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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended June 30, 2004



OR



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



For the transition period from to



Commission File #0-16148



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Multi-Color Corporation

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|OHIO                                                           |  | 31-1125853                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



425 Walnut Street,
Suite 1300, Cincinnati, Ohio 45202

(Address of principal executive offices)



Registrants telephone number  (513) 381-1480



---



Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act).    Yes ̈No  x



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



Common shares, no par
value  6,327,246 (as of August 2, 2004)



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##### Table of Contents

MULTI-COLOR CORPORATION

FORM 10-Q

CONTENTS



|                                                                                                           |  |     
|---------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                           |  | Page
|PART I  FINANCIAL INFORMATION (Unaudited)                                                                 |  |     
|                                                                                                           | 
|Condensed Consolidated Balance Sheets at June 30, 2004 and March 31, 2004                                  |  | 3   
|                                                                                                           | 
|Condensed Consolidated Statements of Income for the Three Months Ended June 30, 2004 and June 30, 2003     |  | 4   
|                                                                                                           | 
|Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2004 and June 30, 2003 |  | 5   
|                                                                                                           | 
|Notes to Condensed Consolidated Financial Statements                                                       |  | 6   
|                                                                                                           | 
|Managements Discussions and Analysis of Financial Condition and Results of Operations                     |  | 9   
|                                                                                                           | 
|Quantitative and Qualitative Disclosures About Market Risk                                                 |  | 12  
|                                                                                                           | 
|Controls and Procedures                                                                                    |  | 12  
|                                                                                                           | 
|PART II  OTHER INFORMATION                                                                                |  |     
|                                                                                                           | 
|Item 1. Legal Proceedings                                                                                  |  | 13  
|                                                                                                           | 
|Item 2. Changes in Securities                                                                              |  | 13  
|                                                                                                           | 
|Item 3. Defaults upon Senior Securities                                                                    |  | 13  
|                                                                                                           | 
|Item 4. Submission of Matters to a Vote of Security Holders                                                |  | 13  
|                                                                                                           | 
|Item 5. Other Information                                                                                  |  | 13  
|                                                                                                           | 
|Item 6. Exhibits and Reports on Form 8-K                                                                   |  | 13  
|                                                                                                           | 
|Signature                                                                                                  |  | 14  



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##### Table of Contents

Item 1. Financial Statements



MULTI-COLOR CORPORATION

Condensed Consolidated Balance Sheets

(Thousands)



