of Constantia Labels. Organic revenue growth increased cost of revenues by 2% or $3,503. The remaining decrease of $3,641 related to the unfavorable effects of foreign exchange.

Gross profit increased 68% or $35,011 compared to the prior year quarter. Acquisitions occurring after the beginning of the second quarter of fiscal 2018 contributed 68% or $34,998 to gross profit. Organic gross profit increased 1% or $675, net of start-up costs of $765 incurred in relation to a new In-Mold label facility in the United States. Unfavorable foreign exchange decreased gross profit by 1% or $662. Gross margins were 20% of net revenues for the current and prior year quarters.

Selling, General and Administrative Expenses and Facility Closure Expenses


	2018			2017			$ Change		% Change
Selling, general and administrative expenses	$	39,191		$	25,200		$	13,991		56	%
% of Net revenues		9.0	%		9.8	%
Facility closure expenses	$	114		$	95		$	19		20	%
% of Net revenues		0.0	%		0.0	%

Selling, general and administrative expenses increased 56% or $13,991 compared to the prior year quarter. Acquisitions occurring after the beginning of the second quarter of fiscal 2018 contributed 60% or $15,045, including acquisition and integration expenses of $1,111. In the current year quarter, the Company incurred an additional $1,143 of acquisition and integration expenses, for a total of $2,254, compared to $4,087 in the prior year quarter. Favorable foreign exchange was $276 and the remaining increase of $2,166 primarily related to compensation costs and professional fees.

Facility closure expenses were $114 in the current year quarter compared to $95 in the prior year quarter.

Interest Expense and Other Income, Net


	2018		2017			$ Change		% Change
Interest expense	$	18,690	$	6,669		$	12,021		180	%
Other expense (income), net	$	1,860	$	(2,676	)	$	4,536		(170	%)

Interest expense increased 180% or $12,021 compared to the prior year quarter primarily due to the increase in debt borrowings to finance the Constantia Labels acquisition.

Other expense was $1,860 in the current year quarter primarily related to the release of a foreign indemnification receivable of $3,063 for which an offsetting tax liability was also relieved reducing the current year tax rate. The balance related to net foreign currency gains. Other income in the prior year quarter was primarily related to the unrealized gain of $8,822 on a forward contract to fix the exchange rate between the U.S. Dollar and the Euro for the Constantia Labels acquisition and non-cash charges related to acquisition-related cross-currency swaps of $5,811. Additionally, the Company sold the Southeast Asian Durables business for a loss of $512 during the prior year quarter. The remaining change in other income in the prior year primarily related to gains and losses on foreign exchange.

Income Tax Expense


	2018		2017		$ Change			% Change
Income tax expense	$	3,125	$	7,296	$	(4,171	)		(57	%)

Income tax expense decreased 57% or $4,171 in the current year quarter compared to the prior year quarter primarily due to the release of a tax liability related to a foreign indemnification receivable related to previous acquisitions for $3,063 in the current year quarter for which there was an offsetting impact in other expense. The effective tax rate was 12% for the current year quarter compared to 32% in the prior year quarter primarily due to the release of a tax liability related to a foreign indemnification receivable.

Six Months Ended September 30, 2018 compared to the Six Months Ended September 30, 2017:

Net Revenues


	2018		2017		$ Change		% Change
Net revenues	$	891,044	$	498,474	$	392,570		79	%

Net revenues increased 79% to $891,044 compared to $498,474 in the six months ended September 30, 2017. Acquisitions occurring after the beginning of fiscal 2018 accounted for a 75% increase in revenues, net of divestitures. Organic revenue increased 4% and was broadly based across geographies and markets.

Cost of Revenues and Gross Profit


	2018			2017			$ Change		% Change
Cost of revenues	$	716,249		$	397,243		$	319,006		80	%
% of Net revenues		80.4	%		79.7	%
Gross profit	$	174,795		$	101,231		$	73,564		73	%
% of Net revenues		19.6	%		20.3	%

Cost of revenues increased 80% or $319,006 compared to the six months ended September 30, 2017. Acquisitions occurring after the beginning of fiscal 2018, net of divestitures contributed 77% or $306,429 to cost of revenues. Organic revenue growth increased cost of revenues by 3% or $12,382, and the unfavorable impact of foreign exchange rates contributed $195.

Gross profit increased 73% or $73,564 compared to the six months ended September 30, 2017. Acquisitions occurring after the beginning of fiscal 2018 contributed 65% or $65,315 to gross profit, net of divestitures. Organic gross profit increased 8% or $7,939. The remaining increase of $310 related to the favorable effects of foreign exchange. Gross margins were 19.6% of net revenues for the six months ended September 30, 2018 compared to 20.3% in the six months ended September 30, 2017.

Selling, General and Administrative Expenses and Facility Closure Expenses


	2018			2017			$ Change		% Change
Selling, general and administrative expenses	$	81,959		$	48,789		$	33,170		68	%
% of Net revenues		9.2	%		9.8	%
Facility closure expenses	$	141		$	129		$	12		9	%
% of Net revenues		0.0	%		0.0	%

Selling, general and administrative expenses increased 68% or $33,170 compared to the six months ended September 30, 2017. Acquisitions occurring after the beginning of fiscal 2018 contributed $30,175, net of divestitures, including acquisition and integration expenses of $2,827. Foreign exchange increased selling, general and administrative expenses by $162. In the six months ended September 30, 2018, the Company incurred an additional $3,647 of acquisition and integration expenses, for a total of $6,474, primarily in relation to Constantia Labels, compared to $4,993 in the six months ended September 30, 2017. The remaining increase of $4,179 primarily related to professional fees and compensation expenses.

Facility closure expenses were $141 in the six months ended September 30, 2018 compared to $129 in the six months ended September 30, 2017. The current period expenses primarily related to the closure of our manufacturing facility in Merignac, France. Expenses in the prior year period related to closure of our manufacturing facility in Dormans, France.

Interest Expense and Other Income, Net


	2018		2017			$ Change		% Change
Interest expense	$	37,889	$	13,004		$	24,885		191	%
Other expense (income), net	$	2,904	$	(1,477	)	$	4,381		(297	%)

Interest expense increased $24,885 compared to the six months ended September 30, 2017 primarily due to the increase in debt borrowings to finance the Constantia Labels acquisition.

Other expense was $2,904 in the six months ended September 30, 2018 compared to income of $1,477 in the six months ended September 30, 2017. Other expense included the release of foreign indemnification receivables of $3,063 in the current year and $1,124 in the prior year for which offsetting tax liabilities were relieved reducing the current and prior year tax rates. Other income in the prior year quarter included the unrealized gain of $8,822 on a forward contract to fix the exchange rate between the U.S. Dollar and the Euro for the Constantia Labels acquisition and non-cash charges related to acquisition-related cross-currency swaps of $5,811. Additionally, the

Company sold the Southeast Asian Durables business for a loss of $512 during the prior year. The remaining change in other income in the prior year primarily related to gains and losses on foreign exchange.

