Multi-Color Corp.
Annual Report 2017

Plain-text annual report

Accelerating Growth Multi-Color Corporation 2017 Annual Report (Form 10-K) DEAR SHAREHOLDERS FISCAL 2017 DELIVERED ON DOUBLE DIGIT CORE EPS GROWTH AT 12% AND LOWER LEVERAGE AT 2.8X NET DEBT/CORE EBITDA. WE ARE WELL PLACED TO ACCELERATE GROWTH IN FISCAL 2018 BOTH ORGANICALLY AND VIA ACQUISITIONS. Vision Fiscal 2018 is our 30th year as a public company and we expect to mark this milestone with over one billion in revenues. Capex in fiscal 2017 and 2018 has been increased to circa 5% of revenues to support higher organic growth expectation. Acquisition revenues in fiscal 2018 are expected to exceed 2017. We welcomed new businesses in Italy, France and Australia during fiscal 2017. Performance Review Revenues for fiscal 2017 increased 6% to $923 million from $871 million in the prior year. Acquisitions accounted for a 5% increase in revenues and organic revenues increased 3%. Foreign exchange rates led to a 2% decrease in revenues. Core gross profit margin was 21% for both fiscal 2017 and fiscal 2016. Core selling, general & administrative expenses were 9% of revenues for both fiscal 2017 and fiscal 2016. Core operating income was 12% of revenues for both fiscal 2017 and fiscal 2016. Free cash flow was $61 million compared to $65 million in the prior year as a result of higher capital expenditures. Diluted earnings per share (EPS) increased 27% to $3.58 per diluted share from $2.82 in the prior year. Excluding the impact of non-core items, core EPS increased 12% to $3.61 per diluted share from $3.22 in the prior year. Customers We seek to further broaden our global reach and scale to support our customers in our core markets of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. We remain committed to maintaining strong customer relationships through the world’s best label solutions and thank all our customers for their business. L to R: Vadis Rodato, President & CEO and Nigel Vinecombe, Executive Chairman Future Growth Our strategy of organic growth in the 3-5% range and double-digit growth via acquisitions remains consistent in the highly fragmented global label market, which is growing circa 5% per year. We continue to be well positioned through our global position to supply customers in a highly fragmented global market. MCC Team Our team of over 5,450 is the heart of our business and we always greatly appreciate and thank them for their integrity, passion, creativity, perseverance and achievements. Nigel Vinecombe Executive Chairman June 2017 Vadis Rodato President and CEO CORPORATE INFORMATION As of June 30, 2017 Officers Nigel A. Vinecombe Executive Chairman Vadis A. Rodato President & Chief Executive Officer Sharon E. Birkett Vice President, Chief Financial Officer & Secretary David G. Buse Global Chief Operating Officer Wine & Spirits Timothy P. Lutz Chief Accounting Officer Mary T. Fetch Vice President, Treasurer Directors Nigel A. Vinecombe Executive Chairman Multi-Color Corporation Ari J. Benacerraf Senior Managing Director Diamond Castle Holdings Robert R. Buck Chairman Beacon Roofing Supply, Inc. Charles B. Connolly President Connemara Converting Simon T. Roberts Managing Director Harvest Partners Vadis A. Rodato President & Chief Executive Officer Multi-Color Corporation Matthew M. Walsh Chief Financial Officer Catalent, Inc. SHAREHOLDER INFORMATION Corporate Headquarters Multi-Color Corporation 4053 Clough Woods Drive Batavia, Ohio 45103 +1 (513) 381-1480 www.mcclabel.com Annual Meeting The Annual Meeting of Shareholders will be held at the Multi-Color Corporate Offices, 4053 Clough Woods Drive Batavia, Ohio on August 9, 2017 at 10:30 a.m. ET. Stock Listing The common shares of Multi-Color Corporation trade on the NASDAQ Global Select market under the Symbol “LABL”. Transfer Agent Computershare Investor Services College Station, Texas Independent Registered Public Accountants Grant Thornton LLP Cincinnati, Ohio UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2017 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-16148 MULTI-COLOR CORPORATION Incorporated in the State of Ohio 4053 Clough Woods Dr. Batavia, OH 45103 (Address of principal executive offices) IRS Employer Identification Number 31-1125853 Name of Each Exchange on Which Registered NASDAQ Global Select Market Securities registered pursuant to Section 12(b) of the Act: Common Stock, no par value Securities registered pursuant to Section 12(g) of the Act: None (513) 381-1480 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes__ No X Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes__ No X Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No__ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K X. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” ”accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer X 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 Act). Yes__ No X The aggregate market value of the voting and non-voting common equity held by non-affiliates was approximately $660,665,940 based upon the closing price of $66.00 per share of Common Stock on the NASDAQ Global Select Market as of September 30, 2016, the last business day of the registrant’s most recently completed second fiscal quarter. As of April 30, 2017, 16,951,808 shares of no par value Common Stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s proxy statement to be filed pursuant to Regulation 14A of the Exchange Act for its 2017 Annual Meeting of Shareholders to be held on August 9, 2017 are incorporated by reference into Part III of this Form 10-K. Part I Part II Part III Part IV Item 1 Item 1A Item 1B Item 2 Item 3 Item 4 Item 5 Item 6 Item 7 Item 7A Item 8 Item 9 Item 9A Item 9B Item 10 Item 11 Item 12 Item 13 Item 14 Item 15 Item 16 - - - - - - - - - - - - - - - - - - - - - 2 Table of Contents Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services Exhibits and Financial Statement Schedules Form 10-K Summary Page 4 8 14 15 16 16 17 19 20 29 30 65 66 66 67 67 67 67 67 67 69 FORWARD-LOOKING STATEMENTS 3 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-K 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 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 is each subject to numerous conditions, uncertainties and risk factors, including those contained in Item 1A in “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; 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; 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; 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. 4 PART I ITEM 1. BUSINESS (In thousands, except for statistical data) OVERVIEW 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 North, Central and South America, Europe, China, Southeast Asia, Australia, New Zealand, and South Africa with a comprehensive range of the latest label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer. The Company was incorporated in 1985, succeeding the predecessor business. Our corporate offices are located at 4053 Clough Woods Drive, Batavia, Ohio 45103 and our telephone number is (513) 381-1480. Our common stock, no par value, is listed on the NASDAQ Global Select Market under the symbol “LABL”. See “Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.” We maintain a website (www.mcclabel.com), which includes additional information about the Company. The website includes corporate governance information for our shareholders and our Code of Ethics can be found under the corporate governance section. Information on the website is not part of this Form 10-K. Shareholders can also obtain on and through our website, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after the Company electronically files such materials with or furnishes such materials to the Securities and Exchange Commission (SEC). Any of these documents may be read and copied at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. Information regarding the operation of the SEC Public Reference Room may be obtained by calling 1-800-SEC-0330. The Company’s filed documents may also be accessed via the SEC Internet site at http://www.sec.gov. References to 2017, 2016 and 2015 are for the fiscal years ended March 31, 2017, 2016 and 2015. PRODUCTS AND SERVICES The Company provides a wide range of products for the packaging needs of our customers and is one of the world’s largest producers of high quality pressure sensitive, in-mold and heat transfer labels, and a major manufacturer of glue-applied and shrink sleeve labels. The Company also provides a full complement of print methods including flexographic, lithographic, rotogravure, letterpress and digital, plus in-house pre-press services. Pressure Sensitive Labels: Pressure sensitive labels adhere to a surface with pressure. The label typically consists of four elements – a substrate, which may include paper, foil or plastic; an adhesive, which may be permanent or removable; a release coating; and a backing material to protect the adhesive against premature contact with other surfaces. The release coating and protective backing are removed prior to application to the container, exposing the adhesive, and the label is pressed or rolled into place. Innovative features of this product include promotional neckbands, peel-away coupons, resealable labels, see-through window graphics, and holographic foil enhancements to cold and hot foil stamping. The pressure sensitive market is the largest category of the overall label market and represents a significant growth opportunity. Our strategy is to be a premier global supplier of pressure sensitive labels that demand high impact graphics or are otherwise technically challenging. In-Mold Labels (IML): The in-mold label process applies a label to a plastic container as the container is being formed in the mold cavity. The finished IML product is a finely detailed label that performs consistently well for plastic container manufacturers and adds marketing value and product security for consumer product companies. Each component of the IML production process requires a special expertise for success. The components include the substrate (the base material for the label), inks, overcoats, varnishes and adhesives. We are unique in the industry in that we manufacture IMLs on rotogravure, flexographic and lithographic printing presses. There are several critical characteristics of a successful IML: the material needs a proper coefficient of friction so that the finished label is easily and consistently picked up and applied to the blow-molded container, the substrate must be able to hold the label’s inks, including metallics and fluorescents, overlay varnishes and adhesives and the material must be able to lay smoothly, without wrinkle or bulge, when applied to a very hot, just molded plastic container that will quickly shrink, along with the label, as its temperature falls. We continually search for alternate substrates to be used in the IML process in order to im prove label performance and capabilities as well as to reduce substrate costs. Technical innovations in this area include the use of peel-away IML coupons, scented and holographic labels.  Heat Transfer Labels (HTL): 5 HTL are reverse printed and transferred from a special release liner onto the container using heat and pressure. The labels are a composition of inks and lacquers tailored to the customer’s specific needs. These labels are printed and then shipped to blow molders and/or contract decorators who transfer the labels to the containers. Once applied, the labels are permanently adhered to the container. The graphics capabilities include fine vignettes, metallic and thermochromatic inks, as well as the patented “frost”, giving an acid-etch appearance. Therimage™ is our pioneer heat transfer label technology developed primarily for applications involving plastic containers serving consumer markets in personal care, food and beverage, and home improvement products. The addition of the Clear ADvantage™ brand provides premium graphics on both glass and plastic containers enabling this decorating technology to achieve the highly sought after “no label” look for the health and beauty aid, beverage, personal care, household chemical and promotional markets. Our “ink only” and flameless HTL technology have increased our capabilities in this area. Flameless technology enables us to provide a solution to customers who want to remove open flames from their operations, which are normally required to pre-treat and post-treat containers for Therimage™ and Clear ADvantage™ products. Flameless technology has applications in all the aforementioned markets. Glue-Applied Labels (Cut and Stack): Glue-applied labels are adhered to containers using an adhesive applied during the labeling process. Available in roll-fed and sheeted formats, the labels are an attractive and cost-effective choice for high volume applications. These labels can be produced on a wide variety of substrates and accommodate a comprehensive range of embellishments including foil stamping, embossing, metallics and unique varnish finishes. Our innovations within glue-applied labels include peel-away promotional labels, thermochromics, holographics and metalized films. We also offer promotional products such as scratch-off coupons, static-clings and tags. Shrink Sleeve Labels: Shrink sleeve labels are produced in colorful, cutting edge styles and materials. The labels are manufactured as sleeves, slid over glass or plastic bottles and then heated to conform precisely to the contours of the container. The 360-degree label and tamper resistant feature of the label are marketing advantages that many of our customers seek when choosing this label type. The shrink sleeve market is a growing decorating technology as consumer product companies look for ways to differentiate their products. Several markets, such as the beverage market within the consumer goods industry, have adopted this decorating technology. Demand for this label solution in the food and personal care markets continues to grow and should broaden the sales opportunities for shrink sleeve labels. Graphic Services: We provide graphics and pre-press services for our customers at all of our manufacturing locations. These services include the conversion of customer digital files and artwork into proofs, production of print layouts and printing plates, and product mock ups and samples for market research. As a result of these capabilities, we are able to go from concept to printed label, thus increasing our customers’ speed to market and further enhancing our value proposition. RESEARCH AND DEVELOPMENT Our product leadership group focuses on research and development, product commercialization and technical service support. The group includes chemical, packaging and field engineers who are responsible for developing and commercializing innovative label and application solutions. Technical service personnel also assist customers and manufacturers in improving container and label performance. The services provided by this group differentiate us from many of our competitors and drive our selection for the most challenging projects. Our research and development expenditures were $5,274, $5,520 and $4,619 in 2017, 2016 and 2015, respectively. SALES AND MARKETING We provide a complete line of label solutions and a variety of technical and graphic services. Our vision is to be the premier global resource of decorating solutions. We sell to a broad range of consumer product, food & beverage, wine & spirits and healthcare companies located in North, Central and South America, Europe, China, Southeast Asia, Australia, New Zealand, and South Africa. Our sales strategy is a consultative selling approach. Our sales organization reviews the requirements of the container and offers a number of alternative decorating methods. Our customers view us as an expert source of materials, methods and technologies with the ability to offer the most cost effective solution. We have continued to make progress in expanding our customer base and portfolio of products, services and manufacturing locations throughout the world. During 2017, 2016 and 2015, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 17%, 17% and 18%, respectively, of the Company’s consolidated net revenues. All of these sales were made to The Procter & Gamble Company. In fiscal 2015, we entered the Irish label market with the acquisition of Multiprint Labels Limited in Dublin, Ireland, which specializes in pressure sensitive labels for the wine & spirits and beverage markets, and New Era Packaging in Drogheda, Ireland, which specializes in labels for the healthcare, pharmaceutical and food industries. We also 6 entered the English label market in fiscal 2015 with the acquisition of Multi Labels Ltd., which specializes in premium alcoholic beverage labels for spirits and imported wine. In fiscal 2016, we entered the Southeast Asian label market with the acquisition of Super Label, which specializes in labels for home & personal care, food & beverage and specialty consumer product industries. We also entered the Spanish wine & spirits market in fiscal 2016 with a start-up operating in La Rioja, Spain. PRODUCTION AND QUALITY To guarantee consistent quality results, all of our label decorating services are backed by aggressively implemented and administered quality programs and qualified technical support staff. Our quality assurance program ensures excellence in every label. Multi-Color’s comprehensive range of printing technologies facilitates our ability to respond quickly and effectively to changing customer needs. Our current printing technologies include flexographic, lithographic, rotogravure, letterpress and digital. Pre-press technology offerings include color separations, color management programs and in-house platemaking and tooling. Our manufacturing operations involve complex processes and utilize factory automation to produce a consistent, high quality label. We employ state of the art technologies including digital platemaking and automated vision inspection systems complemented by a robust systemic quality management system. EMPLOYEES As of March 31, 2017, we had approximately 5,450 employees. Of the total employees, approximately 60 employees are represented by the United Steel, Paper and Forestry, Rubber Manufacturing, Energy, Allied Industrial and Service Workers, International Union (USW) A.F.L.-C.I.O. Local 98 in Norwood, Ohio, and the related labor contract expiring in March 2022. We also have three union agreements in Canada representing approximately 45 employees; two Teamsters/Graphic Communications Conference, Local Union 555Ms, which expires in July 2020 and the Workers Union of Les Graphiques Corpco (CSN), which expires in August 2018. We consider our labor relations to be good and have not experienced any work stoppages during the previous decade. RAW MATERIALS Common to the printing industry, we purchase proprietary products from a number of raw material suppliers. To prevent potential disruptions to our manufacturing facilities, we have developed relationships with more than one supply source for each of our critical raw materials. Our raw material suppliers are major corporations with successful historical performance. Although we intend to prevent any long-term business interruption due to our inability to obtain raw materials, there could be short-term manufacturing disruptions during the customer qualification period for any new raw material source. ACQUISITIONS We are continually in pursuit of selective acquisitions that will contribute to our growth. We believe that acquisitions are a method of increasing our presence in existing markets, expanding into new markets, gaining new customers and product offerings and improving operating efficiencies through economies of scale. Through acquisitions, we intend to broaden our revenue stream by expanding our lines of innovative label solutions, offering a variety of technical and graphic services and fulfilling the specific needs and requirements of our customers. The printing and packaging industry is highly fragmented and offers many opportunities for acquisitions. On July 1, 2014, the Company acquired Multiprint Labels Limited (Multiprint) based in Dublin, Ireland. Multiprint specializes in pressure sensitive labels for the wine & spirits and beverage markets in Ireland and the UK. On January 5, 2015, the Company acquired Multi Labels Ltd., based in Daventry, near London, England, which specializes in premium alcoholic beverage labels for spirits and imported wine. On February 2, 2015, the Company acquired New Era Packaging, which is based near Dublin, Ireland and specializes in labels for the healthcare, pharmaceutical and food industries. On May 1, 2015, the Company acquired Mr. Labels in Brisbane, Queensland Australia, which provides labels primarily to food and beverage customers. On May 4, 2015, the Company acquired Barat Group (Barat) based in Bordeaux, France. Barat operates four manufacturing facilities in Bordeaux and Burgundy, France, and the acquisition gives the Company access to the label market in the Bordeaux wine region and expands our presence in Burgundy. On August 11, 2015, the Company acquired 90% of the shares of Super Label based in Kuala Lumpur, Malaysia, which was publicly listed on the Malaysian stock exchange. During the second and third quarters of fiscal 2016, the Company acquired the remaining shares and delisted Super Label. The acquisition included an 80% controlling interest in the label operations in Indonesia and a 60% controlling interest in certain legal entities in Malaysia and China. During the third quarter of fiscal 2017, the Company acquired the remaining shares of the label operations in Indonesia. Super Label has operations in Malaysia, Indonesia, the Philippines, Thailand and China and produces home & personal care, food & beverage and specialty consumer products labels. This acquisition expands our presence in China and gives us access to new label markets in Southeast Asia. On October 1, 2015, the Company acquired Supa Stik Labels (Supa Stik), which is located in Perth, West Australia and services the local wine, food & beverage and healthcare label markets. 7 On January 4, 2016, the Company acquired Cashin Print and System Label, which are located in Castlebar, Ireland and Roscommon, Ireland, respectively. The businesses supply multinational customers in Ireland, the United Kingdom and Continental Europe and provide Multi-Color with the opportunity to supply a broader product range to a larger customer base, especially in the healthcare market. On July 1, 2016, the Company acquired Italstereo Resin Labels S.r.l. (Italstereo), which is located near Lucca, Italy and specializes in producing pressure sensitive adhesive resin coated labels, seals and emblems. On July 6, 2016, the Company acquired Industria Litografica Alessandrina S.r.l. (I.L.A.), which is located in the Piedmont region of Italy and specializes in producing premium self-adhesive and wet glue labels primarily for the wine & spirits market and also services the food industry. On January 3, 2017, the Company acquired Graphix Labels and Packaging Pty Ltd. (Graphix). 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 Gironde Imprimerie Publicité (GIP). The Company acquired 30% of GIP as part of the Barat acquisition in fiscal 2016. GIP is located in the Bordeaux region of France and specializes in producing labels for the wine & spirits market. See Note 16 to our consolidated financial statements for geographic information relating to our net revenues and long-lived assets. See Note 3 to our consolidated financial statements for further information regarding acquisitions. COMPETITION We have a large number of competitors in the pressure sensitive and glue-applied label markets and several competitors in each of the IML, shrink sleeve and HTL markets. Some of these competitors in the pressure sensitive and glue-applied label markets have greater financial and other resources than us. The competitors in IML, shrink sleeve and HTL markets are either private companies or subsidiaries of public companies and we cannot assess the financial resources of these organizations. We could be adversely affected should a competitor develop labels similar or technologically superior to our labels. We believe competition is principally dependent upon product performance, service, pricing, technical support and innovation. PATENTS AND LICENSES We own a number of patents and patent applications in the U.S., Europe, Australia and South Africa that relate to the products and services we offer to our customers. Although these patents are important to us, we are not dependent upon any one patent. W e believe that these patents, collectively, along with our ability to be a single source provider of many packaging needs, provide us with a competitive advantage over our competition. The expiration or unenforceability of any one of our patents would not have a material adverse effect on us. REGULATION Our operations are subject to regulation by federal, state and foreign environmental protection agencies. To ensure ongoing compliance with these requirements, we have implemented an internal compliance program. Additionally, we continue to make capital investments to maintain compliance with these environmental regulations and to improve our existing equipment. However, there can be no assurances that these regulations will not require expenditures beyond those that are currently anticipated. In the U.S., the Food and Drug Administration regulates the raw materials used in labels for various products. These regulations apply to the consumer product companies for which we produce labels. We use materials specified by the consumer product companies in producing labels.  ITEM 1A. RISK FACTORS (In thousands, except for statistical data) 8 In addition to the other information set forth in this report, the following factors could materially affect the Company’s business, financial condition, cash flows or future results. Any one of these factors could cause the Company’s actual results to vary materially from recent results or from anticipated future results. The risks described below are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results. Risks Relating to Our Business Raw material cost increases or shortages could adversely affect our results of operations and cash flows. As a member of the print industry, our sales and profitability are dependent upon the availability and cost of various raw materials, which are subject to price fluctuations, and the ability to control the fluctuating costs of raw materials, pass on any price increases to our customers or find suitable alternative suppliers. If we are unable to effectively manage these costs or improve our operating efficiencies, or if adverse developments arise concerning certain key raw material vendors, such as disruptions in their productions or lack of availability of the raw materials we need from them, or our relationships with them, our profit margin may decline, especially if the inflationary conditions that have occurred in these markets in the recent past continue to occur. We face risks related to interruption of our operations and lack of redundancy. Our production facilities, websites, transaction processing systems, network infrastructure, supply chain and customer service operations may be vulnerable to interruptions, and we do not have redundancies in all cases to carry on these operations in the event of an interruption. Specifically, the long-term shutdown of our printing presses or malfunctions experienced with our presses could negatively impact our ability to fulfill customers’ orders and on-time delivery needs and adversely impact our operating results and cash flows. We have not identified alternatives to all of our facilities, systems, supply chains and infrastructure, including production, to serve us in the event of an interruption, and if we were to find alternatives, they may not be able to meet our requirements on commercially acceptable terms or at all. In addition, we are dependent in part on third parties for the implementation and maintenance of certain aspects of our communications and production systems, and because many of the causes of system interruptions or interruptions of the production process may be outside of our control, we may not be able to remedy such interruptions in a timely manner, or at all. Any interruptions that cause any of our websites to be unavailable, reduce our order fulfillment performance or interfere with our manufacturing, technology or customer service operations could result in lost revenue, increased costs, negative publicity, damage to our reputation and brand, and an adverse effect on our business and results of operations. Building redundancies into our infrastructure, systems and supply chain to mitigate these risks may require us to commit substantial financial, operational and technical resources, in some cases before the volume of our business increases with no assurance that our revenues will increase. Various laws and governmental regulations applicable to a manufacturer or distributor of consumer products may adversely affect our business, results of operations and financial condition. Our business is subject to numerous federal, state, provincial, local and foreign laws and regulations, including laws and regulations with respect to labor and employment, product safety, including regulations enforced by the United States Consumer Products Safety Commission, import and export activities, the Internet and e-commerce, antitrust issues, taxes, chemical usage, air emissions, wastewater and storm water discharges and the generation, handling, storage, transportation, treatment and disposal of waste materials, including hazardous materials. We routinely incur costs in complying with these regulations and, if we fail to comply, could incur significant penalties. Although we believe that we are in substantial compliance with all applicable laws and regulations, because legal requirements frequently change and are subject to interpretation, we are unable to predict the ultimate cost of compliance or the consequences of non-compliance with these requirements, or the effect on our operations, any of which may be significant. If we fail to comply with applicable laws and regulations, we may be subject to criminal sanctions or civil remedies, including fines, injunctions, or prohibitions on importing or exporting. A failure to comply with applicable laws and regulations, or concerns about product safety, also may lead to a recall or post-manufacture repair of selected products, resulting in the rejection of our products by our customers and consumers, lost sales, increased customer service and support costs, and costly litigation. In addition, failure to comply with environmental requirements could require us to shut down one or more of our facilities. There is risk that any claims or liabilities, including product liability claims, relating to such noncompliance may exceed, or fall outside the scope of, our insurance coverage. Laws and regulations at the state, federal and international levels frequently change and the cost of compliance cannot be precisely estimated. Any changes in regulations, the imposition of additional regulations, or the enactment of any new governmental legislation that impacts employment/labor, trade, health care, tax, environmental or other business issues could have an adverse impact on our financial condition and results of operations. We must be able to continue to effectively manage our growth, including our recent acquisitions, and to execute our long-term growth strategy. We have experienced significant and steady growth over the last several years. Our growth, in particular our recent acquisitions, combined with the geographical