|                                                     |  |               |        |   |                |   |        |  
|---------------------------------------------------- |  | ------------- | ------ | - | -------------- | - | ------ | -
|                                                     |  | June 30, 2004 |        |   | March 31, 2004 |  
|                                                     |  | (Unaudited)   |        |   |                |  
|ASSETS                                               |  |               |        |   |                |   |        |  
|Current Assets:                                      |  |               |        |   |                |   |        |  
|Cash                                                 |  | $             | 1,325  |   |                | $ | 1,464  |  
|Accounts receivable, net                             |  |               | 13,819 |   |                |   | 15,431 |  
|Inventories                                          |  |               | 8,993  |   |                |   | 7,719  |  
|Deferred tax asset                                   |  |               | 455    |   |                |   | 455    |  
|Prepaid and refundable income taxes                  |  |               | 256    |   |                |   | 931    |  
|Prepaid expenses and other                           |  |               | 474    |   |                |   | 461    |  
|                                                     |  |               |        |   |                |   |        |  
|Total current assets                                 |  |               | 25,322 |   |                |   | 26,461 |  
|                                                     |  |              
|Property, plant and equipment, net                   |  |               | 34,651 |   |                |   | 33,207 |  
|                                                     |  |              
|Goodwill                                             |  |               | 11,759 |   |                |   | 11,759 |  
|                                                     |  |              
|Intangible assets, net                               |  |               | 756    |   |                |   | 879    |  
|                                                     |  |              
|Other                                                |  |               | 87     |   |                |   | 141    |  
|                                                     |  |               |        |   |                |   |        |  
|Total assets                                         |  | $             | 72,575 |   |                | $ | 72,447 |  
|                                                     |  |               |        |   |                |   |        |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                 |  |               |        |   |                |   |        |  
|Current liabilities:                                 |  |               |        |   |                |   |        |  
|Current portion of long-term debt                    |  | $             | 4,521  |   |                | $ | 5,913  |  
|Current portion of capital lease obligations         |  |               | 2      |   |                |   | 9      |  
|Accounts payable                                     |  |               | 5,866  |   |                |   | 8,666  |  
|Accrued liabilities                                  |  |               | 3,229  |   |                |   | 3,990  |  
|                                                     |  |               |        |   |                |   |        |  
|Total current liabilities                            |  |               | 13,618 |   |                |   | 18,578 |  
|                                                     |  |              
|Long-term debt, excluding current portion            |  |               | 19,313 |   |                |   | 15,553 |  
|                                                     |  |              
|Capital lease obligations, excluding current portion |  |               |       |   |                |   |       |  
|                                                     |  |              
|Deferred tax liability                               |  |               | 4,919  |   |                |   | 4,919  |  
|                                                     |  |              
|Deferred compensation                                |  |               | 454    |   |                |   | 428    |  
|                                                     |  |               |        |   |                |   |        |  
|Total liabilities                                    |  |               | 38,304 |   |                |   | 39,478 |  
|                                                     |  |              
|Shareholders equity:                                |  |               |        |   |                |   |        |  
|Common stock, no par value, $.10 stated value        |  |               | 300    |   |                |   | 291    |  
|Paid-in capital                                      |  |               | 12,921 |   |                |   | 12,740 |  
|Treasury stock, at cost                              |  |               | (119   | ) |                |   | (119   | )
|Retained earnings                                    |  |               | 21,169 |   |                |   | 20,057 |  
|                                                     |  |               |        |   |                |   |        |  
|Total shareholders equity                           |  |               | 34,271 |   |                |   | 32,969 |  
|                                                     |  |               |        |   |                |   |        |  
|Total liabilities and shareholders equity           |  | $             | 72,575 |   |                | $ | 72,447 |  
|                                                     |  |               |        |   |                |   |        |  



The accompanying notes are an
integral part of this financial information.



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Item 1. Financial Statements (continued)



MULTI-COLOR CORPORATION

Condensed Consolidated Statements of Income

(Unaudited)

(Thousands except per share
amounts)



|                                             |  |                    |        |               |   |       
|-------------------------------------------- |  | ------------------ | ------ | ------------- | - | ------
|                                             |  | Three Months Ended
|                                             |  | June 30, 2004      |        | June 30, 2003
|Net sales                                    |  | $                  | 28,750 |               | $ | 29,107
|                                             |  |                   
|Cost of goods sold                           |  |                    | 24,023 |               |   | 23,415
|                                             |  |                    |        |               |   |       
|Gross profit                                 |  |                    | 4,727  |               |   | 5,692 
|                                             |  |                   
|Selling, general and administrative expenses |  |                    | 2,667  |               |   | 2,514 
|                                             |  |                    |        |               |   |       
|Operating income                             |  |                    | 2,060  |               |   | 3,178 
|                                             |  |                   
|Other (income) expense, net                  |  |                    | 68     |               |   | 157   
|                                             |  |                   
|Interest expense                             |  |                    | 193    |               |   | 369   
|                                             |  |                    |        |               |   |       
|Income before income taxes                   |  |                    | 1,799  |               |   | 2,652 
|Income taxes                                 |  |                    | 684    |               |   | 1,024 
|                                             |  |                    |        |               |   |       
|Net income                                   |  | $                  | 1,115  |               | $ | 1,628 
|                                             |  |                    |        |               |   |       
|Basic earnings per share                     |  | $                  | 0.18   |               | $ | 0.27  
|                                             |  |                   
|Diluted earnings per share                   |  | $                  | 0.17   |               | $ | 0.25  
|                                             |  |                   
|Average number of common shares outstanding: |  |                    |        |               |   |       
|Basic                                        |  |                    | 6,168  |               |   | 5,938 
|                                             |  |                   
|Diluted                                      |  |                    | 6,594  |               |   | 6,504 



Certain prior year amounts have
been reclassified to conform with current year reporting.

The accompanying notes are an integral part of this financial information.



