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ACQUISITIONS

Adhesion Holdings, Inc (York Label Group) Summary

On October 3, 2011, the Company acquired 100% of York Label Group (York), including its joint venture in Santiago, Chile. Headquartered in Omaha, Nebraska, York is a leader in the home & personal care, food & beverage and wine & spirit label markets with manufacturing facilities in the U.S., Canada and Chile. The acquisition is expected to strengthen Multi-Color's presence in its core markets through the combination of the Company's existing customer relationships with York's customer base.

The Company plans to leverage York's strength in pressure sensitive label technologies to expand into new market segments. In addition, Multi-Color can offer all label technologies including IML, heat transfer and shrink sleeve to York's customers. The combined entities of Multi-Color and York anticipate opportunities to leverage raw material purchases and streamline suppliers. The results of York's operations have been included in the Company's consolidated financial statements beginning October 3, 2011.

The purchase price for York consisted of the following:


Cash from proceeds of borrowings	$	261,211
MCC common stock (2,664 shares issued)		46,684
Deferred payment		21,309

		329,204
Net debt assumed		9,870

	$	339,074

The Company issued 2,664 shares of its common stock to York with a restriction on sale or transfer within two years of the closing date. All shares are restricted from sale until the one year anniversary of the closing date of the transaction and 50% of the shares are restricted from sale from the one year anniversary date to the two year anniversary date of the closing of the transaction. The value of this stock was based on the estimated fair value determined using the average share price ($21.91 per share) of common shares on October 3, 2011, the day of the closing of the transaction. The stock value was then reduced by 20% to reflect the estimated fair value of the discount for the one to two year sale restriction as determined by an independent valuation.

The cash portion of the purchase price was funded through borrowings under the amended Credit Facility (see Note 8 for details of the Credit Facility). Assumed net debt included $10,479 of bank debt and capital leases, less $609 of cash acquired. Of the purchase price, $21,309 was to be paid on April 1, 2012 and of this amount, $2,500 was required to be deposited into an escrow account to satisfy DLJ's indemnification obligations with respect to the transaction. On April 1, 2012, the Company paid DLJ $11,880 and deposited $2,500 into escrow in accordance with the Purchase Agreement. The balance due DLJ ($6,929) is subject to dispute as further described below and was placed into a separate escrow account by the Company. The Company spent a total of $1,384 in acquisition expenses related to the acquisition of York.

The Company is a party in a case styled DLJ South American Partners, L.P. ("DLJ") v. Multi-Color Corporation, et al., Case No. C.A. No. 7417-CS which is pending in the Delaware Court of Chancery. In a complaint filed on April 13, 2012, DLJ alleges that the Company failed to make certain payments required by the Merger and Stock Purchase Agreement (the "Merger Agreement") entered into by the Company with Adhesion Holdings, Inc., a Delaware corporation, DLJ, and Diamond Castle Partners IV, L.P., a Delaware limited partnership, ("Diamond Castle"), pursuant to which the Company acquired York Label Group. An affiliate of Diamond Castle has nominated Ari C. Benacerraf and Simon T. Roberts for election to the Board of Directors of the Company at its 2012 Annual Meeting of Shareholders. Mr. Benacerraf and Mr. Roberts are current members of the Company's Board.

DLJ seeks the payment of $6,939 and interest, legal fees and other equitable relief that the Company is unable to reasonably estimate at this time. On May 18, 2012, the Company filed an answer, counterclaim and third party complaint asserting various causes of action against DLJ, Diamond Castle and affiliated entities arising out of their breaches of the Merger Agreement and other actions.

Warszawski Dom Handlowy (WDH) Summary

On July 1, 2011, the Company acquired WDH, a consumer products and spirit label company located in Warsaw, Poland. WDH supplies labels for a number of large consumer products to international brand owners in home & personal care markets, consistent with MCC's large customers in the U.S. The results of WDH's operations have been included in the Company's consolidated financial statements beginning July 1, 2011.

