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Multi-Color Corporation Q3 Sales Up 65%

Press release from the issuing company

CINCINNATI, Jan. 27 -- Multi-Color Corporation today announced financial results for the third quarter ended December 31, 2005, compared with the same period a year ago. The third quarter sales increase included $14.3 million generated from the NorthStar Print Group ("NSPG") acquisition in January 2005 and $7.6 million generated from organic growth, reflecting continued strong demand in the consumer products market and sales to new customers. Gross profit was $9.4 million or 16.9% of sales compared to $6.7 million or 20.0% of sales in the prior year. The Decorating Solutions segment gross margin decreased to 17.5% as a result of product mix at the NSPG operations. Gross margins of 11.3% for the current quarter in the Company's Packaging Services segment were lower than the 18.4% margins of the previous year; however, margins significantly improved from the 4.4% gross margin in the second quarter of FY2006. For the quarter ended December 31, 2005, selling, general and administrative expenses increased $1.6 million over the prior year primarily due to the NSPG acquisition and first-year compliance expenses related to the Sarbanes-Oxley Act. Selling, general and administrative expenses decreased as a percent of sales to 7.9% from 8.4% in the prior year. Interest expense increased $225,000 from the prior year due to the additional debt incurred as a result of the acquisition. In addition, income tax expense increased $476,000 due to additional state and local taxes and higher income. For the nine month period ended December 31, 2005, Multi-Color's net sales of $152 million were 61% higher than the prior year. The organic sales growth rate was 14% and acquisitions accounted for $44.5 million or 77% of the increase in sales for the nine month period. Net income and diluted EPS increased 31% and 29% respectively, to $6.7 million and 99 cents per share for the nine months ended December 31, 2005. The Company has experienced organic sales growth above historical levels during FY2006, due to sales to new customers and strong demand for consumer products. Income was positively impacted by the higher sales; however the Packaging Services segment's profits fell significantly due to a delayed holiday season and resulting productivity issues and service mix. Also for the nine months ended December 31, 2005, the Company reduced debt 20% or $8.3 million and paid dividends to shareholders of $1 million, as a result of strong operating cash flows. Frank Gerace, Chief Executive Officer of Multi-Color Corporation said, "We are pleased with the overall performance and the organic growth rate in our Decorating Solutions segment. While we experienced good top-line growth in our Packaging Services segment, more work needs to be done to maximize the impact of that growth. The reorganization announced in December 2005 will optimize the benefits of Multi-Color's strong product research development capabilities, promote greater cross-selling of products and services and leverage our market knowledge, customer relations and internal organization."

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