separation of our operations, has placed, and will continue to place, a strain on our management, administrative and operational infrastructure. Our ability to manage our operations and anticipated growth will require us to continue to refine our operational, financial and management controls, human resource policies, reporting systems and procedures in the locations in which we operate. In addition, our expectations regarding the earnings, operating cash flow, capital expenditures and liabilities resulting from acquisitions 9 recently completed are based on information currently available to us and may prove to be incorrect. We may not be able to implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls. If we are unable to realize any of the anticipated benefits of an acquisition or manage expected future expansion, or if our long-term growth strategy is not successful, our ability to provide a high-quality customer experience could be harmed, which would damage our reputation and brand and substantially harm our business and results of operations. In addition, projections made by us in connection with forming our long-term growth strategy are inherently uncertain and based on assumptions and judgments by management that may be flawed or based on information about our business and markets that may change in the future, many of which are beyond our reasonable control. These and various other factors may cause our actual results to differ materially from our projections. We are subject to risks associated with our international operations, including compliance with applicable U.S. and foreign anti- corruption laws and regulations such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and other applicable anti-corruption laws, which may increase the cost of doing business in international jurisdictions. We have operations in North, Central and South America, Europe, China, Southeast Asia, Australia and South Africa and we intend to continue expansion of our international operations. As a result, our business is exposed to risks inherent in foreign operations. If we fail to adequately address the challenges and risks associated with our international expansion and acquisition strategy, we may encounter difficulties implementing our strategy, which could impede our growth or harm our operating results. These risks, which can vary substantially by jurisdiction, include the difficulties associated with managing an organization with operations in multiple countries, compliance with differing laws and regulations (including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and local laws prohibiting payments to government officials and other corrupt practices, tax laws, regulations and rates), enforcing agreements and collecting receivables through foreign legal systems. Although we have implemented policies and procedures designed to ensure compliance with these laws, there can be no assurance that our employees, contractors and agents will not take actions in violation of our policies, particularly as we expand our operations through organic growth and acquisitions. Any such violations could subject us to civil or criminal penalties, including material fines or prohibitions on our ability to offer our products in one or more countries, and could also materially damage our reputation, brand, international expansion efforts, business and operating results. Additional risks include the potential for restrictive actions by foreign governments, changes in economic conditions in each market, foreign customers who may have longer payment cycles than customers in the United States, the impact of economic, political and social instability of those countries in which we operate and acts of nature, such as typhoons, tsunamis, or earthquakes. The overall volatility of the economic environment has increased the risk of disruption and losses resulting from hyper−inflation, currency devaluation and tax or regulatory changes in certain countries in which we have operations. Approximately 45% of our sales were derived from our foreign operations (based on the country from which the product was shipped) during fiscal 2017. We also face the challenges and uncertainties associated with operating in developing markets such as China, which may subject us to a relatively high risk of political and social instability and economic volatility, all of which are enhanced, in many cases, by uncertainties as to how local law is applied and enforced, including in areas most relevant to commercial transactions and foreign investment. Currency exchange rate fluctuations could have an adverse effect on our revenue, cash flows and financial results. Because we conduct a significant portion of our business outside the United States, our revenues and earnings and the value of our foreign net assets are affected by fluctuations in foreign currency exchange rates, which may favorably or adversely affect reported earnings and net assets. Currency exchange rates fluctuate in response to, among other things, changes in local, regional or global economic conditions, the imposition of currency exchange restrictions and unexpected changes in regulatory or taxation environments. Fluctuations in currency exchange rates may affect the Company’s operating performance by impacting revenues and expenses outside of the United States due to fluctuations in currencies other than the U.S. dollar or where the Company translates into U.S. dollars for financial reporting purposes the assets and liabilities of its foreign operations conducted in local currencies. We have risks related to continued uncertain global economic conditions and volatility in the credit markets. At times, domestic and international financial markets have experienced extreme disruption, including, among other things, extreme volatility in stock prices and severely diminished liquidity and credit availability. These developments and the related severe domestic and international economic downturn, have continued to adversely impact our business and financial condition in a number of ways, including effects beyond those that were experienced in previous recessions in the United States and foreign economies. Global economic conditions also affect our customers’ businesses and the markets they serve, as well as our suppliers. Because a significant part of our business relies on our customers’ spending, a prolonged downturn in the global economy and an uncertain economic outlook has and could further reduce the demand for printing and related services that we provide to these customers. Economic weakness and constrained advertising spending have resulted, and may in the future result, in decreased revenue, operating margin, earnings and growth rates and difficulty in managing inventory levels and collecting accounts receivable. In particular, our exposure to certain industries currently experiencing financial difficulties and certain financially troubled customers could have an adverse effect on our results of operations. The current restrictions in financial markets and the severe prolonged economic downturn may adversely affect the ability of our customers and suppliers to obtain financing for operations and purchases and to perform their obligations under agreements with us. We also have experienced, and expect to experience in the future, operating margin declines in certain businesses, reflecting the effect of items such as competitive pricing pressures and inventory write-downs. Economic downturns may also result in restructuring actions and associated expenses and impairment of long-lived assets, including goodwill and other intangibles. Uncertainty about future economic conditions makes it difficult for us to forecast operating results and to make decisions about future investments. Finally, economic downturns may affect one or more of our lenders’ ability to fund future draws on our Credit Facility or our ability to access the capital markets or obtain new financing arrangements that are favorable to us. In such an event, our liquidity could be severely constrained with an adverse impact on our ability to operate our businesses. Our ability to meet the financial covenants in the Credit Facility may also be affected by events beyond our control, including a further deterioration of current economic and industry conditions, which 10 could negatively affect our earnings. If it is determined we are not in compliance with these financial covenants, the lenders under the Credit Facility will be entitled to take certain actions, including acceleration of all amounts due under the facility. If the lenders take such action, we may be forced to amend the terms of the credit agreement, obtain a waiver or find alternative sources of capital. Obtaining new financing arrangements or amending our existing one may result in significantly higher fees and ongoing interest costs as compared to those in our current arrangement. Competition in our industry could limit our ability to retain current customers and attract new customers. The markets for our products and services are highly competitive and constantly evolving. We compete primarily based on the level and quality of customer service, technological leadership, product performance and price and the inability to successfully overcome competition in our business could have a material adverse impact on our operating results and cash flows. Some of our competitors have greater financial and other resources than us. We could face competitive pressure as a result of any of the following: our ability to continue to improve our product and service offerings and keep pace with and integrate technological advances and industry evolutions; new products developed by our competitors that are of superior quality, fit our customers’ needs better or have lower prices; patents obtained or developed by competitors; consolidation of our competitors; pricing pressures; loss of proprietary supplies of certain materials; decrease in the utilization of labels. The inability to successfully identify, develop and sell new or improved products and to overcome competition in our business could have a material adverse impact on our operating results and cash flows. Our business growth strategy involves the potential for significant acquisitions, which involve risks and difficulties in integrating potential acquisitions and may adversely affect our business, results of operations and financial condition. All acquisitions involve inherent uncertainties, which may include, among other things, our ability to:      successfully identify targets for acquisition; negotiate reasonable terms; properly perform due diligence and determine all the significant risks associated with a particular acquisition; properly evaluate target company management capabilities; and successfully transition the acquired company into our business and achieve the desired performance. We may acquire businesses with unknown liabilities, contingent liabilities, or internal control deficiencies. We have plans and procedures to conduct reviews of potential acquisition candidates for compliance with applicable regulations and laws prior to acquisition. Despite these efforts, realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position through the initiation, pendency or outcome of litigation or otherwise, or cause us to fail to meet our public financial reporting obligations. We have a history of making acquisitions and, over the past several years, have invested, and in the future may continue to invest, a substantial amount of capital in acquisitions. We continue to evaluate potential acquisition opportunities to support, strengthen and grow our business. Although we have completed many acquisitions, there can be no assurance that we will be able to locate suitable acquisition candidates, acquire possible acquisition candidates, acquire such candidates on commercially reasonable terms, or integrate acquired businesses successfully in the future. In addition, any governmental review or investigation of our proposed acquisitions, such as by the Federal Trade Commission, may impede, limit or prevent us from proceeding with an acquisition. Future acquisitions may require us to incur additional debt and contingent liabilities, which may adversely affect our business, results of operations and financial condition. The process of integrating acquired businesses into our existing operations may result in operating, contract and supply chain difficulties, such as the failure to retain customers or management personnel. Such difficulties may divert significant financial, operational and managerial resources from our existing operations, and make it more difficult to achieve our operating and strategic objectives. We have a significant amount of goodwill and other intangible assets on our balance sheet that are subject to periodic impairment evaluations; an impairment of our goodwill or other intangible assets may have a material adverse impact on our financial condition and results of operations. When we acquire a business, a portion of the purchase price of the acquisition may be allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill is the excess of the purchase price over the fair value of the net identifiable tangible assets acquired. As of March 31, 2017, we had $581,770 of goodwill and intangible assets, the value of which depends on a number of factors, including earnings growth, market capitalization and the overall success of our business. Accounting standards require us to test goodwill for impairment annually, and more frequently when events or changes in circumstances indicate impairment may exist. There can be no assurance that reviews of our goodwill and other intangible assets will not result in impairment charges. Although it does not affect cash flow, an impairment charge does have the effect of decreasing our earnings, assets and shareholders’ equity. Future events may occur that could adversely affect the value of our assets and require future impairment charges. Such events may include, but are not limited to, poor operating results, strategic decisions made in response to changes in economic and competitive conditions, the impact of a deteriorating economic environment and decreases in our market capitalization due to a decline in the trading price of our common stock. During the early years of an acquisition, the risk of impairment to goodwill and intangible assets is naturally higher. This is because the fair values of these assets align very closely with what we recently paid to acquire the reporting units to which these assets are assigned. This 11 means the difference between the carrying value of the reporting unit and its fair value (typically referred to as “headroom”) is naturally smaller at the time of acquisition. Until this headroom grows over time (due to business growth or lower carrying value of the reporting unit due to natural amortization, etc.), a relatively small decrease in reporting unit fair value can trigger an impairment. That fair value is affected by actual business performance but is also determined by the market (usually reflected in the value of our common stock). As a consequence, sometimes even with favorable business performance, the market alone can drive an impairment condition if general business valuations decline significantly. When impairment charges are triggered, they tend to be material due to the sheer size of the assets involved. Our debt instruments impose operating and financial restrictions on us and, in the event of a default, would have a material adverse impact on our business and results of operations. As of March 31, 2017, our consolidated indebtedness, including current maturities of long-term indebtedness, was $481,501, which could have important consequences including the following:      Increasing our vulnerability to global economic and industry conditions; Requiring a substantial portion of cash flows from operating activities to be dedicated to the payment of principal and interest on our indebtedness and, as a result, reducing our ability to use our cash flows to fund our operations and capital expenditures, pay dividends, capitalize on future business opportunities and expand our business; Exposing us to the risk of increased interest expense as certain of our borrowings are at variable rates of interest; Limiting our ability to obtain additional financing for working capital, capital expenditures, additional acquisitions and other business purposes; and Limiting our flexibility to adjust to changing market conditions and react to competitive pressures. We may be able to incur additional indebtedness in the future, subject to the restrictions contained in our credit agreements. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify. Our debt instruments contain covenants that limit our flexibility in operating our business. The agreements governing our indebtedness contain various covenants that may adversely affect our ability to operate our business. Among other things, these covenants limit our ability to incur additional indebtedness, dispose of assets, incur guarantee obligations, make restricted payments, create liens, make equity or debt investments, engage in mergers, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. The agreements governing our indebtedness also require us to maintain (i) a maximum consolidated senior secured leverage ratio, (ii) a maximum consolidated leverage ratio; and (iii) a minimum consolidated interest charge coverage ratio. Our ability to meet the financial ratios and tests contained in our credit agreements and other debt arrangements, and otherwise comply with debt covenants may be affected by various events, including those that may be beyond our control. Accordingly, we may not be able to continue to meet those ratios, tests and covenants. A significant breach of any of these covenants, ratios, tests or restrictions, as applicable, could result in an event of default under our debt arrangements, which would allow our lenders to declare all amounts outstanding to be immediately due and payable. If the lenders were to accelerate the payment of our indebtedness, our assets may not be sufficient to repay in full the indebtedness and any other indebtedness that would become due as a result of any acceleration. Further, as a result of any breach and during any cure period or negotiations to resolve a breach or expected breach, our lenders may refuse to make further loans, which would materially affect our liquidity and results of operations. In the event we were to fall out of compliance with one or more of our debt covenants in the future, we may not be successful in amending our debt arrangements or obtaining waivers for any such non-compliance. Even if we are successful in entering into an amendment or waiver, we could incur substantial costs in doing so. It is also possible that any amendments to our debt instruments or any restructured debt could impose covenants and financial ratios more restrictive than under our current facility. Any of the foregoing events could have a material adverse impact on our business and results of operations, and there can be no assurance that we would be able to obtain the necessary waivers or amendments on commercially reasonable terms, or at all. We rely on several large customers and the loss of one of these customers would have a material adverse impact on our operating results and cash flows. For the fiscal year ended March 31, 2017, one customer accounted for approximately 17% of our consolidated sales and our top twenty- five customers accounted for approximately 48% of our consolidated sales. While we maintain sales contracts with certain of our largest customers, such contracts do not impose minimum purchase or volume requirements and these contracts require renewal on a regular basis in the ordinary course of business. Any termination of a business relationship with, or a significant sustained reduction in business received from, one or more of our largest customers could have a material adverse effect on our revenues and results of operations. The volume and type of services we provide all of our customers may vary from year to year and could be reduced if a customer were to change its outsourcing or print procurement strategy. We cannot guarantee that these contracts will be successfully renewed in the future. The loss or substantial reduction in business of any of our major customers could have a material adverse impact on our operating results and cash flows. 12 We are highly dependent on information technology. If our systems fail or are unreliable our operations may be adversely impacted. The efficient operation of our business depends on our information technology infrastructure and our management information systems. In addition, production technology in the printing industry has continued to evolve specifically related to the pre-press component of production. Our information technology infrastructure and/or our management information systems are vulnerable to damage or interruption from natural or man-made disasters, terrorist attacks, computer viruses or hackers, power loss, or other computer systems, Internet telecommunications or data network failures. Any significant breakdown, virus or destruction could negatively impact our business. We also periodically upgrade and install new systems, which if installed or programmed incorrectly, could cause significant disruptions. If a disruption occurs, we could incur losses and costs for interruption of our operations. We are involved on an ongoing basis in claims, lawsuits, and governmental proceedings relating to our operations, including environmental, commercial transactions, and other matters. The ultimate outcome of these claims, lawsuits, and governmental proceedings cannot be predicted with certainty, but could have a material adverse effect on our financial condition, results of operations, and cash flow. We are also involved in other possible claims, including product and general liability, workers compensation, auto liability, and employment-related matters, some of which may be of a material nature or may be resolved in a manner that has a material adverse effect on our financial condition, results of operations, and cash flow. While we maintain insurance for certain of these exposures, the policies in place are high-deductible policies resulting in our assuming exposure for a layer of coverage with respect to such claims. We cannot predict our future capital needs and any limits on our ability to raise capital in the future could prevent further growth. We may in the future be required to raise capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity financing may be dilutive to the holders of our common stock, and debt financing, if available, may involve restrictive covenants and could reduce our profitability. In addition, we may experience operational difficulties and delays due to working capital restrictions. If we cannot raise funds on acceptable terms, we may have to delay or scale back our growth plans and may not be able to effectively manage competitive pressures. We depend on key personnel, and we may not be able to operate and grow our business effectively if we lose their services or are unable to attract qualified personnel in the future. We are dependent upon the efforts of our senior management team. The success of our business is heavily dependent on our ability to retain our current management and to attract and retain qualified personnel in the future. Competition for senior management personnel is intense, and we may not be able to retain our personnel. We have not entered into employment agreements with our key personnel, other than with our Executive Chairman, Chief Executive Officer and President, Chief Operating Officer and Chief Financial Officer, and these individuals may not continue in their present capacity with us for any particular period of time. Outside of the implementation of succession plans and executive transitions done in the normal course of business, the loss of the services of one or more members of our senior management team could require the remaining executive officers to divert immediate and substantial attention to seeking a replacement and would disrupt our business and impede our ability to execute our business strategy. Any inability to find a replacement for a departing executive officer on a timely basis could adversely affect our ability to operate and grow our business. If we are unable to adequately protect our intellectual property, we may lose some of our competitive advantage. Our success is determined in part by our ability to obtain United States and foreign patent protection for our technology and to preserve our trade secrets. Our ability to compete and the ability of our business to grow could suffer if our intellectual property rights are not adequately protected. There can be no assurance that our patent applications will result in patents being issued or that current or additional patents will afford protection against competitors. We rely on a combination of patents, copyrights, trademarks and trade secret protection and contractual rights to establish and protect our intellectual property. Failure of our patents, copyrights, trademarks and trade secret protection, non-disclosure agreements and other measures to provide protection of our technology and our intellectual property rights could enable our competitors to more effectively compete with us and have an adverse effect on our business, financial condition and results of operations. In addition, our trade secrets and proprietary know-how may otherwise become known or be independently discovered by others. No guarantee can be given that others will not independently develop substantially equivalent proprietary information or techniques, or otherwise gain access to our proprietary technology. We could become involved in intellectual property litigation, which is costly and could cause us to lose our intellectual property rights or subject us to liability. Although we have received patents with respect to certain technologies of ours, there can be no assurance that these patents will afford us any meaningful protection. Although we believe that our use of the technology and products we developed and other trade secrets used in our operations do not infringe upon the rights of others, our use of the technology and trade secrets we developed may infringe upon the patents or intellectual property rights of others. In the event of infringement, we could, under certain circumstances, be required to obtain a license or modify aspects of the technology and trade secrets we developed or refrain from using the same. We may not have the necessary financial resources to defend an infringement claim made against us or be able to successfully terminate any infringement in a timely manner, upon acceptable terms and conditions or at all. Moreover, if the patents, technology or trade secrets we developed or use in our business are deemed to infringe upon the rights of others, we could, under certain circumstances, become liable for damages, which could have a material adverse effect on us and our financial condition. As we continue to market our products, we could encounter patent barriers that are not known today. Furthermore, third parties may assert that our intellectual property rights are invalid, which could result 13 in significant expenditures by us to refute such assertions. If we become involved in litigation, we could lose our proprietary rights, be subject to damages and incur substantial unexpected operating expenses. Intellectual property litigation is expensive and time-consuming, even if the claims are subsequently proven unfounded, and could divert management’s attention from our business. If there is a successful claim of infringement, we may not be able to develop non-infringing technology or enter into royalty or license agreements on acceptable terms, if at all. If we are unsuccessful in defending claims that our intellectual property rights are invalid, we may not be able to enter into royalty or license agreements on acceptable terms, if at all. This could prohibit us from providing our products and services to customers, which could have a material adverse effect on us and our financial condition. Employee benefit costs, including increasing health care costs for our employees may adversely affect our business, results of operations and financial condition. We seek to provide competitive employee benefit programs to our employees. Employee benefit costs, such as U.S. healthcare costs of our eligible and participating employees, may increase significantly at a rate that is difficult to forecast, in part because we are unable to determine the impact that U.S. federal healthcare legislation may have on our employer-sponsored medical plans. Higher employee benefit costs could have an adverse effect on our business, results of operations and financial condition. We provide health care and other benefits to our employees. In recent years, costs for health care have increased more rapidly than general inflation in the U.S. economy. If this trend in health care costs continues, our cost to provide such benefits could increase, adversely impacting our profitability. Changes to health care regulations in the U.S. may also increase the cost to us of providing such benefits. Risks Relating to Our Common Stock Our operating results fluctuate from quarter to quarter. Our quarterly operating results have fluctuated in the past and may fluctuate in the future as a result of a variety of factors, many of which are outside of our control, including:           timing of the completion of particular projects or orders; material reduction, postponement or cancellation of major projects, or the loss of a major client; timing and amount of new business; differences in order flows; sensitivity to the effects of changing economic conditions on our clients’ businesses; the strength of the consumer products industry; the relative mix of different types of work with differing margins; costs relating to expansion or reduction of operations, including costs to integrate current and any future acquisitions; changes in interest costs, foreign currency exchange rates and tax rates; and costs associated with compliance with legal and regulatory requirements. Because of this, we may be unable to adjust spending on fixed costs, such as building and equipment leases, depreciation and personnel costs, quickly enough to offset any revenue shortfall and our operating results could be adversely affected. Due to these factors or other unanticipated events, our financial and operating results in any one quarter may not be a reliable indicator of our future performance. If we fail to comply with U.S. public company reporting obligations or to maintain adequate internal controls over financial reporting, our business, results of operations and financial condition could be adversely affected. As a U.S. public company, we are required to comply with the periodic reporting obligations of the Securities Exchange Act of 1934, including preparing annual reports, quarterly reports and current reports. We are also subject to certain of the provisions of the Sarbanes- Oxley Act of 2002 and Dodd-Frank Act which, among other things, require enhanced disclosure of business, financial, compensation and governance information. Our failure to prepare and disclose this information in a timely manner could subject us to penalties under federal securities laws, expose us to lawsuits, and restrict our ability to access financing. We may identify areas requiring improvement with respect to our internal control over financial reporting, which may require us to design enhanced processes and controls to address any additional issues identified. This could result in significant delays and cost to us and require us to divert substantial resources, including management time, from other activities. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent fraud. Certain provisions of Ohio law and our Articles of Incorporation and Code of Regulations may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares at a favorable price, and may make it more difficult for our shareholders to remove our Board of Directors and management. 14 Provisions in our Amended Articles of Incorporation and Amended and Restated Code of Regulations may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:     advance notice requirements for shareholders proposals and nominations; the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or due to the resignation or departure of an existing board member; the prohibition of cumulative voting in the election of directors, which would otherwise allow less than a majority of shareholders to elect director candidates; and limitations on the removal of directors. In addition, because we are incorporated in Ohio, we are governed by the provisions of Section 1704 of the Ohio Revised Code. These provisions may prohibit large shareholders, particularly those owning 10% or more of our outstanding voting stock, from merging or combining with us. These provisions in our Articles of Incorporation and Code of Regulations and under Ohio law could discourage potential takeover attempts, could reduce the price that investors are willing to pay for our common shares in the future and could potentially result in the market price being lower than it would without these provisions. Although no preferred shares were outstanding as of March 31, 2017 and although we have no present plans to issue any preferred shares, our Articles of Incorporation authorize the Board of Directors to issue up to 1,000 preferred shares. The preferred shares may be issued in one or more series, the terms of which will be determined at the time of issuance by our Board of Directors without further action by the shareholders. These terms may include voting rights, including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion rights, redemption rights and sinking fund provisions. The issuance of any preferred shares could diminish the rights of holders of our common shares and, therefore, could reduce the value of our common shares. In addition, specific rights granted to future holders of preferred shares could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our Board of Directors to issue preferred shares and the foregoing anti-takeover provisions may prevent or frustrate attempts by a third party to acquire control of the Company, even if some of our shareholders consider such change of control to be beneficial. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES As of March 31, 2017, the Company owned and leased the following 47 manufacturing facilities: 15 LocationApproximate Square FeetOwned/LeasedUnited States: Napa, California150,125 Leased Scottsburg, Indiana120,500 Owned Asheville, North Carolina53,500 Leased Omaha, Nebraska31,000 Leased Batavia, Ohio277,730 Owned Norwood, Ohio313,322 Owned York, Pennsylvania160,000 Leased Chesapeake, Virginia49,885 Leased Green Bay, Wisconsin39,600 OwnedInternational: Mendoza, Argentina10,273 Leased Adelaide, Australia65,246 Leased Brisbane, Australia42,744 Leased Barossa, Australia25,306 Leased Griffith, Australia21,775 Leased Melbourne, Australia21,653 Leased Perth, Australia22,184 Leased Montreal, Canada51,650 Leased Santiago, Chile150,610 Leased Guangzhou, China (2)80,191 Leased Daventry, England 34,059 Owned / Leased Dormans, France16,145 Owned Libourne, France39,934 Owned Mérignac, France30,462 Leased Montagny, France20,000 Leased Port-Sainte-Foy, France22,690 Leased Reyrieux, France48,868 Leased Saint Emilion, France35,112 Leased Jakarta, Indonesia27,771 Owned Castlebar, Ireland42,722 Leased Drogheda, Ireland53,529 Owned Roscommon, Ireland12,109 Leased Alessandria, Italy29,500 Owned Florence, Italy23,681 Leased Lucca, Italy (2)134,179 Leased Kuala Lumpur, Malaysia (2)67,951 Owned / Leased Penang, Malaysia70,808 Owned Guadalajara, Mexico82,990 Leased 16 All of the Company’s properties are in good condition, well maintained and adequate for our intended uses. During the three months ended March 31, 2016, the Company began the process to consolidate our two manufacturing facilities located in Glasgow, Scotland into one facility. The transition was substantially completed in the fourth quarter of fiscal 2017. On January 19, 2016, the Company announced plans to consolidate our manufacturing facility located in Sonoma, California, into the Napa, California facility. The transition was substantially completed in the third quarter of fiscal 2017. On November 1, 2015, the Company announced plans to consolidate our manufacturing facility located in Dublin, Ireland into the Drogheda, Ireland facility. The consolidation was substantially completed in the first quarter of fiscal 2017. ITEM 3. LEGAL PROCEEDINGS 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. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. LocationApproximate Square FeetOwned/LeasedInternational continued: Manila, Philippines21,722 Leased Warsaw, Poland61,657 Leased Glasgow, Scotland43,196 Owned Paarl, South Africa114,343 Owned Haro, Spain21,528 Leased Bevaix, Switzerland15,069 Leased Bangkok, Thailand50,470 Owned 17 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares trade on the NASDAQ Global Select Market under the symbol LABL. The following table sets forth the high and low closing sales prices of our common stock (“Common Stock”) as reported on the NASDAQ Global Select Market during fiscal years 2017 and 2016. Our stock is thinly traded and accordingly, the prices below may not be indicative of prices at which a large number of shares can be traded or reflective of prices that would prevail in a more active market. Quarter Ended March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 High $81.15 $78.90 $69.57 $64.05 $63.03 $79.38 $76.49 $69.83 Low $69.55 $63.80 $62.41 $50.38 $41.14 $58.59 $61.91 $57.75 Dividend Per Share $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 As of April 30, 2017, there were approximately 240 shareholders of record of the Common Stock. Beginning in and since the fourth quarter of the fiscal year ended March 31, 2005, we have paid a quarterly dividend of $0.05 per common share. FIVE YEAR PERFORMANCE GRAPH 18 The following performance graph compares Multi-Color’s cumulative annual total shareholder return from March 31, 2012 through March 31, 2017, to that of the NASDAQ Market Index, a broad market index, and the Morningstar Packaging & Containers Index (“Morningstar Packaging & Containers”), an index of 58 printing and packaging industry peer companies. The graph assumes that the value of the investment in the common stock and each index was $100 on March 31, 2012, and that all dividends were reinvested. Stock price performances shown in the graph are not indicative of future price performances. Company/Market/Peer Group Multi-Color Corporation NASDAQ Market Index Morningstar Packaging & Containers 3/31/2012 3/31/2013 3/31/2014 3/31/2015 3/31/2016 3/31/2017 $100.00 $100.00 $100.00 $115.65 $107.14 $125.29 $157.93 $139.48 $144.34 $314.20 $164.75 $171.46 $242.63 $165.66 $150.92 $323.85 $203.56 $176.64 ITEM 6. SELECTED FINANCIAL DATA (In thousands, except per share data) 19 (1) Fiscal 2017 results include $921 ($706 after-tax) related to the closure of our manufacturing facilities located in the following: Glasgow, Scotland; Sonoma, California; Greensboro, North Carolina; Dublin, Ireland; Norway, Michigan and Watertown, Wisconsin. (2) Fiscal 2016 results include $5,200 ($3,708 after-tax) related to the closure of our manufacturing facilities located in the following: Glasgow, Scotland; Sonoma, California; Greensboro, North Carolina; Dublin, Ireland; Norway, Michigan and Watertown, Wisconsin; and a sales office located near Toronto, Canada. (3) Fiscal 2015 results include a $951 impairment of goodwill related to the finalization of the fiscal 2014 annual impairment test for our Latin America Wine & Spirits reporting unit and $7,399 ($4,533 after-tax) in costs primarily related to the closure of our manufacturing facilities located in Norway, Michigan and Watertown, Wisconsin. (4) Fiscal 2014 results include a $13,475 impairment of goodwill related to our Latin America Wine & Spirits reporting unit, $1,166 ($737 after-tax) in costs related to the consolidation of our manufacturing facilities located in El Dorado Hills, California into the Napa, California facility, $1,116 ($781 after-tax) of integration expenses related to the Labelmakers Wine Division acquisition and other income of $3,800 ($3,800 after-tax) from settlement of a legal claim. (5) Fiscal 2013 results include $1,531 ($1,194 after-tax) in costs related to the consolidation of our manufacturing facilities located in Montreal, Canada and Kansas City, Missouri into other existing facilities and $1,337 ($1,040 after-tax) of integration expenses related to the York Label Group (York) acquisition. Refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the impact of acquisitions completed during recent fiscal years that would impact the comparability of the selected financial data above. During fiscal 2017, we acquired Italstereo and I.L.A., which have manufacturing plants in Italy; Graphix, which has a manufacturing plant in Australia; and GIP, which has a manufacturing plant in France. During fiscal 2016, we acquired Mr. Labels and Supa Stik, which have manufacturing plants in Australia; Barat Group, which has manufacturing plants in France; Super Label, which has manufacturing plants in Malaysia, Indonesia, the Philippines, Thailand, and China; and System Label and Cashin Print, which have manufacturing plants in Ireland. During fiscal 2015, we acquired Multiprint Labels Limited and New Era Packaging, which have manufacturing plants in Ireland, and Multi Labels Ltd., which has a manufacturing plant in England. During fiscal 2014, we acquired Imprimerie Champenoise, Labelmakers Wine Division, Flexo Print S.A. De C.V., Gern & Cie SA, John Watson & Company Limited and the DI-NA-CAL label business, which have manufacturing plants in France, Australia, Mexico, Switzerland, Scotland and the U.S., respectively. During fiscal 2013, we acquired Labelgraphics (Holdings) Ltd., which has a manufacturing plant in Scotland. 2017 (1)2016 (2)2015 (3)2014 (4)2013 (5)Net revenues $ 923,295 $ 870,825 $ 810,772 $ 706,432 $ 659,815 Gross profit 196,809 181,626 173,274 132,057 126,351 Operating income 110,966 94,428 96,912 60,123 70,705 Net income attributable to Multi-Color Corporation 60,996 47,739 45,716 28,224 30,300 Basic earnings per common share $ 3.61 $ 2.85 $ 2.75 $ 1.73 $ 1.88 Diluted earnings per common share $ 3.58 $ 2.82 $ 2.71 $ 1.70 $ 1.86 Weighted average shares and equivalents outstanding – basic 16,879 16,750 16,623 16,342 16,145 Weighted average shares and equivalents outstanding – diluted 17,024 16,952 16,877 16,599 16,332 Dividends per common share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20 Dividends paid 3,876 3,351 3,302 3,276 3,237 Net working capital $ 109,420 $ 111,100 $ 99,951 $ 56,993 $ 68,107 Total assets 1,091,990 1,070,066 927,371 964,466 839,550 Current portion of long-term debt 2,093 1,573 2,947 42,648 23,946 Long-term debt 479,408 504,706 455,583 435,554 378,910 Total stockholders’ equity 381,820 342,632 289,473 297,747 275,024 Year Ended March 31, 20 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information included in this Annual Report on Form 10-K 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 1, Item 1A “Risk Factors.” Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date thereof. Refer to “Forward-Looking Statements” following the index in this Form 10-K. In the discussion that follows, all amounts are in thousands (both tables and text), except per share data and percentages. Following is a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of the Company’s financial condition and results of operations. RESULTS OF OPERATIONS The following table shows for the periods indicated, certain components of Multi-Color’s consolidated statements of income as a percentage of net revenues. EXECUTIVE SUMMARY We provide a complete line of innovative decorative label solutions and offer a variety of technical and graphic services to our customers based on their specific needs and requirements. Our customers include a wide range of consumer product companies, and we sup ply labels for many of the world’s best known brands and products, including home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. During fiscal 201 7, the Company had net revenues of $923,295 compared to $870,825 in the prior year, an increase of 6% or $52,470. Acquisitions occurring after the beginning of fiscal 2016 accounted for a 5% increase in revenues. Organic revenues increased 3%. Foreign exchange rates, primarily driven by depreciation of the British pound and the Mexican peso, led to a 2% decrease in revenues year over year. Gross profit increased 8% or $15,183 compared to the prior year. Acquisitions occurring after the beginning of fiscal 2016 contributed $9,876 to the gross profit increase. Gross margins were 21% in fiscal 2017 and fiscal 2016. The label markets we serve exist in a competitive environment amidst price pressures. 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. Operating income increased 18% or $16,538 compared to the prior year primarily due to increased sales and improved margins. Acquisitions occurring after the beginning of fiscal 2016 contributed $5,023 to operating income in fiscal 2017. Operating income in fiscal 2017 includes $921 of expenses primarily related to the consolidation of our manufacturing facilities in Dublin, Ireland into a single location and the consolidation of our manufacturing facilities in Glasgow, Scotland into a single location. Operating income in fiscal 2016 includes $5,200 of expenses primarily related to consolidation of the Dublin manufacturing facilities, consolidation of a manufacturing facility in Greensboro, North Carolina into existing facilities and closure of manufacturing facilities in Norway, Michigan and Watertown, Wisconsin. Other income was $2,735 compared to expense of $1,867 in the prior year. The increase in other income primarily relates to favorable foreign exchange in the current year compared to unfavorable foreign exchange in the prior year and other discrete items. During 2017, 2016 and 2015, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 17%, 17% and 18%, respectively, of the Company’s consolidated net revenues. All of these sales were made to The Procter & Gamble Company. 201720162015Net revenues100.0%100.0%100.0%Cost of revenues78.7%79.1%78.6% Gross profit21.3%20.9%21.4%Selling, general and administrative expenses9.2%9.4%8.4%Facility closure expenses0.1%0.6%0.9%Goodwill impairment0.0%0.0%0.1% Operating income12.0%10.9%12.0%Interest expense2.8%3.0%3.3%Other expense (income), net(0.3)%0.2%0.0% Income before income taxes9.5%7.7%8.7%Income tax expense2.9%2.2%3.1% Net income attributable to Multi-Color Corporation6.6%5.5%5.6%Percentage of Net Revenues 21 Our vision is global leadership in premium label solutions. We currently serve customers located throughout North, Central and South America, Europe, Australia, New Zealand, South Africa, China and Southeast Asia. We continue to monitor and analyze new trends in the packaging and consumer products industries to ensure that we are providing appropriate services and products to our customers. Certain factors that influence our business include consumer spending, new product introductions, new packaging technologies and demographics. Our primary objective for fiscal 2018 is to continue to improve organic growth rates for both revenue and earnings. We expect growth to come from improved performance in our operations and the finalization of integration of our recent acquisitions in Europe. We continue to invest in additional and more productive capacity throughout our business to support operational efficiency and organic growth. COMPARISON OF FISCAL YEARS ENDED MARCH 31, 2017 AND MARCH 31, 2016 Net Revenues Net revenues increased 6% to $923,295 from $870,825 in the prior year. Acquisitions occurring after the beginning of fiscal 2016 accounted for a 5% increase in revenues and organic revenues increased 3%. Foreign exchange rates, primarily driven by depreciation of the British pound and the Mexican peso, led to a 2% decrease in revenues year over year. Cost of Revenues and Gross Profit Cost of revenues increased 5% or $37,287 compared to the prior year. Acquisitions occurring after the beginning of fiscal 2016 contributed 4% or $24,282, partially offset by the favorable impact of foreign exchange rates of 2% or $14,110. Organic revenue growth increased cost of revenues by $27,115. Gross profit increased 8% or $15,183 compared to the prior year. Acquisitions occurring after the beginning of fiscal 2016 contributed $9,876 to gross profit, partially offset by the effect of unfavorable foreign exchange rates of $1,168. Gross margins were 21.3% of net revenues for the current year compared to 20.9% in the prior year. Higher sales volumes in our core markets globally and improved operating efficiencies, primarily in North America, increased margins and led to $6,475 of organic margin improvement compared to the prior year. Selling, General and Administrative (SG&A) Expenses and Facility Closure Expenses SG&A expenses increased 4% or $2,924 compared to the prior year. Acquisitions occurring after the beginning of fiscal 2016 contributed $4,853 to the increase, partially offset by a decrease of $911 due to the favorable impact of foreign exchange rates. In the current year, the Company incurred $1,101 of acquisition and integration expenses compared to $3,683 in the prior year. The remaining increase $%20172016ChangeChangeNet revenues923,295$ 870,825$ 52,470$ 6%$%20172016ChangeChangeCost of revenues726,486$ 689,199$ 37,287$ 5% % of Net revenues78.7%79.1%Gross profit196,809$ 181,626$ 15,183$ 8% % of Net revenues21.3%20.9%$%20172016ChangeChangeSelling, general and administrative expenses84,922$ 81,998$ 2,924$ 4% % of Net revenues9.2%9.4%Facility closure expenses921$ 5,200$ (4,279)$ (82%) % of Net revenues0.1%0.6% 22 primarily relates to increases in compensation costs including internal compliance resources and increased incentive accruals related to company performance in fiscal 2017. Facility closure expenses were $921 in the current year compared to $5,200 in the prior year. These expenses relate to consolidation of facilities in certain locations into other existing facilities, primarily related to the consolidation of our manufacturing facilities in Dublin, Ireland ($355), the consolidation of our manufacturing facilities in Glasgow, Scotland ($262), the consolidation of our plants in Norway, Michigan and Watertown, Wisconsin ($133), Sonoma, California ($52), and Greensboro, North Carolina ($119) into existing facilities. In the prior year, facility closure expenses related to the consolidation of the facilities in Dublin ($1,476) and Glasgow ($597), as well as the consolidation of the plants in Norway, Michigan and Watertown, Wisconsin ($632), Greensboro, North Carolina ($2,247), and Sonoma, California ($220) and closure of a sales office in Toronto, Canada ($28). Interest Expense and Other Income, net Other income was $2,735 compared to expense of $1,867 in the prior year. During the current year, adjustments were made to other income for $887 to reconcile certain supplemental purchase price accruals to management’s current estimate of the liability. Additionally, an adjustment was made to other income for $690 to state MCC’s 30% investment in Gironde Imprimerie Publicité (GIP) at its fair value upon purchase of an additional 67.6% ownership in the company (97.6% owned at March 31, 2017). The remaining change in other income primarily relates to the favorable impact of gains and losses on foreign exchange compared to unfavorable foreign exchange resulting from re-measurement of equipment and other payables from certain currencies into functional currencies in the prior year. Income Tax Expense The Company’s effective tax rate was 30% in fiscal 2017 compared to 28% in the prior year. The tax rate for fiscal 2016 was impacted by the release of valuation allowances on deferred tax assets held in certain foreign jurisdictions and other discrete items that reduced tax expense compared to the current year. COMPARISON OF FISCAL YEARS ENDED MARCH 31, 2016 AND MARCH 31, 2015 Net Revenues Net revenues increased 7% to $870,825 from $810,772 in the prior year. Acquisitions occurring after the beginning of fiscal 2015 accounted for an 11% increase in revenue and organic revenues increased 1%. Foreign exchange rates, primarily driven by the depreciation of the Australian dollar and the Euro, led to a 5% decrease in revenues year over year. Cost of Revenues and Gross Profit $%20172016ChangeChangeInterest expense25,488$ 25,751$ (263)$ (1%)Other expense (income), net(2,735)$ 1,867$ (4,602)$ 246%$%20172016ChangeChangeIncome tax expense26,848$ 18,981$ 7,867$ 41%$%20162015ChangeChangeNet revenues870,825$ 810,772$ 60,053$ 7%$%20162015ChangeChangeCost of revenues689,199$ 637,498$ 51,701$ 8% % of Net revenues79.1%78.6%Gross profit181,626$ 173,274$ 8,352$ 5% % of Net revenues20.9%21.4% 23 Cost of revenues increased 8% or $51,701 compared to the prior year. Acquisitions occurring after the beginning of fiscal 2015 contributed $73,435 or 12%, partially offset by the favorable impact of foreign exchange rates. Gross profit increased $8,352 or 5% compared to the prior year. Acquisitions occurring after the beginning of fiscal 2015 contributed $17,925 to gross profit. Operating inefficiencies offset organic margin improvements resulting in a $4,010 reduction in gross margin. Unfavorable foreign exchange rates of $5,563 also reduced gross profit during the year. Gross margins were 20.9% of net revenues for the current year compared to 21.4% in the prior year. Operating inefficiencies in our core markets globally and the impact of foreign exchange rates led to a 0.4% reduction in gross margin. The remaining reduction in gross margin is primarily due to recent acquisitions which have lower margins than the Company as a whole. Selling, General and Administrative (SG&A) Expenses and Facility Closure Expenses SG&A expenses increased $13,986 or 21% compared to the prior year. Acquisitions occurring after the beginning of fiscal 2015 contributed $11,736 to the increase, partially offset by a decrease of $3,183 due to the favorable impact of foreign exchange rates. In the current year, the Company incurred $3,683 of acquisition and integration expenses, compared to $1,787 in the prior year. The remaining increase relates to professional fees year over year, including an incremental $4,051 for compliance costs. The majority of the compliance costs relate to consulting expenses incurred for remediation measures to strengthen our internal control environment and remediation of material weaknesses. Facility closure expenses were $5,200 compared to $7,399 in the prior year. These expenses relate to consolidation of facilities in certain locations into other existing facilities, including the consolidation of the Norway, Michigan and Watertown, Wisconsin ($632), Greensboro, North Carolina ($2,247), and Sonoma, California ($220) facilities into existing facilities. Additionally, the Company is consolidating its manufacturing facilities in Dublin, Ireland ($1,476) into a single location and the manufacturing facilities in Glasgow, Scotland ($597) into a single location and closed a sales office in Toronto, Canada ($28). In the prior year, facility closure expenses related to Norway, Michigan and Watertown, Wisconsin ($7,271) and El Dorado Hills, California ($128). Goodwill Impairment In 2015, we recorded an impairment charge of $951 related to the finalization of the fiscal 2014 impairment analysis for the Latin America Wine & Spirits reporting unit. Interest Expense and Other Income, net Interest expense decreased $635 or 2% compared to the prior year, due to the write-off of $2,001 of deferred financing fees related to refinancing debt in fiscal 2015. The decrease was offset by an increase in debt borrowings throughout the year to finance acquisitions. Other expense was $1,867 compared to income of $346 in the prior year primarily related to unfavorable foreign exchange resulting from re-measurement of equipment and other payables from certain currencies into functional currencies in Latin America. $%20162015ChangeChangeSelling, general and administrative expenses81,998$ 68,012$ 13,986$ 21% % of Net revenues9.4%8.4%Facility closure expenses5,200$ 7,399$ (2,199)$ (30%) % of Net revenues0.6%0.9%$%20162015ChangeChangeGoodwill impairment-$ 951$ (951)$ (100%)$%20162015ChangeChangeInterest expense25,751$ 26,386$ (635)$ (2%)Other expense (income), net1,867$ (346)$ 2,213$ 640% Income Tax Expense 24 The Company’s effective tax rate decreased to 28% in fiscal 2016 from 35% in the prior year primarily due to the mix of income in some of our foreign jurisdictions, the impact of tax rate changes in certain foreign jurisdictions enacted during the period and other discrete items recognized during the current year that reduced tax expense. Liquidity and Capital Resources Summary of Cash Flows Net cash provided by operating activities was $107,210 in 2017 and $99,401 in 2016. Net income adjusted for non-cash expenses consisting primarily of depreciation and amortization was $109,097 in the current year compared to $98,936 in the prior year. The $10,161 increase from 2016 to 2017 in net income adjusted for non-cash expenses was primarily driven by a 28% increase in net income from $47,829 in 2016 to $61,365 in 2017. The increase in net income in 2017 is the result of an increase in net sales led by increased volumes in North America, Latin America and Australia along with lower facility closure expenses. Our cash from operating assets and liabilities was a net usage of $1,887 in 2017 as compared to a net source of $465 in 2016. Net cash provided by operating activities was $99,401 in 2016 and $106,975 in 2015. Net income adjusted for non-cash expenses consisting primarily of depreciation and amortization, goodwill impairment, facility closure expenses related to impairment loss on fixed assets and changes in deferred taxes was $98,936 in 2016 compared to $104,316 in 2015. This decrease is primarily driven by decreased operating income primarily due to operating inefficiencies in core markets, increased compliance costs and unfavorable foreign exchange, partially offset by increased sales and operating income from acquisitions. Our net source from operating assets and liabilities of $465 in 2016 decreased from $2,659 in 2015. Net cash used in investing activities was $73,635 in 2017, $135,032 in 2016 and $59,922 in 2015. Cash used in investing activities included $28,839, $103,245 and $31,240 which was used for acquisitions in those years, respectively, including $3,123 in purchase price adjustments in 2017 for prior year acquisitions, primarily Cashin Print and System Label. The remaining net usages of $44,796 in 2017, $31,787 in 2016 and $28,682 in 2015 were capital expenditure related, primarily for the purchase of presses net of various sales. Capital expenditures were primarily funded by cash flows from operations. Net cash used in financing activities in fiscal 2017 was $33,641, which included $31,467 of net debt payments and $4,000 of proceeds from various stock transactions, offset by $1,784 in deferred payments related to the Mr. Labels and Flexo Print acquisitions and dividends paid of $3,876. Dividends paid includes $3,378 to shareholders of Multi-Color Corporation and $498 to the minority shareholders of our 60% owned legal entity in Malaysia. Net cash provided by financing activities in fiscal 2016 was $45,200, which included $44,997 of net debt borrowings (primarily used to finance acquisitions) and $4,713 of proceeds from various stock transactions, offset by $1,141 in deferred payments related to the Monroe Etiquette and Multiprint acquisitions and dividends paid of $3,351. Net cash used in financing activities was $37,371 in 2015, which consisted of $19,895 of net debt payments, contingent consideration payments of $10,916 related to the John Watson and Labelgraphics acquisitions, debt issuance costs of $7,921 and dividends paid of $3,302, offset by $4,663 of net proceeds from various stock transactions. Financing activities in 2015 include $250,000 in long-term debt borrowings related to the issuance of the 6.125% Senior Notes due 2022 (the “Notes”) in the third quarter of fiscal 2015 and $341,625 in payments to pay off the Term Loan under the prior credit agreement. The $7,921 in debt issuance costs were paid in conjunction with the issuance of the Notes and entry into the Amended and Restated Credit Agreement (the “Credit Agreement”). Capital Resources On November 21, 2014, the Company issued $250,000 aggregate principal amount of the Notes. The Notes are unsecured senior obligations of the Company. Interest is payable 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 Notes are guaranteed by certain of the Company’s existing direct and indirect wholly-owned domestic subsidiaries that are guarantors under the Credit Agreement. In connection with the issuance of the Notes, the Company incurred debt issuance costs of $5,413 during 2015, which are being deferred and amortized over the eight year term of the Notes. Concurrent with the issuance and sale of the Notes, the Company amended and restated its credit agreement. The Credit Agreement provides for revolving loans of up to $500,000 for a five year term expiring on November 21, 2019. The aggregate commitment amount is comprised of the following: (i) a $460,000 revolving credit facility (the “U.S. Revolving Credit Facility”) and (ii) an Australian dollar equivalent of a $40,000 revolving credit facility (the “Australian Revolving Sub-Facility”). Upon issuance of the Notes, the Company was required to repay in full the Term Loan Facility under the terms of its prior credit agreement. On November 21, 2014, the Company repaid the outstanding balance of $341,625 on the Term Loan Facility using the net proceeds from the Notes and borrowings on the U.S. Revolving Credit Facility. The repayment of the Term Loan Facility was treated primarily as an $%20162015ChangeChangeIncome tax expense18,981$ 25,156$ (6,175)$ (25%) 25 extinguishment of debt. As a result, $2,001 in unamortized deferred financing fees were recorded to interest expense during 2015 as a loss on the extinguishment of debt. The remaining unamortized fees of $2,275 and new debt issuance costs of $2,526, which were incurred during 2015 in conjunction with the Credit Agreement, were deferred and are being amortized over the five year term of the Credit Agreement. The Credit Agreement may 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 senior secured leverage ratio at the time of the borrowing. The weighted average interest rate on borrowings under the U.S. Revolving Credit Facility was 2.72% and 2.33% at March 31, 2017 and 2016, respectively, and on borrowings under the Australian Revolving Sub-Facility was 3.43% and 3.89% at March 31, 2017 and 2016, respectively. 