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Item 1. Financial Statements (continued)



MULTI-COLOR CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Thousands)



|                                                    |  |                    |        |   |               |   |        |  
|--------------------------------------------------- |  | ------------------ | ------ | - | ------------- | - | ------ | -
|                                                    |  | Three Months Ended |       
|                                                    |  | June 30, 2004      |        |   | June 30, 2003 |  
|NET CASH USED IN OPERATING ACTIVITIES               |  | $                  | (319   | ) |               | $ | (1,395 | )
|                                                    |  |                   
|CASH FLOWS FROM INVESTING ACTIVITIES:               |  |                    |        |   |               |   |        |  
|Capital expenditures                                |  |                    | (2,552 | ) |               |   | (623   | )
|Proceeds from sale of property, plant and equipment |  |                    |       |   |               |   | 195    |  
|                                                    |  |                    |        |   |               |   |        |  
|Net cash used in investing activities               |  |                    | (2,552 | ) |               |   | (428   | )
|                                                    |  |                   
|CASH FLOWS FROM FINANCING ACTIVITIES:               |  |                    |        |   |               |   |        |  
|Repayment of long-term debt                         |  |                    | (1,282 | ) |               |   | (1,235 | )
|Proceeds from issuance of long-term debt            |  |                    | 3,650  |   |               |   |       |  
|Repayment of capital lease obligations              |  |                    | (7     | ) |               |   | (10    | )
|Proceeds relating to issuance of common stock, net  |  |                    | 371    |   |               |   | 21     |  
|                                                    |  |                    |        |   |               |   |        |  
|Net cash provided by (used in) financing activities |  |                    | 2,732  |   |               |   | (1,224 | )
|                                                    |  |                    |        |   |               |   |        |  
|Net increase (decrease) in cash                     |  |                    | (139   | ) |               |   | (3,047 | )
|Cash, beginning of period                           |  |                    | 1,464  |   |               |   | 4,109  |  
|                                                    |  |                    |        |   |               |   |        |  
|Cash, end of period                                 |  | $                  | 1,325  |   |               | $ | 1,062  |  
|                                                    |  |                    |        |   |               |   |        |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION   |  |                    |        |   |               |   |        |  
|Interest paid                                       |  | $                  | 95     |   |               | $ | 231    |  
|Income taxes paid                                   |  | $                  | 18     |   |               | $ | 2      |  



The accompanying notes are an
integral part of this financial information.



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MULTI-COLOR CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Amounts in Thousands)



Item 1. Financial Statements (continued)



| | 1. | Basis of Presentation:
| | -- | ----------------------



The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to
such rules and regulations, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes
thereto included in the Companys latest Annual Report on Form 10-K.



The information furnished in these financial statements reflects all estimates and adjustments which are, in the opinion of management, necessary to present fairly the results for the interim periods reported, and all
adjustments and estimates are of a normal recurring nature.



| | 2. | Net Income Per Share Data:
| | -- | --------------------------



The following is a reconciliation of the number of shares used in the Basic Earnings Per Share (EPS) and Diluted EPS computations (shares in
thousands):



|                                 |  |                             |  |      
|-------------------------------- |  | --------------------------- |  | -----
|                                 |  | Three Months Ended June 30,
|                                 |  | 2004                        |  | 2003 
|Basic EPS                        |  | 6,168                       |  | 5,938
|Effect of dilutive stock options |  | 426                         |  | 566  
|                                 |  |                             |  |      
|Diluted EPS                      |  | 6,594                       |  | 6,504
|                                 |  |                             |  |      



All share amounts have
been adjusted to reflect the three for two stock split payable on November 30, 2003.



| | 3. | Inventories:
| | -- | ------------



Inventories are stated at the lower of FIFO (first-in, first-out) cost or market and are comprised of the following:



|                |  |               |       |                |   |      
|--------------- |  | ------------- | ----- | -------------- | - | -----
|                |  | June 30, 2004 |       | March 31, 2004
|Finished Goods  |  | $             | 3,876 |                | $ | 4,295
|Work in Process |  |               | 1,167 |                |   | 1,046
|Raw Materials   |  |               | 3,950 |                |   | 2,378
|                |  |               |       |                |   |      
|                |  | $             | 8,993 |                | $ | 7,719
|                |  |               |       |                |   |      



| | 4. | Debt:
| | -- | -----



In May 2004, the Company entered into an interest rate swap agreement with PNC Bank National Association (PNC). The Company pays interest on a $5 million notional amount at a fixed rate of 3.845%. PNC pays interest
based on the LIBOR rate. The Company utilizes this derivative



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instrument to hedge exposure to changes in interest rates. The Company accounts for this derivative
instrument under the Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133 requires that all derivative instruments be recognized in the financial statements and
measured at fair value regardless of the purpose or intent for holding them.