The purchase price for WDH consisted of the following:


Cash from proceeds of borrowings	$	3,953
Amount held in escrow		450
Deferred payment		438
Contingent consideration		2,919

		7,760
Net debt assumed		4,019

	$	11,779

The cash portion of the purchase price was funded through borrowings under the Credit Facility (see Note 8 for details of the Credit Facility). Assumed net debt included $4,023 of capital leases and other debt, less $4 of cash acquired. At March 31, 2012, the Company had $398 in escrow, which is deferred for three years after the closing date. Any change in escrow amounts would represent an offset to additional assumed liabilities with no change in the purchase price. The Company spent $177 in acquisition expenses related to the acquisition of WDH.

The acquisition agreement provides for a contingent payment to be made to the selling shareholders if certain financial targets are reached. The financial targets were reached in calendar year 2011 and the contingent payment and deferred payment were made in the fourth quarter of fiscal year 2012.

La Cromografica Summary

On April 1, 2011, the Company acquired La Cromografica, an Italian wine label specialist located in Florence, Italy. La Cromografica specializes in high quality wine labels for premium Italian wines and provides further access to the Italian wine label market. The results of La Cromografica's operations have been included in the Company's consolidated financial statements beginning April 1, 2011.

The Purchase Price for La Cromografica consisted of the following:


Cash from proceeds of borrowings	$	9,880
Net debt assumed		1,628

	$	11,508

The purchase price was paid at the end of June 2011 and funded through $9,880 of borrowings under the Credit Facility (see Note 8 for details of the Credit Facility). The Company assumed net debt of $1,628 which included $2,083 of bank debt and capital leases less $455 of cash acquired. The Company spent $41 in acquisition expenses related to the La Cromografica acquisition.

Monroe Etiquette Summary

On October 1, 2010, the Company acquired Monroe Etiquette, a French wine label specialist. The acquisition reinforced MCC's commitment to expanding its global presence in the wine label market. The results of Monroe Etiquette's operations were included in the Company's consolidated financial statements beginning October 1, 2010.

The purchase price for Monroe Etiquette consisted of the following:


Cash from proceeds of borrowings	$	8,984
Deferred payment		912

		9,896
Net debt assumed		506

	$	10,402

The cash portion of the purchase price was funded through $8,984 of borrowings under the Credit Facility. Assumed net debt included $1,293 of bank debt and capital leases less $787 of cash acquired. The seller received approximately 89% of the proceeds in the form of cash on October 1, 2010. The remaining 11% of the purchase price will be paid in cash, but is deferred for five years after the closing date. The Company spent $63 in acquisition expenses related to the Monroe Etiquette acquisition.

Guidotti CentroStampa Summary

On July 1, 2010, the Company acquired Guidotti CentroStampa (CentroStampa), a leading European wine & spirit and olive oil label specialist based in Tuscany, Italy. The acquisition expanded MCC's global presence in the wine & spirit label market and provided an entry into the olive oil label market. The results of CentroStampa's operations were included in the Company's consolidated financial statements beginning July 1, 2010.

The purchase price for CentroStampa consisted of the following:


Cash from proceeds of borrowings	$	41,004
MCC common stock (935 shares issued)		7,928
Contingent consideration		9,267

	$	58,199

The Company issued 935 shares of its common stock to CentroStampa equity holders with a restriction on sale or transfer within one year of the closing date. The value of this stock was determined based on the estimated fair value. The Company used the closing market price on July 1, 2010 to determine the estimated fair market value. The stock value was then reduced by 17.6% to reflect the estimated fair value of the discount for the one year sale restriction as determined by an independent valuation.

The cash portion of the purchase price was funded through $41,004 of borrowings under the amended credit facility. Assumed net debt included $4,368 of bank debt and capital leases less $6,109 of cash acquired. The Company spent $912 in acquisition expenses related to the CentroStampa acquisition.