Income Tax Expense


	2018		2017		$ Change			% Change
Income tax expense	$	10,005	$	11,454	$	(1,449	)		(13	%)

Income tax expense decreased 13% or $1,449 in the current year compared to the prior year primarily due to the release of tax liabilities related to foreign indemnification receivables related to previous acquisitions for $3,063 in the current year and $1,124 in the prior year for which there were offsetting impacts in other expense.

Liquidity and Capital Resources

Comparative Cash Flow Analysis

Through the six months ended September 30, 2018, net cash provided by operating activities was $106,237 compared to $44,214 in the same period of the prior year. Net income adjusted for non-cash expenses consisting primarily of depreciation and amortization was $95,082 in the current year compared to $56,827 in the same period of the prior year. Our source of operating assets and liabilities of $11,155 in the current year increased from a use of $12,613 in the prior year.

Through the six months ended September 30, 2018, net cash used in investing activities was $52,351 compared to $43,772 in the same period of the prior year. Capital expenditures, primarily funded by cash flows from operations totaled $53,941 in the current year compared to $26,262 in the same period of the prior year. Proceeds from the sale of property, plant and equipment totaled $1,590 in the current year compared to $253 in the same period of the prior year. Net cash used in acquisitions totaled $21,383 in the prior year period. The Company received net cash proceeds of $3,620 from the sale of its Southeast Asian durables business in the prior year period.

Through the six months ended September 30, 2018, net cash used in financing activities was $40,906, which included $38,758 of net debt payments and dividends paid of $2,048, offset by $1,004 of proceeds from the issuance of common stock. Cash used in financing activities also included $1,104 related to deferred payments for the Constantia Labels and Italstereo acquisitions.

Through the six months ended September 30, 2017, net cash provided by financing activities was $8,312, which included $9,699 of net debt borrowings and dividends paid of $1,977, offset by $2,432 of proceeds from the issuance of common stock. Dividends paid included $1,698 to shareholders of Multi-Color Corporation and $279 to the minority shareholders of the Southeast Asian durables business. Cash used in financing activities also included $206 related to deferred payments for the Italstereo acquisition and $1,636 in debt issuance costs.

Capital Resources

In conjunction with the Constantia Labels acquisition, effective October 31, 2017 the Company entered into a credit agreement (the “Credit Agreement”) with various lenders. The Credit Agreement replaced the Company’s previous credit agreement and consists of (i) a senior secured first lien term loan A facility (the “Term Loan A Facility”) in an aggregate initial principal amount of $150,000 with a five year maturity, (ii) a senior secured first lien term loan B facility (the “Term Loan B Facility”) in an aggregate principal amount of $500,000 with a seven year maturity, and (iii) a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount up to $400,000, comprised of a $360,000 U.S. revolving credit facility (the “U.S. Revolving Credit Facility“) and a $40,000 U.S. Dollar equivalent Australian sub-facility (the “Australian Revolving Sub-Facility”), each with a five year maturity.

Contractual Obligations

The following table summarizes the Company’s contractual obligations as of September 30, 2018:


	Total		Year 1		Year 2		Year 3		Year 4		Year 5		More than 5 years
Long-term debt	$	1,552,407	$	18,985	$	15,473	$	19,205	$	25,733	$	401,761	$	1,071,250
Capital leases		40,332		4,788		4,128		3,743		2,879		2,930		21,864
Interest on long-term debt (1)		425,110		77,276		75,045		73,790		72,471		52,639		73,889
Rent due under operating leases		95,973		22,811		19,137		16,623		14,421		8,155		14,826
Unconditional purchase obligations		24,674		24,083		496		88		7		—		—
Pension obligations		382		9		15		22		29		37		270
Unrecognized tax benefits (2)		—		—		—		—		—		—		—
Contingent liability acquired		1,348		—		—		1,348		—		—		—
Deferred purchase price		23,260		9,333		1,161		4,874		1,161		6,731		—

Total contractual obligations	$	2,163,486	$	157,285	$	115,455	$	119,693	$	116,701	$	472,253	$	1,182,099

(1)	Interest on floating rate debt was estimated using projected forward London Interbank Offered Rate (LIBOR) and Bank Bill Swap Bid Rates (BBSY) as of September 30, 2018.

(2)	The table excludes $5,670 of liabilities related to unrecognized tax benefits as the timing and extent of such payments are not determinable.

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 2018 10-K. In addition, our significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements included in our 2018 10-K.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company has no material changes to the market risk disclosures made in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018.

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 September 30, 2018. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2018.

Changes in Internal Control Over Financial Reporting

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 September 30, 2018 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, 2018.

Item 6.

Exhibits



10.1		Amended and Restated 2012 Stock Incentive Plan effective August 8, 2018

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: November 9, 2018	By:	/s/ Sharon E. Birkett
		Sharon E. Birkett
		Vice President, Chief Financial Officer,
		Secretary

Exhibit 10.1

MULTI-COLOR CORPORATION

AMENDED AND RESTATED 2012 STOCK INCENTIVE PLAN

TABLE OF CONTENTS


1.	Purposes		1

2.	Definitions		1

3.	Administration of the Plan		5
	(a)	Authority of Committee	5
	(b)	Binding Authority	6
	(c)	Delegation of Authority	6

4.	Eligibility		6

5.	Common Shares Subject to the Plan		6
	(a)	Authorized Number of Common Shares	6
	(b)	Share Counting	7
	(c)	Award Limitations	7
	(d)	Shares to be Delivered	8

6.	Awards to Participants		8
	(a)	Stock Options	8
	(b)	Stock Appreciation Rights	10
	(c)	Restricted Shares and Restricted Share Units	11
	(d)	Performance-Based Exception	13
	(e)	Unrestricted Share Awards	14

7.	Deferred Payment		14

8.	Dilution and Other Adjustments		14

9.	Change in Control		14

10.	Termination		14
	(a)	Termination by Death, Disability, or Retirement	14
	(b)	Termination for Cause	15
	(c)	Other Terminations	15
	(d)	Limitation for ISOs	15
	(e)	Transfers and Leaves of Absence	15

11.	Recoupment or Recovery Policy		16

12.	Miscellaneous Provisions		16
	(a)	Rights as a Shareholder	16
	(b)	No Loans	16
	(c)	Assignment or Transfer	16
	(d)	Withholding Taxes	16
	(e)	No Rights to Awards	17


	(f)	Beneficiary Designation	17
	(g)	Fractional Shares	17
	(h)	Unfunded Plan	17
	(i)	Severability	17
	(j)	Limitation of Liability	17
	(k)	Successors	18
	(l)	Code Section 409A Compliance	18

13.	Effective Date, Amendments, Governing Law and Plan Termination		18
	(a)	Effective Date	18
	(b)	Amendments	18
	(c)	Governing Law	19
	(d)	Plan Termination	19

MULTI-COLOR CORPORATION

AMENDED AND RESTATED 2012 STOCK INCENTIVE PLAN

1.	Purposes

The purposes of the Plan are to provide long-term incentives to those persons with significant responsibility for the success and growth of the Company, to align the interests of such persons with those of the Company’s shareholders, to assist the Company in recruiting, retaining and motivating employees and directors on a competitive basis and to link compensation to performance.