The Company entered into its current credit agreement with PNC Bank, Key Bank, LaSalle Bank and Harris Trust and Savings Bank on June 30, 2004. The Company has available under its Revolving Credit Agreement $10,000 at
June 30, 2004 to provide for additional cash needs. The credit agreement provides for a revolving line of credit up to a maximum of $10,000 and an acquisition facility of $20,000. Under the terms of the credit agreement, the Company is subject to
several financial covenants. The financial covenants require the Company to maintain certain leverage and fixed charge ratios as well as maintain a minimum tangible net worth. The credit agreement expires in June 2007.



| | 5. | Stock Options:
| | -- | --------------



As of June 30, 2004, 542 of the authorized but unissued common shares were reserved for future issuance to key employees and directors under the
Companys qualified and non-qualified stock option plans. Stock options granted under the plans enable the holder to purchase common stock at an exercise price not less than the market value on the date of grant. To the extent not exercised,
options will expire not more than ten years after the date of grant. The applicable options vest immediately or ratably over a three to five year period.



Had compensation cost for the Companys stock option plans been determined based on the fair value at the grant date for awards for the three months
ended June 30, 2004 and 2003, consistent with the provisions of SFAS No. 123, the Companys net income and earnings per share would have been reduced to the pro forma amounts indicated below:



|                                                                                                                   |  |                             |       |      |   |      
|------------------------------------------------------------------------------------------------------------------ |  | --------------------------- | ----- | ---- | - | -----
|                                                                                                                   |  | Three Months Ended June 30,
|                                                                                                                   |  | 2004                        |       | 2003
|Net income - as reported                                                                                           |  | $                           | 1,115 |      | $ | 1,628
|Stock-based compensation expense determined under the fair value method for all awards, net of income tax benefits |  |                             | 72    |      |   | 78   
|                                                                                                                   |  |                             |       |      |   |      
|Net income - proforma                                                                                              |  | $                           | 1,043 |      | $ | 1,550
|                                                                                                                   |  |                             |       |      |   |      
|Net income per common and common equivalent share - as reported                                                    |  |                             |       |      |   |      
|Basic                                                                                                              |  | $                           | 0.18  |      | $ | 0.27 
|Diluted                                                                                                            |  | $                           | 0.17  |      | $ | 0.25 
|                                                                                                                   |  |                            
|Net Income per common and common equivalent share - proforma                                                       |  |                             |       |      |   |      
|Basic                                                                                                              |  | $                           | 0.17  |      | $ | 0.26 
|Diluted                                                                                                            |  | $                           | 0.16  |      | $ | 0.24 



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| | 6. | Plant Exit Activity and Impairment Loss on Long-Lived Assets
| | -- | ------------------------------------------------------------



In December 2003, the Company announced the manufacturing consolidation plan that involved consolidating the operations of the Las Vegas facility into
other existing facility operations and the closure of the Las Vegas facility. As a result of the plant closure, total charges amounted to $1.1 million and were fully recorded in fiscal year 2004. Total severance costs of $77 were included in plant
closure costs and these costs have been paid in full at June 30, 2004.



| | 7. | Segment Information:
| | -- | --------------------



The Company operates in two segments within the packaging industry: Decorating Solutions and Packaging Services. The Decorating Solutions Segments
primary operations involve the printing of labels while the Packaging Services Segment provides promotional packaging, assembling and fulfillment services. Both segments sell to major consumer product companies.