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) a maximum consolidated senior secured leverage ratio of no more than 3.50 to 1.00; (ii) a maximum consolidated leverage ratio of no more than 4.50 to 1.00; and (ii i) a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00. The Credit Agreement contains customary mandatory and optional prepayment provisions and customary events of default. The U.S. Revolving Credit Facility and the Australian Revolving Sub-Facility are secured by the capital stock of subsidiaries, substantially all of the assets of each of our domestic subsidiaries, but excluding existing and non-material real property, and intercompany debt. The Australian Revolving Sub-Facility is also secured by substantially all of the assets of the Australian borrower and its direct and indirect subsidiaries. The Credit Agreement and the indenture governing the Notes (the “Indenture”) limit the Company’s ability to incur additional indebtedness. Additional covenants contained in the Credit Agreement and the Indenture, 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, engage in mergers, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Under the Credit Agreement and the Indenture, 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 Indenture. As of March 31, 2017, the Company was in compliance with the covenants in the Credit Agreement and the Indenture. The Company recorded $1,665, $1,692 and $2,200 in interest expense in 2017, 2016 and 2015, respectively, in the consolidated statements of income to amortize deferred financing costs. Available borrowings under the Credit Agreement at March 31, 2017 consisted of $256,387 under the U.S. Revolving Credit Facility and $8,035 under the Australian Revolving Sub-Facility. The Company also has various other uncommitted lines of credit available at March 31, 2017 in the amount of $9,676. We believe that we have both sufficient short and long-term liquidity and financing at this time. We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We had a net working capital position of $109,420 and $111,100 at March 31, 2017 and 2016, respectively, and were in compliance with our loan covenants and current in our principal and interest payments on all debt. Contractual Obligations The following table summarizes the Company’s contractual obligations as of March 31, 2017: (1) Interest on floating rate debt was estimated using projected forward LIBOR and BBSY rates as of March 31, 2017. (2) The table excludes $5,665 in liabilities related to unrecognized tax benefits as the timing and extent of such payments are not determinable. We do not have any off-balance sheet arrangements as of March 31, 2017. Total Year 1Year 2Year 3Year 4Year 5More than 5 yearsLong-term debt480,424$ 129$ 114$ 230,101$ 37$ 33$ 250,010$ Capital leases7,412 1,964 1,837 1,768 1,375 468 - Interest on long-term debt (1)106,781 23,139 21,787 19,805 16,529 15,313 10,208 Rent due under operating leases57,374 12,257 9,878 8,595 7,433 6,416 12,795 Unconditional purchase obligations17,756 17,349 375 14 14 4 - Pension obligations439 6 15 22 30 40 326 Unrecognized tax benefits (2)- - - - - - - Deferred purchase price7,534 1,080 5,668 786 - - - Total contractual obligations677,720$ 55,924$ 39,674$ 261,091$ 25,418$ 22,274$ 273,339$ Recent Acquisitions 26 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 Gironde Imprimerie Publicité (GIP) for $2,084 plus net debt assumed of $862. The purchase price included $208 that is deferred for one year after the closing date. The Company acquired 30% of GIP as part of the Barat acquisition in fiscal 2016. GIP is located in the Bordeaux region of France and specializes in producing labels for the wine & spirits market. 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 includes $201 and $133 that are deferred for one and two years, respectively, after the closing date. Italstereo is located near Lucca, Italy and specializes in producing pressure sensitive adhesive resin coated labels, seals and emblems. 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 includes $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 producing premium self-adhesive and wet glue labels primarily for the wine & spirits market and also services the food industry. On January 4, 2016, the Company acquired 100% of Cashin Print for $17,487 less net cash acquired of $135 and 100% of System Label for $11,665 less net cash acquired of $2,025. Cashin Print and System Label are located in Castlebar, Ireland and Roscommon, Ireland, respectively. The purchase prices for Cashin Print and System Label include deferred payments of $3,317 and $1,011, respectively. These deferred payments may be paid out in the fourth quarter of fiscal 2019. The acquired businesses supply multinational customers in Ireland, the United Kingdom and Continental Europe and provide Multi-Color with the opportunity to supply a broader product range to a larger customer base, especially in the healthcare market. On October 1, 2015, the Company acquired 100% of Supa Stik Labels (Supa Stik) for $6,787 less net cash acquired of $977. Supa Stik is located in Perth, West Australia and services the local wine, food & beverage and healthcare label markets. The purchase price includes $622 that is deferred for two years after the closing date. On August 11, 2015, the Company acquired 90% of the shares of Super Label based in Kuala Lumpur, Malaysia, which was publicly listed on the Malaysian stock exchange. During the second and third quarters of fiscal 2016, the Company acquired the remaining shares and delisted Super Label. The total purchase price was $39,782 less net cash acquired of $6,035. Super Label has operations in Malaysia, Indonesia, the Philippines, Thailand, and China and produces home & personal care, food & beverage and specialty consumer products labels. This acquisition expands our presence in China and gives us access to new label markets in Southeast Asia. On May 4, 2015, the Company acquired 100% of Barat Group (Barat) based in Bordeaux, France for $49,973 less net cash acquired of $746. Barat operates four manufacturing facilities in Bordeaux and Burgundy, France, and the acquisition gives the Company access to the label market in the Bordeaux wine region and expands our presence in Burgundy. On May 1, 2015, the Company acquired 100% of Mr. Labels in Brisbane, Queensland Australia for $2,110. The purchase price includes $196 that was deferred until the first anniversary of the closing date, which was paid during fiscal 2017. Mr. Labels provides labels primarily to food and beverage customers. On February 2, 2015, the Company acquired New Era Packaging (New Era) for $16,366 less net cash acquired of $1,741. New Era is based near Dublin, Ireland and specializes in labels for the healthcare, pharmaceutical and food industries. On January 5, 2015, the Company acquired Multi Labels Ltd. (Multi Labels) for $15,670 plus net debt assumed of $3,733. Multi Labels is based in Daventry, near London, England, and specializes in premium alcoholic beverage labels for spirits and imported wine. On July 1, 2014, the Company acquired Multiprint Labels Limited (Multiprint) based in Dublin, Ireland for $1,662 plus net debt assumed of $2,371. The purchase price includes $273 that was deferred for one year after the closing date, which was paid during fiscal 2016. Multiprint specializes in pressure sensitive labels for the wine & spirits and beverage markets in Ireland and the UK. Inflation We do not believe that our operations have been materially affected by inflation. Inflationary price increases for raw materials could adversely impact our sales and profitability in the future. Critical Accounting Policies and Estimates The preparation of 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. We believe the following critical accounting policies impact the more significant judgments and estimates used in the preparation of our consolidated financial statements. Additionally, our senior management has reviewed the critical accounting policies and estimates with the Board of Directors’ Audit and Finance Committee. For a more detailed discussion of the application of these and other accounting policies, refer to Note 2 of the consolidated financial statements. Business Combinations 27 The Company allocates the purchase price of its acquisitions to the assets acquired and liabilities assumed based upon their respective fair values at the acquisition date. The Company reports in its consolidated financial statements provisional amounts for the items for which accounting is incomplete. Goodwill is adjusted for any changes to provisional amounts made within the measurement period. The Company utilizes management estimates and an independent third-party valuation firm to assist in determining the fair values of assets acquired and liabilities assumed. Such estimates and valuations require the Company to make significant assumptions, including projections of future events and operating performance. Goodwill and Other Acquired Intangible Assets Impairment reviews comparing fair value to carrying value are highly judgmental and involve the use of significant estimates and assumptions, which determine whether there is potential impairment and the amount of any impairment charge recorded. Fair value assessments involve estimates of discounted cash flows that are dependent upon discount rates and long-term assumptions regarding future sales and margin trends, market conditions, cash flow and multiples of revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA"). Actual results may differ from these estimates. Fair value measurements used in the impairment reviews of goodwill and intangible assets are Level 3 measurements. See further information about our policy for fair value measurements within this section below. Goodwill. Goodwill is not amortized and is tested for impairment annually. Impairment is also tested when events or changes in circumstances indicate that the assets’ carrying values may be greater than the fair values. Historically, the Company’s policy was to perform the annual goodwill impairment test as of the last day of February of each fiscal year. Beginning in fiscal 2016, the Company moved from accelerated filer status to large accelerated filer status. As a result, the Form 10-K was required to be filed 15 days earlier than in previous years. In order to meet the shorter filing timeline, the Company changed its annual goodwill impairment testing date from the last day of February to the last day of January of each fiscal year, beginning in fiscal 2016. This change in the goodwill impairment testing date represents a change in accounting principle, which management determined to be preferable under the circumstances. The Company determined that it is impracticable to objectively determine projected cash flows and related valuation estimates that would have been used as of January 31 for periods prior to January 31, 2016 without the use of hindsight. Therefore, this change was applied prospectively on January 31, 2016. Based on operating results for the Europe Wine & Spirits (EUR W&S) reporting unit, a quantitative goodwill impairment assessment was performed during the second quarter of 2017 for this reporting unit. No impairment was indicated. Based on operating results for the Latin American Consumer Product Goods (LA CPG) and Latin America Wine & Spirits (LA W&S) reporting units during fiscal 2015, a quantitative goodwill impairment assessment was performed as of September 30, 2014 for those two reporting units. No impairment was indicated. No events or changes in circumstances occurred in 2016 that required goodwill impairment testing in between annual tests. Goodwill has been assigned to reporting units for purposes of impairment testing. The reporting units are the Company’s divisions. The Company can evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than the carrying value and whether it is necessary to perform the two-step goodwill impairment test. In conjunction with our annual impairment test as of January 31, 2017, the Company performed a quantitative assessment for all of our reporting units. The first step of the impairment test compares the fair value of each reporting unit to its carrying value. We estimated the fair value of each reporting unit using a combination of: (i) a market approach based on multiples of revenue and EBITDA from recent comparable transactions and other market data; and (ii) an income approach based on expected future cash flows discounted at rates ranging between 8.5% to 11.0% in 2017. The discount rate reflects the risk associated with each respective reporting unit, including the industry and geographies in which they operate. The market and income approaches were both considered, with the income approach selected based on judgment of the comparability of the recent transactions due to the fluid nature of the business and recent acquisitions. The market approach was used to corroborate values determined by the income approach. We considered recent economic and industry trends, as well as risk in executing our current plans from the perspective of a hypothetical buyer in estimating expected future cash flows in the income approach. For all of our reporting units, the first step of the impairment test did not indicate potential impairment as the estimated fair value of the reporting units exceeded the carrying amount. As a result, the second step of the impairment test was not required. Significant assumptions used to estimate the fair value of our reporting units include estimates of future cash flows, discount rates and multiples of revenue and EBITDA. These assumptions are typically not considered individually because assumptions used to select one variable should also be considered when selecting other variables; however, sensitivity of the overall fair value assessment to each significant variable is also considered. In conjunction with our annual impairment test as of January 31, 2016, the Company performed a qualitative assessment for all but two of our reporting units and determined that it was not more likely than not that the fair values of the reporting units were less than the carrying values. Due to changes in sales forecasts during fiscal 2016, the Company performed the first step of the two-step goodwill impairment test for the LA CPG reporting unit. As it passed the first step of the fiscal 2015 impairment test by less than 5%, the Company performed the first step of the two-step goodwill impairment test for the Asia Pacific Wine & Spirits (AP W&S) reporting unit. For both LA CPG and AP W&S, the first step of the impairment test did not indicate potential impairment as the estimated fair value of the reporting unit exceeded the carrying amount. As a result, the second step of the impairment test was not required. Intangible Assets. Intangible assets with definite useful lives are amortized over periods of up to 21 years based on a number of assumptions including estimated period of economic benefit and utilization. Intangible assets are tested for impairment when events or 28 changes in circumstances indicate that the assets’ carrying values may be greater than their fair values. Tests are performed over asset groups at the lowest level of identifiable cash flows. The Company performed impairment testing on long-lived assets, including intangibles, at certain manufacturing locations during fiscal 2017 and 2016 due to the existence of impairment indicators. The undiscounted future cash flows associated with the long-lived assets were greater than their carrying values, and therefore, no impairment was present in either of these two years related to intangible assets. Impairment of Long-Lived Assets We review long-lived assets for impairment when events or changes in circumstances indicate that assets might be impaired and the related carrying amounts may not be recoverable. Changes in market conditions and/or losses of a production line could have a material impact on the consolidated statements of income. The determination of whether impairment exists involves various estimates and assumptions, including the determination of the undiscounted cash flows estimated to be generated by the assets involved in the review. The cash flow estimates are based upon our historical experience, adjusted to reflect estimated future market and operating conditions. Measurement of an impairment loss requires a determination of fair value. We base our estimates of fair values on quoted market prices when available, independent appraisals as appropriate and industry trends or other market knowledge. Tests are performed over asset groups at the lowest level of identifiable cash flows. The Company recorded $2,006 in impairment losses on fixed assets during fiscal 2016 related to assets that more likely than not will be sold or otherwise disposed of significantly before the end of their estimated useful lives, $1,874 of which related to the closure of various manufacturing facilities. In addition, the Company performed impairment testing on long-lived assets at certain manufacturing locations during fiscal 2017, 2016 and 2015 due to the existence of other impairment indicators. The estimated undiscounted cash flows associated with the long-lived assets were greater than their carrying values, and therefore, no impairment was present in any of these three years related to intangible assets. Income Taxes The Company is subject to income taxes in both the United States and numerous foreign jurisdictions. Income taxes are recorded based on the current year amounts payable or refundable. Deferred income taxes are recognized at the enacted tax rates for the expected future tax consequences related to temporary differences between amounts reported for income tax purposes and financial reporting purposes as well as any tax attributes. Deferred income taxes are not provided for the undistributed earnings of subsidiaries operating outside of the U.S. that have been permanently reinvested in foreign operations. We regularly review our deferred income tax balances for each jurisdiction to estimate whether these deferred income tax balances are more likely than not to be realized based on the information currently available. Projected future taxable income is based on forecasted results and assumptions as to the jurisdiction in which the income will be earned. The timing of reversals of any existing temporary differences is based on our methods of accounting for income taxes and current tax legislation. Unless the deferred tax balances are more likely than not to be realized, a valuation allowance is established to reduce the carrying values of any deferred tax balances until circumstances indicate that realization becomes more likely than not. The Company establishes reserves for income tax related uncertainties based on estimates of whether it is more likely than not that the tax uncertainty would be sustained upon challenge by the appropriate tax authorities. Provisions for and changes to these reserves and any related net interest and penalties are included in income tax expense in the consolidated statements of income. Significant judgment is required when evaluating our tax provisions and determining our provision for income taxes. We regularly review our tax positions and we adjust the reserves as circumstances change. Fair Value Measurements The Company defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. To increase consistency and comparability in fair value measurements, the Company uses a three-level hierarchy that prioritizes the use of observable inputs. The three levels are: Level 1 – Quoted market prices in active markets for identical assets and liabilities Level 2 – Observable inputs other than quoted market prices in active markets for identical assets and liabilities Level 3 – Unobservable inputs The determination of where an asset or liability falls in the hierarchy requires significant judgment. Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in goodwill, other intangible assets and long- lived assets impairment analyses, the valuation of acquired intangibles and in the valuation of assets held for sale. The Company tests goodwill for impairment annually, as of the last day of January of each fiscal year. Impairment is also tested when events or changes in circumstances indicate that the assets’ carrying values may be greater than the fair values. Goodwill and intangible assets are typically valued using Level 3 inputs. New Accounting Pronouncements For a discussion of new accounting pronouncements, see Note 2 to our consolidated financial statements.  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (In thousands, except for statistical data) 29 Multi-Color does not enter into derivatives or other financial instruments for trading or speculative purposes, but we may utilize them to manage our fixed to variable-rate debt ratio or to manage foreign currency exchange rate volatility. Multi-Color is exposed to market risks from changes in interest rates on certain of its outstanding debt. The outstanding loan balance under our Credit Agreement bears interest at a variable rate based on prevailing short-term interest rates in the United States and Australia. The Company had three forward starting non-amortizing Swaps with a total notional amount of $125,000 to convert variable rate debt to fixed rate debt. The Swaps became effective October 2012 and expired in August 2016. The Swaps resulted in interest payments based on an average fixed rate of 1.396% plus the applicable margin per the requirements in the Credit Agreement. Foreign currency exchange risk arises from our international operations in Argentina, Australia, Canada, Central America, Chile, China, Europe, Southeast Asia, and South Africa as well as from transactions with customers or suppliers denominated in foreign currencies. The functional currency of each of the Company’s subsidiaries is generally the currency of the country in which the subsidiary operates. The results of operations of our foreign subsidiaries are translated into U.S. dollars at the average exchange rate for each monthly period. As foreign exchange rates change, there are changes to the U.S. dollar equivalent of sales and expenses denominated in foreign currencies. During fiscal 2017, approximately 45% of our net sales were made by our foreign subsidiaries and their combined net income was 26% of the Company’s net income. The balance sheets of our foreign subsidiaries are translated into U.S. dollars at the closing exchange rates of each monthly balance sheet date. During fiscal 2017, the Company recorded an unrealized foreign currency translation loss of $25,254 in other comprehensive income as a result of movements in foreign currency exchange rates related to the Argentine Peso, Australian Dollar, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan, Euro, Indonesian Rupiah, Malaysian Ringgit, Mexican Peso, Philippine Peso, Polish Zloty, South African Rand, Swiss Franc, and the Thai Baht. See Notes 2 and 19 to the Company’s consolidated financial statements. As of March 31, 2017, a 10% change in these foreign exchange rates would change shareholders’ equity by approximately $44,000. This hypothetical change was calculated by multiplying the net assets of each of our foreign subsidiaries by a 10% change in the applicable foreign exchange rate.  ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements and Financial Statement Schedules 30 CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm Consolidated Statements of Income Consolidated Statements of Comprehensive Income (Loss) Consolidated Balance Sheets Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Page 31-32 33 34 35 36 37 38 All financial statement schedules have been omitted because they are either not required or the information is included in the financial statements or notes thereto. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 31 Board of Directors and Stockholders Multi-Color Corporation We have audited the accompanying consolidated balance sheets of Multi-Color Corporation (an Ohio corporation) and subsidiaries (the “Company”) as of March 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2017. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Multi- Color Corporation and subsidiaries as of March 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2017 in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 30, 2017 expressed an unqualified opinion. /s/ GRANT THORNTON LLP Cincinnati, Ohio May 30, 2017 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 32 Board of Directors and Stockholders Multi-Color Corporation We have audited the internal control over financial reporting of Multi-Color Corporation (an Ohio corporation) and subsidiaries (the “Company”) as of March 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Industria Litografica Alessandrina S.r.l (“I.L.A.”), Italstereo Resin Labels S.r.l (“Italstereo”), Gironde Imprimerie Publicite (“GIP”) and Graphix Labels and Packing Pty Ltd (“Graphix”), whose financial statements reflect total assets and revenues constituting 4.1% and 1.2% percent, respectively, of the related consolidated financial statement amounts as of and for the year ended March 31, 2017. As indicated in Management’s Report, I.L.A., Italstereo, GIP and Graphix were acquired during the year ended March 31, 2017. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of I.L.A., Italstereo, GIP and Graphix. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended March 31, 2017, and our report dated May 30, 2017 expressed an unqualified opinion on those financial statements. /s/ GRANT THORNTON LLP Cincinnati, Ohio May 30, 2017  CONSOLIDATED STATEMENTS OF INCOME For the Years Ended March 31 (In thousands, except per share data) 33 The accompanying notes are an integral part of the consolidated financial statements. 201720162015Net revenues923,295$ 870,825$ 810,772$ Cost of revenues726,486 689,199 637,498 Gross profit196,809 181,626 173,274 Selling, general and administrative expenses84,922 81,998 68,012 Facility closure expenses921 5,200 7,399 Goodwill impairment- - 951 Operating income110,966 94,428 96,912 Interest expense25,488 25,751 26,386 Other expense (income), net(2,735) 1,867 (346) Income before income taxes88,213 66,810 70,872 Income tax expense26,848 18,981 25,156 Net income61,365 47,829 45,716 Less: Net income attributable to noncontrolling interests369 90 - Net income attributable to Multi-Color Corporation60,996$ 47,739$ 45,716$ Weighted average shares and equivalents outstanding: Basic16,879 16,750 16,623 Diluted17,024 16,952 16,877 Basic earnings per common share3.61$ 2.85$ 2.75$ Diluted earnings per common share3.58$ 2.82$ 2.71$ Dividends per common share0.20$ 0.20$ 0.20$ CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the Years Ended March 31 (In thousands) 34 (1) The amount for the years ended March 31, 2017, 2016 and 2015 includes a tax impact of $284, $(277) and $1,002, respectively, related to the settlement of foreign currency denominated intercompany loans. (2) Amounts are net of tax of $(133), $(303) and $(353) for the years ended March 31, 2017, 2016 and 2015, respectively. (3) Amounts are net of tax of $(108), $(22) and $106 for the years ended March 31, 2017, 2016 and 2015, respectively. The accompanying notes are an integral part of the consolidated financial statements. 201720162015Net income61,365$ 47,829$ 45,716$ Other comprehensive income (loss): Unrealized foreign currency translation loss (1)(25,254) (2,671) (56,200) Unrealized gain on interest rate swaps, net of tax (2)196 485 563 Change in minimum pension liability, net of tax (3)174 35 (169) Total other comprehensive income (loss)(24,884) (2,151) (55,806) Comprehensive income (loss)36,481 45,678 (10,090) Less: Comprehensive income attributable to noncontrolling interests157 163 - Comprehensive income (loss) attributable to Multi-Color Corporation36,324$ 45,515$ (10,090)$  CONSOLIDATED BALANCE SHEETS As of March 31 (In thousands, except per share data) 35 The accompanying notes are an integral part of the consolidated financial statements. 20172016ASSETSCurrent assets: Cash and cash equivalents25,229$ 27,709$ Accounts receivable, net141,211 134,920 Other receivables7,871 8,807 Inventories, net63,995 61,191 Prepaid expenses12,187 13,618 Other current assets3,253 2,280 Total current assets253,746 248,525 Property, plant and equipment, net247,261 221,295 Goodwill412,550 422,009 Intangible assets, net169,220 169,146 Other non-current assets6,365 5,773 Deferred income tax assets2,848 3,318 Total assets1,091,990$ 1,070,066$ LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Current portion of long-term debt2,093$ 1,573$ Accounts payable88,475 82,958 Accrued expenses and other liabilities53,758 52,894 Total current liabilities144,326 137,425 Long-term debt479,408 504,706 Deferred income tax liabilities65,761 65,798 Other liabilities20,675 19,505 Total liabilities710,170 727,434 Commitments and contingenciesStockholders' equity: Preferred stock, no par value, 1,000 shares authorized, no shares outstanding- - Common stock, no par value, stated value of $0.10 per share; 40,000 shares authorized, 17,254 and 17,111 shares issued at March 31, 2017 and 2016, respectively1,054 1,040 Paid-in capital158,399 150,783 Treasury stock, 302 and 293 shares at cost at March 31, 2017 and 2016, respectively(11,168) (10,556) Retained earnings316,461 258,848 Accumulated other comprehensive loss(85,795) (61,123) Total stockholders' equity attributable to Multi-Color Corporation378,951 338,992 Noncontrolling interests2,869 3,640 Total stockholders' equity 381,820 342,632 Total liabilities and stockholders' equity1,091,990$ 1,070,066$ CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) 36 The accompanying notes are an integral part of the consolidated financial statements. Shares IssuedAmountPaid-In CapitalTreasury StockRetained EarningsNoncontrolling InterestsTotalMarch 31, 201416,571 989$ 131,632$ (3,760)$ 172,052$ (3,166)$ -$ 297,747$ Net income45,716 45,716 Other comprehensive loss(55,806) (55,806) Issuance of common stock324 32 5,483 5,515 Excess tax benefit from stock-based compensation2,644 2,644 Restricted stock grant11 - Stock-based compensation1,970 1,970 Shares acquired under employee plans(5,008) (5,008) Common stock dividends(3,305) (3,305) March 31, 201516,906 1,021$ 141,729$ (8,768)$ 214,463$ (58,972)$ -$ 289,473$ Net income47,739 90 47,829 Other comprehensive income (loss)(2,151) 73 (2,078) Acquisitions3,477 3,477 Issuance of common stock190 19 4,065 4,084 Excess tax benefit from stock-based compensation2,007 2,007 Restricted stock grant15 - Stock-based compensation2,982 2,982 Shares acquired under employee plans(1,788) (1,788) Common stock dividends(3,354) (3,354) March 31, 201617,111 1,040$ 150,783$ (10,556)$ 258,848$ (61,123)$ 3,640$ 342,632$ Net income60,996 369 61,365 Other comprehensive loss(24,672) (212) (24,884) Acquisitions62 62 Issuance of common stock136 14 3,338 3,352 Excess tax benefit from stock-based compensation1,258 1,258 Restricted stock grant8 - Restricted stock forfeitures(1) - Stock-based compensation3,042 3,042 Shares acquired under employee plans(612) (612) Buyout of noncontrolling interest(22) (492) (514) Common stock dividends(3,383) (3,383) Dividends paid to noncontrolling interests(498) (498) March 31, 201717,254 1,054$ 158,399$ (11,168)$ 316,461$ (85,795)$ 2,869$ 381,820$ Accumulated Other Comprehensive LossCommon Stock  CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended March 31 (In thousands) 37 The accompanying notes are an integral part of the consolidated financial statements. 