2.	Definitions

For purposes of the Plan, the following capitalized terms shall have the meanings specified below:

(a) “Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act.

(b) “Award” means a grant of Stock Options, Stock Appreciation Rights, Restricted Shares or Restricted Share Units, or any or all of them, to a Participant.

(c) “Award Agreement” means an agreement, either in written or electronic format, between the Company and a Participant setting forth the terms and conditions of an Award granted to the Participant.

(d) “Award Value” shall mean $65,000, subject to adjustment in Section 6(c).

(e) “Beneficial Owner” has the meaning given in Rule 13d-3 under the Exchange Act.

(f) “Board” means the Board of Directors of the Company.

(g) “Cause” means with respect to any Participant, unless otherwise provided in the applicable Award Agreement, (i) the Participant’s conviction or misappropriation of money or other property or conviction of a felony, or a guilty plea or plea of nolo contendere by Participant with respect to a felony, (ii) conduct by the Participant that is in competition with the Company, conduct by a Participant that breaches the Participant’s duty of loyalty to the Company or a Participant’s willful misconduct, any of which materially injures the Company, (iii) a willful and material breach by the Participant of his or her obligations under any agreement entered into between the Participant and the Company that materially injures the Company, or (iv) the Participant’s failure to substantially perform his or her duties with the Company (other than by reason of the Participant’s Disability). For Participants subject to Section 16 of the Exchange Act, the determination of whether any conduct, action or failure to act constitutes “Cause” shall be made by the Committee in its sole discretion.

(h) “Change in Control” means the occurrence of any of the following events:

(i) Any Person (including a “group” as defined in Section 14(d) of the Exchange Act) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 25% of the combined voting power of the Company’s then-outstanding securities; provided, however, that no Change of Control shall be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Company;

(ii) During any consecutive 12 month period, individuals who at the beginning of such 12 month period constitute the Board and any new director whose election to the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two–thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute at least a majority of the Board;

(iii) A reorganization, merger or consolidation of the Company in each case, unless, following such reorganization, merger or consolidation, all or substantially all of the individuals and entities who were the Beneficial Owners of the Company’s outstanding voting securities immediately prior thereto beneficially own, directly or indirectly, more than 80% of the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of directors resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership immediately prior to such reorganization, merger or consolidation of the outstanding voting securities of the Company; or

(iv) A liquidation, dissolution, sale or other disposition of all or substantially all of the assets of the Company (other than in a transaction in which all or substantially all of the individuals and entities who were the Beneficial Owners of the Company’s outstanding voting securities immediately prior to such sale or other disposition beneficially own, directly or indirectly, substantially all of the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of directors of the acquiror of such assets (either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such sale or other disposition).

(i) “Code” means the Internal Revenue Code of 1986, as amended, and any rules, regulations or guidance promulgated thereunder. Any reference to the Code or a section thereof shall also refer to any successor Code or section.

(j) “Committee” means a committee appointed by the Board consisting of at least three members of the Board, all meeting the definitions of “outside director” set forth in Code Section 162(m), “independent director” set forth in The Nasdaq Stock Market rules, and “non-employee director” set forth in Rule 16b-3 of the Exchange Act, or any successor definitions adopted for a similar purpose by the Internal Revenue Service, any national securities exchange on which the Common Shares are listed or the Securities and Exchange Commission.

(k) “Common Share” or “Common Shares” means one or more of the common shares, without par value, of the Company.

(l) “Company” means Multi-Color Corporation, a corporation organized under the laws of the State of Ohio, its subsidiaries, divisions and affiliated businesses.

(m) “Date of Grant” means the date on which the Committee authorizes the grant of an Award or such later date as may be specified by the Committee in such authorization.

(n) “Disability” means a Participant’s physical or mental incapacity resulting from personal injury, disease, illness or other condition which (i) prevents him or her from performing his or her duties for the Company, as determined by the Committee or its designee, or (ii) results in his or her termination of employment or service with the Company. The Committee may substitute a different definition for the term “Disability” in its discretion as it deems appropriate.

(o) “Effective Date” has the meaning set forth in Section 13(a).

(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any rules, regulations, schedules or guidance promulgated thereunder. Any reference to the Exchange Act or a section thereof shall also refer to any successor Exchange Act or section.

(q) “Exercise Price” means the purchase price of a Common Share covered by a Stock Option or SAR, as applicable.

(r) “Fair Market Value” on any date means the closing price of the Common Shares as reported on The Nasdaq Stock Market or, if applicable, any other national securities exchange on which the Common Shares are principally traded, or, if there were no sales of Common Shares on such date, then on the immediately preceding date on which there were any sales of Common Shares. If the Common Shares cease to be traded on a national securities exchange, the Fair Market Value shall be determined pursuant to a reasonable valuation method prescribed by the Committee. In the case of an ISO (or Tandem SAR), Fair Market Value shall be determined by the Committee in accordance with Code Section 422. For Awards intended to be exempt from Code Section 409A, Fair Market Value shall be determined by the Committee in accordance with Code Section 409A.

(s) “Full-Value Award” means Restricted Shares, Restricted Share Units or unrestricted Common Shares.

(t) “ISO” means an Incentive Stock Option satisfying the requirements of Code Section 422 and designated as an ISO by the Committee.

(u) “Non-Employee Director” means a member of the Board who is not an employee of the Company.

(v) “NQSO” means a non-qualified Stock Option that does not satisfy the requirements of Code Section 422 or that is not designated as an ISO by the Committee.

(w) “Participant” means a person eligible to receive an Award under the Plan, as set forth in Section 4, and designated by the Committee to receive an Award subject to the conditions set forth in the Plan and any Award Agreement.

(x) “Performance-Based Exception” means the performance-based exception to the deductibility limitations of Code Section 162(m), as set forth in Code Section 162(m)(4)(C).

(y) “Performance Goals” means the goals established by the Committee, as described in Section 6(d)(ii).

(z) “Performance Measures” means the criteria set out in Section 6(d)(iii) that may be used by the Committee as the basis for a Performance Goal.

(aa) “Performance Period” means the period established by the Committee during which the achievement of Performance Goals is assessed in order to determine whether and to what extent an Award that is conditioned on attaining Performance Goals has been earned.

(bb) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Company securities.

(cc) “Plan” means the Multi-Color Corporation Amended and Restated 2012 Stock Incentive Plan, as amended and restated from time to time.

(dd) “Prior Plan” means the Multi-Color Corporation 2003 Stock Incentive Plan, as it may have been amended and/or restated.

(ee) “Restricted Shares” means Common Shares that are subject to restrictions, as described in Section 6(c).

(ff) “Restricted Share Units” means a right, as described in Section 6(c), denominated in Common Shares to receive an amount, payable in either cash, Common Shares, Restricted Shares, or a combination thereof, equal to the value of a specified number of Common Shares.