Financial information by operating segment is as follows:



|                               |  |                             |        |   |      |   |        |  
|------------------------------ |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                               |  | Three Months Ended June 30, |       
|                               |  | 2004                        |        |   | 2003 |  
|Sales:                         |  |                             |        |   |      |   |        |  
|Decorating Solutions           |  | $                           | 24,495 |   |      | $ | 25,898 |  
|Packaging Services             |  |                             | 4,255  |   |      |   | 3,209  |  
|                               |  |                             |        |   |      |   |        |  
|                               |  | $                           | 28,750 |   |      | $ | 29,107 |  
|                               |  |                             |        |   |      |   |        |  
|Income before income taxes:    |  |                             |        |   |      |   |        |  
|Decorating Solutions           |  | $                           | 2,325  |   |      | $ | 3,172  |  
|Packaging Services             |  |                             | 402    |   |      |   | 134    |  
|Corporate expenses             |  |                             | (928   | ) |      |   | (654   | )
|                               |  |                             |        |   |      |   |        |  
|                               |  | $                           | 1,799  |   |      | $ | 2,652  |  
|                               |  |                             |        |   |      |   |        |  
|Capital expenditures:          |  |                             |        |   |      |   |        |  
|Decorating Solutions           |  | $                           | 1,910  |   |      | $ | 451    |  
|Packaging Services             |  |                             | 450    |   |      |   | 135    |  
|Corporate                      |  |                             | 192    |   |      |   | 37     |  
|                               |  |                             |        |   |      |   |        |  
|                               |  | $                           | 2,552  |   |      | $ | 623    |  
|                               |  |                             |        |   |      |   |        |  
|Depreciation and amortization: |  |                             |        |   |      |   |        |  
|Decorating Solutions           |  | $                           | 1,032  |   |      | $ | 939    |  
|Packaging Services             |  |                             | 98     |   |      |   | 80     |  
|Corporate                      |  |                             | 16     |   |      |   | 17     |  
|                               |  |                             |        |   |      |   |        |  
|                               |  | $                           | 1,146  |   |      | $ | 1,036  |  
|                               |  |                             |        |   |      |   |        |  
|Total assets:                  |  |                             |        |   |      |   |        |  
|Decorating Solutions           |  | $                           | 59,670 |   |      | $ | 56,437 |  
|Packaging Services             |  |                             | 9,108  |   |      |   | 8,138  |  
|Corporate                      |  |                             | 3,797  |   |      |   | 1,466  |  
|                               |  |                             |        |   |      |   |        |  
|                               |  | $                           | 72,575 |   |      | $ | 66,041 |  
|                               |  |                             |        |   |      |   |        |  



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Thousands)



Executive Overview



We provide a wide range of products and services for the packaging needs of our customers through two segments. Our Decorating Solutions Segment provides
a complete line of label solutions for consumer product and food and beverage companies. Our Packaging Services Segment provides promotional packaging design, sourcing and custom assembly services to consumer product companies and national
retailers. Our vision is to be a premier global resource of packaging services and decorating solutions. Currently, our customers are located throughout North and South America. We monitor and analyze trends in the packaging industry in order to
ensure that we are providing appropriate products and services to our customers. Factors that influence our business are: consumer spending; new product introductions; new packaging technologies and demographics.



Consolidated net sales were relatively flat as compared to the same quarter
in the prior year. Our Packaging Services Segment continues to experience significant sales growth but this growth was offset by a decline in sales within our Decorating Solutions Segment. We experienced a delay in orders from one of our major
customers during the quarter. However, we expect to make up this sales shortfall in the next quarter and throughout the remainder of the year. Our quarter was also negatively impacted by the operating inefficiencies that occurred at our Scottsburg,
Indiana facility. During last fiscal year, we closed our Las Vegas, Nevada facility and moved the business into our Scottsburg facility. The integration of this business extended into our fiscal year 2005. We had previously expected that all
integration issues would have been completed by March 31, 2004. Our management team has been working diligently to address the integration and operating issues at our Scottsburg facility and has made improvements aimed at optimal efficiency and
productivity at this facility.



The label markets we serve
through our Decorating Solutions Segment continue to experience a competitive environment and price pressures. We have initiated many cost reduction programs to meet the demands of the market while minimizing the impact on our margins. We
continually search for ways to reduce our costs through improved production and labor efficiencies, reduced substrate waste, new substrate options and lower substrate pricing. We completed several Six Sigma projects in fiscal 2004 to focus on these
efforts and are continuing these types of projects in fiscal 2005.



Over the past four years, we have made progress in expanding our customer base and portfolio of products, services and manufacturing locations in order to address issues related to the concentration of business. We continue to examine
business strategies to diversify our business.



During the
quarter, we also continued the installation of a new press at our Scottsburg facility. This press is expected to be operational during our second quarter. We have also started the implementation process of a new integrated business enterprise system
to replace our current information systems and to support our information needs. A new credit facility was also signed during the quarter with our existing bank group. The new credit facility gives us expanded borrowing capabilities and an
acquisition facility.