201720162015CASH FLOWS FROM OPERATING ACTIVITIES:Net income61,365$ 47,829$ 45,716$ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation33,480 31,295 29,828 Amortization of intangible assets14,425 13,178 11,541 Amortization of deferred financing costs1,665 1,692 2,200 Loss on write-off of deferred financing fees- - 2,001 Impairment loss on fixed assets- 132 777 Facility closure expenses related to impairment loss on fixed assets- 1,874 5,208 Goodwill impairment- - 951 Gain on sale of Watertown facility- (476) - Loss (gain) on benefit plans related to facility closures133 88 (726) Gain on previously held equity interests(690) - - Net (gain) loss on disposal of property, plant and equipment(230) 282 199 Net (gain) loss on interest rate swaps103 (276) 351 Stock-based compensation expense3,042 2,982 1,970 Excess tax benefit from stock-based compensation (1,258) (2,007) (2,644) Deferred income taxes, net(2,938) 2,343 6,944 Changes in assets and liabilities, net of acquisitions: Accounts receivable(7,457) (5,412) 1,953 Inventories(1,999) 3,273 (1,048) Prepaid expenses and other assets1,067 (10,581) 1,811 Accounts payable171 11,773 (4,095) Accrued expenses and other liabilities6,331 1,412 4,038 Net cash provided by operating activities107,210 99,401 106,975 CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures(46,146) (34,892) (29,153) Investment in acquisitions, net of cash acquired(28,839) (103,245) (31,240) Proceeds from sale of Watertown and Norway facilities- 2,505 - Proceeds from sale of property, plant and equipment1,350 600 471 Net cash used in investing activities(73,635) (135,032) (59,922) CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings under revolving lines of credit265,746 362,960 323,895 Payments under revolving lines of credit(292,797) (309,621) (227,818) Borrowings of long-term debt2,156 823 251,896 Repayments of long-term debt(6,572) (9,165) (367,868) Payment of acquisition related contingent consideration and deferred payments(1,784) (1,141) (10,916) Buyout of non-controlling interest(514) - - Proceeds from issuance of common stock2,742 2,706 2,019 Excess tax benefit from stock-based compensation1,258 2,007 2,644 Debt issuance costs- (18) (7,921) Dividends paid(3,876) (3,351) (3,302) Net cash provided by/(used in) financing activities(33,641) 45,200 (37,371) Effect of foreign exchange rate changes on cash(2,414) 91 (1,653) Net increase/(decrease) in cash and cash equivalents(2,480) 9,660 8,029 Cash and cash equivalents, beginning of year27,709 18,049 10,020 Cash and cash equivalents, end of year25,229$ 27,709$ 18,049$  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for statistical and per share data) (1) THE COMPANY 38 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 North, Central and South America, Europe, China, Southeast Asia, Australia, New Zealand, and South Africa with a comprehensive range of the latest label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation References to 2017, 2016 and 2015 are for the fiscal years ended March 31, 2017, 2016 and 2015, respectively. The consolidated financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain prior year balances have been reclassified to conform to current year classifications. As of March 31, 2017, the Company’s operations were conducted through the Consumer Product Goods and Wine & Spirits operating segments, which are aggregated into one reportable segment in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting.” The metrics used by management to assess the performance of the Company’s operating segments include revenue trends, gross profit margin and operating margin. The Company’s operating segments have historically had similar economic characteristics and are expected to have similar economic characteristics and long-term financial performance in future periods. 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. Business Combinations The Company allocates the purchase price of its acquisitions to the assets acquired and liabilities assumed based upon their respective fair values at the acquisition date. The Company utilizes management estimates and an independent third-party valuation firm to assist in determining these fair values. The excess of the acquisition price over the estimated fair value of the net assets is recorded as goodwill. Goodwill is adjusted for any changes to acquisition date fair value amounts made within the measurement period. Acquisition-related transaction costs are recognized separately from the business combination and expensed as incurred. Revenue Recognition The Company recognizes revenue on sales of products when the customer receives title to the goods and risk of loss transfers to the customer, which is generally upon shipment or delivery depending on sales terms, persuasive evidence of an arrangement exists, the sales price is fixed or determinable and collectability is reasonably assured. Revenues are generally denominated in the currency of the country from which the product is shipped and are net of applicable returns and discounts. In addition, the Company also recognizes revenues related to multiple-element arrangements with both pre-press activities and traditional label revenues. These pre-press charges are specific to the customer and product under contract and the output generated has no marketable use outside of the label production process for the specific contract run. We have only one deliverable for revenue recognition and a single unit of accounting. As such, to the extent that revenue for these pre-press activities is separately billed, it is deferred and recognized over the period of the associated label runs. These label runs range from a single production run to ongoing runs over an average of 3-4 months. The associated costs are also deferred and recognized over the same period. Shipping fees billed to customers are included in net revenues and shipping costs are included in cost of revenues in the consolidated statements of income. Taxes collected from customers and remitted to governmental authorities in applicable jurisdictions are excluded from net revenues. Cost of Revenues Cost of revenues primarily consists of direct materials and supplies consumed in the manufacture of product, as well as manufacturing labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost of revenues also includes inbound freight costs and costs to distribute products to customers. Selling, General and Administrative Expenses Selling, general and administrative expenses (SG&A) primarily consist of sales and marketing costs, corporate and divisional administrative and other costs and depreciation and amortization expense related to non-manufacturing assets. Advertising costs are charged to expense as incurred and were minimal in 2017, 2016 and 2015. Research and Development Costs Research and development costs are charged to expense as incurred and were $5,274, $5,520 and $4,619 in 2017, 2016 and 2015, respectively. 39 Cash and Cash Equivalents The Company records all highly liquid short-term investments with maturities of three months or less as cash equivalents. At March 31, 2017 and 2016, the Company had cash in foreign bank accounts of $24,656 and $25,483, respectively. Outstanding checks of $8,876 and $6,574 were included in accounts payable as of March 31, 2017 and 2016, respectively. Accounts Receivable Our customers are primarily major consumer product, food & beverage, wine & spirits and container companies. Accounts receivable consist of amounts due from customers in connection with our normal business activities and are carried at sales value less allowance for doubtful accounts. The allowance for doubtful accounts is established to reflect the expected losses of accounts receivable based on past collection history, age, account payment status compared to invoice payment terms and specific individual risks identified. The delinquency of a receivable account is determined based on these factors. The Company does not accrue interest on aged accounts receivable. Supply Chain Financing During 2015, the Company entered into supply chain financing agreements with two of its customers. The receivables for both the agreements are sold without recourse to the customers’ banks and are accounted for as sales of accounts receivable. Gains and losses on the sale of these receivables are included in selling, general and administrative expenses in the consolidated statements of income, and losses of $561, $363 and $67 were recorded during 2017, 2016 and 2015, respectively. Inventories Inventories are valued at the lower of cost or market value and substantially all are maintained using the FIFO (first-in, first-out) or specific identification method. Excess and obsolete inventory allowances are generally established based on inventory age. Property, Plant and Equipment Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation expense, which includes the amortization of assets recorded under capital leases, is calculated using the straight-line method over the estimated useful lives of the assets, or the remaining terms of the leases, as follows: Buildings Building improvements Machinery and equipment Computers Furniture and fixtures 20-39 years 15 years 3-15 years 3-5 years 5-10 years Goodwill and Other Acquired Intangible Assets Impairment reviews comparing fair value to carrying value are highly judgmental and involve the use of significant estimates and assumptions, which determine whether there is potential impairment and the amount of any impairment charge recorded. Fair value assessments involve estimates of discounted cash flows that are dependent upon discount rates and long-term assumptions regarding future sales and margin trends, market conditions, cash flow and multiples of revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA"). Actual results may differ from these estimates. Fair value measurements used in the impairment reviews of goodwill and intangible assets are Level 3 measurements. See further information about our policy for fair value measurements within this section below. See further information regarding our impairment tests in Note 7. Goodwill. Goodwill is not amortized and is tested for impairment annually. Impairment is also tested when events or changes in circumstances indicate that the assets’ carrying values may be greater than the fair values. Historically, the Company’s policy was to perform the annual goodwill impairment test as of the last day of February of each fiscal year. Beginning in fiscal 2016, the Company moved from accelerated filer status to large accelerated filer status. As a result, the Form 10-K was required to be filed 15 days earlier than in previous years. In order to meet the shorter filing timeline, the Company changed its annual goodwill impairment testing date from the last day of February to the last day of January of each fiscal year, beginning in fiscal 2016. This change in the goodwill impairment testing date represents a change in accounting principle, which management determined to be preferable under the circumstances. The Company determined that it is impracticable to objectively determine projected cash flows and related valuation estimates that would have been used as of January 31, 2016 for periods prior to January 31, 2016 without the use of hindsight. Therefore, this change was applied prospectively on January 31, 2016. Goodwill has been assigned to reporting units for purposes of impairment testing. The reporting units are the Company’s divisions. The Company can evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than the carrying value and whether it is necessary to perform the two-step goodwill impairment test. The first step of the impairment test compares the fair value of the reporting unit to the carrying value. The market and income approaches were both considered, with the income approach selected based on judgement of the comparability of recent transactions due to the fluid nature of the business and recent acquisitions. The market approach was used to corroborate values determined by the income approach. Intangible Assets. Intangible assets with definite useful lives are amortized over periods of up to 21 years based on a number of assumptions including estimated period of economic benefit and utilization. Intangible assets are tested for impairment when events or changes in circumstances indicate that the assets’ carrying values may be greater than their fair values. We test for impairment by comparing (i) estimates of undiscounted future cash flows, before interest charges, included in our operating plans to (ii) the carrying values of the related assets. Tests are performed over asset groups at the lowest level of identifiable cash flows. Impairment of Long-Lived Assets We review long-lived assets for impairment when events or changes in circumstances indicate that assets might be impaired and the related carrying amounts may not be recoverable. Changes in market conditions and/or losses of a production line could have a material 40 impact on the consolidated statements of income. The determination of whether impairment exists involves various estimates and assumptions, including the determination of the undiscounted cash flows estimated to be generated by the assets involved in the review. The cash flow estimates are based upon our historical experience, adjusted to reflect estimated future market and operating conditions. Measurement of an impairment loss requires a determination of fair value. We base our estimates of fair values on quoted market prices when available, independent appraisals as appropriate and industry trends or other market knowledge. Tests are performed over asset groups at the lowest level of identifiable cash flows. Income Taxes The Company is subject to income taxes in both the United States and numerous foreign jurisdictions. Income taxes are recorded based on the current year amounts payable or refundable. Deferred income taxes are recognized at the enacted tax rates for the expected future tax consequences related to temporary differences between amounts reported for income tax purposes and financial reporting purposes as well as any tax attributes. Deferred income taxes are not provided for the undistributed earnings of subsidiaries operating outside of the U.S. that have been permanently reinvested in foreign operations. We regularly review our deferred income tax balances for each jurisdiction to estimate whether these deferred income tax balances are more likely than not to be realized based on the information currently available. Projected future taxable income is based on forecasted results and assumptions as to the jurisdiction in which the income will be earned. The timing of reversals of any existing temporary differences is based on our methods of accounting for income taxes and current tax legislation. Unless the deferred tax balances are more likely than not to be realized, a valuation allowance is established to reduce the carrying values of any deferred tax balances until circumstances indicate that realization becomes more likely than not. The Company establishes reserves for income tax related uncertainties based on estimates of whether it is more likely than not that the tax uncertainty would be sustained upon challenge by the appropriate tax authorities. Provisions for and changes to these reserves and any related net interest and penalties are included in income tax expense in the consolidated statements of income. Significant judgment is required when evaluating our tax provisions and determining our provision for income taxes. We regularly review our tax positions and we adjust the reserves as circumstances change. 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 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. Derivative Financial Instruments The Company accounts for derivative financial instruments by recognizing derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value and recognizing the resulting gains or losses as adjustments to the consolidated statements of income or accumulated other comprehensive income (loss). The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company manages interest costs using a mixture of fixed rate and variable rate debt. Additionally, the Company enters into interest rate swaps (Swaps) whereby it agrees to exchange with a counterparty, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount. Upon inception, the Swaps were designated as a cash flow hedge, and the Company adjusted the carrying value of these derivatives to their estimated fair value and recorded the adjustment in accumulated other comprehensive income (loss). In conjunction with entering into the Credit Agreement on November 21, 2014, the Company de-designated the Swaps as a cash flow hedge. Subsequent to November 21, 2014, changes in the fair value of the de-designated Swaps are immediately recognized in interest expense. The Company manages foreign currency exchange rate risk of foreign currency denominated firm commitments to purchase presses and other equipment by periodically entering into foreign currency forward contracts. 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 settle in the following quarter. If designated as a fair value hedge, changes in the fair value of a contract are recorded in other income and expense in the consolidated statements of income in the same period during which the related hedged item affects the consolidated statements of income. The Company evaluates effectiveness on an ongoing quarterly basis. If not designated as a hedging instrument, changes in the fair value of a contract are immediately recognized in other income and expense in the consolidated statements of income. Fair Value Measurements The carrying value of financial instruments approximates fair value. The Company defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. To increase consistency and comparability in fair value measurements, the Company uses a three-level hierarchy that prioritizes the use of observable inputs. The three levels are: Level 1 – Quoted market prices in active markets for identical assets and liabilities Level 2 – Observable inputs other than quoted market prices in active markets for identical assets and liabilities Level 3 – Unobservable inputs The determination of where an asset or liability falls in the hierarchy requires significant judgment. 41 Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in goodwill, other intangible assets and long- lived assets impairment analyses, the valuation of acquired intangibles and in the valuation of assets held for sale. The Company tests goodwill for impairment annually, as of the last day of January of each fiscal year. Impairment is also tested when events or changes in circumstances indicate that the assets’ carrying values may be greater than the fair values. Goodwill and intangible assets are typically valued using Level 3 inputs. Foreign Exchange The functional currency of each of the Company’s subsidiaries is generally the currency of the country in which the subsidiary operates. Assets and liabilities of foreign operations are translated using period end exchange rates, and revenues and expenses are translated using average exchange rates during each period. Translation gains and losses are reported in accumulated other comprehensive income (loss) as a component of stockholders’ equity and were a loss of $25,254, $2,671 and $56,200 during 2017, 2016 and 2015, respectively. Transaction gains and (losses) are reported in other income and expense in the consolidated statements of income and were ($533), $2,185 and ($117) during 2017, 2016 and 2015, respectively. New Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04, “Intangibles-Goodwill and Other,” which simplifies the accounting for goodwill impairments. This update removes step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A 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 impairments 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 will assist 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 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2018. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this update on its consolidated financial statements, but it is not expected to have a material 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 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2018. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of this update on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several areas of accounting for employee share-based payments, including the accounting for income taxes and forfeitures and the classification of excess tax benefits and employee taxes paid when directly withholding shares for tax-withholding purposes. This ASU requires that excess tax benefits for share-based payments be recognized as income tax expense and classified within operating cash flows rather than being recorded within additional paid-in capital and classified within financing cash flows. This update is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2017. The Company will adopt the update effective April 1, 2017. Due to the nature of share-based payment exercise patterns, the Company will not know all potential impacts of the update until the end of the quarter in which the standard is adopted. The Company believes the most significant impact will come from the amendments related to accounting for excess tax benefits, which will result in recognition of excess tax benefits against income tax expenses rather than additional paid-in capital. In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires that lessees recognize almost all leases on the balance sheet as a right-of-use asset and a lease liability. 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. This update should be applied at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating 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. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which eliminated the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This update is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2016. This update was applied prospectively to adjustments to provisional amounts that occurred after the effective date. See Note 7 for additional disclosures provided as a result of adoption of this ASU, which did not have a material impact on the Company’s consolidated financial statements. 42 In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. This update does not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. Prior to issuance of this ASU, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and a floor of net realizable value less normal profit margin). For inventory within the scope of the new guidance, entities will be required to compare the cost of inventory to only its net realizable value, and not to the three measures required by current guidance. This update is effective prospectively for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2017. The Company will adopt the update effective April 1, 2017, and it is not expected to have a material impact on the Company’s consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which provides criteria for determining whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This update is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2016. We elected to apply this update prospectively to all arrangements entered into or materially modified after the effective date. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Under previous accounting guidance, debt issuance costs were recognized as a deferred charge (an asset). The recognition and measurement of debt issuance costs are not affected by this update, only the presentation in the Consolidated Balance Sheet. This update is effective retrospectively for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2016. The Company’s adoption of this update, as of the effective date, is a change in accounting principle. In July 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line- of-Credit Arrangements.” This update adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company elected to present all debt issuance costs, net of accumulated amortization, as a direct deduction from the carrying amount of the debt liability, including those related to our line-of-credit arrangements. As a result, $1,665 and $6,335 were reclassified from prepaid expenses and other non-current assets, respectively, to long-term debt in the Consolidated Balance Sheets as of March 31, 2016. See Note 8 for additional information on debt issuance costs. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides revised guidance for revenue recognition. The standard’s core principle is that an entity should recognize revenue for 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. This guidance provides five steps that should be applied to achieve that core principle. In July 2015, the FASB deferred the effective date of this standard by one year to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for the Company is the fiscal year beginning April 1, 2018. In March 2016, the FASB issued ASU 2016-08, which clarifies the implementation guidance on principal versus agent considerations for Topic 606. In April 2016, the FASB issued ASU 2016-10, which clarifies the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance. In December 2016, the FASB issued ASU 2016-20, which further clarifies and removes inconsistencies in ASU 2014-09 guidance. These updates can be applied retrospectively to each period presented or as a cumulative-effect adjustment (modified retrospective) as of the date of adoption. The Company has begun its process for implementing this guidance, including a review of all revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition. The Company plans to adopt the new revenue guidance and these updates for the fiscal year beginning April 1, 2018 using the modified retrospective approach and is currently evaluating the impact of this update on its consolidated financial statements. No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on the consolidated financial statements. (3) ACQUISITIONS Super Enterprise Holdings Berhad (Super Label) Summary On August 11, 2015, the Company acquired 90% of the shares of Super Label based in Kuala Lumpur, Malaysia, which was publicly listed on the Malaysian stock exchange. During the second and third quarters of fiscal 2016, the Company acquired the remaining shares and delisted Super Label. Super Label has operations in Malaysia, Indonesia, the Philippines, Thailand and China and produces home & personal care, food and beverage and specialty consumer products labels. This acquisition expanded our presence in China and gave us access to new label markets in Southeast Asia. The acquisition included an 80% controlling interest in the label operations in Indonesia and a 60% controlling interest in certain legal entities in Malaysia and China. During the third quarter of fiscal 2017, the Company acquired the remaining shares of the label operations in Indonesia for $514. The results of Super Label’s operations were included in the Company’s consolidated financial statements beginning on August 11, 2015. The purchase price for Super Label consisted of the following: 43 The cash portion of the purchase price was funded through borrowings under our Credit Agreement (see Note 8). Net cash acquired included $8,152 of cash acquired less $2,117 of bank debt assumed. The Company spent $1,434 in acquisition expenses related to the Super Label acquisition. These expenses were recorded in selling, general, and administrative expenses in the consolidated statements of income, $7 in fiscal 2017 and $1,427 in fiscal 2016. Barat Group (Barat) Summary On May 4, 2015, the Company acquired 100% of Barat based in Bordeaux, France. Barat operates four manufacturing facilities in Bordeaux and Burgundy, France, and the acquisition gives the Company access to the label market in the Bordeaux wine region and expands our presence in Burgundy. The acquisition included a 30% minority interest in Gironde Imprimerie Publicité (GIP), which was accounted for under the cost method based upon Multi-Color’s inability to exercise significant influence over the business. The results of Barat’s operations were included in the Company’s consolidated financial statements beginning on May 4, 2015. The purchase price for Barat consisted of the following: The cash portion of the purchase price was funded through the Credit Agreement (see Note 8). The purchase price included $2,160 due to the seller, which was paid during the three months ended September 30, 2015. Net cash acquired included $4,444 of cash acquired less $3,698 of bank debt assumed related to capital leases. The Company spent $1,500 in acquisition expenses related to the Barat acquisition. These expenses were recorded in selling, general and administrative expenses in the consolidated statements of income, $12 in fiscal 2017, $816 in fiscal 2016 and $672 in fiscal 2015. In conjunction with the acquisition of Barat, the Company recorded an indemnification asset of $1,115, which represents the seller’s obligation under the purchase agreement to indemnify Multi-Color for the outcome of potential contingent liabilities relating to uncertain tax positions. Purchase Price Allocation and Other Items Based on fair value estimates, the purchase prices for Super Label and Barat have been allocated to individual assets acquired and liabilities assumed as follows: Cash from proceeds of borrowings 39,782$ Net cash acquired(6,035) Total purchase price33,747$ Cash from proceeds of borrowings 47,813$ Deferred payment2,160 Purchase price, before cash acquired49,973 Net cash acquired(746) Total purchase price49,227$ 44 During fiscal 2017, goodwill decreased by $4,741 related to measurement period adjustments for the Super Label acquisition, primarily $4,601 and $1,683 related to the final valuation of property, plant and equipment and intangible assets, respectively, partially offset by an increase of $1,654 related to the final valuation of deferred tax assets and liabilities. No material measurement period adjustments related to Super Label were recognized in the consolidated statements of income in fiscal 2017 that would have been recognized in previous periods if the adjustments to provisional amounts were recognized as of the acquisition date. During fiscal 2016, goodwill increased by $7,328 related to measurement period adjustments for the Super Label acquisition. This increase was primarily due to a measurement period adjustment of $6,321 related to the fair value of the noncontrolling interests acquired and $2,428 in additional purchase price paid in conjunction with the compulsory acquisition of the remaining shares of Super Label during the third quarter of fiscal 2016, partially offset by decreases related to the preliminary valuation of intangible assets of $754 and updated valuation of current and deferred tax assets and liabilities. During fiscal 2016, goodwill decreased by $15,053 related to measurement period adjustments for the Barat acquisition. This decrease was primarily due to completion of the valuation of intangible assets and property, plant and equipment of $21,852 and $1,497, respectively, partially offset by an increase of $7,956 due to completion of the final valuation of current and deferred tax assets and liabilities. The fair value of the noncontrolling interests for Super Label were estimated based on market valuations performed by an independent third party using a combination of: (i) an income approach based on expected future discounted cash flows; and (ii) an asset approach. The estimated fair value of identifiable intangible assets and their estimated useful lives are as follows: Identifiable intangible assets are amortized over their useful lives based upon a number of assumptions including the estimated period of economic benefit and utilization. The weighted-average amortization period for identifiable intangible assets acquired in the Barat acquisition is 19 years. The goodwill for Super Label is attributable to access to the label markets in Malaysia, Indonesia, the Philippines and Thailand and the acquired workforce. The goodwill for Barat is attributable to access to the label market in the Bordeaux wine region and the acquired workforce. Goodwill arising from the Super Label and Barat acquisitions is not deductible for income tax purposes. Super LabelBaratAssets Acquired: Net cash acquired6,035$ 746$ Accounts receivable8,479 8,489 Inventories4,276 2,863 Property, plant and equipment22,002 8,356 Intangible assets2,437 21,852 Goodwill8,668 23,391 Other assets1,984 2,794 Total assets acquired53,881 68,491 Liabilities Assumed: Accounts payable5,087 3,049 Accrued income taxes payable936 355 Accrued expenses and other liabilities1,725 7,043 Deferred tax liabilities2,874 8,071 Total liabilities assumed10,622 18,518 Net assets acquired43,259 49,973 Noncontrolling interests(3,477) - Net assets acquired attributable to Multi-Color Corporation39,782$ 49,973$ FairValueUseful LivesFairValueUseful LivesCustomer relationships2,437$ 15 years20,849$ 20 yearsNon-compete agreements- - 780 2 yearsTrademarks- - 223 1 yearTotal identifiable intangible assets2,437$ 21,852$ BaratSuper Label Below is a roll forward of the goodwill acquired from the acquisition date to March 31, 2017: 45 The accounts receivable acquired as part of the Super Label acquisition had a fair value of $8,479 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $8,809 and the estimated contractual cash flows not expected to be collected are $330. The accounts receivable acquired as part of the Barat acquisition had a fair value of $8,489 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $8,679 and the estimated contractual cash flows not expected to be collected are $190. The net revenues and net income of Super Label included in the consolidated statement of income from the acquisition date through March 31, 2016 were $23,157 and $175, respectively. The net revenues and net income of Barat included in the consolidated statement of income from the acquisition date through March 31, 2016 were $30,098 and $1,251, respectively. Pro Forma Information (Unaudited) The following table provides the unaudited pro forma results of operations for the years ended March 31, 2016 and 2015 as if Super Label and Barat had been acquired as of the beginning of fiscal year 2015. 