(gg) “Restriction Period” means, with respect to any Full-Value Award, the period during which any risk of forfeiture or other restrictions set by the Committee, including performance restrictions, remain in effect until such time as they have lapsed under the terms and conditions of the Full-Value Award or as otherwise determined by the Committee, including the Performance Period for Full-Value Awards intended to qualify for the Performance-Based Exception.

(hh) “Retirement” means, with respect to employees of the Company, retirement with the Company at or after age 55 and, with respect to Non-Employee Directors of the Company, retirement at or after seven years of service.

(ii) “Securities Act” means the Securities Act of 1933, as amended, and any rules, regulations, schedules or guidance promulgated thereunder. Any reference to the Securities Act or a section thereof shall also refer to any successor Securities Act or section.

(jj) “Stock Appreciation Right” or “SAR” means the right, as described in Section 6(b), to receive a payment equal to the excess of the Fair Market Value of a Common Share on the date the SAR is exercised over the Exercise Price established for that SAR at the time of grant, multiplied by the number of Common Shares with respect to which the SAR is exercised.

(kk) “Stock Option” means the right, as described in Section 6(a), to purchase Common Shares at a specified price for a specified period of time. Stock Options include ISOs and NQSOs.

(ll) “Tandem SAR” means a SAR granted in tandem with a Stock Option.

3.	Administration of the Plan

(a) Authority of Committee . The Plan shall be administered by the Committee. Unless otherwise determined by the Board, the Compensation Committee of the Board shall serve as the Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include the sole and exclusive authority to (within the limitations described in the Plan):

(i) select Participants to be granted Awards under the Plan and grant Awards pursuant to the terms of the Plan;

(ii) determine the type, size and terms of the Awards to be granted to each Participant;

(iii) determine the time when Awards are to be granted and any conditions that must be satisfied before an Award is granted;

(iv) establish objectives and conditions for earning an Award;

(v) determine all other terms and conditions, not inconsistent with the terms of the Plan and any operative employment or other agreement, of any Award granted under the Plan, and determine the appropriate Award Agreement evidencing the Award;

(vi) determine whether the terms, conditions, and objectives for earning an Award have been met, including, without limitation, any such determination or certification, as the case may be, required for compliance with Code Section 162(m);

(vii) modify or waive the terms and conditions of Awards granted under the Plan, not inconsistent with the terms of the Plan and any operative employment or other agreement, accelerate the vesting, exercise or payment of an Award or cancel or suspend an Award;

(viii) determine whether the amount or payment of an Award should be reduced or eliminated, and determine if, when and under what conditions payment of all or any part of any Award may be deferred;

(ix) determine the guidelines and/or procedures for the payment or exercise of Awards;

(x) determine whether an Award should qualify, regardless of its amount, as deductible in its entirety for federal income tax purposes, including whether any Awards granted to an employee should qualify for the Performance-Based Exception;

(xi) adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan;

(xii) construe, interpret, administer and implement the Plan, any Award Agreements or related documents and correct any defect, supply an omission or reconcile any inconsistency in or between the Plan, any Award Agreement or related documents; and

(xiii) make factual determinations with respect to the Plan and any Awards and otherwise supervise the administration of the Plan.

(b) Binding Authority . The Committee’s interpretations of the Plan, and all actions taken and determinations made by the Committee pursuant to the powers vested in it under the Plan, shall be conclusive and binding on all parties, including the Company, its shareholders and all Participants.

(c) Delegation of Authority . To the extent not prohibited by law or the rules of the national securities exchange on which the Company’s Common Shares are listed, the Committee may allocate its authority hereunder to one or more of its members or delegate its authority hereunder to one or more Non-Employee Directors or one or more officers of the Company, except that no such allocation or delegation shall be permitted with respect to Awards intended to qualify for the Performance-Based Exception, and may grant authority to employees of the Company to execute documents on behalf of the Committee or to otherwise assist in the administration and operation of the Plan. When the Committee delegates its authority hereunder to one or more officers of the Company, it shall specify the total number of Awards that the officer or officers may award and the terms on which any Awards may be issued, offered or sold. In no event shall the Committee authorize any officer to designate such officer as a recipient of any Awards.

4.	Eligibility

Subject to the terms and conditions of the Plan, the Committee may select, from all eligible persons, Participants to whom Awards shall be granted under the Plan and shall determine the nature and amount of each Award. Eligible persons include any of the following individuals: (i) any officer or key employee of the Company, and (ii) any Non-Employee Director. All Awards shall be evidenced by an Award Agreement, and Awards may be conditioned upon the Participant’s execution of an Award Agreement.

5.	Common Shares Subject to the Plan

(a) Authorized Number of Common Shares . Unless otherwise authorized by the Company’s shareholders and subject to this Section 5 and Section 8, the maximum aggregate

number of Common Shares available for issuance under the Plan is 1,250,000, plus (i) the number of Common Shares that, on the Effective Date, are available to be granted under the Prior Plan but which are not then subject to outstanding awards under the Prior Plan, and (ii) the number of Common Shares subject to outstanding awards under the Prior Plan as of the Effective Date which thereafter are forfeited, settled in cash or cancelled or expire. Upon the Effective Date, the Prior Plan will terminate; provided that all outstanding awards under the Prior Plan as of the Effective Date shall remain outstanding and shall be administered and settled in accordance with the provisions of the Prior Plan, as applicable.

(i) The maximum number of Common Shares available for grant with respect to Full-Value Awards is 500,000.

(ii) The maximum number of Common Shares available for issuance with respect to ISOs is 1,250,000.

(b) Share Counting . The following rules shall apply in determining the number of Common Shares available for grant under the Plan:

(i) Common Shares subject to any Award shall be counted against the maximum share limitation as one Common Share for every Common Share subject thereto.

(ii) To the extent that any Award is forfeited, cancelled, settled in cash, returned to the Company for failure to satisfy vesting requirements or other conditions of the Award or otherwise terminates without an issuance of Common Shares being made, the maximum share limitation shall be credited with one Common Share for each Common Share subject to such Award, and such number of credited Common Shares may again be made subject to Awards under the Plan.

(iii) Any Common Shares tendered by a Participant or withheld as full or partial payment of withholding or other taxes or as payment for the exercise or conversion price of an Award or repurchased by the Company with Stock Option proceeds shall not be added back to the number of Common Shares available for issuance under the Plan. Upon exercise of a SAR, the number of Common Shares subject to the Award that are being exercised shall be counted against the maximum aggregate number of Common Shares that may be issued under the Plan on the basis of one Common Share for every Common Share subject thereto, regardless of the actual number of Common Shares used to settle the SAR upon exercise.

(iv) Any Common Shares underlying Awards granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who become employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction shall not, unless required by law or regulation, count against the reserve of available Common Shares under the Plan.

(c) Award Limitations . Subject to the adjustment provisions of Section 8, the following limits shall apply with respect to Awards intended to quality for the Performance-Based Exception:

(i) The maximum aggregate number of Common Shares that may be subject to Stock Options or SARs granted in any calendar year to any one Participant shall be 300,000 Common Shares.

