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MultiColor Corp. Reports Operating Results (10-Q)

November 09, 2010 | About:
10qk

10qk

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MultiColor Corp. (LABL) filed Quarterly Report for the period ended 2010-09-30.

Multicolor Corp. has a market cap of $242.2 million; its shares were traded at around $18.33 with a P/E ratio of 14.1 and P/S ratio of 0.9. The dividend yield of Multicolor Corp. stocks is 1.1%. Multicolor Corp. had an annual average earning growth of 7.7% over the past 10 years. GuruFocus rated Multicolor Corp. the business predictability rank of 2.5-star.LABL is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

The First Amendment amended the Credit Agreement to (i) permit the acquisition of Guidotti CentroStampa S.p.A. by the Company; (ii) increase the Aggregate U.S. Revolving Commitment (as defined in the First Amendment) by USD $20 million thereby increasing the total borrowing capacity from USD $180 million to USD $200 million, with the potential to increase total borrowing capacity by USD $50 million; (iii) allow up to US $40 million of U.S. revolving loans to be advanced in alternative currencies; (iv) extend the maturity date of the Credit Facilities (as defined in the Credit Agreement) to April 1, 2014; (v) increase the maximum leverage ratio to 3.75 to 1.00 with scheduled step-downs; and (vi) implement a change in interest rate margins over the applicable Eurocurrency or Australian BBSY rate ranging from 1.75% to 3.25% based on the leverage ratio. The Company incurred $1,520 of debt issuance costs related to the debt modification which are being deferred and amortized over the life of the amended Credit Facility.

In January 2009, we announced plans to consolidate our heat transfer label (HTL) manufacturing business located in Framingham, Massachusetts into our other existing facilities. The transition began immediately with final plant closure occurring in the second quarter of fiscal 2010. In connection with the closure of the Framingham facility, the Company recorded a total pre-tax charge of $2,553 during the fourth quarter period ending March 31, 2009, consisting of $1,407 in cash charges for employee severance and other termination benefits related to 62 associates and $1,146 in non-cash charges related to asset impairments.

Through the six months ended September 30, 2010, net cash provided by operating activities was $11,491 compared to $15,817 in the same period of the prior year. The decrease in cash flow is primarily due to higher tax payments in fiscal 2011, $975 in acquisition expenditures and timing of working capital movements. The consolidated days sales outstanding (DSO) at September 30, 2010 is approximately 49 days.

CentroStampa. Capital expenditures in the six months ended September 30, 2010 were $7,484 and were partially offset by proceeds from the sale of plant and equipment of $293. The majority of these expenditures were to purchase new presses in the Australian, South African and North American operations. The Company also made equipment deposits of $1,589 for the purchase of new presses. Cash used in investing activities in the prior year included capital expenditures of $3,189. The projected amount of capital expenditures for 2011 is $15.8 million.

Through the six months ended September 30, 2010, net cash provided by financing activities was $31,352 as compared to net cash used in financing activities of $13,503 in the prior year. During the six months ended September 30, 2010, we had net debt additions of $34,572 compared to net debt payments of $12,266 in the prior year. The increase in net debt was due to an increase in borrowings to finance the Guidotti CentroStampa acquisition.

On February 29, 2008 and in connection with the Collotype acquisition, the Company executed a five-year $200 million credit agreement with a consortium of bank lenders (Credit Facility) that expired in 2013. In June, 2010, the Company amended the credit facility in conjunction with the acquisition of Guidotti CentroStampa. The amendment extended the expiration date of the credit facility from February 28, 2013 to April 1, 2014, increased the aggregate U.S. revolving commitment by $20 million, allowed up to US $40 million of U.S. revolving loans to be advanced in alternative currencies, increased the maximum leverage ratio to 3.75 to 1.00 with scheduled step-downs, and implemented a change in interest rate margins over the applicable Eurocurrency or Australian BBSY rate ranging from 1.75% to 3.25% based on the leverage ratio. The Credit Facility contains an election to increase the facility by up to an additional $50 million. The Company incurred $1,520 of debt issuance costs related to the debt modification which are being deferred and amortized over the life of the amended Credit Facility. At September 30, 2010, the aggregate principal amount of $195 million under the Credit Facility is comprised of the following: (i) a $130 million revolving credit facility that allows the Company to borrow in Euro up to the equivalent of $40 million (U.S. Revolving Credit Facility); (ii) the Australian dollar equivalent of a $40 million revolving credit facility (Australian Sub-Facility); and (iii) a $25 million term loan facility (Term Loan Facility), which amortizes $10 million per year.

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