The selling shareholders have agreed to indemnify MCC with respect to the acquisition, including certain losses arising out of a breach of their warranties or covenants under the acquisition agreement. The acquisition agreement provides that 5% of the purchase price is subject to achieving certain financial targets and subject to certain quantitative measures. During the third quarter ended December 31, 2010, we adjusted the fair value of the contingent consideration related to the acquisition. The adjustment was based on information obtained during the third quarter relating to conditions that existed at the acquisition date. As a result, we treated this as a purchase price adjustment as of the acquisition date. On December 31, 2010, certain financial targets subject to certain quantitative measures required to realize the contingent payment were satisfied in full and the entire liability was paid in July 2011.

An additional 10% is held in escrow for up to five years to fund certain potential indemnification obligations of the selling shareholders. The Company had $5,617 and $7,322 at March 31, 2012 and March 31, 2011, respectively, in this escrow account. The escrow will be released from the first to the fifth anniversary of the date of closing in the amount of 2% of the purchase price per year in accordance with the provisions of the escrow agreement.

Purchase Price Allocation and Other Items

The determination of the final purchase price and its allocation to specific assets acquired and liabilities assumed for York will be finalized prior to the end of the second quarter of fiscal 2013 once independent fair value appraisals of assets and liabilities and valuation of tax liabilities are finalized. The determination of the final purchase price and its allocation to specific assets acquired and liabilities assumed for WDH will be finalized prior to the end of the first quarter of fiscal year 2013 once fair value appraisals of assets and valuation of tax liabilities are finalized. We do not anticipate any substantial changes to the preliminary purchase price or related allocation. The determination of the final purchase price and its allocation to specific assets acquired and liabilities assumed for La Cromografica was finalized during the fourth quarter of fiscal 2012 after fair value appraisals of assets and valuation of tax liabilities were finalized. There were no material changes to the preliminary purchase price or related allocation. The determination of the final purchase price and its allocation to specific assets acquired and liabilities assumed for CentroStampa and Monroe Etiquette was finalized during the fourth quarter of fiscal year 2011 after fair value appraisals of assets and valuation of tax liabilities were finalized. There were no material changes to the preliminary purchase price or related allocation.

Based on fair value estimates, the purchase price for CentroStampa, Monroe Etiquette and La Cromografica and the preliminary purchase price for WDH and York has been allocated to individual assets acquired and liabilities assumed as follows:


	CentroStampa		Monroe Etiquette		La Cromografica		WDH		York
Assets Acquired:
Cash, less debt assumed	$	1,741	$	—	$	—	$	—	$	—
Accounts receivable		15,110		2,153		4,534		2,673		33,550
Inventories		6,024		313		1,254		1,000		19,671
Property, plant and equipment		16,327		3,072		5,638		3,486		54,790
Intangible assets		16,383		4,159		1,280		2,393		82,100
Goodwill		23,405		3,742		3,488		6,709		177,705
Other assets		1,218		104		30		703		10,105

Total assets acquired	$	80,208	$	13,543	$	16,224	$	16,964	$	377,921

Liabilities Assumed:
Accounts payable		7,020		302		2,320		3,765		21,056
Accrued income taxes payable		365		173		—		—		324
Accrued expenses and other liabilities		6,037		883		1,287		981		12,528
Net debt assumed		—		506		1,628		4,019		9,870
Deferred tax liabilities		8,587		1,783		1,109		439		4,939

Total liabilities assumed		22,009		3,647		6,344		9,204		48,717

Net assets acquired	$	58,199	$	9,896	$	9,880	$	7,760	$	329,204

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


	CentroStampa				Monroe Etiquette				La Cromografica				WDH				York
	Fair Value		Useful Lives		Fair Value		Useful Lives		Fair Value		Useful Lives		Fair Value		Useful Lives		Fair Value		Useful Lives
Customer relationships	$	13,697		18 years	$	4,084		20 years	$	1,138		16 years	$	2,393		18 years	$	82,100		18 years
Trademarks		440		1.5 years		75		1.25 years		142		2 years		—		—		—		—
Licensing intangible		2,246		5 years		—		—		—		—		—		—		—		—