(ii) The maximum aggregate number of Common Shares that may be subject to Full-Value Awards granted in any calendar year to any one Participant shall be 100,000 Common Shares.

(d) Shares to be Delivered . Common Shares to be delivered by the Company under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

6.	Awards to Participants

(a) Stock Options .

(i) Grants . Subject to the terms and conditions of the Plan, Stock Options may be granted to Participants, in such number and upon such terms and conditions as the Committee determines, and may consist of ISOs or NQSOs. Stock options may be granted alone or with Tandem SARs. With respect to Stock Options granted with Tandem SARs, the exercise of either such Stock Options or Tandem SARs will result in the simultaneous cancellation of the same number of Stock Options or Tandem SARs, as the case may be.

(ii) Exercise Price . The Exercise Price shall be equal to or, at the Committee’s discretion, greater than the Fair Market Value on the date the Stock Option is granted, unless the Stock Option was granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction, in which case the assumption or substitution shall be accomplished in a manner that permits the Stock Option to be exempt from Code Section 409A.

(iii) Term . The term of Stock Options shall be determined by the Committee in its sole discretion, but in no event shall the term exceed ten years from the Date of Grant.

(iv) ISO Limits . ISOs may be granted only to Participants who are employees of the Company (or of any parent or subsidiary corporation within the meaning of Code Section 424) on the Date of Grant, and may only be granted to an employee who, at the time the Stock Option is granted, does not own more than ten percent of the total combined voting power of all classes of stock of the Company (or of any parent or subsidiary corporation within the meaning of Code Section 424), unless (A) the Exercise Price is at least 110% percent of the Fair Market Value on the Date of Grant, and (B) the ISO is not exercisable after five years from the Date of Grant. The aggregate Fair Market Value of all Common Shares, determined at the time the ISOs are granted, with respect to which ISOs are exercisable by a Participant for the first time during any calendar year (under all plans of the Company) shall not exceed $100,000 or such other amount as may subsequently be specified by the Code. If such Fair Market Value exceeds the $100,000 limit, the ISOs exceeding the limit shall be treated as NQSOs, taking the Stock Options in the order each was granted. The terms of all ISOs shall be consistent with and contain or be deemed to contain all provisions required to qualify as an “incentive stock option” under Code Section 422.

(v) No Repricing . Subject to the adjustment provisions of Section 8, without the approval of the Company’s shareholders, (A) the Exercise Price for any outstanding Stock Option may not be decreased after the Date of Grant, (B) no outstanding Stock Option may be surrendered to the Company as consideration for the grant of a new Stock Option with a lower Exercise Price, and (C) no other modifications to any outstanding Stock Option may be made that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the national securities exchange on which the Common Shares are listed.

(vi) Form of Payment . Vested Stock Options may be exercised in whole or in part, and the Exercise Price shall be paid to the Company at the time of exercise, subject to any applicable rules or regulations adopted by the Committee:

(A)

to the extent permitted by applicable law, pursuant to cashless exercise procedures that are approved by the Committee;

(B)

through the tender of unrestricted Common Shares owned by the Participant (or by delivering a certification or attestation of ownership of such Common Shares) valued at their Fair Market Value on the date of exercise;

(C)

in cash or its equivalent; or

(D)

by any combination of (A), (B), and (C) above.

(vii) No Dividends or Shareholder Rights . No dividends or dividend equivalents may be paid on Stock Options. Except as otherwise provided herein, a Participant shall have no rights as a holder of Common Shares covered by a Stock Option unless and until such Common Shares have been registered to the Participant as the owner.

(viii) Terms and Conditions of Non-Qualified Options Eligible for Grant to Non-Employee Directors . In the event and to the extent that the Board of Directors so determines, Non-Employee Directors shall be eligible to receive grants of NQSOs for Common Shares, in such number as may be determined by the Board of Directors from time to time, upon appointment or election and/or immediately after each subsequent annual meeting of shareholders if such person is serving as a Non-Employee Director at such time either by virtue of being re-elected or serving a term in excess of one year. All grants shall be made on the date of the event giving rise to the NQSO and shall have an Exercise Price of Fair Market Value on such date. Such grants shall vest in three equal annual installments beginning on the first anniversary of such date and each anniversary thereafter or at such other time(s) as the Board or the Committee shall have otherwise determined.

(A)

Any and all NQSOs granted to Non-Employee Directors shall be exercisable in the manner provided in Section 6(a) for a term of ten years.

(B)

Any and all NQSOs granted to Non-Employee Directors shall be transferable as provided in Section 12(c) and shall terminate in

accordance with Section 10(a), except that the timing provisions of Subsections 10(a) and 10(c) may not be varied by Committee determination.

(C)

Notwithstanding anything contained herein to the contrary, if at any time a Non-Employee Director holder of a NQSO granted under the Plan becomes an employee, officer or director of or a consultant to an entity which the Committee determines is a competitor of the Company, such NQSO shall automatically terminate as of the date such conflicting relationship was established.

(b) Stock Appreciation Rights .

(i) Grants . Subject to the terms and provisions of the Plan, SARs may be granted to Participants, in such number and upon such terms and conditions as the Committee determines, and may be granted alone or as Tandem SARs. With respect to Tandem SARs, the exercise of either such Stock Options or SARs will result in the simultaneous cancellation of the same number of Tandem SARs or Stock Options, as the case may be.

(ii) Exercise Price . The Exercise Price shall be equal to or, at the Committee’s discretion, greater than Fair Market Value on the date the SAR is granted, unless the SAR was granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company, in which case the assumption or substitution shall be accomplished in a manner that permits the SAR to be exempt from Code Section 409A.

(iii) Term . The term of a SAR shall be determined by the Committee in its sole discretion, but in no event shall the term exceed ten years from the Date of Grant; provided that, each SAR granted in tandem with a Stock Option shall terminate upon the termination or exercise of the related Stock Option.

(iv) No Repricing . Subject to the adjustment provisions of Section 8, without the approval of the Company’s shareholders, (A) the Exercise Price for any outstanding SAR may not be decreased after the Date of Grant, (B) no outstanding SAR may be surrendered to the Company as consideration for the grant of a new SAR with a lower Exercise Price, and (C) no other modifications to any outstanding SAR may be made that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the national securities exchange on which the Common Shares are listed.

(v) Form of Payment . Vested SARs may be exercised in whole or in part, and the Committee may authorize payment of a SAR in the form of cash, Common Shares valued at its Fair Market Value on the date of the exercise or a combination thereof, or by any other method as the Committee may determine.

(vi) Tandem SARs . Tandem SARs may be exercised for all or part of the Common Shares subject to the related Stock Option upon the surrender of the right to exercise

the equivalent portion of the related Stock Option. A Tandem SAR may be exercised only with respect to the Common Shares for which its related Stock Option is then exercisable. Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (A) the Tandem SAR will expire no later than the expiration of the underlying ISO; (B) the value of the payout with respect to the Tandem SAR may be for no more than 100% of the excess of the Fair Market Value of the Common Shares subject to the underlying ISO at the time the Tandem SAR is exercised over the Exercise Price of the underlying ISO; and (C) the Tandem SAR may be exercised only when the Fair Market Value of the Common Shares subject to the ISO exceeds the Exercise Price of the ISO.