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 acquisitions had occurred on the dates indicated or that may result in the future. The following is a reconciliation of actual net revenues and net income attributable to Multi-Color Corporation to pro forma net revenues and net income attributable to Multi-Color Corporation: The following table identifies pro forma adjustments: Other Acquisition Activity 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 Gironde Imprimerie Publicité (GIP) for $2,084 plus net debt assumed of $862. The purchase price included $208 that is deferred for one year after the closing date. The Company acquired 30% of GIP as part of the Barat acquisition in fiscal 2016, which included a fair value equity interest in GIP of $771. Immediately prior to obtaining a controlling interest in GIP, the Company recognized a gain of $690 as a result of re-measuring the fair value of the equity interest based on the most recent share activity. GIP is located in the Bordeaux region of France and specializes in producing labels for the wine & spirits market. 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 $201 and $133 that are deferred for one and two years, respectively, after the closing date. Italstereo is located near Lucca, Italy and specializes Super LabelBaratBalance at acquisition date8,668$ 23,391$ Foreign exchange impact(716) (1,035) Balance at March 31, 20177,952$ 22,356$ 20162015Net revenues887,803$ 888,757$ Net income attributable to Multi-Color50,270$ 46,295$ Diluted earnings per share2.97$ 2.74$ Net RevenuesNet IncomeNet RevenuesNet IncomeMulti-Color Corporation actual results870,825$ 47,739$ 810,772$ 45,716$ Acquired companies results16,978 1,063 77,985 4,373 Pro forma adjustments- 1,468 - (3,794) Pro forma results887,803$ 50,270$ 888,757$ 46,295$ 2016201520162015Acquired companies financing costs150$ 2,063$ Acquisition transaction costs2,243 672 Incremental depreciation and amortization- (1,838) Incremental interest costs(925) (4,691) Pro forma adjustments1,468$ (3,794)$ 46 in producing pressure sensitive adhesive resin coated labels, seals and emblems. 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 includes $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. The combined net revenues and net income included in the consolidated statement of income for the year ended March 31, 2017 for Graphix, GIP, Italstereo, and I.L.A. is $11,177 and $425, respectively. The results of operations of these acquired businesses have been included in the consolidated financial statements since the respective dates of acquisition and have been determined to be immaterial for purposes of additional disclosure. The determination of the final purchase price allocation to specific assets acquired and liabilities assumed is incomplete for Graphix, GIP, Italstereo and I.L.A. 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 January 4, 2016, the Company acquired 100% of Cashin Print for $17,487 less net cash acquired of $135 and 100% of System Label for $11,665 less net cash acquired of $2,025. Cashin Print and System Label are located in Castlebar, Ireland and Roscommon, Ireland, respectively. The purchase prices for Cashin Print and System Label included $1,411 and $1,571, respectively, for purchase price adjustments, which were paid to the seller during the three months ended June 30, 2016. In addition, the purchase prices for Cashin Print and System Label include deferred payments of $3,317 and $1,011, respectively. These deferred payments may be paid during the fourth quarter of fiscal 2019. During the third quarter of fiscal 2017, the long-term liabilities related to these deferred payments were reduced based on management’s current estimate of the future payout and $887 was recorded in other income in the consolidated statements of income. The acquired businesses supply multinational customers in Ireland, the United Kingdom and Continental Europe and provide Multi-Color with the opportunity to supply a broader product range to a larger customer base, especially in the healthcare market. On October 1, 2015, the Company acquired 100% of Supa Stik Labels (Supa Stik) for $6,787 less net cash acquired of $977. Supa Stik is located in Perth, West Australia and services the local wine, food & beverage and healthcare label markets. The purchase price included $622 that is deferred for two years after the closing date. On May 1, 2015, the Company acquired 100% of Mr. Labels in Brisbane, Queensland Australia for $2,110. The purchase price included $196 that was deferred until the first anniversary of the closing date, which was paid during fiscal 2017. Mr. Labels provides labels primarily to food and beverage customers. The combined net revenues and net income included in the consolidated statement of income for the year ended March 31, 2016 for Cashin Print, System Label, Supa Stik and Mr. Labels were $8,679 and $922, respectively. The results of operations of these acquired businesses have been included in the consolidated financial statements since the respective dates of acquisition and have been determined to be immaterial for purposes of additional disclosure. On February 2, 2015, the Company acquired 100% of New Era Packaging (New Era) for $16,366 less net cash acquired of $1,741. New Era is based near Dublin, Ireland and specializes in labels for the healthcare, pharmaceutical and food industries. On January 5, 2015, the Company acquired 100% of Multi Labels Ltd. (Multi Labels) for $15,670 plus net debt assumed of $3,733. Multi Labels is based in Daventry, near London, England, and specializes in premium alcoholic beverage labels for spirits and imported wine. On July 1, 2014, the Company acquired 100% of Multiprint Labels Limited (Multiprint) based in Dublin, Ireland for $1,662 plus net debt assumed of $2,371. The purchase price included $273 that was deferred for one year after the closing date, which was paid during fiscal 2016. Multiprint specializes in pressure sensitive labels for the wine & spirits and beverage markets in Ireland and the UK. The combined net revenues and net loss included in the consolidated statement of income for the year ended March 31, 2015 for New Era, Multi Labels and Multiprint were $12,628 and $(295), respectively. The results of operations of these acquired businesses have been included in the consolidated financial statements since the respective dates of acquisition and have been determined to be individually and collectively immaterial for further disclosure. Effective February 1, 2014, the Company acquired the assets of the DI-NA-CAL label business, based near Cincinnati, Ohio, from Graphic Packaging International, Inc., for $80,667. DI-NA-CAL provides decorative label solutions primarily in the heat transfer label markets for home & personal care and food & beverage through long-standing relationships with blue chip national and multi-national customers. Upon closing, $8,067 of the purchase price was deposited into an escrow account and was to be released to the seller on the 18 month anniversary of the closing date in accordance with the provisions of the escrow agreement. The escrow amount is to fund certain potential obligations of the seller with respect to the transaction. During the second quarter of fiscal 2016, all but $598 of the escrow amount was released to the seller. As of March 31, 2017, $351 remained in the escrow account. The Company spent $452 in acquisition expenses related to the DI-NA-CAL acquisition. These expenses were recorded in selling, general and administrative expenses in the consolidated statements of income, $147 in fiscal 2015 and $305 in fiscal 2014. In conjunction with the acquisition of DI-NA-CAL, the Company recorded an indemnification asset of $427, which represented the seller’s obligation to indemnify Multi-Color relating to pre-acquisition customer quality claims. As discussed above, an escrow fund exists for indemnification obligations, subject to certain minimum thresholds and deductibles. The seller paid the Company for the indemnification asset during the fourth quarter of fiscal 2015. On October 1, 2013, the Company acquired 100% of John Watson & Company Limited (Watson) based in Glasgow, Scotland, for $21,634 less net cash acquired of $143. Watson is a leading glue-applied spirit label producer in the U.K. The purchase price included a performance based earnout of $8,498, estimated as of the acquisition date. The amount of the earnout was based on a comparison between EBITDA for the acquired business for fiscal 2013 and fiscal 2014 less certain adjustments and any claims to fund certain potential indemnification obligations of the seller with respect to the transaction. An additional $1,063 related to the earnout due to the sellers was accrued in the fourth quarter of fiscal 2014 based on better than estimated fiscal 2014 performance by the acquired company compared to estimates made at the time of the acquisition, which was recorded in other expense in the consolidated statements of income. In June 2014, the amount of the earnout was finalized and an additional $343 was accrued, which was recorded in other expense in the consolidated statements of income. The earnout was paid in July 2014. 47 On August 1, 2013, the Company acquired 100% of Flexo Print S.A. De C.V. (Flexo Print) based in Guadalajara, Mexico for $31,847 plus net debt assumed of $2,324. Flexo Print is a leading producer of home & personal care, food & beverage, wine & spirits and pharmaceutical labels in Latin America. Upon closing, $3,058 of the purchase price was deposited into an escrow account, and an additional $1,956 of the purchase price was retained by MCC and was deferred until the third anniversary of the closing date and deposited into the escrow account during the second quarter of fiscal 2017. These combined escrow amounts are to be released to the seller on the fifth anniversary of the closing date in accordance with the purchase agreement. An additional $757 of the purchase price was retained by MCC at closing and was paid to the seller on the third anniversary of the closing date in accordance with the purchase agreement. The combined escrow and retention amounts are to fund certain potential indemnification obligations of the seller with respect to the transaction. In the fourth quarter of fiscal 2014, second quarter of fiscal 2015, third quarter of fiscal 2015 and first quarter of fiscal 2016, the Company adjusted the deferred payment by $(1,157), $69, $69 and $217, respectively, in settlement of an indemnification claim. In conjunction with the acquisition of Flexo Print, the Company recorded an indemnification asset of $3,279, which represents the seller’s obligation under the purchase agreement to indemnify Multi-Color for the outcome of potential contingent liabilities relating to uncertain tax positions. As discussed above, a portion of the purchase price was held back by Multi-Color and additional funds are being held in an escrow account in order to support the sellers’ indemnification obligations. (4) ACCOUNTS RECEIVABLE ALLOWANCE The Company’s customers are primarily producers of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. Accounts receivable consist of amounts due from customers in connection with our normal business activities and are carried at sales value less allowance for doubtful accounts. The allowance for doubtful accounts is established to reflect the expected losses of accounts receivable based on past collection history, age, account payment status compared to invoice payment terms and specific individual risks identified. The following table summarizes the activity in the allowance for doubtful accounts: (5) INVENTORIES The Company’s inventories as of March 31 consisted of the following: (6) PROPERTY, PLANT AND EQUIPMENT The Company’s property, plant and equipment as of March 31 consisted of the following: Total depreciation expense for 2017, 2016 and 2015 was $33,480, $31,295 and $29,828, respectively. 201720162015Balance at beginning of year2,497$ 2,101$ 2,028$ Provision234 1,249 330 Accounts written-off(384) (864) (75) Foreign exchange(74) 11 (182) Balance at end of year2,273$ 2,497$ 2,101$ 20172016Finished goods35,204$ 35,126$ Work-in-process8,933 7,066 Raw materials26,862 25,508 Total inventories, gross70,999 67,700 Inventory reserves(7,004) (6,509) Total inventories, net63,995$ 61,191$ 20172016Land4,300$ 2,937$ Buildings, building improvements and leasehold improvements53,711 44,055 Machinery and equipment330,089 309,150 Furniture, fixtures, computer equipment and software27,648 25,178 Construction in progress22,428 7,483 Property, plant and equipment, gross438,176 388,803 Accumulated depreciation(190,915) (167,508) Property, plant and equipment, net247,261$ 221,295$ 48 As a result of our decision to close certain manufacturing facilities during fiscal 2016 and 2015, the Company determined that it was more likely than not that certain fixed assets at these facilities would be sold or otherwise disposed of significantly before the end of their estimated useful lives. As a result of the decision to close our manufacturing facility located in Sonoma, California, during fiscal 2016 non-cash fixed asset impairment charges of $220 were recorded, primarily to write off certain machinery and equipment that was not transferred to other locations and was abandoned. As a result of the decision to consolidate our manufacturing facilities located in Glasgow, Scotland, during fiscal 2016 non-cash fixed asset impairment charges of $115 were recorded, primarily to write off certain machinery and equipment that was not transferred to other locations and was abandoned. As a result of the decision to close our manufacturing facility located in Greensboro, North Carolina, during fiscal 2016 non-cash fixed asset impairment charges of $786 were recorded, primarily to write off certain machinery and equipment that was not transferred to other locations and was abandoned. As a result of the decision to close our manufacturing facility located in Dublin, Ireland, during fiscal 2016 non-cash fixed asset impairment charges of $219 were recorded, primarily to write off certain machinery and equipment and leasehold improvements that were not transferred to other locations and were abandoned. As a result of the decision to close our manufacturing facilities located in Norway, Michigan and Watertown, Wisconsin, during fiscal 2015, non-cash fixed asset impairment charges of $5,208 were recorded, primarily to write off certain machinery and equipment that was not transferred to other locations and was abandoned. Also included in these charges is an impairment related to the land and building in Norway, Michigan. These carrying amounts were adjusted to their estimated fair value, less costs to sell, which were determined based on a market valuation from an independent third party. The land and building in Watertown, Wisconsin were not impaired. During fiscal 2016, additional impairment charges of $534 were recorded to adjust the carrying value of the land and building held for sale at the Norway facility to their estimated fair value, less costs to sell, which were determined based upon a quoted market price. The land and buildings at the Norway and Watertown facilities were sold during fiscal 2016, and a gain of $476 was recorded in facility closure expenses in the consolidated statements of income related to the sale of the Watertown facility. These asset impairment charges were recorded in facility closure expenses in the consolidated statements of income. See Note 20 for further information on these facility closures. During fiscal 2015, the Company also determined that it was more likely than not that certain fixed assets at the manufacturing facilities located in Chile and Argentina will be sold or otherwise disposed of significantly before the end of their estimated useful lives. Non-cash impairment charges of $621 related to these assets was recorded in selling, general and administrative expenses in the consolidated statements of income, primarily to write-down certain machinery and equipment to their estimated fair values. In addition, the carrying amounts of certain machinery and equipment that was abandoned were written off. During fiscal 2016, non-cash impairment charges of $73 were recorded to write-off additional assets that were abandoned. In addition, the Company performed impairment testing on long-lived assets at certain manufacturing locations during fiscal 2017, 2016, and 2015 due to the existence of other impairment indicators. The undiscounted cash flows associated with the long-lived assets were greater than their carrying values, and therefore, no additional impairment was present in any of these three years. (7) GOODWILL AND INTANGIBLE ASSETS The changes in the Company’s goodwill consisted of the following: See Note 3 for further information regarding acquisitions. 20172016Balance at beginning of year Goodwill, gross434,212$ 381,308$ Accumulated impairment losses(12,203) (13,087) Goodwill, net422,009 368,221 Activity during the year Acquisitions12,551 53,833 Adjustments to prior year acquisitions(12,049) 206 Currency translation(9,961) (251) Balance at end of year Goodwill, gross424,941 434,212 Accumulated impairment losses(12,391) (12,203) Goodwill, net412,550$ 422,009$ 49 Historically, the Company’s policy was to perform the annual goodwill impairment test as of the last day of February of each fiscal year. Beginning in fiscal 2016, the Company changed its annual goodwill impairment test date to the last day of January of each fiscal year. See Note 2 for further information. In conjunction with our annual impairment test as of January 31, 2017, the Company performed a quantitative assessment for all of our reporting units. The first step of the impairment test compares the fair value of each reporting unit to its carrying value. We estimated the fair value of each reporting unit using a combination of: (i) a market approach based on multiples of revenue and EBITDA from recent comparable transactions and other market data; and (ii) an income approach based on expected future cash flows discounted at rates ranging between 8.5% to 11.0% in 2017. The discount rate reflects the risk associated with each respective reporting unit, including the industry and geographies in which they operate. The market and income approaches were both considered, with the income approach selected based on judgment of the comparability of the recent transactions due to the fluid nature of the business and recent acquisitions. The market approach was used to corroborate values determined by the income approach. We considered recent economic and industry trends, as well as risk in executing our current plans from the perspective of a hypothetical buyer in estimating expected future cash flows in the income approach. For all of our reporting units, the first step of the impairment test did not indicate potential impairment as the estimated fair value of the reporting units exceeded the carrying amount. As a result, the second step of the impairment test was not required. Significant assumptions used to estimate the fair value of our reporting units include estimates of future cash flows, discount rates and multiples of revenue and EBITDA. These assumptions are typically not considered individually because assumptions used to select one variable should also be considered when selecting other variables; however, sensitivity of the overall fair value assessment to each significant variable is also considered. In conjunction with our annual impairment test as of January 31, 2016, the Company performed a qualitative assessment for all but two of our reporting units and determined that it was not more likely than not that the fair values of the reporting units were less than the carrying values. Due to changes in sales forecasts during fiscal 2016, the Company performed the first step of the two-step goodwill impairment test for the Latin America Consumer Product Goods (LA CPG) reporting unit. As it passed the first step of the fiscal 2015 impairment test by less than 5%, the Company performed the first step of the two-step goodwill impairment test for the Asia Pacific Wine & Spirits (AP W&S) reporting unit. For both LA CPG and AP W&S, the first step of the impairment test did not indicate potential impairment as the estimated fair value of the reporting unit exceeded the carrying amount. As a result, the second step of the impairment test was not required. As a result of our fiscal 2014 impairment test, the Company recorded an estimated non-cash goodwill impairment charge of $13,475 related to our Latin America Wine & Spirits (LA W&S) reporting unit in fiscal 2014. During fiscal 2015, the Company finalized the fiscal 2014 impairment test and recorded an additional non-cash goodwill impairment charge of $951 for LA W&S. Based on operating results for the Europe Wine & Spirits (EUR W&S) reporting unit, a quantitative goodwill impairment assessment was performed during the second quarter of 2017 for this reporting unit. No impairment was indicated. Based on operating results for the LA CPG and LA W&S reporting units during fiscal 2015, a quantitative goodwill impairment assessment was performed as of September 30, 2014 for those two reporting units. No impairment was indicated. No events or changes in circumstances occurred in 2016 that required goodwill impairment testing in between annual tests. The Company’s intangible assets as of March 31 consisted of the following: The intangible assets were established in connection with completed acquisitions. They are amortized, using the straight-line method, over their estimated useful lives based on a number of assumptions including customer attrition rates, percentage of revenue attributable to technologies, royalty rates and projected future revenue growth. The weighted-average amortization period for the intangible assets acquired in fiscal 2017 is 13 years. The weighted-average amortization period for the intangible assets acquired in fiscal 2016 is 16 years. Total amortization expense of intangible assets for 2017, 2016 and 2015 was $14,425, $13,178 and $11,541, respectively. Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying AmountCustomer relationships228,518$ (61,546)$ 166,972$ 215,317$ (49,258)$ 166,059$ Technologies1,658 (1,368) 290 1,308 (1,308) - Trademarks1,013 (1,013) - 1,101 (1,082) 19 Licensing intangible1,958 (1,958) - 2,091 (2,091) - Non-compete agreements5,063 (3,116) 1,947 5,160 (2,149) 3,011 Lease intangible128 (117) 11 137 (80) 57 Total238,338$ (69,118)$ 169,220$ 225,114$ (55,968)$ 169,146$ 20172016 The estimated useful lives for each intangible asset class are as follows: 50 Customer relationships Technologies Trademarks Licensing intangible Non-compete agreements Lease intangible 7 to 21 years 7 to 8 years 1 to 2 years 5 years 2 to 7 years 3 years The annual estimated amortization expense for future years is as follows: The Company performed impairment testing on long-lived assets, including intangibles, at certain manufacturing locations during fiscal 2017 and 2016 due to the existence of impairment indicators. The estimated undiscounted future cash flows associated with the long- lived assets were greater than their carrying values, and therefore, no impairment was present in either of these two years related to intangible assets. (8) DEBT The components of the Company’s debt as of March 31 consisted of the following: (1) The 6.125% Senior Notes are due on December 1, 2022. (2) Borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility mature on November 21, 2019. The following is a schedule of future annual principal payments as of March 31, 2017: On November 21, 2014, the Company issued $250,000 aggregate principal amount of 6.125% Senior Notes due 2022 (the “Notes”). The Notes are unsecured senior obligations of the Company. Interest is payable on June 1st and December 1st of each year beginning June Fiscal 201814,258$ Fiscal 201914,067 Fiscal 202014,067 Fiscal 202113,699 Fiscal 202212,324 Thereafter100,805 Total 169,220$ Long-Term DebtLong-Term DebtUnamortizedLess UnamortizedUnamortizedLess UnamortizedDebt IssuanceDebt IssuanceDebt IssuanceDebt IssuancePrincipalCostsCostsPrincipalCostsCosts6.125% Senior Notes (1)250,000$ (3,822)$ 246,178$ 250,000$ (4,497)$ 245,503$ U.S. Revolving Credit Facility (2)198,100 (2,335) 195,765 230,000 (3,258) 226,742 Australian Revolving Sub-Facility (2)31,965 (178) 31,787 27,948 (245) 27,703 Capital leases7,412 - 7,412 5,745 - 5,745 Other subsidiary debt359 - 359 586 - 586 Total debt487,836 (6,335) 481,501 514,279 (8,000) 506,279 Less current portion of debt(2,093) - (2,093) (1,573) - (1,573) Total long-term debt485,743$ (6,335)$ 479,408$ 512,706$ (8,000)$ 504,706$ 20172016DebtCapital LeasesTotalFiscal 2018129$ 1,964$ 2,093$ Fiscal 2019114 1,837 1,951 Fiscal 2020230,101 1,768 231,869 Fiscal 202137 1,375 1,412 Fiscal 202233 468 501 Thereafter250,010 - 250,010 Total480,424$ 7,412$ 487,836$ 51 1, 2015 until the maturity date of December 1, 2022. The Company’s obligations under the Notes are guaranteed by certain of the Company’s existing direct and indirect wholly-owned domestic subsidiaries that are guarantors under the Credit Agreement (defined below). In connection with the issuance of the Notes, the Company incurred debt issuance costs of $5,413 during 2015, which are being deferred and amortized over the eight year term of the Notes. Concurrent with the issuance and sale of the Notes, the Company amended and restated its credit agreement. The Amended and Restated Credit Agreement (the “Credit Agreement”) provides for revolving loans of up to $500,000 for a five year term expiring on November 21, 2019. The aggregate commitment amount is comprised of the following: (i) a $460,000 revolving credit facility (the “U.S. Revolving Credit Facility”) and (ii) an Australian dollar equivalent of a $40,000 revolving credit facility (the “Australian Revolving Sub-Facility”). Upon issuance of the Notes, the Company was required to repay in full the Term Loan Facility under the terms of its prior credit agreement. On November 21, 2014, the Company repaid the outstanding balance of $341,625 on the Term Loan Facility using the net proceeds from the Notes and borrowings on the U.S. Revolving Credit Facility. The repayment of the Term Loan Facility was treated primarily as an extinguishment of debt. As a result, $2,001 in unamortized deferred financing fees were recorded to interest expense during 2015 as a loss on the extinguishment of debt. The remaining unamortized fees of $2,275 and new debt issuance costs of $2,526, which were incurred during 2015 in conjunction with the Credit Agreement, were deferred and are being amortized over the five year term of the Credit Agreement. The Credit Agreement may 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 senior secured leverage ratio at the time of the borrowing. The weighted average interest rate on borrowings under the U.S. Revolving Credit Facility was 2.72% and 2.33% at March 31, 2017 and 2016, respectively, and on borrowings under the Australian Revolving Sub-Facility was 3.43% and 3.89% at March 31, 2017 and 2016, respectively. 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) a maximum consolidated senior secured leverage ratio of no more than 3.50 to 1.00; (ii) a maximum consolidated leverage ratio of no more than 4.50 to 1.00; and (iii) a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00. The Credit Agreement contains customary mandatory and optional prepayment provisions and customary events of default. The U.S. Revolving Credit Facility and the Australian Revolving Sub-Facility are secured by the capital stock of subsidiaries, substantially all of the assets of each of our domestic subsidiaries, but excluding existing and non-material real property, and intercompany debt. The Australian Revolving Sub-Facility is also secured by substantially all of the assets of the Australian borrower and its direct and indirect subsidiaries. The Credit Agreement and the indenture governing the Notes (the “Indenture”) limit the Company’s ability to incur additional indebtedness. Additional covenants contained in the Credit Agreement and the Indenture, 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, engage in mergers, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Under the Credit Agreement and the Indenture, 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 Indenture. As of March 31, 2017, the Company was in compliance with the covenants in the Credit Agreement and the Indenture. The Company recorded $1,665, $1,692 and $2,200 in interest expense in 2017, 2016 and 2015, respectively, in the consolidated statements of income to amortize deferred financing costs. Available borrowings under the Credit Agreement at March 31, 2017 consisted of $256,387 under the U.S. Revolving Credit Facility and $8,035 under the Australian Revolving Sub-Facility. The Company also has various other uncommitted lines of credit available at March 31, 2017 in the amount of $9,676. The carrying value of debt approximates fair value. The fair value of long-term debt is based on observable inputs, including quoted market prices (Level 2). The fair value of the Notes was $260,625 as of March 31, 2017. Capital Leases The present value of the net minimum payments on the capitalized leases as of March 31 is as follows: Included in the consolidated balance sheet as of March 31, 2017 under property, plant and equipment are cost and accumulated depreciation related to capitalized leases of $10,702 and $1,959, respectively. Included in the consolidated balance sheet as of March 31, 2016 under property, plant and equipment are cost and accumulated depreciation related to capitalized leases of $7,686 and $393, respectively. The capitalized leases carry interest rates from 2.32% to 10.11% and mature from fiscal 2018 to fiscal 2022. 