Total identifiable intangible assets	$	16,383			$	4,159			$	1,280			$	2,393			$	82,100

Identifiable intangible assets are amortized over their useful lives based on a number of assumptions including the estimated period of economic benefit and utilization. The Company expects amortization expense related to the fiscal 2012 acquisitions to be approximately $4,900 annually for the next five years.

None of the goodwill arising from the CentroStampa, Monroe Etiquette, La Cromografica or WDH acquisitions is deductible for income tax purposes. Approximately $47,620 of the goodwill arising from the York acquisition is deductible for income tax purposes. Below is a roll forward of the acquisition goodwill from acquisition date to March 31, 2012:


	CentroStampa		Monroe Etiquette			La Cromografica			WDH			York
Balance at acquisition date	$	23,405	$	3,742		$	3,488		$	6,709		$	177,705
Foreign exchange impact		2,124		(75	)		(216	)		(659	)		(1,498	)

Balance at March 31, 2012	$	25,529	$	3,667		$	3,272		$	6,050		$	176,207

The goodwill for CentroStampa and La Cromografica is attributable to the workforce of the acquired business and the access to two significant markets, the olive oil label market and the Italian wine label market. Italy represents approximately 20% of the world's wine production and is also a leading producer of olive oils. The goodwill for Monroe Etiquette is attributable to access to the French wine label market and the workforce of the acquired business. The goodwill for WDH is attributable to access to the Eastern European pressure sensitive label market and the workforce of the acquired business. The goodwill for York is attributable to strengthening MCC's presence in home & personal care, food & beverage and wine & spirit label markets in North America and Chile and the workforce of the acquired business.

The accounts receivable acquired as part of the CentroStampa acquisition had a fair value of $15,110 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $15,197 and the estimated contractual cash flows that are not expected to be collected are $87. The accounts receivable acquired as part of the Monroe Etiquette acquisition had a fair value of $2,153 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $2,176 and the estimated contractual cash flows that are not expected to be collected are $23. The accounts receivable acquired as part of the La Cromografica acquisition had a fair value of $4,534 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $4,620 and the estimated contractual cash flows that are not expected to be collected are $86. The accounts receivable acquired as part of the WDH acquisition had a fair value of $2,673 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $3,132 and the estimated contractual cash flows that are not expected to be collected are $459. The accounts receivable acquired as part of the York acquisition had a fair value of $33,550 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $35,472 and the estimated contractual cash flows that are not expected to be collected are $1,922.

The net revenues and net income for CentroStampa, Monroe Etiquette, La Cromografica, WDH and York are included in the consolidated statement of income for the year ended March 31, 2012. The combined net revenues and net income for the year ended March 31, 2012 for these acquired entities were $195,181 and $6,321, respectively. The combined net revenues and net income included in the consolidated statement of income for CentroStampa and Monroe Etiquette were $44,322 and $4,370, respectively, for the year ended March 31, 2011.

Pro Forma Information

The following table provides the unaudited pro forma results of operations for the year ended March 31, 2012 and 2011 as if CentroStampa, Monroe Etiquette, La Cromografica, WDH and York had been acquired as of the beginning of fiscal year 2011. The pro forma results include certain purchase accounting adjustments, such as capital lease adjustments, the estimated changes in depreciation, intangible asset amortization, inventory step-up and interest expense. 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 dates indicated or that may result in the future.