(vii) No Dividends or Shareholder Right s . No dividends or dividend equivalents may be paid on SARs. Except as otherwise provided herein, a Participant shall have no rights as a holder of Common Shares covered by a SAR unless and until such Common Shares have been registered to the Participant as the owner.

(i) Grants . Subject to the terms and provisions of the Plan, Restricted Shares and Restricted Share Units may be granted to Participants in such number and upon such terms and conditions as the Committee determines. Restricted Shares will be registered in the name of the Participant and deposited with the Company or its agent in certificated or book-entry form. The Committee shall grant Restricted Shares to each Non-Employee Director annually with the first such grant to be effective on the Effective Date. The number of Restricted Shares granted to each Non-Employee Director each year shall be the number of Common Shares equal to the Award Value divided by the Fair Market Value of a Common Share on the date of grant. Notwithstanding the foregoing, the Committee may grant Stock Options in lieu of or in addition to Restricted Shares. The Committee shall have the authority to establish the Award Value annually; provided, however, that the Award Value may not exceed $150,000 for any year. Unless otherwise determined by the Committee, the restrictions on transfer with respect to Restricted Shares granted to Non-Employee Directors shall lapse as follows: (i) on the first anniversary of the date of grant with respect to one-third of the Restricted Shares; (ii) on the second anniversary of the date of grant with respect to an additional one-third of the Restricted Shares; and (iii) and on the third anniversary of the date of grant with respect to the remaining one-third of the Restricted Shares.

(ii) Restrictions . Restricted Shares or Restricted Share Units may be granted at no cost or at a purchase price determined by the Committee, which may be less than the Fair Market Value, but subject to such terms and conditions as the Committee determines, including, without limitation: forfeiture conditions, transfer restrictions, restrictions based upon the achievement of specific performance goals (Company-wide, divisional and/or individual), which may be based on one or more Performance Measures, time-based restrictions on vesting and/or restrictions under applicable federal or state securities laws. Subject to Sections 9 and 10, for Awards to employees, no Restricted Shares or Restricted Share Units conditioned upon the achievement of performance shall be based on a Restriction Period of less than one year, and, except as may be determined by the Committee, any Restriction Period based solely on continued employment or service (time-based) shall be for a minimum of three years, subject to (A) pro rata or graded vesting prior to the expiration of such time-based Restriction Period, and

(B) acceleration due to the Participant’s death, Disability or Retirement, in each case as specified in the applicable Award Agreement; provided that the Restriction Period applicable to the first vesting date of an Award subject to pro rata or graded vesting (as referenced in (A) above) may be for less than one year, provided the first vesting date is no earlier than the fiscal year-end date of the fiscal year during which the Award was granted. To the extent the Restricted Shares or Restricted Share Units are intended to qualify for the Performance-Based Exception, except as may be determined by the Committee, the applicable restrictions shall be based on the achievement of Performance Goals over a Performance Period, as described in Section 6(d).

(iii) Transfer Restrictions . Unless otherwise provided in the applicable Award Agreement, during the Restriction Period, Restricted Shares and Restricted Share Units may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. In order to enforce the limitations imposed upon the Restricted Shares, the Committee may (A) cause a legend or legends to be placed on any certificates evidencing such Restricted Shares, and/or (B) cause “stop transfer” instructions to be issued, as it deems necessary or appropriate.

(iv) Dividends and Voting Rights . Unless otherwise determined by the Committee, during the Restriction Period, Participants who hold Restricted Shares shall have the right to receive dividends in cash or other property or other distribution or rights in respect of the Restricted Shares and shall have the right to vote the Restricted Shares as the record owners; provided that, unless otherwise determined by the Committee, any dividends or other property payable to a Participant during the Restriction Period shall be distributed to the Participant only if and when the restrictions imposed on the applicable Restricted Shares lapse. Unless otherwise determined by the Committee, during the Restriction Period, Participants who hold Restricted Share Units shall be credited with dividend equivalents in respect of such Restricted Share Units; provided that, unless otherwise determined by the Committee, such dividend equivalents shall be distributed (without interest) to the Participant only if and when the restrictions imposed on the applicable Restricted Share Units lapse. Participants shall have no other rights as a shareholder with respect to Restricted Share Units unless otherwise determined by the Committee. Notwithstanding the forgoing, no Restricted Shares or Restricted Share Units conditioned upon the achievement of performance shall provide the Participant with dividend or shareholder rights unless otherwise determined by the Committee; provided that an Award Agreement may provide for payment (in money or shares) equal to the dividends paid on the number of Common Shares payable upon vesting of such Restricted Shares or Restricted Share Units or at any time prior thereto.

(v) Payment of Restricted Share Units . Restricted Share Units that become payable in accordance with their terms and conditions shall be settled in cash, Common Shares, Restricted Shares, or a combination thereof, as determined by the Committee.

(vi) Ownership . Restricted Shares shall be registered in the name of the Participant on the books and records of the Company or its designee (or by one or more physical certificates if physical certificates are issued) subject to the applicable restrictions imposed by the Plan. At the end of the Restriction Period that applies to Restricted Shares, the number of shares to which the Participant is entitled shall be delivered to the Participant free and clear of the restrictions, either in certificated or book-entry form. No Common Shares shall be registered

in the name of the Participant with respect to Restricted Share Units, and Participants shall have no ownership interest in the Common Shares to which the Restricted Share Units relate, unless and until payment is made in Common Shares.

(vii) Forfeiture . If a Participant who holds Restricted Shares or Restricted Share Units fails to satisfy the restrictions, terms or conditions applicable to the Award, except as otherwise determined by the Committee, or if such Participant’s service as a Non-Employee Director of the Company terminates other than by death, Disability or Retirement prior to the expiration of the applicable Restriction Period, the Participant shall forfeit the Restricted Shares or Restricted Share Units. The Committee may at any time waive such restrictions or accelerate the date or dates on which the restrictions will lapse; however, to the extent the Restricted Shares or Restricted Share Units are intended to qualify for the Performance-Based Exception, the provisions of Section 6(d)(iv) will apply.

(d) Performance-Based Exception .

(i) Grants . Subject to the provisions of the Plan, Full-Value Awards granted in a manner that is intended to qualify for the Performance-Based Exception shall be conditioned upon the achievement of Performance Goals as the Committee shall determine, in its sole discretion.

(ii) Performance Goals . Performance Goals shall be based on one or more Performance Measures, over a Performance Period, as to be determined by the Committee.