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Results of Operations



Three Months Ended June 30, 2004 Compared to the Three Months Ended June 30, 2003



|                             |  |          |        |          |   |        |          |   |        |   |  |    |   
|---------------------------- |  | -------- | ------ | -------- | - | ------ | -------- | - | ------ | - |  | -- | --
|                             |  | June 30, |        | $ Change |   |        | % Change |  
|Net Sales                    |  | 2004     |        | 2003     |   |       
|Consolidated Net Sales       |  | $        | 28,750 |          | $ | 29,107 |          | $ | (357   | ) |  | (1 | )%
|Decorating Solutions Segment |  | $        | 24,495 |          | $ | 25,898 |          | $ | (1,403 | ) |  | (5 | )%
|Packaging Services Segment   |  | $        | 4,255  |          | $ | 3,209  |          | $ | 1,046  |   |  | 33 | % 



The Packaging
Services Segments sales increased for the three months ended June 30, 2004 as compared to the same period of the prior year due to increased sales with existing customers. The Decorating Solutions Segment experienced decreased revenues from
the first quarter of last year primarily due to a delay in orders from a major customer. This sales shortfall is expected to be made up in the second quarter and throughout the remainder of our fiscal year.



|                             |  |          |       |   |          |   |       |          |  |   |        |   |  |     |   
|---------------------------- |  | -------- | ----- | - | -------- | - | ----- | -------- |  | - | ------ | - |  | --- | --
|                             |  | June 30, |       |   | $ Change |   |       | % Change | 
|Gross Profit                 |  | 2004     |       |   | 2003     |   |       |         
|Consolidated Gross Profit    |  | $        | 4,727 |   |          | $ | 5,692 |          |  | $ | (965   | ) |  | (17 | )%
|% of Sales                   |  |          | 16    | % |          |   | 20    | %        |  |   |        |   |  |     |   
|Decorating Solutions Segment |  | $        | 4,277 |   |          | $ | 5,327 |          |  | $ | (1,050 | ) |  | (20 | )%
|% of Sales                   |  |          | 17    | % |          |   | 21    | %        |  |   |        |   |  |     |   
|Packaging Services Segment   |  | $        | 450   |   |          | $ | 365   |          |  | $ | 85     |   |  | 23  | % 
|% of Sales                   |  |          | 11    | % |          |   | 11    | %        |  |   |        |   |  |     |   



Consolidated gross
profit decreased $965 as compared to the same period in the prior year as a result of the decrease in sales and operating inefficiencies in the Decorating Solutions Segment. Consolidated gross profit as a percentage of sales has decreased from last
year. The decrease in the Decorating Solutions Segments gross profit as a percentage of sales is a result of operating inefficiencies at our Scottsburg, Indiana facility that developed after the consolidation of the Las Vegas shrink sleeve
business. The integration of this business took longer than previously expected. The increase in the Packaging Services Segments gross profit is a result of increased volume.





|                                    |  |          |       |   |          |   |          |   |  |   |     |  |   |  
|----------------------------------- |  | -------- | ----- | - | -------- | - | -------- | - |  | - | --- |  | - | -
|                                    |  | June 30, |       |   | $ Change |   | % Change |  
|                                    |  | 2004     |       |   | 2003     |   |          |  
|Selling, General and Administrative |  |          |       |   |          |   |          |   |  |   |     |  |   |  
|Consolidated SGA                    |  | $        | 2,667 |   |          | $ | 2,514    |   |  | $ | 153 |  | 6 | %
|% of Sales                          |  |          | 9     | % |          |   | 9        | % |  |   |     |  |   |  



Selling, general and
administrative expenses increased due to expenses related to our compliance with the internal control requirements of Sarbanes-Oxley.



|                 |  |          |     |          |   |     |          |   |      |   |  |     |   
|---------------- |  | -------- | --- | -------- | - | --- | -------- | - | ---- | - |  | --- | --
|                 |  | June 30, |     | $ Change |   |     | % Change |  
|                 |  | 2004     |     | 2003     |   |    
|Interest Expense |  |          |     |          |   |     |          |   |      |   |  |     |   
|Interest Expense |  | $        | 193 |          | $ | 369 |          | $ | (176 | ) |  | (48 | )%