	Year Ended March 31,
	2012		2011
Net revenues	$	635,686	$	620,119
Net income	$	9,885	$	23,135
Diluted earnings per share	$	0.61	$	1.44

Pro forma information was prepared for the financial results of WDH and York for the year ended March 31, 2012 as if the acquisitions of WDH and York had occurred at the beginning of the year. Net income for the year ended March 31, 2012 includes a non-recurring loss on extinguishment of debt recorded by York of $13,569, prior to acquisition. Below is a table detailing a reconciliation of actual net revenues and net income to the pro forma net revenues and net income:


	Year Ended March 31, 2012
	Net Revenues		Net Income
Multi-Color Corporation actual results	$	510,247	$	19,700
WDH local results for the year ended March 31, 2012		3,611		104
York local results for the year ended March 31, 2012		121,828		(15,901	)
Pro forma adjustments		—		5,982

Pro forma results	$	635,686	$	9,885

Pro forma information was prepared for the financial results of CentroStampa, Monroe Etiquette, La Cromografica, WDH and York for the year ended March 31, 2011 as if these acquisitions had occurred at the beginning of the year. Included in the net loss for York is a non-recurring loss on extinguishment of debt of $13,569. Below is a table detailing a reconciliation of actual net revenues and net income to the pro forma net revenues and net income:


	Year Ended March 31, 2011
	Net Revenues		Net Income
Multi-Color Corporation actual results	$	338,284	$	18,411
Acquired company results for the year ended March 31, 2011		281,835		3,938
Pro forma adjustments		—		786

Pro forma results	$	620,119	$	23,135

Below is a table detailing the pro forma adjustments:


	Adjustments
	Year Ended March 31, 2012			Year Ended March 31, 2011
Present value of deferred payments for CentroStampa and Monroe Etiquette	$	—		$	(21	)
Acquired intangibles amortization		1,570			(5,352	)
Amortization of debt issuance costs relating to the amendment of the credit facility		507			(34	)
Interest expense for debt related to acquisitions		—			(1,436	)
Depreciation expense related to capital leases		(158	)		(844	)
Lease expense related to capital leases		(317	)		(698	)
Interest expense related to capital leases		(54	)		(279	)
York depreciation expense adjustment		1,502			10,921
York interest expense adjustment		4,691			3,905
York finished goods adjustment		1,530			(1,530	)
York acquisition expense adjustment		1,347			—
Income taxes		(4,541	)		(3,714	)
Other adjustments		(95	)		(132	)

Total pro forma adjustments	$	5,982		$	786

Other Acquisition Activity

On May 2, 2011, the Company entered into agreements to buy 70% ownership in two label operations in Latin America; one in Santiago, Chile and the other in Mendoza, Argentina with a regional partner owning the remaining 30%. MCC's investment including debt assumed was approximately $3,900. These companies focus on providing premium labels to the expanding Latin American wine and spirit markets. The results of operations of these acquired businesses have been included in the consolidated financial statements since the date of the acquisition and have been determined to be individually and collectively immaterial for further disclosure.

In September 2011, the Company bought the regional partner's 30% ownership interest in the two label operations in Latin America for 40,000 shares of Multi-Color stock. As a result, MCC now owns 100% of the label operations in Chile and Argentina.


Non-controlling interests at acquisition date	$	939
Loss attributable to non-controlling interests		(32	)
Foreign exchange		(65	)
Buy-out of non-controlling interests		(842	)

Non-controlling interests at March 31, 2012	$	—

During the third quarter of fiscal 2011, MCC announced plans to invest in establishing label operations in China. MCC is located in the major southern city of Guangzhou, near many national and international consumer product brand owners. The new business is managed by MCC's Asia Pacific President of Consumer Products. The business became fully operational in the first quarter of fiscal 2012.

At March 31, 2011, the Company had $783 in an escrow account related to the acquisition of Collotype, pending resolution of various contingencies primarily related to income taxes for pre-acquisition activities of Collotype. On February 29, 2012, the fourth anniversary of the acquisition date, the remaining funds in the escrow in the amount of $842 were released to the sellers per the escrow agreement.