(iii) Performance Measures . The Performance Measure(s) may be described in terms of objectives that are related to the individual Participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit of the Company, and shall consist of one or more or any combination of the following criteria: cash flow, profit, revenue, stock price, market share, sales, net income, operating income, return ratios, earnings per share, earnings (which may include an add back for taxes, interest, and/or depreciation and amortization), operating earnings, profit margins, earnings per Common Share, favorable comparison to established budgets, return on shareholders’ equity, return on assets, attainment of strategic and operational initiatives, comparisons with various stock market indices, reduction in costs or a combination of such factors, personal performance measures, working capital, total assets, net assets, return on sales, return on invested capital, gross margin, costs, shareholders’ equity, shareholder return and/or productivity or productivity improvement. The Performance Goals based on these Performance Measures may be expressed in absolute terms or relative to the performance of other entities.

(iv) Treatment of Awards . With respect to any Full-Value Award that is intended to qualify for the Performance-Based Exception: (A) the Committee shall interpret the Plan and this Section 6(d) in light of Code Section 162(m), (B) the Committee shall not amend the Full-Value Award in any way that would adversely affect the treatment of the Full-Value Award under Code Section 162(m), and (C) such Full-Value Award shall not vest or be paid until the Committee shall first have certified that the Performance Goals have been achieved.

(e) Unrestricted Share Awards .

Subject to the terms and provisions of the Plan, the Committee may grant awards of unrestricted Common Shares to Participants in such number and upon such terms and conditions as the Committee determines in recognition of outstanding achievements or contributions by such Participants or otherwise. Unrestricted Common Shares issued on a bonus basis may be issued for no cash consideration.

7.	Deferred Payment

Subject to the terms of the Plan, the Committee may determine that all or a portion of any Award to a Participant, whether it is to be paid in cash, Common Shares or a combination thereof, shall be deferred or may, in its sole discretion, approve deferral elections made by Participants. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, which terms shall comply with Code Section 409A.

8.	Dilution and Other Adjustments

In the event of any merger, reorganization, consolidation, liquidation, recapitalization, reclassification, redesignation, stock dividend, other distribution other than ordinary cash dividends (whether in the form of cash, shares or otherwise), stock split, reverse stock split, spin off, combination, repurchase or exchange of shares or issuance of warrants or rights to purchase shares or other securities, or other change in corporate structure affecting the Common Shares, the Committee shall make such adjustments in the aggregate number and type of Common Shares which may be delivered and the individual award maximums as set forth in Section 5, the number and type of Common Shares subject to outstanding Awards and the Exercise Price or other price of Common Shares subject to outstanding Awards (provided the number of Common Shares subject to any Award shall always be a whole number), as may be and to the extent determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Such adjustment shall be conclusive and binding for all purposes of the Plan. Any such adjustment or lack of adjustment of an ISO or SAR shall be made in compliance with Code Sections 422 and 424, and no such adjustment shall be made that would cause any Award which is or becomes subject to Code Section 409A to fail to comply with the requirements of Code Section 409A or is exempt from Code Section 409A to become subject to Code Section 409A.

9.	Change in Control

Notwithstanding any other provision of the Plan to the contrary, immediately upon the occurrence of a Change in Control, the following provisions of this Section 9 shall apply except to the extent an Award Agreement provides for a different treatment (in which case the Award Agreement shall govern): all outstanding Stock Options and SARs vest and become fully exercisable; and all Full-Value Awards become fully vested.

10.

Termination

(a) Termination by Death, Disability, or Retirement . The terms and conditions of the Participant’s Award Agreement shall govern the extent, if at all, to which the vesting of any

Award is accelerated or forfeited due to a Participant’s death, Disability, or Retirement; provided that, for Full-Value Awards intended to qualify for the Performance-Based Exception, no vesting may occur or no distribution may be made prior to the attainment of the Performance Goals. Notwithstanding anything to the contrary, the Committee may determine, in its sole discretion, in the case of any termination of a Participant’s employment or service other than for Cause, that the restrictions on some or all of the Restricted Shares and Restricted Share Units awarded to such Participant shall immediately lapse and, to the extent the Committee deems appropriate, such shares shall thereafter be immediately transferable and nonforfeitable.

(b) Termination for Cause . If a Participant’s employment or service terminates for Cause, (i) all Stock Options and SARs (or portions thereof) which have not been exercised, whether vested or not, and (ii) all Full-Value Awards, shall immediately be forfeited upon termination, including such Awards that are subject to performance conditions (or unearned portions thereof).

(c) Other Terminations . If a Participant’s employment or service terminates, voluntarily or involuntarily, for any reason other than death, Disability, Retirement or Cause, (i) any vested portion of Stock Options or SARs held by the Participant at the time of termination may be exercised for a period of three months (or such other period as the Committee may specify at or after the time of grant) from the termination date, or until the expiration of the original term of the Stock Option or SAR, whichever period is shorter, (ii) no unvested portion of any Stock Option or SAR shall become vested, including such Awards that are subject to performance conditions (or unearned portions thereof), and (iii) all Full-Value Awards, including such Awards that are subject to performance conditions (or unearned portions thereof), shall immediately be forfeited upon termination. Notwithstanding the foregoing, the Committee shall have the authority to determine that Stock Options or SARs held by Participant who retires before attaining age 55 shall terminate on a date which is more than three months after the date such Participant’s employment terminates, provided that such termination date shall be on or before the expiration of the original term of the Stock Option or SAR.

(d) Limitation for ISOs . No ISO may be exercised more than three months following termination of employment for any reason (including Retirement) other than death or Disability, nor more than one year following termination of employment for the reason of death or Disability (as defined in Code Section 422), or such Award will no longer qualify as an ISO and shall thereafter be, and receive the tax treatment applicable to, a NQSO. For this purpose, a termination of employment is cessation of employment, under the rules applicable to ISOs, such that no employment relationship exists between the Participant and the Company.

(e) Transfers and Leaves of Absence . The transfer of a Participant within the Company shall not be deemed a termination of employment except as required by Code Sections 422 and 409A, and other applicable laws. The following leaves of absences are not deemed to be a termination of employment:

(i) if approved in writing by the Company, for military service, sickness or any other purpose approved by the Company, and the period of absence does not exceed 90 days;

(ii) if in excess of 90 days, if approved in writing by the Company, but only if the Participant’s right to reemployment is guaranteed by statute or contract and provided that the Participant returns to work within 30 days after the end of such absence; and

(iii) subject to the restrictions of Code Section 409A and to the extent that such discretion is permitted by law, if the Committee determines in its discretion that the absence is not a termination of employment.

11.

Recoupment or Recovery Policy

Any Award shall be subject to forfeiture or repayment pursuant to the terms of any applicable compensation recoupment or recovery policy adopted by the Company, Committee or Board, as thereafter amended, including any policy adopted to comply with the rules of any stock exchange on which the Common Shares are traded or the Securities and Exchange Commission.

12.

Miscellaneous Provisions

(a) Rights as a Shareholder . Except as otherwise provided herein, a Participant shall have no rights as a shareholder with respect to Awards hereunder, unless and until the Common Shares have been registered to the Participant as the owner.

(b) No Loans . No loans from the Company to Participants shall be permitted in connection with the Plan.