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Interest expense decreased as compared to the same period in the prior year as a result of the continued
pay down of debt. A portion of the decrease in interest expense relates to the interest savings realized in conjunction with the November 2003 purchase of the Scottsburg, Indiana facility property. We previously leased this facility and had recorded
the lease as a capital lease. A term loan for $3,600 was obtained in order to finance the purchase. We have also experienced lower interest rates compared to the same period of the prior year.





|                   |  |          |     |          |   |       |          |   |      |   |  |   |     |   
|------------------ |  | -------- | --- | -------- | - | ----- | -------- | - | ---- | - |  | - | --- | --
|                   |  | June 30, |     | % Change |   |       | % Change |  
|                   |  | 2004     |     | 2003     |   |      
|Income Tax Expense |  |          |     |          |   |       |          |   |      |   |  |   |     |   
|Income Tax Expense |  | $        | 684 |          | $ | 1,024 |          | $ | (340 | ) |  | $ | (33 | )%





Income tax expense decreased $340 as compared to the same period in the prior year primarily due to the related decrease in net income and decrease in the
effective tax rate. The effective tax rate for the three months ended June 30, 2004 was 37.5% as compared to 39% for the same period in the prior year. The effective tax rate decreased primarily as a result of Multi-Color earning and recognizing
state investment tax credits.



Liquidity and Capital Resources



Through the three months ended June 30, 2004 net cash used in operating
activities was $319 as compared to $1,395 in the same period of the prior year. The change is due primarily to a decrease in accounts receivable offset by an increase in inventory and a decrease in accounts payable. We had record sales in the fourth
quarter of fiscal 2004 that resulted in strong cash collections and increased payable disbursements for material costs in the quarter ending June 30, 2004. Inventory levels were increased during the quarter ending June 30, 2004 in order to meet
customer requirements.



We intend to make capital expenditures
of approximately $5,000 during fiscal 2005, consisting primarily of completing purchases related to a new printing press and the installation of a new business enterprise system that started in fiscal 2004 as well as other plant equipment. We
believe that cash flows from operations and availability under the revolving line of credit are sufficient to meet our capital requirements and debt service requirements for the next twelve months.



From time to time we review potential acquisitions of businesses. While
there are no present commitments to acquire any businesses that would have a material impact on our financial position or results of operations, such acquisitions may require us to issue additional equity or incur additional debt.



We have available under our Revolving Credit Agreement $10,000 at June 30,
2004 to provide for additional cash needs. We entered into this current credit agreement with PNC Bank, Key Bank, LaSalle Bank and Harris Trust and Savings Bank on June 30, 2004. The credit agreement provides for a revolving line of credit up to a
maximum of $10,000 and an acquisition facility of $20,000. Under the terms of the credit agreement, we are subject to several financial covenants. The financial covenants require us to maintain certain leverage and fixed charge ratios as well as
maintain a minimum tangible net worth. We are prohibited from declaring dividends on the common stock of Multi-Color under the agreement. The credit agreement expires in June 2007. As part of our new credit agreement, we received funds from the
above bank group which will be used to pay down other debt in our second quarter.



We believe that we have both sufficient short and long term liquidity financing. We had a working capital position of $11,704 and $7,983 at June 30, 2004 and 2003, respectively. At June 30, 2004, we were in compliance
with our loan covenants and current in our principal and interest payments on all debt.



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##### Table of Contents

Contractual Obligations ($ in thousands)



The following table summarizes Multi-Colors contractual obligations as
of June 30, 2004:



Aggregated Information about Contractual
Obligations and Other Commitments:



|                                         |  |       |        |        |   |        |  |        |       |        |   |        |  |                   |       |  |   |       |  |   |      
|---------------------------------------- |  | ----- | ------ | ------ | - | ------ |  | ------ | ----- | ------ | - | ------ |  | ----------------- | ----- |  | - | ----- |  | - | -----
|June 30, 2004                            |  | Total |        | Year 1 |   | Year 2 |  | Year 3 |       | Year 4 |   | Year 5 |  | More than 5 years
|Long-term debt                           |  | $     | 23,834 |        | $ | 4,521  |  | $      | 3,979 |        | $ | 3,979  |  | $                 | 4,620 |  | $ | 1,140 |  | $ | 5,595
|Rent due under Capital Lease Obligations |  |       | 2      |        |   | 2      |  |        |      |        |   |       |  |                   |      |  |   |      |  |   |     
|Rent due under Operating Leases          |  |       | 8,864  |        |   | 1,116  |  |        | 1,336 |        |   | 950    |  |                   | 799   |  |   | 834   |  |   | 3,829
|Other Long-Term Obligations              |  |       | None   |        |   |        |  |        |       |        |   |        |  |                   |       |  |   |       |  |   |      
|Unconditional Purchase Obligations       |  |       | None   |        |   |        |  |        |       |        |   |        |  |                   |       |  |   |       |  |   |      
|                                         |  |       |        |        |   |        |  |        |       |        |   |        |  |                   |       |  |   |       |  |   |      
|Total Contractual Cash Obligations       |  | $     | 32,700 |        | $ | 5,639  |  | $      | 5,315 |        | $ | 4,929  |  | $                 | 5,419 |  | $ | 1,974 |  | $ | 9,424
|                                         |  |       |        |        |   |        |  |        |       |        |   |        |  |                   |       |  |   |       |  |   |      



Item 3. Quantitative and Qualitative Disclosures About Market Risk



The Company has no material changes to the disclosure made on this matter in the Companys Form 10-K for the year ended March 31, 2004.



Item 4. C
ontrols and Procedures



The
Companys chief executive officer and chief financial officer evaluated the Companys disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange
Act of 1934. Their evaluation concluded that the disclosure controls and procedures are effective in connection with the filing of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.



There have been no significant changes in the Companys internal
controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action.



Forward Looking Statements



The Company believes certain statements contained in this report that are
not historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created by that Act. Reliance should not be placed on
forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Any forward-looking statement
speaks 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.



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##### Table of Contents

Statements concerning expected financial performance, on-going business strategies, and possible future
action which the Company intends to pursue in order to achieve strategic objectives constitute forward-looking information. Implementation of these strategies and the achievement of such financial performance are each subject to numerous conditions,
uncertainties and risk factors. Factors which could cause actual performance by the Company to differ materially from these forward-looking statements include, without limitation, factors discussed in conjunction with a forward-looking statement;
changes in general economic and business conditions; the ability to integrate acquisitions; the success of its significant customers; competition; acceptance of new product offerings; changes in business strategy or plans; quality of management;
availability, terms and development of capital; availability of raw materials; business abilities and judgment of personnel; changes in, or the failure to comply with, government regulations, and other factors. 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.



Part II -
Other Information

|Item | 1.
Legal Proceedings  None
|---- | ---------------------------



|Item | 2.
Changes in Securities  None
|---- | -------------------------------



|Item | 3.
Defaults upon Senior Securities  None
|---- | -----------------------------------------



|Item | 4. S
ubmission of Matters to a Vote of Security Holders - None
|---- | --------------------------------------------------------------



|Item | 5.
Other Information  None.
|---- | ----------------------------



|Item | 6. E
xhibits and Reports on Form 8-K
|---- | ------------------------------------



| | (a) | Exhibits:
| | --- | ---------



|      |  |                                                                         
|----- |  | ------------------------------------------------------------------------
|10.43 |  | Second Amendment to Credit Agreement dated June 30, 2004                
|      | 
|31.1  |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 
|      | 
|31.2  |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 
|      | 
|32.1  |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|      | 
|32.2  |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



| | (b) | Reports on Form 8-K:
| | --- | --------------------



| | 1. | A report pursuant to Item 12 of Form 8-K was filed on May 6, 2004 to announce the Companys results of operations for the fourth quarter and fiscal year ending March 31, 2004.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | A report pursuant to Item 5 of Form 8-K was filed on June 28, 2004 to announce the Companys preliminary outlook of financial results for the first quarter ending June 30,
2004.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Signature



Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                      |  |                         |  |                        
|--------------------- |  | ----------------------- |  | -----------------------
|                      |  | Multi-Color Corporation
|                      |  | (Registrant)           
|                      |  |                        
|Date: August 12, 2004 |  | By:                     |  | /s/ Dawn H. Bertsche   
|                      |  |                         |  | Dawn H. Bertsche       
|                      |  |                         |  | Vice President Finance,
|                      |  |                         |  | Chief Financial Officer



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