20172016Total minimum lease payments8,327$ 6,289$ Less amount representing interest(915) (544) Present value of net minimum lease payments7,412 5,745 Current portion(1,964) (1,227) Capitalized lease obligations, less current portion5,448$ 4,518$ (9) FINANCIAL INSTRUMENTS Interest Rate Swaps 52 The Company used interest rate swap agreements (Swaps) to minimize its exposure to interest rate fluctuations on variable rate debt borrowings. Swaps involve the exchange of fixed and variable rate interest payments and do not represent an actual exchange of the underlying notional amounts between the two parties. The Company had three forward starting non-amortizing Swaps with a total notional amount of $125,000 to convert variable rate debt to fixed rate debt. The Swaps became effective October 2012 and expired in August 2016. The Swaps resulted in interest payments based on an average fixed rate of 1.396% plus the applicable margin per the requirements in the Credit Agreement. Upon inception, the Swaps were designated as a cash flow hedge, with the effective portion of gains and losses, net of tax, measured on an ongoing basis, recorded in accumulated other comprehensive income (loss). If the hedge or a portion thereof were determined to be ineffective, any gains and losses would be recorded in interest expense in the consolidated statements of income. In conjunction with entering into the Credit Agreement on November 21, 2014 (see Note 8), the Company de-designated the Swaps as a cash flow hedge. The cumulative loss on the Swaps recorded in accumulated other comprehensive income (AOCI) at the time of de- designation was reclassified into interest expense in the same periods during which the originally hedged transactions affected earnings, as these transactions were still probable of occurring. Subsequent to November 21, 2014, changes in the fair value of the de-designated Swaps were immediately recognized in interest expense. The gains (losses) on the interest rate swaps recognized were as follows: Foreign Currency Forward Contracts Foreign currency exchange risk arises from our international operations in Australia, Europe, South America, Mexico, Canada, China, Southeast Asia and South Africa as well as from transactions with customers or suppliers denominated in currencies other than the U.S. dollar. The functional currency of each of the Company’s subsidiaries is generally the currency of the country in which the subsidiary operates. At times, the Company uses 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 settle in the following quarter. During the year ended March 31, 2017, 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. One contract to fix the purchase price of a Euro denominated firm commitment for the purchase of a press and other equipment that settled during 2016 was designated as a hedging instrument; therefore, changes in the fair value of the contract were recorded in other income and expense in the same period during which the related hedged item affected the consolidated statements of income. The amount of gain (loss) on the foreign currency forward contracts recognized in the consolidated statements of income was as follows: 20172016Interest rate swaps not designated as hedging instruments: Loss reclassified from AOCI into earnings(329)$ (788)$ Gain recognized in earnings225 1,064 20172016Foreign currency forward contracts designated as hedging instruments: Gain (loss) on foreign currency forward contracts-$ 470$ Gain (loss) on related hedged items- (470) Foreign currency forward contracts not designated as hedging instruments: Gain (loss) on foreign currency forward contracts220$ 31$ Gain (loss) on related hedged items(188) (32) (10) ACCRUED EXPENSES AND OTHER LIABILITIES The Company’s accrued expenses and other liabilities as of March 31 consisted of the following: 53 (11) EMPLOYEE BENEFIT PLANS The Company maintains a 401K retirement savings plan (Plan) for U.S. employees who meet certain service requirements. The Plan provides for voluntary contributions by eligible U.S. employees up to a specified maximum percentage of gross pay. At the discretion of the Company’s Board of Directors, the Company may contribute a specified matching percentage of the employee contributions. The Company also makes contributions to various retirement savings plans for Australian employees as required by law equal to 9% of gross pay and to other voluntary and involuntary defined contribution plans in China, Canada, England, Ireland, Italy, Mexico, Scotland, South Africa and Switzerland. Company contributions to these retirement savings plans were $5,189, $4,982 and $4,437 in 2017, 2016 and 2015, respectively. The Company sponsors several pension plans, including our principal pension plan for certain former U.S. employees as well as other subsidiary pension plans around the globe. Our principal pension plan which is discussed below, is a single employer defined benefit pension plan (Pension Plan) which covers eligible union employees at its former Norway, Michigan plant who were hired prior to July 14, 1998. The Pension Plan provides benefits based on a flat payment formula and years of credited service at a normal retirement age of 65. The benefits are actuarially reduced for early retirement. The Company recorded $145, $89 and $158 of net periodic benefit cost in 2017, 2016 and 2015, respectively. The Company used a March 31 measurement date (the fiscal year end) for the Pension Plan in 2017 and 2016. The plans’ benefit obligations, plan assets and funded status as of March 31, 2017 and 2016 are as follows: the Company’s benefit obligation was $1,136 and $1,653 as of March 31, 2017 and 2016, respectively. The fair value of plan assets was $580 and $959 as of March 31, 2017 and 2016, respectively. As of March 31, 2017 and 2016, the Company’s unfunded obligation was $556 and $694, respectively. Non-U.S. Plans Certain subsidiaries outside the United States sponsor defined benefit postretirement plans that cover eligible regular employees. The Company deposits funds and/or purchases investments to fund these plans in addition to providing reserves for these plans. Benefits under the defined benefit plans are typically based on years of service and the employee’s compensation. The range of assumptions that are used for the non-U.S. defined benefit plans reflect the different economic environments within the various countries. These defined benefit plans are recorded based upon local accounting standards and are immaterial to the Company’s financial position and results of operations. (12) INCOME TAXES Earnings before income taxes were as follows: 20172016Accrued payroll and benefits24,286$ 20,176$ Accrued income taxes5,604 3,016 Professional fees500 2,730 Accrued taxes other than income taxes1,616 1,372 Deferred lease incentive209 266 Accrued interest5,178 5,310 Accrued severance47 90 Customer rebates2,672 2,541 Deferred press payments- 898 Exit and disposal costs related to facility closures 123 370 Deferred payments 1,068 5,072 Deferred revenue7,076 6,771 Other5,379 4,282 Total accrued expenses and other liabilities53,758$ 52,894$ 201720162015U.S. 65,113$ 55,764$ 57,958$ Foreign23,100 11,046 12,914 Total 88,213$ 66,810$ 70,872$ The provision (benefit) for income taxes as of March 31 includes the following components: 54 The following is a reconciliation between the U.S. statutory federal income tax rate and the effective tax rate: 201720162015Current: Federal16,889$ 11,492$ 10,923$ State and local2,498 1,103 1,421 Foreign9,298 4,268 6,289 Total Current28,685 16,863 18,633 Deferred: Federal987 5,360 6,880 State and local(147) 437 1,025 Foreign(2,677) (3,679) (1,382) Total Deferred(1,837) 2,118 6,523 Total26,848$ 18,981$ 25,156$ 201720162015U.S. federal statutory rate35.0%35.0%35.0%State and local income taxes, net of federal income tax benefit1.7%2.1%2.9%Section 199 deduction(1.8)%(1.5)%(1.2)%International rate differential(3.3)%(2.6)%(1.2)%Unrecognized tax benefits(0.9)%(1.6)%0.4%Foreign permanent differences(2.1)%(2.0)%(2.1)%Non-deductible transaction costs0.2%1.5%0.3%Valuation allowances1.2%(2.2)%0.8%Goodwill impairment- - 0.3%Other0.4%(0.3)%0.3%Effective tax rate30.4%28.4%35.5% The net deferred tax components as of March 31 consisted of the following: 55 As of March 31, 2017, Multi-Color had tax-effected state and foreign operating loss carryforwards of $727 and $4,488, respectively. As of March 31, 2016, Multi-Color had tax-effected state and foreign operating loss carryforwards of $875 and $5,072, respectively. There were no federal operating loss carryforwards as of March 31, 2017 and 2016. The state operating loss carryforwards will expire between fiscal 2026 and fiscal 2031. The foreign operating loss carryforwards include $1,577 with no expiration date; the remainder will expire between fiscal 2019 and fiscal 2033. The state operating loss carryforwards include losses of $727 that were acquired in connection with business combinations. Utilization of the acquired state tax loss carryforwards may be limited pursuant to Section 382 of the Internal Revenue Code of 1986. As of March 31, 2017 and 2016, Multi-Color had valuation allowances of $4,860 and $4,494, respectively. As of March 31, 2017 and 2016, $4,752 and $4,366, respectively, of the valuation allowances related to certain deferred tax assets in foreign jurisdictions due to the uncertainty of the realization of future tax benefits from those assets. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment. At each reporting date, the Company considers both negative and positive evidence that impacts the assessment of the realization of deferred tax assets. 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 March 31, 2017 and 2016, the Company had liabilities of $5,665 and $6,253, respectively, recorded for unrecognized tax benefits for U.S. federal, state and foreign tax jurisdictions. During the years ended March 31, 2017 and 2016, the Company recognized $175 and $(118), respectively, of interest and penalties in income tax expense in the consolidated statements of income. The liability for the gross amount of interest and penalties at March 31, 2017 and 2016 was $1,892 and $1,806, respectively. The liability for unrecognized tax benefits is classified in other noncurrent liabilities on the 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 year ended March 31, 2017, the Company released $1,381 of reserves, including interest and penalties, related to uncertain tax positions for which the statutes of limitations have lapsed or there was a reduction in the tax position related to a prior year. The Company believes that it is reasonably possible that $1,759 of unrecognized tax 20172016Deferred tax liabilities: Book basis over tax basis of fixed assets(28,911)$ (26,075)$ Book basis over tax basis of intangible assets(45,044) (45,671) Lease obligations- (948) Deferred financing costs(434) (628) Other(185) (228) Total deferred tax liabilities(74,574) (73,550) Deferred tax assets: Inventory reserves1,632 1,822 Inventory capitalization595 282 Allowance for doubtful accounts332 391 Stock based compensation expense1,535 1,339 Minimum pension liability642 637 Loss carry forward amounts5,215 5,947 Credit carry forward amounts378 331 Interest rate swaps- 126 State basis over tax basis of fixed assets565 552 Non-deductible accruals and other5,037 4,033 Deferred compensation206 104 Lease obligations384 - Gross deferred tax asset16,521 15,564 Valuation allowance(4,860) (4,494) Net deferred tax asset 11,661 11,070 Net deferred tax liability(62,913)$ (62,480)$ benefits as of March 31, 2017 could be released within the next 12 months due to 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 $5,075. A summary of the activity for the Company’s unrecognized tax benefits as of March 31 is as follows: 56 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 March 31, 2017, the Company is no longer subject to U.S. federal examinations by tax authorities for years before fiscal 2014. The Company is no longer subject to state and local examinations by tax authorities for years before fiscal 2012. In foreign jurisdictions, the Company is no longer subject to examinations by tax authorities for years before fiscal 1999. The Company did not provide for U.S. federal income taxes or foreign withholding taxes in fiscal 2017 on approximately $54,882 of undistributed earnings of its foreign subsidiaries as such earnings are intended to be reinvested indefinitely. Quantification of the deferred tax liability, if any, associated with these undistributed earnings is not practicable. The Company may periodically repatriate a portion of these earnings to the extent we can do so essentially tax-free or at minimal tax cost. (13) MAJOR CUSTOMERS During 2017, 2016 and 2015, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 17%, 17% and 18%, 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 4% and 2% of the Company’s total accounts receivable balance at March 31, 2017 and 2016, respectively. 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. (14) EARNINGS PER COMMON SHARE The following is a reconciliation of the number of shares used in the basic EPS and diluted EPS computations: The Company excluded 172, 120 and 102 shares in the fiscal years ended March 31, 2017, 2016 and 2015, respectively, from the computation of diluted EPS because these shares would have an anti-dilutive effect. (15) STOCK-BASED COMPENSATION The Company maintains incentive plans which authorize the issuance of stock-based compensation including stock options, restricted stock and restricted share units to officers, key employees and non-employee directors. New shares are issued upon exercise of stock options or vesting of restricted stock or restricted share units. As of March 31, 2017, 1,075 shares of common stock remained reserved for future issuance under the 2012 Stock Incentive Plan, 2003 Stock Incentive Plan, as amended, and 2006 Director Equity Compensation Plan. The Company measures compensation costs related to share-based transactions at the grant date, based on the fair value of the award, and recognizes them as expense over the requisite service period. 20172016Beginning balance6,253$ 4,045$ Additions based on tax positions related to the current year196 318 Additions of tax positions of prior years684 3,515 Reductions of tax positions of prior years(7) (166) Lapse of applicable statutes of limitations(1,091) (1,280) Currency translation(370) (179) Ending balance5,665$ 6,253$ Per SharePer SharePer ShareSharesAmountSharesAmountSharesAmountBasic EPS16,879 3.61$ 16,750 2.85$ 16,623 2.75$ Effect of dilutive securities145 (0.03) 202 (0.03) 254 (0.04) Diluted EPS17,024 3.58$ 16,952 2.82$ 16,877 2.71$ 201720162015 57 For the year ended March 31, 2017, the Company recorded pre-tax compensation expense for stock-based incentive awards of $3,042 which increased selling, general and administrative expenses by $2,064 and cost of revenues by $978 and had an associated tax benefit of $943. For the year ended March 31, 2016, the Company recorded pre-tax compensation expense for stock-based incentive awards of $2,982 which increased selling, general and administrative expenses by $2,211 and cost of revenues by $771 and had an associated tax benefit of $835. For the year ended March 31, 2015, the Company recorded pre-tax compensation expense for stock-based incentive awards of $1,970 which increased selling, general and administrative expenses by $1,246 and cost of revenues by $724 and had an associated tax benefit of $690. Stock Options 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 and will expire not more than ten years after the date of grant. The applicable options vest ratably over a five year period. The Company calculates the value of each employee stock option, estimated on the grant date, using the Black-Scholes model and the following weighted average assumptions: The Company estimated volatility based on the historical volatility of its common stock. The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the options in effect at the time of the grant. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The expected life of the options represents the weighted-average period the stock options are expected to remain outstanding and is based on review of historical exercise behavior of option grants with similar vesting periods. The Company uses an estimated forfeiture rate based on historical data. The forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. A summary of the changes in the options outstanding for years ended March 31, 2017, 2016 and 2015 is shown below: As of March 31, 2017, the total compensation cost related to nonvested options not yet recognized and the weighted-average period over which it is expected to be recognized is $3,722 and 3.0 years, respectively. The weighted average grant-date fair value of options granted during the year ended March 31, 2017, 2016 and 2015 was $22.72, $24.35 and $18.10, respectively. Cash received from options exercised during the year ended March 31, 2017 was $2,742, with a tax benefit of 201720162015Expected life (years)5.8 5.8 6.2 Risk-free interest rate1.2%1.9%2.0%Expected volatility38.9%40.1%51.9%Dividend yield0.3%0.3%0.6%WeightedWeighted AverageAggregate Average ExerciseRemaining LifeIntrinsic OptionsPrice(Years)ValueOutstanding at March 31, 2014895 19.65$ Granted121 37.29$ Exercised(324) 17.01$ 10,021$ Forfeited(36) 19.26$ Outstanding at March 31, 2015656 24.24$ Granted157 61.85$ Exercised(190) 21.41$ 8,037$ Forfeited(23) 35.97$ Outstanding at March 31, 2016600 34.50$ Granted32 61.62$ Exercised(136) 24.52$ 5,664$ Forfeited(25) 41.66$ Outstanding at March 31, 2017471 38.84$ 6.415,132$ Exercisable at March 31, 2017191 26.72$ 4.98,475$ Exercisable at March 31, 2016194 20.03$ 4.76,449$ 58 $1,146. The total grant-date fair value of options vested during the year ended March 31, 2017, 2016 and 2015 was $2,062, $1,528 and $1,265, respectively. Restricted Stock Restricted stock grants under the plans typically vest over a three to five year period. The cost of these awards is determined using the fair value of the Company’s common stock on the date of the grant and is recognized on a straight-line basis over the period the restrictions lapse. A summary of the changes in restricted shares for the year ended March 31, 2017, 2016 and 2015 is shown below: As of March 31, 2017, the total compensation cost related to non-vested restricted shares not yet recognized and the weighted-average period over which it is expected to be recognized was $739 and 1.8 years. The total grant-date fair value of restricted shares vested during the year ended March 31, 2017, 2016 and 2015 was $720, $520 and $495, respectively. The Company realized a tax benefit of $112 from restricted shares vested during the year ended March 31, 2017. Restricted Share Units Restricted share units (RSUs) granted under the plans vest over a three year period, and the number of RSUs that will vest is based on the Company’s level of achievement of a certain performance target. Based on the extent to which the performance condition is met, it is possible for none of the RSUs to vest or for a range up to the maximum to vest. The cost of these awards is determined using the fair value of the Company’s common stock on the date of grant and is recognized over the requisite service period based on the Company’s estimate of the probable outcome of the performance condition. We evaluate our estimate quarterly, and the expense is adjusted for any change in our estimate of the probable outcome. A summary of the changes in restricted share units for the years ended March 31, 2017 and 2016 are shown below: As of March 31, 2017, the total compensation cost related to non-vested RSUs not yet recognized was $1,104 based upon the Company’s estimate of the probable outcome of the performance condition. The weighted-average period over which it is expected to be recognized was 1.7 years. (16) GEOGRAPHIC INFORMATION During fiscal 2017, we acquired Italstereo, I.L.A., Graphix and GIP. During fiscal 2016, we acquired Cashin Print, System Label, Supa Stik, Super Label, Barat and Mr. Labels and began producing labels from our start-up operation in La Rioja, Spain. During fiscal 2015, we acquired New Era, Multi Labels and Multiprint. All of these acquisitions expanded the Company’s geographic presence. See Note 3 for further information regarding these acquisitions. The Company now manufactures labels in the United States, Argentina, Australia, Canada, Chile, China, England, France, Indonesia, Ireland, Italy, Malaysia, Mexico, the Philippines, Poland, Scotland, South Africa, Spain, Restricted Grant DateSharesFair ValueNon-vested restricted shares at March 31, 201435 27.05$ Granted 11 42.46$ Vested(19) 25.89$ Non-vested restricted shares at March 31, 201527 34.07$ Granted 15 68.15$ Vested(17) 31.34$ Non-vested restricted shares at March 31, 201625 55.99$ Granted 8 64.50$ Vested(15) 51.67$ Forfeited(1) 64.05$ Non-vested restricted shares at March 31, 201717 62.72$ Weighted AverageGrant DateRSUsFair ValueNon-vested RSUs at March 31, 2015- -$ Granted 42 64.05$ Non-vested RSUs at March 31, 201642 64.05$ Granted 35 61.19$ Forfeited(18) 62.59$ Non-vested RSUs at March 31, 201759 62.80$ Switzerland and Thailand. Net revenues, based on the geographic area from which the product is shipped, for the years ended March 31 and long-lived assets by geographic area as of March 31 are as follows: 59 (17) COMMITMENTS AND CONTINGENCIES Operating Lease Agreements The Company has various equipment, office and facility operating leases. Leases expire on various dates through June 2026 and some of the leases contain clauses requiring escalating rent payments. Rent expense during 2017, 2016 and 2015 was $12,767, $12,920 and $12,995, respectively. The annual future minimum rental obligations as of March 31, 2017 are as follows: Purchase Obligations The Company has entered into purchase agreements for various raw materials, uniforms, supplies, utilities, other services and property, plant and equipment. Total estimated purchase obligations are $17,756 at March 31, 2017. Litigation The Company is subject to various legal claims and contingencies that arise out of the normal course of business, including claims related to commercial transactions, product liability, health and safety, taxes, environmental matters, employee matters and other matters. Litigation is subject to numerous uncertainties and the outcome of individual claims and contingencies is not predictable. It is possible that some legal matters for which reserves have or have not been established could result in an unfavorable outcome for the Company and any such unfavorable outcome could be of a material nature or have a material adverse effect on our financial condition, results of operations and cash flows. 201720162015Net revenues: United States511,551$ 504,598$ 512,383$ Australia72,450 59,237 63,245 Other International339,294 306,990 235,144 Total923,295$ 870,825$ 810,772$ 20172016Long-lived assets: United States370,492$ 372,208$ Australia105,670 89,300 Other International359,234 356,715 Total835,396$ 818,223$ Fiscal 201812,257$ Fiscal 20199,878 Fiscal 20208,595 Fiscal 20217,433 Fiscal 20226,416 Thereafter12,795 Total57,374$ (18) SUPPLEMENTAL CASH FLOW DISCLOSURES 60 Supplemental disclosures with respect to cash flow information and non-cash investing and financing activities are as follows: (19) ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in the Company’s accumulated other comprehensive loss by component consisted of the following: (1) Net of tax of $18 for defined benefit pension items. (2) Net of tax of $(51) for defined benefit pension items. 201720162015Supplemental Disclosures of Cash Flow Information: Interest paid23,672$ 24,244$ 16,033$ Income taxes paid, net of refunds21,143 18,680 16,206 Supplemental Disclosures of Non-Cash Activities: Additional minimum pension liability(282)$ 57$ (275)$ Capital expenditures incurred but not yet paid3,323 2,446 3,664 Capital lease obligations incurred864 3,740 - Change in interest rate swap fair value225 1,064 565 Business combinations accounted for as a purchase: Assets acquired (excluding cash)45,328$ 153,504$ 48,354$ Liabilities assumed(16,669) (39,457) (16,854) Liabilities for contingent / deferred payments242 (7,326) (260) Noncontrolling interests(62) (3,476) - Net cash paid 28,839$ 103,245$ 31,240$ ForeignGains and lossescurrencyon cash flowDefined benefititemshedgespension itemsTotalBalance at March 31, 2015(57,880)$ (681)$ (411)$ (58,972)$ OCI before reclassifications (1)(2,671) - (29) (2,700) Amounts reclassified from AOCI- 485 64 549 Net current period OCI(2,671) 485 35 (2,151) Balance at March 31, 2016(60,551) (196) (376) (61,123) OCI before reclassifications (2)(25,042) - 83 (24,959) Amounts reclassified from AOCI- 196 91 287 Net current period OCI(25,042) 196 174 (24,672) Balance at March 31, 2017(85,593)$ -$ (202)$ (85,795)$ Reclassifications out of accumulated other comprehensive loss consisted of the following: 61 (1) Reclassified from AOCI into interest expense in the consolidated statements of income. See Note 9. (2) Reclassified from AOCI into facility closure expenses in the consolidated statements of income. These components are included in the computation of net periodic pension cost. See Note 11. (20) FACILITY CLOSURES Sonoma, California On January 19, 2016, the Company announced plans to consolidate our manufacturing facility located in Sonoma, California, into our existing facility in Napa, California. The transition was substantially completed in the third quarter of fiscal 2017. Below is a summary of the exit and disposal costs related to the closure of the Sonoma facility: Below is a reconciliation of the beginning and ending liability balances related to the exit and disposal costs: Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved from Sonoma to Napa. As a result of the decision to close our Sonoma facility, the Company determined that it was more likely than not that certain fixed assets at the Sonoma facility would be sold or otherwise disposed of significantly before the end of their estimated useful lives. During fiscal 2016, non-cash impairment charges of $220 related to these assets were recorded, primarily to write off certain machinery and equipment that was not transferred to other locations and was abandoned. During fiscal 2017, the Company recorded a net gain on the sale of property, plant and equipment of $185 related to assets in Sonoma that were not transferred to Napa and were sold. In addition, the Company wrote-off $140 in property, plant and equipment that was not transferred to Napa and was abandoned. These items were recorded in facility closure expenses in the consolidated statements of income. The cumulative costs incurred in conjunction with the closure as of March 31, 2017 are $272, which were recorded in facility closure expenses in the consolidated statements of income, $52 and $220 in 2017 and 2016, respectively. Glasgow, Scotland During the three months ended March 31, 2016, the Company began the process to consolidate our two manufacturing facilities located in Glasgow, Scotland into one facility. The transition was substantially completed in the fourth quarter of fiscal 2017. 20172016Gains and losses on cash flow hedges: Interest rate swaps (1)329$ 788$ Tax (133) (303) Net of tax196 485 Defined benefit pension items: Amortization of net actuarial (gains) losses (2)15 16 Settlement and curtailments (2)133 88 Tax (57) (40) Net of tax91 64 Total reclassifications, net of tax287$ 549$ Total costs incurred2017Severance and other termination benefits6$ 6$ 6$ Other associated costs91 91 91 Total costs expected to be incurredCumulative costs incurred as of March 31, 2017Balance at March 31, 2016Amounts ExpensedAmounts PaidBalance at March 31, 2017Severance and other termination benefits-$ 6 (6) -$ Other associated costs-$ 91 (67) 24$ Below is a summary of the exit and disposal costs related to the closure of the Glasgow facility: 62 Below is a reconciliation of the beginning and ending liability balances related to the exit and disposal costs: Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved in order to consolidate our two manufacturing facilities located in Glasgow into one facility. As a result of the decision to consolidate our Glasgow facilities, the Company determined that it was more likely than not that certain fixed assets at the closing Glasgow facility would be sold or otherwise disposed of significantly before the end of their estimated useful lives. During fiscal 2016, non-cash impairment charges of $115 related to these assets were recorded in facility closure expenses in the consolidated statements of income, primarily to write off certain machinery and equipment that was not transferred to other locations and was abandoned. During fiscal 2017, the Company recorded a net gain on the sale of property, plant and equipment of $377 related to assets that were not transferred to other locations and were sold. The cumulative costs incurred in conjunction with the closure as of March 31, 2017 are $859, which were recorded in facility closure expenses in the consolidated statements of income, $262 and $597 in fiscal 2017 and 2016, respectively. Greensboro, North Carolina On October 5, 2015, the Company announced plans to consolidate our manufacturing facility located in Greensboro, North Carolina into other North American facilities. The transition was substantially completed in the fourth quarter of fiscal 2016. Below is a summary of the exit and disposal costs related to the closure of the Greensboro facility: Below is a reconciliation of the beginning and ending liability balances related to the exit and disposal costs: 20172016Severance and other termination benefits479$ 100$ 379$ 479$ Other associated costs642 - 700539 103 642 Total costs expected to be incurredCumulative costs incurred as of March 31, 2017Total costs incurredBalance at March 31, 2016Amounts ExpensedAmounts PaidBalance at March 31, 2017Severance and other termination benefits106$ 100 (206) -$ Other associated costs-$ 539 (440) 99$ Balance at March 31, 2015Amounts ExpensedAmounts PaidBalance at March 31, 2016Severance and other termination benefits-$ 379 (273) 106$ Other associated costs-$ 103 (103) -$ 20172016Severance and other termination benefits651$ (22)$ 673$ 651$ Contract termination costs- (66) 66 - Other associated costs844 207 637 844 Cumulative costs incurred as of March 31, 2017Total costs expected to be incurredTotal costs incurredBalance at March 31, 2016Amounts ExpensedAmounts PaidBalance at March 31, 2017Severance and other termination benefits202$ (22) (180) -$ Contract termination costs66$ (66) - -$ Other associated costs114$ 207 (321) -$ Balance at March 31, 2015Amounts ExpensedAmounts PaidBalance at March 31, 2016Severance and other termination benefits-$ 673 (471) 202$ Contract termination costs-$ 66 - 66$ Other associated costs-$ 637 (523) 114$ 63 Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved from the Greensboro facility to other North American facilities and costs to return the facility to its original leased condition. As a result of the decision to close our Greensboro facility, the Company determined that it was more likely than not that certain fixed assets at the Greensboro facility would be sold or otherwise disposed of significantly before the end of their estimated useful lives. During fiscal 2016, non-cash impairment charges of $786 related to these assets were recorded in facility closure expenses in the consolidated statements of income, primarily to write off certain machinery and equipment that was not transferred to other locations and was abandoned. In addition, $85 related to the write off of fixed assets that were not transferred to other facilities and were disposed of in conjunction with the final facility clean-up was recorded in facility closure expenses in fiscal 2016. The cumulative costs incurred in conjunction with the closure as of March 31, 2017 are $2,366, which were recorded in facility closure expenses in the consolidated statements of income, $119 and $2,247 in fiscal 2017 and 2016, respectively. Dublin, Ireland During the three months ended December 31, 2015, the Company began the process to consolidate our manufacturing facility located in Dublin, Ireland into our existing facility in Drogheda, Ireland. The consolidation was substantially completed in the first quarter of fiscal 2017. Below is a summary of the exit and disposal costs related to the closure of the Dublin facility: Below is a reconciliation of the beginning and ending liability balances related to the exit and disposal costs: Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved from Dublin to Drogheda and costs to relocate employees. As a result of the decision to close our Dublin facility, the Company determined that it was more likely than not that certain fixed assets at the Dublin facility would be sold or otherwise disposed of significantly before the end of their estimated useful lives. During fiscal 2016, non-cash fixed asset impairment charges of $219 were recorded in facility closure expenses in the consolidated statements of income, primarily to write off certain machinery and equipment and leasehold improvements that were not transferred to other locations and were abandoned. The cumulative costs incurred in conjunction with the closure as of March 31, 2017 are $1,831, which were recorded in facility closure expenses in the consolidated statements of income, $355 and $1,476 in fiscal 2017 and 2016, respectively. Norway, Michigan and Watertown, Wisconsin On September 16, 2014, the Company decided to close our manufacturing facilities located in Norway, Michigan and Watertown, Wisconsin, subject to satisfactory completion of the customer qualification process. Due to available capacity, we transitioned the Norway and Watertown business to other North American facilities. On November 4, 2014, the Company communicated to employees its plans to close the Norway and Watertown facilities. Production at the facilities ceased during the fourth quarter of fiscal 2015. The land and building at the Watertown facility were sold during fiscal 2016, and a gain of $476 was recorded in facility closure expenses in the consolidated statements of income. In addition, the land and building at the Norway facility were sold during fiscal 2016. 