(c) Assignment or Transfer . Except as otherwise provided under the Plan, no Award or any rights or interests therein shall be transferable other than by will or the laws of descent and distribution. The Committee may, in its discretion, provide that an Award (other than an ISO) is transferable without the payment of any consideration to a Participant’s family member, subject to such terms and conditions as the Committee may impose. For this purpose, “family member” has the meaning given to such term in the General Instructions to the Form S-8 registration statement under the Securities Act. All Awards shall be exercisable, during the Participant’s lifetime, only by the Participant or a person who is a permitted transferee pursuant to this Section 12(c). Once awarded, the Common Shares (other than Restricted Shares) received by Participants may be freely transferred, assigned, pledged or otherwise subjected to lien, subject to the restrictions imposed by the Securities Act, Section 16 of the Exchange Act and the Company’s Insider Trading Policy, each as amended. Notwithstanding any other provision in this Plan to the contrary, no provisions of this Plan or any Award Agreement shall restrict the ability of: (i) any Investor Directors (as defined in the Investor Rights Agreement entered into as of October 3, 2011, by and between the Company and the stockholders of the Company whose names appear on the signature pages thereof (the “Investors”)) to assign their rights or interests in any Award to an Investor or an Affiliate thereof with which such Investor Director is employed or otherwise affiliated (an “Investor Assignee”); or (ii) the Company to satisfy its obligations to Investor Directors hereunder with respect to granting Awards to which they may be entitled by entering into an Award Agreement with any such Investor Assignee.

(d) Withholding Taxes . The Company shall have the right to deduct from all Awards paid in cash to a Participant any taxes required by law to be withheld with respect to such Awards. All statutory minimum applicable withholding taxes arising with respect to Awards

paid in Common Shares to a Participant shall be satisfied by the Company retaining Common Shares having a Fair Market Value on the date the tax is to be determined that is equal to the amount of such statutory minimum applicable withholding tax (rounded, if necessary, to the next lowest whole number of Common Shares); provided, however, that, subject to any restrictions or limitations that the Company deems appropriate, a Participant may elect to satisfy such statutory minimum applicable withholding tax through cash or cash proceeds.

(e) No Rights to Awards . Neither the Plan nor any action taken hereunder shall be construed as giving any person any right to be retained in the employ or service of the Company, and the Plan shall not interfere with or limit in any way the right of the Company to terminate any person’s employment or service at any time. Except as set forth herein, no employee or other person shall have any claim or right to be granted an Award under the Plan. By accepting an Award, the Participant acknowledges and agrees that (i) the Award will be exclusively governed by the Plan, including the right of the Company to amend or cancel the Plan at any time without the Company incurring liability to the Participant (except, to the extent the terms of the Award so provide, for Awards already granted under the Plan), (ii) the Participant is not entitled to future award grants under the Plan or any other plan, and (iii) the value of any Awards received shall be excluded from the calculation of termination or other severance payments or benefits.

(f) Beneficiary Designation . To the extent allowed by the Committee, each Participant under the Plan may name any beneficiary or beneficiaries to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives all of such benefit. Unless the Committee determines otherwise, each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and shall be effective only when received in writing by the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

(g) Fractional Shares . Fractional Common Shares shall not be issued or transferred under an Award, but the Committee may direct that cash be paid in lieu of fractional shares or may round off fractional shares, in its discretion.

(h) Unfunded Plan . The Plan shall be unfunded and any benefits under the Plan shall represent an unsecured promise to pay by the Company. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general unsecured creditor of the Company.

(i) Severability . If any provision of the Plan is deemed illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

(j) Limitation of Liability . Members of the Board and the Committee and officers and employees of the Company who are their designees acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross or willful misconduct in the performance of their duties hereunder.

(k) Successors . All obligations of the Company with respect to Awards granted under the Plan shall be binding on any successor to the Company, whether as a result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

(l) Code Section 409A Compliance . Each Award granted under the Plan is intended to be either exempt from or in compliance with the requirements of Code Section 409A and any regulations or guidance that may be adopted thereunder, including any transition relief available under applicable guidance. The Plan may be amended or interpreted by the Committee as it determines appropriate in accordance with Code Section 409A and to avoid a plan failure under Code Section 409A(a)(1). If a Participant is a “specified employee” as defined in Code Section 409A at the time of the Participant’s separation from service with the Company, then solely to the extent necessary to avoid the imposition of any additional tax under Code Section 409A, the commencement of any payments or benefits under an Award shall be deferred until the date that is six months following the Participant’s separation from service (or such other period as required to comply with Code Section 409A).

13.

Effective Date, Amendments, Governing Law and Plan Termination

(a) Effective Date . The Effective Date of the Plan is the date on which the Company’s shareholders approve the Plan at a duly held shareholder meeting.

(b) Amendments .

(i) Amendment of the Plan . The Committee or the Board may at any time terminate or amend the Plan in whole or in part, but no such action shall materially and adversely affect any rights or obligations with respect to any Awards granted prior to the date of such termination or amendment without the consent of the affected Participant, except to the extent that the Committee reasonably determines that such termination or amendment is necessary or appropriate to comply with applicable law or the rules and regulations of any stock exchange on which the Common Shares are traded or to preserve any intended favorable, or avoid any unintended unfavorable, tax effects for the Company, Plan or Participants. Notwithstanding the foregoing, unless the Company’s shareholders shall have first approved the amendment, no amendment of the Plan shall be effective if the amendment would: (A) increase the maximum number of Common Shares that may be delivered under the Plan or to any one individual (except to the extent made pursuant to Section 8 hereof), (B) extend the maximum period during which Awards may be granted under the Plan, (C) add to the types of awards that can be made under the Plan, (D) modify the requirements as to eligibility for participation in the Plan, (E) permit a repricing or decrease the Exercise Price to less than the Fair Market Value on the Date of Grant of any Stock Option or SAR, except for adjustments made pursuant to Section 8, (F) materially increase benefits to Participants, including, without limitation, in excess of the limitations in Section 6(c)(i) hereof, or (G) otherwise require shareholder approval pursuant to the Plan or applicable law or the rules of the principal securities exchange on which Common Shares are traded.

(ii) Amendment of Awards . The Committee may amend, prospectively or retroactively, the terms of an Award, provided that no such amendment is inconsistent with the

terms of the Plan or would materially and adversely affect the rights of any Participant without his or her written consent.

(c) Governing Law . To the extent not preempted by Federal law, the Plan and all Award Agreements are construed in accordance with and governed by the laws of the State of Ohio. The Plan is not intended to be governed by the Employment Retirement Income Security Act of 1974, and shall be so construed and administered.

(d) Plan Termination . No Awards shall be made under the Plan after the tenth anniversary of the Effective Date.

Amended by Shareholders on August 8, 2018

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Henry, certify that:

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

2.	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 report;

3.	Based on my knowledge, the financial statements, and other financial information included in this 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;

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 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 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 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 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.

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;

2.	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 report;

3.	Based on my knowledge, the financial statements, and other financial information included in this 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.

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Henry, 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 September 30, 2018 (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.

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 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 September 30, 2018 (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.

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.

Date: November 9, 2018

/s/ Michael J. Henry

Michael J. Henry

President and Chief Executive Officer