20172016Severance and other termination benefits765$ 102$ 663$ 765$ Contract termination costs177 177 - 177 Other associated costs670 76 594 670 Total costs expected to be incurredCumulative costs incurred as of March 31, 2017Total costs incurredBalance at March 31, 2016Amounts ExpensedAmounts PaidBalance at March 31, 2017Severance and other termination benefits-$ 102 (102) -$ Contract termination costs-$ 177 (177) -$ Other associated costs83$ 76 (159) -$ Balance at March 31, 2015Amounts ExpensedAmounts PaidBalance at March 31, 2016Severance and other termination benefits-$ 663 (663) -$ Other associated costs-$ 594 (511) 83$ Below is a summary of the exit and disposal costs related to the closure of the Norway and Watertown facilities: 64 Below is a reconciliation of the beginning and ending liability balances related to the exit and disposal costs: Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved from the Norway and Watertown facilities to other North American facilities and costs to maintain the facilities while held for sale. During fiscal 2015, the Company recorded non-cash impairment charges of $5,208 related to property, plant and equipment at the Norway and Watertown facilities, which were recorded in facility closure expenses in the consolidated statements of income. During fiscal 2016, additional impairment charges of $534 were recorded to adjust the carrying value of the land and building held for sale at the Norway facility to their estimated fair value, less costs to sell. See Note 6. Proceeds from the sale of property, plant and equipment that was not transferred to other locations of $72 were recorded as a credit to facility closure expenses in fiscal 2015. In addition, $93 for the write-off of raw materials not transferred to other facilities was recorded in facility closure expenses in fiscal 2015. Due to the closure of the Norway facility, in January 2015 the Company withdrew from a multiemployer pension plan covering certain current and former employees of this plant. During the three months ended December 31, 2014, the Company recorded a loss contingency of $214 for our estimated withdrawal liability, which was recorded in facility closure expenses in the consolidated statements of income. During the three months ended March 31, 2015, the trustees of the multiemployer pension plan accepted our proposed lump sum payment of $224 to settle the withdrawal liability. The additional liability of $10 was accrued to facility closure expenses, and the full settlement amount was paid. During fiscal 2017, 2016 and 2015, the Company recorded settlement expense of $133, $88 and $83, respectively, related to the defined benefit pension plan that covers eligible union employees of our Norway plant who were hired prior to July 14, 1998. In addition, during fiscal 2015, the Company recorded a curtailment loss of $18 related to this defined benefit pension plan. During fiscal 2015, the Company recorded a curtailment gain of $827 related to the postretirement health and welfare plan that provides health benefits upon retirement to certain Norway plant employees hired on or before July 31, 1998. The settlement expenses and curtailment gain and loss were recorded in facility closure expenses in the consolidated statements of income. The cumulative costs incurred in conjunction with the closure as of March 31, 2017 are $8,036, which were recorded in facility closure expenses in the consolidated statements of income, $133, $632 and $7,271 in fiscal 2017, 2016 and 2015, respectively. El Dorado Hills, California On October 16, 2013, the Company announced plans to consolidate our manufacturing facility located in El Dorado Hills, California, into the Napa, California facility. The transition was completed in the fourth quarter of fiscal 2014. In connection with the closure of the El Dorado Hills facility, the Company recorded charges of $128 and $1,166 in fiscal 2015 and 2014, respectively, for employee termination benefits, including severance and relocation and other costs. The total costs incurred in connection with the closure were $1,294, which were recorded in facility closure expenses in the consolidated statements of income. Other Facility Closure Costs During fiscal 2016, the Company closed a small sales office located near Toronto, Canada and recorded costs of $28 related to the closure. (21) QUARTERLY DATA (UNAUDITED) Earnings per share amounts are computed independently each quarter. As a result, the sum of each quarter’s per share amount may not equal the total per share amount for the respective year. 20162015Severance and other termination benefits2,023$ 134$ 1,889$ 2,023$ Contract termination costs64 - 64 64 Other associated costs943 352 591 943 Cumulative costs incurred as of March 31, 2017Total costs expected to be incurredTotal costs incurredBalance at March 31, 2016Amounts ExpensedAmounts PaidBalance at March 31, 2017Other associated costs5$ - (5) -$ Balance at March 31, 2015Amounts ExpensedAmounts PaidBalance at March 31, 2016Severance and other termination benefits747$ 134 (881) -$ Other associated costs19$ 352 (366) 5$ 65 Fiscal 2017 results include $921 ($706 after-tax) in costs related to the closure of our manufacturing facilities located in the following: Glasgow, Scotland; Sonoma, California; Greensboro, North Carolina; Dublin, Ireland; Norway, Michigan and Watertown, Wisconsin. These expenses were recorded as follows: Fiscal 2016 results include $5,200 ($3,708 after-tax) in costs related to the closure of our manufacturing facilities located in the following: Glasgow, Scotland; Sonoma, California; Greensboro, North Carolina; Dublin, Ireland; Norway, Michigan and Watertown, Wisconsin; and a sales office near Toronto, Canada. These expenses were recorded as follows: ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. Fiscal 2017FirstSecondThirdFourthNet revenues236,494$ 232,140$ 210,658$ 244,003$ Gross profit52,093 49,953 41,217 53,546 Net income15,910 16,534 12,195 16,726 Net income attributable to Multi-Color Corporation15,805 16,343 12,126 16,722 Basic earnings per share0.94$ 0.97$ 0.72$ 0.99$ Diluted earnings per share0.93 0.96 0.71 0.98 QuarterFirstSecondThirdFourthFacility closure expenses157$ 57$ 393$ 314$ QuarterFiscal 2016FirstSecondThirdFourthNet revenues217,920$ 219,784$ 206,028$ 227,093$ Gross profit46,835 47,131 39,610 48,050 Net income13,254 16,654 9,637 8,284 Net income attributable to Multi-Color Corporation13,254 16,570 9,628 8,287 Basic earnings per share0.80$ 0.99$ 0.57$ 0.49$ Diluted earnings per share0.79 0.98 0.57 0.49 QuarterFirstSecondThirdFourthFacility closure expenses253$ 472$ 1,790$ 2,685$ Quarter ITEM 9A. CONTROLS AND PROCEDURES (In thousands, except for statistical data) (a) Evaluation of Disclosure Controls and Procedures 66 The term “disclosure controls and procedures” as defined by Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In accordance with Exchange Act Rule 13a-15(b), Multi-Color’s management, with the participation of the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2017. Based on this evaluation, Multi-Color has concluded that the disclosure controls and procedures were effective as of March 31, 2017. Multi-Color’s management does not expect that its disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to simple errors or mistakes. The design of any system of controls is based in part upon certain assumptions regarding the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. (b) Management’s Report on Internal Control over Financial Reporting Multi-Color’s management is responsible for the preparation and accuracy of the financial statements and other information included in this report. Multi-Color’s management is also responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of management, including Multi-Color’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, Multi-Color conducted an evaluation of the effectiveness of internal control over financial reporting as of March 31, 2017, based on the criteria set forth in Internal Control – Integrated Framework (2013) (the “Framework”) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management concluded that, as of March 31, 2017, its internal control over financial reporting was effective based on the Framework. The Company’s assessment of and conclusion on the effectiveness of its internal control over financial reporting did not include the internal controls of the companies it acquired during fiscal 2017 which were included in the 2017 consolidated financial statements. These acquired companies constituted $44,536 or 4.1% of the Company’s total assets as of March 31, 2017, and $11,177 or 1.2% of total net revenues, for the year end March 31, 2017. There are inherent limitations on the effectiveness of any system of internal controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective internal controls and procedures can only provide reasonable assurance of achieving their control objectives. Item 8 includes the audit report of Grant Thornton LLP on Multi-Color’s internal control over financial reporting as of March 31, 2017. (c) Changes in Internal Control over Financial Reporting There were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Multi-Color’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION Not Applicable. 67 PART III The information required by the following Items will be included in the Company’s definitive Proxy Statement for the 2017 Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission within 120 days after the end of the Registrant’s fiscal year and is incorporated herein by reference. ITEM 10. Directors, Executive Officers and Corporate Governance ITEM 11. Executive Compensation ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ITEM 13. Certain Relationships and Related Transactions, and Director Independence ITEM 14. Principal Accountant Fees and Services ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)(1) Financial Statements: PART IV The following Consolidated Financial Statements of Multi-Color Corporation and subsidiaries and the Reports of the Independent Registered Public Accounting Firm are included in Part II, Item 8. Reports of Independent Registered Public Accounting Firm Consolidated Statements of Income for the years ended March 31, 2017, 2016 and 2015 Consolidated Statements of Comprehensive Income (Loss) for the years ended March 31, 2017, 2016 and 2015 Consolidated Balance Sheets as of March 31, 2017 and 2016 Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2017, 2016 and 2015 Consolidated Statements of Cash Flows for the years ended March 31, 2017, 2016 and 2015 Notes to Consolidated Financial Statements Management’s Report on Internal Control Over Financial Reporting is included in Part II, Item 9A. (a)(2) Financial Statement Schedules: All schedules have been omitted because they are either not required or the information is included in the financial statements and notes thereto. (b) Exhibits Exhibit Number Exhibit Description 3.1 3.2 4.1 4.2 10.1 Amended and Restated Articles of Incorporation (together with amendments incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal years ending March 31, 1996 and 2000 and Current Report on Form 8-K filed on August 17, 2007) Amended and Restated Code of Regulations (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on November 18, 2013) Investor Rights Agreement of Multi-Color Corporation, dated as of October 3, 2011, by and between Multi- Color Corporation and each of the Investors whose name appears on the signature pages thereof (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on October 5, 2011) Indenture governing the 6.125% Senior Notes due 2022, dated as of November 21, 2014, by and among Multi- Color Corporation, the Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on November 21, 2014) Guaranty and Collateral Agreement dated as of February 29, 2008 among Multi-Color Corporation, other parties thereto and Bank of America, N.A., as the Administrative Agent (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on March 6, 2008) 68 10.2 10.3 10.4 Pledge and Security Agreement dated as of February 29, 2008 made by Multi-Color Corporation Australian Acquisition Pty Limited in favor of Westpac Banking Corporation, as Australian Administrative Agent (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on March 6, 2008) Asset Purchase Agreement, dated as of February 1, 2014, by and between Graphic Packaging International, Inc., Bluegrass Labels Company, LLC, MCC-Norwood, LLC, and Multi-Color Corporation (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q filed on February 10, 2014) Amended and Restated Credit Agreement dated as of November 21, 2014 among Multi-Color Corporation, Collotype International Holdings Pty Limited, certain Subsidiaries of Multi-Color Corporation, Bank of America, N.A., Westpac Banking Corporation, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Robobank Nederland”, New York Branch, Keybank National Association, JPMorgan Chase Bank, N.A., BMO Harris Financing, Inc., the Other Lenders Party Hereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and BMO Capital Markets (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on November 21, 2014) 10.5 First Amendment to Amended and Restated Credit Agreement, made and entered into as of October 28, 2015, by and among Multi-Color Corporation, Collotype International Holdings Pty Limited, the Approving Lenders, certain Subsidiaries of Multi-Color Corporation and Bank of America, N.A. (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2015) 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 MANAGEMENT CONTRACTS AND COMPENSATION PLANS 2003 Stock Incentive Plan (incorporated by reference from the Registrant’s proxy materials filed in connection with the 2003 Annual Meeting of Shareholders) Amendment to 2003 Stock Incentive Plan dated August 16, 2007 (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on August 17, 2007) 2006 Director Equity Compensation Plan (incorporated by reference from the Registrant’s proxy materials filed in connection with the 2006 Annual Meeting of Shareholders) Amended and Restated Employment Agreement between Multi-Color Corporation and Nigel A. Vinecombe effective as of January 1, 2016 (incorporated by reference from the Registrant’s Quarterly Report on Form 10- Q for the quarter ending December 31, 2015) Amendment to 2003 Stock Incentive Plan dated September 16, 2010 (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on September 16, 2010) 2012 Stock Incentive Plan (incorporated by reference to the Registrant’s Proxy Statement for its 2012 Annual Meeting of Shareholders) Amended and Restated Employment Agreement between Multi-Color Corporation and Vadis Rodato effective as of January 1, 2016 (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ending December 31, 2015) Employment Agreement between Multi-Color Corporation and Sharon Birkett effective as of July 1, 2014 (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2014) Form of Indemnification Agreement dated February 3, 2015, by and between Multi-Color Corporation and the respective Indemnified Representative (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ending December 31, 2014) Employment Letter dated December 2, 2014 regarding compensation of Tim Lutz (incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal year ending March 31, 2015) Addendum to Employment Letter dated January 20, 2016 regarding compensation of Tim Lutz (incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal year ending March 31, 2016) Form of Restricted Share Agreement (incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal year ending March 31, 2015) 10.18 Form of Restricted Share Unit Agreement (incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal year ending March 31, 2015) 10.19 Employment Agreement between Multi-Color Corporation and David Buse effective as of January 1, 2016 (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ending December 31, 2015)  21 Subsidiaries of Multi-Color Corporation 69 23 24 Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm Power of Attorney (included as part of signature page) 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 32.2 Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 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 ITEM 16. FORM 10-K SUMMARY Not Applicable. 70 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Dated: May 30, 2017 MULTI-COLOR CORPORATION By: /s/ Vadis A. Rodato Vadis A. Rodato President and Chief Executive Officer (Principal Executive Officer) We, the undersigned directors and officers of Multi-Color Corporation, hereby severally constitute Vadis A. Rodato and Sharon E. Birkett, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the date indicated. Name /s/ Vadis A. Rodato Vadis A. Rodato /s/ Sharon E. Birkett Sharon E. Birkett /s/ Timothy P. Lutz Timothy P. Lutz /s/ Nigel A. Vinecombe Nigel A. Vinecombe /s/ Ari J. Benacerraf Ari J. Benacerraf /s/ Robert R. Buck Robert R. Buck /s/ Charles B. Connolly Charles B. Connolly /s/ Simon T. Roberts Simon T. Roberts /s/ Matthew M. Walsh Matthew M. Walsh Capacity Date President, Chief Executive Officer and Director May 30, 2017 (Principal Executive Officer) Vice President, Chief Financial Officer, Secretary (Principal Financial Officer) Chief Accounting Officer (Principal Accounting Officer) May 30, 2017 May 30, 2017 Executive Chairman of the Board of Directors May 30, 2017 Director _______ Director Director Director Director May 30, 2017 May 30, 2017 May 30, 2017 May 30, 2017 May 30, 2017 71 Exhibit 21 SUBSIDIARIES OF MULTI-COLOR CORPORATION Subsidiary Jurisdiction of IncorporationOwnership PercentageMulti-Color Argentina S.A.Argentina100%Multi-Color Australia Finance Pty LimitedAustralia100%Collotype International Holdings Pty LimitedAustralia100%Multi-Color Australia Acquisition Pty LimitedAustralia100%Multi-Color Australia Holdings Pty LimitedAustralia100%Collotype BSM Labels PtyAustralia100%Collotype iPack Pty LimitedAustralia100%Labelmakers Wine Division Pty LimitedAustralia100%Magnus Donners Pty LimitedAustralia100%Collotype Labels International Pty LimitedAustralia100%Graphix Labels and Packaging Pty LtdAustralia100%Multi-Color (Barossa) Pty LtdAustralia100%Multi-Color (Griffith) Pty LtdAustralia100%Multi-Color (QLD) Pty LtdAustralia100%Multi-Color (SA) Pty LtdAustralia100%Multi-Color (WA) Pty LtdAustralia100%Multi-Color Corporation Australia Pty LtdAustralia100%Multi-Color Montreal Canada CorporationCanada100%CM Holdings Ltd.Cayman100%MCC Investments Chile LtdChile100%Multi-Color Chile S.A.Chile100%Collotype Labels Chile SAChile 100%Guangzhou Super Serigraph Electronics Co. LtdChina 60%Multi-Color Packaging Printing Co., Ltd. China 100%Financiere Barat SASFrance100%Multi Color France Holding SASFrance100%Presses d'Aquitaine SASFrance100%MCC GIPFrance97.6%MCC Bordeaux France SASFrance100%MCC Epernay France SASFrance100%MCC Lyon France SASFrance100%MCC Montagny France SASFrance100%MCC Port-Sainte-Foy FranceFrance100%MCC Saint-Emilion France SASFrance100%PT Multi Color Jakarta IndonesiaIndonesia100%HM Investments Limited Ireland100%New Era Packaging Ireland LimitedIreland100%Tandheapley Holdings LimitedIreland100%TealsideIreland100%Collotype Labels Ireland LimitedIreland100%Multi-Color Labels Castlebar Ireland LimitedIreland100%Multi-Color Labels Ireland LimitedIreland100%Multi-Color Labels Roscommon Ireland LimitedIreland100%New Era Packaging Holdings LimitedIreland100% 72 Centro Stampa Holding S.r.l.Italy100%Multi Color Italian Holding S.r.l.Italy100%I.L.A. Industria Litografica Alessandrina S.r.l.Italy100%Italstereo Resin Labels S.r.l.Italy100%Multi Color - Italia S.p.A.Italy100%Super Box (Malaysia) Sdn BhdMalaysia100%MCC Labels (Kuala Lumpur) Sdn. Bhd.Malaysia100%Doukoban Marketing Sdn BhdMalaysia60%MCC Labels (Penang) Sdn. Bhd.Malaysia100%MCC Labels Asia Sdn BhdMalaysia100%MCC Labels Enterprise (Penang) Sdn. BhdMalaysia100%MCC Labels Industries (Kuala Lumpur) Sdn. Bhd.Malaysia100%S.E. Printing (M) Sdn BhdMalaysia60%S.E. Slimbright Sdn BhdMalaysia60%Super Labels Sdn BhdMalaysia100%Zenith Action Sdn BhdMalaysia100%Zenith Pioneer (M) Sdn BhdMalaysia100%Multi Color Global Label S.A. de C.V.Mexico100%Multi-Color Label Corporation Mexico S.A. de C.V.Mexico100%MCC Labels1 Netherlands, B.V.Netherlands100%MCC LABL2 Netherlands, B.V.Netherlands100%MCC Mexico 3 Holding B.V.Netherlands100%MCC Mexico 4 Holding B.V.Netherlands100%MCC Labels (Manila) Philippines, Inc.Philippines100%Multi-Color Warsaw Poland S.A.Poland100%John Watson (Holdings) LtdScotland100%Labelgraphics (Holdings) Ltd.Scotland100%Labelgraphics (Scotland) Ltd.Scotland100%MCC Scotland Holdings Ltd. Scotland100%Multi-Color Clydebank Scotland LimitedScotland100%Multi-Color Glasgow Scotland LimitedScotland100%Collotype Labels International (RSA) Pty LtdSouth Africa100%MCC Label Paarl South Africa (Pty) LtdSouth Africa100%Multi-Color Haro Spain, S.L.Spain100%Q Label Holding SarlSwitzerland100%Multi-Color Suisse S.A.Switzerland100%Multi-Color (Thailand) Co., Ltd.Thailand100%Multi-Color Daventry England LtdUnited Kingdom100%Multi-Color Stevenage England LimitedUnited Kingdom100%Cameo Sonoma LimitedUSA (California)100%Collotype Labels USA Inc.USA (California)100%Chilean Label Corp Holdings, LLCUSA (Delaware)100%LabelCorp Holdings, IncUSA (Delaware)100%LabelCorp International LLCUSA (Delaware)100%M Acquisition, LLC USA (Delaware)100%Multi-Color Australia, LLCUSA (Delaware)100%Adhesion Intermediate Holdings, Inc. USA (Delaware)100%MCC-Finance 2 LLCUSA (Delaware)100% 73 MCC-Finance LLCUSA (Delaware)100%LabelCorp Management, Inc.USA (Delaware)100%LSK Label, Inc.USA (Delaware)100%Asheville Acquisition Corporation LLCUSA (Delaware)100%Industrial Label CorporationUSA (Delaware)100%PSC Acquisition Company, LLCUSA (Delaware)100%York Tape & Label, LLCUSA (Delaware)100%Laser Graphic Systems, IncorporatedUSA (Kentucky)100%MCC-Norway, LLCUSA (Michigan)100%MCC-Troy, LLCUSA (Ohio)100%MCC-Uniflex, LLCUSA (Ohio)100%MCC Mexico Holdings 2 LLCUSA (Ohio)100%MCC-Mexico Holdings 1 LLCUSA (Ohio)100%MCC-Dec Tech, LLCUSA (Ohio)100%MCC-Batavia, LLCUSA (Ohio)100%MCC-Norwood, LLCUSA (Ohio)100%MCC-Wisconsin, LLCUSA (Ohio)100%Southern Atlantic Label Co., Inc.USA (Virginia)100% 74 Exhibit 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our reports dated May 30, 2017, with respect to the consolidated financial statements and internal control over financial reporting included in the Annual Report of Multi-Color Corporation on Form 10-K for the year ended March 31, 2017. We consent to the incorporation by reference of said reports in the Registration Statements of Multi-Color Corporation on Form S-3 (File No. 333-202770) and Forms S-8 (File No. 333-183181, File No. 333-145667, File No. 333-137184, File No. 333-129151, File No. 333-113960, and File No. 333- 81260). /s/ GRANT THORNTON LLP Cincinnati, Ohio May 30, 2017 75 Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Vadis A. Rodato, certify that: 1. I have reviewed this annual report on Form 10-K 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; 4. 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: a) 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; b) 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; c) 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 d) 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): a) 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 b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 30, 2017 By: /s/ Vadis A. Rodato Vadis A. Rodato President and Chief Executive Officer 76 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 annual report on Form 10-K 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; 4. 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: a) 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; b) 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; c) 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 d) 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): a) 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 b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 30, 2017 By: /s/ Sharon E. Birkett Sharon E. Birkett Vice President, Chief Financial Officer, Secretary 77 Exhibit 32.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Vadis A. Rodato, 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) requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and the Annual Report on Form 10-K of the Company for the year ended March 31, 2017 (the “Report”) fully complies with the (2) the Company. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Date: May 30, 2017 By: /s/ Vadis A. Rodato Vadis A. Rodato President and Chief Executive Officer 78 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) requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and the Annual Report on Form 10-K of the Company for the year ended March 31, 2017 (the “Report”) fully complies with the (2) the Company. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Date: May 30, 2017 By: /s/ Sharon E. Birkett Sharon E. Birkett Vice President, Chief Financial Officer, Secretary DEAR SHAREHOLDERS FISCAL 2017 DELIVERED ON DOUBLE DIGIT CORE EPS GROWTH AT 12% AND LOWER LEVERAGE AT 2.8X NET DEBT/CORE EBITDA. WE ARE WELL PLACED TO ACCELERATE GROWTH IN FISCAL 2018 BOTH ORGANICALLY AND VIA ACQUISITIONS. Vision Fiscal 2018 is our 30th year as a public company and we expect to mark this milestone with over one billion in revenues. Capex in fiscal 2017 and 2018 has been increased to circa 5% of revenues to support higher organic growth expectation. Acquisition revenues in fiscal 2018 are expected to exceed 2017. We welcomed new businesses in Italy, France and Australia during fiscal 2017. Performance Review Revenues for fiscal 2017 increased 6% to $923 million from $871 million in the prior year. Acquisitions accounted for a 5% increase in revenues and organic revenues increased 3%. Foreign exchange rates led to a 2% decrease in revenues. Core gross profit margin was 21% for both fiscal 2017 and fiscal 2016. Core selling, general & administrative expenses were 9% of revenues for both fiscal 2017 and fiscal 2016. Core operating income was 12% of revenues for both fiscal 2017 and fiscal 2016. Free cash flow was $61 million compared to $65 million in the prior year as a result of higher capital expenditures. Diluted earnings per share (EPS) increased 27% to $3.58 per diluted share from $2.82 in the prior year. Excluding the impact of non-core items, core EPS increased 12% to $3.61 per diluted share from $3.22 in the prior year. Customers We seek to further broaden our global reach and scale to support our customers in our core markets of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. We remain committed to maintaining strong customer relationships through the world’s best label solutions and thank all our customers for their business. L to R: Vadis Rodato, President & CEO and Nigel Vinecombe, Executive Chairman Future Growth Our strategy of organic growth in the 3-5% range and double-digit growth via acquisitions remains consistent in the highly fragmented global label market, which is growing circa 5% per year. We continue to be well positioned through our global position to supply customers in a highly fragmented global market. MCC Team Our team of over 5,450 is the heart of our business and we always greatly appreciate and thank them for their integrity, passion, creativity, perseverance and achievements. Nigel Vinecombe Executive Chairman June 2017 Vadis Rodato President and CEO CORPORATE INFORMATION As of June 30, 2017 Officers Nigel A. Vinecombe Executive Chairman Vadis A. Rodato President & Chief Executive Officer Sharon E. Birkett Vice President, Chief Financial Officer & Secretary David G. Buse Global Chief Operating Officer Wine & Spirits Timothy P. Lutz Chief Accounting Officer Mary T. Fetch Vice President, Treasurer Directors Nigel A. Vinecombe Executive Chairman Multi-Color Corporation Ari J. Benacerraf Senior Managing Director Diamond Castle Holdings Robert R. Buck Chairman Beacon Roofing Supply, Inc. Charles B. Connolly President Connemara Converting Simon T. Roberts Managing Director Harvest Partners Vadis A. Rodato President & Chief Executive Officer Multi-Color Corporation Matthew M. Walsh Chief Financial Officer Catalent, Inc. SHAREHOLDER INFORMATION Corporate Headquarters Multi-Color Corporation 4053 Clough Woods Drive Batavia, Ohio 45103 +1 (513) 381-1480 www.mcclabel.com Annual Meeting The Annual Meeting of Shareholders will be held at the Multi-Color Corporate Offices, 4053 Clough Woods Drive Batavia, Ohio on August 9, 2017 at 10:30 a.m. ET. Stock Listing The common shares of Multi-Color Corporation trade on the NASDAQ Global Select market under the Symbol “LABL”. Transfer Agent Computershare Investor Services College Station, Texas Independent Registered Public Accountants Grant Thornton LLP Cincinnati, Ohio Accelerating Growth Multi-Color Corporation 2017 Annual Report (Form 10-K) 

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